Friends and business associates were shocked by the death Monday of Scott Coles, president and chief executive of Mortgages Ltd., the state's largest private mortgage bank involved in financing many high-profile Valley projects.
Coles, 48, was found dead at his home near Camelback Mountain in Phoenix on Monday afternoon. The cause of death is being investigated, but authorities said no foul play is suspected.
In addition to lending funds for such projects as the Centerpoint towers in downtown Tempe and the Centrovida apartment-retail project in Scottsdale, Coles and his company were major philanthropic contributors to the Boys and Girls Clubs of Metro Phoenix, Phoenix Suns Charities and other organizations.
In recent months the company became a target of lawsuits by several borrowers. They claimed Mortgages Ltd., which loaned money from funds provided by individual investors, had breached the terms of their loan contracts. John Clemency, attorney for Mortgages Ltd., said all but one of those suits has been settled.
Laura Martini, interim president of Mortgages Ltd., said Coles was "a very dynamic person and extremely passionate about his family, his company and the legacy that his father started."
Mortgages Ltd. was founded in 1963 by Charles J. Coles and Ronald Anatole. The younger Coles joined the company in 1987 and became president in 1992. He took over as chairman and CEO in 1995. Under his leadership the company, located at 44th Street and Camelback Road, grew to about 40 employees with a billion-dollar portfolio.
Martini said the firm will continue to operate under the direction of a management team that was in place before Coles' death.
"We will continue to protect all investor funds and provide quality service for borrowing customers," she said. "It is important that people understand that even though he was the icon of the company, there is a six-member management team that worked with Scott daily. Our intent is to move forward."
Although the news was an "extreme shock" to the staff, Martini said Tuesday that "every person has risen to the occasion."
State bank regulators said Tuesday they will send examiners to the company to make sure it is conducting business in compliance with Arizona laws and that the management transition is orderly.
"The man was the key executive of the company - the principal manager ... and when we had learned that he had died, the department decided that it would be prudent to conduct a full examination to be sure the transition happens in an orderly way," said Jack Hudock, spokesman for the Arizona Department of Financial Institutions.
He said the department has no investigations or disciplinary actions pending against the company.
A lawsuit against Mortgages Ltd. was filed last month by Scottsdale-based Rightpath Ltd. Development, which borrowed $120 million from Mortgages Ltd. to develop the 400-acre Major League Baseball and Entertainment District in Glendale.
Rightpath alleged that Mortgages Ltd. failed to fund the full amount of the loan and charged higher interest and fees than were stated in the loan agreement. Rightpath is seeking a ruling in Maricopa County Superior Court relieving Rightpath of having to pay interest on the loan, said Chris Reeder, attorney for Rightpath.
He declined to speculate on how Coles' death might affect resolution of the case, but he added the death was "very unfortunate. Our condolences go to the family."
He said Rigthpath is capable of moving ahead with the development with $107 million supplied by Mortgages Ltd. The project includes a spring training facility for the Los Angeles Dodgers and the Chicago White Sox, which is under construction with funding provided by the Arizona Sports and Tourism Authority.
The remainder of the project consisting of residential, retail and hotel developments is in the planning stages, he said. No date has been set to begin construction, he said.
Another high-profile project funded by Mortgages Ltd. that wound up in litigation was the Chateaux on Central condo complex at Palm Lane and Central Avenue in Phoenix. The developer, Central PHX Partners LLC, filed a suit in April alleging that Mortgages Ltd. had put the project "at serious risk of failure" by not lending sufficient funds to finish it.
That suit was settled a few weeks ago with Mortgages Ltd. assuming ownership of the project.
Martini said Mortgages Ltd. intends to complete the first phase within 90 days and sell the units. She said no decision has been made about completing the second phase.
Mortgages Ltd. also loaned funds for the two-tower Centerpoint residential and retail development in Tempe but was unable to provide enough money to complete the project by the end of this year, partly because of the changing investment climate, according to published reports.
Mortgages Ltd. supplied $132 million, but the developer, Avenue Communities, is reportedly seeking $50 million more to complete the buildings.
Ken Losch, principal in Avenue Communities, declined to discuss Centerpoint's financial situation, but he issued a statement extending "deepest sympathies to Scott's wife, children, family and friends. ... Scott was known for investing in real estate, but he was also a great investor in community causes, too."
As the largest private lender in Arizona, Mortgages Ltd. had a reputation for being open to all types of deals, said Mitchel Medigovich, president of Cattlemen's Mortgage & Investment Corp.
"(Coles) grew Mortgages Ltd. probably far beyond his father's dreams," he said.
Private loans are designed for people who can't get funding through banks, don't want to provide personal information to banks or need funding quickly, said Stan Lund, president of the Arizona Association of Mortgage Brokers. But the credit crunch has made obtaining funds for projects much more difficult, Lund said.
"I'm sure it hurt (Coles') company as much as it hurt every company out there," he said.
Coles was also known in the community as a generous philanthropist who gave money to a variety of charities.
"He was one of our most prolific and generous donors," said Pat Ray, chairman of the board of directors for the Phoenix Boys & Girls Clubs.
He also sponsored groups of children to go on weekend trips to his various vacation properties, where they often camped and swam, Ray said.
"He was just a very generous guy, a very down-to-earth guy," he said.
At the Valley Youth Theatre, Coles donated $1,000 last year to the group's Sponsor-a-Seat program. Some 20 disadvantaged children were able to attend a production of "High School Musical" and eat lunch with the cast, producing artistic director Bobb Cooper said.
"I'm just tremendously sad for the family," Cooper said.
Francine Hardaway, a friend who met Coles about five years ago, recalled a fundraising event that she and Coles attended several years ago. Hardaway bid on a painting during a silent auction, but Coles outbid her. He gave her the painting anyway.
"I was absolutely floored," Hardaway said. "People don't usually make those kinds of gestures."
Funeral services are scheduled at 11:15 a.m. Thursday at Temple Chai, 4645 E. Marilyn Road, Phoenix.