State Seeks to Get Records of Mazur’s Deals : Businessman Suspected of Securities Law Violations

The state Department of Corporations believes that Century City businessman and arts patron Sherman Mazur has violated state securities laws, according to papers filed Wednesday in Los Angeles Superior Court.

Mazur, 39, of Encino, is chairman of American Resource Corp., a privately held company that two years ago was gaining a reputation as a “white knight” that would take over financially troubled real estate limited partnerships for investors and nurse them back to health. The company, which claimed that it controlled about $750 million in assets, was frequently touted by real estate consultants as one of the nation’s fastest-growing real estate companies.

Mazur has since become a controversial figure, however. He has been sued by investors and former associates, who accuse him of letting properties fall into foreclosure by failing to pay lenders and skimming money from partnerships before putting them into bankruptcy proceedings. Mazur, through his lawyers, has denied the allegations.

Mazur also for the past year has been a business associate of tax shelter promoter Gerald L. Schulman, a North Hollywood businessman who was convicted in February in U.S. District Court on 20 counts of felony tax fraud. Schulman is also being sued by some of the 5,000 investors who entrusted some $200 million to him.

Mazur paid $10 million last year to take over the management of 580 buildings owned by some 5,000 investors in Schulman programs, including such celebrities as actor-director Woody Allen and major league baseball pitcher Rick Sutcliffe.

Using Own Funds

Investors in the Schulman properties and their attorneys have expressed concern in recent weeks that their investments may be in danger because some of the properties have entered foreclosure proceedings since Mazur began managing them.

H. Roy Jeppson, one Mazur’s lawyers, confirmed that about 10 properties are in jeopardy of foreclosure. But, he said, Mazur has been pumping $1.5 million a month of his money into the properties. Some of the properties have entered foreclosure proceedings, he said, because payments for debt and bills far exceeds the rent the buildings bring in.

The papers filed Wednesday by the Department of Corporations are part of an effort by state authorities to gain records and books from Nash & Co., a Beverly Hills accounting firm that prepared financial reports for Mazur’s operations.

Department investigators have alleged that the statements were fraudulent and that Mazur used them to convince investors that his company was financially stronger than it was so he could gain control of distressed real estate partnerships.

Plan Civil Suit

The same papers contend that the financial statements failed to note extensive litigation involving Mazur, including 39 lawsuits filed in Los Angeles Superior Court in which he was a defendant. The papers also state that statements did not include notes on “an extensive number” of properties Mazur placed into bankruptcy, which the department said would overstate the assets of Mazur and his companies.

The state has not filed suit against Mazur, but Corporations Department attorneys have stated in previous court appearances that they plan to file a civil case against him soon.