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SilverLeaf Financial, the CEO of which last year settled charges of felony securities fraud and theft, has been sued by investors who say they were swindled out of $1.2 million.
Dwight Shane Baldwin, chief of the Salt Lake City private equity firm, is a defendant in the lawsuit filed in a Nevada district court in June and amended last week.
The suit alleges that SilverLeaf misrepresented the true ownership of a pool of foreclosed residential real estate properties to the investors, most of whom own businesses in Clark County, Nev., which is home to Las Vegas.
The suit also claims that Baldwin failed to disclose that he had been charged in March 2010 by the Utah attorney general with two counts of securities fraud and two counts of theft for deceiving two people with promises of big profits in return for investing in a company he controlled.
Baldwin also allegedly hid a plea agreement reached a month later with the Attorney General's office that allowed him to enter a guilty plea in abeyance to two amended counts of attempted theft. Under the deal, Baldwin's record would be cleared if he completed probation without committing any more crimes over the ensuing 18 months. He also agreed to repay investors.
Baldwin was unavailable for comment Wednesday. In a voice message, SilverLeaf President Mark Staples said he hadn't seen the suit. Staples is not a defendant.
Negotiations for the sale of the properties and loans allegedly began in May 2010, a month after Baldwin struck his deal with the Attorney General's office.
A sales agreement was reached in June, under which the investors would buy the assets of a portfolio of 114 foreclosed properties that SilverLeaf allegedly purchased from the Federal Deposit Insurance Corp. and later packaged into an entity called SilverLeaf 23.
It isn't clear how involved Baldwin was in the negotiations, said Erik Fox, a Las Vegas attorney who represents the investors.
"That is to be determined. Certainly he is chief executive officer of SilverLeaf. His name is on a number of the executed documents in this matter, including the purchase agreement between our clients and SilverLeaf," Fox said.
The fact a lawsuit has been filed against Baldwin apparently does not constitute a violation of the plea in abeyance agreement, said Paul Murphy, spokesman for the Attorney General's office. "If he had committed a new criminal offense, that would be a problem."
During the negotiations, SilverLeaf representatives allegedly claimed that SilverLeaf 23 owned clear title to the properties.
"However, once our clients purchased, they found out that SilverLeaf 23 did not in fact own many of the properties," Fox said.
In a document filed with a Nevada district court, the investors allegedly discovered that deeds were not available for many of the properties. Other properties came with copies of deeds, which were invalid because no original deeds were available or recorded.
Many properties were subject to delinquent taxes or liens, and several homes had been demolished or condemned, according to the document.