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Judge orders McGhan to testify in civil suit
A Nevada judge has ruled a former Osage man, accused of being part of a $100 million swindle, must testify in a suit brought against him, his wife, their two adult children and others.
Don McGhan, 73, a 1952 graduate of Osage High School, sought to exercise his 5th Amendment rights against self-incrimination so he would not have to testify.
The civil suit names McGhan; his wife Shirley, also formerly of Osage; their son James McGhan, daughter Nikki Pomeroy; Peter DeMarigney, an investment broker; several insurance companies, brokerage firms and a bank.
The suit claims more than 130 landowners put money from real estate sales into escrow accounts at Southwest Exchange, a Henderson, Nev., real estate escrow business owned by the McGhans.
Prosecutors say the victims thought they were putting their money in tax-exempt accounts for 180 days. The suit alleges the McGhans used Southwest's assets to help float several other McGhan-owned companies.
When the once-booming real estate market, which bolstered Southwest's assets, slowed down last year, it ate away at the company's stability. When Southwest folded in January, depositors lost from $25,000 to $22 million each.
McGhan was a successful entrepreneur who was a pioneer in developing silicone breast implants. He made his fortune running companies in the field of medical devices.
There have been several legal maneuvers since the lawsuit against the McGhans was filed.
On April 26, McGhan and his daughter signed affadavits saying they would take the Fifth Amendment in any court proceedings.
But District Judge Elizabeth Gonzalez ruled on May 22 that McGhan signed an affadavit related to the case on Feb. 2, and by doing that, he waived his right to Fifth Amendment protection.
In a related matter, on May 24, Gonzalez froze the assets of the McGhans and their son and daughter after it was alleged that Nikki Pomeroy, the daughter, continued to spend assets of Southwest Exchange after it had been placed in receivership.
McGhan graduated from the University of Iowa in 1956 and worked for Dow Corning Corp. in Midland, Mich., where he helped develop silicone breast implants.
In 1970, the McGhans moved to Santa Barbara, Calif., where they started several new businesses in the medical device field.
In 1992, they moved to Las Vegas where they started Medicor Ltd., a start-up medical device company.
In 2000, McGhan was fined $50,000 by the Securities and Exchange Commission for submitting false or misleading financial statements regarding Inamed Corp., another of his companies.
In 2004, McGhan purchased Southwest Exchange. Court documents claim McGhan set up a loan scheme in which he funneled $47.3 million in Southwest Exchange funds to Medicor accounts. He is also accused of devising a plan in which Medicor would get $70 million from another McGhan company that was siphoning funds from Southwest Exchange.
--by John Skipper, for the Press-News
John Skipper is a reporter for the Globe Gazette, like the Press-News a Lee Ent. Newspaper.
Story created Jun 12, 2007 - 15:55:38 CDT.
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