D.A. Will Take on Major Fraud Case if State Asks : Investigation: Criminal probe of Lincoln Mortgage & Loan of Newport Beach would be one of the biggest handled by the office.

The Orange County district attorney’s office said Friday it will investigate a Newport Beach mortgage company for fraud if state regulators formally ask it to do so.

The state Department of Corporations has already accused Kenneth E. Sarvak and Lincoln Mortgage & Loan Co. of fraud in a civil lawsuit, so a request by the agency for a criminal investigation seems likely.

Such a case would be one of the largest ever investigated by the district attorney’s major fraud unit, said Joe D’Agostino, the assistant district attorney on the case. Sarvak’s investors are owed $27 million.

The investigation would take a minimum of three to six months, D’Agostino said. Some complicated fraud investigations, he said, can take two years.

The Corporations Department contends that Sarvak misled investors about how safe their money was.

Sarvak and several of his companies, including Lincoln, have filed for bankruptcy.

Many of the 275 investors are elderly, and bankruptcy lawyers say they might lose their life savings. Sarvak also invested money for prominent sports figures, including Chuck Knox, head coach of the Los Angeles Rams football team.

Through his lawyer, Sarvak, 68, strongly denied wrongdoing.

“Obviously, we’ll cooperate with the district attorney--just as we did with the Department of Corporations before they became hostile to us,” John B. Casoria, Sarvak’s lawyer, said Friday.

Sarvak contends that the Corporations Department has a vendetta against him.

Sarvak used investors’ money to make real estate loans, promising that he would hold the deeds to the properties as collateral so that the money would be safe.

The Corporations Department contends in its lawsuit that Sarvak lied to investors: He didn’t actually own all those deeds.

Sarvak took in $30 million from investors, according to an audit by the state Department of Real Estate, but has only $9 million worth of deeds to back it up.