KLAS-TV Channel 8 News Las VegasI-Team Investigation: $83 Million Missing After Firm's Collapse
It's been two weeks since the collapse of a Henderson financial firm -- at least $83 million is still missing.
But tonight, a district court judge is ordering a local bank to release all the financial records of the company called Southwest 1031 exchange.
Tonight we are getting our first look about just how dire this situation is for those with money in that company.
Attorneys have previously estimated about $83 million in clients' money is missing. But today -- in court documents -- we are seeing just how little of that money is left in the company's bank accounts.
By the time Southwest 1031 Exchange closed its doors two weeks ago, many clients of the firm already suspected trouble.
In court documents, Silver State Bank -- where Southwest Exchange kept its accounts -- says it began receiving calls in January about promised fund transfers that never materialized.
And now the bank says only $817,765 remains in all of Southwest Exchange's accounts. The money is currently frozen.
In court, Judge Elizabeth Gonzalez ordered the bank to turn over all of the company's records to a so-called "receiver" appointed by the court to follow the money-trail.
Attorneys for those with missing money says it is an important step.
"The receiver is going to have access to those funds and is going to be essentially -- at least for the interim -- have the rights of ownership, meaning he will be able to track down documents, he will be able to trace account history, he will be able to get any information out of the bank that he needs in order to find out what went on here," said Terry Coffing, clients' attorney.
Firms like Southwest 1031 Exchange hold money during real estate transactions as a way for clients to defer federal taxes. The only requirement is that they post a $50,000 bond and register with the Nevada Real Estate Division.
State Senator Mike Schneider says the magnitude of this case is being felt in Carson City.
"This was a catastrophe what happened," said Schneider.
He's proposing moving the regulation of 1031 Exchange companies to the state banking division and requiring clients' signatures before any money is moved.
"You can have all the laws in the world but if you have a crook in there that wants to defraud people and steal money, it is hard to stop them -- but we can put greater barriers up there."
Not everyone with money tied up in Southwest Exchange has hired an attorney, nor been at these court hearings.
Of course, everyone still wants to know "where's the money?" There are plenty of theories but one attorney told us today everyone is pretty sure of one thing -- it is not all in one place.
The losses from the collapse of a Henderson financial company could top $83 million. That's the estimate from attorneys after a series of hearings in District Court Tuesday. More>>
