So many more of these to come. So many more...
USA Capital bankruptcy filing leaves investors stunned
LAS VEGAS -- Investors say they are stunned, angry and frustrated at Las Vegas-based USA Capital, a short-term mortgage lender that filed for bankruptcy protection last week.
The lender, with $950 million in assets, filed for bankruptcy court protection on April 13.
The company, with an office in Reno and Incline Village, raised investment funds to make short-term mortgage loans secured by real estate development and commercial properties. Investors were attracted by interest rates of 12 percent to 14 percent on their investments and by the relative security of having real estate for collateral.
It's the latest in a series of private lenders who have failed in Las Vegas, including Harley Harmon Mortgage, Interstate Mortgage Group and Global Express Capital.
"Unbelievable," investor Rich Maiorana, 55, who invested $50,000 in a USA Capital fund.
The bankruptcy filing "just makes them look to be terribly dishonest," Maiorana said.
Phyllis Resler, a widow and great-grandmother, works part time for a church to supplement her Social Security benefits. She has $56,000 invested with USA Capital.
"Help," she said, laughing nervously. "I can't earn and replace what I have at age 69. That will take a lifetime."
April 20, 2006
Here they come... the bankruptcy filings of the ponzi scheme leaders
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5 comments:
In my economics book I was stunned to find a section detailing what happened to Indonesia in 1997 causing the Asian financial crisis.
See if this sounds familiar:
1. Too many imports and deficit weakened the rupali (sp)
2. Rates rise to combat the fall of the rupali
3. Asset prices fall as rates shoot through the roof
4. Unable to service debt Indonesia suffers a horrible financial crisis.
The same thing happened in Mexico in 1994. The US has a lot more strength but we also have the largest housing bubble and we're not immune to a crisis like the ones above.
The biggest difference is the U.S. dollar is curently used as the world's reserve currency. Banks could dump their pesos and rupiis, but it's a little harder to swap out the dollar for another currency. That's not to say it can't happen (it happened to the British Empire) or will never happen, it's just more difficult.
But we're making it more probable every day by running those huge trade and budget deficits.
"Help," she said, laughing nervously. "I can't earn and replace what I have at age 69. That will take a lifetime."
Sorry Phyllis. Better find yourself a nice shopping cart to live out of before all the good ones are gone.
Yep, at age 69 maybe she should have considered the risk she was taking *before* she invested her hard-earned money in a quick-profit scheme.
I hate to sound so cold-hearted, but jeez, get a clue.
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