A Nevada mortgage company has been ordered to stop making illegal, unsecured loans that were presented to investors as loans secured by real estate.
The state's Department of Business and Industry, Mortgage Lending Division, has issued a cease and desist order to OneCap Mortgage Corp.
Prompted by seven complaints during the past four months alleging that the Las Vegas-based company misled or ignored investors, the state began an investigation into claims that unsecured loans were presented as secured by real estate, according to a copy of the order.
The company's Web site indicates it provides asset-based loans, unsecured credit lines up to $1 million, the regulator said.
Several deals totaling around $20 million were outlined in the order. Two of the transactions were personally guaranteed by Rudy Herrera, Raymond Herrera, Antun Barbato and Vincent Barbato.
One loan transferring funds from OneCap to a project was guaranteed by OneCap President and CEO Vince Hesser, but it was not secured by real estate -- in violation of mortgage broker laws, the order said. Three loans had unrecorded deeds in the file, which the company claimed would only be filed if the underlying loans defaulted.
In one of the transactions, documentation indicated OneCap was publicly traded as an OTCBB stock under the symbol ONEA -- though the order noted, "based on information and belief, it is in fact neither publicly traded nor ever was publicly traded."
A fact sheet on the Web site states OneCap is traded on the OTCBB exchange under the symbol ONCP -- though accompanying stock price information is dated June 30, 2001. Market capitalization as of July 31, 2001, is quoted at $6.6 million.
"OneCap is a full service residential and commercial real estate and mortgage brokerage company," the Web site states. "The company's single-source business model represents an attractive way for both residential and commercial customers to maneuver through the complex real estate and financing process in a time-efficient, cost-effective manner."
OneCap improperly operated as OneCap Holding Corp., OneCap Funding Corp. and a number of other similar sounding names, the state claims.
"The practical effect of this business structure is that neither the division nor the complaining partners are able to discern whether the respondent or some other unlicensed affiliate of respondent is the party with whom certain real estate transactions were consummated," the order said. "Further, upon information and belief, respondent has not filed a fictitious business name statement."
It also failed to file a financial statement with the state regulator within the required time after its fiscal year ended.
In addition to ordering OneCap to stop illegal activities, the order requires the company to pay a $250,000 administrative fine by Nov. 16, 2007. By next week, OneCap must provide a list of all transactions since 2004.
The state is also demanding that the company take down its Web site.
As of today, a message posted on the home page says, "TEMPORARILY UNAVAILABLE." However, the rest of the pages appear to still be active.