Lawsuit targets National Title in investment scheme case

National Title Co. of Las Vegas faces a lawsuit and federal scrutiny over a real estate investment scheme that caused 60 to 100 investors to lose an estimated $20 million, according to court papers and the government.

The title company's attorney, Mark Ferrario, called the lawsuit frivolous.

"National Title will aggressively defend this lawsuit," Ferrario said of the lawsuit, adding that the plaintiffs' attorney, Gregory Burke, filed similar lawsuits in other California courts and one of those has been dismissed.

Ferrario said he was unaware of any federal investigation and said he doubted there was one.

In an email, Tracy Bouchard, owner of National Title and an individual defendant, said the civil complaint is without merit.

"I have already defeated these allegations once and will again," Bouchard said. "I think you should give local business the benefit of the doubt based on our impeccable track record over the years and that these allegations have already been addressed and defeated."

Bouchard didn't respond to a request for comment about the federal investigation.

The lawsuit pending in Los Angeles federal court, names National Title and Bouchard as defendants.

National Title was established in 1983 and has 30 employees, down from 130 at the peak of the real estate boom, the Las Vegas Review-Journal reported in December.

Other named defendants are Derrick Phelps and two companies in which Phelps is the majority shareholder -- Investors Realty and Enterprise Mortgage Services. The Nevada Secretary of State has revoked the incorporations of Phelps' two Henderson companies, and Phelps could not be reached for comment.

In addition to the civil action, the investment scheme is also under investigation by the U.S. Postal Inspection Service and the Federal Bureau of Investigation, Burke said.

Postal Inspection Service spokeswoman Patricia Armstrong confirmed Wednesday that her agency received complaints and is "looking into National Title," but declined to comment on whether it was investigating individuals. An FBI spokesman declined all comment.

"If there was an investigation involving Tracy (Bouchard) and the postal inspectors, I think I would know about it," Ferrario said. "I'm not aware of any such investigation."

The lawsuit, which seeks certification as a class action, alleges that the defendants sold unregistered securities "in a fraudulent real estate investment scheme."

The defendants held seminars in Nevada, California and Hawaii. Attendees at the seminars were urged to invest $50,000 to $100,000 in the purchase of five or 10 houses, Burke said. Investors borrowed money for the balance of the house purchases, he said.

Burke said investors were told an individual with bad credit would buy a deed contract, make loan payments and cover other expenses. After a year, the houses would be sold, producing a profit for investors, he said.

The defendants provided the plaintiffs with inflated appraisals, failed to manage the investment portfolio of houses and didn't find buyers for the properties, according to the lawsuit.

The property expenses were not paid by the person holding a contract on the real estate deed, Burke said. The investors lost their money when the properties were foreclosed, according to Burke and court papers.

"The investment was nothing more than a fraudulent scheme to churn fees by placing 'investors' into multiple properties they could not afford," the lawsuit states.

James McFadden, a Los Angeles area dentist; Mike Golpa, a California resident; and Mario Gonzales of Henderson are the named plaintiffs in the lawsuit filed May 15. They lost $4 million in the investment scheme, Burke said.

Contact reporter John G. Edwards at
jedwards@reviewjournal.com or 702-383-0420.