NEWPORT BEACH — Investors who have pumped $20 million or more into companies owned by Orange County mortgage banker Madgy Hanna may have to wait until state regulators and local law enforcement agencies unravel a tangle of corporations and business deals to find out where their money went and whether there is any left.
The affairs of Hanna's Newport Pacific Group and several mortgage-lending subsidiaries are being probed by state and local authorities, including police in Newport Beach and Irvine, the Orange County district attorney's office and the state departments of corporations and real estate.
Newport Pacific Group and most of its subsidiaries shut down in mid-July and failed to make monthly interest payments to investors who have bought the companies' bonds in several private offerings during the past four years.
In addition, an Atlanta mortgage broker says he has filed a complaint with the Georgia Banking Commission alleging that one of Hanna's companies failed to provide funds for several mortgages that it had approved, and failed to pay brokers' fees.
Hanna is sole owner of Newport Pacific Group, which owns Newport Pacific Mortgage Acceptance Corp., which in turn owns mortgage brokers Newport Pacific Funding and SC Funding.
To help deal with the mounting turmoil, Hanna--once a politically connected apartment builder with close ties to former Orange County Supervisor Don Roth--has retained a criminal attorney to work with his longtime civil lawyer.
At SC Funding, which appears to be the only remaining Hanna-owned financing company still operating, officials acknowledge the various investigations and complaints, but say the problems all occurred before Hanna relinquished control of the company to a new board of directors led by one of SC's major creditors.
SC Funding, President Jeff Gray said, "is cooperating fully with all those agencies [conducting investigations] and in many cases we have brought them in. We see ourselves on the side of those people who are concerned about possible fraud or misappropriation."
Hanna has not commented on the situation. He stopped developing real estate and started financing it about four years ago, said Randall Johnson, his Newport Beach civil attorney.