State Seeks Takeover of Newport Investment Firm : Probe: Investors have sued Kenneth Sarvak to recover money. An audit of investors’ account indicated a shortage.

The state Department of Corporations said Thursday that it will try to wrest control of a company from Kenneth E. Sarvak, who has been sued by more than a dozen of his investors.

Over the years, Sarvak has loaned money from hundreds of investors to homeowners through first and second mortgages. Some of the investors--many of whom are elderly--allege in lawsuits that Sarvak lied to them about the safety of their investments and stalled when they asked him to return their money.

The state Department of Real Estate said last month that a trust account holding investors’ money was at least $600,000 short and that state auditors were still poring over the books to see if more was missing.

Through his lawyers, Sarvak has denied any wrongdoing and says the auditors’ figures are wrong.

The Department of Corporations said it will ask an Orange County Superior Court judge today to appoint a receiver for a Sarvak company, Washington Trust Deed Service Corp. of Newport Beach.

Another Sarvak company, Lincoln Mortgage & Loan Co. of Newport Beach, is temporarily beyond the reach of the Department of Corporations, because Sarvak filed for bankruptcy last month.

The Department of Corporations said it will also ask the judge to bar Sarvak from selling securities and making misleading statements to investors.

All of that is largely symbolic, Sarvak’s lawyer said, because Sarvak’s companies have ground to a halt and Sarvak has stopped selling investments.

Sarvak agreed Thursday not to oppose the department’s request for a restraining order, bankruptcy attorney William M. Burd said, because he has complied with the law all along.

Sarvak has not yet told the bankruptcy court how much he owes and what his assets are worth. His 20 largest unsecured creditors alone are owed $5.2 million. And there are nearly 200 creditors, Burd said.

Among the investors owed money are former Boston Red Sox shortstop Glenn Hoffman, 35, who is in for $225,000; and Chuck Knox, 61, head coach of the Rams, who invested an undisclosed amount.

Both were among the wide circle of Sarvak’s acquaintances, many of whom invested with the 68-year-old Sarvak because he promised annual returns as high as 14%.