An ongoing Securities and Exchange Commission inquiry has cost Vestin Group Inc., a Las Vegas-based commercial lender, about $1.5 million to respond to.
Michael Shustek, founder and chief executive of Vestin Group Inc., on Tuesday delivered the bad news to a crowd of about two dozen gathered at the company's annual shareholders meeting. Beyond that, he said the company has received no indication from the SEC on the status of the probe, which was announced in November.
"We have had no other words (from the SEC)," Shustek said of the investigation in response to a shareholder question. "I am sad to report that we have spent about $1.5 million on the inquiry ... which of course comes out of shareholders pockets."
He said between $1.3 million and $1.5 million is expected to be expensed in the company's second quarter financial report.
He said the SEC has interviewed seven employees and at least two former employees. Shustek added that he has been scheduled to meet with SEC officials twice and both meetings were canceled by the regulators. He said another meeting is scheduled for late July.
"This is disrupting the public company as well as the subsidiaries," he said, adding that he expects the inquiry to reveal no wrongdoing on the part of Vestin. "We dot our I's and cross out T's."
Despite the news, there was no notable dissent from investors gathered at the meeting.
"I have a lot of confidence," said Calvin Owens, a Las Vegas resident who has invested in Vestin stock as well as the company's real estate investment funds. "There is no way (Shustek) is going to do anything that's not only illegal but improper ... He would be the biggest loser."
Shustek also said that while representatives from Planned Licensing Inc., the management company for former spokesman Joe Namath, have threatened a lawsuit against Vestin, no legal action has been taken. The company announced in April that it had terminated Namath's contract after an embarrassing sideline interview Namath gave during a December National Football League game.
Investors expressed concern over Namath's apparent intent to sell off 800,000 warrants that are expected to be converted into saleable shares within 90 days. He was granted those warrants when he signed the deal as spokesman in 2001, and if sold at one time would dilute the already thinly traded Vestin shares.
Shustek said a reverse 2-for-1 stock split approved by shareholders at the meeting will help protect against that dilution. Shustek controls about 3 million of Vestin's 5 million outstanding shares.
Also approved at the meeting was the re-election of the company's five current board members and the appointment of Moore Stephens Wurth Frazer and Torbet LLP as the company's independent auditor.
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