Is dead CEO’s mortgage empire crumbling?
By John Dickerson
Mortgages Ltd. CEO Scott Coles, 48, was found dead on Monday in his $11.3 million home. The cause of death has yet to be determined, but the unfortunate event may fit the scenario of CEO suicide during an economic downturn.
Mortgages Ltd. isn’t a small-time residential loan operation. It’s one of the biggest in Arizona and specializes in massive construction loans for commercial projects, brokering $3.3 billion in 2006, according to the company’s Web site.
Investors had worried to New Times about Mortgages Ltd.'s economic health, and Coles' unfortunate death comes on the heels of that.
Interestingly, Mortgages Ltd. settled a large lawsuit over a $47 million loan just three days before Coles died, Maricopa County Superior Court records show. The lawsuit alleged that Mortgages Ltd. had insufficient funds to provide the $47 million loan it guaranteed. The suit is one of eight involving Mortgages Ltd. since January.
“Our matter was settled,” says attorney Scott Rose, who represented plaintiffs Phillip and Mollie Anderson. “All I can tell you is that we want to express our sympathy to the family. It’s not in Mortgages Ltd. interest, nor is it in my client’s interest, to talk about it very much. We settled out of court for an undisclosed amount, and we dismissed the complaint.”
The Andersons and Central PHX Partners investors filed a court complaint in March alleging that their luxury condominium project, Chateaux on Central, stalled because Mortgages Ltd. failed to produce the $47 million loan it had guaranteed.
“On or around December 13, 2007, Central PHX Partners was informed by Mortgages Ltd. that Mortgages Ltd. might not have funds sufficient to meet its obligations under the parties’ agreement, and Mortgages Ltd. has confirmed this on numerous occasions since that date,” the complaint reads.
If the company began struggling earlier, it certainly didn't stop Coles from personally investing $31.39 million in real estate in September of 2006, according to this real estate blog. Coles made the purchase, which included his $11.3 million home, through his personal S M Coles LLC.
Executives at Mortgages Ltd. have publicly stated that the company, which holds $890 million from investors (according to its Web site), is in fine financial health. They’ve also issued a statement on the company’s site to ease the concerns of investors and customers:
“With Scott’s strategic business and transition plans solidly in place, the senior management team looks forward to the future with confidence; however, [we are] deeply saddened knowing Scott will not be here to enjoy the success.”
The company says it won’t be taking questions from investors until a conference call scheduled Tuesday, June 10 at 11 a.m.
Coles, who inherited the company from his father, is survived by his wife and three children. Funeral services are scheduled for Thursday, June 5 at 11:15 a.m. at Temple Chai in Phoenix.