A legal battle that pits the son of the late Las Vegas Mayor Oran Gragson against the son of the late Gov. Kenny Guinn was played out in the Nevada Supreme Court Tuesday over a failed $1.1 million investment.
Kenneth Gragson and a group of elderly citizens invested with Jeff Guinn's Aspen Financial Services, which loaned money for the development of Milano Residences.
The project included 100 condominiums near Cactus Avenue and Bermuda Road in Las Vegas.
The Gragson group lost money when Milano failed and the citizens filed suit in district court alleging fraud, breach of fiduciary responsibility and other claims against Aspen and Guinn.
John Bailey, attorney for Aspen-Guinn, asked the Supreme Court for an order to prevent the Gragson group from taking the depositions of Guinn and other company officials while a federal investigation was under way into the loan.
Bailey argued the Gragson group was "in cahoots" with the FBI and the U.S. attorney's office in the federal probe of the loan. He said the answers to questions in the depositions of Aspen officials would be turned over to the FBI to aid in its investigation against the company.
If the Aspen officials took the Fifth Amendment in refusing to answer questions that would be used to create an unfair inference against them in the future civil trial, Bailey said.
But attorney Aaron Maurice, representing the Gragson group, told the court there was no substance to the reports that the civil and criminal cases overlap. His clients, he said, want to find out where every dollar of their investments went.
Maurice said his clients were in "their golden years" and the case needs to move forward.
The Gragson group complains that Susan Mardian, who controlled the Milano project, pocketed $7.5 million of the money loaned by Aspen. His clients need to take the depositions so the civil trial can be scheduled.
He argued there has not been any indictment against the Aspen company and Guinn and questioned how long the investigation, if there is one, is going to last.
Bailey said his clients want to give these depositions because they feel they have done nothing wrong. But their criminal attorney has advised them against giving the depositions.
To testify fully in the depositions to aid in their civil case, the Aspen officials face the risk of helping the potential criminal investigation and prosecution against them.
Justices raised the issue that other courts have ruled that officials in a civil case can't be shielded from testifying unless there is an actual criminal indictment issued — which is not the case here.
They suggested there were other avenues to keep the answers in a civil deposition confidential such as sealing the record of those answers.
The court took the arguments under submission.