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Through a series of wine-and-dine meetings at the Rockridge house, on Coles' golf course, and around town, Coles convinced Burton and his two partners (one of whom is Danny Hendon of Danny's Family Carwashes) that he could provide a $190 million loan faster than any competitor.
"We relied upon what this guy told us. We could have gone with a more traditional lender. He sort of courted us and induced us, saying, 'I'm your guy. We're your company. We can provide up to $190 million,'" Burton says.
Coles even wrote a letter to Bank of America, guaranteeing the $190 million for Rightpath. But after Rightpath paid millions in up-front loan fees, Coles was unable to fund the entire loan.
Rightpath attorney Chris Reeder has since scrutinized Coles' final years of business. "It's just really in the last three years he got greedy. Greed took over, and it consumed him. He started doing things he shouldn't have done, making promises he shouldn't have and making factual representations that were wrong," Reeder says.
"It's also become clear that when his senior management brought this to him, he ignored them. That's why a lot of his senior management left the company."
By the middle of 2007, Coles was making risky loans on projects way bigger than Mortgages Ltd. had ever funded. By the end of the year, those loans caught up with him. Some developers stopped making their payments. Then an even bigger problem arose: Coles ran out of money to fund the loans he'd committed to (and already collected multimillion-dollar fees on).
Most those projects are now stalled because they don't have the money to proceed. (Rightpath's Main Street Glendale is one exception, Burton says, because he and Hendon have enough resources to keep the project afloat.)
As Coles grew more desperate for money, he increased the hidden fees on existing loans, Reeder says. In one case, he charged a minority congregation church $2.5 million to pay off a $1 million loan — even though it had never missed a mortgage payment.
Reeder says Coles then tried to charge the same excessive fees and interest rates (63 percent APR) to bigger clients, and that's where he got in trouble. One record shows Coles charged Rightpath $3 million for a simple transaction that normally costs about $1,000.
"For years, he would go beat up on these little guys. His fatal mistake was trying to get into the big leagues," Reeder says.
"A Rightpath Limited group is not going to be intimidated by those kind of games. He started playing those games with people with the resources to fight it," adds Reeder, who's now pursuing Mortgages Ltd. under RICO statutes for racketeering and fraud.
"That's tantamount to loan sharking. It was the sledgehammer that broke the camel's back," Reeder says of the $3 million fee. "We feel it's a strong racketeering case."
Even as Coles struggled to fund loans and find investors to keep his machine running, he maintained his lavish lifestyle.
In July 2007, he purchased more than $31 million in real estate from Michael Peloquin — even though Peloquin owed Mortgages Ltd. and its investors more than $70 million.
County records show that acquisition included a $10.1 million Biltmore mansion next door to another $11.3 million mansion Coles purchased (both are separate from Rockridge Estates).
Coles certainly wasn't cutting back on expenses at Rockridge, either. It was during late 2007 that he decided to expand his nine-hole golf course to 18 holes.
Travis Marting, who designed and built the Rockridge golf course, says, "We pretty much worked on it and finished the nine-hole in 2007. He decided to make it an 18-hole in the second half of 2007," Marting says, adding that he deeply respected Coles.
J.R. Roren remembers when he learned that Coles had never even played golf before building his own course.
"When he first got the course, he just was horrible. I said, 'Scott, you're a horrible golfer.' He said, 'I've never played golf before.' To the day he died, he'd never played golf on a real course," Roren says.
One summer night in 2007, Roren's and Coles' families were eating at California Pizza Kitchen at Biltmore Fashion Park. Coles suddenly decided to fly both of their families to Aspen on his private jet the next morning.
Looking back on his years of friendship, Roren says, "He almost was kind of childlike in a way. I sometimes look at the situation, and it's almost like this was a very high-powered man, but when it came to his relationship with Ashley and things like that, the feedback I got was that he was almost immature when it came to romance and things like that. That was kind of odd."
In December 2007, Coles personally borrowed $6 million from Mortgages Ltd. To this day, attorneys who've examined Coles' finances can't figure out what he did with that money.
As Coles' business and personal life crumbled, he maintained his busy philanthropic calendar.
On February 7 of this year, he and Ashley attended the Arizona Kidney Foundation's "Dancing with the Stars" fundraiser. Coles donated a vacation package to raffle. It included transportation to and from, and stays at, his $10 million Aspen home, his Las Vegas condo, his Coronado Island home and another home in the Bahamas (New Times has been unable to confirm whether Coles actually owned it), as well as the use of a new Rolls-Royce and chauffeur.
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