Makeshift blinds a cardboard box, a black plastic trash bag covered hallway windows at the south Reno office of Cetus Mortgage Ltd. last week.
Inside, workers from the Nevada Division of Mortgage Lending pored through the records of a company that the state had taken over just hours before.
Among their first jobs is figuring how many loans Cetus had made, the value of those loans and the number of investors from whom Cetus had raised money. That job will take at least several days.
Joseph Darby, the Reno attorney who represents Cetus, didn't respond to two phone calls requesting comment about the situation last week, and state officials didn't have much to say beyond a 240-word press release. They cautioned that the exact nature of the investigation remains confidential.
Under state law, Cetus has 60 days to resolve its financial and operational issues. If problems persist, state mortgage commissioner Joseph Waltuch can liquidate the company's assets.
Employees of the state mortgage division also were talking last week with mortgage brokers and escrow companies to gauge their interest in taking over the Cetus portfolio of loans including problem loans that will need to be worked out.
And the State Contractors Board last week delivered another blow to a Sparks-based construction company that was the biggest client of Cetus Mortgage.
The board summarily suspended the contractors license of JE Morros Construction & Development Co., which had developed entry-level homes in Spanish Springs. The construction company had filed a petition for Chapter 11 bankruptcy protection in late June. Cetus was listed as a creditor in the bankruptcy filing, although the amount wasn't large enough to warrant a spot among Morros' biggest creditors.
Cetus Mortgage had been in business in Reno since 1987, and its collapse into the arms of state officials came quickly.
The company specialized in "hard-money" lending loans, typically at relatively high interest rates, secured by real estate, in deals that can't be financed by banks or other lending institutions. Cetus raised money from investors, promising them higher-than-market interest rates, and loaned the money to developers, builders and others in the real estate business.
In court documents supporting its takeover of the company, the Division of Mortgage Lending said it started fielding complaints in June from investors in Cetus deals. They said projects they financed hadn't broken ground, they weren't being repaid by Cetus and investors' signatures appeared to be forged on some documents.
Initially, state regulators were low-key.
They distributed a press release after noon on July 3 a time when most folks were packing up for the three-day weekend saying that Cetus's owner Marcilin "Marcie" Benvin had voluntarily decided to close the business and was helping state officials find another mortgage company and escrow agency to take over the portfolio.
Joseph Waltuch, the commissioner of the division of mortgage lending, even praised Benvin's help.
"We are pleased," he said in that July 3 press release, "that Ms. Benvin is cooperating with us as we work to resolve this situation."
Things unraveled over the holiday weekend.
In fact, the state's attorneys said in the order that authorized takeover of the firm, Benvin had failed to show up for one meeting with state regulators and cancelled two more at the last minute in late June and early July.
At a July 1 meeting, Benvin acknowledged that JE Morros hadn't made payments on a loan from Cetus, and Benvin had dipped into other pools of money to send checks to investors. She figured things would work out when Morros got a new land and construction loan, but that loan fell through when Ticor Title found irregularities in several loans arranged for Morros, regulators said.
Benvin promised to get the firm's records including a list of investors to regulators during the holiday weekend.
On Monday, state officials said they hadn't received the information, and Waltuch signed the order taking over Cetus.
