Capella Mortage Defrauded Investors - Las Vegas NV

Avoid Capella Mortgage – at minimum incompetence/negligence, possible fraud.  Below is a lengthy description of a fraudulent deal Capella originated which will result in a significant financial loss for investors.  Capella Mortgage has had investor complaints filed against them with state authorities and the deal below is current under investigation by the NV and CO Attorney Generals.  One investor warned other investors of the potential fraud, and Capella has sued that investor in an attempt to keep these problem loans silent so they can continue to earn large fees placing investors in problem loans.

Overview:  Capella Mortgage is a hard money lender (HML) in Las Vegas, NV whose principals are Corinne Cordon and her son Matthew Dale.  Capella has been in business for years & investors were fine until Capella recently moved from single party trust deeds on local homes to multi-million dollar construction loans in which they receive large origination fees.  Investors now face multiple defaulting deals and stand to lose millions of dollars – all due to Corinne and Matthew’s lax underwriting, conflicts of interest, and misleading investors about the deal terms, property status & borrower history.   

Overview of a problem Capella deal in Aspen, CO: 

Capella pitched a $3.9M loan to finish construction on a luxury Aspen, CO home they claimed appraised at $5.5M once complete (71% LTV).  Investors funded this loan without knowing over 30 worldwide investors were involved in the deal.  When problems arise, this structure leads to lengthy delays in coordinating investors.  Also, Capella does not permit investors to see the borrowers’ credit or background information due to “confidentiality” (investors are only told prior to lending funds it is an LLC borrower) and investors don’t learn their fellow investor contact information. 

For this deal, the $3.9M loan was to pay-off a $3.3M first mortgage from another lender and leave $600K to finish construction.  Capella stated construction control would be used, but turned over the $600K in construction funds to the borrower with no oversight.  Investors expected Capella would underwrite the deal with appropriate due diligence as Capella earned a $136,000 origination fee but that was not done.  It was later discovered the prior lender refused to loan additional funds to the borrowers as they suspected fraud and that is when Capella pitched this deal to its investors.

After Capella funded the $3.9M loan, the borrowers made one interest payment and their check bounced.  Capella never disclosed this to its investors and rather than initiate foreclosure, Capella repeatedly vouched for the borrowers and raised another $800K from investors to supposedly “finish the home.”   At this point, the loan increased to $4.37M and the home was still not complete.  Corinne and family then decided, without investor approval, to vacation in Aspen while supposedly overseeing the construction progress (despite not being a licensed contractor).  Corinne and her sister got into disputes with the borrowers, the police were involved, and she ultimately leaves Aspen and tells investors she is afraid of the borrowers.  It was evident the borrowers misappropriated investor funds from the start, yet, Capella still refused to foreclose.

Conflict of interest/Negligence?  After the borrowers identities became known, investors quickly discovered the borrowers were the defendants in multiple prior lawsuits, none of which was disclosed to investors but must have been known by Capella if they did a simple background check.  One borrower was a mortgage broker whose CO license was revoked for fraud by the state years before this deal.  Especially troubling is the $5.5M appraisal Capella relied upon to fund this deal was prepared by the borrowers.  Capella hid this major conflict of interest from investors.  A few weeks after this deal closed the borrower’s CO appraisal license was revoked – for fraud in a prior deal.  In its pitch, Capella said the home was 80% complete but Capella never had an independent contractor assess the home and it was later discovered the house was nowhere close to 80% complete.   Capella is based in NV and doing an out of state loan in CO.  Rather than use a CO attorney to draft the deed / note (as CO is a non-judicial foreclosure state), Capella tried to save money and had a CA legal document mill create the docs.   Turns out, the deed/note was not drafted in compliance with CO standards.

A year into this mess a few investors met with Corinne as Capella was doing nothing; no construction, no foreclosure.   Corinne admitted she was in over her head and did not know what to do.  At that point, the investors came together to attempt to salvage what fund they could and attempted to non-judicially foreclose on the property.  The attorneys the investors retained learned that during Corinne’s time in Aspen she caused so many issues with the local officials that the County would not facilitate a non-judicial foreclosure.  As a result, the investors had to waste more months and over $125K in legal fees to judicially foreclose – all due to Capella’s incorrect loan documents.   After foreclosure, the investors hired a reputable contractor to oversee the home completion.  The new contractor determined there we many deficiencies with the prior construction to be remedied (e.g., the project did not even have County approved construction plans) and the home when funded was nowhere close to 80% complete.  Finishing the home would require another $1.5M investment - - so the investors are now into this “deal” for $6.6M, which is $2.7M more than the original loan Capella stated was needed to finish the home when they underwrote this deal.  Due to Capella’s incompetence and/or fraud, investors stand to lose hundreds of thousands of dollars on this investment, yet Capella earned a $136,500 origination fee.

Capella has similar deals I can detail in which they made large ($100,000+) origination fees, failed in their due diligence and investor disclosure and the investors will take a huge financial loss.  Even more troubling is Capella decided to start a few LLC funds to bundle these types of deals so investors will have even less transparency into the underlying loans and problems that arise.  I highly recommend you AVOID Capella Mortgage, Corinne Cordon and Matthew Dale.