DM MORTGAGE INVESTORS LLC, 424B5, 2000-11-15

DM MORTGAGE INVESTORS LLC
424B5, 2000-11-15
LOAN BROKERS

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<PAGE>

Prospectus supplement to prospectus dated November 13, 2000

10,000,000 Units

of Limited Liability Company Interests

DM MORTGAGE INVESTORS, LLC

----------------------------

DM Mortgage Investors, LLC is a Nevada limited liability company (the
"Company"). We invest in mortgage loans, which are loans where our collateral
is real property. The loans will be selected for us by our manager, Vestin
Mortgage, Inc. (formerly Capsource, Inc.).

We are offering and selling to the public up to a maximum of 10,000,000
units for $10.00 per unit. This offering includes units to be issued under our
distribution reinvestment plan. Through October 25, 2000, we have sold
2,426,072 units.

=============================== =======================================================================
Price to Selling Commissions/ Proceeds to
Public Expense Reimbursement (2) DM LLC
------------------------------- -----------------------------------------------------------------------
<S> <C> <C> <C>
Per Unit......... ............ $10.00 --- $10.00
------------------------------- -----------------------------------------------------------------------
Total Maximum.... ............ $100,000,000.00(1) --- $100,000,000.00(1)
=============================== =======================================================================
</TABLE>

(1) Includes units purchased under our distribution reinvestment plan.

(2) All selling commissions and expenses related to this offering will be paid
by Vestin Mortgage. To the extent that such expenses consist of payments to
non-affiliated third parties, such payments will be deemed a capital
contribution to us, up to a maximum of $1,000,000.

The most significant risks to our investment include:

o Restricted right to sell or transfer your units

o Total reliance on Vestin Mortgage

o Payment of substantial fees to Vestin Mortgage, which is our affiliate

o Tax risks of the offering and membership in DM LLC

o Insufficiency of the minimum proceeds

o Restricted distributions and increased risk due to leveraging

o Conflicts of interest for Vestin Mortgage and Vestin Capital

o Recent organization and lack of significant assets, operating history and
financing source.

You should read the complete discussion of the risk factors beginning on
page 7 of the Prospectus.

This prospectus supplement is provided to update the financial information
for DM Mortgage, LLC and Vestin Group, Inc. and Subsidiaries, through
September 30, 2000.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THE UNITS OR PASSED UPON THE ADEQUACY
OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

THE USE OF FORECASTS IN THIS OFFERING IS PROHIBITED. NO ONE IS PERMITTED TO
MAKE ANY ORAL OR WRITTEN PREDICTIONS ABOUT THE CASH BENEFITS OR TAX
CONSEQUENCES YOU WILL RECEIVE FROM YOUR INVESTMENT.

November 14, 2000

<PAGE>
TABLE OF CONTENTS

<TABLE>

<S> <C>
PART A. DM MORTGAGE INVESTORS, LLC

1. Financial Statements........................................................ S-1

2. Notes to Financial Statements............................................... S-4

3. Management's Discussion and Analysis of Financial Condition and Results of
Operations.................................................................. S-6

PART B. VESTIN GROUP, INC. AND SUBSIDIARIES (FORMERLY SUNDERLAND CORPORATION AND
SUBSIDIARIES)

1. Financial Statements........................................................ S-10

2. Notes to Financial Statements............................................... S-13

3. Management's Discussion and Analysis of
Financial Condition and Results of Operations............................... S-15

</TABLE>

<PAGE>
PART A

DM MORTGAGE INVESTORS, LLC

BALANCE SHEETS

September 30, December 31,
2000 1999
(Unaudited) (Audited)
------------ -----------
<S> <C> <C>
ASSETS
Assets
Cash and cash equivalents ................................... $ 5,849,950 $ --
Certificates of Deposits .................................... 550,000 --
Interest receivables ........................................ 91,175 --
Due from Managing Member .................................... 46,845 --
Investment in loans secured by real estate.................... 13,265,450 --
Deferred offering costs ..................................... -- 115,100
----------- --------
Total assets............................................... $19,803,420 $115,100
=========== ========

LIABILITIES AND MEMBERS' EQUITY
Liabilities
Due to Managing Member ...................................... $ 501 $ --
Deferred revenues ........................................... 42,941 --
----------- --------
Total liabilities.......................................... 43,442 --
Members' equity............................................... 19,759,978 115,100
----------- --------
Total members' equity...................................... 19,759,978 115,100
----------- --------
Total liabilities and members' equity...................... $19,803,420 $115,100
=========== ========
</TABLE>

See Accompanying Notes to Financial Statements

S-1

<PAGE>
DM MORTGAGE INVESTORS, LLC

STATEMENTS OF OPEREATIONS

For the three For the nine
months ended months ended
September 30, September 30,
2000 2000
(Unaudited) (Unaudited)
------------ ------------
<S> <C> <C>
Revenues
Interest income on loans secured by real estate ........................... $ 92,473 $ 92,473
Interest income--other .................................................... 29,345 29,345
Other fees ................................................................ 3,904 3,904
---------- ----------
Total revenues........................................................... 125,722 125,722
Operating expenses
General and administrative ................................................ 95 95
---------- ----------
Total operating expenses................................................. 95 95
---------- ----------
Net income ................................................................. $ 125,627 $ 125,627
========== ==========
Net income allocated to members ............................................ $ 125,627 $ 125,627
========== ==========
Net income allocated to members per weighted average membership units (a) .. $ 0.083 $ 0.083
========== ==========
Weighted average number of members' units (a) .............................. 1,523,213 1,523,213
========== ==========
</TABLE>
--------
(a) The weighted average number of members' units is calculated based upon the
daily number of outstanding units beginning on September 1, 2000,
commencement date of operations.

See Accompanying Notes to Financial Statements

S-2

<PAGE>
DM MORTGAGE INVESTORS, LLC

STATEMENT OF CASH FLOWS

For the nine
months ended
September 30,
2000
(Unaudited)
------------
<S> <C>
Cash flows from operating activities:
Net income ........................................................... $ 125,627
Changes in operating assets and liabilities:
Increase in interest receivables.................................... (91,175)
Increase in due from Managing Member................................ (46,845)
Increase in due to Managing Member.................................. 501
Increase in deferred revenues....................................... 42,941
------------
Net cash provided by operating activities........................... 31,049
------------
Cash flows from investing activities:
Investment in certificates of deposits.............................. (550,000)
Investment in loans secured by real estate.......................... (13,265,450)
------------
Net cash used by investing activities............................... (13,815,450)
------------
Cash flows from financing activities:
Proceeds from sale of membership units.............................. 19,634,351
------------
Net cash provided by financing activities........................... 19,634,351
------------
Net change in cash and cash equivalents............................. 5,849,950
Cash and cash equivalents-beginning balance......................... --
------------
Cash and cash equivalents-ending balance............................ $ 5,849,950
============
Supplemental cash flow information:
Non-cash transaction:
Conversion of deferred offering costs to membership units ......... $ 688,370
============
</TABLE>

See Accompanying Notes to Financial Statements

S-3

<PAGE>
DM MORTGAGE INVESTORS, LLC
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)

Note 1 -- Basis of Presentation

The accompanying financial statements have been prepared in accordance with
Securities and Exchange Commission requirements for interim financial
statements. Therefore, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. The financial statements should be read in conjunction
with the year ended December 31, 1999 financial statements of DM Mortgage
Investors, LLC ("the Company") included in Form S-11/A filed with the
Securities and Exchange Commission.

On September 1, 2000, the Company commenced operations as a result of
effectiveness of its Form S-11/A filed with the Securities and Exchange
Commission for the public offering of its units on that same date. The Company
may offer to sell a maximum of 10,000,000 units to the public at a price of
$10 per unit. The duration of the public offering will be for a period of two
years following the effective date of the Form S-11/A during at which time the
Company must receive paid subscriptions for at least 150,000 units by December
31, 2000. In the event the minimum number of units are not sold by December
31, 2000, the subscription amounts will be returned in full to the
subscribers. As of September 30, 2000, the Company met the 150,000 minimum
number of units to be sold.

The Managing Member of the Company is Vestin Mortgage, Inc. (formerly
Capsource, Inc., dba Del Mar Mortgage), a Nevada Corporation engaged in the
business of mortgage services, specifically the origination of mortgages,
principally in the greater Las Vegas area. Vestin Mortgage, Inc. ("Vestin") is
a wholly-owned subsidiary of Vestin Group, Inc. (formerly Sunderland
Corporation), a Nevada Corporation, whose common stock is publicly held and is
traded on the NASDAQ under the symbol "VSTN."

The results of operations for the interim periods shown in this report are
not necessarily indicative of results to be expected for the full year. In the
opinion of management, the information contained herein reflects all
adjustments necessary to make the results of operations for the interim
periods a fair statement of such operation. All such adjustments are of a
normal recurring nature.

Note 2 -- Investment in Loans Secured by Real Estate

As of September 30, 2000, investment in loans secured by real estate
approximating $13,265,000 are comprised of five (5) loans with maturities of one
year, interest rates ranging from 14% to 15% paid monthly, and principal due on
maturity. These loans are secured by real estate through a first deed of trust.

The following is a summary of the Company's investment in loans secured by
real estate as of September 30, 2000:

Loan Amount Loan Amount
Funded by Funded by Interest Loan
Borrower DM Mortgage Other Investors Rate Length Loan Type Collateral
-------- ----------- --------------- ---- ------ --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Car Spa Norco, LLC.... $ 3,345,000 $ 355,000 14.0% 12 mos. Commercial Land and Building
The Ranches, LLC...... $ 3,115,000 $ 5,000 15.0% 12 mos. Land Land
Mesquite 643, LLC..... $ 4,358,550 $ 3,141,450 14.0% 12 mos. Commercial Land
Q Summerlin, LLC...... $ 1,686,900 $ 7,063,100 14.0% 12 mos. Commercial Land and Building
BP Euphoria, LLC...... $ 760,000 $ -- 14.0% 12 mos. Commercial Land
----------- -----------
$13,265,450 $10,574,550
=========== ===========
</TABLE>

As of September 30, 2000, all loan payments are current and performing.
Accordingly, the Company's management estimates that a provision for allowance
on loan losses is not deemed necessary.

S-4

<PAGE>
DM MORTGAGE iNVESTORS, LLC
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)

Note 3--Transactions with Aaffiliates

As of September 30, 2000, Due from Managing Member approximating $47,000
relate to loan origination fees due from Vestin.

Vestin may originate loans and earn loan brokerage fees paid by the
borrowers for loans selected for investment into the Company. The Managing
Member may, in its full discretion, share with the Company the origination
fees it receives from the borrowers. The Managing Member is under no
obligation to share its origination fees and investor should not assumed that
any origination fees will be shared with the Company. As of September 30,
2000, the Company received approximately $47,000 in fees which approximately
$4,000 was recorded as income and the remaining balance of $43,000 has been
recorded as deferred fees and amortized over 11 months based on the effective
interest method.

Vestin, as the Managing Member, is entitled to an annual management fee of
up to 0.25% of the aggregate capital contributions to the Company which will be
paid by the Company. Vestin has elected to waive such fee for the month ended
September 30, 2000. If such fee and expense would have been recorded as of
September 30, 2000, it would have decreased net income by approximately $8,000
to $118,000 from a reported net income of approximately $126,000. Accordingly,
the pro forma effect of net income allocated to members per weighted average
membership units would have been a decrease of $0.006 to $0.077 from $0.083.

Note 4--Deferred Offering Costs

As of September 30, 2000, the Company incurred approximately $688,000 of
offering costs paid by Vestin on behalf of the Company at which time was
recorded as deferred offering costs. At September 30, 2000, the Company
converted this deferred offering costs amount as membership units in the
Company since the minimum number of units to be sold was met. Any additional
offering costs incurred by the Company will be converted to membership units
in the Company up to an aggregate of $1,000,000 and any additional cost will
be absorbed by the Managing Member.

Note 5--Subsequent Events

On October 5, 2000, the Company made cash distributions to its members
totaling $168,568.

Subsequent to September 30, 2000 through October 25, 2000, the Company sold
approximately 440,000 additional units to the public with total proceeds of
approximately $4,400,000. The proceeds will be invested in loans secured by
real estate.

The Company will be concurrently filing a post-effective amendment to its
Form S-11 with its September 30, 2000 Form 10-Q, to include the elimination of
certain fees chargeable to the Company by Vestin and its affiliates.

S-5

<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

The following information should be read in conjunction with the financial
statements and the accompanying notes thereto included in Item 1 of this
Quarterly Report, and the Form S-11/A filed with the Securities and Exchange
Commission.

Forward Looking Statements

When used in this Quarterly Report on Form 10-Q the words or phrases "will
likely result," "are expected to," "will continue," "is anticipated," or
similar expressions are intended to identify "forward looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995.
Such statements are subject to certain risks and uncertainties, including but
not limited to changes in interest rates, and fluctuations in operating
results. Such factors, which are discussed in Management's Discussion and
Analysis of Financial Condition and Results of Operations, could affect the
Company's financial performance and could cause the Company's actual results
for future periods to differ materially from any opinion or statements
expressed herein with respect to future periods. As a result, the Company
wishes to caution readers not to place undue reliance on any such forward
looking statements, which speak only as of the date made.

The following financial review and analysis is intended to assist in
understanding and evaluating the financial condition and results of operations
of the Company for the three and nine months ended September 30, 2000. This
information should be read in conjunction with the financial statements and
accompanying notes included in this quarterly report.

Company Overview

DM Mortgage Investors, LLC (the "Company"), a Nevada Limited Liability
Company, is engaged in business as a mortgage lender to make and purchase
first, second, wraparound, participating and construction loan investments
secured by real estate through deeds of trust and mortgages. Prior to
September 1, 2000, the Company was considered to be a development stage
company. On August 23, 2000, the Company's Form S-11/A filed with the
Securities and Exchange Commission became effective for the initial public
offering of 10,000,000 units at $10 per unit with a minimum of 150,000 units
to be sold by December 31, 2000. Subsequently, the Company commenced its
operations. As of September 30, 2000, the Company sold approximately 1,964,000
units. The Company will continue to offer its remaining unsold units to the
public for a period of two years following the effective date of its Form S-
11/A.

The Manager of the Company is Vestin Mortgage, Inc. ("Vestin"), a licensed
mortgage company in the State of Nevada, specifically engaged in the
origination of mortgages. Vestin is a wholly-owned subsidiary of Vestin Group,
Inc., a Nevada corporation, whose common stock is publicly held and is traded
on the NASDAQ under the ticker symbol "VSTN."

As of September 30, 2000, the Company incurred approximately $688,000 in
offering costs paid by Vestin on behalf of the Company. The Company has deemed
these offering costs to be a capital contribution to the Company and has
accordingly credited Vestin's capital account as of September 30, 2000.

From October 1, 2000 through October 25, 2000, the Company sold
approximately 440,000 additional units to the public with total proceeds of
approximately $4,400,000.

As of the date of filing of this 10-Q, the Company filed a post-effective
amendment to its Form S-11/A, to include the eliminations of certain fees
chargeable to the Company by Vestin and its affiliates.

S-6

<PAGE>
Results of Operations

Summary of Financial Results

For the Three For the Nine
Months Ended Months Ended
September 30, 2000 September 30, 2000
------------------ ------------------
<S> <C> <C>
Total revenues..... ....................................... $ 125,722 $ 125,722
Total expenses..... ....................................... $ 95 $ 95
Net income......... ....................................... $ 125,627 $ 125,627

Earnings per unit:
Net income allocated to members per weighted
average membership units ............................... $ 0.083 $ 0.083
Annualized net interest yield to members (b) ............. 9.96% 9.96%
Weighted average membership units (a) .................... 1,523,213 1,523,213
</TABLE>
--
(a) The weighted average number of members' units is calculated based upon the
daily number of outstanding units beginning on September 1, 2000,
commencement date of operations.
(b) The annualized net interest yield to members is calculated based upon the
net income allocated to members per weighted average membership units as
of September 30, 2000 multiplied by twelve (12) months, and then divided
by 10.

Summary of actual and anticipated investment in loans secured by real estate
performance:

<TABLE>
<CAPTION>
<C>
<S>
Actual investment in loans secured by real estate at September 30, 2000.......................... $ 13,265,450
Actual weighted average interest rate yield on investment in loans secured by real estate
as of September 30, 2000 ....................................................................... 14.20%
Anticipated weighted average interest rate yield on investment in loans secured by real estate
as of December 31, 2000 (c) .................................................................... 14.14%
Anticipated net income allocated to members per weighted average membership units
as of December 31, 2000 (d) .................................................................... 13.30%
Weighted average membership units at December 31, 2000 (e)....................................... 2,032,272
</TABLE>
--------
(c) Anticipated weighted average interest rate yield on investment in loans
secured by real estate as of December 31, 2000 is based on 2 additional
investment in loans totaling $5,750,000 with an assumed interest rate of
14%. This assumption is based on no additional units being sold after
September 30, 2000 and utilizing $5,750,000 of the total $5,849,950 of cash
and cash equivalents toward such investments.
(d) Anticipated net income allocated to members per weighted average membership
units as of December 31, 2000 is based on interest earned from investment in
loans secured by real estate less expenses (i.e., general and
administrative, management fees, etc.).
(e) Weighted average membership units at December 31, 2000 is based upon the
daily number of outstanding units from September 1, 2000 through
December 31, 2000 assuming no additional units are sold after September 30,
2000.
Note: This is a forward looking statement and actual results may be different
due to interest rate fluctuations, loan defaults, changes in general
economic conditions, etcetera.

Net income for both three and nine months ended September 30, 2000 resulted
primarily from interest income on loans secured by real estate approximating
$92 thousand and interest income approximating $29 thousand related to
interest earned on cash and cash equivalents held at bank institutions.

Interest income on loans secured by real estate for approximately $92
thousand was a result of interest earned on loan investments portfolio with a
weighted average yield of 14.20% for both the three and nine months ended
September 30, 2000.

S-7

<PAGE>

Interest income -- other for approximately $29 thousand for both three and
nine months ended September 30, 2000 was a result on interest earned from cash
and cash equivalents and certificates of deposits held at bank institutions with
a weighted average yield of 6%.

Investment in Loans Secured by Real Estate Portfolio

As of September 30, 2000, investment in loans secured by real estate
approximating $13,265,000 are comprised of five (5) loans secured through
first deeds of trust. The following is a summary of the Company's investment
in loans secured by real estate as of September 30, 2000:

Loan Amount Loan Amount Loan to
Funded by Funded by Appraised Value
Borrower DM Mortgage Other Investors Value Ratio
-------- ----------- --------------- ----- -----
<S> <C> <C> <C> <C>
Car Spa Norco, LLC ..... $ 3,345,000 $ 355,000 $ 6,400,000 58.0%
The Ranches, LLC ....... $ 3,115,000 $ 5,000 $ 7,150,000 43.6%
Mesquite 643, LLC ...... $ 4,358,550 $ 3,141,450 $14,000,000 53.6%
Q Summerlin, LLC ....... $ 1,686,900 $ 7,063,100 $12,600,000 69.4%
BP Euphoria, LLC ....... $ 760,000 $ -- $ 1,250,000 60.8%
----------- -------------- ----------- -----
$13,265,450 $10,574,650 $41,400,000 57.6%
=========== ============== =========== =====

Interest Loan
Borrower Rate Length Loan Type Collateral
-------- ---- ------ --------- ----------
<S> <C> <C>
Car Spa Norco, LLC ..... 14.0% 12 mos. Commercial Land and Building
The Ranches, LLC ....... 15.0% 12 mos. Land Land
Mesquite 643, LLC ...... 14.0% 12 mos. Commercial Land
Q Summerlin, LLC ....... 14.0% 12 mos. Commercial Land and Building
BP Euphoria, LLC ....... 14.0% 12 mos. Commercial Land
</TABLE>

As of September 30, 2000, investment in loans secured by real estate are
invested in loans with a weighted average interest yield of 14.20% maturing
within twelve (12) months. The Company believes that on an annual basis, overall
net yield to the members on a weighted average per unit basis will range from
13% to 13.5%, net of all operating expenses, through the year ended December 31,
2000. The Company believes that it will achieve these rates through the high
yield returns it anticipates receiving from current and future investment in
loans secured by real estate. This is a forward looking statement and there can
be no assurance that the Company will achieve such anticipated results and
actual results may be different due to interest rate fluctuations, loan
defaults, changes in general economic condition, etcetera.

Investment in Loans Secured by Real Estate Quality

Some losses are considered normal when funding mortgage type loans and the
amount of losses will vary as the loan portfolio is affected by changing
economic conditions and financial experiences of these borrowers. There is no
precise method of predicting specific losses or amounts that ultimately may be
charged off to particular segments of the investment in loans portfolio.

The conclusion that a Company loan may become uncollectible, in whole or in
part, is a matter of professional judgment. Although lenders such as
traditional banks, and savings and loan institutions are subject to federal
and state regulations that require them to perform ongoing analyses of their
loan portfolios, loan to value ratios, reserves, etc., and to obtain current
information regarding its borrowers and the securing properties, the Company
is not subject to such regulations and has not adopted these practices.
Rather, the management of the Company, in connection with the quarterly
closing of the accounting records of the Company and the preparation of the
financial statements, evaluates the Company's investment in loans portfolio.
Based upon this evaluation method, a determination is made as to whether the
allowance for loan losses is adequate to cover potential losses of the
Company. As of September 30, 2000 management believes that no allowances for
loan losses is necessary. Based upon the loan to value criteria established by
the management of the Company and that all loans are current and performing,
it is in the opinion of the Company's management that the investment in loans
secured by real estate appear in general to be adequately secured as of
September 30, 2000.

Managements professional judgment of the adequacy of allowance for loan
losses may include considerations of economic conditions, borrower's financial
condition, evaluation of industry trends, review and evaluation of loans
identified as having loss potential, and quarterly review by Managing Member's
loan committee.

S-8

<PAGE>
Capital and Liquidity

Liquidity is a measure of a company's ability to meet potential cash
requirements, including ongoing commitments to fund lending activities and for
general operation purposes. The Company believes that interest earned from both
investment loans and cash held at bank institutions in the next twelve months
will be sufficient to meet its capital requirements. The Company does not
anticipate the hiring of any employees, acquiring fixed assets such as office
equipment or furniture, or incurring material office expenses during the next
twelve months because the Company will be utilizing Vestin's personnel and
office equipment. The Company may pay Vestin an annual management fee up to
0.25% of its aggregate capital contributions. The Company will not reimburse
Vestin for any overhead expenses in excess of this management fee.

During the three and nine months ended September 30, 2000, cash flows
provided by operating activities approximated $31 thousand. Investing
activities consisted of investment in loans secured by real estate in the
amount of $13.8 million. Financing activities consisted of proceeds from the
sale of units in the amount of $20 million.

The Company will rely upon the cash flow from operations to provide for its
capital requirements. Management believes that cash generated from operations
will be sufficient to provide for its capital requirements for at least the
next 12 months. The Company will continue to offer to sell its remaining
unsold units up to a maximum of 10,000,000 units. As of September 30, 2000,
the Company has sold approximately 2 million units with proceeds approximating
$19.6 million. Proceeds from future sale of the Company's units will be used
to provide capital for investments in loans. There can be no assurance that
the Company will be able to sell its remaining unsold units.

At September 30, 2000, the Company had $5.8 million in cash and cash
equivalents and $19.8 million in total assets. On the same date, total
liabilities were nominal. Accordingly, the Company appears to have sufficient
working capital to meet its operating needs in the near term.

The Company maintains working capital reserves of at least 3% of aggregate
members' capital accounts in cash and cash equivalents, and certificates of
deposits. This reserve is available to pay expenses in excess of revenues,
satisfy obligations of underlying security properties, expend money to satisfy
our unforeseen obligations and for other permitted uses of the working capital.
Working capital reserves of up to 3% are included in the funds committed to loan
investments in determining what proportion of the offering proceeds and
reinvested distributions have been invested in mortgage loans.

S-9

<PAGE>
PART B

VESTIN GROUP, INC.
AND SUBSIDIARIES
(FORMERLY SUNDERLAND CORPORATIONAND SUBSIDIARIES)
CONSOLIDATED BALANCE SHEET
(UNAUDITED)

ASSETS

September 30,
2000
------------
<S> <C>
Assets
Cash ............................................................................................................ $ 945,461
Accounts receivable ............................................................................................. 2,085,006
Due from stockholder ............................................................................................ 508,569
Due from affiliate .............................................................................................. 173,799
Notes receivable-related party .................................................................................. 629,900
Notes receivable ................................................................................................ 1,753,626
Investments in marketable securities ............................................................................ 149,382
Investment in real estate held for sale ......................................................................... 1,306,901
Investments in mortgage loans on real estate .................................................................... 5,176,400
Other investments ............................................................................................... 1,094,520
Deferred tax asset .............................................................................................. 27,540
Property and equipment, net ..................................................................................... 276,671
Other assets, net ............................................................................................... 93,539
------------
Total assets................................................................................................... $14,221,314
============

<CAPTION>
LIABILITIES AND STOCKHOLDER'S EQUITY

<S> <C>
Liabilities
Accounts payable ................................................................................................. $ 380,063
Accrued expenses ................................................................................................. 177,988
Income taxes payable ............................................................................................. 1,742,069
Due to related party ............................................................................................. 46,845
Note payable ..................................................................................................... 1,294,624
Lines of credit .................................................................................................. 2,016,511
-----------
Total liabilities............................................................................................... 5,658,100
Commitments and contingencies ..................................................................................... --

Stockholders' equity
Preferred stock, $.0001 par value; 20 million shares authorized; no shares issued ................................ --
Common stock, $.0001 par value; 100 million shares authorized; 7,240,681 shares issued and outstanding ........... 724
Additional paid-in capital ....................................................................................... 2,344,379
Retained earnings ................................................................................................ 6,218,111
-----------
Total stockholders' equity ....................................................................................... 8,563,214
-----------
Total liabilities and stockholders' equity ....................................................................... $14,221,314
===========
</TABLE>

See Accompanying Notes to Financial Statements

S-10

<PAGE>
VESTIN GROUP, INC.
AND SUBSIDIARIES
(FORMERLY SUNDERLAND CORPORATION AND SUBSIDIARIES)
CONSOLIDATED BALANCE SHEET
(UNAUDITED)

Three Months Ended Nine Months Ended
September 30, September 30,
----------------------- -------------------------
2000 1999 2000 1999
---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues
Revenues from lending services and income
investments .................................. $3,938,530 $3,291,390 $10,966,289 $ 8,921,952
Revenue from financial services ................ 397,915 222,537 1,486,499 1,014,051
Interest income ................................ 258,857 127,098 537,602 298,571
Other income ................................... 21,709 -- 13,514 --
---------- ---------- ----------- -----------
Total revenues................................ 4,617,011 3,641,025 13,003,904 10,234,574

Operating expenses
Sales and marketing ............................ 239,535 528,018 1,253,675 2,106,020
General and administrative ..................... 2,699,959 1,740,557 6,440,835 4,338,668
---------- ---------- ----------- -----------
Total operating expenses...................... 2,939,494 2,268,575 7,694,510 6,444,688
Income before provision for income taxes 1,677,517 1,372,450 5,309,394 3,789,886
Provision for income taxes ..................... 570,356 466,633 1,805,194 1,288,561
---------- ---------- ----------- -----------
Net income ..................................... $1,107,161 $ 905,817 $ 3,504,200 $ 2,501,325
========== ========== =========== ===========
Basic and fully diluted earnings per common
share ........................................ $ 0.15 $ 0.13 $ 0.48 $ 0.35
========== ========== =========== ===========
Weighted average number of common shares used
in per share calculation ..................... 7,240,681 7,240,681 7,240,681 7,240,681
========== ========== =========== ===========
</TABLE>

See Accompanying Notes to Financial Statements

S-11

<PAGE>
VESTIN GROUP, INC.
AND SUBSIDIARIES
(FORMERLY SUNDERLAND CORPORATION AND SUBSIDIARIES)
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)

Nine Months Ended
September 30,
-------------------------
2000 1999
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income ........................................................................... $ 3,504,200 $ 2,501,325
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization....................................................... 58,432 25,777
Unrealized loss on investment in marketable securities.............................. 85,567 --
Changes in operating assets and liabilities:
Increase in accounts receivable..................................................... (900,377) (372,598)
Increase in other assets............................................................ (73,105) (308,096)
Increase in due from shareholder and affiliate...................................... (682,368) (307,699)
Increase (decrease) in accounts payable and accrued expenses........................ 67,892 (70,124)
Decrease in due to related party.................................................... (222,796) --
Increase in income taxes payable.................................................... 1,005,194 1,302,814
----------- -----------
Net cash provided by operating activities.......................................... 2,842,639 2,771,399
----------- -----------
Cash flows from investing activities:
Cash outlay for property and equipment.............................................. (79,663) (59,273)
Increase in notes receivable........................................................ (767,968) --
Net purchase of investments......................................................... (773,283) (1,500,813)
----------- -----------
Net cash used by investing activities............................................... (1,620,914) (1,560,086)
----------- -----------
Cash flows from financing activities:
Distribution to the stockholders.................................................... (178,435) (2,152,737)
Stockholder contributions........................................................... -- 347,666
Payments received on stockholder loan............................................... -- 535,646
Payments on capital lease obligations............................................... -- (17,821)
Net advances (payments) on notes payable and lines of credit........................ (1,282,889) 11,808
----------- -----------
Net cash used by financing activities............................................... (1,461,324) (1,275,438)
----------- -----------
Net decrease in cash................................................................ (239,599) (64,125)
Cash-beginning balance.............................................................. 1,185,060 590,441
----------- -----------
Cash-ending balance................................................................. $ 945,461 $ 526,316
=========== ===========
</TABLE>

Supplemental Schedule of Non-Cash Investing Activities:

On March 15, 2000, 10,300 shares of common stock were issued to acquire all of
the outstanding shares of DM Financial Services, Inc.

On March 31, 2000, 800,000 shares of common stock were issued to acquire all
of the outstanding shares of L.L. Bradford & Company.

On January 31, 2000, 17,700 shares of common stock were issued to acquire all
of the outstanding shares of DM Mortgage Advisors, Inc.

On August 31, 2000, 251,000 shares of common stock were issued to acquire all
of the outstanding shares of Mortgage Source, Inc.

See Accompanying Notes to Financial Statements

S-12

<PAGE>
VESTIN GROUP, INC.
AND SUBSIDIARIES
(FORMERLY SUNDERLAND CORPORATION AND SUBSIDIARIES)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS)
(UNAUDITED)

Note 1--Basis of Presentation

The accompanying consolidated financial statements have been prepared in
accordance with Securities and Exchange Commission requirements for interim
financial statements. Therefore, they do not include all of the information
and footnotes required by generally accepted accounting principles for
complete financial statements. The financial statements should be read in
conjunction with the Form 10-KSB/A for the year ended December 31, 1999 of
Vestin Group, Inc. ("Vestin" or "the Company").

Financial data for all periods presented have been retroactively adjusted to
reflect the effect of the recent mergers with L.L. Bradford & Company, Vestin
Capital, Inc., DM Mortgage Advisors, Inc., and Mortgage Source, Inc. each of
which was accounted for as a pooling of interest transaction.

Note 2--Acquisition

On August 31, 2000, the Company acquired all the outstanding capital stock
of Mortgage Source, Inc. (MSI), in exchange for approximately 251,000 shares
of the Company's common stock pursuant to a tax-free reorganization. MSI is a
Las Vegas based mortgage company currently licensed in 13 states. The
acquisition of MSI has been accounted for as a pooling of interests, and
accordingly, the accompanying consolidated financial statements of the Company
have been restated to include the accounts and operations of MSI for all
periods presented.

Note 3--DM Mortgage Investors, LLC

In August 2000, the Securities Exchange Commissions (SEC), declared effective
the registration statement of DM Mortgage Investors, LLC (the "Fund") under
which it will offer up to 10,000,000 units at $10 per unit. The Fund will invest
in mortgage loans secured by real property. Vestin Mortgage, Inc. a subsidiary
of the Company is the Managing Member of the fund. As of September 30, 2000,
Vestin's investment in the fund totaled $788,370 which is included as other
investments totaling $1,094,520. Vestin Mortgage, Inc., as the Managing Member,
is entitled to an annual management fee of up to 0.25% of the aggregate capital
contributions to the Fund which will be paid by the Fund. Vestin Mortgage, Inc.
has elected to waive such fee for the three months ended September 30, 2000.

Note 4--Due From Stockholder

As of September 30, 2000, due from stockholder of approximately $509,000
consist of advances made to an officer and director of the Company. Due from
stockholder is non-interest bearing and due on demand.

Note 5--Note Receivable-Related Party

In September of 2000, Mortgage Source, Inc., a subsidiary of Vestin Group,
Inc., extended a loan to the Chief Financial Officer of the Company in the
amount of $629,900 for the purchase of a personal residence. The loan was
extended at an interest rate of 7.25% with normal and usual closing costs. On
October 2, 2000, Mortgage Source sold the loan to a third party lender for the
original principal balance and interest rate.

S-13

<PAGE>

VESTIN GROUP, INC.
AND SUBSIDIARIES
(FORMERLY SUNDERLAND CORPORATION AND SUBSIDIARIES)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS)
(UNAUDITED)

Note 6--Recent Accounting Pronouncements

In December 1999, the Securities and Exchange Commission (the "commission")
issued Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial
Statements" ("SAB 101"). SAB 101 summarizes certain of the Commission's views
in applying generally accepted accounting principles to revenue recognition.
The Company has applied the provisions for SAB 101 in the financial
information presented herein.

In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." The new
standard establishes accounting and reporting standards for derivative
instrument, including certain derivative instruments embedded in other
contracts, and for hedging activities. SFAS No. 133 is effective for all
quarters of the fiscal years beginning after June 15, 2000. We do not expect
SFAS No. 133 to have a material effect on our financial conditions or results
of operations.

S-14
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

The following information should be read in conjunction with the
consolidated financial statements and the accompanying notes thereto included
in Item 1 of this Quarterly Report, the Form 8-K/A filed on June 13, 2000, and
the form 10-KSB/A for the year ended December 31, 1999 of Vestin Group, Inc.

Forward Looking Statements

When used in this Quarterly Report on Form 10-QSB the words or phrases "will
likely result," "are expected to," "will continue," "is anticipated," or
similar expressions are intended to identify "forward looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995.
Such statements are subject to certain risks and uncertainties, including but
not limited to changes in interest rates, the Company's dependence on debt
financing and securitizations to fund operations, and fluctuations in
operating results. Such factors, which are discussed in Management's
Discussion and Analysis of Financial Condition and Results of Operations,
could affect the Company's financial performance and could cause the Company's
actual results for future periods to differ materially from any opinion or
statements expressed herein with respect to future periods. As a result, the
Company wishes to caution readers not to place undue reliance on any such
forward looking statements, which speak only as of the date made.

The following financial review and analysis is intended to assist in
understanding and evaluating the financial condition and results of operations
of the Company for the three and nine months ended September 30, 2000 and
1999. This information should be read in conjunction with the financial
statements and accompanying notes included in this quarterly report.

Company Overview

Vestin Group, Inc., formerly known as Sunderland Corporation, provides
financial services primarily within the Southwestern United States. In the
past, the Company's sole business activity had been offering income
investments to private investors using short-term loans secured by real
estate, primarily for commercial and residential developers. The Company is
currently diversifying its operations to provide an array of financial
services, including income-producing investments, financial consulting,
corporate finance, Internet financial services, insurance and investment
services as more fully described below. As a result, the Company's past
performance is not an indication of future operating results.

Since January 1, 2000, the Company has significantly expanded the range of
its financial products and services and its geographical reach and has
reorganized into three divisions: Lending/Income Investments, Financial
Services, and Internet Services.

Lending/Income Investments

Vestin, through the Company's Lending/Income Investment Division, is one of
the nation's largest lenders of private funds. Its largest subsidiary, Vestin
Mortgage, Inc. (formerly Capsource, Inc., doing business as Del Mar Mortgage),
has facilitated more than $700 million in lending transactions for the last
three years without the loss of principal or interest to any of its 4,500
investors.

The division's primary operation involves real estate collateralized income
investments. Vestin uses its own resources along with funds from private
investors to originate loans to real estate developers and owners for land
acquisitions, development, residential construction, commercial constructions
and "mezzanine" loans. The average term of the loans originated by the Company
is one year.

The Lending/Income Division generates revenue from several sources
including:

(i) Loan origination fees ranging from 2-4% of the loan

(ii) Administrative fees on the loans it originates, and

(iii) Loan progress fees equal to the difference between the interest
rate collected from borrowers and the interest rate paid to
investors/institutional sources.

S-15
<PAGE>

Because of the expediency of the Company's loan approval and funding process
(typically 10-20 days) compared to other conventional lenders (typically 30-
120 days), borrowers have been willing to pay a higher interest rate.
Accordingly, this high rate of interest on a secured investment attracts
investors willing to fund such loans.

Following the Company's strategic growth plan, DM Mortgage Advisors, Inc.
was acquired in January 2000. DM Mortgage Advisors, Inc. is an Arizona based
mortgage company that provides access to that state's fast growing real estate
markets.

On August 31, 2000, the Company completed its acquisition of all the
outstanding capital stock of Mortgage Source, Inc. (MSI) in exchange for
approximately 251,000 shares of the Company's common stock. MSI is a Las Vegas
based mortgage company that performs conventional residential lending and is
licensed in 13 states. The acquisition will significantly increase the
Company's range of products and services. MSI completed more than $63 million
in residential home loans in 1999. It intends to be licensed in all 50 states
and is seeking to open offices in Utah, Idaho and two additional locations in
Nevada by year-end. In addition to their conforming home loans, MSI
specializes in zero-down mortgages and second chance loans for consumers with
average credit. MSI generates 10 percent of its loans through its website,
www.ezlend.com.

Financial Services

The Company is expanding its financial services division to provide clients
with multiple products through various resources available to the Company.
Collectively, the products and services are intended to allow clients to
integrate a wide variety of financial planning products through the Vestin
Group.

In the first quarter of Fiscal Year 2000, the Company completed a merger
with L.L. Bradford and Company, one of the largest accounting and consulting
firms in Las Vegas, Nevada. The merger significantly expands the range of
financial products and services offered by the Financial Services Division,
including consulting, accounting, tax, estate planning and other financial
services.

The Company began building a national financial services network with the
acquisition in the early part of 2000 of Vestin Capital, Inc., formerly DM
Financial Services, Inc. Vestin Capital is registered as a broker-dealer in 49
states. Vestin Capital, Inc. will provide various insurance and mutual fund
products to the Company's clients. In addition, Vestin Mortgage, Inc.,
formerly Capsource Inc. dba Del Mar Mortgage, is the manager of DM Mortgage
Investors, LLC, ("the Fund") which invests in mortgage loans secured by
commercial and residential real property, primarily in Nevada, Arizona and
California (including properties under construction). In August 2000, the
Securities and Exchange Commission declared effective the Form S-11
registration statement of the Fund for the offer and sale of 10,000,000 units
for $10.00 per unit. As of September 30, 2000, approximately 2,000,000 units
of the Fund's units were sold.

Internet services

The Company is implementing plans to offer financial services on the
Internet. To date, such operations have not generated any revenues.

S-16
<PAGE>

Results of Operations

Summary Financial Results
(dollars in thousands, except per share data)

Three Months Ended Nine Months Ended
September 30, September 30,
----------------------- Percentage ----------------------- Percentage
2000 1999 Increases 2000 1999 Increases
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Total revenues .............................. $ 4,617 $ 3,641 27% $ 13,004 $ 10,235 27%
Total expenses .............................. $ 2,939 $ 2,269 30% $ 7,695 $ 6,445 19%
Net income .................................. $ 1,107 $ 906 22% $ 3,504 $ 2,501 40%

Earnings per share:
Basic and diluted......................... $ 0.15 $ 0.13 15% $ 0.48 $ 0.35 37%
Weighted average number of common shares.. 7,240,681 7,240,681 -- 7,240,681 7,240,681 --
</TABLE>

Net Income. For the third quarter of 2000, net income increased $0.2 million,
or 22%, to $1.1 million from $.9 million for the third quarter of 1999. Basic
and fully diluted earnings per common share increased to $.15 compared to $.13
per share for the third quarter of 1999 on average common shares of 7,240,681
for both periods.

For the nine months ended September 30, 2000, net income increased $1.0
million, or 40%, to $3.5 million from $2.5 million for the nine months ended
September 30, 1999. Basic and fully diluted earnings per common share increased
to $.48 compared to $.35 for the nine months ended September 30, 1999.

The increase in net income and earnings per share primarily resulted from
higher origination fees and growth in volume of loans originated from the
Company's lending/Income Investment division during the period.

Total Revenues. For the third quarter of 2000, total revenues increased $1.0
million, or 27%, to $4.6 million from $3.6 million for the third quarter of
1999. Growth in total revenues primarily resulted from increased loan
origination fees from the Company's lending services division in the third
quarter of 2000, as a result of increased origination rates. The average loan
origination fee approximated 5% for the third quarter ended September 30, 2000
as compared to 3.6% for the third quarter of 1999.

For the nine months ended September 30, 2000, total revenues increased $2.8
million, or 27%, to $13.0 million from $10.2 million for nine months ended
September 30, 1999. Growth in total revenues primarily resulted from increased
loan origination fees from the Company's lending services division and increased
loan volume by approximately $13.0 million, or 10%, to $144.7 million from
$131.7 million for the nine months ended September 30, 1999.

Total Expenses. For the third quarter of 2000, total expenses increased $0.6
million or 30% as compared to the third quarter of 1999. For the nine months
ended September 30, 2000, total expenses increased $1.3 million, or 19%, to
$7.7 million from $6.4 million for the nine months ended September 30, 1999. The
increase in total expenses in both periods is primarily related to advertising
costs paid in connection with DM Mortgage Investors, LLC and an increase on
general operating expenses as a result of increased revenues.

Capital and Liquidity

Liquidity is a measure of a company's ability to meet potential cash
requirements, including ongoing commitments to fund lending activities and for
general operation purposes. Cash for originating loans and general operating
expenses is primarily obtained through cash flows from operations, lines of
credit and private investors. As of September 30, 2000, lines of credit
exceeding $10 million were available.

S-17
<PAGE>

The Company continues to significantly rely on access to private investors
for funding of its lending activities through real estate collateralized
investments. As a result of real estate collateralized investments, the
Company has been able to increase its cash flow from its lending activities.
The Company currently has its private investors placed in approximately 120
real estate collateralized investments totaling $272 million. The Company will
need to seek new investors to support its continued growth in the lending
activities.

In August 2000, the Securities Exchange Commissions (SEC), declared
effective the registration statement of DM Mortgage Investors, LLC (the
"Fund") under which it will offer up to 10,000,000 units at $10 per unit. The
Fund will invest in loans secured by real property originated and managed by
Vestin Mortgage, Inc. thereby providing additional investment funds for
originating loans. As of September 30, 2000, the Fund sold approximately 2
million units for an approximate total of $20 million of which $13.3 million
has been invested in loans brokered by Vestin Mortgage.

The Company has historically relied upon the cash flow from operations to
provide for its capital requirements. Management believes that cash generated
from operations, together with cash and investments in loans on hand at
September 30, 2000 will be sufficient to provide for its capital requirements
for at least the next 12 months. The Company, in June 2000, obtained a
$3,000,000 unsecured line of credit from Silver State Bank in Las Vegas,
Nevada making a total of over $10,000,000 in lines of credit available from
various financial institutions. The Company may seek additional equity
financing for additional working capital in the early part of 2001 through an
offering of its common stock. Further, the Company will be actively seeking
additional credit line arrangements. There can be no assurance that the
Company will be able to complete a secondary offering or obtain credit lines.

During each of the nine months ended September 30, 2000 and 1999, cash flows
provided by operating activities approximated $2.8 million. Investing
activities consisted primarily of the purchase of real estate collateralized
investments in the amount of $.8 million and an increase in notes receivable
of approximately $0.8 million. Financing activities consisted primarily of
payments on lines of credit of approximately $1.3 million.

At September 30, 2000, Vestin had $.9 million of cash and $14.2 million in
total assets. On the same date, total liabilities were $5.7 million.
Accordingly, Vestin appears to have sufficient working capital to meet its
operating needs in the near term without the need for additional external
financing.

S-18
<PAGE>

November 13, 2000
PROSPECTUS

10,000,000 Units

of Limited Liability Company Interests

DM MORTGAGE INVESTORS, LLC

-----------------------------

DM Mortgage Investors, LLC is a Nevada limited liability company (the
"Company"). We invest in mortgage loans, which are loans where our collateral is
real property. The loans will be selected for us by our Manager, Vestin
Mortgage, Inc. (formerly Capsource, Inc.).

We are offering and selling to the public up to a maximum of 10,000,000 units
for $10.00 per unit. This offering includes units to be issued under our
distribution reinvestment plan. Through October 25, 2000, we have sold 2,426,072
units.

<TABLE>
<CAPTION>
=======================================================================================================
Price to Selling Commissions/ Proceeds to
Public Expense Reimbursement(2) DM LLC
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Unit.......... ............ $10.00 --- $10.00
-------------------------------------------------------------------------------------------------------
Total Maximum..... ............ $100,000,000.00(1) --- $100,000,000.00(1)
=======================================================================================================
</TABLE>

(1) Includes units purchased under our distribution reinvestment plan.

The most significant risks to our investment include:

o Restricted right to sell or transfer your units

o Total reliance on Vestin Mortgage

o Payment of substantial fees to Vestin Mortgage, which is our affiliate

o Tax risks of the offering and membership in DM LLC

o Restricted distributions and increased risk due to leveraging

o Conflicts of interest for Vestin Mortgage and Vestin Capital

o Recent organization and lack of significant assets, operating history and
financing source.

You should read the complete discussion of the risk factors beginning on
page 7.

Vestin Capital, Inc. (formerly DM Financial Services, Inc.) is the lead
dealer selling our units in this offering. As our "lead dealer," Vestin
Capital will be the primary seller of units and may also engage other dealers
to sell units. Vestin Capital and Vestin Mortgage are both owned by the same
company, Vestin Group, Inc. (formerly known as Sunderland Corporation).

You must purchase at least 200 units for $2,000. To purchase units, you must
first sign the enclosed subscription agreement and make the representations and
warranties included in that agreement.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THE UNITS OR PASSED UPON THE ADEQUACY OR
ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.

THE USE OF FORECASTS IN THIS OFFERING IS PROHIBITED. NO ONE IS PERMITTED TO
MAKE ANY ORAL OR WRITTEN PREDICTIONS ABOUT THE CASH BENEFITS OR TAX CONSEQUENCES
YOU WILL RECEIVE FROM YOUR INVESTMENT.

November 13, 2000

<PAGE>
NOTICE TO CALIFORNIA RESIDENTS

All certificates representing units resulting from any offers or sales of
units to California residents will bear the following legend restricting
transfer:

It is unlawful to consummate a sale or transfer of this security, or any
interest therein, or to receive any consideration therefor, without the prior
written consent of the Commissioner of the Corporation of the State of
California, except as permitted in the Commissioner's Rules.

A copy of the applicable rule of the California Commissioner of Corporations
will be furnished to each California investor by Vestin Mortgage.

NOTICE TO PENNSYLVANIA RESIDENTS

Because the minimum closing amount is less than $10,000,000, you are
cautioned to carefully evaluate our ability to fully accomplish our stated
objectives and to inquire as to the current dollar volume of program
subscriptions.

<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
SUMMARY................................................................................................................... 1
RISK FACTORS.............................................................................................................. 7
Investment Risks......................................................................................................... 7
You will not have the benefit of reviewing the past performance of DM LLC.............................................. 7
Your units lack liquidity and marketability............................................................................ 7
You have a limited ability to have your units redeemed................................................................. 7
Depending upon the number of units we sell, we may be unable to diversify our loan portfolio adequately or meet
investment objectives................................................................................................ 7
We must rely on Vestin Mortgage to manage our operations and select our loans for investment........................... 8
We depend on key personnel of Vestin Mortgage.......................................................................... 8
You may face a delay before distributions begin........................................................................ 8
Any borrowing by us will increase your risk and reduce the amount we have available to distribute to members .......... 8
Risks of the Mortgage Lending Business................................................................................... 8
Defaults on our mortgage loans will decrease our revenues and your distributions....................................... 8
We will invest in kinds of loans that have a greater risk of default than first mortgage loans on commercial
properties........................................................................................................... 8
Our loans are not guaranteed by any government agency.................................................................. 9
Our mortgage loans will not be marketable and we expect no secondary market to develop................................. 9
Our loan portfolio is riskier because it will not be diversified geographically........................................ 9
We may have difficulty protecting our rights as a secured lender....................................................... 10
Our underwriting standards and procedure are more lenient than conventional lenders, which may create additional risks
to your return....................................................................................................... 10
By becoming the owner of property, we may become liable for unforeseen environmental obligations....................... 10
Our results are subject to fluctuations in interest rates and other economic conditions................................ 10
We face competition for mortgage loans that may reduce available yields and fees available............................. 11
Conflicts of Interest Risks.............................................................................................. 11
Vestin Mortgage will face conflicts of interest concerning the allocation of its personnel's time...................... 11
Vestin Mortgage will face conflicts of interest arising due to our fee structure....................................... 12
Vestin Mortgage will face conflicts of interest relating to other investments in mortgage loans........................ 12
We may not have control over joint ventures with affiliates............................................................ 12
Lack of Control by Members............................................................................................... 12
Your right to vote is limited and you are bound by majority vote....................................................... 12
Your interest in DM LLC may be diluted as we sell additional units..................................................... 12
The value of your units may decrease below ten dollars................................................................. 13
Risks Related to Vestin Capital.......................................................................................... 13
Vestin Capital is newly formed and has no operating history or track record in public offerings........................ 13
Vestin Capital is an Affiliate of Vestin Mortgage...................................................................... 13
Federal Income Tax Risks................................................................................................. 13
Your cash flow and distributions will be reduced if we are taxed as a corporation...................................... 13
If we are deemed to not be engaged in a trade or business, the tax benefits of partnership status will be adversely
affected............................................................................................................. 13
An IRS audit of our books and records could result in an audit of your tax returns..................................... 13
Inconsistencies between federal, state and local tax rules may adversely affect your return............................ 14
Retirement Plan Risks.................................................................................................... 14
An investment in DM LLC may not qualify as an appropriate investment under all retirement plans........................ 14
USE OF PROCEEDS........................................................................................................... 15
INVESTOR SUITABILITY STANDARDS............................................................................................ 16
</TABLE>

<PAGE>
<TABLE>
<S> <C>
INVESTMENT OBJECTIVES AND POLICIES........................................................................................ 19
Acquisition and Investment Policies...................................................................................... 19
Mortgage Loans to Affiliates............................................................................................. 22
Purchase of Loans from Vestin Mortgage and its Affiliates................................................................ 22
Commitment of Offering Proceeds.......................................................................................... 22
Types of Loans We Intend to Invest In.................................................................................... 23
Prepayment Penalties..................................................................................................... 24
Balloon Payment.......................................................................................................... 24
Borrowing................................................................................................................ 24
Repayment of Mortgages on Sales of Properties............................................................................ 25
No Trust or Investment Company Activities................................................................................ 25
Various Other Policies and Procedures.................................................................................... 25
Competition and General Economic Conditions.............................................................................. 25
Regulation............................................................................................................... 25
MANAGEMENT................................................................................................................ 27
Our Management........................................................................................................... 27
Vestin Mortgage.......................................................................................................... 27
Removal of Vestin Mortgage as Manager.................................................................................... 27
Evaluation and Acquisition by Vestin Mortgage............................................................................ 28
Management of Loan Portfolio............................................................................................. 28
Mortgage Loans........................................................................................................... 28
Prior Experience......................................................................................................... 28
Directors and Executive Officers of Vestin Mortgage and Vestin........................................................... 30
Affiliated Companies..................................................................................................... 33
COMPENSATION OF VESTIN MORTGAGE AND AFFILIATES............................................................................ 34
CONFLICTS OF INTEREST..................................................................................................... 36
Share ownership.......................................................................................................... 39
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS..................................... 41
FIDUCIARY RESPONSIBILITY.................................................................................................. 42
Exculpation and Defenses................................................................................................. 42
Indemnification.......................................................................................................... 43
SUMMARY OF OPERATING AGREEMENT, RIGHTS OF MEMBERS AND DESCRIPTION OF UNITS................................................ 44
Your Status.............................................................................................................. 44
Limited Liability of Members............................................................................................. 44
Term of DM LLC........................................................................................................... 44
Meetings................................................................................................................. 44
Voting and Other Rights of Members....................................................................................... 44
Capital Accounts......................................................................................................... 45
Capital Contribution of Vestin Mortgage.................................................................................. 45
Unit Repurchases and Deemed Distributions................................................................................ 45
Write-Down of Investments................................................................................................ 45
Members' Return on Investment............................................................................................ 45
Distribution Reinvestment Plan........................................................................................... 46
Reinvestment of Proceeds of Capital Transactions......................................................................... 47
Assignment and Transfer of Units......................................................................................... 47
Repurchase of Units, Withdrawal from DM LLC.............................................................................. 47
Options and Warrants..................................................................................................... 48
Special Power of Attorney................................................................................................ 48
FEDERAL INCOME TAX CONSEQUENCES........................................................................................... 49
Classification as a Partnership.......................................................................................... 50
We Will Not Be Classified As A Publicly Traded Partnership............................................................... 50
General Principles of Partnership Taxation............................................................................... 52
</TABLE>

<PAGE>
<TABLE>
<S> <C>
Determination of Basis in Units.......................................................................................... 52
Allocations of Profits and Losses........................................................................................ 53
Limitations on the Deduction of Losses................................................................................... 53
The Basis Limitation..................................................................................................... 53
The At Risk Limitation................................................................................................... 53
The Passive Loss Rules................................................................................................... 53
Computation of Gain or Loss on Sale or Redemption of Units............................................................... 54
Character of Gain or Loss................................................................................................ 54
Tax Rates on a Partner's Share of Ordinary Income from the Partnership................................................... 54
Distributions and Deemed Distributions................................................................................... 54
Depreciation............................................................................................................. 55
Investment Interest...................................................................................................... 55
Tax Treatment of Tax-Exempt Entities..................................................................................... 55
Partnership Tax Returns, Tax Information and Audits...................................................................... 56
Vestin Mortgage is Tax Matters Partner................................................................................... 57
Original Issue Discount Rules............................................................................................ 57
Market Discount.......................................................................................................... 57
No Section 754 Election--Impact on Subsequent Purchasers................................................................. 57
Treatment of Compensation of Vestin Mortgage............................................................................. 58
Possible Legislative Tax Changes......................................................................................... 59
State and Local Taxes.................................................................................................... 59
ERISA Considerations..................................................................................................... 59
Annual Valuation......................................................................................................... 59
Plan Assets Generally.................................................................................................... 60
HOW WE PROTECT OUR RIGHTS AS A LENDER..................................................................................... 62
Overview of Mortgages.................................................................................................... 62
Foreclosure.............................................................................................................. 62
Environmental Risks...................................................................................................... 63
Second Mortgages; Rights of Senior Mortgages............................................................................. 63
Statutory Rights of Redemption........................................................................................... 64
Anti-Deficiency Legislation.............................................................................................. 64
Bankruptcy Laws.......................................................................................................... 65
Enforceability of Certain Provisions..................................................................................... 65
REPORTS TO MEMBERS........................................................................................................ 67
PLAN OF DISTRIBUTION...................................................................................................... 68
LEGAL MATTERS............................................................................................................. 69
EXPERTS................................................................................................................... 69
AVAILABLE INFORMATION..................................................................................................... 69
</TABLE>

iii

<PAGE>
SUMMARY

Because this is a summary, it does not contain all the information that may
be important to you. Before you invest, you should read this entire prospectus
carefully, including the section entitled "Risk Factors," beginning at page 7,
and the Financial Statements and Notes, beginning at page F-1.
<TABLE>
<CAPTION>
<S> <C>
DM Mortgage Investors, LLC. DM Mortgage Investors, LLC was organized in December 1999
as a Nevada limited liability company. Under our articles
and our Third Amended and Restated Operating Agreement,
which we refer to as our operating agreement, our
existence ends on December 31, 2019, unless the members
vote to extend our duration. In this prospectus we refer
to DM Mortgage Investors, LLC as "DM LLC," "we,"
"us" or "our." Our offices are at 2901 El Camino
Avenue, Suite 206, Las Vegas, Nevada 89102, and our
telephone number is (702) 227-0965.

Our Manager................ Our Manager is Vestin Mortgage, Inc., a Nevada
corporation, which was incorporated in 1997 as Capsource,
Inc. Its executive offices are at 2901 El Camino Avenue,
Suite 206, Las Vegas, Nevada 89102, and its telephone
number is (702) 227-0965. Vestin Mortgage is a mortgage
broker licensed in the State of Nevada since 1997.

Investment Policies........ We will invest in mortgage loans where our collateral is
real property located primarily in Nevada, Arizona and
California. There may be commercial or residential
buildings on the real property, but our collateral may
also consist of real property with buildings under
construction and no physical structures at all. The loans
will be selected for us by Vestin Mortgage from among
loans obtained by Vestin Mortgage or mortgage brokers with
which we are not affiliated. We believe these loans will
be attractive to borrowers because of the expediency of
Vestin Mortgage's loan approval process, which takes from
10 to 20 days.

We do not intend to invest in or own real
property. However, we may own real property if we
foreclose on a defaulted loan.

We expect to obtain a line of credit which we
currently intend to use to acquire, operate and
develop for resale the real properties on which
we have foreclosed although we may use the funds
for other purposes as set forth in "Investment
Objective and Policies---Borrowing". Our total
indebtedness under the line of credit will not
exceed 70% of the fair market value of the
outstanding mortgage loans in our loan portfolio.

You will not receive any distributions on your
investment before we invest the proceeds of this
offering in mortgage loans and receive interest
payments on those loans.

Summary Risk Factors....... The following are some of the significant risks concerning
your investment:

o There is no public trading market for the
units, and we do not expect one to ever
develop. Further, the transfer and redemption
of your units is restricted. Consequently, you
will have a difficult time trying to obtain
cash for your units.

o We rely on Vestin Mortgage, our Manager, for
the day-to- day management of our business and
the selection of our mortgages.

o If we do not remain qualified as a partnership
for federal income tax purposes, we would be
subject to the payment of tax on our income at
corporate rates, which would reduce the amount
of funds available for payment of distributions
to you.

o Any borrowing by us under a line of credit will
increase the risk of your investment and reduce
the amount we have available to distribute to
you.

o Real estate investments are subject to cyclical
economic trends which are out of our control.
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
<S> <C>
o Vestin Mortgage has not yet identified the
mortgage loans that we will invest in with the
proceeds of this offering. As a result, you
will not have an opportunity to determine for
yourself whether the real properties that are
our collateral justify using the proceeds of
this to make a particular loan.

o We were formed late last year and have no
significant assets, no operating history and no
current sources of financing.

Before you invest in DM LLC, you should see the
complete discussion of "Risk Factors" beginning
on page 7 of this prospectus.

Estimated Use of Proceeds
of Offering................ We anticipate that we will invest in mortgage loans 97% of
the proceeds of this offering and the distributions
reinvested under our reinvestment plan. We will use 3% of
offering proceeds as a working capital reserve.

Conflicts of Interest...... Vestin Mortgage will face various conflicts of interest
resulting from its activities, including the following:

o Vestin Mortgage will receive substantial fees
for obtaining, processing, making and
brokering, managing and selling of mortgage
loans, as well as for other services. The terms
of these transactions have not been set by
arms-length negotiations. The fees for these
services are described in greater detail under
"Compensation to Vestin Mortgage and
Affiliates" in this summary and as set forth in
greater detail in the main body of this
prospectus. Vestin Mortgage's compensation is
based on the volume and size of the mortgages
selected for us, and our interests may diverge
from those of Vestin Mortgage and Mr. Shustek,
the indirect owner of a controlling interest in
Vestin Mortgage, in deciding whether we should
invest in a particular loan.

o Vestin Mortgage will be receiving fees from
borrowers that would otherwise increase our
returns. These fees include the fees listed
under "Fees Paid by Borrower" in the above
mentioned compensation description. Because
Vestin Mortgage receives all of these fees, our
interests will diverge from those of Vestin
Mortgage and Mr. Shustek when Vestin Mortgage
determines whether to charge higher interest
rates and risk losing fees from the loans.

o Vestin Mortgage must allocate its time between
our activities and its other activities. These
other activities include its current activities
as a licensed mortgage broker and may in the
future include acting as the manager or general
partner of, or adviser to, funds with
objectives similar to ours.
</TABLE>

2
<PAGE>

Vestin Group, Vestin Mortgage
and Their Affiliates

The following chart shows the ownership structure of the
various persons and entities that are affiliated with
Vestin (formerly Sunderland Corporation) and Vestin
Mortgage:

Michael V. Shustek

Vestin Group, Inc. Del Mar Mortgage, Inc.
Officers and Directors include: (Predecessor to the
Michael Shustek, business now operated
Chairman of the Board, CEO, by Vestin Mortgage)
and controlling shareholder 100% owned by
Stephen Byrne, President Michael Shustek
Lance Bradford, CFO, Secretary

Vestin Capital Vestin Mortgage
(Lead Dealer) (Manager and initial
100% owned by Vestin Member of DM LLC)
100% owned by Vestin
<TABLE>
<S> <C>
Compensation to Vestin..... Vestin Mortgage and Affiliates will receive the following
compensation:
</TABLE>
<TABLE>>
<CAPTION>
Type of Compensation Form of Compensation
Offering Stage:
<S> <C> <C>
Vestin Mortgage's capital
account in the Company will
be credited up to a maximum
of $1,000,000 for offering
expenses paid by Vestin
Mortgage on our behalf to
third parties that are not
affiliated with Vestin
Mortgage................... Deemed capital contribution
up to $1,000,000.00
</TABLE>
<TABLE>
<CAPTION>
Operational Stage:
<S> <C>
Where the fees below are described as competitive fees or based on local market conditions, that
means the fees are determined by price competition within a given market. To ensure that our fees
remain competitive, we will directly contact our competition, such as major banks in the local
market or other relevant commercial lenders. We expect that the interest rate on the loans in which
we invest will be 2-3 points higher than comparable loans made by banks and that the fees paid to
Vestin Mortgage will be 2-3 points higher than similar fees charged by conventional lenders. We
believe that this rate structure is consistent with rates and fees charged by other non-conventional
lenders. References below to local law also contemplate additional requirements imposed by local or
state law, such as usury laws.
</TABLE>

3
<PAGE>

<TABLE>
<CAPTION>
Paid by Borrower
<S> <C>
Loan Brokerage Fee .................................. 2%-6% of each loan, competitive fee based
on local market conditions

Loan Evaluation and Processing Fees ................. 2%-5% of each loan, competitive fee based
on local market conditions

Servicing Fee for Administering Loans ............... Annual fee of up to 0.25% of outstanding
principal

Loan Extension Fee .................................. 2%-5% of outstanding principal, as
permitted by local law and local market
conditions
<CAPTION>
Paid by Us

<S> <C>
Annual Management Fee ............................... Up to 0.25% of our aggregate capital
contributions, paid monthly in arrears
Real Estate Brokerage Fees on Resales Of
Foreclosed Property ..... ........................... If a foreclosure occurs, up to 3% of
proceeds to Vestin Mortgage where it
substantially contributed to sale; up to
6% for all persons involved.
</TABLE>
<TABLE>
<S> <C>
Members' Return on
Investment ............... Our mortgage loans will generate monthly payments of interest or principal to DM LLC, which Vestin
Mortgage intends to distribute to you. Distributions of interest received will be paid monthly by
cash or distribution reinvestment. All net income attributable to interest payments from borrowers
will be distributed to the members, which will include an allocation to Vestin Mortgage
corresponding to the relative size of Vestin Mortgage's capital account.

We will also receive net proceeds in the form of the repayment of principal or the prepayment of a
mortgage loan, net proceeds of a foreclosure sale, or deemed proceeds resulting from loan
modifications or extensions that result in a disposition for tax purposes. We may not actually
distribute these proceeds as cash, but under our operating agreement, for tax purposes only, any
such proceeds are deemed to be distributed to the members and then recontributed to DM LLC by the
member. Any distributions of net proceeds of loan repayments will be made to the members, including
Vestin Mortgage, pro rata based upon their capital accounts.

Distribution Reinvestment
Plan ..................... You may elect to reinvest the distributions of our net income that you receive from DM LLC when you
return your subscription agreement or at a later date. If you so elect to participate in our
distribution reinvestment plan, you will be taxed on your share of our taxable income even though
you will not receive any cash distributions. Additionally, solely for tax purposes, you will be
deemed to have received and recontributed to DM LLC any proceeds we receive from loan repayments,
foreclosures or other capital transactions, or any loan modifications treated as a disposition for
tax purposes. We believe that this characterization will not affect the tax liability of our
members. However, if the Internal Revenue Service unexpectedly were to disagree, you may have a tax
liability with no cash distributions to pay that liability. We may end the distribution reinvestment
plan at any time. See "Summary of Operating Agreement, Rights of Members and Description of
Units--Distribution Reinvestment Plan."
</TABLE>

4
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
ERISA Considerations....... The section of this prospectus entitled "ERISA Considerations" describes the effect the purchase of
units will have on individual retirement accounts, or IRAs, retirement plans subject to the Employee
Retirement Income Security Act of 1974, also known as ERISA, and the Internal Revenue Code of 1986,
which we call the Internal Revenue Code. ERISA is a federal law that regulates the operation of
retirement plans. Any retirement plan trustee or individual considering purchasing shares for a
retirement plan or an IRA should read this section of the prospectus very carefully.

Units...................... Your investment will be recorded on our books only. We will not issue unit certificates. If you wish
to redeem or transfer your units, you must send an executed redemption or transfer form to us. We
will provide the required redemption form to you upon request.

Operating Agreement........ Your relationship with DM LLC and with Vestin Mortgage will be governed by the operating agreement.
Some of the significant features of the operating agreement are as follows:

We will allocate to you our income, gains, losses and distributions in the same proportion that your
capital account bears to all of the capital accounts of all of our members. The number of units you
own will be of no significance in this determination.

In this prospectus, when we refer to a majority, we mean those members whose capital accounts
together are over 50% of the amount all of the members' capital accounts. A majority can bind all of
our members of fundamental matters affecting DM LLC. If such a vote occurs, you will be bound by the
majority vote even if you did not vote with the majority.

Michael V. Shustek, an officer and a director of Vestin Mortgage, is the owner of a controlling
interest in Vestin Group, Inc., the company that owns Vestin Mortgage. Accordingly, Mr. Shustek may
be deemed to have indirect control of the conduct of our business, subject to the rights of the
majority described above and elsewhere in this prospectus.

The operating agreement is discussed in more detail in "Summary of Operating Agreement, Rights of
Members and Description of Units," beginning on page 44. If any statements in this prospectus differ
from the operating agreement, you should rely on the operating agreement. The operating agreement is
attached as Exhibit A.

The Offering............... We are offering for sale a maximum of 10,000,000 units of limited liability company interests at
$10.00 per unit. These units include units issued under our distribution reinvestment plan. The
minimum initial purchase is 200 units for $2,000, except to the extent that state suitability
standards dictate otherwise. Through October 25, 2000, we have sold 2,426,072 units.

Tax Considerations......... In the opinion of our tax counsel, we will be treated for federal income tax purposes as a
partnership. You should consult your own tax advisor regarding personal tax consequences that might
be associated with your investment in the units. See "Federal Income Tax Risks," beginning at page
13, and "Federal Income Tax Consequences," beginning at page 49 of this prospectus.

Suitability................ To invest in units, you must have either:
o a net worth, exclusive of home, home furnishings and automobiles, of at least $45,000 and a
minimum annual gross income of at least $45,000; or

o a minimum net worth of at least $150,000.
</TABLE>

5
<PAGE>

<TABLE>
<S> <C>
As described more fully in "Investor Suitability Standards," beginning on page 16, a significant
number of states have more stringent requirements than those set forth above. Additionally, you will
have to make additional representations to us before we determine that the investment is suitable for
you.

To Purchase Units.......... To purchase units you must complete and sign the subscription agreement, which is Exhibit B at page
B-1 of this prospectus, and deliver it to the Manager or the securities dealer that has solicited
your investment, together with payment for the number of units specified in the subscription
agreement. We may accept or reject your subscription in whole or in part. If we do not accept your
subscription, your purchase payment will be returned to you promptly without interest.

Our acceptance of your subscription agreement is effective when we countersign it, for the number of
units we set forth next to our signature. If we accept your subscription agreement, you will be an
owner of the units and a member of DM LLC. If we do accept your subscription agreement, we will
provide you with a confirmation of the number of units you have acquired. Because the units are not
certificated, we will not mail you a unit certificate. We will furnish all investors in California
whose subscriptions are accepted with a copy of the operating agreement.
</TABLE>

6
<PAGE>

RISK FACTORS

You should carefully consider the following risks and other information in
the prospectus before purchasing units.

Investment Risks

You will not have the benefit of reviewing the past performance of DM LLC.

We were organized in December 1999 and commenced operations on September 1,
2000. Accordingly we have a very limited operating history. We have no external
source of financing and are relying on capital contributions received via this
Offering.

Your units lack liquidity and marketability.

There will be no public trading market for your units, and you cannot freely
sell or transfer your units or use them as collateral for a loan. Our operating
agreement restricts the transfer of units so that we may avoid being classified
as a "publicly traded partnership" under Section 7704 of the Internal Revenue
Code. Because classification as a publicly traded partnership would
significantly decrease the value of the units of all our members, Vestin
Mortgage must consent to any sale or assignment of your units. Vestin Mortgage
will withhold its consent to the extent necessary to prohibit transfers that
could cause us to be classified as a publicly traded partnership. Further, the
resale of the units may be restricted by state securities laws. Consequently,
you may not be able to obtain cash for your units in a timely manner and you
should purchase the units for at least one year.

You have a limited ability to have your units redeemed.

You have a limited ability to have your shares redeemed by us. Some of these
limitations include the following:

o You will be paid within 61 to 91 days after you deliver written notice of
withdrawal to Vestin Mortgage;

o You can only redeem your units after you have held them for one year;

o Redemption payments only return all or the requested part of your capital
account and are not affected by the value of our underlying assets, except
for any payment made upon final liquidation;

o Payments are made only to the extent we have available cash from proceeds
of repayments of principal and capital contributions;

o There is no reserve fund for repurchases;

o You may withdraw a maximum of $100,000 during any calendar year subject to
the Manager's limited discretion to permit larger withdrawals (provided
that in exercising its discretion, the Manager will not take any action
which would adversely affect the Company or Members as a whole).

o The total amount withdrawn by all members during any calendar year cannot
exceed 10% of the amount of capital accounts of all the members;

o We will only make redemption payments on the last day of any month.

If we do not sell a significant number of units in this offering, your
ability to have your units redeemed will be adversely affected, particularly if
the amount of requested withdrawals should increase substantially. Additionally,
because a substantial portion of our loans is "interest only," we will not
receive net proceeds as frequently as we would with loans where the principal is
repaid in periodic installments. To help permit redemptions, we will not
refinance or invest in new loans using payments of loan principal by borrowers
or new invested capital of members unless we have sufficient funds to cover
requested withdrawals.

Depending upon the number of units we sell, we may be unable to diversify our
loan portfolio adequately or meet investment objectives.

We will require about 15 loans to adequately diversify our portfolio to the
extent desired by Vestin Mortgage. If we fail to adequately diversify our loan
portfolio, our revenues will be too closely tied to the performance of the
borrower under each loan we invest in. Through October 25, 2000, we have sold
2,426,072 units for an aggregate amount of $24,260,720. If we do not raise
significant additional proceeds, we may not be able to pursue the investment
opportunities that we anticipate will develop.

7
<PAGE>

We must rely on Vestin Mortgage to manage our operations and select our loans
for investment.

Our ability to achieve our investment objectives and to pay distributions to
you depends upon Vestin Mortgage's performance in obtaining, processing, making
and brokering loans for us to invest in and determining the financing
arrangements for borrowers. You will have no opportunity to evaluate the terms
of mortgages, the real property that is our collateral or other economic or
financial data concerning our loans. You must rely entirely on the judgment of
Vestin Mortgage in investing the proceeds of this offering.

We depend on key personnel of Vestin Mortgage.

We do not have any officers or employees. Our success depends upon the
continued contributions of certain key personnel of Vestin Mortgage, including
Michael V. Shustek, Stephen J. Byrne and Lance Bradford, each of whom would be
difficult to replace because of his extensive experience in his field, extensive
market contacts and familiarity with Vestin Mortgage's activities. If any of
these key employees were to cease employment, our operating results could
suffer. Our future success also depends in large part upon Vestin Mortgage's
ability to hire and retain additional highly skilled managerial, operational and
marketing personnel. Vestin Mortgage may require additional operations and
marketing people who are experienced in obtaining, processing, making and
brokering loans and who also have contacts in the market. The size of our loan
portfolio may require Vestin Mortgage to hire and retain additional financial
and accounting personnel to assist Mr. Bradford in managing Vestin Mortgage's
accounting services. Competition for these people is intense, and we cannot
assure you that Vestin Mortgage will be successful in attracting and retaining
skilled personnel.

You may face a delay before distributions begin.

There may be a substantial period of time before Vestin Mortgage fully
invests the proceeds of this offering. Consequently, the distributions you
receive on your investment may be delayed or reduced pending the investment of
the offering proceeds in mortgage loans.

Any borrowing by us will increase your risk and reduce the amount we have
available to distribute to members.

We anticipate that we will obtain a line of credit that we currently intend
to use to acquire, operate and develop for resale the real properties on which
we have foreclosed, although we may use the funds for other purposes as set
forth in "Investment Objectives--- Borrowing". We may borrow up to 70% of the
fair market value of our outstanding mortgage loans at any time to finance these
acquisitions. Should we be unable to repay the indebtedness and make the
interest payments on the loans, the lender will likely declare us in default and
require that we repay all amounts owing under the loan facility. Even if we are
repaying the indebtedness in a timely manner, interest payments owing on the
borrowed funds will reduce our income and the distributions you receive.

Risks of the Mortgage Lending Business

Defaults on our mortgage loans will decrease our revenues and your
distributions.

We are in the business of investing in mortgage loans and, as such, we risk
defaults by borrowers. Any failure of a borrower to repay loans or interest on
loans will reduce our revenues and your distributions, the value of your units
and your interest in DM LLC as a whole.

We will invest in kinds of loans that have a greater risk of default than first
mortgage loans on commercial properties.

o We will likely invest a material amount of our assets in construction
mortgage loans. These are loans made to real estate developers for up to
two years to fund the construction or renovation of buildings on real
property. These loans are riskier than loans secured by income producing
properties because during construction the borrower does not receive
income from the property to make payments on the loan.

o We will likely invest about 10% of our assets in second mortgage loans
and, to a much lesser extent, wraparound, or all-inclusive, mortgage
loans. In a second mortgage loan, our rights as a lender,

<PAGE>
including our rights to receive payment on foreclosure, will be subject to
the rights of the first mortgage lender. In a wraparound mortgage loan,
our rights will be similarly subject to the rights of a first mortgage
lender, but the aggregate indebtedness evidenced by our loan documentation
will be the first mortgage loan plus the new funds we invest. We would
receive all payments from the borrower and forward to the senior lender
its portion of the payments we receive. Because both of these types of
loans are subject to the first mortgage lender's right to payment on
foreclosure, we incur a greater risk when we invest in each of these types
of loans.

o We expect to invest in commercial property loans that have "balloon
payments". A balloon payment is a large principal balance that is payable
after a period of time during which the borrower has repaid none or only a
small portion of the principal balance. Loans with balloon payments are
riskier than loans with even payments of principal over an extended time
period like 15 or 30 years because the borrower's repayment depends on its
ability to refinance the loan or sell the property profitably when the
loan comes due.

o Sometimes we may invest in loans that are significantly larger than
$1,500,000, which we expect to be the average size of our loans. These
larger loans are risky because they reduce our ability to diversify our
loan portfolio.

o We may invest in loans where the collateral is an interest in a lease.
These loans are riskier because the only rights we will have is to assume
the borrower's obligations under the lease and to use the property for the
length of time and in the limited manner permitted under the lease.

o We may invest in bridge loans. These are loans to enable commercial
borrowers to make improvements to their property so that they can qualify
for institutional refinancing. These loans are riskier because there is no
assurance that the developer will ever qualify for the refinancing or that
the improvements will yield the anticipated increase in value and income.

o We will also invest in loans to purchase or develop raw, unimproved land.
We determine whether to invest in these loans based upon the "90-day quick
sale value" of the property and the borrower's actual capital investment
in the property. The "90-day quick sale value" is the highest price for
which the land could actually be sold within the next 90 days, as
determined by local real estate brokers and others. We believe that this
90-day period approximates the time required for a foreclosure. These
loans are riskier because the property is not capable of generating any
income, as compared to a commercial property, and because there is no
assurance that we will be able to sell the property within the 90-day
period.

Our loans are not guaranteed by any government agency.

Our loans will not be insured or guaranteed by a federally owned or
guaranteed mortgage agency. As a result, our recourse if there is a default may
only be to foreclose upon the mortgaged real property.

Our mortgage loans will not be marketable and we expect no secondary market to
develop.

We do not expect our mortgage loans to be marketable and we do not expect a
secondary market to develop for them. Because of our limited ability to reduce
the risk of default by borrowers by selling or transferring our mortgage loans,
you and we will bear all of the risk of our investments in mortgage loans until
they mature.

Our loan portfolio is riskier because it will not be diversified
geographically.

Our results will primarily reflect the condition of the real estate markets
in the states of Nevada, California and Arizona, where we will likely invest in
or purchase about 70% of our loans. Consequently, if economic conditions in any
of these three states decline, or if the recent increase in building and
property values in these geographic areas ceases, there will be an increase in
the number of defaults on our loans or fewer loans in which to invest.

9
<PAGE>
We may have difficulty protecting our rights as a secured lender.

We believe that our loan documents will enable us to enforce our commercial
arrangements with borrowers. However, the rights of borrowers and other secured
lenders may limit our practical realization of those benefits. For example:

o Judicial foreclosure is subject to the delays of protracted litigation.
Although we expect non-judicial foreclosure to be quicker, our collateral
may deteriorate and decrease in value during any delay in foreclosing on
it.

o The borrower's right of redemption during foreclosure proceedings can
deter the sale of our collateral and can for practical purposes require us
to manage the property.

o Unforeseen environmental hazards may subject us to unexpected liability
and procedural delays in exercising our rights.

o The rights of junior or senior secured parties in the same property can
create procedural hurdles for us when we foreclose on collateral.

o We may not be able to pursue deficiency judgments after we foreclose on
collateral.

o State and federal bankruptcy laws can prevent us from pursuing any
actions, regardless of the progress in any of these suits or proceedings.

Our underwriting standards and procedure are more lenient than conventional
lenders, which may create additional risks to your return.

o We will invest in loans to borrowers who will not be required to meet the
credit standards of conventional mortgage lenders, which is riskier than
investing in loans made to borrowers who are required to meet those credit
standards.

o Because we approve a mortgage loan more quickly than other mortgage
lenders, there may be a risk that the inquiry we perform as part of our
credit procedures will not reveal the need for additional precautions. If
so, the interest rate we charge and the collateral we require may not
protect us adequately or generate adequate returns for the risk
undertaken.

By becoming the owner of property, we may become liable for unforeseen
environmental obligations.

We intend to only own real property if we foreclose on a defaulted loan and
purchase the property at the foreclosure sale. Under applicable environmental
laws, however, any owner of real property is fully liable for the costs involved
in cleaning up any contamination by materials hazardous to the environment. Even
though we might be entitled to indemnification from the person that caused the
contamination, there is no assurance that the person would be able to indemnify
us to the full extent of our liability. Furthermore, we would still have court
and administrative expenses for which we may not be entitled to indemnification.

Our results are subject to fluctuations in interest rates and other economic
conditions.

o Our results of operations will vary with changes in interest rates and
with the performance of the relevant real estate markets. If the economy
is healthy, we expect that more people will be borrowing money to acquire,
develop or renovate real property. However, if the economy grows too fast,
interest rates may increase too much and the cost of borrowing may become
too expensive. This will result in our investing in fewer loans and thus
reduce our revenues and the distributions you receive.

10
<PAGE>
o One of the results of interest rate fluctuations is that borrowers seek to
extend their low-interest-rate mortgage loans after market interest rates
have increased. All of our loan documents permit us to raise the interest
rate we charge on extended loans anywhere from between 3/4% to 3% from the
then-current rate on the loan. This creates two risks for us:

o There is no assurance that this permitted rate increase will be adequate
if interest rates have increased beyond the range contemplated by our loan
documents.

o If interest rates rise, borrowers under loans with monthly or quarterly
principal payments may be compelled to extend their loans to decrease the
principal paid with each payment because the interest component has
increased. If this happens, we are likely to be at a greater risk of the
borrower defaulting on the extended loan, and the increase in the interest
rate on our loan may not be adequate compensation for the increased risk.

Additionally, any fees paid to extend the loan are paid to Vestin Mortgage,
not to us. Our revenues and distributions will decline if we are unable to
reinvest at higher rates or if an increasing number of borrowers default in
their loans.

o Most of the loans we invest in do not have prepayment penalties. If, at a
time of relatively low interest rates, a borrower should prepay
obligations that have a higher interest rate from an earlier period, we
will likely not be able to reinvest the funds in mortgage loans earning
that higher rate of interest. In the absence of a prepayment fee, we will
receive neither the anticipated revenue stream at the higher rate nor any
compensation for its loss.

o Our results will also reflect other economic conditions, such as a
particular industry migrating to or from one of the states into which we
make loans. Although in recent years more businesses have migrated into
and expanded within Nevada, California and Arizona, there is no assurance
that this trend will continue. If this trend reverses, our ability to
invest in loans in these states will be adversely affected.

We face competition for mortgage loans that may reduce available yields and
fees available.

Our competitors consist primarily of conventional mortgage lenders and
mortgage loan investors that operate in Nevada, California and Arizona,
including Bank of America, Bank One, Wells Fargo, Residential Funding, First
Security Bank, and United Bank of Texas. Our ability to invest in loans also
depends on Vestin Mortgage's ability to compete as a non-conventional mortgage
lender in the Nevada area against companies such as Consolidated Mortgage Corp.
and Global Express Mortgage, which originate the same types of loans as does
Vestin Mortgage. Many of the companies against which we and Vestin Mortgage
compete have substantially greater financial, technical and other resources than
either DM LLC or Vestin Mortgage. Additionally, if our competition decreases
interest rates on their loans or makes funds more easily accessible, yields on
our loans could decrease and the costs associated with making loans could
increase, both of which would reduce our revenues and the distributions you
receive.

Conflicts of Interest Risks

The risk factors below describe material conflicts of interest that may arise
in the course of Vestin Mortgage's management and operation of our business. The
list of potential conflicts of interest reflects our knowledge of the existing
or potential conflicts of interest as of the date of this prospectus. We cannot
assure you that no other conflicts of interest will arise in the future.

Vestin Mortgage will face conflicts of interest concerning the allocation of
its personnel's time.

Vestin Mortgage and Mr. Shustek, who indirectly owns a controlling interest
in Vestin Mortgage, anticipate that they will also sponsor other real estate
programs having investment objectives and legal and financial obligations
similar to ours and engage in the business activities described in the
"Conflicts of Interest" section in this prospectus. As a result, Vestin Mortgage
and Mr. Shustek may have conflicts of interest in allocating their time and
resources between our business and those other activities. During times of
intense activity in other programs and ventures, Vestin Mortgage and Mr. Shustek
will likely devote less time and resources to our business than they ordinarily
would.

<PAGE>
Vestin Mortgage will face conflicts of interest arising due to our fee
structure.

Vestin Mortgage will receive substantial fees from borrowers for transactions
involving loan mortgages. These fees are quantified and described in greater
detail under "Compensation to Vestin Mortgage and Affiliates" in the summary and
in the compensation table contained elsewhere in this prospectus. Vestin
Mortgage's compensation is based on the volume and size of the mortgages
selected for us. Our interests will diverge from those of Vestin Mortgage and
Mr. Shustek when Vestin Mortgage decides whether we should invest in a loan that
is not squarely within our investment guidelines.

Vestin Mortgage will be receiving fees from borrowers that would otherwise
increase our returns. Because Vestin Mortgage receives all of these fees, our
interests will diverge from those of Vestin Mortgage and Mr. Shustek when Vestin
Mortgage decides whether to charge higher interest rates or to receive higher
fees from the borrower.

Vestin Mortgage will face conflicts of interest relating to other investments
in mortgage loans.

We expect to invest in mortgage loans when one or more other companies
managed by Vestin Mortgage are also investing in mortgage loans. There is a risk
that Vestin Mortgage may select for us a mortgage loan investment that provides
lower returns than a mortgage loan investment purchased by another Vestin
Mortgage program or entity.

We may not have control over joint ventures with affiliates.

We will consider investing in or purchasing loans jointly with other lenders.
Although we intend to only participate in loans with publicly registered
entities, we may invest with other entities in the future. In joint ventures
with related parties, there is a risk that neither co-venturer may control the
venture, which could result in an impasse on joint venture decisions.

Lack of Control by Members

Your right to vote is limited and you are bound by majority vote.

You cannot exercise control over our affairs. That is entirely in the hands
of Vestin Mortgage. Additionally, because Vestin Mortgage is wholly owned by
Vestin, a company which Michael Shustek has a controlling interest, Mr. Shustek
may be deemed to indirectly control Vestin Mortgage's and our activities. You
may vote only in a limited number of specific instances, in which case a
majority, being the owners of our capital accounts aggregating over 50% of all
of the members' capital accounts, can take action and bind all of the members.
These situations in which all members are bound include votes to:

o dissolve DM LLC;

o change the nature of our business;

o amend the operating agreement;

o remove and replace Vestin Mortgage;

o approve a merger with or into another company; or

o approve a sale of all or a majority of our assets.

Although Vestin Mortgage may not change the nature of our business without
majority approval, Vestin Mortgage may change our investment policies consistent
with the fiduciary duties it owes to all of the members. While you will not have
any vote on these investment policies, you retain your vote to remove and
replace Vestin Mortgage.

Your interest in DM LLC may be diluted as we sell additional units.

When we receive your initial investment, Vestin Mortgage will establish for
you an individual capital account on our books. Your capital account will begin
with the amount of your first capital contribution for units. We do not adjust
your capital account for unrealized appreciation or depreciation of our
underlying assets, except for write-downs of assets. Consequently, your capital
account may not reflect your portion of

<PAGE>
the fair market value of our underlying assets, particularly immediately after
another member makes a capital contribution or distribution reinvestment.

For example, you bought one unit for ten dollars and now have ten dollars in
your capital account. The assets we bought for ten dollars become worth twenty
dollars, but the gain is unrealized, which means that we have not yet sold the
relevant assets and "locked in" our profit. A new member contributes ten
dollars, which is credited to his capital account. You and the new member will
each have a ten dollar capital account. However, as a result of the new
contribution, the value of your units would decrease from twenty dollars to
fifteen dollars. In this way, your portion of the underlying value of the fair
market value of our assets would be diluted by a later sale of units.

The value of your units may decrease below ten dollars.

The value of your share of our underlying assets at any time may be less or
more than $10.00 per unit, depending on when the unit was purchased. For
example, if the fair market value of our assets at the time of a capital
contribution or distribution reinvestment is less than the cost of these assets
on our books, then the value of your units immediately after a capital
contribution or distribution reinvestment may be less than ten dollars.

Risks Related to Vestin Capital

Vestin Capital is newly formed and has no operating history or track record in
public offerings.

Vestin Capital (formerly DM Financial Services), the lead dealer in this
offering, is a newly formed securities brokerage firm that has not previously
participated in a public offering of securities. As a result, Vestin Capital has
no history of selling publicly offered securities itself or in recruiting
dealers to assist in the sale of publicly offered securities. The absence of
this track record may make it more difficult for it to sell our units. If Vestin
Capital does not sell a sufficient number of our units, we may not be able to
diversify our portfolio to the extent necessary to achieve our objectives.

Vestin Capital is an Affiliate of Vestin Mortgage.

Vestin Capital is wholly owned by Vestin Group Inc., which also owns Vestin
Mortgage. Consequently, Vestin Capital may have a conflict of interest in
performing its obligations to conduct a "due diligence" investigation of the
statements made in this prospectus and may not conduct the investigation with
the same degree of care as a non-affiliated dealer.

Federal Income Tax Risks

Your cash flow and distributions will be reduced if we are taxed as a
corporation.

If we fail to qualify as a partnership for any taxable year, we would then be
subject to federal income tax on any taxable income in that taxable year at
regular corporate rates. You could not then take tax deductions for your share
of our deductions or credits. You would be subject to tax on your share of our
income to the extent we distribute it to you out of current or accumulated
earnings and profits, or as taxable gain in excess of the cost of your units. If
we were taxed as a corporation, your cash flow, the distributions you receive
and the value of your units will be significantly reduced. See "Federal Income
Tax Consequences --- General Principles of Partnership Taxation," at 52 and
"---Tax Rates on a Partner's Share of Ordinary Income from the Partnership," at
page 54.

If we are deemed to not be engaged in a trade or business, the tax benefits of
partnership status will be adversely affected.

If the Internal Revenue Service does not consider us to be engaged in a trade
or business, the result would be that your share of our expenses would be
deductible only to the extent that all of your miscellaneous itemized deductions
exceed two percent of your adjusted gross income.

An IRS audit of our books and records could result in an audit of your tax
returns.

If we are audited by the IRS and it makes determinations adverse to us,
including the disallowance of deductions we have taken, the IRS may decide to
audit your income tax returns. Any such audit could result

<PAGE>
in adjustments to your tax return for items of income, deductions or credits,
and the imposition of penalties and interest for the adjustments and additional
expenses for filing amended income tax returns.

Inconsistencies between federal, state and local tax rules may adversely affect
your return.

If we are treated as a partnership for federal income tax purposes but as a
corporation for state or local income tax purposes, or if deductions that are
allowed by the IRS are not allowed by state or local regulators, your cash flow
and distributions would be adversely affected.

Retirement Plan Risks

An investment in DM LLC may not qualify as an appropriate investment under all
retirement plans.

There are special considerations that apply to pension or profit sharing
trusts or IRAs investing in units. If you are investing the assets of a pension,
profit sharing, 401(k), Keogh or other qualified retirement plan or the assets
of an IRA in DM LLC, you could incur liability or subject the plan to taxation
if:

o your investment is not consistent with your fiduciary obligations under
ERISA and the Internal Revenue Code;

o your investment is not made in accordance with the documents and
instruments governing your plan or IRA, including your plan's investment
policy;

o your investment does not satisfy the prudence and diversification
requirements of Sections 40(a)(1)(B) and 404(A)(1)(C) of ERISA;

o your investment impairs the liquidity of the plan;

o your investment produces "unrelated business taxable income" for the plan
or IRA;

o you will not be able to value the assets of the plan annually in
accordance with ERISA requirements; and

o your investment constitutes a prohibited transaction under Section 406 of
ERISA or Section 4975 of the Internal Revenue Code.

<PAGE>

USE OF PROCEEDS

We will invest 97% of the Offering proceeds in mortgage loans. We will
require about 15 loans to adequately diversify our portfolio to the extent
desired by Vestin Mortgage. If we fail to adequately diversify our loan
portfolio, our revenues will be too closely tied to the performance of the
borrower under each loan we invest in. As of September 30, 2000, we have
invested $13,265,450 in 5 loans. Through October 25, 2000, we have sold
2,426,072 units for an aggregate amount of $24,260,720. If we do not raise
significant additional proceeds, we may not be able to pursue the investment
opportunities that we anticipate will develop.

We will maintain working capital reserves of at least 3%. This reserve is
available to pay any future expenses in excess of revenues, satisfy obligations
of underlying security properties, expend money to satisfy our unforeseen
obligations and for other permitted uses of our working capital. Working capital
reserves of up to 3% in cash or cash equivalents are excluded from the funds
committed to mortgage investments in determining what proportion of the offering
proceeds and reinvested distributions have been invested in mortgage loans.

The following table contains information about the estimated use of the gross
proceeds of this offering. Many of the figures represent our best estimate since
we cannot now precisely calculate the figures.

<TABLE>
<CAPTION>
Maximum Offering
(10,000,000 units) Pct of Offering
<S> <C> <C>
Gross Offering Proceeds ..................................... $100,000,000 100.0%
Less:
Public Offering Expenses(1) ............................... --- ---
------------ -----
Net Amount received in this Offering(2) ................... 100,000,000 100.0%
Less:
Working Capital Reserves: ................................... 3,000,000 3.0%
------------ -----
Cash Available for Investment in Mortgage Loans: ............. $97,000,000 97.0%
============ =====
</TABLE>
---------------
(1) Vestin Mortgage will pay all selling commissions and expenses related to
this offering. To the extent that such expenses consist of filing and review
fees, legal, accounting, printing and other expenses of this offering paid
to non-affiliates of Vestin Mortgage, payment of such expenses will be
deemed a capital contribution by Vestin Mortgage up to a maximum of
$1,000,000. Such expenses are described further in the registration
statement of which this prospectus forms a part. Such expenses through
September 30, 2000 were approximately $688,000, which amount was deemed a
capital contribution by Vestin Mortgage effective as of such date.
(2) Borrowers will pay to Vestin Mortgage all acquisition, selection, processing
and brokerage and selling expenses for loans made by Vestin Mortgage.
Consequently, these expenses do not appear in the table.

Vestin Mortgage has not set the amount of sales proceeds to be allocated to
the various types of mortgage loans in which we invest, except to the extent
described in "Investment Objectives and Policies." Vestin Mortgage reviews each
loan to determine if it meets our investment criteria. We plan to invest the
entirety of our cash available for investments in mortgage loans. We do not
expect to use any of the proceeds of this offering to acquire assets other than
in the ordinary course of our business.

Pending investment in the mortgage loans, we may invest the proceeds of this
offering in relatively safe, short-term liquid investments such as U.S. Treasury
bills, notes or bonds, certificates of deposit or commercial paper. We
anticipate that these proceeds, once received, will be held at BankWest of
Nevada or in an account at a financial institution or securities firm that has
assets in excess of $50,000,000.

15
<PAGE>
INVESTOR SUITABILITY STANDARDS

As a result of the risks inherent in an investment in units, the units are
suitable only for persons who meet the financial suitability standards adopted
by the states in which they live, as set forth below. Our units are only
suitable for those who desire a relatively long term investment for which they
do not need liquidity for at least one year, in light of the other limitations
on redemption and transfer described in this prospectus.

You must meet one of the investor suitability standards contained in the
second and third columns in the table below and the suitability standard
contained in the fourth column, if applicable, to purchase units and to
participate in our reinvestment plan. Fiduciaries must also meet one of these
conditions. If the investment is a gift to a minor, the custodian or the donor
must meet these conditions. For purposes of the net worth calculations below,
net worth is the amount by which your assets exceed your liabilities, but
excluding your house, home furnishings or automobile(s) among your assets. In
the subscription agreement, you will have to confirm that you meet these minimum
standards. Our including a state in the chart below is for informational
purposes only and is not intended to imply that the offering of units has been
qualified in the particular state at this time. We will not sell in a
state in which we have not qualified the offering.
<TABLE>
<CAPTION>
1. Minimum Net
Worth AND Minimum 2. Additional
State(s) Gross Income Minimum Net Worth Standards
----------------------------------------- -------------------- --------------------
<S> <C> <C> <C>
Alabama, $45,000/$45,000 $150,000 N/A
Arkansas,
Colorado,
Connecticut,
Delaware,
Florida,
Georgia, Hawaii,
Idaho, Illinois,
Indiana, Kansas,
Kentucky,
Michigan,
Minnesota,
Montana, New
Mexico, New
York, Oklahoma,
Oregon, Texas,
Utah, Vermont,
Virginia,
Washington, West
Virginia, OR AND
Wisconsin
----------------------------------------- -------------------- --------------------
Arizona, Alaska, $60,000/$60,000 $225,000 N/A
California,
Iowa,
Massachusetts,
Mississippi,
Missouri, New
Jersey,7
Tennessee
----------------------------------------- -------------------- --------------------
Maine $50,000/$50,000 $200,000 N/A
----------------------------------------- -------------------- --------------------
New Hampshire $125,000/$50,000 $250,000 N/A
----------------------------------------- -------------------- --------------------
South Carolina $65,000/$65,000 $150,000 N/A
----------------------------------------- -------------------- --------------------
Minimum investment is
Nevada $45,000/$45,000 $150,000 $5,000
----------------------------------------- -------------------- --------------------
Investment is less
than 10% of Net Worth.
We will make no
sales in these
states until we
receive proceeds of
Ohio, at least
Pennsylvania $ 45,000/$45,000 $ 150,000 $5,000,000.
--------------------------------------------------------------------------------------------------------
District of
Columbia,
Louisiana, These jurisdictions do not have quantified suitability requirements. We believe
Nebraska, North that it is reasonable for us to rely upon the suitability standards set forth
Dakota, Rhode above when selling units to residents of these jurisdictions.
Island
--------------------------------------------------------------------------------------------------------
Maryland, South No minimum requirements. Disclosure state only. We will follow the guidelines
Dakota, for the preponderance of the states above in selling units in these states.
Wyoming
</TABLE>

16
<PAGE>

In addition to the foregoing suitability standards, we cannot accept
subscriptions from anyone if the representations required are either not
provided or are provided but are inconsistent with our determination that the
investment is suitable for the subscriber. In addition to the financial
information we require, the representations we require of you state that you:

o have received this prospectus;

o understand that no federal or state agency has made any finding or
determination as to the fairness of public investment in, nor made any
recommendation or endorsement of, the units; and

o understand that an investment in DM LLC will not, in itself, create a
retirement plan as described in the Internal Revenue Code and that, to
create a retirement plan, you must comply with all applicable provisions
of the Internal Revenue Code.

Each of these representations reflects that we are not indicating any
approval by anyone other than Vestin Mortgage or that an investment will have an
effect other than to make you a member of DM LLC.

You will also represent that you are familiar with some of the risk factors
we describe and that this investment matches your investment objectives.
Specifically, you represent to us that you:

o understand that we intend to be taxed as a partnership and not as a
corporation, and that, among other things, this may result in your being
required to pay taxes even though we may not have distributed cash to you;

o understand that there will be no public market for the units, that there
are substantial restrictions on repurchase, sale, assignment or transfer
of the units, and that it may not be possible readily to liquidate an
investment in the units; and

o have investment objectives that correspond to those described elsewhere in
this prospectus, i.e., to preserve the capital invested and to receive
monthly distributions of cash.

You will also represent to us that you have the capacity to invest in DM LLC
by confirming that:

o you are legally able to enter into a contractual relationship with us,
and, if you are an individual, have attained the age of majority in the
state in which you live; and

o if you are a trustee, are the trustee for the trust on behalf of which you
are purchasing the units, and have due authority to purchase units on
behalf of the trust.

If you are purchasing as a fiduciary, you will also represent that the above
representations and warranties are accurate for the person(s) for whom you are
purchasing units.

By executing the subscription agreement, you will not be waiving any rights
under the Securities Act or the Securities and Exchange Act of 1934.

The subscription agreement also contains a series of short questions so that
we or our dealers may also assess for ourselves the accuracy of these
representations. For employee benefit plans, the questions are more expansive
because of the application of additional provisions of the Internal Revenue Code
relating to retirement plans.

Due to the nature of our investments, it is likely that all or substantially
all of our income will be taxable to you as ordinary income. See "Federal Income
Tax Consequences" at page 49. The units may, therefore, be suitable for:

o persons seeking current taxable income;

o Keogh Plan accounts or corporation, pension or profit sharing plans, which
we refer to collectively as qualified plans;

o IRAS or Roth IRAS;

o Simplified Employee Pensions, or SEP's; and

<PAGE>
o other entities exempt from federal income taxation such as endowment
partnerships and foundations, and charitable, religious, scientific or
educational organizations (assuming the provisions of their governing
instruments and the nature of their tax exemptions permit such
investment).

Our investment objectives and policies are intended to make the units
suitable investments for employee benefit plans under current law. In this
regard, ERISA provides a comprehensive regulatory scheme for plan assets.
Further, Vestin Mortgage intends to manage DM LLC so that an investment by a
qualified plan will not make our assets plan assets under ERISA. The ERISA
regulations are also applicable to an IRA. "Federal Income Tax Consequences ---
ERISA Considerations" at page 59.

Vestin Mortgage is not permitted to allow any qualified plan to purchase
units if Vestin Mortgage has investment discretion over the assets of the
qualified plan, or if Vestin Mortgage regularly gives individualized investment
advice that serves as the primary basis for the investment decisions made for
these assets. This prohibition is designed to prevent a violation of ERISA. You
should obtain the advice of your attorney, tax advisor, or business consultant
for the legal, tax and business aspects of this investment before subscribing
for units.

To assure that this offering complies with applicable state law, each dealer
selling our units is required to:

o inquire diligently of all prospective investors to assure that our units
are a suitable investment in light of the investor's age, educational
level, knowledge of investments, financial means and other pertinent
factors;

o for at least six years, maintain records of the information used to
determine that an investment in units is suitable and appropriate for each
investor; and

o transmit promptly to us all properly completed and executed subscription
agreements.

<PAGE>
INVESTMENT OBJECTIVES AND POLICIES

We intend to invest in mortgage loans where our collateral is real property
located primarily in Nevada, Arizona and California. The loans we invest in will
be selected for us by Vestin Mortgage (formerly Capsource) from among loans
originated by Vestin Mortgage or non-affiliated mortgage brokers. When Vestin
Mortgage or someone else originates a loan for us, that person obtains the
borrower, processes the loan application, makes or invests in the loan, and
brokers or sells the loan to us. We believe our loans will be attractive to
borrowers because of the expediency of Vestin Mortgage's loan approval process,
which takes about 10 to 20 days. Vestin Mortgage will obtain, negotiate and make
each loan, after which we will acquire the loan.

As a non-conventional mortgage lender, we are more willing to invest in loans
that are riskier than first mortgage loans on commercial properties. For
example, we invest a significant amount in construction loans, in which the real
property being developed is not generating any income to the borrower. Our
second mortgage investments are riskier because our rights will be subject to
the rights of the first mortgage lender. The "balloon payment" loans and bridge
loans in which we invest are riskier because the borrower's repayment depends on
its ability to refinance the loan or develop the property so it can refinance
the loan. All of these loans are described in greater detail in the pages that
follow under "Types of Loans We Intend to Invest In." Additionally, as a
non-conventional lender, we are more willing to invest in mortgage loans to
borrowers that conventional lenders would not deem to be creditworthy. See "Risk
Factors -- Risks of the Mortgage Lending Business." Because of our increased
willingness to fund riskier loan types and borrowers, borrowers are willing to
pay us an interest rate that is 2-3 points above the rates charged by
conventional lenders.

In addition to those policies contained in this prospectus and the operating
agreement, Vestin Mortgage may establish written policies on loans and
borrowings. Vestin Mortgage will also administer our operations and performance
to assure that the policies are implemented and remain in your best interest.

Our principal investment objectives are to:

o Produce revenues from the interest income on our mortgage loans;

o Provide monthly cash distributions to you from the net income earned on
our mortgage loans;

o Preserve and return your capital contributions; and

o Reinvest payments of principal and proceeds of prepayments, sales and
insurance proceeds, net of expenses.

We cannot assure you that we will achieve these objectives or that your
capital will not decrease. Vestin Mortgage may change the overall investment
strategy, subject to the fiduciary obligations that it owes to all members.
However, Vestin Mortgage may not change the investment objectives above, except
upon majority approval. Vestin Mortgage has no authority to do anything that
would impair our ability to carry on our ordinary business as a mortgage
investor.

Acquisition and Investment Policies

We will seek to invest substantially all of the offering proceeds and
distribution reinvestments in mortgage loans, after paying applicable fees and
expenses. We anticipate that we will invest about 97% of the offering proceeds
and distribution reinvestments in mortgage loans. Approximately 3% will be held
as a working capital cash reserve. Vestin Mortgage will receive a credit to its
capital account up to a maximum of $1,000,000 to the extent that it pays the
expenses of this offering to non-affiliated third parties.

We anticipate that the majority of our collateral on our mortgage loans will
be the real property that the borrower is purchasing or developing with the
funds that we make available. We sometimes refer to these real properties as the
security properties. While we may invest in other types of loans, we believe
that most of the loans in which we invest will have been made to real estate
developers with a lesser proportion of loans involving land loans and bridge
financing. We anticipate that about 20-65% of the loans invested in with the
offering proceeds will be secured by commercial properties, 15-25% by unimproved
land, 10-20%

<PAGE>
by apartments and income-producing properties and 5% by single family
residences. We do not anticipate that our mortgage investments will be insured
or guaranteed by any government agency.

Vestin Mortgage will continuously evaluate prospective investments, select
the mortgages in which we invest and make all investment decisions on our behalf
in its sole discretion, unless the operating agreement provides otherwise. You
are not entitled to act on any proposed investment. In evaluating prospective
mortgage loan investments, Vestin Mortgage considers such factors as the
following:

o the ratio of the amount of the investment to the value of the property by
which it is secured;

o the potential for capital appreciation of the property securing the
investment;

o expected levels of rental and occupancy rates;

o current and projected revenues from the property;

o potential for rental increases;

o the status and condition of the record title of the property securing the
investment;

o geographic location of the property securing the investment; and

o the financial condition of the borrowers and their principals, if any, who
guarantee the loan.

Vestin Mortgage can obtain our loans from non-affiliated mortgage brokers and
previous borrowers, and by solicitations of new borrowers in those states where
permissible. We may purchase existing loans that were originated by third party
lenders and acquired by Vestin Mortgage for us. Vestin Mortgage is required to
sell the loans to us for the lower of Vestin Mortgage's cost or the then-
current market value.

When selecting mortgage loans for us, Vestin Mortgage will adhere to the
following guidelines, which are intended to control the quality of the
collateral given for our loans:

1. Priority of Mortgages. Our mortgage on the security property will not
be junior to more than one other mortgage. The only subordinated mortgages we
currently intend to invest in at this time are second mortgages, although in
the future we may invest in wraparound, or all-inclusive, mortgages. We
anticipate that our mortgage loans will be diversified as to priority
approximately as follows: first mortgages --- 90%; second mortgages --- 10%.

2. Loan-to-Value Ratio. We do not anticipate that the amount of our loan
combined with the outstanding debt secured by a senior mortgage on a security
property will exceed the following percentage of the appraised value of the
security property:
<TABLE>
<CAPTION>
Type of Secured Property Loan-to-Value Ratio
<S> <C>
Residential 75%
Unimproved Land 60%
Commercial 75%
Property under Development/Construction 75% (of anticipated post-development
Loan value)
Leasehold Interest 75% (of value of leasehold interest)
</TABLE>

3. Construction Mortgage Loans. We anticipate that we will invest 20-65%
of the offering proceeds in construction loans other than home improvement
loans on residential property, subject to the following guidelines:

o The loan-to-value ratio on construction loans in which we invest will not
exceed 80% of the independently appraised, completed value of the security
property.

o We currently do not intend to invest in or purchase construction loans
secured by properties Vestin Mortgage considers to be special-use
properties, other than loans to casinos.

Vestin Mortgage, in its discretion, may increase any of the above loan-to-
value ratios if a given loan is supported by credit adequate to justify a
higher loan-to-value ratio, including personal guarantees. These loan-to-
value ratios will not apply to financing offered by us to the purchaser of
any real estate

<PAGE>
acquired through foreclosure, or to refinance an existing loan that is in
default when it matures. In those cases, Vestin Mortgage, in its sole
discretion, shall be free to accept any reasonable financing terms it deems
to be in our best interests. Nevertheless, in no event will the loan-to-value
ratio on any loan exceed 80% of the independently appraised completed value
of the property. The target loan-to-value ratio for our loan portfolio as a
whole is approximately 70%.

We will receive an independent appraisal for each security property. You
may review copies of these appraisals upon reasonable notice to us. We will
retain appraisers who will be licensed or qualified as independent appraisers
and be certified by or hold designations from one or more of the following
organizations: The Federal National Mortgage Association, the Federal Home
Loan Mortgage Corporation, the National Association of Review Appraisers, the
Appraisal Institute, the Society of Real Estate Appraisers, M.A.I., Class IV
Savings and Loan appraisers or from among appraisers with other
qualifications acceptable to Vestin Mortgage. However, appraisals are only
estimates of value and cannot be relied on as measures of realizable value.
An employee or agent of Vestin Mortgage will review each appraisal report and
will conduct a "drive-by" for each property on which an appraisal is made. A
"drive-by" means that the person drives to the property and assesses the
front exterior of the subject property, the adjacent properties and the
neighborhood. A drive-by does not include entering any structures on the
property, although in most cases our employee or agent will attempt to do so.

4. Terms of Mortgage Loans. Most of our loans will be for one to seven
years. We anticipate that most of our loans will provide for payments of
interest only with a "balloon" payment of principal payable in full at the
end of the term. Some loans will provide for the deferral and compounding of
all or a part of accrued interest for various periods of time.

5. Escrow Conditions. Our loans will be funded by us through an escrow
account held by a title insurance company, subject to the following
conditions:

o Borrowers will obtain satisfactory title insurance coverage for all loans,
with the title insurance policy naming us as the insured and providing
title insurance in an amount at least equal to the principal amount of the
loan. Title insurance insures only the validity and priority of our deed
of trust, and does not insure us against loss by other causes, such as
diminution in the value of the security property.

o Borrowers will obtain satisfactory fire and casualty insurance for all
loans secured by improved real property, naming us as loss payee in an
amount sufficient to cover the replacement cost of improvements.

o All insurance policies, notes, deeds of trust or mortgages, escrow
agreements, and any other loan document for a particular transaction will
name us as payee and beneficiary. Mortgage loans will not be written in
the name of Vestin Mortgage or any other nominee.

6. Purchase of Mortgage Investments from Affiliates. We may acquire
mortgage loans from our affiliates, including Vestin Mortgage, for a price
not in excess of the par value of the note or its fair market value,
whichever is lower, plus allowable fees and expenses, but without the
allowance of any other compensation for the loans. Except for the
compensation paid to Vestin Mortgage described elsewhere in this prospectus,
any affiliate from which we purchase mortgage loans will remit to us all
income it earns from the mortgage loan while the loan is in its portfolio.

7. Note Hypothecation. We may also acquire mortgage loans secured by
assignments of secured promissory notes. These mortgage loans must satisfy
our stated investment standards, including our loan-to-value ratios, and also
may not exceed 80% of the principal amount of the assigned note. For example,
if the property securing a note we acquire is commercial property, the total
amount of outstanding debts secured by the property must not exceed 75% of
the appraised value of the property, and the mortgage loan will not exceed
80% of the principal amount of the assigned note. For mortgage loans secured
by promissory notes, we will rely on the appraised value of the underlying
property, as determined by an independent written appraisal which was
conducted within the then-preceding twelve months. If an appraisal was not
conducted within that period, then we will arrange for a new appraisal to be
prepared for the property. All these appraisals will satisfy the standards
described above.

<PAGE>
8. Joint Ventures. We may also participate in loans with other lenders,
including affiliates, by providing funds for or purchasing an undivided
interest in a loan meeting our investment guidelines described above. We
would be more likely to participate in loans if, for example:

o we did not have sufficient funds to invest in an entire loan,

o we received offering proceeds that were insufficient to purchase more than
15 loans, or

o Vestin Mortgage originated a loan that fit within our investment
guidelines but would be over 20% of our portfolio or otherwise
disproportionately large given our then existing portfolio.

Because we will not participate in a loan that would not otherwise meet
our requirements, and will only participate in a joint venture with third
parties where we hold a controlling interest in the venture, we believe that
the risk of our participation is minimized. We will not give Vestin Mortgage,
Vestin or any of our affiliates any consideration similar to rebates or give-
backs or enter into reciprocal arrangements with Vestin Mortgage or its
affiliates that might be entered into in lieu of joint ventures.

9. Diversification. No single mortgage loan will exceed 20% of our assets
when the loan is made. Additionally, no more than 20% of our loan portfolio
will be represented by mortgage loans in favor of any one borrower.

10. Reserve Fund. We will establish contingency working capital reserves
of at least three percent of the gross proceeds of this offering to cover our
unexpected cash needs.

11. Credit Evaluations. Before making a loan, Vestin Mortgage must first
determine that a borrower has sufficient equity in the security property to
meet the loan-to-value ratios described above. Vestin Mortgage may also
consider the income level and creditworthiness of a borrower to determine its
ability to repay the mortgage loan.

12. Sale of Mortgage Investments. Although Vestin Mortgage has no plan to
do so, Vestin Mortgage may sell our mortgage loans or interests in our loans
to either affiliates or non-affiliated parties when Vestin Mortgage believes
that it is advantageous to us to do so. However, as noted elsewhere in this
prospectus, we do not expect that the loans will be marketable or that a
secondary market will ever develop for them.

13. Other Fees Payable to us by Borrowers. We will also receive all fees
paid by borrowers when Vestin Mortgage permits the assumption of loans,
provides escrow services to borrowers, permits the reconveyance of a property
subject to a lien, and collects late fees or prepayment fees. All of these
fees are determined by price competition within a given market, as described
under "Operational Stage" in the compensation table on page 4 of this
prospectus.

Mortgage Loans to Affiliates

We will not invest in mortgage loans made to Vestin Mortgage, Vestin or any
of our affiliates. However, we may acquire an investment in a mortgage loan
payable by Vestin Mortgage when Vestin Mortgage has assumed by foreclosure the
obligations of the borrower under that loan.

Purchase of Loans from Vestin Mortgage and its Affiliates

In addition to those loans Vestin Mortgage selects for us, we may purchase
loans that were originated by Vestin Mortgage or other parties and first held
for Vestin Mortgage's own portfolio, as long as the loan is not in default and
otherwise satisfies all of our lending criteria. Additionally, if the loan did
not originate within the 90 days before its purchase by us, Vestin Mortgage must
retain a minimum of a 10% interest in the loan. This requirement also applies to
any loan originated by an affiliate of Vestin Mortgage, such as Vestin, Mr.
Shustek or another principal of Vestin Mortgage.

Commitment of Offering Proceeds

Vestin Mortgage anticipates that we will commit 100% of the offering proceeds
received by us and of our investment distributions to invest in or purchase
mortgage loans, including three percent of the proceeds that we will hold as
working capital reserves.

<PAGE>
Types of Loans We Intend to Invest In

We primarily invest in first and second mortgage loans and construction
mortgage loans on real property, although we will also invest in the types of
loans described below. Ordinarily, we will invest in loans having terms of one
to seven years and we will not invest in mortgage loans with a maturity of more
than 15 years. All loans provide for monthly payments of interest and some also
provide for principal amortization although our loans may provide for payments
of interest only and a payment of principal in full at the end of the loan term.
Vestin Mortgage does not intend to originate loans for us that permit the
principal to grow, or be capitalized, when accrued interest on the loan is not
paid.

First Mortgage Loans

First mortgage loans are secured by first mortgages on real property. We
expect that these loans will have terms of one to seven years.

Second Mortgage Loans

Our collateral for our second mortgage loans is real property that is already
subject to prior mortgage indebtedness. In the future we may also invest in
wraparound loans, which is similar to a second loan except that the loan balance
is the outstanding balance under the existing mortgage loans plus the amount
actually to be advanced by us under the new mortgage loan. Under a wraparound
loan, we would make principal and interest payments on behalf of the borrower to
the holders of the prior mortgage loans.

Construction Loans

Construction loans are loans originally made for both original development
and renovation of property. We expect our construction loans to be secured by
first mortgages on real property for terms of six months to two years.

We do not anticipate that we will disburse funds on a construction loan until
work in the previous phase of the project has been completed, and an independent
inspector has verified certain aspects of the construction and its costs.
Additionally, we require the submission of signed labor and material lien
releases by the borrower for each completed phase of the project before making
any periodic disbursements of loan proceeds.

Leasehold Interest Loans

Loans on leasehold interests are secured by an assignment of the borrower's
leasehold interest in the particular real property. We anticipate that the terms
of these loans will not exceed 15 years. The leasehold interest loans are either
amortized over a period that is shorter than the lease term or have a maturity
date prior to the date the lease terminates. These loans all permit Vestin
Mortgage to cure any default under the lease.

Variable Rate Loans

Variable rate loans originated by Vestin Mortgage may use as indices the one
and five year Treasury Constant Maturity Index, the Prime Rate Index and the
Monthly Weighted Average Cost of Funds Index for Eleventh District Savings
Institutions (Federal Home Loan Bank Board). Vestin Mortgage may negotiate
spreads over these indices of 2.5% to 5.5%, depending upon market conditions
when the loan is made.

It is possible that the interest rate index used in a variable rate loan will
rise (or fall) more slowly than the interest rate of other loan investments
available to us. Vestin Mortgage attempts to minimize this interest rate
differential by tying variable rate loans to indices that are sensitive to
fluctuations in market rates. Additionally, most variable rate loans originated
by Vestin Mortgage contain provisions under which the interest rate cannot fall
below the initial rate.

Bridge Loans

A bridge loan provides funds for commercial borrowers to make improvements to
the property to increase the net operating income of their property so that it
can qualify for institutional refinancing. Vestin Mortgage will value the
existing property and we will invest in loans for up to 75% of that value.

<PAGE>
Land Loans

We will also invest in loans to purchase or develop raw, unimproved land. We
determine whether to invest in these loans based upon the "90-day quick sale
value" of the property and the borrower's actual capital investment in the
property. The "90-day quick sale value" is the highest price for which the land
could actually be sold within the next 90 days, as determined by local real
estate brokers and others. We believe this 90-day period approximates the time
required for a foreclosure. The value of the land is generally the same as its
cost to the borrower. We do not expect to invest in loans for more than 60% of
the "90-day quick sale value," and we anticipate that the borrower will have
made actual capital expenditures of at least 25% of the property's value.

Interest Rate Caps

All our variable rate loans will have interest rate caps. We anticipate that
the interest rate cap will be a ceiling that is 2-4% above the starting rate
with a floor rate equal to the starting rate. For these loans there is the risk
that the market rate may exceed the interest cap rate.

Assumable Loans

Variable rate loans of five to ten year maturities are not assumable without
the prior consent of Vestin Mortgage. We do not expect to invest in or purchase
a significant amount of other assumable loans. To minimize our risk, any
borrower assuming an existing mortgage loan will be subject to the same
underwriting criteria as the original borrower.

Prepayment Penalties

We do not anticipate that many of the loans we invest in will contain
prepayment penalties. If our loans are at a high rate of interest in a market of
falling interest rates, the failure to have a prepayment penalty provision in
the loan allows the borrower to refinance the loan at a lower rate of interest,
thus providing a lower yield to us on the reinvestment of the prepayment
proceeds. However, these loans will usually be written with relatively high
minimum interest rates, which we would expect to minimize the risk of lower
yields.

Balloon Payment

Most of the loans we invest in or purchase will require the borrower to make
a "balloon payment" on the principal amount upon maturity of the loan. To the
extent that a borrower has an obligation to pay mortgage loan principal in a
large lump sum payment, its ability to repay the loan may be dependent upon its
ability to sell the property, obtain suitable refinancing or otherwise raise a
substantial amount of cash. As a result, these loans involve a higher risk of
default than loans where the principal is paid at the same time as the interest
payments.

Borrowing

We may incur indebtedness:

o to finance our investments in mortgage loans,

o to prevent a default under mortgage loans that are senior to our mortgage
loans,

o to discharge senior mortgage loans if this becomes necessary to protect
our investment in mortgage loans, or

o to operate or develop a property that we acquired under a defaulted loan.

We anticipate that we will obtain a line of credit for the above purposes and
also to acquire, operate and develop for resale the real properties on which we
have foreclosed. At no time will our indebtedness under our line of credit, once
obtained, exceed 70% of the fair market value of our mortgage loans. This
indebtedness may be with recourse to our assets.

<PAGE>
Repayment of Mortgages on Sales of Properties

We may require a borrower to repay a mortgage loan upon the sale of the
mortgaged property rather than allow the buyer to assume the existing loan. We
will require repayment if we determine that repayment appears to be advantageous
to us based upon then-current interest rates, the length of time that the loan
has been held by us, the creditworthiness of the buyer and our objectives. We
will either invest our net proceeds from any capital transaction in new mortgage
loans, hold the net proceeds as cash or distribute them to the members. These
net proceeds will also include the principal of a loan deemed to be repaid for
tax purposes as a result of the nature of a loan modification or loan extension.
Our operating agreement provides that whether we choose to distribute the
proceeds or reinvest them, you will be deemed to have received a distribution of
capital and recontributed the same amount to DM LLC. Capital transactions
include payments of principal, foreclosures and prepayments of mortgages, to the
extent classified as a return of capital under the Internal Revenue Code, and
any other disposition of a mortgage or property.

No Trust or Investment Company Activities

We have not qualified as a real estate investment trust under the Internal
Revenue Code, and therefore we are not subject to the restrictions on its
activities that are imposed on real estate investment trusts. We intend to
conduct our business so that we are not an "investment company" within the
meaning of the Investment Company Act of 1940. Last, we intend to conduct our
business so that we are not to be deemed a "dealer" in mortgage loans for
federal income tax purposes.

Various Other Policies and Procedures

Without majority approval, we will not:

o issue securities senior to the units or issue any units or other
securities for other than cash;

o invest in the securities of other issuers for the purpose of exercising
control, except when exercising our rights as a secured lender;

o underwrite securities of other issuers;

o discontinue providing our members with the reports described in this
prospectus; or

o offer securities in exchange for property.

Competition and General Economic Conditions

Banks, thrifts, conduit lenders and other entities both larger and smaller
than us may compete with Vestin Mortgage to make the type of loans in which we
invest. For the past few years, the major institutional lenders have not been as
active in the commercial mortgage market as in prior years. Recently, however,
many major institutional lenders have reentered the commercial mortgage market
due to a stronger economy, stabilized or increased property values and leasing
rates, and the decrease in demand for residential loans. As a result, we
anticipate competition for investments in mortgages secured by commercial
properties, which creates pressure on lenders to lower interest rates.
Consequently, we may not be able to obtain as high interest rates on mortgage
investments as we would otherwise obtain, which would affect our revenues and
the distributions you receive.

Regulation

Our operations are conducted by Vestin Mortgage. Vestin Mortgage's operations
as a mortgage company are subject to extensive regulation by federal, state and
local laws and governmental authorities. Vestin Mortgage conducts its real
estate mortgage business under a "privileged" license issued by the State of
Nevada Financial Institutions Division. Under applicable Nevada law, the
division has broad discretionary authority over Vestin Mortgage's activities,
including the authority to conduct periodic regulatory audits of all aspects of
Vestin Mortgage's operations.

<PAGE>
We and Vestin Mortgage are also subject to the Equal Credit Opportunity Act
of 1974, which prohibits creditors from discriminating against loan applicants
on the basis of race, color, sex, age or marital status, and the Fair Credit
Reporting Act of 1970, which requires lenders to supply applicants with the name
and address of the reporting agency if the applicant is denied credit. We are
also subject to various other federal and state securities laws regulating the
issuance and sale of securities, as well as the Employee Retirement Income
Security Act of 1974.

Should we or Vestin Mortgage fail to adhere to these regulations, we could
face potential disciplinary or other civil action that could have a material
adverse effect on our business.

<PAGE>
MANAGEMENT

Our Management

Our business is managed by Vestin Mortgage, Inc. (formerly Capsource, Inc.),
as the Manager of our limited liability company. The telephone number for Vestin
Mortgage's offices is (702) 227-0965. Vestin Mortgage is a mortgage broker
licensed in the State of Nevada and a wholly owned subsidiary of Vestin Group,
Inc. (formerly Sunderland Corporation). Vestin is a Delaware corporation with
publicly held common stock that trades on the Nasdaq Smallcap Market under the
symbol "VSTN". Until early July, 2000, Vestin traded under the symbol "DLMA."
Vestin had a net worth of approximately $4,700,000 as of December 31, 1999 and
is briefly described later in this section.

Vestin Mortgage

Vestin Mortgage manages and controls our affairs and has responsibility and
final authority in almost all matters affecting our business. These duties
include dealings with members, accounting, tax and legal matters, communications
and filings with regulatory agencies and all other needed management and
operational duties. Additionally, because Michael Shustek owns a controlling
interest in Vestin and Vestin wholly owns Vestin Mortgage, Mr. Shustek may be
deemed to control our activities through Vestin Mortgage. As our only Manager,
Vestin Mortgage has complete authority and responsibility for managing DM LLC
regarding the following:

o evaluating and choosing the mortgage loans in which we will invest;

o deciding what agreements we will enter into and whether we will enter into
joint ventures with other companies to invest in mortgage loans;

o originating, servicing and managing our mortgage loan investments; and

o managing all our other operations.

Notwithstanding that Vestin Mortgage has the broad authority described above,
neither Vestin Mortgage directly nor Mr. Shustek indirectly may do any of the
following:

o impair our ability to carry on or change the nature of our business;

o admit a Manager without prior majority approval;

o sell all or over 50% of our assets or dissolve DM LLC without the prior
majority approval; and

o anything else not permitted in the operating agreement.

You have no right to participate in the management or control of our business
or affairs other than to exercise the limited voting rights provided for members
in the operating agreement. Vestin Mortgage has primary responsibility for the
initial selection, evaluation and negotiation of our mortgage loans. Vestin
Mortgage will provide all executive, supervisory and administrative services for
our operations, including servicing the mortgage loans we hold. Our books and
records are maintained by Vestin Mortgage, subject to audit by independent
certified public accountants.

Removal of Vestin Mortgage as Manager

Vestin Mortgage will cease to be our Manager upon its removal, withdrawal or
dissolution, or if it is found to be bankrupt. A majority, excluding Vestin
Mortgage's interest, can remove Vestin Mortgage as our Manager upon the
following conditions:

o if the members have not previously elected an additional Manager, the
removal will not become effective for at least 120 days following the
consent or authorizing vote by the majority;

o during the 120 days set forth above, a majority can agree in writing to
continue our business and, within six months following the termination
date of the last remaining Manager, elect and admit a new Manager who
agrees to continue our existence; and

o the substitution of a new Manager shall be effective when the new Manager
accepts in writing the duties and responsibilities of a Manager.

If our business continues after Vestin Mortgage is no longer our Manager,
then we will pay Vestin Mortgage a sum equal to all amounts then owing to it. By
majority vote, we may terminate Vestin

<PAGE>
Mortgage's interest in DM LLC by paying an amount equal to the then-present fair
market value of Vestin Mortgage's interest in DM LLC, which would be Vestin
Mortgage's outstanding Capital Account at such time. All payments to a
terminated Manager must be fair and must protect our solvency and liquidity.

If a majority does not designate and admit a new Manager within the time
specified, DM LLC will dissolve. Vestin Mortgage may assign its interest in DM
LLC, but our Manager may not be changed except as set forth above.

Evaluation and Acquisition by Vestin Mortgage

Vestin Mortgage considers prospective loans for us. In that regard, Vestin
Mortgage evaluates the credit of prospective borrowers, analyzes the return to
us of potential mortgage loan transactions, reviews property appraisals, and
determines which types of transactions appear to be most favorable to us.

Management of Loan Portfolio

After we acquire mortgage loans, Vestin Mortgage also manages our mortgage
loan portfolio. Vestin Mortgage is responsible for:

o creating and implementing investment policies in furtherance of those
contained in the operating agreement;

o preparing and reviewing budgets, economic surveys, cash flow and taxable
income or loss projections and working capital requirements;

o preparing and reviewing of reports for securities filings, distribution to
our members or otherwise;

o communicating with members;

o supervising and reviewing our bookkeeping, accounting and audits;

o supervising and reviewing the preparation of our state and federal tax
returns; and

o supervising professionals employed by us, including attorneys, accountants
and appraisers.

Mortgage Loans

Vestin Mortgage obtains, processes, makes and invests in, brokers or sells,
and manages and services our mortgage loans. Its mortgage loan services also
include:

o reviewing of loans;

o recommending changes in loans;

o employing and supervising employees who handle the loans;

o preparing and reviewing projected performance;

o reviewing of reserves and working capital; and

o collecting and maintaining all loans.

Prior Experience

In April 1999, Vestin, then known as Sunderland, acquired the mortgage
brokerage business of Del Mar Mortgage, Inc. and Del Mar Holdings, Inc. from
Michael Shustek by purchasing their assets and assuming their liabilities in
exchange for shares of common stock. As part of a corporate reorganization,
Vestin transferred the mortgage brokerage business of Del Mar Mortgage and Del
Mar Holdings to Vestin Mortgage, then known as Capsource. At the time of these
transactions, Vestin conducted business as Sunderland Corporation.

Vestin Mortgage holds a privileged mortgage broker's license in Nevada. As a
licensed mortgage broker, Vestin Mortgage is subject to regular on site
examinations by the Financial Institutions Division of the State of Nevada,
which also reviews its advertising, mandates strict record maintenance, and
reviews its financial reporting, including its financial statements and monthly
activity reports.

Vestin Mortgage obtains borrowers through approved advertisements, referrals
and repeat business, and obtains investors interested in funding the loan in the
same manner. It then matches the two together in compliance with Nevada law.

<PAGE>
Vestin Mortgage obtains a loan and then processes the application. When
processing a loan, Vestin Mortgage will

o order and review a property title search,

o perform a property inspection,

o obtain an appraisal which is reviewed for reasonableness, and

o perform credit underwriting through borrower interviews, credit reports
and review of borrower and principals' financials.

After processing the loan, Vestin Mortgage reviews the loan through its loan
committee, and then presents the loan to investors. Investors select the loan(s)
they wish to invest in and receive an assignment from Vestin Mortgage in the
form of an individual promissory note and trust deed issued by the borrower. The
investors receive a lender's policy of title insurance reflecting their
beneficial interest in the real property. Nevada law requires mortgage companies
to provide copies of loan documentation and borrower information (credit
underwriting criteria), as well as real estate lending risk disclosures, to the
investors (lenders). Vestin Mortgage also services loans once they have closed.

Vestin Mortgage does not charge any fees to investors. Vestin Mortage's
compensation is primarily in the form of loan evaluation and processing fees as
well as origination fees paid by borrowers, each ranging from three to five
percent of the respective loan amount.

Vestin Mortgage acts as a mortgage broker originating many separate loans,
each of which is separately funded by institutions and individuals. In contrast,
here we will be the party investing in loans with our own funds. Our assets will
be a pool of loans, the distributions from and proceeds of which will be passed
through to you as described in this prospectus. Unlike DM LLC, Vestin Mortgage
does not and will not own the loans. The assets of Vestin Mortgage are primarily
receivables in the form of evaluation, processing, origination and servicing
fees.

Since 1997, Vestin Mortgage and its predecessors Del Mar Mortgage and Del Mar
Holdings have acted as mortgage brokers for the investment by about 4,500
investors in about 400 mortgage notes totaling about $500 million. Vestin
Mortgage currently services over 125 loans totaling approximately $272 million.
The collateral for these loans are real properties primarily located in Nevada,
California and Arizona. Vestin Mortgage used working capital obtained from
capital contributions to fund some of these loans prior to selling them as part
of its mortgage brokerage business, except for $1,980,000 of indebtedness
incurred to finance these transactions. Vestin Mortgage and Del Mar Mortgage
limit their businesses to mortgage lending, and have not acquired any real
properties except in connection with loan foreclosures.

For the three year period ended December 31, 1999, the properties securing
these loans can be subdivided as follows:

Aggregate amount invested
(as percentage of total purchases by
Property Type these programs)
<S> <C>
Commercial (total)..................... 58%
Land Acquisition....................... 36%
Residential............................ 6%
</TABLE>

Of the loans described in the foregoing table, 90% by dollar amount were
development loans, including construction loans, the balance were land
acquisition loans and loans secured by developed properties.

There have been no major adverse conditions with respect to Vestin Mortgage's
or Del Mar Mortgage's businesses. Of the loans that were made, we are aware of
only five properties that have gone to foreclosure sale over the last six years.
The default rate on the loans brokered by Vestin Mortgage and Del Mar Mortgage
has averaged less than 1% during the last three years.

The description above of Vestin Mortgage and its predecessors is not intended
to provide a description of the loans to be invested in or purchased by us in
the future.

<PAGE>
Directors and Executive Officers of Vestin Mortgage and Vestin

The directors and executive officers of Vestin Mortgage are listed below:

<TABLE>
<CAPTION>
Name Age Title
<S> <C> <C>
Michael V. Shustek............................. 41 Director, Chief Executive Officer,
Chairman
Stephen J. Byrne............................... 43 President and Director
Peggy S. May................................... 31 Senior Vice President
Lance K. Bradford.............................. 33 Treasurer, Secretary and Director
</TABLE>

The directors and officers of Vestin are as follows:

<TABLE>
<CAPTION>
Name Age Title
<S> <C> <C>
Michael V. Shustek........................... 41 Chairman of the Board, Chief Executive
Officer and Director
Stephen J. Byrne............................. 43 President and Director
Ira S. Levine................................ 39 Executive Vice President of Legal and
Corporate Affairs
Lance K. Bradford............................ 33 Chief Financial Officer, Corporate
Secretary and Director
Stephen A. Schneider......................... 54 Chief Operations Officer
Michael J. Whiteaker......................... 50 Vice President of Regulatory Affairs
Robert J. Aalberts........................... 49 Director
John E. Dawson............................... 42 Director
Robert L. Forbuss............................ 51 Director
Robert A. Groesbeck.......................... 39 Director
</TABLE>

All the directors of Vestin Mortgage and Vestin hold office until the next
annual meeting of shareholders or period of one year. The last annual meeting of
stockholders was June 23, 2000. Vestin, as the only shareholder of Vestin
Mortgage, can change the constitution of Vestin Mortgage's Board of Directors at
its sole discretion. Similarly, Michael Shustek can cause a change in the Board
of Directors of Vestin by virtue of his controlling ownership interest in
Vestin. Vestin, which is a reporting company under the Securities Exchange Act,
has already established an audit committee consisting of three independent
directors and requires that its audit committee be comprised of independent
directors. Vestin Mortgage, which is privately held and has only three
directors, has no audit committee and no requirement of independence at this
time. The By-laws of Vestin Mortgage and Vestin provide for up to 10 directors
and permit the Board of Directors to fill any vacancy on the Board of Directors.
Officers of both companies serve at the discretion of the Board of Directors.

The principal occupation and business experience for each of our officers and
directors, for at least the last five years, are as follows:

Michael V. Shustek has been a director of Vestin Mortgage and Chairman of the
Board of Directors, Chief Executive Officer and a director of Vestin since April
1999. In 1995, Mr. Shustek founded Del Mar Mortgage, and has been involved in
various aspects of the real estate industry in Nevada since 1990. In 1993, he
founded Foreclosures of Nevada, Inc., a company specializing in non-judicial
foreclosures. In 1993, Mr. Shustek also started Shustek Investments, a company
that originally specialized in property valuations for third-party lenders or
investors and which continues today as the primary vehicle for his private
investment portfolio. In 1997, Mr. Shustek founded Nevada First Bank, with the
largest initial capital base of any new state charter in Nevada's history. In
2000, Mr. Shustek co-authored a book, Trust Deed Investments, on the topic of
private mortgage lending. Mr. Shustek is a guest lecturer at the University of
Nevada, Las Vegas, where he also teaches a course in Real Estate Law and Ethics.
Mr. Shustek received a Bachelor of Science degree in Finance at the University
of Nevada, Las Vegas.

On November 9, 1998, the State of Nevada, Department of Business and
Industry, Financial Institutions Division and Del Mar Mortgage Inc., which is
owned by Mr. Shustek, settled allegations of noncompliance brought by the
division. Del Mar Mortgage neither admitted nor denied the division's
allegations. On February 11, 1999, the division issued an order against Del Mar
Mortgage, which alleged violations of the

<PAGE>
Nevada regulatory statutes and established a conservator to oversee Del Mar
Mortgage's operations. On February 16, 1999, Del Mar Mortgage sued the division,
contesting the order. On March 26, 1999, Del Mar Mortgage and the division
entered into a stipulated court order that effectively superceded the November
1998 agreement. The stipulated court order also vacated the division's order and
removed the conservator. Without admitting any facts, and solely to settle these
matters, Del Mar Mortgage agreed to assure compliance with applicable law in all
advertisements, solicitations of mortgage borrowers and in its making and
servicing of mortgage loans. Vestin Mortgage and Vestin, as successors to the
mortgage company business of Del Mar Mortgage, agreed to adhere to the terms of
the stipulation. Del Mar Mortgage also paid an additional $20,000 to the
division under the November 1998 agreement, in addition to the $30,000 Del Mar
Mortgage had paid prior to February.

Stephen J. Byrne has been the President and a director of Vestin Mortgage
since its inception as Capsource, Inc. in 1997 and has been the President and a
director of Vestin since April 1999. Mr. Byrne joined Del Mar Mortgage in June
1998 as its Senior Lending Officer. In 1997, Mr. Byrne founded Vestin Mortgage
which he owned and operated before joining Del Mar Mortgage. From 1991 to 1997,
Mr. Byrne served as Vice President of Wells Fargo Bank and of its predecessor
First Interstate Bank of Nevada. Mr. Byrne served in various capacities with
First Interstate Bank, including Manager of the Diversified Asset Group based
in Las Vegas and the commercial Diversified Asset Group in Houston, Texas. Mr.
Byrne received a Bachelor of Science degree in Business Administration from
Hastings College, Hastings, Nebraska.

Ira S. Levine received his BS in Business Administration specializing in
accounting from the U. of Nevada in 1982, his Juris Doctorate from Pepperdine
University School of Law in 1985 and his Masters of Legal Letters in Taxation
from New York University in 1986. Mr. Levine is a member of the state bars of
both Nevada and California. Since 1997, Mr. Levine has been a partner in the law
firm of Berkley, Gordon, Levine, Goldstein & Garfinkel, LLP. Prior to that he
was a shareholder in the law firm of Levine, McBride & Garfinkel, LLP. From 1995
to 1997, Mr. Levine was a shareholder in the law firm of Streich Lang. Prior to
that, Mr. Levine was senior vice president, secretary and general counsel of
United Gaming, Inc. now known as Alliance Gaming, Inc. Mr. Levine started his
legal career with the law firm of McKenna, Conner & Cuneo in Los Angeles, CA.

Peggy S. May has been with Vestin since September 1995, and has been the
Senior Vice President since 1997. She is responsible for all new and existing
clients, loan packages and manages investor relationships and serves as the
administrator of the corporate offices. Ms. May has over ten years of experience
in title, escrow and private lending.

Lance K. Bradford has been a director, Treasurer and Secretary of Vestin
Mortgage and the Chief Financial Officer, Corporate Secretary, and a director of
Vestin since April 1999. Since 1992, Mr. Bradford has been a partner in L.L.
Bradford & Company, Las Vegas, Nevada, a Certified Public Accounting firm that
he founded. From 1988 to 1991, Mr. Bradford served as an accountant with Ernst &
Young International. Mr. Bradford received a Bachelor of Science degree in
Accounting from the University of Nevada, Reno.

Stephen A. Schneider has been Chief Operations Officer since July 2000. Mr.
Schneider is responsible for the maintenance of all banking and financial
relationships. Mr. Schneider has over 26 years experience in the financial
services industry. He worked at US Bank where he managed the bank's business
banking department and underwrote loans for companies with sales of $1 million
to $10 million and maintained relationships with the bank's business customers.
Mr. Schneider sits on the boards of Focus Las Vegas and Leadership Las Vegas
Youth as well as several other organizations. He will assist in the creation of
the Vestin Foundation, a non-profit organization aimed at funding local
charitable organizations.

Michael J. Whiteaker has been a Vice President of Regulatory Affairs since
May 14, 1999 and is experienced in the banking and finance regulatory fields,
having most recently served with the State of Nevada -- from 1982 to 1999 -- as
its Supervisory Examiner, responsible for the financial and regulatory
compliance audits of all financial institutions in Nevada. Mr. Whiteaker has
worked extensively on matters pertaining to both state and federal statutes,
examination procedures, policy determination and credit administration for
commercial and real estate loans. From 1973 to 1982 Mr. Whiteaker was Assistant
Vice President of Nevada National Bank, responsible for a variety of matters
including loan review.

31
<PAGE>

Robert J. Aalberts has been a director of Vestin since April 1999. Since
1991, Mr. Aalberts has held the Ernst Lied Professor of Legal Studies
professorship at the University of Nevada, Las Vegas. From 1984 to 1991, Mr.
Aalberts was an Associate Professor of Business Law at Louisiana State
University -- Shreveport. From 1982 through 1984, he served as an attorney for
Gulf Oil Company. Mr. Aalberts has co-authored a book relating to the regulatory
environment, law and business of real estate; and he is the author of numerous
legal articles, dealing with various aspects of real estate, business and the
practice of law. Mr. Aalberts received his Juris Doctor degree from Loyola
University, New Orleans, Louisiana and received a Master of Arts from the
University of Missouri. He is a member of the State Bar of Louisiana.

John E. Dawson has been a director of Vestin since March 2000. Since 1995,
Mr. Dawson has been a partner at the law firm of Marquis & Aurbach. Before
joining Marquis & Aurbach, Mr. Dawson was affiliated with the law firm of
Jeffrey L. Burr & Associates. Mr. Dawson co-authored the Asset Protection
Guidebook for Attorneys and Accountants and has presented seminars on asset
protection. Mr. Dawson received his Bachelor's Degree from Weber State and his
J.D. from Brigham Young University. Mr. Dawson received his Masters of Law
(L.L.M.) in Taxation from the University of San Diego in 1993. Mr. Dawson was
admitted to the Nevada Bar in 1988 and the Utah Bar in 1989.

Robert L. Forbuss has been a director of Vestin since March 2000. Since
February 1999, Mr. Forbuss has been the President of Strategic Alliances, a
business and government affairs consulting organization. From March 1998
through February 1999, he was the President of Medical Transportation of
America. From February 1997 to March 1998, Mr. Forbes was the Chief Executive
Officer of the Southwest Division of American Medical Response. From March 1994
to February 1997, he was Senior Vice President of Laidlaw Medical
Transportation, which had acquired Mercy Medical Services, Inc., a company that
Mr. Forbuss founded, owned and managed for 22 years. The latter four companies
are all in the business of providing emergency ambulance and transportation
services. Mr. Forbuss received his Bachelor of Arts in Public Administration
and Political Science from the University of California at Long Beach.

Robert A. Groesbeck has been a director of Vestin since August 2000. Mr.
Groesbeck received his BA in Criminal Justice from the U. of Nevada in 1985,
his Juris Doctorate from Thomas S. Cooley School of Law in 1990 and his Masters
of Business Administration from National University in 1993. Mr. Groesbeck is
the founder of Home Works, a full service home services company. From 1994 to
June 2000, Mr. Groesbeck was the General Counsel of Republic Silver State
Disposal, Inc. From 1993 to 1997, Mr. Groesbeck was the Mayor of Henderson,
Nevada. Mr. Groesbeck currently serves on numerous charitable boards.

Robert W. Fine, a director of Vestin from April 1999 until September 2000,
resigned from the Board for personal reasons.

The following information about executive compensation has been provided by
Vestin and Vestin Mortgage. Vestin employees receive no extra pay for serving as
directors. Each non-employee director receives $3,750 per quarter, which
includes personal attendance at one quarterly board meeting and one committee
meeting on which the director serves, plus reimbursement of reasonable travel
expenses if the director lives more than 100 miles from Vestin's principal place
of business. For each Board of Directors meeting in excess of one per quarter,
directors receive $750 for each meeting attended in person and $500 for each
meting attended telephonically. For each committee meeting in excess of one per
quarter, directors receive $500 for each meeting attended in person and $250 for
each meeting attended telephonically. Each Vestin director will receive 15,000
options to acquire Vestin common stock at the then fair market value on the
later of the date the non-employee director is elected to the Board or the date
the option is approved by Vestin's stockholders and the underlying shares of
common stock are registered. Vestin provides directors' and officers' liability
insurance of $5,000,000 and also has agreed to indemnify each director to the
fullest extent of Delaware law.

The following Summary Compensation Table sets forth the compensation paid or
awarded for the fiscal year ended December 31, 1999 to Vestin and Vestin
Mortgage's Chief Executive Officer and the next most highly compensated
executive officers whose compensation for the fiscal year ended December 31,
1999 exceeded $100,000. No other executive officer received compensation in
excess of $100,000 for fiscal year ended December 31, 1999 from either Vestin or
Vestin Mortgage.

32
<PAGE>
Summary Compensation Table

<TABLE>
<CAPTION>
Annual Long Term
Compensation(1) Compensation
-------------------- ----------------------
All Other
----------------------
Name and Position Year Salary($) Bonus($) Other Awards Compensation
---- --------- -------- ----- ------ ------------
<S> <C> <C> <C> <C> <C> <C>
Michael V. Shustek ............................................. 1999 720,000 0 0 0 0
Chairman and Chief
Executive Officer
Stephen J. Byrne(2) ............................................ 1999 240,000 171,515 0 0 0
President
Peggy S. May ................................................... 1999 120,000 0 0 0 0
Senior Vice President
</TABLE>
---------------
(1) Vestin began payments to its personnel as of April, 1999.

(2) Vestin entered into employment arrangements with Mr. Byrne who was
initially employed by Del Mar Mortgage, Inc., in October 1998. In April
1999 the Company assumed Mr. Byrne's two-year employment contract as a loan
officer and underwriter at an annual salary of $65,000. Mr. Byrne has an
employment contract with the Company for serving as its President at an
annual salary of $240,000.

The compensation above for each of Messrs. Shustek and Byrne includes
compensation for services rendered to Vestin Mortgage and other Vestin
affiliates as set forth in the most recent 10-K of Vestin, which was filed by
Sunderland Corporation. Of the amounts set forth above, Mr. Shustek received
$360,000 of his total compensation for services rendered to Vestin Mortgage, and
Mr. Byrne received $286,515 of his total compensation for services rendered to
Vestin Mortgage. Ms. May provided services to and received her compensation
directly from Vestin Mortgage.

Vestin's Board of Directors adopted a stock option plan on July 28, 1999.
Vestin's stockholders approved the plan at Vestin's annual stockholders' meeting
on June 23, 2000.

Affiliated Companies

VESTIN GROUP, INC.

Vestin is a holding company, incorporated in Delaware, which owns and
conducts its business primarily through Vestin Mortgage. Vestin also owns Vestin
Capital, our dealer-Manager. The common stock of Vestin trades under the symbol
"VSTN" on the Nasdaq Smallcap Market. Prior to early July, 2000, the symbol was
"DLMA". For a complete description of Vestin, potential investors should review
Vestin's most recent periodic reports on file with the Securities and Exchange
Commission, which can be found in the Commission's EDGAR database on the
Internet at http://www.sec.gov.

VESTIN CAPITAL, INC.

Vestin Capital, Inc. (formerly DM Financial Services, Inc.), the lead dealer,
is a securities brokerage firm registered with the Securities and Exchange
Commission and a member of the National Association of Securities Dealers,
Inc., or NASD. Vestin Capital is a Nevada corporation formed in 1998 to expand
and develop business opportunities, including offering real estate loans and
private investments in promissory notes secured by deeds of trust.

Vestin Capital may obtain other securities brokerage firms to sell the units,
sell the units to its customers and provide us with sales, promotional and
marketing assistance for the distribution of the units.

<PAGE>

COMPENSATION OF VESTIN MORTGAGE AND AFFILIATES

<TABLE>
<S> <C>
Compensation to Vestin Mortgage and Affiliates ....... Vestin Mortgage and Affiliates will
receive certain fees and credit for
certain expenses for performing services
in this offering and for conducting our
operations.

<CAPTION>
Offering and Organizational Stage
<S> <C>
Public Offering Expenses ............................. Vestin Mortgage will pay all selling
commissions and expenses related to this
offering. To the extent that such
expenses consist of filing and review
fees, legal, accounting, printing and
other expenses of this offering paid to
non-affiliates of Vestin Mortgage,
payment of such expenses will be deemed a
capital contribution by Vestin Mortgage
up to a maximum of $1,000,000. Such
expenses through September 30, 2000, were
$688,000, which amount was deemed a
capital contribution by Vestin Mortgage
as of such date.
</TABLE>
---------------
(1) Where aggregate fees are provided in the chart on the preceding pages, they
are based upon our receipt of $100,000,000 in gross proceeds in this
offering and the anticipated investment of $100,000,000 in mortgage loans
(including cash reserves).

Operational Stage

Where the fees below are described as competitive fees or based on local
market conditions, that means the fees are determined by price competition
within a given market. To ensure that our fees remain competitive, we will
directly contact our competition, such as major banks in the local market or
other relevant commercial lenders. We expect that the interest rate on the
loans in which we invest will be 2-3 points higher than comparable loans
made by banks and that the fees paid to Vestin Mortgage will be 2-3 points
higher than similar fees charged by conventional lenders. We believe that
this rate structure is consistent with rates and fees charged by other
non-conventional lenders. References below to local law also contemplate
additional requirements imposed by local or state law, such as usury laws.

<TABLE>
<CAPTION>
Paid by Borrowers
<S> <C>
Loan Brokerage Fees for Loan Selection and
Origination .......................................... 2%-6% of each loan, competitive fee based on local market conditions.
Vestin Mortgage and its affiliates may receive up to $5,190,000 in loan
brokerage fees. These fees are paid by the borrower no later than when the
loan proceeds are disbursed.

Loan Evaluation and Processing Fees .................. 2%-5% of each loan, competitive fee based on local market conditions.
Vestin Mortgage and its affiliates may receive up to $4,325,000 in loan
evaluation and processing fees. These fees are paid by the borrower no
later than when the loan proceeds are disbursed.

Service Fee for Administering Loans .................. Annual fee of up to 0.25% of the outstanding principal balance of loans.
These fees will be paid by the borrower either annually or added to the
monthly payments.
</TABLE>

34
<PAGE>

<TABLE>
<S> <C>
Loan Extension Fee ................................... 2%-5% of outstanding principal, as permitted by local law and local market
conditions. The amount to be received is not determinable at this time.
These fees will paid when the loan is extended.

Paid by Us

Annual Management Fee ................................. Up to 0.25% of our aggregate capital
contributions to the Company, paid monthly
in arrears.

Real Estate Brokerage Fees on Resales of
Foreclosed Property to Vestin Mortgage ................ Up to 3% of proceeds where Vestin Mortgage substantially contributed to
the sale; up to 6% for all persons involved. These fees are not yet
determinable. We will pay these fees promptly out of the proceeds of a
sale of the relevant real estate.
</TABLE>

Vestin Mortgage will make arrangements with the respective borrowers for
Vestin Mortgage's fees owing from those borrowers. Vestin Mortgage anticipates
that borrowers will pay its compensation out of the proceeds of loans or upon
closing the relevant transaction. For loan servicing fees, Vestin Mortgage will
receive these fees monthly in arrears along with the payments it receives on
loans that we have acquired. Vestin Mortgage will make arrangements with
borrowers within one month to receive late fees on loan payments.

The Manager may, in its sole discretion, share with us the origination fees
it receives from borrowers. The Manager is under no obligation to share its
origination fees and investors should not assume that any origination fees will
be shared with the Company.

35
<PAGE>
CONFLICTS OF INTEREST

The relationships among us, Vestin Mortgage and the directors and other
affiliates of Vestin Mortgage will result in various conflicts of interest.
Vestin Mortgage and its directors and other affiliates are engaged in business
activities involving real estate lending, and anticipate engaging in additional
business activities in the future that may be competitive with us. Vestin
Mortgage and its officers and directors will exercise their fiduciary duties to
us and to you in a manner they believe will preserve and protect your rights as
a member. Additionally, our operating agreement contains provisions that limit
our ability to enter into transactions with Vestin Mortgage and its affiliates.

The paragraphs below describe material conflicts of interest that may arise
in the course of Vestin Mortgage's management and operation of our business. The
list of potential conflicts of interest reflects our knowledge of the existing
or potential conflicts of interest as of the date of this prospectus. We cannot
assure you that no other conflicts of interest will arise in the future.

The organizational structure of Vestin, Vestin Mortgage and their affiliates
is as follows:

Michael Shustek
Vestin Group, Inc.
(controlling interest owned by Michael Shustek)

Del Mar Mortgage, Inc.
(100% owned by Michael
Shustek)

Vestin Capital
(100% owned by Vestin)
Lead Dealer

Vestin Mortgage
(100% owned by Vestin)
Manager and initial Member of
DM LLC

1. Payment of Fees and Expenses. Vestin Mortgage and its affiliates will
receive substantial fees and expenses from the proceeds of the offering and our
ongoing operations, including:

Paid by Borrowers:

o loan brokerage fees

o loan evaluation and processing fees

o loan servicing fees

o loan extension fees

Paid by Us:

o annual management fee, and

o real estate brokerage commissions payable upon the resale of foreclosed
properties.

Fees charged to us will be payable even if we are not profitable or the
particular transaction causes us to incur a loss.

We will pay an annual management fee to Vestin Mortgage of up to 0.25% of the
aggregate capital contributions to the Company. The annual management fee
referred to above equals 0.25% of the aggregate capital contributions to us for
administrative services necessary to its prudent operation of DM LLC. Vestin
Mortgage will pay and will not be reimbursed by us for any general or
administrative overhead expenses it incurs that exceed its annual management
fee.

2. Purchase Of Mortgage Notes from Vestin Mortgage. We will acquire our
mortgage loans from or through Vestin Mortgage. Vestin Mortgage is in the
business of obtaining, processing, making, brokering and selling, and managing
and servicing mortgage loans. All our mortgage loans purchased from Vestin
Mortgage will be at prices no higher than the lesser of the cost of the mortgage
loan to Vestin Mortgage or the then current market value of the mortgage loan. A
committee of officers and directors of Vestin Mortgage makes

<PAGE>
all decisions concerning the mortgage loans in which we will invest or purchase.
This committee is currently comprised of Stephen J. Byrne, Steve Schneider, Mike
Whiteaker, Peggy May, and Daniel Stubbs (underwriting Manager). Because Vestin
Mortgage's fees are generated by the volume of the mortgage loans we purchase,
Vestin Mortgage will face a conflict of interest in determining whether a loan
not squarely within our investment guidelines is appropriate for our loan
portfolio.

3. Non-Arm's Length Agreements. Our agreements and arrangements for
compensating Vestin Mortgage are not the result of arm's-length negotiations.
Additionally, none of the three directors of Vestin Mortgage is independent.

4. Competition for the Time and Services of Common Officers. We will rely on
Vestin Mortgage and its directors and officers for the management of our
operations. When performing their duties, the officers, directors and employees
of Vestin Mortgage may, for their own account or that of others, originate
mortgages and acquire investments similar to those made or acquired by DM LLC.
The directors of Vestin Mortgage also may act as trustees, directors or
officers, or engage in other activities for themselves and/or other entities and
may acquire, broker and originate similar mortgage investments for their own
account or that of others. Accordingly, conflicts of interest will arise in
operating more than one entity for allocating time between the entities. The
directors and officers of Vestin Mortgage will devote such time to our affairs
and as they determine in good faith and in compliance with their fiduciary
obligations to us and our members, to be necessary for our benefit.

Vestin Mortgage believes it has sufficient staff to be capable of discharging
its responsibility to us and to all other entities to which they or their
officers or affiliates are responsible. However, during times when we and the
other businesses are handling a high volume of loans, a conflict will arise as
to which company's loan processing to complete first.

Currently, Vestin Mortgage is not the mortgage broker for another Vestin
Mortgage program or entity. Vestin Mortgage does market loans to other investors
as part of its regular mortgage company business, but there are currently no
other mortgage loan investors for which Vestin Mortgage serves in the same
capacity as Vestin Mortgage does for DM LLC. We do not believe that Vestin
Mortgage will take on a significant amount of additional work outside of the
services that Vestin Mortgage performs for DM LLC. Vestin Mortgage currently
intends to focus its efforts on our mortgage loan investments and, to the extent
that our business grows, to reduce the amount of time spent on originating other
mortgage loans. There can be no assurance, however, that Vestin Mortgage will
continue with these business plans and Vestin Mortgage may service other
programs in the future.

5. Competition between us, Vestin Mortgage and Vestin Mortgage's Affiliates
for the Purchase and Sale of Mortgage Loans. Vestin Mortgage anticipates that it
or its other affiliates will engage in businesses which are or will be
competitive with ours or which have the same management as we do. To the extent
that these other entities with similar investment objectives have funds
available for investment when we do and a potentially suitable investment has
been offered to us or one of these programs, conflicts of interest will arise as
to which entity should acquire the investment.

If any conflict arises between us and any other affiliated program as to
which company will have the right to invest in a particular mortgage loan or
other investment, Vestin Mortgage will make the determination largely based on a
review of the respective loan portfolios. Vestin Mortgage will also base the
decision on factors such as the amount of funds available for investment, yield,
portfolio diversification, type and location of the property on which Vestin
Mortgage will make the mortgage loan, and proposed loan or other transaction
terms. The officers and directors of Vestin Mortgage will be responsible for
monitoring this allocation method to be sure that it is applied fairly.

The officers, directors and employees of Vestin Mortgage may for their own
account or that of others originate, acquire or broker mortgage investments
similar to those made or acquired by us. Vestin Mortgage remains subject to a
fiduciary duty to us and our members described in this prospectus. Subject to
this fiduciary duty, neither Vestin Mortgage nor its affiliates will be
obligated to present to us any particular investment opportunity that comes to
their attention, even if the opportunity is of a character that might be
suitable for us.

<PAGE>

6. Lack of Independent Dealer-Manager. Because we are a newly formed company
with no prior performance history, we expected difficulty obtaining non-
affiliated brokerage firm to act as our dealer-manager on terms and conditions
that would be as favorable as those that could be obtained from Vestin Capital.
Accordingly, we believe that the use of Vestin Capital as the lead dealer for
our offering of units is in our best interests and those of our members. We did
not negotiate the fees to be paid to Vestin Capital on an arm's length basis.
Vestin Capital and Vestin Mortgage have not entered into any arm's length
agreements.

7. Lack of Separate Representation. We are represented by the same counsel as
Vestin Mortgage and its affiliates, and we anticipate that this multiple
representation by our attorneys will continue in the future. If a dispute arises
between us and Vestin Mortgage or any of its affiliates, Vestin Mortgage or the
affiliate will either obtain separate counsel or facilitate our retaining
separate counsel for such matters. However, we do not anticipate obtaining
separate counsel should there be a need in the future to negotiate or prepare
contracts or other agreements between us and Vestin Mortgage for services
including those contemplated by this prospectus, and as a result these
agreements will not reflect arm's length bargaining.

8. Rights of Affiliates. Any director or officer of Vestin Mortgage and any
other affiliate may acquire, own, hold and dispose of units for his individual
account and may exercise all rights of a member, except for voting rights with
respect to the Manager, to the same extent and in the same manner as if he were
not an affiliate of ours.

9. We may invest in mortgages acquired by Vestin Mortgage. If Vestin Mortgage
determines that an entire loan is not suitable for our loan portfolio, we may
invest in the loan with Vestin Mortgage. Our portion of the total loan may be
smaller or greater than the portion of the loan made by Vestin Mortgage, but we
expect that the terms of the loans will be substantially similar. Investing with
Vestin Mortgage could result in a conflict of interest between us and Vestin
Mortgage if the borrower defaults on the loan and each of us seeks to protect
our interests in the loan and in the security property. Because we have no
written or oral agreement or understanding with Vestin Mortgage concerning our
relative priority when a borrower defaults, you must rely on Vestin Mortgage to
act in accordance with its fiduciary duty under the operating agreement to
protect your interest.

38
<PAGE>

Share ownership

The following table indicates the share ownership of Vestin. This information
was taken from Vestin's proxy statement on file with the Commission. Vestin owns
all of the 100 issued and outstanding shares of Vestin Mortgage, and Vestin
Mortgage owns all of the 36,444 issued and outstanding units in DM LLC.

Percent of
Common Stock Common Stock
Name Beneficially Owned(1) Beneficially Owned
<S> <C> <C>
Michael V. Shustek, Chairman and Chief Executive Officer 3,798,000 54.3%
129 Augusta
Henderson, Nevada 89014

Stephen J. Byrne, President, Director 63,533 *
1808 Dalton Avenue
Henderson, Nevada 89014

Ira S. Levine, Executive Vice President of Legal and
Corporate Affairs 100,100 *
2901 El Camino Avenue, Suite 206
Las Vegas, Nevada 89102

Peggy S. May, Senior Vice President 10,000 *
2901 El Camino Avenue, Suite 206
Las Vegas, Nevada 89102

Lance K. Bradford, Chief Financial Officer, Corporate
Secretary and Director 670,000 9.7%
3441 Eastern Avenue
Las Vegas, Nevada 89109

Stephen A. Schneider, Chief Operations Officer 10,000 *
2901 El Camino Avenue, Suite 206
Las Vegas, Nevada 89102

Michael J. Whiteaker 16,667 *
2901 El Camino Avenue, Suite 206
Las Vegas, Nevada 89102

Robert J. Aalberts, Director 6,000 *
311 Vallarte Drive
Henderson NV 89014

Robert W. Fine 405,000 5.8%
3 Palazzo Terrace
Henderson, Nevada 89014

John E. Dawson, Esq., Director 13,400 *
228 South Fourth Street
Las Vegas, Nevada 89101

Robert L. Forbuss, Director 5,000 *
200 Starlite Drive
Las Vegas, Nevada 89107

Robert A. Groesbeck, Director 5,000 *
2901 El Camino Avenue, Suite 206
Las Vegas, Nevada 89102

All directors and executive officers as a group (8 persons) 4,712,600(2) 67.4%
</TABLE>

--------------
* Less than 1%

(Footnotes continued on next page)

39
<PAGE>
(Footnotes continued from previous page)

(1) Based upon 6,989,270 shares outstanding. (2) Includes 640,000 shares
received by Mr. Bradford and his spouse from the Company's acquisition of
L.L. Bradford & Company on March 31, 2000. 320,000 of these shares are
owned by Mr. Bradford's spouse. Mr. Bradford disclaims beneficial ownership
of these shares.

(2) Includes presently exercisable options and warrants in the following
amounts: Shustek --- 500,000, Byrne --- 33,333, Levine --- 75,000, Schneider
--- 10,000, Whiteaker --- 16,667, Aalberts --- 5,000, Fine --- 5,000,
Dawson --- 5,000, Forbuss --- 5,000, Groesbeck --- 5,000.

<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Twelve Month Plan of Operation

During the next 12 months, we plan to invest in mortgage loans where our
collateral is real property located primarily in the states of Nevada,
California and Arizona. Upon the sale of these units and the end of our escrow
arrangement, Vestin Mortgage will select mortgage loans for us, and also will
assist us by obtaining, processing and managing these loans for us. We believe
that we will have an adequate number of opportunities to invest in mortgage
loans in the above named states when our escrow ends.

During the next 12 months, we anticipate that our cash reserve will be
adequate to pay our administrative expenses. We therefore do not anticipate
needing additional funds to satisfy our cash requirements during this period.

We do not anticipate hiring any employees, acquiring any fixed assets like
office equipment or furniture, or incurring material office expenses during the
next 12 months because we will be utilizing Vestin Mortgage's personnel and
office equipment. We will pay Vestin Mortgage a flat, annual fee of up to 0.25%
of our aggregate capital.

We do not intend to incur any indebtedness at the commencement of our
operations, although we do intend to establish a line of credit for future use.

The following is a summary of the Company's investment in loans secured by
real estate as of September 30, 2000:

Loan Amount Loan Amount
Funded by Funded by Interest Loan
Borrower DM Mortgage Other Investors Rate Length Loan Type Collateral
------------------ ----------- --------------- -------- ------- ---------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Car Spa Norco, LLC $ 3,345,000 $ 355,000 14.0% 12 mos. Commercial Land and Building
The Ranches, LLC $ 3,115,000 $ 5,000 15.0% 12 mos. Land Land
Mesquite 643, LLC $ 4,358,550 $ 3,141,450 14.0% 12 mos. Commercial Land
Q Summerlin, LLC $ 1,686,900 $ 7,063,100 14.0% 12 mos. Commercial Land and Building
BP Euphoria, LLC $ 760,000 $ -- 14.0% 12 mos. Commercial Land
----------- -----------

$13,265,450 $10,574,550
=========== ===========

</TABLE>

<PAGE>
FIDUCIARY RESPONSIBILITY

Vestin Mortgage (formerly Capsource) is a fiduciary for you and DM LLC. As a
fiduciary, Vestin Mortgage must exercise good faith and integrity when handling
our affairs. Vestin Mortgage must not take advantage of us, and must make full
disclosure of any conflicts of interest or benefit to it in its dealings with
us. As set forth in the operating agreement, Vestin Mortgage has fiduciary
responsibility for the safekeeping and use of all of our funds and assets and
Vestin Mortgage will not use, or permit another to use our funds or assets in
any manner except for our exclusive benefit. Vestin Mortgage will not allow our
assets to be commingled with its assets or the assets of any other person or
company. Vestin Mortgage and its affiliates may engage in activities similar to
or identical with our business, but Vestin Mortgage must devote such of its time
to our business as it determines, in good faith, to be reasonably necessary.
Vestin Mortgage also acts for its own account as a mortgage broker. In
connection with this activity, it also brokers, arranges and services mortgage
loans for investors that it obtains in the ordinary course of its mortgage
brokerage business, including by way of seminars, general solicitations and
referrals. When it acts in those capacities, it has a fiduciary duty to each
company as set forth in the respective organizational documents, if any, and
under applicable law, and Vestin Mortgage is bound to treat each fairly and with
equal access to investment opportunities.

Additionally, Vestin Mortgage could change our investment guidelines when a
reasonably prudent person would do likewise, subject to its fiduciary duties to
our members. However, Vestin Mortgage can only change our investment objectives
upon majority approval.

The above described fiduciary duty is both contractual, arising by virtue of
the operating agreement, and imposed by Nevada common law.

Based upon the present state of the law, you have the following legal rights
and remedies concerning Vestin Mortgage and the conduct of our operations:

o you may bring individual actions on behalf of yourself or class actions on
behalf of yourself and other members to enforce your rights under the
operating agreement and Nevada limited liability company law, including for
breaches by Vestin Mortgage of its fiduciary duty;

o a majority may remove Vestin Mortgage as our Manager, as described
elsewhere in this prospectus;

o you may bring actions on our behalf for claims we might have as derivative
actions, if Vestin Mortgage refuses to bring suit; and

o you may bring actions under federal or state securities laws, either
individually or as part of a class of members, if Vestin Mortgage has
violated those laws in connection with the offer and sale, or repurchase of
units.

This is a rapidly changing and developing area of law. If you have questions
concerning the duties of Vestin Mortgage in its role as our Manager, you should
consult with your own legal counsel.

Exculpation and Defenses

The operating agreement exculpates Vestin Mortgage from liability to the
fullest extent permitted by law. Vestin Mortgage will not be liable to us or to
you for errors in judgment or other acts or omissions not amounting to
misconduct or negligence, which is the fiduciary standard imposed under the
operating agreement. This means that Vestin Mortgage will have no liability to
you unless you can show that Vestin Mortgage intentionally caused the damages or
losses, or if Vestin Mortgage did not exercise the same degree of care that a
reasonably careful person would have used in the same circumstances. If Vestin
Mortgage can show that it acted in good faith and in a manner reasonably
believed to be in our best interest, and with such care as a reasonably prudent
person in a like situation would use, Vestin Mortgage would likely have an
effective defense to any legal action. You will have a more limited right of
action than you might have absent this limitation in the operating agreement.

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Indemnification

DM LLC will indemnify Vestin Mortgage, its affiliates and agents for
liabilities they incur on our behalf in dealing with third parties if they
believed the relevant conduct was in our best interest, and where there was no
fraud and no breach of a fiduciary duty or the operating agreement. The members
do not have any personal obligation to indemnify any person or entity. If the
indemnification provisions purport to include indemnification for liabilities
arising under the Securities Act of 1933, in the opinion of the Securities and
Exchange Commission, that indemnification is contrary to public policy and
unenforceable.

Notwithstanding the statements regarding indemnification in the preceding
paragraph, we will not indemnify Vestin Mortgage or any of its affiliates,
agents, or attorneys, nor any person acting as securities broker or dealer for
the units from any liability, loss or damage incurred by them arising due to an
alleged violation of federal or state securities laws unless:

o there has been a successful adjudication on the merits of each count
involving alleged securities law violations as to the particular party;

o the claims have been dismissed with prejudice on the merits by a court of
competent jurisdiction as to the particular party; or

o a court of competent jurisdiction approves a settlement of the claims
against the particular party and finds that indemnification of the
settlement and related costs should be made.

Before seeking a court approval for indemnification, Vestin Mortgage is required
to cause the party seeking indemnification to apprise the court of the position
of the Securities and Exchange Commission and the Nevada Administrator
concerning indemnification for securities violations.

We will not purchase any insurance that protects a party from any liability
for which we could not indemnify that party.

<PAGE>
SUMMARY OF OPERATING AGREEMENT,
RIGHTS OF MEMBERS AND DESCRIPTION OF UNITS

This is a summary of the operating agreement and does not contain all the
information that may be important to you. Furthermore, you will be bound by the
operating agreement by purchasing your units. Consequently, you should read
carefully both this prospectus and the operating agreement, which you can find
as Exhibit A.

Your Status

Our acceptance of your subscription agreement is effective when we
countersign it for the number of units we set forth next to our signature. If we
accept your subscription and payment for units, you will receive units in DM
LLC. We will promptly send you a confirmation of the number of units you have
acquired. This will be evidence that you are a member of DM LLC. As a member,
you have the rights that are outlined in this prospectus.

Limited Liability of Members

The Nevada statute under which DM LLC has been formed provides that members
are not personally liable for the obligations of their limited liability
company. The operating agreement also provides that every written agreement
entered into by us is not enforceable against our members personally.

Term of DM LLC

DM LLC will cease operating on December 31, 2019. Before then, the members
may vote by a majority to extend its life or to dissolve it sooner.
Additionally, DM LLC may dissolve earlier if Vestin Mortgage ceases serving as
the Manager and the members cannot agree on a new Manager within six months.

Meetings

Either Vestin Mortgage or members owning capital accounts with at least 10%
of the amounts in all capital accounts may call meetings of the members. Vestin
Mortgage has informed us that it has no present intention of calling any
meetings of the members. Any voting by the members is anticipated to be by
written consent.

Voting and Other Rights of Members

We require the vote or consent of a majority to do any of the following:

o amend the operating agreement, except that Vestin Mortgage may amend it

--- to remedy any ambiguity or formal defect or omission,

--- to conform it to applicable laws and regulations, and

--- to make any change which, in the judgment of Vestin Mortgage, is not to
the prejudice of the members;

o dissolve DM LLC and wind up our business;

o add or remove a Manager;

o cause us to merge with another company; and

o approve or disapprove the sale of all or over 50% of our assets.

You may inspect our books and records at our principal office during our
regular business hours. We also maintain a copy of each appraisal for the
security property where we have invested in a mortgage loan at our principal
office for at least six years after the last date that we held the related
mortgage. You may inspect and copy these appraisals during our regular business
hours. We may charge you a fee for copying them.

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Capital Accounts

Vestin Mortgage will credit the capital account it establishes for you when
we receive your initial investment after the escrow ends. We will allocate to
your capital account the percentage of our income, gains, losses and
distributions that the amount in your capital account bears to all members'
capital accounts. Your capital account will increase by the amount of additional
capital contributions you make, including distribution reinvestments, and by
your share of income and gains realized by us. Your capital account will
decrease by your share of losses realized by us and any income or capital we
distribute to you. Increases and decreases in your capital account do not depend
on the number of units you own.

Except for when we write down our investments, we do not adjust capital
accounts to reflect unrealized appreciation or depreciation of our underlying
assets. Consequently, the amount in your capital account may not reflect your
portion of the fair market value of our underlying assets. This is a continuous
offering in which allocations will be made based on the proportionate interest
of capital accounts. As a result, depending upon when units are purchased, the
units purchased by our members for ten dollars will likely have:

o different rights to distributions and income from our mortgage loans, and

o different proportionate interests in the fair market value of our
underlying assets.

If the fair market value of our assets is less than the cost of the assets on
our books when you make a capital contribution, then the value of your units'
interest in the fair market value of our underlying assets may be less than ten
dollars. Conversely, if the fair market value of our assets is greater than the
cost of the assets on our books when a new member makes a capital contribution,
then your units' interest in the realized gains in the fair market value of our
assets will be shared with the new members making the contribution or
reinvestment. This will result in a dilution in the value of your units'
interest in the fair market value of our underlying assets. These principles
apply equally for when a member makes a distribution reinvestment.

Capital Contribution of Vestin Mortgage

Vestin Mortgage must contribute to our capital an amount equal to at least
1.0% of the aggregate capital accounts of all our members. Vestin Mortgage's
capital account will be credited up to a maximum of $1,000,000 for expenses of
this offering which it pays to non-affiliated third parties.

Unit Repurchases and Deemed Distributions

The number of units you hold will decrease when we return capital to you and
will increase when you contribute or are deemed to recontribute capital. If we
return capital to you, we will treat it as a redemption of units in an amount
proportionate to the amount in your capital account. We will provide statements
to you reflecting the number of units that we have redeemed and the number of
units that you still own as a result of the redemption.

Additionally, for tax purposes you will be deemed to have received a return
of capital and recontributed to DM LLC any proceeds we receive from loan
repayments, foreclosures or other capital transactions, or any loan
modifications or extensions treated as a disposition for tax purposes. While we
believe that this characterization will not affect the tax liability of our
members, if the Internal Revenue Service unexpectedly were to disagree, you may
have a tax liability with no cash distributions to pay that liability.

Write-Down of Investments

As indicated above, we make quarterly downward adjustments to the fair market
value of our assets to reflect then-current market conditions. We refer to these
downward adjustments as write-downs. We will make any necessary write- downs
within 30 days following the end of each calendar quarter. Our accountants will
then confirm that the write-down conforms with generally accepted accounting
principles. If a write-down is required, the write-down shall be effective on
the last day of the calendar quarter and the capital accounts of all members on
that date shall be reduced accordingly.

Members' Return on Investment

Our mortgage loans will generate monthly payments of interest and/or
principal to us. We intend to distribute these payments to you as described
below. These distributions will be paid monthly in arrears in

<PAGE>
cash or via reinvestment. We will not accumulate assets other than mortgage
notes or similar instruments and we will not accumulate cash on hand, except for
working capital reserves of at least 3% of capital contributions. We cannot make
distributions to you until we have received the proceeds from the offering, and
invested them in mortgage loans. Thereafter, our first distribution to you will
be your share of our distribution for the month in which your contribution is
actually received by us and invested. We calculate the amount of your
distributions on a pro rata basis, based upon the monthly return, if any, on all
of our assets, the size of your capital account and, if applicable, when during
the month we received your contribution.

We will distribute all net income attributable to interest and fee payments
we receive from borrowers. When we distribute net income attributable to these
payments, all distributions will be made to the members, including Vestin
Mortgage, in proportion to their contributed capital.

Net proceeds will include the proceeds from the repayment of principal or the
prepayment of a mortgage loan, or the net proceeds of a foreclosure sale. Vestin
Mortgage may consider the alternatives listed below in determining whether and
how much of the net proceeds to distribute in cash:

o reinvesting in new loans,

o improving or maintaining any properties that we acquire through
foreclosure,

o paying permitted operating expenses, or

o distributing to the members.

Before making a distribution, we will pay our expenses and other liabilities
and confirm that our working capital reserves are adequate.

Distribution Reinvestment Plan

You can elect to participate in the distribution reinvestment plan by so
indicating in your completed subscription agreement, or you can later elect to
become a participant. We will treat you as a distribution reinvestment plan
participant on the date we actually receive your initial investment, if you
indicate in your subscription agreement that you want to participate in the
plan. You may also make an election or revoke a previous election at any time by
sending us written notice. Units purchased under the plan will be credited to
your capital account as of the first day of the month following the month in
which the reinvested distribution was made. If you notify us prior to 10 days
before the end of any given month, you will be removed from the reinvestment
plan during that month and any distribution you receive that month will be paid
in cash. If you notify us within ten days of the end of the month, you will need
to wait a month to receive cash instead of units.

Your continued participation in the plan depends on whether you meet our
investor suitability standards. While you are a participant, for each $10.00 in
distributions you reinvest, you will acquire one unit. Vestin Mortgage may
terminate or reinstate, as applicable, the distribution reinvestment plan at any
time. Vestin Mortgage shall not earn any fees when you reinvest net proceeds.

If you choose to reinvest your distributions in units, we will send you a
report within 30 days after each time you receive units describing the
distributions you received, the number of units you purchased, the purchase
price per Unit, and the total number of units accumulated. We will also send you
a current prospectus and tax information for income earned on units under the
reinvestment plan for the calendar year when you receive annual tax information
from us. You must pay applicable income taxes upon all distributions, whether
the distribution is paid in cash or reinvested.

No reinvestment participant shall have the right to draw checks or drafts
against his distribution reinvestment account.

Units you acquire through the distribution reinvestment plan carry the same
rights as the units you acquired through your original investment. However, as
previously noted, the value of the new units issued for ten dollars will not
necessarily be the same as those previously acquired for ten dollars.

<PAGE>

We may amend or end the distribution reinvestment plan for any reason at any
time by mailing a notice to you at your last address of record at least 30 days
before the effective date of our action. Vestin Mortgage specifically reserves
the right to suspend or end the distribution reinvestment plan if:

o Vestin Mortgage determines that the distribution reinvestment plan impairs
our capital or operations;

o Vestin Mortgage determines that an emergency makes continuing the plan
unreasonable;

o any governmental or regulatory agency with jurisdiction over us requires us
to do so;

o in the opinion of our counsel, the distribution reinvestment plan is no
longer permitted by federal or state law;

o if transactions involving units within the previous twelve (12) months
would result in our being considered terminated under Section 708 of the
Internal Revenue Code; or

o Vestin Mortgage determines that allowing any further reinvestments would
create a material risk that we would be treated as a "publicly traded
partnership" within the meaning of Section 7704 of the Internal Revenue
Code.

Reinvestment of Proceeds of Capital Transactions

We will either invest our net proceeds from any capital transaction in new
mortgage loans, hold the net proceeds as cash or distribute them to the members.
Capital transactions include payments of principal, foreclosures and prepayments
of mortgages, to the extent classified as a return of capital under the Internal
Revenue Code, and any other disposition of a mortgage or property. Net proceeds
of capital transactions will also include the principal of a loan deemed to be
repaid for tax purposes as a result of a loan modification or loan extension.
Our operating agreement provides that if we reinvest the proceeds, you will be
deemed to have received a distribution of capital and recontributed the same
amount to DM LLC for tax purposes. Units purchased by virtue of a deemed
recontribution of distributed capital will be credited to your capital account
as of the day when the distribution was deemed to be made. Units you acquire
through the deemed recontribution of capital carry the same rights as the units
you acquired through your original investment. However, as previously noted, the
value of the new units issued for ten dollars will not necessarily be the same
as those previously acquired for ten dollars.

Assignment and Transfer of Units

Your rights to sell or transfer units are limited. There is no public market
in which you may sell your units. We do not expect a public market to emerge
anytime in the future. You may not sell parts of units unless required by law
and you may not transfer any units if, as a result, you would own fewer than 200
units. You may transfer your units using a form approved by Vestin Mortgage and
must obey all relevant laws when you are permitted to transfer units. Any person
who buys units from you must meet the investor suitability requirements in his
home state. Vestin Mortgage must approve any new members and all transfers of
membership must comply with the operating agreement. Vestin Mortgage's consent
to transfers will be withheld to the extent needed to prohibit transfers that
would cause us to be classified as a publicly traded partnership under the
Internal Revenue Code.

Repurchase of Units, Withdrawal from DM LLC

You may withdraw, or partially withdraw, from DM LLC and obtain the return of
all or part of your capital account within 61 to 91 days after you deliver
written notice of withdrawal to Vestin Mortgage, subject to the following
additional conditions:

o You should not expect to be able to withdraw from DM LLC until one year
after you purchased units.

o We can only make cash payments in return of an outstanding capital account
from net proceeds and capital contributions.

o You will be limited to a maximum of $100,000 in withdrawals per calendar
year, subject to the Manager's limited discretion to permit larger
withdrawals.

o We are not required to sell any portion of our assets to fund a withdrawal.

<PAGE>

o Vestin Mortgage will not reinvest net proceeds for a period of up to 90
days after receiving a withdrawal notice from you if we do not have
sufficient funds available to distribute to you all of your capital account
in cash.

o The amount to be distributed to you depends solely on your capital account
on the date of the distribution, even if this is not the same as your
proportionate share of the then fair market value of our assets.

o We will not permit more than 10% of the outstanding capital accounts of
members to be withdrawn during any calendar year, except upon the
dissolution of DM LLC.

o If your capital account is reduced below $2,000 due to any withdrawal
payment, we may distribute all remaining amounts in your capital account to
you in cancellation of your units, and you will then cease to be a member.

o All payments to meet requests for withdrawal are on a "first-come, first-
served" basis. If the sums needed to fund withdrawals in any particular
month exceed the amount of cash available for withdrawals, funds will be
distributed first to the member whose request we received first, until his
withdrawal request is paid in full.

Options and Warrants

The operating agreement does not provide for the purchase of options or
warrants to any party. In the event that Vestin Mortgage, as Manager, elects to
issue options or warrants, they will be offered on the same terms to all
persons, including members other than Vestin, its subsidiaries and affiliates,
Additionally:

o The options or warrants will have an exercise price that is not less than
the fair market value of the units on the date the options or warrants are
issued;

o The options or warrants will not be issued for consideration less than the
fair market value of the option or warrant on the date of issue; and

o Units underlying the options or warrants, in aggregate, shall not exceed
10% of the then issued and outstanding units.

Special Power of Attorney

Under the terms of the operating agreement and the subscription agreement,
you appoint Vestin Mortgage your attorney-in-fact for certain documents,
including the signing of the operating agreement. You cannot revoke this special
power of attorney, which will survive your death and stays with your units even
if they are assigned.

48
<PAGE>
FEDERAL INCOME TAX CONSEQUENCES

The following is a summary of the anticipated federal income tax aspects of
an investment in units. Because this is a summary, it does not contain all the
information that may be important to you. This summary is based on the Internal
Revenue Code as in existence on the date of this prospectus, existing laws,
judicial decisions and administrative regulations, rulings and practice, any of
which are subject to change, and these changes could be retroactive.

We and our members may be subject to state and local taxes in states and
localities in which the IRS or state authorities deem us to be doing business,
and except where we reference specific states, this discussion does not cover
state or local tax consequences you may incur in connection with your
investment.

Some of the deductions we intend to claim or positions we intend to take for
tax purposes may be challenged by the IRS. The IRS has increased its audit
efforts with respect to limited partnerships and limited liability companies,
and an audit of our information return may result in, among other things, an
increase in our gross income, the disallowance of certain deductions or credits
we have claimed or in an audit of your income tax returns.

Any audit adjustments made by the IRS could adversely affect you even if none
of these adjustments are ultimately sustained, since you and the other members
will, directly or indirectly, bear the expense of contesting the adjustments.

We advise you to consult your own tax advisors, with specific reference to
your own tax situation and potential changes in applicable laws and regulations.

Vestin Mortgage will prepare our information returns, which will not be
reviewed by our independent accountants or tax counsel. Vestin Mortgage will
handle all of our other tax matters, often with the advice of independent
accountants and/or tax counsel.

Tax counsel has delivered an opinion letter to us which is attached as an
exhibit to the registration statement of which this prospectus forms a part.
This letter contains the following opinions with respect to tax matters
affecting us:

o we will be classified as a partnership rather than as an association
taxable as a corporation for federal income tax purposes;

o we will not be classified as a publicly traded partnership for federal
income tax purposes; and

o the discussion set forth below is an accurate summary of the material
federal income tax aspects of your investment in units.

The following discusses the material tax issues associated with an investment
in units. All of the conclusions as to the tax treatment of a particular tax
item set forth in the following discussion reflect the opinion of tax counsel
unless otherwise expressly indicated.

The discussion considers existing laws, applicable current and proposed
Treasury Regulations, current published administrative positions of the IRS
contained in revenue rulings, revenue procedures and other IRS pronouncements,
and published judicial decisions. We do not know whether a court would sustain
any position we take for tax purposes, if contested, or whether there might be
legislative or administrative changes or court decisions that would modify this
discussion. Any of these changes may or may not be retroactive with respect to
transactions prior to the date of the changes. Moreover, it is possible that the
changes, even if not applied retroactively, could reduce the tax benefits
anticipated to be associated with an investment in units.

We urge you to consult and rely upon your own tax advisor with respect to the
federal and state consequences arising from an investment in units. The cost of
the consultation could, depending on the amount charged to you, decrease any
return anticipated on the investment. Nothing in this prospectus is or should be
construed as legal or tax advice to any specific investor as individual
circumstances may vary. This federal income tax consequences section of this
prospectus only provides the current state of

<PAGE>

tax laws. You should be aware that the IRS may not agree with all tax positions
taken by us and that legislative, administrative or court decisions may reduce
or eliminate your anticipated tax benefits.

Classification as a Partnership

Under Treasury Regulations issued in December 1996, a domestic limited
liability company with more than one member will be classified as a partnership
for federal income tax purposes unless it makes an election to be classified as
an association taxable as a corporation. We are a domestic limited liability
company, and we have more than one member. Vestin Mortgage will not cause us to
make an election to be classified as an association taxable as a corporation.
Based on the foregoing, it is the opinion of tax counsel that we will be
classified as a partnership for federal income tax purposes.

Assuming that we will be classified as a partnership for federal income tax
purposes, in the discussion that follows, as the context requires:

o the use of the term partnership will be construed to refer also to a
limited liability company classified as a partnership for federal income
tax purposes;

o the use of the term partner will be construed to refer also to a member of
a limited liability company; and

o the use of the terms partnership interest or interest in the partnership or
similar terms will be construed to refer also to the interest of a member
in a limited liability company.

We Will Not Be Classified As A Publicly Traded Partnership

Section 7704 of the Internal Revenue Code treats publicly traded partnerships
as corporations for federal income tax purposes. Section 7704(b) of the Internal
Revenue Code defines the term publicly traded partnership as any partnership,
including a limited liability company otherwise classified as a partnership for
federal income tax purposes, where the equity interests are:

o readily traded on an established securities market; or

o readily tradable on a secondary market or the substantial equivalent of a
secondary market. In the discussion that follows, the references to a
secondary marked also include the substantial equivalents to a secondary
market.

In 1995, the IRS issued final Treasury Regulations under Section 7704 of the
Internal Revenue Code. These regulations provide that an established securities
market includes:

o a national securities exchange registered under the Securities Exchange
Act of 1934;

o a national securities exchange exempt from registration because of the
limited volume of transactions;

o a foreign securities exchange;

o a regional or local exchange; and

o an interdealer quotation system that regularly disseminates firm buy or
sell quotations by identified brokers or dealers by electronic means or
otherwise.

In determining when partnership interests will be treated as readily tradable
on a secondary market, there are a number of safe harbors that allow certain
transactions to be disregarded including a safe harbor that is available if the
sum of the percentage interests in partnership capital or profits that are sold
or otherwise disposed of during the taxable year does not exceed two percent
(2%) of the total interests in partnership capital or profits.

The IRS will disregard certain transfers for purposes of determining whether
this safe harbor is met:

o transfers at death,

o transfers in which the basis is determined under Section 732 of the
Internal Revenue Code,

o interests issued by the partnership for cash, property or services, and

<PAGE>
o interests in the partnership which are redeemed pursuant to the safe harbor
discussed in the next paragraph.

The IRS also will disregard transfers of an interest in a partnership
pursuant to a redemption or repurchase agreement where the partnership maintains
a plan of redemption or repurchase in which the partners may tender their
partnership interests for purchase by the partnership, another partner or
persons related to another partner. These transfers will be disregarded in
determining that our units are readily tradable on a secondary market if:

o the redemption agreement requires that the redemption cannot occur until at
least 60 calendar days after the partner notifies the partnership in
writing of the partner's intention to exercise the redemption rights;

o the redemption agreement requires that the redemption price cannot be
established until at least 60 days after receipt of the notification by the
partnership or the price is established not more than 4 times during the
partnership's taxable year; and

o the sum of the percentage interests in partnership capital and profits
represented by partnership interests that are transferred, other than in
transfers otherwise disregarded, as described above, during the taxable
year of the partnership, does not exceed 10% of the total interests in
partnership capital or profits.

Our operating agreement provides that, subject to the limitations described
elsewhere in this prospectus, you may withdraw or partially withdraw as a member
and obtain the return of your outstanding capital account. These provisions
constitute a redemption or repurchase agreement within the meaning of these
regulations.

The limitations on your right to withdraw your capital account set forth in
our operating agreement include:

o a requirement that the withdrawal will not be made until at least 61 days
after written notice of withdrawal is delivered to Vestin Mortgage;

o the amount distributed to you will be a sum equal to your capital account
as of the date of the distribution; and

o in no event will Vestin Mortgage permit the withdrawal during any calendar
year of more than 10% of the outstanding units.

In the opinion of tax counsel, the foregoing limitations satisfy the
requirements applicable to the safe harbor for transfers made pursuant to a
redemption or repurchase agreement.

Our operating agreement provides that you may not transfer your units if
Vestin Mortgage determines that the transfer would result in our being
classified as a publicly traded partnership within the meaning of Section
7704(b) of the Internal Revenue Code. To prevent this classification, our
operating agreement provides that:

o Vestin Mortgage will not permit trading of units on an established
securities market within the meaning of Section 7704(b) of the Internal
Revenue Code;

o Vestin Mortgage will prohibit any transfer of units which would cause the
sum of percentage interests in our capital or profits represented by
partnership interests that are transferred during any taxable year to
exceed the limitation under the safe harbor which applies if the sum of the
percentage interests in the partnership capital or profits that are sold or
otherwise disposed of during the taxable year does not exceed two percent
of the total interests in partnership capital or profits; and

o Vestin Mortgage will not permit any withdrawal of units except in
compliance with the provisions of our operating agreement.

Based upon the provisions of our operating agreement and the representations
of Vestin Mortgage, tax counsel's opinion is that:

<PAGE>
o units will not be traded on an established securities market within the
meaning of Section 7704 of the Internal Revenue Code;

o our operation with regard to the withdrawal by members will qualify for the
safe harbor that applies to interests which are transferred pursuant to a
redemption or repurchase agreement;

o our operation with regard to the transfer of units by members will qualify
for the above-referenced safe harbor that applies based upon the percentage
interests in the partnership capital or profits that are sold or otherwise
disposed of during the taxable year;

o units will not be considered as readily tradable on a secondary market; and

o we will not be classified as a publicly traded partnership for purposes of
Section 7704 of the Internal Revenue Code.

A partnership which is classified as a publicly traded partnership under
Section 7704 of the Internal Revenue Code will not be treated as a corporation
for federal income tax purposes if 90% or more of its gross income is qualifying
income. Qualifying income under Section 7704(c) includes for these purposes,
among other passive-type items, interest, dividends, real property rents, and
gains from the sale of real property, but excludes interest derived in the
conduct of a financial business.

If a publicly traded partnership is not taxed as a corporation because it
meets the qualifying income test, the passive loss rules discussed below are
applied separately to the partnership, and a tax-exempt partner's share of the
partnership's gross income is treated as income from an unrelated trade or
business under the unrelated trade or business taxable income rules discussed
below.

It is not clear whether we would satisfy the qualifying income test of
Section 7704(c) of the Internal Revenue Code, and tax counsel is unable to give
an opinion on this issue. This would be relevant only if it were determined that
we should be classified as a publicly traded partnership. Vestin Mortgage
expects that more than 90% of our income will be qualifying income. However, it
is not clear whether we will be engaged in the conduct of a financial business,
and tax counsel is unable to give an opinion on this issue. If we were
classified as a publicly traded partnership and considered to be engaged in a
financial business, we would be treated as a corporation for federal income tax
purposes.

General Principles of Partnership Taxation

A partnership is not subject to any federal income taxes. We will file
information returns reporting our operations on the accrual basis for each
calendar year.

Determination of Basis in Units

You will not be taxed on distributions you receive from us unless the
distributions exceed your adjusted basis in your units. Your adjusted basis in
your units is the amount you originally paid for the units increased by:

o your proportionate share of partnership indebtedness with respect to which
no member is personally liable;

o your proportionate share of our taxable income, and

o any additional capital contributions made by you, and decreased by:

o your proportionate share of our losses,

o the amount of cash, and fair value of noncash, distributions to you, and

o any decreases in your share of any of partnership nonrecourse liabilities.

Any increase in nonrecourse liabilities is treated as a cash contribution and
a decrease in nonrecourse liabilities is treated as a cash distribution, even
though you do not actually contribute or receive cash. Distributions in excess
of your basis generally will be treated as gain from the sale or exchange of
your units.

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Allocations of Profits and Losses

We will allocate to the members profits and losses and cash distributions in
the manner described in our operating agreement. Any allocation of profits and
losses will be recognized as long as it has substantial economic effect under
the Treasury Regulations promulgated under Section 704(b) of the Internal
Revenue Code by satisfying one of these tests:

o it has substantial economic effect;

o it is in accordance with the partners' interest in the partnership,
determined by taking into account all facts and circumstances; or

o it is deemed to be in accordance with the partners' interest in the
partnership.

We have decided to establish the validity of the allocations of profits and
losses under our operating agreement by demonstrating that these allocations
will be in accordance with the partners' interest in the partnership. The
allocations of profits, losses and cash distributions contained in our operating
agreement will be substantially proportionate to the capital accounts of the
members. For this reason, in the opinion of tax counsel, the IRS should treat
the allocations as being substantially in accordance with the partners'
interests in the partnership within the meaning of this alternative method for
establishing the validity of allocations.

Limitations on the Deduction of Losses

We do not expect that we will incur net losses in any taxable year. However,
if we were to incur losses in any year, your ability to deduct your distributive
share of the losses would be subject to the potential application of the
limitations discussed below.

The Basis Limitation

Section 704(d) of the Internal Revenue Code provides that a partner's share
of partnership losses is deductible only to the extent of his adjusted basis in
his partnership interest at the end of the year in which the losses occur.
Losses disallowed under Section 704(d) of the Internal Revenue Code may be
carried forward indefinitely until adequate basis is available to permit their
deduction. Due to this limitation, you will be precluded from deducting losses
in excess of your adjusted basis in your units.

The At Risk Limitation

Section 465 of the Internal Revenue Code provides that a partner's share of
partnership losses is deductible only to the extent the partner is at risk. The
primary effect of this provision is to limit the availability of tax losses of a
partnership as offsets against other taxable income of a partner to the
partner's adjusted basis in his partnership interest, excluding any portion of
adjusted basis attributable to partnership nonrecourse indebtedness. In
addition, the at risk amount does not include contributions by a partner to the
extent the partner used the proceeds of a nonrecourse borrowing to make the
contributions.

The Passive Loss Rules

Section 469 of the Internal Revenue Code limits the deductibility of losses
from passive activities for individuals, estates, trusts and certain closely-
held corporations. A passive activity includes an activity which involves the
conduct of a trade or business in which the taxpayer does not materially
participate. Losses from passive activities are only allowed to offset income
from passive activities and will not be allowed to offset portfolio income,
trade or business income or other nonpassive income, including wages or
salaries. Suspended losses and credits attributable to passive activities are
carried forward and treated as deductions and credits from passive activities in
the next year. Suspended losses from a passive activity are allowed in full when
the taxpayer disposes of his entire interest in the passive activity in a
taxable transaction.

The Treasury Regulations under Section 469 of the Internal Revenue Code
provide that in certain situations, net income, but not net loss from a passive
activity is treated as nonpassive. One of the items covered by these regulations
is net income from an equity-financed lending activity. An equity- financed
lending activity is defined as an activity that involves a trade or business of
lending money, if the average outstanding balance of liabilities incurred in the
activity for the taxable year does not exceed 80% of the average outstanding
balance of the interest-bearing assets held in the activity for the year.

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Vestin Mortgage expects that at no time will the average outstanding balance
of our liabilities exceed 80% of the average outstanding balance of our mortgage
loans. If we are deemed to be engaged in the trade or business of lending money,
our income will generally be recharacterized as nonpassive income, even though
our net losses or your loss on the sale of a unit will be treated as passive
activity losses.

If we are not considered engaged in a trade or business of lending money,
then income and loss will be considered portfolio income and loss, and you will
not be permitted to offset passive losses from other activities against your
share of our income.

Section 67(a) of the Internal Revenue Code provides that most miscellaneous
itemized deductions are deductible by an individual taxpayer only to the extent
that they exceed 2% of the taxpayer's adjusted gross income and are subject to
additional limitations for certain high-income taxpayers. Deductions from a
trade or business are not subject to these limitations. Your allocable share of
our expenses will be considered miscellaneous itemized deductions subject to
this 2% limitation only if we are not considered to be in the trade or business
of lending money.

Computation of Gain or Loss on Sale or Redemption of Units

If you sell your units, including a sale of your units to us in a redemption
transaction, you will recognize gain or loss on the sale measured by the
difference between the amount realized and your adjusted basis in the units.

Character of Gain or Loss

Gain on the sale of units which have been held over 12 months should be
taxable as long-term capital gain, except for that portion of the gain allocable
to substantially appreciated inventory items and unrealized receivables, as
those terms are defined in Section 751 of the Internal Revenue Code, which would
be treated as ordinary income. We may have unrealized receivables arising from
the ordinary income component of market discount bonds. In addition, if we hold
property as a result of foreclosure, which is unsold at the time you sell your
units, or hold an investment in a mortgage loan that is classified as an equity
interest, the amount of ordinary income that would result if we were to sell the
property is expected to be an unrealized receivable.

For noncorporate taxpayers, long-term capital gain for assets held longer
than 12 months is subject to a maximum rate of 20%, or 10% for individuals in
the 15% tax bracket. The amount of ordinary income against which a noncorporate
taxpayer may deduct a capital loss is the lower of $3,000 or $1,500 in the case
of a married taxpayer filing a separate return, or the excess of these losses of
the taxpayer over the taxpayer's capital gain.

Tax Rates on a Partner's Share of Ordinary Income from the Partnership

Your tax liability with respect to an investment in units will depend upon
your individual tax bracket. Currently, there are five tax brackets for
individuals. For calendar year 2000,

o the first bracket is at 15% on taxable income not over $43,850 in the case
of married taxpayers filing joint returns,

o the second at 28% on taxable income from $43,850-$105,950,

o the third at 31% on taxable income from $105,950-$161,450,

o the fourth at 36% on taxable income from $161,450-$288,350, and

o the fifth at 39.6% on taxable income over $288,350.

Distributions and Deemed Distributions

Distributions to you from us may take the form of either actual cash
distributions or so-called "deemed distributions." A deemed distribution is
treated as a cash distribution and can result from your decision to participate
in our distribution reinvestment plan. If you elect to participate in our
distribution reinvestment plan, under the terms of our operating agreement, you
will be deemed to have received a distribution of your share of net income and
to have recontributed the same amount to DM LLC.

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Our operating agreement also provides that a deemed distribution and an
equivalent recontribution will result if we reinvest our net proceeds from any
capital transactions in new mortgage loans. Capital transactions are defined in
the operating agreement to include payments of principal, foreclosures and
prepayments of mortgages, or any other disposition of a mortgage or property.
For this purpose, a disposition of a mortgage is deemed to occur if "significant
modifications" to the mortgage are made within the meaning of Section 1001 of
the Internal Revenue Code and the regulations thereunder.

Distributions to you, including deemed distributions, will not generate
taxable income to you unless and to the extent the amount of any such
distribution exceeds your basis in your units. We do no anticipate that you will
recognize any taxable income as a result of any deemed distributions resulting
from your election to participate in our distribution reinvestment plan or from
our decision to reinvest net proceeds from any capital transactions (including
significant modifications of any existing mortgage).

Depreciation

From time to time we may acquire equity or leasehold interests in real
property by foreclosure. The cost of the improvements on any of these owned real
property may be recovered through depreciation deductions over a period of 39
years.

Investment Interest

Section 163(d) of the Internal Revenue Code, applicable to noncorporate
taxpayers and S corporation shareholders, limits the deductibility of interest
incurred on loans used to acquire or carry property held for investment.
Property held for investment includes all investments held for the production of
taxable income or gain, but does not include trade or business property or
interest incurred to construct trade or business property. Investment interest
is deductible by noncorporate taxpayers and S corporation shareholders only to
the extent it does not exceed net investment income for the taxable year.

Net investment income is the excess of investment income over the sum of
investment expenses. Interest expense we incur and interest expense you incur to
acquire your units will not be treated as investment interest to the extent
attributable to a passive activity conducted by us. However, that portion of
interest expense allocable to portfolio investments is subject to the investment
interest limitations.

Interest attributable to debt you incur in order to purchase or carry units
may constitute investment interest subject to these deductibility limitations.
You should consider the effect of investment interest limitations on using debt
financing for your purchase of units.

Tax Treatment of Tax-Exempt Entities

Sections 511 through 514 of the Internal Revenue Code impose a tax on the
unrelated business taxable income of organizations otherwise exempt from tax
under Section 501(a) of the Internal Revenue Code. The entities subject to the
unrelated business income tax include:

o qualified plans, and

o IRAs.

Other charitable and tax-exempt organizations are also generally subject to
the unrelated business income tax. Interest income is not subject to this tax
unless it constitutes debt-financed income.

Unrelated business taxable income includes gross income, which may be subject
to deductions and modifications, derived from any trade or business regularly
carried on by a partnership. Among the items excluded from unrelated business
taxable income are:

o interest and dividend income;

o rents from real property, other than debt-financed property or property
from which participating rentals are derived; and

o gains on the sale, exchange or other disposition of assets held for
investment.

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The receipt of unrelated business taxable income by an entity subject to the
unrelated business income tax has no effect on the entity's tax-exempt status or
on the exemption from tax of its other income; however, the continual receipt of
unrelated business taxable income may cause some of these entities to lose their
exemptions. For certain types of entities subject to this tax, the receipt of
any unrelated business income taxable may cause all income of the tax-exempt
entity to be subject to tax. For example, for charitable remainder trusts, the
receipt of any taxable income from an unrelated trade or business during a
taxable year will result in the taxation of all of the trust's income from all
sources for that year. If you are a tax-exempt entity, we urge you to consult
your own tax advisors concerning the possible adverse tax consequences resulting
from an investment in units.

Vestin Mortgage intends to invest our assets so as to assure that tax-exempt
members will not derive unrelated business taxable income or unrelated debt-
financed income with respect to their units. Unrelated debt-financed income
might be derived in the event that Vestin Mortgage deems it advisable to incur
indebtedness under a line of credit in connection with foreclosures on property
where mortgagors have defaulted on their loans.

If we acquire property subject to acquisition indebtedness, the income
attributable to the portion of the property which is debt financed may be
treated as unrelated business taxable income to the entity holding units.

Sales of foreclosure property might also produce unrelated business taxable
income if we are characterized as a dealer with respect to that property.
Mortgage loans which we invest in or purchase which permit us to participate in
the appreciation value of the properties may be recharacterized by the IRS as an
equity interest and the recharacterization could result in unrelated debt-
financed income. The IRS might not agree that our other income is not subject to
tax under the unrelated business income and unrelated debt-financed income tax
provisions.

If an IRA or a qualified plan is a member and its partnership income
constitutes unrelated business taxable income, this income is subject to tax
only to the extent that its unrelated business taxable income from all sources
exceeds $1,000 for the taxable year.

In considering an investment in units of a portion of the assets of a
qualified plan or IRA, a fiduciary should consider:

o whether the investment is in accordance with the documents and instruments
governing the plan or IRA;

o whether the investment satisfies the diversification requirements of
Section 404(a)(1)(c) of ERISA;

o whether the investment is prudent considering, among other matters, that
there probably will not be a market created in which the investment can be
sold or otherwise disposed of; and

o whether the investment would cause the IRS to impose an excise tax under
Section 4975 of the Internal Revenue Code.

We do not expect an investment in units by an IRA to be subject to the above
diversification and prudence requirements of ERISA unless the IRA also is
treated under Section 3(2) of ERISA as part of an employee pension benefit plan
which is established or maintained by an employer, employee organization, or
both.

Partnership Tax Returns, Tax Information and Audits

Vestin Mortgage will prepare our information income tax returns. In
connection with the preparation of our income tax returns, Vestin Mortgage will
prepare and distribute to the Members not later than seventy-five (75) days
after the close of each fiscal year all information necessary in the preparation
of the Members' federal income tax returns, including our Schedule K (Form
1065), Partner's Share of Income, Credits, Deductions, and each Member's
respective Schedule K-1. Such information will not be supplied to assignees who
are not substitute Members.

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You are required to report your distributive share of the items set forth on
your Schedule K-1 on your individual tax return consistent with our treatment of
the items on our returns. You may report an item inconsistently if you file a
statement with the IRS identifying the inconsistency. Otherwise, the IRS may
summarily assess additional tax necessary to make your treatment of the item
consistent with our treatment of the item without a notice of deficiency or an
opportunity to protest the additional tax in the Tax Court being afforded to
you. Penalties for intentional disregard of the consistency requirements may
also be assessed.

Our tax returns may be audited by the IRS. Tax audits and adjustments are
made at our level in once unified proceeding, the results of which are binding
on all members. You may, however, protest the additional tax paying the full
amount thereof and suing for a refund in either the U.S. Claims Court or a U.S.
District Court.

Vestin Mortgage is Tax Matters Partner

A limited liability company which is classified as partnership for tax
purposes must designate a tax matters partner to represent it in dealing with
the IRS. Vestin Mortgage will serve as the tax matters partner to act on our
behalf and on behalf of the members with respect to partnership items, to deal
with the IRS and to initiate any appropriate administrative or judicial actions
to contest any proposed adjustments at the partnership level.

If you own less than a 1% of the units, you will not receive notice from the
IRS of these administrative proceedings unless you form a group with other
members, having an aggregate interest of 5% or more, and request the notice.
However, all members have the right to participate in the administrative
proceedings will be our responsibility and may adversely affect the
profitability, if any, of our operations.

Adjustments, if any, resulting from any audit may require you to file an
amended tax return, and may result in an audit of your own tax return. Any audit
of your tax return could result in adjustments of items unrelated to our
operations as well as income and losses from our operations.

Original Issue Discount Rules

The original issue discount rules under the Internal Revenue Code pertain to
mortgage loans and obligations issued by us. The effect will be that we will
realize as interest income the amount that economically accrues under a mortgage
loan during the course of the year, using compound interest concepts, even where
a lesser amount is actually paid or accrued under its terms. Identical concepts
will be used for determining our interest deduction on our obligations, if any.

Market Discount

We may purchase mortgage investments for an amount substantially less than
the remaining principal balance of the mortgage investments. Each monthly
payment which we receive from a mortgagor will consist of interest at the stated
rate for the investment in a mortgage loan and a principal payment. If we
purchase an investment in a mortgage loan at a discount, for federal income tax
purposes the principal portion of each monthly payment will constitute the
return of a portion of our investment in the investment in a mortgage loan and
the payment of a portion of the market discount for the investment in a mortgage
loan.

We will recognize the amount of each monthly payment attributable to market
discount as ordinary income, but the amount of each monthly payment representing
the return of our investment will not constitute taxable income to us. The
Internal Revenue Code also treats accrued market discount as ordinary income on
the sale of an investment in a mortgage loan.

No Section 754 Election -- Impact on Subsequent Purchasers

Section 754 of the Internal Revenue Code permits a partnership to elect to
adjust the basis of its property in the case of a transfer of an interest in the
partnership. The effect of this election would be that, with respect to the
transferee only, the basis of our property would either be increased or
decreased by the difference between the transferee's basis for his units and his
proportionate share of our basis for all proportionate share of our basis for
all property we own.

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Vestin Mortgage has decided that due to the accounting difficulties which
would be involved, it will not cause us to make an election pursuant to Section
754 of the Internal Revenue Code. Accordingly, our basis in our assets will not
be adjusted to reflect the transferee's purchase price of his units.

This treatment might not be attractive to prospective purchasers of units,
and you might have difficulty for that reason in selling your units or you might
be forced to sell at a discounted price.

Treatment of Compensation of Vestin Mortgage

We will pay Vestin Mortgage and its affiliates certain fees and expenses for
services relating to the conduct of our business, including real estate
brokerage fees of up to 3% of proceeds from the resale of foreclosed property
and an annual management fee of up to 0.25%.

In computing our taxable income for each year, we intend:

o to reduce our gain from the resale of any foreclosed property sold during
such year by the amount of all real estate brokerage fees paid to Vestin
Mortgage and its affiliates,

o to allocate income and losses to Vestin Mortgage consistent with its
capital account.

Our ability to obtain the foregoing tax treatment relative to these fees
depends in large measure on the value of the services rendered in exchange
therefore, which is a question of fact that may depend on events to occur in the
future. Due to this uncertainty, tax counsel was unable to give an opinion as to
the proper tax treatment of these fees, and the IRS may attempt to
recharacterize one or more aspects of our treatment of these items by, for
example, disallowing the deduction of fees paid. If successful, such
recharacterization could cause the tax benefits generated by these payments
and/or allocations of profits and losses to Vestin Mortgage to be deferred or
lost.

Vestin Mortgage will also be entitled to fees payable by borrowers in
connection with our investing in or purchasing a mortgage loan. These fees
include loan brokerage fees for loan selection and origination, loan evaluation
and processing fees and loan extension fees. The exact amount of the foregoing
fees will be negotiated with prospective borrowers on a case-by-case basis. In
addition, Vestin Mortgage will act as a servicing agent with respect to our
investments, for which it will be paid by the relevant borrower an annual fee of
up to one-quarter of one percent (0.25%) of the unpaid balance of the respective
mortgage loan serviced.

Since any of the commissions or fees described in the preceding paragraph
will be payable by the borrowers, their payment should not have any effect on
the calculation of our taxable income. The IRS could take the position that
these commissions or fees, or any of them, are constructively paid by us, in
which case our interest income would be increased by the amount of the
commissions, and we could deduct the commissions only to the extent the
commissions or fees are reasonable compensation for the services rendered and
otherwise considered deductible expenditures. This could result in an increase
in the Company's taxable income for any year in which such a recharacterization
occurs and an allocation of this increase in taxable income among the members.

Since this is ultimately an issue of fact which may depend on future events,
tax counsel was unable to give an opinion regarding the issue.

We will receive fees from borrowers when Vestin Mortgage

o permits the reconveyance of property upon full payment of a loan,

o permits the assumption of a loan,

o acts as escrow agent for our mortgage investments, or

o receives a delinquent payment under a mortgage loan or, in some cases, a
prepayment of a mortgage loan.

We expect that our fees will be comparable to those generally prevailing in
the geographic area where the mortgaged property is located. These fees will be
included as income when we calculate our taxable income.

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Possible Legislative Tax Changes

In recent years there have been a number of proposals made in Congress by
legislators, government agencies and by the executive branch of the federal
government for changes in the federal income tax laws. In addition, the IRS has
proposed changes in regulations and procedures, and numerous private interest
groups have lobbied for regulatory and legislative changes in federal income
taxation. It is impossible to predict the likelihood of adoption of any
proposal, the likely effect of any proposals upon the income tax treatment
presently associated with investment in mortgage loans or units, or the
effective date, which could be retroactive, of any legislation which may derive
from any past or future proposal.

We strongly urge you to consider ongoing developments in this uncertain area
and to consult your own tax advisors in assessing the risks of investment in
units.

State and Local Taxes

We currently contemplate investing in or purchasing loans in Nevada,
California and Arizona. Nevada does not have an income tax law, and, we believe
that no taxes will be imposed by the State of Nevada or any of its localities on
our assets or income or on any member's share of any income derived from our
activities in Nevada.

California and Arizona may impose a tax on our assets or income, or on each
member based on his share of any income derived from our activities in those
states. In addition, we may decide to invest in or purchase loans secured by
properties in other states and localities which also may impose these taxes.

If you are entity that is exempt from federal income taxation, it is likely
that you are also exempt from state and local taxation.

The state in which you reside may impose taxes on your share of any income
derived from your interest in us. You should consult with your own tax advisors
concerning the applicability and impact of any state and local tax laws in your
state of residence.

ERISA Considerations

ERISA requires that the assets of qualified plans be held in trust and that
the trustee, or a duly authorized investment Manager, within the meaning of
Section 3(38) of ERISA shall have exclusive authority and sole discretion to
manage and control the assets of the plan. ERISA also imposes certain duties on
persons who are fiduciaries of employee benefit plans subject to its provisions
and prohibits certain transactions between ERISA and an employee benefit plan
and the parties in interest with respect to qualified plans, including
fiduciaries.

Under the Internal Revenue Code, similar prohibitions apply to all qualified
plans and IRAs. Under ERISA, any person who exercises any authority or control
respecting the management or disposition of the assets of a qualified plan or
IRA is considered to be a fiduciary of the plan or IRA, subject to certain
exceptions not here relevant.

ERISA and the Internal Revenue Code also prohibit parties in interest,
including fiduciaries of an IRA or qualified plan, from engaging in various acts
of self-dealing. To prevent a possible violation of these self-dealing rules,
Vestin Mortgage may not permit the purchase of units with assets of any IRA or
qualified plan if Vestin Mortgage:

o has investment discretion with respect to the assets of the plan or IRA, or

o regularly gives individualized investment advice which serves as the
primary basis for the investment decisions made with respect to the assets
of the plan or IRA.

Annual Valuation

Fiduciaries of any qualified plan subject to ERISA are required to determine
annually the fair market value of the assets of the plan as of the close of the
plan's fiscal year. Although Vestin Mortgage will provide annually upon the
written request of a member an estimate of the value of the units based upon,
among other

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things, outstanding mortgage investments, fair market valuation based on trading
will not be possible because there will be no market for the units.

Plan Assets Generally

If our assets are deemed to be plan assets under ERISA:

o our investment will be subject to the prudence standards and other
provisions of ERISA applicable to investments by qualified plans and their
fiduciaries would extend to investments made by us,

o certain transactions that we might seek to enter into might constitute
prohibited transactions under ERISA and the Internal Revenue code because
Vestin Mortgage would be deemed to be a fiduciary of the plans, and

o our audited financial information would have to be reported annually to the
Department of Labor.

In 1986, the Department of Labor promulgated final regulations defining the
term plan assets. Under these regulations, when a plan makes an equity
investment in another entity, the underlying assets of that entity will be
considered plan assets unless one or more of the following exemptions applies:

o equity participation by benefit plan investors is not significant,

o the entity is a real estate operating company, or

o the equity interest is a publicly-offered security.

Exemption for Insignificant Participation by Qualified Plans. This exemption
is available if less than 25% of each class of equity interests in the
corporation or partnership is held in the aggregate by qualified plans or IRAs.

For purposes of this 25% rule, the interests of any person who had
discretionary authority or control with respect to the assets of the entity, or
who provides investment advice for a fee with respect to the assets of the
entity, or any affiliate of a person who has that authority or control, shall be
disregarded.

Thus, while Vestin Mortgage and its affiliates are not prohibited from
purchasing units, any purchases of units by any of them will be disregarded in
determining whether this exemption is satisfied. We cannot assure you that we
will always qualify for this exemption.

Exemption For a Real Estate Operating Company. For purposes of this
exemption, an entity is a real estate operating company if at least 50% of its
assets valued at cost, other than short-term investments pending long-term
commitment, are invested in real estate which is managed or developed and with
respect to which the entity has the right substantially to participate directly
in the management or development of real estate.

The preamble to these regulations states the Department of Labor's view that
an entity would not be engaged in the management or development of real estate
if it merely services mortgages on real estate. Thus, it is unlikely that we
would qualify for an exemption from plan assets treatment as a real estate
operating company.

Exemption for Publicly Offered Securities. For purposes of this exemption, a
publicly offered security is a security that is:

o freely transferable,

o part of a class of securities that is owned by 100 or more investors
independent of the issuer and of one another, and

o either part of a class of securities registered under Section 12(b) or
12(g) of the Exchange Act of 1934, or sold to the plan as part of an
offering of securities to the public pursuant to an effective registration
statement under the Securities Act and the class of securities of which the
security is a part is registered under the Securities Exchange Act of 1934
within 120 days, or such later time as may be allowed by the Securities and
Exchange Commission, after the end of the fiscal year of the issuer during
which the offering of such securities to the public occurred.

<PAGE>
For purposes of this definition, whether a security is freely transferable is
a factual question to be determined on the basis of all relevant facts. If a
security is part of an offering in which the minimum is $10,000 or less,
however, certain customary restrictions on the transferability of partnership
interests necessary to permit partnerships to comply with applicable federal and
state laws, to prevent a termination or of the entity for federal or state tax
purposes and to meet certain enumerated administrative needs not, alone or in
combination, affect a finding that such securities are freely transferable.

The units will be sold as part of an offering of securities to the public
pursuant to registration under the Securities Act, and Vestin Mortgage has
represented that it will cause us to register the units under the Exchange Act
within 120 days, or such later time as may be allowed by the Securities and
Exchange Commission, after the end of our fiscal year during which the offering
of units to the public occurred. The units will not be subject to any
restrictions on transfer other than those enumerated in the operating agreement,
these regulations and referenced in the preceding paragraph. Based on the
foregoing, the units should be publicly offered securities within the meaning of
these regulations. As a result, our underlying assets should be not considered
to be plan assets under these regulations.

<PAGE>
HOW WE PROTECT OUR RIGHTS AS A LENDER

The following discussion is a summary of legal aspects of mortgage loans.
Because this is a summary, it does not contain all the information that may be
important to you. Many of the legal aspects of mortgage loans are governed by
applicable state laws, which may vary substantially. The following material does
not reflect the laws of any particular state, unless specifically indicated.

Overview of Mortgages

We invest in mortgage loans. In connection with these loans, we receive
mortgages or other similar instruments such as deeds of trust, granting us
rights in the security properties. Our authority under a mortgage is governed by
applicable law and the express provisions of the mortgage.

Priority of liens on mortgaged property created by mortgages depends on their
terms and on the order of filing with a state, county or municipal office,
although this priority may be altered by the mortgagee's knowledge of unrecorded
liens against the security property. However, filing or recording does not
establish priority over governmental claims for real estate taxes and
assessments. In addition, the Internal Revenue Code provides priority for
certain tax liens over the mortgage.

Foreclosure

Non-judicial Foreclosure

If a mortgage loan secured by a deed of trust is in default, we will protect
our rights by foreclosing by a non-judicial sale. Deeds of trust differ from
mortgages in form, but are in most other ways similar to mortgages. Deeds of
trust will contain specific provisions enabling non-judicial foreclosure in
addition to those provided for in applicable statutes upon any material default
by the borrower. Applicable state law controls the extent that we have to give
notice to interested parties and the amount of foreclosure expenses and costs,
including attorney's fees, which may be covered by a lender, and charged to the
borrower.

Judicial Foreclosure

Foreclosure under mortgage instruments other than deeds of trust is more
commonly accomplished by judicial action initiated by the service of legal
pleadings. When the mortgagee's right to foreclose is contested, the legal
proceedings necessary to resolve the issue can be time-consuming. A judicial
foreclosure is subject to most of the delays and expenses of other litigation,
sometimes requiring up to several years to complete. For this reason, we do not
anticipate using judicial foreclosure to protect our rights due to the
incremental time and expense involved in these procedures.

When foreclosing under a mortgage instrument, the sale by the designated
official is often a public sale. The willingness of third parties to purchase
the property will depend to some extent on the status of the borrower's title,
existing redemption rights and the physical condition of the property. It is
common for the lender to purchase the security property at a public sale where
no third party is willing to purchase the property, for an amount equal to the
outstanding principal amount of the indebtedness and all accrued and unpaid
interest and foreclosure expenses. In this case, the debt owed to the mortgagee
will be extinguished. Thereafter, the mortgagee would assume the burdens of
ownership, including paying operating expenses and real estate taxes and making
repairs. The lender is then obligated as an owner until it can arrange a sale of
the property to a third party. If we foreclose on the security property, we
expect to obtain the services of a real estate broker and pay the broker's
commission in connection with the sale of the property. Depending upon market
conditions, the ultimate proceeds of the sale of the property may not equal our
investment in the property. A lender commonly incurs substantial legal fees and
court costs in acquiring a mortgaged property through contested foreclosure
and/or bankruptcy proceedings.

Lenders also need to comply with procedure-related environmental rules and
regulations. An increasing number of states require that any environmental
hazards are eliminated before a property may be resold. A lender may be
responsible under federal or state law for the cost of cleaning up a mortgaged
property that is environmentally contaminated. As a result, a lender could
realize an overall loss on a mortgage loan even if the related mortgaged
property is sold at foreclosure or resold after it is acquired through
foreclosure for an amount equal to the full outstanding principal amount of the
mortgage loan, plus accrued interest.

<PAGE>
In foreclosure proceedings, courts frequently apply equitable principles,
which are designed to relieve the borrower from the legal effects of his
immaterial defaults under the loan documents or the exercise of remedies that
would otherwise be unjust in light of the default. These equitable principles
and remedies may impede our efforts to foreclose.

Environmental Risks

Our security property may be subject to potential environmental risks. Of
particular concern may be those security properties which are, or have been, the
site of manufacturing, industrial or disposal activity. These environmental
risks may give rise to a diminution in value of the security property or
liability for clean-up costs or other remedial actions. This liability could
exceed the value of the real property or the principal balance of the related
mortgage loan. For this reason, we may choose not to foreclose on contaminated
property rather than risk incurring liability for remedial actions.

Under the laws of certain states, an owner's failure to perform remedial
actions required under environmental laws may give rise to a lien on mortgaged
property to ensure the reimbursement of remedial costs. In some states this lien
has priority over the lien of an existing mortgage against the real property.
Because the costs of remedial action could be substantial, the value of a
mortgaged property as collateral for a mortgage loan could be adversely affected
by the existence of an environmental condition giving rise to a lien.

The state of law is currently unclear as to whether and under what
circumstances clean-up costs, or the obligation to take remedial actions, can be
imposed on a secured lender. If a lender does become liable for clean up costs,
it may bring an action for contribution against the current owners or operators,
the owners or operators at the time of on-site disposal activity or any other
party who contributed to the environmental hazard, but these persons or entities
may be bankrupt or otherwise judgment-proof. Furthermore, an action against the
borrower may adversely affected by the limitations on recourse in the loan
documents.

For the foregoing reasons, we anticipate that Vestin Mortgage will protect us
and you by requiring a Phase I Environmental Site Assessment of the security
properties prior to selecting a loan for us to invest in.

Second Mortgages; Rights of Senior Mortgages

We do not presently intend to acquire mortgages that are subordinate to more
than one other mortgage. Our rights as mortgagee or beneficiary under a second
mortgages will be subordinate to those of the mortgagee under the senior
mortgage, including the prior rights of the senior mortgagee to receive rents,
hazard insurance and condemnation proceeds and to cause the security property to
be sold upon default of the mortgagor. This can extinguish a second mortgage
unless we assert our subordinate interest in foreclosure litigation or satisfy
the defaulted senior loan. In many states a junior mortgagee may satisfy a
defaulted senior loan in full, or may cure the default, and bring the senior
loan current, in either even adding the amounts expended to the balance due on
the junior loan. Absent a provision in the senior mortgage, or unless required
by state law, a senior mortgagee need not give notice of default to a junior
mortgagee.

The form of mortgage used by many institutional lenders confers on the
mortgagee the right both to receive insurance proceeds and condemnation awards.
Thus, in the event improvements on the property are damaged or destroyed by fire
or other casualty, or in the event the property is taken by condemnation, the
first mortgagee will have the prior right to collect any insurance proceeds
payable and any condemnation award of damages in and to apply the same to the
indebtedness secured by the senior mortgage. Proceeds in excess of the amount of
senior indebtedness will, in most cases, be applied to the indebtedness secured
by a junior mortgage. The right to insurance proceeds and condemnation awards
may be limited, as in cases where the mortgagor is allowed to use the insurance
proceeds and condemnation award to repair the damage unless the security of the
mortgagee has been impaired.

The form of mortgage used by many institutional lenders also contains a
"future advance" clause, which provides that additional amounts advanced to or
on behalf of the mortgagor by the mortgagee are to be secured by the mortgage.
While this type of clause is valid under the laws of most states, the priority
of any advance made under the clause may depend on whether the advance was an
"obligatory" or "optional" advance. If the mortgagee is obligated to advance the
additional amounts, the advance may be entitled to

<PAGE>
receive the same priority as amounts initially made under the mortgage,
notwithstanding that there may be intervening junior mortgages and other liens
and notwithstanding that the mortgagee or beneficiary had actual knowledge of
them. Where the mortgagee is not obligated to advance the additional amounts and
has actual knowledge of the intervening junior mortgages and other liens, the
advance may be subordinate to these intervening junior mortgages and other
liens. Priority of advances under a "future advance" clause may also rest on
state law giving priority to advances made under the loan agreement up to a
"credit limit" amount stated in the recorded mortgage.

We can also protect ourselves by including provisions obligating the
mortgagor to do the following:

o pay before delinquency all taxes and assessments on the property and, when
due, all encumbrances, charges and liens on the property which appear prior
to the mortgage,

o to provide and maintain fire insurance on the property,

o to maintain and repair the property,

o and not to commit or permit any waste on the property, and

o to appear in and defend any action or proceeding purporting to affect the
property or the rights of the mortgagee under the mortgage.

Upon a failure of the mortgagor to perform any of these obligations, we would
have the right under the mortgage to perform the obligation, with the mortgagor
agreeing to reimburse us for any sums we expend on behalf of the mortgagor. All
sums we expend become part of the indebtedness secured by the mortgage.

Statutory Rights of Redemption

After a foreclosure sale pursuant to a mortgage, the borrower and foreclosed
junior lienors may have a statutory period in which to redeem the property from
the foreclosure sale. Redemption may be limited to where the mortgagee receives
payment of all or the entire principal balance of the loan, accrued interest and
expenses of foreclosure. The statutory right of redemption diminishes the
ability of the lender to sell the foreclosed property. The right of redemption
may defeat the title of any purchaser at a foreclosure sale or any purchaser
from the lender subsequent to a foreclosure sale. One remedy we may have is to
avoid a post-sale redemption by waiving our right to a deficiency judgment.
Consequently, as noted above, the practical effect of the redemption right is
often to force the lender to retain the property and pay the expenses of
ownership until the redemption period has run.

Anti-Deficiency Legislation

We may acquire interests in mortgage loans which limit our recourse to
foreclosure upon the security property, with no recourse against the borrower's
other assets. Even if recourse is available pursuant to the terms of the
mortgage loan against the borrower's assets in addition to the mortgaged
property, we may confront statutory prohibitions which impose prohibitions
against or limitations on this recourse. For example, the right of the mortgagee
to obtain a deficiency judgment against the borrower may be precluded following
foreclosure. A deficiency judgment is a personal judgment against the former
borrower equal in most cases to the difference between the net amount realized
upon the public sale of the security and the amount due to the lender. Other
statutes require the mortgagee to exhaust the security afforded under a mortgage
by foreclosure in an attempt to satisfy the full debt before bringing a personal
action against the borrower. We may elect, or be deemed to have elected, between
exercising our remedies with respect to the security or the deficiency balance.
The practical effect of this election requirement is that lenders will usually
proceed first against the security rather than bringing personal action against
the borrower. Other statutory provisions limit any deficiency judgment against
the former borrower following a judicial sale to the excess of the outstanding
debt over the fair market value of the property at the time of the public sale.

In Nevada, we can pursue a deficiency judgment against the borrower or a
guarantor if the value of the property securing the loan is insufficient to pay
back the debt owed to us. In jurisdictions like California, however, if we
desire to seek a judgment in court against the borrower for the deficiency
balance, we may be required to seek judicial foreclosure and/or have other
security from the borrower. We would expect this to be a more prolonged
procedure, and is subject to most of the delays and expenses that affect other
lawsuits.

<PAGE>
Bankruptcy Laws

We may subject to delays from statutory provisions that afford relief to
debtors from our ability to obtain payment of the loan, to realize upon
collateral and/or to enforce a deficiency judgment. Under the United States
Bankruptcy Code of 1978, which we refer to as the Bankruptcy Code, and analogous
state laws, foreclosure actions and deficiency judgment proceedings are
automatically suspended upon the filing of the bankruptcy petition, and often no
interest or principal payments are made during the course of the bankruptcy
proceeding. The delay and consequences in obtaining our remedy can be
significant. Also under the Bankruptcy Code, the filing of a petition in
bankruptcy by or on behalf of the holder of a second mortgage may prevent the
senior lender from taking action to foreclose out the junior lien.

Under the Bankruptcy Code, the amount and terms of a mortgage on property of
the debtor may be modified under equitable principles or otherwise. Under the
terms of an approved bankruptcy plan, the court may reduce the outstanding
amount of the loan secured by the real property to the then current value of the
property in tandem with a corresponding partial reduction of the amount of the
lender's security interest. This leaves the lender having the status of a
general unsecured creditor for the differences between the property value and
the outstanding balance of the loan. Other modifications may include the
reduction in the amount of each monthly payment, which may result from a
reduction in the rate of interest and/or the alteration of the repayment
schedule, and/or change in the final maturity date. A court may approve a plan,
based on the particular facts of the reorganization case that effected the
curing of a mortgage loan default by paying arrearage over time. Also, under the
Bankruptcy Code, a bankruptcy court may permit a debtor to de-accelerate a
mortgage loan and to reinstate the loan even though the lender accelerated the
mortgage loan and final judgment of foreclosure had been entered in state court
prior to the filing of the debtor's petition. This may be done even if the full
amount due under the original loan is never repaid. Other types of significant
modifications to the terms of the mortgage or deed of trust may be acceptable to
the bankruptcy court, often depending on the particular facts and circumstances
of the specific case.

In a bankruptcy or similar proceeding action may be taken seeking the
recovery as a preferential transfer of any payments made by the mortgagor under
the related mortgage loan to the lender. Payments on long-term debt may be
protected from recovery as preferences if they are payments in the ordinary
course of business made on debts incurred in the ordinary course of business.
Whether any particular payment would be protected depends upon the facts
specific to a particular transaction.

Enforceability of Certain Provisions

Due-On-Sale Provisions

Federal law pre-empts state constitutional, statutory and case law that
prohibits the enforcement of due-on-sale clauses and permits lenders to enforce
these claims in accordance with their terms. As a result, due-on-sale clauses
are enforceable except in those states whose legislatures exercised their
limited authority to regulate the enforceability of these clauses. Due-on-sale
clauses will not be enforceable in bankruptcy proceedings.

Acceleration on Default

We may invest in mortgage loans which contain a "debt-acceleration" clause,
which permits us to accelerate the full debt upon a monetary or nonmonetary
default of the borrower. The courts of most states will enforce clauses
providing for acceleration in the event of a material payment default after we
give appropriate notices. The equity courts of any state, however, may refuse to
foreclose a mortgage when an acceleration of the indebtedness would be
inequitable or unjust. Furthermore, a borrower may avoid foreclosure and
reinstate an accelerated loan by paying only the defaulted amounts and the costs
and attorney's fees incurred by the lender in collecting these defaulted
payments.

State courts also are known to apply various legal and equitable principles
to avoid enforcement of the forfeiture provisions of instalment contracts. For
example, a lender's practice of accepting late payments from the borrower may be
deemed a waiver of the forfeiture clause. State courts also may impose equitable
grace periods for payment of arrearage or otherwise permit reinstatement of the
contract following a default. If a borrower under an instalment contract has
significant equity in the property, a court may apply equitable

<PAGE>
principles to reform or reinstate the contract or to permit the borrower to
share the proceeds upon a foreclosure sale of the property if the sale price
exceeds the debt.

Prepayment Provisions

In the absence of state statutory provisions prohibiting prepayment fees, we
expect that the courts will enforce claims requiring prepayment fees. However,
in some states prepayment fees may be unenforceable for residential loans or
after a mortgage loan has been outstanding for a number of years. Applicable law
may limit the amount of any prepayment fee to a specified percentage of the
original principal amount of the mortgage loan, to a specified percentage of the
outstanding principal balance of a mortgage loan, or to a fixed number of
month's interest on the prepaid amount. We may have to contend with laws that
render prepayment provisions on default or other involuntary acceleration of a
mortgage loan unenforceable against the mortgagor or trustor. Some state
statutory provisions may also treat prepayment fees as usurious if they exceed
statutory limits. We anticipate that our loans will not have prepayment
provisions.

Secondary Financing: Due-on-Encumbrance Provisions

Some mortgage loans may have no restrictions on secondary financing, thereby
permitting the borrower to use the mortgaged property as security for one or
more additional loans. We are more likely to invest in mortgage loans that
permit us, as first lender, to accelerate the maturity of a loan if the borrower
grants a second mortgage or in mortgage loans that require our consent to any
junior or substitute financing.

Where a borrower encumbers the mortgaged property with one or more junior
liens, the first lender is subjected to the following additional risks:

o the borrower may have difficulty servicing and repaying multiple loans;

o acts of the senior lender which prejudice the junior lender or impair the
junior lender's security may create a superior equity in favor of the
junior lender;

o if the borrower defaults on the senior loan and/or any junior loan or
loans, the existence of junior loans and actions taken by junior lenders
can impair the security available to the senior lender and can interfere
with, delay and even prevent the taking of action by the senior lender.

o the bankruptcy of a junior lender may operate to stay foreclosure or
similar proceedings by the senior lender.

We expect that our loans will prohibit junior mortgages and intend to monitor
our loans closely so that we will know when a junior lien holder acquires an
interest in the security property.

Applicability of Usury Laws

State and federal usury laws limit the interest that lenders are entitled to
receive on a mortgage loan. In determining whether a given transaction is
usurious, courts may include charges in the form of points and fees as interest,
but may exclude payments in the form of reimbursement of foreclosure expenses or
other charges found to be distinct from interest. If, however, the amount
charged for the use of the money loaned is found to exceed a statutorily
established maximum rate, the form employed and the degree of overcharge are
both immaterial. Statutes differ in their provision as to the consequences of a
usurious loan. One group of statutes requires the lender to forfeit the interest
above the applicable limit or imposes a specified penalty. Under this statutory
scheme, the borrower may have the recorded mortgage or deed of trust cancelled
upon paying its debt with lawful interest, or the lender may foreclose, but only
for the debt plus lawful interest. Under a second, more severe type of statute,
a violation of the usury law results in the invalidation of the transaction,
thereby permitting the borrower to have the recorded mortgage or deed of trust
cancelled without any payment and prohibiting the lender from foreclosing.

Nevada law does not apply limitations on interest that may be charged on the
type of loans that we intend to invest in or purchase. In California, we will
only invest in loans that were made through real estate brokers licensed by the
California Department of Real Estate. Mortgage loans made or arranged by a
licensed real estate broker are exempt from the California usury law provisions
that restrict the maximum rate of interest on California loans. All underlying
mortgage loans on California property that are invested in or purchased by us
will be arranged for us by such a licensed California real estate broker.

<PAGE>
REPORTS TO MEMBERS

Pursuant to applicable state guidelines and the undertakings we have made to
the Securities and Exchange Commission in our filings, we will be required to
deliver certain reports to our members and make various filings with the
Commission, particularly in the early stages of our operations. These reports
and filings are described in this section.

Within 75 days after the close of our fiscal year, Vestin Mortgage will
prepare and distribute to you all the information about us you need to prepare
your federal income tax return. The materials delivered to you annually will
include:

o audited financial statements: balance sheet, statements of income or loss,
Members' equity, and cash flow;

o a statement as to any transactions between us and Vestin Mortgage or its
affiliates, and of the fees, commissions, compensation and other benefits
paid by us or accrued to Vestin Mortgage or its affiliates for the fiscal
year completed, showing the amount paid or accrued to each recipient and
the respective services performed; and

o a report identifying distributions from:

--- cash flow from operations during that year,

--- cash flow from operations of prior years that had been held as
reserves,

--- proceeds from capital transactions, lease payments on net leases with
builders and sellers, and

--- reserves from the gross proceeds of the offering originally obtained
from our members.

Copies of the financial statements and reports referred to above, other than
those delivered for purposes of your income tax return, shall be distributed to
you within 120 days after the close of each taxable year.

We will also provide you with the information required by Form 10-Q within 45
days of the end of each fiscal quarter.

Because the Securities and Exchange Commission has declared effective the
registration statement of which this prospectus is a part, we have become
subject to the reporting requirements of the Securities Exchange Act. This means
that we will be required to file periodic reports, including quarterly reports
within 45 days after the end of each fiscal quarter and annual reports within 90
days of the end of each fiscal year. These reports contain financial information
and an analysis of our business for that quarter or year, including comparisons
with prior performance, as well as additional disclosure in the annual reports.
Our Manager and the holders of over 5% of our units will also be required to
file reports reflecting their levels of unit ownership. Furthermore, for so long
as the proceeds of this offering are not fully committed or returned to
investors, Vestin Mortgage shall prepare a special report containing a statement
of the amount of the mortgage loans in which we have invested, the material
terms of these loans, the identity of the borrower and the real property
securing the mortgage loans and the appraised values of that real property. This
report may be included in the quarterly report described below. We will send you
copies of the report within sixty (60) days after the end of each quarter.
Vestin Mortgage will not prepare a special report during quarters when there are
no mortgage loans or origination, placement or evaluation fees.

If we decide to register our units under Section 12(g) of the Securities
Exchange Act of 1934, Vestin Mortgage shall prepare, at our expense:

o a quarterly report for each of the first three quarters in each fiscal year
containing unaudited financial statements, consisting of a balance sheet, a
statement of income or loss and statement of cash flow, and

o a statement of other pertinent information regarding DM LLC and ts
activities during the period covered by the report.

We will distribute copies of these statements and information to you within
sixty (60) days after the close of the respective quarter.

<PAGE>
PLAN OF DISTRIBUTION

Vestin Capital, Inc. (formerly DM Financial Services, Inc.), our lead dealer,
is using this prospectus to offer units to the public on our behalf. Vestin
Capital, which is an NASD member, is an affiliate of Vestin Mortgage and wholly
owned subsidiary of Vestin Group, Inc., the Delaware corporation that owns
Vestin Mortgage. In addition, employees of Vestin Mortgage where they may
legally do so sell units directly. They will not receive any compensation for
such sales. Vestin Mortgage may pay Vestin Capital up to 1.0% of the gross
proceeds of the sale of units it sells as a fee for selling the units and for
managing any selected dealers. Vestin Capital may engage non-affiliated
securities brokerage firms that are members of the NASD to act as selected
dealers to sell units to the public. Vestin Mortgage will pay the selected
dealers sales commissions of up to 3.5% of the gross proceeds of their
respective sales of units. We will not reimburse Vestin Mortgage for such
commissions or any expenses incurred by Vestin Capital and reimbursed by Vestin
Mortgage in connection with this offering. Vestin Mortgage's capital account in
the Company will be credited up to a maximum of $1,000,000 for offering expenses
paid by Vestin Mortgage on our behalf to third parties that are not affiliated
with Vestin Mortgage. In no event will the maximum compensation to be paid to
NASD members by Vestin Mortgage in connection with this offering exceed 10% of
the gross proceeds plus 0.5% for bona fide due diligence expenses.

We will be reviewing subscription applications as they are received. We will
indicate our acceptance of your subscription agreement by countersigning it and
indicating the number of units we will issue.

We will seek to sell a total of 10,000,000 units for $100,000,000, which
includes units to be issued under our distribution reinvestment plan. We may
sell units through December 31, 2001, or we may decide to end the offering. In
certain states where the offering will be made, we may not be allowed to extend
the offering beyond one year unless we have the permission of the appropriate
state agency.

If you want to purchase units, you should complete the subscription
agreement, which you can find at Exhibit B to this prospectus and which will be
provided by the person or the securities dealer that offered you the units. You
should return the subscription agreement and full payment for the units being
purchased to that dealer and make your payment to "DM Mortgage Investors, LLC".
You may obtain additional copies of the subscription agreement from Vestin
Mortgage, whose address is 2901 El Camino Avenue, Suite 206, Las Vegas, Nevada
89102, telephone number (702) 227-0965.

By submitting the signed Subscription Agreement with payment for the purchase
of units, you:

o agree to be bound by the operating agreement;

o grant a special and limited power of attorney to Vestin Mortgage; and

o represent and warrant that you meet the relevant suitability standards and
are eligible to purchase units.

Neither Vestin Capital nor any other securities brokerage firm will permit
sales to discretionary accounts without prior specific written approval of the
owner of the account.

<PAGE>
LEGAL MATTERS

For matters of Nevada law, Berkley, Gordon, Levine, Goldstein & Garfinkel,
LLP, Vestin Mortgage's attorneys, have reviewed the legality of our issuance of
units. Ira Levine, Executive Vice President of Legal and Corporate Affairs of
Vestin Group, Inc., is a partner in Berkley, Gordon, Levine, Goldstein &
Garfinkel, LLP. Our tax counsel is Wendel, Rosen, Black & Dean, LLP, Oakland,
California.

EXPERTS

Grant Thornton LLP has audited our financial statements as of December 31,
1999, and for the period from December 14, 1999 (the date we began business)
through December 31, 1999. These financial statements are included in this
prospectus and in the registration statement of which this prospectus forms a
part. We include Grant Thornton's report here and elsewhere in this registration
statement. We rely on Grant Thornton as experts in auditing and on the Grant
Thornton report for the financial statements we include here.

Grant Thornton LLP has also audited the financial statements of Vestin Group,
Inc. as of December 31, 1999 and for the year then ended included in this
prospectus or in the Registration Statement. We include Grant Thornton's report
here and elsewhere in this Registration Statement. We rely on Grant Thornton as
experts in auditing and on the report of Grant Thornton for the financial
statements included here.

AVAILABLE INFORMATION

This prospectus does not contain all the information in the Registration
Statement on Form S-11 (No. 333-32800) and accompanying exhibits which we have
filed with the Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933. Additionally, we will become subject to the reporting
requirements of the Securities and Exchange Act of 1934 and, consequently, will
file annual and quarterly reports and other information with the Commission.
Copies of the Registration Statement on Form S-11 and all amendments thereto and
other reports and information filed by us can be inspected and copied at the
public reference facilities (phone number (800) SEC-0330) maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. Copies of that
material can be obtained from the Public Reference Section of the Commission,
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The
Commission also maintains a World Wide Web site that contains reports, proxy and
information statements and other information for registrants that file
electronically with the Commission. The address of this site is
http://www.sec.gov.

As required by the Commission in connection with real estate related
offerings on Form S-11, we have also undertaken to provide you directly with the
financial statements required by Form 10-K for the first full year of operations
of the Company and to file with the Commission "sticker supplements" to this
prospectus during the distribution period. We will also consolidate all of these
supplements into a post-effective amendment filed at least once every three
months, with the information contained in such amendment provided simultaneously
to our members.

You will also be able to review our filing on Form 8-K that we will file
after the end of the distribution period. This report will contain additional
financial statements and information required under the Securities Exchange Act
for purchases made after the end of the distribution period involving the use of
10 percent or more, on a cumulative basis, of the net proceeds of the offering.
We will also provide the information contained in this report to the members at
least once each quarter after the distribution period of the offering has ended.

<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
DM MORTGAGE INVESTORS, LLC

<S> <C>
Report of Independent Certified Public Accountants....................................................................... F-2

Balance Sheets at December 31, 1999 and June 30, 2000.................................................................... F-3
Statements of Members' Equity for the Period from December 14, 1999 (Date of Inception) through December 31, 1999 and
June 30, 2000............................................................................................................ F-4

Notes to the Financial Statements........................................................................................ F-5

VESTIN GROUP, INC. AND SUBSIDIARIES

Report of Independent Certified Public Accountants....................................................................... F-8
Consolidated Balance Sheets at December 31, 1999 and June 30, 2000....................................................... F-9

Consolidated Statements of Income for the Year Ended December 31, 1999 and the Six Months Ended June 30, 2000............ F-10

Consolidated Statement of Shareholders' Equity for the Year Ended December 31, 1999...................................... F-11

Consolidated Statements of Cash Flows for the Year Ended December 31, 1999 and the Six Months Ended June 30, 2000 ....... F-12
Notes to Consolidated Financial Statements............................................................................... F-13
</TABLE>

F-1

<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Member
DM Mortgage Investors, LLC

We have audited the accompanying balance sheet of DM Mortgage Investors, LLC (A
Development Stage Company), as of December 31, 1999, and the related statement
of members' equity for the period from December 14, 1999 (date of inception)
through December 31, 1999. These financial statements are the responsibility of
the Company's management and Board of Directors. Our responsibility is to
express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of DM Mortgage Investors, LLC, as
of December 31, 1999, in conformity with accounting principles generally
accepted in the United States of America.

/s/ GRANT THORNTON LLP
Reno, Nevada
January 10, 2000

F-2

<PAGE>
DM MORTGAGE INVESTORS, LLC
(A Development Stage Company)

BALANCE SHEETS

December 31, June 30,
1999 2000
----------- -----------
(Unaudited)
<S> <C> <C>
ASSETS
Deferred offering costs ................................................ $115,100 $364,441
-------- --------
Total assets....... ................................................. $115,100 $364,441
======== ========
LIABILITIES AND MEMBERS' EQUITY
Liabilities........... ................................................. $ --- $ ---
Members' equity---actual 11,510 and 36,444 units at $10 per unit
at December 31, 1999 and June 30, 2000, respectively ................... 115,100 364,441
-------- --------
Total liabilities and members' equity ............................... $115,100 $364,441
======== ========
</TABLE>

The accompanying notes are an integral part of these statements.

F-3

<PAGE>
DM MORTGAGE INVESTORS, LLC
(A Development Stage Company)

STATEMENTS OF MEMBERS' EQUITY

<TABLE>
<S> <C>
Inception, December 14, 1999 ....................................... $ ---

Issuance of units .................................................. 115,100
--------
Members' equity at December 31, 1999 ............................... 115,100

Issuance of units .................................................. 249,341
--------
Members' equity at June 30, 2000 (unaudited) ....................... $364,441
========
</TABLE>

The accompanying notes are an integral part of these statements.

F-4

<PAGE>
DM MORTGAGE INVESTORS, LLC
(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

December 31, 1999 (data relating to June 30, 2000 is unaudited)

Note A---Summary of Significant Accounting Policies

1. Organization

DM Mortgage Investors, LLC, a Nevada Limited Liability Company, (the Company)
is a development stage company primarily engaged in business as a mortgage
lender to make and purchase first, second, wraparound, participating and
construction mortgage investments secured by deeds of trust and mortgages on
real estate. The Company was organized on December 14, 1999 (date of formation)
and will continue until December 31, 2019 unless dissolved prior or extended
thereto under the provisions of the operating agreement.

The Manager of the Company is Vestin Mortgage, Inc. (formerly Capsource,
Inc., dba Del Mar Mortgage), a Nevada corporation engaged in the business of
mortgage services, specifically the origination of mortgages, principally in
the greater Las Vegas area. Vestin Mortgage, Inc. is a wholly-owned subsidiary
of Vestin Group, Inc. (formerly Sunderland Corporation), a Delaware
Corporation, whose common stock is publicly held and is traded on the NASDAQ
under the symbol "VSTN."

For the period from December 14, 1999 (date of inception) through June 30,
2000, the only transactions were non-cash deferred offering costs which were
paid by the Manager on behalf of the Company.

2. Interim Financial Statements

The financial statements for the six months ended June 30, 2000 are
unaudited; however, in the opinion of management, all adjustments, consisting of
normal recurring adjustments necessary for a fair presentation of the Company's
financial position and results of operations for such period have been included.
The results for the six months ended June 30, 2000 are not necessarily
indicative of the results that may be expected for the year ending December 31,
2000.

3. Management Estimates

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

4. Income Taxes

Income tax effects resulting from the Company's operations pass through to
the members individually and, accordingly, no provision for income taxes is
included in the financial statements.

5. Revenue Recognition

Interest is recognized as revenue when earned according to the terms of the
loan.

6. Debt Securities

The Company will classify its debt securities as held-to-maturity, as the
Company has the ability and the intent to hold the securities until maturity.
These securities will be recorded at amortized cost, adjusted for the
amortization or accretion of premiums or discounts. A decline in the market
value of any held-to-maturity security below cost that is deemed to be other
than temporary will result in a reduction in carrying amount to fair value. The
impairment would be charged to earnings and a new cost basis for the security
would be established. Premiums and discounts will be amortized or accreted over
the life of the related security as an adjustment to yield using the effective
interest method.

F-5

<PAGE>
DM MORTGAGE INVESTORS, LLC
(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS---(Continued)

December 31, 1999 (data relating to June 30, 2000 is unaudited)

Note A---Summary of Significant Accounting Policies---(Continued)

7. Loans Secured by Trust Deeds

Loans secured by trust deeds will be originated by Vestin Mortgage, Inc. and
will be recorded at cost. Interest income on loans will be accrued by the simple
interest method. The Company will not recognize interest income on loans once
they are determined to be impaired until the interest is collected in cash. A
loan is impaired when, based on current information and events, it is probable
that the Company will be unable to collect all amounts due according to the
contractual terms of the loan agreement and a specific reserve has been
recorded. Cash receipts will be allocated to interest income, except when such
payments are specifically designated as principal reduction or when management
does not believe the Company's investment in the loan is fully recoverable.

Note B---Members' Equity

1. Membership Units

The Manager (in its Capacity as the Initial Member) shall contribute to the
capital of the Company an amount equal to at least 1.0% of the aggregate of the
Capital Contributions of the other Members; provided that the Manager shall be
deemed to have contributed to the capital of the Company an amount equal to
expenses of the Company incurred in connection with the Offering up to a maximum
of $1,000,000, to the extent such expenses are paid by the Manager to
non-affiliated parties. The members shall contribute to the capital of the
Company an amount equal to $10.00 for each unit subscribed for by each member,
with a minimum subscription of 200 units per member. The total Capital
contributions of the members will not exceed $100,000,000.

Notwithstanding, (i) Net Losses, if any, allocable to the period prior to the
admission of any additional members pursuant to the Operating Agreement (see
Note B2) hereof shall be allocated 99% to the Manager and 1.0% to the Initial
Member, and net income during the same period, if any, shall be allocated to the
Manager, and (ii) Profits or Losses allocable to the period commencing with the
admission of any additional such members and all subsequent periods shall be
allocated pursuant to the operating agreement.

2. Allocations and Distributions

In accordance with the operating agreement, the Company's profits, gains and
losses are to be credited to and charged against each member in proportion to
their respective capital accounts as of the close of business on the last day of
each calendar month.

Distributions of interest received on mortgage loans are paid monthly in cash
or as reinvested distributions. 100% of net income attributable to interest
payments from borrowers is distributed to the members including an allocation to
Vestin Mortgage corresponding to Vestin Mortgage's capital account.

Distributions of net proceeds in the form of repayment of principal on a
mortgage loan will be made to the members pro rata based on their capital
accounts.

Note C---Transactions with the Manager and its Affiliates

1. Fees Paid by the Company

a. The Company shall pay the Manager an annual management fee up to 0.25% of
aggregate capital contributions to the Company, paid monthly in arrears.

b. Vestin Mortgage, Inc. will receive fees for reselling properties
foreclosed upon. These fees are to be not greater than 3.00% of the
proceeds where substantial service has been performed by the Manager.

F-6
<PAGE>
DM MORTGAGE INVESTORS, LLC
(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS---(Continued)

December 31, 1999 (data relating to June 30, 2000 is unaudited)

Note C---Transactions with the Manager and its Affiliates---(Continued)

2. Fees Paid by Borrowers

a. Vestin Mortgage, Inc. will receive fees of 2.00% to 5.00% of each loan as
compensation for loan evaluation and processing fees. These fees shall be
reasonable and shall be payable only for services actually rendered.

b. Vestin Mortgage, Inc. will originate all loans the Company invests in.
Vestin Mortgage, Inc. has the ability to act as broker for which it will
receive a commission of approximately 2.00% to 6.00% of the principal
amount of each mortgage investment made during the year.

c. All of the Company's loans are to be serviced by Vestin Mortgage, Inc.,
in consideration for which Vestin Mortgage, Inc. will receive up to
0.25% of the total unpaid principal balance of each mortgage investment
serviced.

d. Vestin Mortgage, Inc. will receive loan extension fees of 2.00% to 5.00%
of the outstanding principal as permitted by local law and local market
conditions.

Vestin Mortgage, Inc. has the right to purchase from the Company the interest
receivable or principal on delinquent loans held by the Company. The Company
shall not sell a foreclosed property to the Manager or to another program in
which the Manager or its affiliates has an interest.

F-7

<PAGE>

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors
Vestin Group, Inc. and Subsidiaries

We have audited the accompanying consolidated balance sheet of Vestin Group,
Inc. and Subsidiaries (formerly Sunderland Corporation and Subsidiaries) as of
December 31, 1999, and the related consolidated statements of income,
stockholders' equity and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Vestin Group, Inc. and
Subsidiaries as of December 31, 1999, and the results of its operations and its
cash flows for the year then ended in conformity with accounting principles
generally accepted in the United States of America.

/s/ GRANT THORNTON LLP
Reno, Nevada
May 18, 2000

F-8

<PAGE>
VESTIN GROUP, INC. AND SUBSIDIARIES
(formerly Sunderland Corporation and Subsidiaries)

CONSOLIDATED BALANCE SHEETS

December 31, June 30,
1999 2000
----------- -----------
(Restated) (Unaudited)
<S> <C> <C>
ASSETS
Cash.................. ................................................. $1,109,454 $ 1,415,942
Accounts receivable, net ............................................... 1,157,047 1,484,828
Due from stockholder.. ................................................. --- 207,915
Notes receivable...... ................................................. 323,000 1,249,210
Investments in marketable securities ................................... 114,949 621,043
Investment in real estate held for sale ................................ 1,293,194 1,306,901
Investments in mortgage loans on real estate ........................... 5,516,244 3,893,579
Deferred tax asset.... ................................................. 27,542 27,542
Other assets.......... ................................................. 134,089 403,062
Property and equipment, net ............................................ 107,988 133,293
---------- -----------
Total assets....... ................................................. $9,783,507 $10,743,315
========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable...... ................................................. $ 250,765 $ 190,002
Accrued expenses...... ................................................. 205,477 164,580
Lines of credit....... ................................................. 1,985,564 57,684
Income taxes payable.. ................................................. 736,875 1,673,651
Due to related party.. ................................................. 269,641 ---
Note payable.......... ................................................. 1,290,000 1,284,339
Obligations under capital leases ....................................... 24,127 ---
---------- -----------
Total liabilities.. ................................................. 4,762,449 3,370,256
---------- -----------
Commitments and contingencies .......................................... --- ---
---------- -----------
Stockholders' equity
Preferred stock, $.0001 par value; 20 million shares authorized;
no shares issued ..... ................................................. --- ---
Common stock, $.0001 par value; 100 million shares authorized;
6,989,270 shares issued and outstanding ................................ 699 699
Additional paid-in capital ............................................ 1,739,427 2,206,879
Retained earnings.... ................................................. 3,280,932 5,165,481
---------- -----------
Total stockholders' equity .......................................... 5,021,058 7,373,059
---------- -----------
Total liabilities and stockholders' equity ......................... $9,783,507 $10,743,315
========== ===========
</TABLE>

The accompanying notes are an integral part of these statements

The investors in DM Mortgage Investors, LLC are not acquiring an interest in
Vestin Group, Inc. and Subsidiaries

F-9

<PAGE>
VESTIN GROUP, INC. AND SUBSIDIARIES
(formerly Sunderland Corporation and Subsidiaries)

CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
Six Months
Year Ended Ended
December 31, June 30,
1999 2000
----------- -----------
(Restated) (Unaudited)
<S> <C> <C>
Revenues
Loan origination and related fees ..................................... $11,237,208 $6,368,454
Revenue from accounting services ...................................... 1,313,885 1,084,403
Interest income...... ................................................. 612,391 282,218
Other income 58,825 4,182
----------- ----------
Total revenues..... ................................................. 13,222,309 7,739,257
----------- ----------
Expenses
Sales and marketing expenses .......................................... 1,749,948 853,028
General and administrative expenses ................................... 7,077,536 3,261,799
Interest expenses.... ................................................. 148,272 75,615
----------- ----------
Total expenses..... ................................................. 8,975,756 4,190,442
----------- ----------
Income before provision for income taxes ............................ 4,246,553 3,548,815

Provision for income taxes ............................................. 959,333 1,136,776
----------- ----------
NET INCOME......... ................................................. $ 3,287,220 $2,412,039
=========== ==========
Pro forma information (unaudited) (Note A):
Historical income before income taxes ................................. $ 4,246,553 $3,548,815
Pro forma income taxes ................................................ 1,443,828 1,206,597
----------- ----------
Pro forma net income. ................................................. $ 2,802,725 $2,342,218
=========== ==========
Pro forma net income per share ........................................ $ 0.40 $ 0.34
=========== ==========
Weighted average shares outstanding ................................... 6,982,914 6,989,270
=========== ==========
</TABLE>

The accompanying notes are an integral part of these statements

The investors in DM Mortgage Investors, LLC are not acquiring an interest in
Vestin Group, Inc. and Subsidiaries

F-10

<PAGE>
VESTIN GROUP, INC. AND SUBSIDIARIES
(formerly Sunderland Corporation and Subsidiaries)

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

Preferred Sto ck Common Stock Additional Receivable
--------------- ------------------ Paid-in from Retained
Shares Amount Shares Amount Capital Stockholder Earnings
------ ------ --------- ------ ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1999, restated ........ --- $0-- - 5,719,270 $572 $ 3,135,064 $(535,646) $ 344,347

Cancellation of $0.0001 common stock in
connection with recapitalization ............ --- -- - (100,000) (10) --- --- ---
Issuance of $0.0001 common stock in
connection with recapitalization ............ --- -- - 1,350,000 135 291 --- ---

Distribution of assets, net of liabilities,
to Del Mar Mortgage, Inc. ................... --- -- - --- --- (1,152,046) --- ---
Distribution of assets, net of liabilities,
to Del Mar Holdings, Inc. ................... --- -- - --- --- (643,260) --- ---

Acquisition of Vestin Mortgage, Inc.
(formerly Capsource, Inc.) .................. --- -- - 20,000 2 12,358 --- ---
Contribution by stockholder through relief
of note payable ............................. --- -- - --- --- 535,646 --- ---

Payments received on receivable from
stockholder ................................. --- -- - --- --- --- 535,646 ---
Distribution to stockholders of L.L.
Bradford and Company ........................ --- -- - --- --- --- --- (350,635

Cash contributions .......................... 37,020 --- ---

Net income .................................. --- -- - --- --- --- --- 3,287,220
--- ---- - --------- ---- ----------- --------- ----------

Balance at December 31, 1999, restated ...... --- $ -- - 6,989,270 $699 $ 1,739,427 $ --- $3,280,932
=== ==== = ========= ==== =========== ========= ==========
</TABLE>

<TABLE>

Total
-----------
<S> <C>
Balance at January 1, 1999, restated ................................................................................ $ 2,944,337

Cancellation of $0.0001 common stock in connection with recapitalization ............................................ (10
Issuance of $0.0001 common stock in connection with recapitalization ................................................ 426

Distribution of assets, net of liabilities, to Del Mar Mortgage, Inc. ............................................... (1,152,046
Distribution of assets, net of liabilities, to Del Mar Holdings, Inc. ............................................... (643,260

Acquisition of Vestin Mortgage, Inc. (formerly Capsource, Inc.) ..................................................... 12,630
Contribution by stockholder through relief of note payable .......................................................... 350,000

Payments received on receivable from stockholder .................................................................... 535,646
Distribution to stockholders of L.L. Bradford and Company ........................................................... (350,635

Cash contributions .................................................................................................. 37,020

Net income .......................................................................................................... 3,287,220
-----------

Balance at December 31, 1999, restated .............................................................................. $ 5,021,058
===========
</TABLE>

The accompanying notes are an integral part of these statements

The investors in DM Mortgage Investors, LLC are not acquiring an interest in
Vestin Group, Inc. and Subsidiaries.

F-11

<PAGE>
VESTIN GROUP, INC. AND SUBSIDIARIES
(formerly Sunderland Corporation and Subsidiaries)

CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months
Year Ended Ended
December 31, June 30,
1999 2000
----------- -----------
(Restated) (Unaudited)
<S> <C> <C>
Cash flow from operating activities:
Net income ......................................................................................... $ 3,287,220 $ 2,412,039
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization..................................................................... 51,470 19,163
Loss on disposal of assets........................................................................ 466 --
Changes in operating assets and liabilities:
Accounts receivable ............................................................................. (537,469) (327,781
Deferred tax asset .............................................................................. (27,542) --
Other assets. ................................................................................... (16,078) (272,507
Due from stockholder. ........................................................................... (292,033) (207,915
Accounts payable and accrued expenses ........................................................... 746,900 (101,666
Due to related party. ........................................................................... 332,270 (269,641
Income taxes payable. ........................................................................... 736,875 936,776
----------- -----------
Net cash provided by operating activities..................................................... 4,282,079 2,188,468
----------- -----------
Cash flows from investing activities:
Purchase of property and equipment ................................................................. (52,241) (40,934
Purchase of investment in note receivable. ......................................................... (323,000) ---
Issuance of notes receivable ....................................................................... --- (926,210
Purchase of investment in marketable securities. ................................................... (114,949) ---
Proceeds from sale of investments, net ............................................................. --- 1,102,864
Purchase of real estate held for sale. ............................................................. (3,194) ---
Purchase of investments in mortgage loans. ......................................................... (3,055,520) ---
----------- -----------
Net cash provided by (used in) investing activities........................................... (3,548,904) 135,720
----------- -----------
Cash flows from financing activities:
Advances (payments) on line of credit, net........................................................ 1,978,588 (1,957,668
Payments on short-term note....................................................................... (100,000) ---
Distribution to stockholders...................................................................... (2,482,940) (60,032
Payments received from note receivable from stockholder........................................... 535,646 ---
Deferred offering costs........................................................................... (115,100) ---
Proceeds from stockholders........................................................................ 62,020 ---
Capital lease payments............................................................................ (4,742) ---
----------- -----------
Net cash used in financing activities......................................................... (126,528) (2,017,700
----------- -----------
NET INCREASE IN CASH.......................................................................... 606,647 306,488
Cash at beginning of year. .......................................................................... 502,807 1,109,454
Cash at end of year. ................................................................................ $ 1,109,454 $ 1,415,942
=========== ===========
Supplemental cash flow information:
Cash paid for Federal income taxes ................................................................. $ 250,000 $ 200,000
=========== ===========
Cash paid for interest ............................................................................. $ 134,566 $ 75,615
=========== ===========
Noncash investing and financing activities:
Investment in real estate held for sale. ........................................................... $ 1,290,000 $ ---
=========== ===========
Contribution by stockholder through relief of note payable ......................................... $ 350,000 $ ---
=========== ===========
Distribution of liabilities, net of assets assumed to stockholders
of Del Mar Mortgage, Inc. and Del Mar Holdings, Inc ................................................. $ 336,999 $ ---
=========== ===========
Purchase of property and equipment on line of credit ............................................... $ 6,976 $ 26,763
=========== ===========
Purchase of property and equipment on capital lease. ............................................... $ 9,435 $ ---
=========== ===========
</TABLE>

The accompanying notes are an integral part of these statements.

The investors in DM Mortgage Investors, LLC are not acquiring an interest in
Vestin Group, Inc. and Subsidiaries.

F-12

<PAGE>
VESTIN GROUP, INC. AND SUBSIDIARIES
(formerly Sunderland Corporation and Subsidiaries)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 1999 Restated (data relating to June 30, 2000 is unaudited)

Note A---Organization and Summary of Significant Accounting Policies

Organization

The Company changed its name from Sunderland Corporation to Vestin Group,
Inc. Vestin Group, Inc. ( "Vestin Group" or the "Company ") was incorporated
in the State of Delaware on June 2, 1998. The Company conducts its operations
primarily through Vestin Mortgage, Inc. (formerly Capsource, Inc.), its wholly
owned subsidiary. Vestin Mortgage, Inc. ( "Vestin Mortgage ") operates as a
mortgage company licensed in the state of Nevada. Vestin Mortgage is engaged in
the origination, arrangement and secondary purchase and sale of loans secured
by real property. The Company's primary operations consist of arranging for
investor funding of mortgage loans for the construction of commercial and
residential projects in southern Nevada. The Company also services such loans.

On April 27, 1999, Vestin Group, a non-operating public company with nominal
net assets, acquired certain assets and assumed certain liabilities representing
the operations of Del Mar Mortgage, Inc. and Del Mar Holdings, Inc. (the "Del
Mar Entities") in exchange for 4,891,270 shares of Vestin Group common stock
(post 5-for-3 stock split). The combination of the Del Mar Entities has been
accounted for in a manner similar to a pooling of interest, as the companies
were under common control. Vestin Group concurrently acquired 100% of the
outstanding common stock of Vestin Mortgage in exchange for 20,000 shares of
Vestin Group common stock.

Under generally accepted accounting principles, the acquisition of the Del
Mar Entities is considered to be a capital transaction in substance, rather than
a business combination. That is, the acquisition is equivalent to the issuance
of stock by the Del Mar Entities for the net monetary assets of Vestin Group,
accompanied by a recapitalization, and is accounted for as a change in capital
structure. Accordingly, the accounting for the acquisition is identical to that
resulting from a reverse acquisition, except that no goodwill is recorded. Under
reverse takeover accounting, the post reverse-acquisition comparative historical
financial statements of the "legal acquirer" (Vestin Group), are those of the
"legal acquiree" (Del Mar Entities) (i.e. the accounting acquirer).

Accordingly, the consolidated financial statements of Vestin Group as of
December 31, 1999, and for the year then ended, are the combined historical
financial statements of Del Mar Mortgage, Inc. and Del Mar Holdings, Inc. The
assets not acquired, net of the liabilities not assumed, have been accounted
for as distributions to Del Mar Mortgage, Inc. and Del Mar Holdings, Inc.'s
stockholders.

The business combination with Vestin Mortgage has been accounted for as a
purchase business combination. The cost of Vestin Mortgage is based upon the
fair value of the 20,000 common shares issued to the Vestin Mortgage
shareholder, which was $12,360. The acquisition resulted in the recognition of
$1,390 of goodwill, which was expensed for the year ended December 31, 1999.

On March 31, 2000, the Company consummated a merger with L.L. Bradford &
Company (LLB) (see Note T). LLB operates as a certified public accounting and
consulting practice in the State of Nevada offering services in the area of
attestation, tax planning and preparation, general accounting services, business
valuation, mergers and acquisition, management advisory, financial consulting,
initial public and private offering consulting, and internet start- up
consulting.

As disclosed in Note R, the Company acquired all of the outstanding common
stock of Vestin Capital, Inc. (formerly DM Financial Services, Inc.) and DM
Mortgage Advisors, Inc. These acquisitions have been accounted for as a pooling
of interests, and accordingly, the accompanying consolidated financial
statements of the Company have been restated to include the accounts and
operations for all periods presented.

The investors in DM Mortgage Investors, LLC are not acquiring an interest in
Vestin Group, Inc. and Subsidiaries.

F-13

<PAGE>
VESTIN GROUP, INC. AND SUBSIDIARIES
(formerly Sunderland Corporation and Subsidiaries)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS---(Continued)

December 31, 1999 Restated (data relating to June 30, 2000 is unaudited)

Note A---Organization and Summary of Significant Accounting Policies---
(Continued)

The Company operates in one business segment. As a result of the mergers
discussed above, the Company will determine the applicability of SFAS No. 131,
Disclosures about Segments of an Enterprise and Related Information, which
requires reporting business segments and information, including how the segments
are determined, products and services provided, and changes in the measurement
of segment accounts from period to period.

Interim Financial Statements

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and
it's wholly-owned subsidiaries. All significant inter-company transactions and
balances have been eliminated in consolidation.

Concentrations

Substantially all of the Company's operations are derived from Southern
Nevada. Consequently, the Company's results of operations and financial
condition are affected by general trends in the Southern Nevada economy and its
commercial and residential real estate market.

The Company's mortgage loans will require the borrower to make a balloon
payment of the principal at maturity. To the extent that a borrower has an
obligation to pay a mortgage loan in a lump sum payment, its ability to satisfy
this obligation may be dependent upon its ability to refinance or raise a
substantial amount of cash. An increase in interest rates over the mortgage rate
applicable at origination of the loan may have an adverse effect on the
borrower's ability to refinance.

Financial instruments, which potentially subject the Company to credit risk,
consist primarily of cash in bank. The Company maintains its cash in bank
deposit accounts, which at times may exceed Federally insured limits.

Use of Estimates

Revenue Recognition

The Company recognizes revenue primarily from loan origination fees, loan
servicing fees, extension fees and accounting services. Loan origination fees
are recorded as revenue at the close of escrow and reduced by direct loan
origination costs. Loan servicing fees are recorded as revenue when such
services are rendered. Servicing fees represent the interest spread between what
is paid to the investor and what the borrower pays for the use of the money.
This can vary from loan to loan. Extension fees are recorded as revenue at the
extension grant date. Accounting services are recognized when services are
rendered.

The investors in DM Mortgage Investors, LLC are not acquiring an interest in
Vestin Group, Inc. and Subsidiaries.

F-14

<PAGE>
VESTIN GROUP, INC. AND SUBSIDIARIES
(formerly Sunderland Corporation and Subsidiaries)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS---(Continued)

December 31, 1999 Restated (data relating to June 30, 2000 is unaudited)

Note A---Organization and Summary of Significant Accounting Policies---
(Continued)

Loan Origination Fees

Loan origination fees related to investments in mortgage loans on real estate
are amortized principally by the effective interest method over the term of the
related obligation.

Investments in Marketable Securities

Investments in equity securities consist of common stock. The securities are
stated at market value as determined by the most recently traded price of each
security at the balance sheet date. All marketable securities are defined as
available-for-sale securities under the provisions of Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in Debt and
Equity Securities."

Management determines the appropriate classification of its investments in
marketable securities at the time of purchase and reevaluates such determination
at each balance sheet date. Securities that are bought and held principally for
the purpose of selling them in the near term are classified as trading
securities and unrealized holding gains and losses are included in earnings.
Debt securities for which the Company does not have the intent or ability to
hold to maturity and equity securities are classified as available- for-sale.
Available-for-sale securities are carried at fair value, with the unrealized
gains and losses, net of tax, reported in other comprehensive income. The net
unrealized gains and losses were immaterial for the year ended December 31,
1999. The cost of investments sold is determined on the specific identification
or the first-in, first-out method.

Property and Equipment

Property and equipment are stated at cost. Depreciation is provided
principally on the straight-line method over the estimated useful lives of the
assets of 5 and 7 years. The cost of repairs and maintenance is charged to
expense as incurred.

Comprehensive Income

The Company has no material components of other comprehensive income, and
accordingly, comprehensive income is the same as net income for the period.

Advertising Costs

Advertising costs are expensed as incurred and amounted to $365,836 for the
year ended December 31, 1999.

Income Taxes

The liability method is used to account for income taxes. Under this method,
deferred income tax assets and liabilities are determined based on differences
between the financial reporting and tax bases of assets and liabilities and are
measured using the enacted tax rates and laws that are scheduled to be in effect
when the differences are expected to reverse.

The investors in DM Mortgage Investors, LLC are not acquiring an interest in
Vestin Group, Inc. and Subsidiaries.

F-15

<PAGE>
VESTIN GROUP, INC. AND SUBSIDIARIES
(formerly Sunderland Corporation and Subsidiaries)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS---(Continued)

December 31, 1999 Restated (data relating to June 30, 2000 is unaudited)

Note A---Organization and Summary of Significant Accounting Policies---
(Continued)

Pro Forma Financial Information (Unaudited)

Prior to the recapitalization of the Company (April 27, 1999) and the
acquisition of L.L. Bradford & Company, the earnings of Del Mar Mortgage, Inc.
and L.L. Bradford & Company, which are included in the Consolidated Statement of
Income, were taxed to the shareholders of Del Mar Mortgage, Inc. and L.L.
Bradford & Company. The pro forma information reflects a provision for income
taxes as if the Company had been a C corporation for the entire year ended
December 31, 1999 using an assumed effective tax rate of 34%. Pro forma net
income per share has been computed by dividing pro forma net income by the
weighted average shares outstanding, assuming that the shares exchanged for the
purchase of L.L. Bradford & Company were outstanding for the entire year.

Impairment of Long-Lived Assets to be Disposed

The Company continually monitors events and changes in circumstances that
could indicate carrying amounts of long-lived assets may not be recoverable.
When such events or changes in circumstances are present, the Company assesses
the recoverability of long-lived assets by determining whether the carrying
value of such assets will be recovered through undiscounted expected future cash
flows. If the total of the future cash flows is less than the carrying amount of
those assets, the Company recognizes an impairment loss based on the excess of
the carrying amount over the fair value of the assets. Assets to be disposed of
are reported at the lower of the carrying amount or the fair value less costs to
sell.

Earnings Per Share

Primary and fully-diluted earnings per share is based on the weighted-average
number of outstanding common shares during the applicable period.

Note B---Accounts Receivable

The Company services loans which have been arranged for the investor parties
through a servicing agreement. The servicing agreement stipulates that all
extension fees charged on behalf of the investors shall be retained by the
Company as part of the loan servicing fees. Accounts receivable represent
extension and loan origination fees earned but not yet received along with
receivables for accounting services net of $117,420 and $106,764 allowance for
doubtful accounts at December 31, 1999 and June 30, 2000, respectively.

Note C---Investment in Real Estate held for Sale

The Company has an investment in real estate held for sale totaling
$1,293,194 at December 31, 1999. The investment in real estate held for sale is
recorded at the lower of carrying amount or fair value less cost to sell.

Note D---Investments in Mortgage Loans on Real Estatae

The Company invests in mortgage loans. The mortgage loans are secured by
first trust deeds on real estate. These loans have maturities of one year or
less with interest rates ranging from 12% to 14% payable monthly, with principal
due at maturity. Management believes the underlying value of the assets securing
the mortgage loans was sufficient at December 31, 1999 to realize their carrying
value. Accordingly, no allowance for loan losses has been established.

The investors in DM Mortgage Investors, LLC are not acquiring an interest in
Vestin Group, Inc. and Subsidiaries.

F-16

<PAGE>
VESTIN GROUP, INC. AND SUBSIDIARIES
(formerly Sunderland Corporation and Subsidiaries)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS---(Continued)

December 31, 1999 Restated (data relating to June 30, 2000 is unaudited)

Note E---Property and Equipment

Property and equipment consists of the following:
<TABLE>
<CAPTION>

December 31, June 30,
1999 2000
----------- --------
<S> <C> <C>
Furniture and equipment ................................................... $116,267 $157,201
Computers and equipment held under capital leases ......................... 26,446 26,446
-------- --------
142,713 183,647
Less: Accumulated depreciation. ........................................... (34,725) (50,354)
-------- --------
Total property and equipment. ............................................. $107,988 $133,293
======== ========
</TABLE>

Note F---Note Payable

In 1999, the Company foreclosed on real estate which was subject to an
existing lien (the "note"). The term of the note is for one year and includes
interest at 12.75% per annum. The note is secured by certain real estate. The
note was originally due on October 8, 1999 and was extended to October 8, 2000.
The note requires monthly interest payments with the balance of unpaid principal
and interest due on demand.

Note G---Lines of Credit

The Company maintains a $3,000,000 floating line of credit with a financial
institution. The outstanding balance as of December 31, 1999 totaled $1,980,000.
The line of credit, which is guaranteed by the Company's majority shareholder,
is payable in monthly installments of interest only at the bank's prime lending
rate plus 1.5% (10% at December 31, 1999) and expires on December 15, 2000. The
line of credit is secured by 1,450,000 shares of the Company's common stock held
by the majority stockholder (23.5% of the outstanding stock at December 31,
1999) and the deeds of trust on the property being advanced against. The line of
credit agreement limits payments of dividends on the Company's stock and
transfers between related parties without prior written consent from financial
institution. The line of credit contains certain covenants, which the Company
has complied with as of December 31, 1999.

The Company also maintains an equipment line of credit with Wells Fargo Bank.
$50,000 is available on this line of credit for the acquisition of equipment
through February 26, 2000. Principal and interest is payable on each advance
over a payment schedule of not less than 36 months or more than 96 months, as
agreed by the Company and the bank. At the time of each advance, the Company can
either elect a fixed or a variable interest rate. The fixed interest rate is
2.875% above the treasury rate in effect as of the close of the business on the
Thursday of the week preceding disbursement of the advance, rounded to the
nearest .05%. The variable interest rate is at .5% above the prime rate. The
outstanding balance as of December 31, 1999 totaled $5,564 and is at the fixed
interest rate (10.65% at December 31, 1999). The line of credit is secured by
the Company's equipment purchased or acquired in whole or in part with the
advance.

In June 2000, the Company secured an additional $3,000,000 line of credit
with a financial institution. As of June 30, 2000, no amounts have been drawn on
this additional line of credit. The line of credit, which is guaranteed by the
Company's majority stockholder and secured by various promissory notes and deeds
of trust, is payable in monthly installments of interest only at the prime
lending rate plus 1.0% (10.5% at June 30, 2000) and expires on June 12, 2001.

The investors in DM Mortgage Investors, LLC are not acquiring an interest in
Vestin Group, Inc. and Subsidiaries.

F-17

<PAGE>
VESTIN GROUP, INC. AND SUBSIDIARIES
(formerly Sunderland Corporation and Subsidiaries)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS---(Continued)

December 31, 1999 Restated (data relating to June 30, 2000 is unaudited)

Note G---Lines of Credit---(Continued)

The following are the maturities under the lines of credit as of December 31,
1999:
<TABLE>
<S> <C>
2000...................... ....................................... $1,981,994
2001...................... ....................................... 2,464
2002...................... ....................................... 1,106
----------
$1,985,564
==========
</TABLE>

Note H---Credit Agreement

The Company has entered into a credit agreement with a financial institution
that maintains non-interest bearing trust funds held on behalf of the investors
and the Company (Note J). The credit agreement allows the Company to borrow
funds up to the amount held in the trust accounts at a rate of 1% and invest
those funds in commercial paper (securities). The Company has provided the
financial institution with a security interest in the securities and, at all
times, the securities remain in the financial institution's custody and control.
The balance drawn down upon the credit agreement was $-0- at December 31, 1999
and June 30, 2000.

Note I---Capital Leases

The Company is the lessee of computers and equipment under capital leases
expiring in various years through 2004. The assets and liabilities under capital
leases are recorded at the lower of the present value of the minimum lease
payments or the fair value of the assets. The assets are depreciated over the
lower of their related lease terms or their estimated productive lives.
Depreciation of capital leases is included in depreciation expense for 1999.
Accumulated depreciation on capital leases was $6,596 at December 31, 1999.

Minimum future lease payments under capital leases as of December 31, 1999
for each of the next five years and in the aggregate are:
<TABLE>
<CAPTION>

Year Ending December 31,
<S> <C>

2000...................... .......................................... $ 8,458
2001...................... .......................................... 8,458
2002...................... .......................................... 8,458
2003...................... .......................................... 4,629
2004...................... .......................................... 423
-------
30,426
Less: Amounts representing interest ................................. (6,299)
-------
$24,127
=======
</TABLE>

Interest rates on capital leases vary from 6.7% to 15.5%.

Note J---Trust Accounts

The Company manages on behalf of Del Mar Mortgage, Inc., a company wholly
owned by the Company's majority stockholder, certain trust assets including cash
and receivables on behalf of the investors. The cash is held at a financial
institution and the Company records and reconciles the receivables from
borrowers. At December 31, 1999, the cash held in trust was $667,345 and the
trust receivables were $1,215,466. The related trust liability was $1,882,811 at
December 31, 1999. The trust assets and liabilities are not recorded on the
balance sheet of the Company at December 31, 1999.

The investors in DM Mortgage Investors, LLC are not acquiring an interest in
Vestin Group, Inc. and Subsidiaries.

F-18

<PAGE>
VESTIN GROUP, INC. AND SUBSIDIARIES
(formerly Sunderland Corporation and Subsidiaries)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS---(Continued)

December 31, 1999 Restated (data relating to June 30, 2000 is unaudited)

Note K---Loans Serviced for Others

The Company services loans for others, which are not shown on the balance
sheet. The face amount of these loans at December 31, 1999 approximated
$227,000,000. Loans serviced for others include construction loans that are
originated by the Company.

Note L---Related Party Transactions

On April 27, 1999, the Company entered into a non-renewable transition
agreement (the "Agreement") with Del Mar Mortgage, Inc., a company wholly owned
by the Company's majority stockholder. The Agreement requires the Company to pay
Del Mar Mortgage, Inc. 25% of loan origination fees earned from April 27, 1999
through October 26, 1999 and 12.5% of such fees from October 27, 1999 through
April 26, 2000. The Agreement also requires the Company to remit to Del Mar
Mortgage, Inc. all future loan servicing and extension fees recognized on loans
originated by the Company prior to April 27, 1999. The Agreement terminated on
April 26, 2000. The Company incurred $2,597,641 in fees related to the Agreement
for the year ended December 31, 1999, which have been recorded as general and
administrative expenses in the consolidated financial statements.

The Company has recorded accounts receivable from Del Mar Mortgage, Inc. of
$443,390 as of December 31, 1999. The Company also has a balance due to Del Mar
Mortgage, Inc. of $244,641. These balances bear no interest and are due on
demand.

As of December 31, 1999, the Company had $25,000 due to stockholders, bearing
no interest and due on demand.

Note M---Income Taxes

The components of income tax expense (benefit) are as follows:
<TABLE>
<S> <C>
Current................... ......................................... $986,875
Deferred.................. ......................................... (27,542)
--------
$959,333
========
</TABLE>

Deferred taxes result from temporary differences in the recognition of
certain revenue and expense items for income tax and financial reporting
purposes. The significant components of the Company's deferred taxes as of
December 31, 1999 are as follows:
<TABLE>
<S> <C>
Deferred tax assets:
Accrued compensation..... .......................................... $27,542
Less: Valuation allowance. .......................................... ---
-------
Net deferred taxes........ .......................................... $27,542
=======
</TABLE>

The reconciliation of the statutory federal rate to the Company's effective
income tax rate is as follows:
<TABLE>
<S> <C>
Statutory tax provision... ....................................... $1,332,880
Earnings taxed to shareholder .................................... (381,867)
Non-deductible expenses... ....................................... 8,320
----------
$ 959,333
==========
</TABLE>

The investors in DM Mortgage Investors, LLC are not acquiring an interest in
Vestin Group, Inc. and Subsidiaries.

F-19

<PAGE>
VESTIN GROUP, INC. AND SUBSIDIARIES
(formerly Sunderland Corporation and Subsidiaries)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS---(Continued)

December 31, 1999 Restated (data relating to June 30, 2000 is unaudited)

Note N---Employee Benefit and Stock Option Plan

401(k) Plan

The Company maintains a 401(k) Savings Plan which covers substantially all
full-time employees. Participants may make tax-deferred contributions of up to
15% of annual compensation (subject to other limitations specified by the
Internal Revenue Code). The Company matches employee contributions dollar for
dollar up to 5% of compensation. The Company contributed $ 37,537 to the plan
for the year ended December 31, 1999.

Stock Option Plan

The Company's stockholders have approved the adoption of a stock option plan
for the benefit of its eligible employees, consultants, officers and directors.
The plan, effective August 1, 2000, allows for 600,000 shares of common stock to
be issued upon exercise of stock options.

Note O---Employment Agreements

The Company has employment agreements and arrangements with certain officers
and key employees. The agreements generally continue for a period of three years
or until terminated by the executive or the Company with cause. The agreements
and arrangements provide the employees with a base salary and benefits. The
agreements contain covenants against competition with the Company, which extend
for a period of time after termination.

Note P---Fair Value of Financial Instruments

The carrying amounts of cash, accounts receivable, notes receivable, mortgage
loans, accounts payable and notes payable approximate fair value because of the
short-term maturity of these instruments.

Note Q---Commitments and Contingencies

Lease Commitments

The Company operates from leased office facilities under a noncancellable
operating lease. The lease requires the Company to pay certain escalation
clauses for real estate taxes, operating expense, usage and common area charges.
The Company also leases equipment under a noncancellable operating lease. Rent
expense for leased office facilities and equipment charged to operations for the
year ended December 31, 1999 was $254,278.

The investors in DM Mortgage Investors, LLC are not acquiring an interest in
Vestin Group, Inc. and Subsidiaries.

F-20

<PAGE>
VESTIN GROUP, INC. AND SUBSIDIARIES
(formerly Sunderland Corporation and Subsidiaries)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS---(Continued)

December 31, 1999 Restated (data relating to June 30, 2000 is unaudited)

Note Q---Commitments and Contingencies---(Continued)

Future minimum rental payments required under the operating leases as of
December 31, 1999, are as follows:
<TABLE>
<S> <C>
2000...................... ........................................ $ 180,418
2001...................... ........................................ 190,193
2002...................... ........................................ 193,728
2003...................... ........................................ 197,128
2004...................... ........................................ 66,363
---------
$827,830
=========
</TABLE>

Note R---Acquisitions

On December 23, 1999, the Company consummated an agreement to acquire all the
outstanding capital stock of Vestin Capital, Inc., a newly formed Las Vegas,
Nevada based securities broker-dealer for 10,300 shares of the Company's common
stock and DM Mortgage Advisors, Inc., a Phoenix, Arizona based mortgage funding
company for 17,700 shares of the Company's common stock. The acquisition of
Vestin Capital, Inc. and DM Mortgage Advisors, Inc. is accounted for as a
pooling of interest, and accordingly, the accompanying consolidated financial
statements have been restated to include the accounts and operations for all
periods presented.

In June 2000, the Company entered into a letter of intent for the acquisition
of Mortgage Source, Inc. (MSI), a Las Vegas based mortgage company currently
licensed in 13 states. The Company is currently in negotiations for shares of
its common stock to be issued in exchange for one hundred percent (100%) of the
issued and outstanding shares of MSI.

The purchase price of MSI will be based on the MSI stockholder's equity as at
the closing date of the proposed transaction plus a multiple of adjusted
earnings before taxes.

Note S---Litigation

The Company is a defendant in various lawsuits incurred in the normal course
of business. In the opinion of management, after consulting with legal counsel,
the liabilities, if any, resulting from these matters will not have a material
effect on the consolidated financial statements of the Company.

Note T---Pooling of Interest Transaction

On March 31, 2000, the Company consummated a merger with L.L. Bradford &
Company (LLB), accounted for as a pooling of interest, and accordingly, the
accompanying consolidated financial statements have been restated to include the
accounts and operations of LLB for all periods presented. Under the terms of the
merger, the Company issued 800,000 shares of its common stock for all of LLB's
outstanding common stock.

The investors in DM Mortgage Investors, LLC are not acquiring an interest in
Vestin Group, Inc. and Subsidiaries.

F-21

<PAGE>
VESTIN GROUP, INC. AND SUBSIDIARIES
(formerly Sunderland Corporation and Subsidiaries)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS---(Continued)

December 31, 1999 Restated (data relating to June 30, 2000 is unaudited)

Note T---Pooling of Interest Transaction---(Continued)

The consolidated balance sheet at December 31, 1999 reflects the combining of
the Company prior to consummation of the merger and LLB as of this date.
Combined and separate results of operations for the year ended December 31, 1999
of the Company and LLB for the restated period is as follows:

<TABLE>
<CAPTION>
Vestin
Group, Inc.
and
Subsidiaries LLB Eliminations Combined
------------ ---------- ------------ -----------
<S> <C> <C> <C> <C>
Year ended December 31, 1999 revenues ............................. $11,868,918 $1,503,391 $(150,000) $13,222,309

Income before provision for income taxes December 31, 1999 ........ 3,869,956 376,597 --- 4,246,553

Net income December 31, 1999 ...................................... 2,910,623 376,597 --- 3,287,220

Six months ended June 30, 2000 revenues ........................... 6,650,267 1,163,990 (75,000) 7,739,257

Income before provision for income taxes June 30, 2000 ............ 3,121,667 427,148 --- 3,548,815

Net income June 30, 2000 .......................................... 2,059,726 352,313 --- 2,412,039
</TABLE>

During the year ended December 31, 1999, the Company and LLB entered into
certain transactions for services performed by LLB in the normal course of
business. These intercompany transactions have been eliminated in the
accompanying financial statements.

The acquisition of Vestin Capital, Inc. and DM Mortgage Advisors, Inc.
treated as a pooling of interest is not separately stated in the above schedule
as the effect to revenues and income is immaterial (see Note R).

The investors in DM Mortgage Investors, LLC are not acquiring an interest in
Vestin Group, Inc. and Subsidiaries.

F-22

<PAGE>
EXHIBIT A

DM MORTGAGE INVESTORS, LLC

THIRD AMENDED AND RESTATED
LIMITED LIABILITY COMPANY OPERATING AGREEMENT
DM MORTGAGE INVESTORS, LLC

TABLE OF CONTENTS
ARTICLE 1
ORGANIZATION OF THE LIMITED LIABILITY COMPANY........ 1
1.1 Formation............................................ 1
1.2 Name................................................. 1
1.3 Place of Business.................................... 1
1.4 Purpose.............................................. 1
1.5 Articles of Organization............................. 1
1.6 Term of Existence.................................... 1
1.7 Power of Attorney.................................... 2
1.8 Nature of Power of Attorney.......................... 2

ARTICLE 2
DEFINITIONS.......................................... 2
2.1 Acquisition and Investment Evaluation Expenses ...... 2
2.2 Acquisition and Investment Evaluation Fees .......... 2
2.3 Administrator........................................ 2
2.4 Affiliate................................ ........... 2
2.5 Agreement............................................ 3
2.6 Capital Account...................................... 3
2.7 Capital Contribution................................. 3
2.8 Capital Transaction.................................. 3
2.9 Cash Flow............................................ 3
2.10 Code................................................. 4
2.11 Company.............................................. 4
2.12 Deed of Trust........................................ 4
2.13 [Reserved]........................................... 4
2.14 Fiscal Year.......................................... 4
2.15 [Reserved]........................................... 4
2.16 Gross Asset Value.................................... 4
2.17 Independent Expert................................... 4
2.18 Interest............................................. 4
2.19 Investment in Mortgage Loans......................... 4
2.20 [Reserved]........................................... 4
2.21 Majority............................................. 4
2.22 [Reserved]........................................... 4
2.23 Manager.............................................. 5
2.24 Member............................................... 5
2.25 Mortgage Investment(s)............................... 5
2.26 Mortgage Loans....................................... 5
2.27 NASAA Guidelines..................................... 5
2.28 Net Income Available for Distribution................ 5
2.29 Net Proceeds......................................... 5
2.30 Net Worth............................................ 5
2.31 Nevada Statutes...................................... 5

<PAGE>

2.32 Offering............................................. 5
2.33 [Reserved]........................................... 5
2.34 Person............................................... 5
2.35 Profits and Losses................................... 5
2.36 Program.............................................. 6
2.37 [Reserved]........................................... 6
2.38 [Reserved]........................................... 6
2.39 Prospectus........................................... 6
2.40 Real Property........................................ 6
2.41 Regulations.......................................... 6
2.42 Reinvested Distributions............................. 6
2.43 Roll-Up.............................................. 6
2.44 Roll-Up Entity....................................... 6
2.45 [Reserved]........................................... 6
2.46 Sponsor.............................................. 6
2.47 Subscription Agreement............................... 6
2.48 Units................................................ 6
2.49 Writedown............................................ 7
2.50 Writedown Amount..................................... 7

ARTICLE 3
THE MANAGER.......................................... 7
3.1 Control in Manager................................... 7
3.2 Limitations on Manager's Authority .................. 8
3.3 Right to Purchase Receivables and Loans ............. 9
Extent of Manager's Ob ligation and
3.4 Fiduciary Duty....................................... 9
3.5 Liability and Indemnification of Manager ............ 9
3.6 Assignment by the Manager........................... 10
3.7 [Reserved].......................................... 11
3.8 Removal of Manager.................................. 11
3.9 Right to Rely on Manager............................ 11
3.10 Transfer of the Control of the Manager ............. 11

ARTICLE 4
INVESTMENT AND OPERATING POLICIES .................. 11
4.1 Commitment of Capital Contributions ................ 11
4.2 Investment Policy................................... 11

ARTICLE 5
CAPITAL CONTRIBUTIONS; LOANS TO COMPANY ............ 12
5.1 Capital Contribution by Manager .................... 12
5.2 Contributions of Other Members ..................... 12
5.3 Interest...................... ..................... 12
5.4 Loans......................... ..................... 12

ARTICLE 6
VOTING AND OTHER RIGHTS OF MEMBERS ................. 12
6.1 No Participation in Management ..................... 12
6.2 Rights and Powers of Members........................ 12
6.3 Meetings............................................ 13
6.4 Limited Liability of Members........................ 13
6.5 Access to Books and Records......................... 13
6.6 Representation of Company........................... 13

<PAGE>

ARTICLE 7
PROFITS AND LOSSES; CASH DISTRIBUTIONS.............. 14
7.1 Allocation of Profits and Losses.................... 14
7.2 Net Income Available For Distribution............... 14
7.3 Net Proceeds........................................ 14
7.4 Cash Distributions Upon Dissolution................. 14
7.5 Special Allocation Rules............................ 14
7.6 Code Section 704 (c) Allocations.................... 15
7.7 Intent of Allocations............................... 15
7.8 Quarterly Valuation of Assets....................... 16

ARTICLE 8
REINVESTED DISTRIBUTIONS PLAN....................... 16
8.1 Members' Reinvested Distributions................... 16
8.2 Purchase of Additional Units........................ 16
8.3 Statement of Account................................ 16
8.4 Continued Suitability Requirements.................. 16
8.5 Changes or Termination of the Plan.................. 16

ARTICLE 9
BOOKS AND RECORDS, REPORTS AND RETURNS.............. 17
9.1 Books and Records................................... 17
9.2 Annual Statements................................... 17
9.3 Special Quarterly Reports........................... 17
9.4 Filings............................................. 18
9.5 Suitability Requirements............................ 18
9.6 Fiscal Matters...................................... 18

ARTICLE 10
TRANSFER OF COMPANY INTERESTS....................... 19
10.1 Interest of Manager................................. 19
10.2 Transfer of Member's Interest....................... 19
10.3 Further Restrictions on Transfers................... 20

ARTICLE 11
DEATH, LEGAL INCOMPETENCY, OR WITHDRAWAL OF
A MEMBER; WITHDRAWAL OF MANAGER ............................ 21
11.1 Effect of Death or Legal Incompetency of
a Member on the Company............................. 21
11.2 Rights of Personal Representative......./........... 21
11.3 Withdrawal of Members Other than Managers........... 21
11.4 Withdrawal by Manager............................... 22
11.5 Payment to Terminated Manager....................... 22

ARTICLE 12
DISSOLUTION OF THE COMPANY.......................... 22
12.1 Events Causing Dissolution.......................... 22
12.2 Winding Up.......................................... 22
12.3 Order of Distribution of Assets..................... 23
12.4 No Recourse to Manager.............................. 23
12.5 Compliance With Timing Requirements of
Regulations...................................... 23

ARTICLE 13
ROLL-UPS AND INVESTMENTS IN OTHER PROGRAMS.......... 23
13.1 Roll-Up Transactions: Appraisal..................... 23
13.2 Members' Rights in a Roll-Up........................ 23
13.3 Limitations on Roll-Ups............................. 24

iii

<PAGE>

ARTICLE 14
COMPENSATION TO THE MANAGER AND ITS AFFILIATES...... 24

ARTICLE 15
MISCELLANEOUS....................................... 24
15.1 Covenant to Sign Documents.......................... 24
15.2 Notices............................................. 24
15.3 Right to Engage in Competing Business .............. 24
15.4 Amendment........................................... 25
15.5 Entire Agreement.................................... 25
15.6 Waiver.............................................. 25
15.7 Severability........................................ 25
15.8 Application of Nevada law........................... 25
15.9 Captions............................................ 25
15.10 Number and Gender................................... 25
15.11 Counterparts........................................ 25
15.12 Waiver of Action for Partition ..................... 25
15.13 Defined Terms....................................... 26
15.14 Binding on Assignees................................ 26

iv
<PAGE>
EXHIBIT A

THIRD AMENDED AND RESTATED
OPERATING AGREEMENT
OF
DM MORTGAGE INVESTORS, LLC
A Nevada Limited Liability Company

THIS THIRD AMENDED AND RESTATED OPERATING AGREEMENT (this "Agreement") was
made and entered into as of the 2nd day of November, 2000, by and among Vestin
Mortgage, Inc., a Nevada corporation (the "Manager" and, in its capacity as a
member of the Company, the "Initial Member" and collectively with all Persons
who may become members of the Company from time to time in accordance herewith,
the "Members"), and DM Mortgage Investors, LLC, a Nevada limited liability
company (the "Company").

WITNESSETH

WHEREAS, the Initial Member and the Company are the parties to the Company's
Operating Agreement dated as of December 15, 1999 (as amended and restated as of
May 31, 2000 and August 1, 2000, the "Original Agreement"); and

WHEREAS, a majority of the Members desire to amend and restate the Original
Agreement;

NOW, WHEREFORE, in consideration for the mutual agreements, covenants and
premises set forth herein, the Original Agreement is hereby amended and restated
in its entirety as follows:

ARTICLE 1
ORGANIZATION OF THE LIMITED LIABILITY COMPANY

1.1 Formation. The Initial Member caused the formation of the Company on
December 14, 1999 under the provisions of Title 7, Chapter 86, of the Nevada
Statutes.

1.2 Name. The name of the Company is DM MORTGAGE INVESTORS, LLC.

1.3 Place of Business. The principal place of business of the Company is and
will be located at 2901 El Camino Avenue, Suite 206, Las Vegas, Nevada 89102,
until the Manager changes it after giving the Members notice. In addition, the
Company may maintain such other offices and places of business in the United
States as the Manager may deem advisable. The Manager will file all necessary or
desirable documents to permit the Company to conduct its business lawfully in
any state or territory of the United States.

1.4 Purpose. The primary purpose of this Company is to generate cash flow and
to distribute to the Members the Profits of the Company from its operations. The
Company will invest in and purchase first, second, wraparound, participating and
construction Mortgage Investments, and do all things reasonably related thereto,
including developing, managing and either holding for investment or disposing of
real property acquired through foreclosure, either directly or through general
partnerships or other joint ventures, all as further provided for in this
Agreement.

1.5 Articles of Organization. The Company's Articles of Organization, as
amended, and Certificate of Acceptance of Appointment of Resident Agent have
been duly executed, acknowledged and filed with the Office of the Secretary of
State of the State of Nevada under the provisions of the Nevada Statues. The
Initial Member hereby approves, ratifies and confirms all of these actions. The
Manager is authorized to execute and cause to be filed additional Certificates
of Amendment of the Articles of Organization whenever required by the Nevada
Statutes or this Agreement.

1.6 Term of Existence. The Company's existence began on December 14, 1999 and
will continue until December 31, 2019, unless earlier terminated under the
provisions of this Agreement or by operation of law. A

<PAGE>

Majority may extend the Company's term, provided that the Company remains in
compliance with the NASAA Guidelines.

1.7 Power of Attorney. Each of the Members irrevocably constitutes and
appoints the Manager as his true and lawful attorney-in-fact, with full power
and authority for him, and in his name, place and stead, to execute,
acknowledge, publish and file:

1.7.1 This Agreement, the Articles of Organization, as amended to date,
as well as any and all additional amendments thereto required under
the laws of the State of Nevada or of any other state, or which the
Manager deems advisable to prepare, execute and file;

1.7.2 Any certificates, instruments and documents, including, without
limitation, Fictitious Business Name Statements, as may be required
to be filed by the Company by any governmental agency or by the
laws of any state or other jurisdiction in which the Company is
doing or intends to do business, or which the Manager deems
advisable to file; and

1.7.3 Any documents which may be required to effect the continuation of
the Company, the admission of an additional or substituted Member,
or the dissolution and termination of the Company, provided that
the continuation, admission, substitution or dissolution or
termination, as applicable, is in accordance with the terms of this
Agreement.

1.8 Nature of Power of Attorney. The grant of authority in Section 1.7:

1.8.1 Is a Special Power of Attorney coupled with an interest, is
irrevocable, survives the death of the Member and shall not be
affected by the subsequent incapacity of the Member;

1.8.2 May be exercised by the Manager for each member by a facsimile
signature of or on behalf of the Manager or by listing all of the
members and by executing any instrument with a single signature of
or on behalf of the Manager, acting as attorney-in-fact for all of
them; and

1.8.3 Shall survive the delivery of an assignment by a Member of the
whole or any portion of his Interest; except that where the
assignee thereof has been approved by the Manager for admission to
the Company as a substituted Member, the Special Power of Attorney
shall survive the delivery of the assignment for the sole purpose
of enabling the person to execute, acknowledge, and file any
instrument necessary to effect the substitution.

ARTICLE 2
DEFINITIONS

Unless stated otherwise, the terms set forth in this Article 2 shall, for all
purposes of this Agreement, have the following meanings:

2.1 Acquisition and Investment Evaluation Expenses means expenses including
but not limited to legal fees and expenses, travel and communication expenses,
costs of appraisals, accounting fees and expenses, title insurance funded by the
Company, and miscellaneous expenses related to the evaluation, selection and
acquisition of Mortgage Investments, whether or not acquired.

2.2 Acquisition and Investment Evaluation Fees means the total of all fees
and commissions paid by any Person when purchasing or investing in Mortgage
Investments. Included in the computation of these fees or commissions shall be
any selection fee, mortgage placement fee, nonrecurring management fee, and any
evaluation fee, loan fee, or points paid by borrowers to the Manager, or any fee
of a similar nature, however designated.

2.3 Administrator means the agency or official administering the securities
law of a state in which Units are registered or qualified for offer and sale.

2.4 Affiliate means, for any person, (a) any person directly or indirectly
controlling, controlled by or under common control with the Person, (b) any
other Person owning or controlling ten percent (10%) or more of the

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outstanding voting securities of the Person, (c) any officer, director or Member
of the Person, or (d) if the other Person is an officer, director or Manager,
any company for which the Person acts in any similar capacity.

2.5 Agreement means this Third Amended and Restated Operating Agreement, as
further amended from time to time.

2.6 Capital Account means, for any Member, the Capital Account maintained for
the Member in accordance with the following provisions:

2.6.1 The Manager shall credit to each Member's Capital Account the
Member's Capital Contribution, the Member's distributive share of
Profits, any items in the nature of income or gain (from unexpected
adjustments, allocations or distributions) that are specially
allocated to a Member, and the amount of any Company liabilities
that are assumed by the Member or that are secured by any Company
property distributed to the Member.

2.6.2 The Manager shall debit from each Member's Capital Account the
amount of cash and the fair market value of any Company property
distributed to the Member under any provision of this Agreement,
the Member's distributive share of Losses, and any items in the
nature of expenses or losses that are specially allocated to a
Member and the amount of any liabilities of the Member that are
assumed by the Company or that are secured by any property
contributed by the Member to the Company.

If the Gross Asset Value of a Company asset is adjusted as a result of a
Writedown, the Manager shall concurrently adjust the Capital Accounts of all
Members in order to reflect the aggregate net adjustment that would have
occurred if the Company had recognized Losses equal to the Writedown Amount and
the Losses were allocated under Article 7.

If any interest in the Company is transferred in accordance with Section 10.2
of this Agreement, the transferee shall succeed to the Capital Account of the
transferor to the extent it relates to the transferred interest.

The foregoing provisions and the other provisions of this Agreement relating
to the maintenance of Capital Accounts are intended to comply with Treasury
Regulation Section 1.704-1(b), and shall be interpreted and applied in a manner
consistent with the Regulation. If the Manager determines that it is prudent to
modify the manner in which the Capital Accounts, or any debits or credits
thereto, are computed in order to comply with the then existing Treasury
Regulation, the Manager may make the modification, provided that it is not
likely to have a material effect on the amounts distributable to any Member
under Articles 7 and 12 of this Agreement upon the dissolution of the Company.
The Manager shall adjust the amounts debited or credited to Capital Accounts for
(a) any property contributed to the Company or distributed to the Manager, and
(b) any liabilities that are secured by the contributed or distributed property
or that are assumed by the Company or the Manager, if the Manager determines the
adjustments are necessary or appropriate under Treasury Regulation Section
1.704-1(b)(2)(iv). The Manager shall make any appropriate modification if
unanticipated events might otherwise cause this Agreement not to comply with
Treasury Regulation Section 1.704-1(b) as provided for in Sections 7.7 and 15.4.

2.7 Capital Contribution means the total investment and contribution to the
capital of the Company by a Member in cash, by advancing expenses to non-
affiliated third parties on behalf of the Company or by way of automatic
reinvestment of Company distributions (or deemed distributions) of capital and/
or net income and, in the case of the Manager (in its capacity as a Member), its
Promotional Interest. "Initial Capital Contribution" means the amount paid in
cash by each Member with his original subscription for and acquisition of Units
of the Company under the Prospectus.

2.8 Capital Transaction means (i) the repayment of principal or prepayment of
a Mortgage Investment, including deemed repayments of Mortgage Investments or
other dispositions thereof, to the extent classified as a return of capital
under the Code, (ii) the foreclosure, sale, exchange, condemnation, eminent
domain taking or other disposition under the Code of a Mortgage Investment or
Real Property subject to a Mortgage Investment, or (iii) the payment of
insurance or a guarantee for a Mortgage Investment.

2.9 Cash Flow means cash funds provided from operations (other than
repayments of mortgage loan principal) including without limitation, interest,
points, revenue participations, participations in property

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appreciation, and interest or dividends from interim investments paid to the
Company after deducting cash funds used to pay general Company expenses and debt
payments.

2.10 Code means the Internal Revenue Code of 1986, as amended from time to
time, and corresponding provisions of subsequent revenue laws.

2.11 Company means DM Mortgage Investors, LLC, the Nevada limited liability
company to which this Agreement pertains.

2.12 Deed(s) of Trust means the lien(s) created on the Real Property of
borrowers securing their respective obligations to the Company to repay Mortgage
Investments, whether in the form of a deed of trust, mortgage or otherwise.

2.13 [Reserved]

2.14 Fiscal Year means, subject to the provisions of Section 706 of the Code
and Section 9.6.1, (i) the period commencing on the date of formation of the
Company and ending on December 31, 1999 (ii) any subsequent 12 month period on
January 1 and ending on December 31 and (iii) the period commencing January 1
and ending on the date on which all Company assets are distributed to the
Members under Article 12.

2.15 [Reserved]

2.16 Gross Asset Value means, for any Company asset, the following:

2.16.1 The initial Gross Asset Value of any Company asset at the time
that it is contributed by a Member to the capital of the Company
shall be an amount equal to the fair market value of the Company
asset (without regard to the provisions of Code Section 7701(g)),
as determined by the contributing Member and the Manager;

2.16.2 The Gross Asset Values of all Company assets shall be adjusted,
as determined by the distributed Member and the Manager, to equal
their respective fair market values upon the distribution to a
Member by the Company of more than a de minimis amount of Company
assets (other than money), unless all Members simultaneously
receive distributions of undivided interests in the distributed
Company assets in proportion to their respective Capital
Accounts;

2.16.3 The Gross Asset Values of all Company assets shall be adjusted to
equal their respective fair market values (as determined by the
Manager, in its reasonable discretion) upon the termination of
the Company for Federal income tax purposes under Code Section
708(b)(1)(B); and

2.16.4 The Gross Asset Value of a Company asset shall be adjusted in the
case of a Writedown of the Company asset in accordance with
Sections 2.49, 2.50 and 7.8.

2.17 Independent Expert means a Person with no material current or prior
business or personal relationship with the Manager, who is engaged to a
substantial extent in the business of rendering opinions regarding the value of
assets of the type held by the Company, and who is qualified to perform the
services.

2.18 Interest means the Capital Accounts of Members, which are divided into
"Units."

2.19 Investment in Mortgage Loans means the amount of Capital Contributions
used to make or invest in Mortgage Investments or the amount actually paid or
allocated to the purchase of Mortgage Investments, working capital reserves
allocable thereto (except that working capital reserves in excess of 3.0% shall
not be included), and other cash payments such as interest and taxes.

2.20 [Reserved]

2.21 Majority means any group of Members who together hold a majority of the
total outstanding Interests of the Company as of a particular date (or if no
date is specified, the first day of the then current calendar month).

2.22 [Reserved]

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2.23 Manager means Vestin Mortgage, Inc., a Nevada corporation, in that
capacity, or any Person replacing Vestin Mortgage under this Agreement. For
greater certainty, Vestin Mortgage, in its capacity as the Initial Member, is a
distinct entity from the Manager for purposes of this Agreement unless the
context should indicate to the contrary.

2.24 Member means an owner of Units in the Company, unless the instruments
through which the Units were transferred to the owner did not also convey the
transferor's status as a Member.

2.25 Mortgage Investment(s) means the Mortgage Loan(s) or an interest in the
Mortgage Loans that are held by the Company.

2.26 Mortgage Loans means investments of the Company that are notes,
debentures, bonds and other evidences of indebtedness or obligations that are
negotiable or non-negotiable and secured or collateralized by Deeds of Trust on
Real Property.

2.27 NASAA Guidelines means the Mortgage Program Guidelines of the North
American Securities Administrators Association, Inc. adopted on September 10,
1996, as amended from time to time unless indicated to the contrary by the
context.

2.28 Net Income Available for Distribution means Cash Flow less amount set
aside for creation or restoration of reserves during the month; provided that:

2.28.1 The operating expenses shall not include any general overhead
expenses of the Manager not specifically related to, billed to or
reimbursable by the Company as specified in Exhibit 14 to this
Agreement; and

2.28.2 Net Income Available for Distribution shall not exceed the amount
of cash on hand.

2.29 Net Proceeds means the net cash proceeds (or deemed net proceeds) from
any Capital Transaction.

2.30 Net Worth means the excess of total assets over total liabilities as
determined by generally accepted accounting principles consistently applied,
except that if any of the assets have been depreciated, then the amount of the
depreciation relative to any particular asset may be added to the depreciated
cost of the asset to compute total assets, provided that the amount of
depreciation may be added only to the extent that the amount resulting after
adding the depreciation does not exceed the fair market value of the asset.

2.31 Nevada Statutes means Nevada Revised Statutes, as amended from time to
time, unless indicated to the contrary by the context.

2.32 Offering means the offer and sale of Units of the Company made under the
Prospectus.

2.33 [Reserved]

2.34 Person means any natural person, partnership, corporation,
unincorporated association or other legal entity.

2.35 Profits and Losses mean, for each Fiscal Year or any other period, an
amount equal to the Company's taxable income or loss for the Fiscal Year or
other given period, determined in accordance with Code Section 703(a) (for this
purpose, all items of income, gain, loss, or deduction required to be stated
separately under Code Section 703(a)(1) shall be included in taxable income or
loss), with the following adjustments (without duplication):

2.35.1 Any income of the Company that is exempt from federal income tax
and not otherwise taken into account in computing Profits or
Losses under this Section 2.35 shall be added to the taxable
income or loss;

2.35.2 Any expenditures of the Company described in Section 705(a)(2)(B)
of the Code or treated as Section 705(a)(2)(B) of the Code
expenditures under Treasury Regulation Section 1.704-
1(b)(2)(iv)(i), and not otherwise taken into account in computing
Profits or Losses under this Section 2.35, shall be subtracted
from the taxable income or loss.

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If any Company asset has a Gross Asset Value which differs from its adjusted
cost basis, gain or loss resulting from the disposition of the Company asset
shall be computed using the Gross Asset Value (rather than adjusted cost basis)
of the Company asset.

Notwithstanding any other provision of this Section, any items in the nature
of income, gain, expenses or losses, which are specially allocated under
Section 7.5.1, 7.5.2 and 7.6, shall not be taken into account in computing
Profits or Losses.

2.36 Program means a limited or general partnership, limited liability
company, limited liability partnership, trust, joint venture, unincorporated
association or similar organization other than a corporation formed and operated
for the primary purpose of investing in mortgage loans.

2.37 [Reserved]

2.38 [Reserved]

2.39 Prospectus means the prospectus that forms a part of the Registration
Statement on Form S-11 under the Securities Act of 1933 (Registration
No. 333-32800), originally filed by the Company with the Securities and
Exchange Commission on February 17, 2000, as amended, and any supplement or
amended Prospectus or new prospectus that forms a part of a supplement to the
Registration Statement filed by the Company, unless the context should indicate
to the contrary.

2.40 Real Property means and includes (a) land and any buildings, structures,
and improvements, and (b) all fixtures, whether in the form of equipment or
other personal property, that is located on or used as part of land. Real
Property does not include Deeds of Trust, mortgage loans or interests therein.

2.41 Regulations means, except where the context indicates otherwise, the
permanent, temporary, proposed, or proposed and temporary regulations of the
U.S. Department of the Treasury under the Code, as the regulations may be
lawfully changed from time to time.

2.42 Reinvested Distributions means Units purchased under the Company's Plan
(as defined in Article 8 of this Agreement).

2.43 Roll-Up means a transaction involving the acquisition, merger,
conversion, or consolidation, either directly or indirectly, of the Company and
the issuance of securities of a Roll-Up Entity. "Roll-Up" does not include a
transaction involving (i) securities of the Company, if any, listed on a
national securities exchange or quoted on the Nasdaq National Market for 12
months or (ii) conversion to corporate, trust, limited liability company, or
association form of only the Company if, as a consequence of the transaction,
there will be no significant adverse change in any of the following: (a)
Members' voting rights; (b) the term of existence of the Company; (c) Manager
compensation; (d) the Company's investment objectives.

2.44 Roll-Up Entity means a company, real estate investment trust,
corporation, limited liability company, limited or general partnership or other
entity that would be created or would survive after the successful completion of
a proposed Roll-Up.

2.45 [Reserved]

2.46 Sponsor means any Person (a) directly or indirectly instrumental in
organizing, wholly or in part, a Program, or a Person who will manage or
participate in the management of a Program, and any Affiliate of any the Person,
but does not include a Person whose only relation with a Program is that of an
independent property manager or other provider of services (such as attorneys,
accountants or underwriters), whose only compensation is received in that
capacity, or (b) is a "Sponsor" as otherwise defined in the NASAA Guidelines.
Vestin Group, Inc., the Manager's parent company, is the initial Sponsor of the
Company.

2.47 Subscription Agreement means the document that is an exhibit to and part
of the Prospectus that every Person who buys Units of the Company must execute
and deliver with full payment for the Units and which, among other provisions,
contains the written consent of each Member to the adoption of this Agreement.

2.48 Units mean the units of equity in the Company evidencing the Company's
Interests that are (a) issued to Members upon their admission to the Company
under the Subscription Agreement and the Prospectus or (b) transferred to those
who become substituted Members under Section 10.2 hereof. The Manager may
purchase

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Units on the same basis as other Members. Units purchased at different times do
not necessarily represent the same underlying amount of Interests.

2.49 Writedown means a determination by the Manager for a particular Mortgage
Investment or other Company investment (which determination has been verified by
the Company's accountants as being in conformity with generally accepted
accounting principles) that the fair market value of the investment at the time
the determination is made is less than the amount actually paid or allocated to
the purchase of the investment, which determination shall be made by the Company
and its accountants within thirty (30) days of the end of each calendar quarter
and any Writedown shall be effective on the last day of the relevant calendar
quarter during the term of this Agreement.

2.50 Writedown Amount means, for any Mortgage Investment or other Company
investment, the amount by which, at the time that a Writedown is determined for
the Investment, the amount actually paid or allocated to the purchase of the
investment exceeds its fair market value.

ARTICLE 3
THE MANAGER

3.1 Control in Manager. Subject to the provisions of Section 3.2 and except
as otherwise expressly stated elsewhere in this Agreement, the Manager has
exclusive control over the business of the Company (with all acts and decisions
being in its sole discretion except as specifically set forth in this
Agreement), including the power to assign duties, to determine how to invest the
Company's assets, to sign bills of sale, title documents, leases, notes,
security agreements, Mortgage Investments and contracts, and to assume direction
of the business operations. As Manager of the Company and its business, the
Manager has all duties generally associated with that position, including
dealing with Members, being responsible for all accounting, tax and legal
matters, performing internal reviews of the Company's investments and loans,
determining how and when to invest the Company's capital, and determining the
course of action to take for Company loans that are in default. The Manager also
has all of these powers for ancillary matters. Without limiting the generality
of the foregoing, the powers include the right (except as specifically set forth
in this Agreement, including under Section 3.2):

3.1.1 To evaluate potential Company investments and to expend the
capital of the Company in furtherance of the Company's business;

3.1.2 To acquire, hold, lease, sell, trade, exchange, or otherwise
dispose of all or any portion of Company property or any interest
therein at a price and upon the terms and conditions as the
Manager may deem proper;

3.1.3 To cause the Company to become a joint venturer, general or
limited partner or member of an entity formed to own, develop,
operate and dispose of properties owned or co-owned by the Company
acquired through foreclosure of a Mortgage Loan;

3.1.4 To manage, operate and develop Company property, or to employ and
supervise a property manager who may, or may not, be an Affiliate
of the Manager;

3.1.5 To borrow money from banks and other lending institutions for any
Company purpose, and as security therefor, to encumber Company
property;

3.1.6 To repay in whole or in part, refinance, increase, modify, or
extend, any obligation, affecting Company property;

3.1.7 To employ from time to time, at the expense of the Company,
persons, including the Manager or its Affiliates, required for the
operation of the Company's business, including employees, agents,
independent contractors, brokers, accountants, attorneys, and
others; to enter into agreements and contracts with persons on
terms and for compensation that the Manager determines to be
reasonable; and to give receipts, releases, and discharges for all
of the foregoing and any matters incident thereto as the Manager
may deem advisable or appropriate; provided, however, that any
agreement or contract between the Company and the Manager or
between the Company and an Affiliate of the Manager shall contain
a provision that the agreement or contract may be terminated by
the Company without penalty on sixty

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(60) days' written notice and without advance notice if the
Manager or Affiliate who is a party to the contract or agreement
resigns or is removed under the terms of this Agreement;

3.1.8 To maintain, at the expense of the Company, adequate records and
accounts of all operations and expenditures and furnish the
Members with annual statements of account as of the end of each
calendar year, together with all necessary tax-reporting
information;

3.1.9 To purchase, at the expense of the Company, liability and other
insurance to protect the property of the Company and its business;

3.1.10 To refinance, recast, modify, consolidate, extend or permit the
assumption of any Mortgage Loan or other investment owned by the
Company;

3.1.11 To pay all expenses incurred in the operation of the Company;

3.1.12 To file tax returns on behalf of the Company and to make any and
all elections available under the Code;

3.1.13 To modify, delete, add to or correct from time to time any
provision of this Agreement as permitted under Section 15.4
hereof.

3.2 Limitations on Manager's Authority. The Manager has no authority to:

3.2.1 Do any act in contravention of this Agreement;

3.2.2 Do any act which would make it impossible to carry on the ordinary
business of the Company;

3.2.3 Confess a judgment against the Company;

3.2.4 Possess Company property or assign the rights of the Company in
property for other than a Company purpose;

3.2.5 Admit a person as a Manager without the prior affirmative vote or
consent of a Majority, or any higher vote as may be required by
applicable law;

3.2.6 Voluntarily withdraw as Manager without the prior affirmative vote
or consent of a Majority unless its withdrawal would neither
affect the tax status of the Company nor materially adversely
affect the Members (subject to any delay in effectiveness of the
withdrawal as set forth elsewhere herein);

3.2.7 Sell all or substantially all of the assets of the Company in one
or a series of related transactions that is not in the ordinary
course of business, without the prior affirmative vote or consent
of a Majority;

3.2.8 Amend this Agreement without the prior affirmative vote or consent
of a Majority, except as permitted by Section 15.4 of this
Agreement;

3.2.9 Dissolve or terminate the Company without the prior affirmative
vote or consent of a Majority;

3.2.10 Cause the merger or other reorganization of the Company without
the prior affirmative vote or consent of a Majority;

3.2.11 Grant to any of its Affiliates an exclusive right to sell any
Company assets;

3.2.12 Receive or permit the Manager or any Affiliate of the Manager to
receive any insurance brokerage fee or write any insurance policy
covering the Company or any Company property;

3.2.13 Receive from the Company a rebate or participate in any reciprocal
business arrangement which would enable the Manager or any of its
Affiliates to do so;

3.2.14 Commingle the Company's assets with those of any other Person;

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3.2.15 Use or permit another Person to use the Company's assets in any
manner, except for the exclusive benefit of the Company;

3.2.16 Pay or award, directly or indirectly, any commissions or other
compensation to any Person engaged by a potential investor for
investment advice as an inducement to the advisor to advise the
purchase of Units; provided, however, that this clause shall not
prohibit the payment of Sales Commissions;

3.2.17 Make loans to the Manager or an Affiliate of the Manager; or

3.2.18 Pay, directly or indirectly, a commission or fee (except as
otherwise set forth in Article 14 hereof) to the Manager or any
Affiliate of the Manager in connection with the reinvestment or
distribution of the proceeds of a Capital Transaction.

3.3 Right to Purchase Receivables and Loans. As long as the requirements of
Article 4 are met and the Company adheres to the investment policy described in
the Prospectus, the Manager, in its sole discretion, may at any time, but is not
obligated to:

3.3.1 Purchase from the Company the interest receivable or principal on
delinquent Mortgage Loans held by the Company;

3.3.2 Purchase from a senior lien holder the interest receivable or
principal on mortgage loans senior to Mortgage Loans held by the
Company; and/or

3.3.3 Use its own monies to cover any other costs associated with
Mortgage Loans held by the Company such as property taxes,
insurance and legal expenses.

3.4 Extent of Manager's Obligation and Fiduciary Duty. The Manager shall
devote the portion of its time to the business of the Company as it determines,
in good faith, to be reasonably necessary to conduct the Company's business. The
Manager shall not be bound to devote all of its business time to the affairs of
the Company, and the Manager and its Affiliates may engage for their own account
and for the account of others in any other business ventures and employments,
including ventures and employments having a business similar or identical or
competitive with the business of the Company. The Manager has fiduciary
responsibility for the safekeeping and use of all funds and assets of the
Company, whether or not in the Manager's possession or control, and the Manager
will not employ, or permit another to employ the Company's funds or assets in
any manner except for the exclusive benefit of the Company. The Manager will not
allow the assets of the Company to be commingled with the assets of the Manager
or any other Person. The Company shall not permit a Member to contract away the
fiduciary duty owed to any Member by the Manager under common law. The Manager,
for so long as it owns any Units as a Member, hereby waives its right to vote
its Units and to have them considered as outstanding in any vote for removal of
the Manager or for amendment of this Agreement (except as provided in Sections
3.1.13 and 15.4) or otherwise.

3.5 Liability and Indemnification of Manager. Neither the Manager nor any of
its Affiliates, agents or attorneys (hereinafter, an "Indemnified Party") shall
be liable, responsible or accountable in damages or otherwise to any other
Member, the Company, its receiver or trustee (the Company and its receiver or
trustee, if any, are hereinafter referred to as "Indemnitors") for, and the
Indemnitors agree to indemnify, pay, protect and hold harmless each Indemnified
Party (on the demand of the Indemnified Party) from and against any and all
liabilities, obligations, losses, damages, actions, judgments, suits,
proceedings, reasonable costs, reasonable expenses and disbursements (including,
without limitation, all reasonable costs and expenses of defense, appeal and
settlement of any and all threatened, pending, or completed suits, actions or
proceedings instituted against the Indemnified Party or the Company and all
reasonable costs of investigation related thereto) (collectively referred to as
"Liabilities" for the remainder of this Section) which may be imposed on,
incurred by, or asserted against the Indemnified Party or the Company, where the
Liabilities relate to or arise out of any action or inaction on the part of the
Company or on the part of the Indemnified Party for services to or on behalf of
the Company (and for an Indemnified Party which is an Affiliate of the Manager
for an act which the Manager would be entitled to indemnification if the act
were performed by it). These rights are conditioned upon the Indemnified Party
having reasonably believed that its actions were in or not opposed to the best
interest of the Company, and, for any criminal action or proceeding, the
Indemnified Party's having had no reasonable cause to believe its conduct was
unlawful.

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Notwithstanding the foregoing, any right to indemnification hereunder shall
be subject to the following:

1. The Company shall not indemnify the Manager for any liability or loss
suffered by the Manager, nor shall the Manager be held harmless for any
loss or liability suffered by the Company, unless all of the following
conditions are met:

a. the Manager has determined, in good faith, that the course of
conduct which caused the loss or liability was in the best interest
of the Company;

b. the Manager was acting on behalf of or performing services for the
Company;

c. such liability or loss was not the result of the negligence or
misconduct by the Manger; and

d. such indemnification or agreement to hold harmless is recoverable
only out of the assets of the Company and not from the Participants.

2. Notwithstanding anything to the contrary contained in subection 1
above, the Manager (which shall include Affiliates only if such
Affiliates are performing services on behalf of the Company) and any
Person acting as a broker-dealer shall not be indemnified for any
losses, liabilities or expenses arising from an alleged violation of
federal or state securities laws unless the following conditions are
met:

a. there has been a successful adjudication on the merits of each count
involving alleged securities law violation as to the particular
indemnitee; or

b. such claims have been dismissed with prejudice on the merits by a
court of competent jurisdiction as to the particular indemnitee; or

c. a court of competent jurisdiction has approved a settlement of the
claims against a particular indemnitee and has determined that
indemnification of the settlement and related costs should be made;
and

d. in the case of subparagraph c of this paragraph, the court of law
considering the request for indemnification has been advised of the
position of the Securities and Exchange Commission and the position
of any state securities regulatory authority in which securities of
the Company were offered or sold as to indemnification for
violations of securities laws; provided that the court need only be
advised of and consider the positions of the securities authority of
those states:

(1) which are specifically set forth in the Company agreement; and

(2) in which plaintiffs claim they were offered or sold Company
interests.

3. The Company may not incur the cost of that portion of liability
insurance which insures the Manager for any liability as to which the
Manager is prohibited from being indemnified under this subsection.

4. The provision of advancement from Company funds to the Manager or its
Affiliates for legal expenses and other costs incurred as a result of
any legal action is permissible if the following conditions are
satisfied:

a. the legal action relates to acts or omissions with respect to the
performance of duties or services on behalf of the Company;

b. the legal action is initiated by a third party who is not a Member,
or the legal action is initiated by a Member and a court of
competent jurisdiction specifically approves such advancement; and

c. the Manager or its Affiliates undertake to repay the advanced funds
to the Company in cases in which such Person is not entitled to
indemnification under paragraph 1 of this section 3.5.

3.6 Assignment by the Manager. The Manager's Interest in the Company may be
assigned at the discretion of the Manager, subject to Section 10.1.

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3.7 [Reserved]

3.8 Removal of Manager. The Manager may be removed upon the following
conditions:

3.8.1 The Members may remove the Manager by written consent or vote of a
Majority (excluding any Interest of the Manager being removed).
This removal of the Manager, if there is no other Manager, shall
not become effective for at least 120 days following the consent
or vote of the Majority.

3.8.2 During the 120 day period described in Section 3.8.1, the Majority
(excluding any Interest of the removed Manager) shall have the
right to agree in writing to continue the business of the Company
and, within six months following the termination date of the last
remaining Manager, elect and admit a new Manager(s) who agree(s)
to continue the existence of the Company.

3.8.3 Substitution of a new Manager, if any, shall be effective upon
written acceptance of the duties and responsibilities of a Manager
by the new Manager. Upon effective substitution of a new Manager,
this Agreement shall remain in full force and effect, except for
the change in the Manager, and business of the Company shall be
continued by the new Manager. The new Manager shall thereupon
execute, acknowledge and file a certificate of amendment to the
Articles of Organization of the Company in the manner required by
Section 26.221 of the Nevada Law.

3.8.4 Failure of a Majority to designate and admit a new Manager within
the time specified herein shall dissolve the Company, in
accordance with the provisions of Article 12 of this Agreement.

3.9 Right to Rely on Manager. Any person dealing with the Company may rely
(without duty of further inquiry) upon a certificate signed by the Manager as
to:

3.9.1 The identity of the Manager or any Member;

3.9.2 The existence or nonexistence of any fact or facts which
constitute a condition precedent to acts by the Manager or which
are in any further manner germane to the affairs of the Company;

3.9.3 The persons who are authorized to execute and deliver any
instrument or document of the Company; and

3.9.4 Any act or failure to act by the Company or any other matter
whatsoever involving the Company or any Member.

3.10 Transfer of the Control of the Manager. A sale or transfer of a
controlling interest in the Manager will not terminate the Company or be
considered the withdrawal or resignation of the Manager.

ARTICLE 4
INVESTMENT AND OPERATING POLICIES

4.1 Commitment of Capital Contributions. The Manager shall take all
reasonable steps to commit ninety-seven percent (97%) of Capital Contributions
to investments in Mortgage Loans (excluding the amount established as reserves),
provided that under no circumstances may such commitment decrease below the
applicable percentage in the NASAA Guidelines. The Company may invest in or
purchase Mortgage Loans of such duration and on such real property and with such
additional security as the Manager in its sole discretion shall determine,
subject to Section 4.2. These Mortgage Loans may be senior to other mortgage
loans on the real property, or junior to other mortgage loans on the real
property, all in the sole discretion of the Manager.

4.2 Investment Policy. In making investments, the Manager shall follow the
investment policy described in the Prospectus.

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ARTICLE 5
CAPITAL CONTRIBUTIONS; LOANS TO COMPANY

5.1 Capital Contribution by Manager. The Manager (in its capacity as the
Initial Member) shall contribute to the capital of the Company an amount equal
to at least 1% of the aggregate of the Capital Contributions of the other
Members; provided that the Manager shall be deemed to have contributed to the
capital of the Company an amount equal to expenses of the Company incurred in
connection with the Offering up to a maximum of $1,000,000, to the extent such
expenses are paid by the Manager to non-affiliated parties.

5.2 Contributions of Other Members. Members other than the Manager shall
acquire Units in accordance with the terms of the Subscription Agreement or any
future subscription materials approved by the Manager. The names, addresses,
date of admissions and Capital Contributions of the Members shall be set forth
in a schedule maintained by the Manager. The Manager shall update the schedule
to reflect the then-current ownership of Units (and Interests) without any
further need to obtain the consent of any Member, and the schedule, as revised
from time to time by the Manager, shall be presumed correct absent manifest
error. Any member shall have a right to inspect such schedule upon written
request to the Manager.

5.3 Interest. No interest shall be paid on, or in respect of, any
contribution to Company Capital by any Member, nor shall any Member have the
right to demand or receive cash or other property in return for the Member's
Capital Contribution, subject to Article 11 hereof.

5.4 Loans. Any Member or Affiliate of a Member may, with the written consent
of the Manager, lend or advance money to the Company. If the Manager or, with
the written consent of the Manager, any Member shall make any loans to the
Company or advance money on its behalf, the amount of any loan or advance shall
not be treated as a contribution to the capital of the Company, but shall be a
debt due from the Company. The amount of any loan or advance by a lending Member
or an Affiliate of a Member shall be repayable out of the Company's cash and
shall bear interest at a rate of not in excess of the lesser of (i) the prime
rate established, from time to time, by any major bank selected by the Manager
for loans to the bank's most creditworthy commercial borrowers, plus five
percent (5%) per annum, or (ii) the maximum rate permitted by applicable law.
None of the Members or their Affiliates shall be obligated to make any loan or
advance to the Company. This section shall be subject to the Company's
Investment Policy as it relates to transactions with the Manager or its
Affiliates.

ARTICLE 6
VOTING AND OTHER RIGHTS OF MEMBERS

6.1 No Participation in Management. Except as expressly provided in this
Agreement, no Member shall take part in the conduct or control of the Company's
business or have any right or authority to act for or bind the Company.

6.2 Rights and Powers of Members. In addition to the rights of the Members to
remove and replace the Manager and as otherwise provided for in Section 3.2, the
Members shall have the right to vote upon and take any of the following actions
upon the approval of a Majority, without the concurrence of the Manager, and an
affirmative vote of a Majority shall be required to allow or direct the Manager
to:

6.2.1 Dissolve and windup the Company before the expiration of the term
of the Company;

6.2.2 Amend this Agreement, subject to the rights to the Manager granted
in Section 15.4 of this Agreement and subject also to the prior
consent of the Manager if either the distributions due to the
Manager or the duties of the Manager are affected;

6.2.3 Merge the Company or sell all or substantially all of the assets
of the Company, otherwise than in the ordinary course of its
business.

6.2.4 Change the nature of the Company's business; and

6.2.5 Elect to continue the business of the Company other than in the
circumstances described in Section 3.8 of this Agreement.

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6.3 Meetings.

6.3.1 The Members may hold meetings of Members within or outside the
State of Nevada at any place selected by the Person or Persons
calling the meeting. If no other place is stated, meetings shall
be held at the Company's principal place of business as
established in accordance with Section 1.3 of this Agreement. The
Members may approve by written consent of a Majority any matter
upon which the Members are entitled to vote at a duly convened
meeting of the Members, which consents will have the same effect
as a vote held at a duly convened meeting of the Members.

6.3.2 The Manager, or Members representing more than ten percent (10%)
of the outstanding Interests for any matters on which the Members
may vote, may call a meeting of the Company. If Members
representing the requisite Interests present to the Manager a
statement requesting a Company meeting, or the Manager calls the
meeting, the Manager shall fix a date for a meeting and shall
(within ten (10) days after receipt of a statement, if applicable)
give personal or mailed notice or notice by any other means of
written communication, addressed to each Member at the respective
address of the Member appearing on the books of the Company or
given to the Company for the purpose of notice, not less than
fifteen (15) or more than sixty (60) days before the date of the
meeting, to all Members of the date, place and time of the meeting
and the purpose for which it has been called. Unless otherwise
specified, all meetings of the Company shall be held at 2:00 p.m.
local time at the principal office of the Company.

6.3.3 Members may vote in person or by proxy. A Majority, whether
present in person or by proxy, shall constitute a quorum at any
meeting of Members. Any question relating to the Company which may
be considered and acted upon by the Members may be considered and
acted upon by vote at a Company meeting, and any vote required to
be in writing shall be deemed given if approved by a vote by
written ballot.

6.4 Limited Liability of Members. Units are non-assessable. No Member shall
be personally liable for any of the expenses, liabilities, or obligations of the
Company or for any Losses beyond the amount of the Member's Capital Contribution
to the Company and the Member's share of any undistributed net income and gains
of the Company.

6.5 Access to Books and Records. The Members and their designated
representatives shall have access to all books and records of the Company during
the Company's normal business hours. An alphabetical list of the names and
addresses of all Members together with the number of Units held by each of them
will be maintained as a part of the books and records of the Company. The
Company shall make the list available on request to any Member or his
representative for a stated purpose including, without limitation, matters
relating to Members' voting rights, tender offers, and the exercise of Members'
rights under federal proxy law. A copy of the Members list shall be mailed to
any Member requesting it within ten business days of the request, although the
Company may change a reasonable amount for the copy. The Member list shall be
updated at least quarterly to reflect changes in the information contained
therein.

If the Manager neglects or refuses to exhibit, produce or mail a copy of the
Member list as requested, the Manager shall be liable to any Member requesting
the list for the costs, including attorney fees, incurred by that Member for
compelling the production of the list, and for actual damages suffered by the
Member by reason of the refusal or neglect. However, the Company need not
exhibit, produce or mail a copy of the Member list if the actual purpose and
reason for the request therefor is to secure the list or other information for
the purpose of selling the list or copies thereof, or of using it for a
commercial purpose other than the in the interest of the Person as a Member in
the Company. The Manager may require the Person requesting the list to represent
that the list is not requested for any commercial purpose. The remedies provided
hereunder to Members requesting copies of the list are in addition to, and shall
not in any way limit, other remedies available to Members under federal or
Nevada law.

6.6 Representation of Company. Each of the Members hereby acknowledges and
agrees that the attorneys representing the Company and the Manager and its
Affiliates do not represent and shall not be deemed under the applicable codes
of professional responsibility to have represented or be representing any or all
of the Members in any respect at any time. Each of the Members further
acknowledges and agrees that the attorneys shall have no

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obligation to furnish the Members with any information or documents obtained,
received or created in connection with the representation of the Company, the
Manager and its Affiliates.

ARTICLE 7
PROFITS AND LOSSES; CASH DISTRIBUTIONS

7.1 Allocation of Profits and Losses. The Manager shall credit all Company
Profits to and charge all Company Losses against the Members in proportion to
their respective Interests. The Manager shall allocate to the Members all
Profits and Losses realized by the Company during any month as of the close of
business on the last day of each calendar month, in accordance with their
respective Interests and in proportion to the number of days during the month
that they owned the Interests (i.e., a weighted average Capital Account),
without regard to Profits and Losses realized for time periods within the month.

7.2 Net Income Available For Distribution. The Company shall distribute Net
Income Available for Distribution to Members according to the allocations
provided for in Section 7.1, in cash to those Members who have on file with the
Company their written election to receive cash distributions, as a pro rata
share of the total Net Income Available for Distribution. The Company shall make
these distributions monthly in proportion to the weighted average Capital
Account of each Member during the preceding calendar month.

7.3 Net Proceeds. Net Proceeds may also be distributed to Members in cash or
retained by the Company for other uses as set forth herein. Net Proceeds will be
deemed to be distributed to the Members to upon receipt by the Company thereof,
regardless of whether any actual cash distributions of the Net Proceeds occur.
Immediately thereafter, there shall be a deemed recontribution by each Member to
the extent of the deemed distribution of Net Proceeds. The Company may use Net
Proceeds to make new loans, improve or maintain properties acquired by the
Company through foreclosure or to pay operating expenses. Distributions of Net
Proceeds shall be in accordance with the allocations provided for in Section 7.1
above.

7.4 Cash Distributions Upon Dissolution. Upon dissolution and winding up of
the Company, the Company shall thereafter distribute Net Income Available for
Distribution and Net Proceeds available for distribution, if any, to the Members
in accordance with the provisions of Section 12.3 of this Agreement.

7.5 Special Allocation Rules.

7.5.1 For purposes of this Agreement, a loss or allocation (or item
thereof) is attributable to non-recourse debt which is secured by
Company property to the extent of the excess of the outstanding
principal balance of the debt (excluding any portion of the
principal balance which would not be treated as an amount realized
under Section 1001 of the Code and Treasury Regulation Section
1.1001-2 if the debt were foreclosed upon) over the adjusted basis
of the property. This excess is called "Minimum Gain" (whether
taxable as capital gain or as ordinary income) as more explicitly
set forth in Treasury Regulation Sections 1.704-2(b)(2) and
1.704- 2(d). Notwithstanding any other provision of Article 7, the
allocation of loss or deduction (or item thereof) attributable to
non-recourse debt which is secured by Company property will be
allowed only to the extent that the allocation does not cause the
sum of the deficit Capital Account balances of the Members
receiving the allocations to exceed the Minimum Gain determined at
the end of the Company's taxable year to which the allocations
relate. The balance of the losses shall be allocated to the
Manager. Any Member with a deficit Capital Account balance
resulting in whole or in part from allocations of loss or
deduction (or item thereof) attributable to non-recourse debt
which is secured by Company property shall, to the extent
possible, be allocated income or gain (or item thereof) in an
amount not less than the Minimum Gain at a time no later than the
time at which the Minimum Gain is reduced below the sum of the
deficit Capital Account balances. This section is intended and
shall be interpreted to comply with the requirements of Treasury
Regulation Section 1.704-2(f).

7.5.2 If any Member receives any adjustments, allocations or
distributions, not covered by Subsection 7.5.1, so as to result in
a deficit Capital Account, items of Company income and gain shall
be specially allocated to the Members in an amount and manner
sufficient to eliminate the deficit

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balances in his Capital Account created by the adjustments,
allocations or distributions as quickly as possible. This Section
shall constitute a qualified income offset under Treasury
Regulation Section 1.704-1(b)(2)(ii).

7.5.3 For purposes of determining the Profits, Losses, Net Income
Available for Distribution or any other items allocable to any
period, these other items shall be determined on a daily, monthly,
or other basis, as determined by the Manager using any permissible
method under Section 706 of the Code and the Treasury Regulations
thereunder.

7.5.4 Notwithstanding Sections 7.1 and 7.2 hereof, (i) Net Losses, if
any, allocable to the period before the admission of any
additional Members under Section 5.2 hereof shall be allocated
ninety-nine (99.0%) to the Manager and one percent (1.0%) to the
Initial Member, and Net Income during that same period, if any,
shall be allocated to the Manager, and (ii) Profits or Losses
allocable to the period commencing with the admission of any
additional Members and all subsequent periods shall be allocated
under Section 7.1.

7.5.5 Except as otherwise provided in this Agreement, all items of
Company income, gain, loss, deduction, and any other allocations
not otherwise provided for shall be divided among the Members in
the same proportions as they share Net Income or Net Losses, as
the case may be, for the year.

7.6 Code Section 704(c) Allocations.

7.6.1 Income, gains, losses and deductions, as determined for Federal
income tax purposes, for any Company asset which has a Gross Asset
Value that differs from its adjusted basis for Federal income tax
purposes shall, solely for Federal income tax purposes, be
allocated among the Members so as to take account of any variation
between the adjusted basis of the Company asset to the Company for
Federal income tax purposes and its initial Gross Asset Value in
accordance with Code Section 704(c) and the Treasury Regulations
thereunder. In furtherance of the foregoing, it is understood and
agreed that any income, gain, loss, or deduction attributable to
Code Section 704(c) property shall be allocated to the Members in
accordance with the traditional method of making Code Section
704(c) allocations, in accordance with Treasury Regulation
ss.1.704-3(b).

7.6.2 If the Gross Asset Value of any Company asset is adjusted under
and under Section 2.16, subsequent allocations of income, gain,
losses and deductions, as determined for Federal income tax
purposes, for the Company asset shall, solely for Federal income
tax purposes, take account of any variation between the adjusted
basis of the Company asset for Federal income tax purposes and its
Gross Asset Value in the same manner as under Code Section 704(c)
and the Treasury Regulations thereunder.

7.6.3 Allocations under this Section 7.6 are solely for purposes of
Federal, state and local income taxes and shall not affect, or in
any way be taken into account in computing, any Member's Capital
Account.

7.6.4 Except as otherwise set forth in this Agreement, any elections or
other decisions relating to allocations under this Section 7.6
shall be made by the Manager, with the review and concurrence of
the Company's accountants, in a manner that reasonably reflects
the purpose and intention of this Agreement.

7.7 Intent of Allocations. It is the intent of the Company that this
Agreement comply with the safe harbor test set out in Treasury Regulation
Sections 1.704-1(b)(2)(ii)(d) and 1.704-2 and the requirements of those
Sections, including the qualified income offset and minimum gain charge-back,
which are hereby incorporated by reference. If, for whatever reasons, the
Company is advised by counsel or its accountants that the allocation provisions
of this Agreement are unlikely to be respected for federal income tax purposes,
the Manager is granted the authority to amend the allocation provisions of this
Agreement, to the minimum extent deemed necessary by counsel or its accountants
to effect the plan of Allocations and Distributions provided in this Agreement.
The

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Manager shall have the discretion to adopt and revise rules, conventions and
procedures as it believes appropriate for the admission of Members to reflect
Members' interests in the Company at the close of the years.

7.8 Quarterly Valuation of Assets. For each of the Company's Mortgage
Investments and other investments, the Manager shall review the investments at
the end of each calendar quarter and determine if a Writedown is required with
respect thereto. The Manager shall cause the Company's accountants, within
thirty (30) days of the end of each calendar quarter, to verify that the
Manager's determination was made in compliance with generally accepted
accounting principles. Any Writedown of an asset resulting from the valuation
shall be effective on the last day of the respective calendar quarter during the
term of this Agreement.

ARTICLE 8
DISTRIBUTION REINVESTMENT PLAN

8.1 Members' Reinvested Distributions. A Member may elect to participate in
the Company's Distribution Reinvestment Plan (the "Plan") at the time of his
purchase of Units, by electing to do so in the Subscription Agreement executed
by the Member. The Member's participation in the Plan commences after the
Company has accepted the Member's Subscription Agreement. Subsequently, a Member
may revoke any previous election or make a new election to participate in the
Plan by sending written notice to the Company. The notice shall be effective for
the month in which the notice is received, if received at least ten (10) days
before the end of the calendar month. Otherwise the notice is effective the
following month.

8.2 Purchase of Additional Units. Under the Plan, participating Members use
distributions to purchase additional Units at ten dollars ($10.00) per Unit. The
Manager will credit Units purchased under the Plan to the Member's Capital
Account as of the first day of the month following the month in which the
Reinvested Distribution is made. If a Member revokes a previous election to
participate in the Plan, subsequent to the month in which the Company receives
the revocation notice, the Company shall make distributions in cash to the
Member instead reinvesting the distributions in additional in Units.

8.3 Statement of Account. Within 30 days after the Reinvested Distributions
have been credited to Members participating in the Plan, the Manager will mail
to participating Members a statement of account describing the Reinvested
Distributions received, the number of incremental Units purchased, the purchase
price per Unit (if other than ten dollars ($10.00) per Unit), and the total
number of Units held by the Member. Before the Members' reinvestment of
distributions in the Company, the Manager will also mail an updated Prospectus
or other updated disclosure document to each Member that fully describes the
Plan, including the minimum investment amount, the type or source of proceeds
which may be reinvested and the tax consequences of the reinvestment to the
Members.

8.4 Continued Suitability Requirements. Each Member who is a participant in
the Plan must continue to meet the investor suitability standards described in
the Subscription Agreement and Prospectus (subject to minimum requirements of
applicable securities laws) to continue to participate in reinvestments. It is
the responsibility of each Member to notify the Manager promptly if he no longer
meets the suitability standards set forth in the Prospectus for a purchase of
Units in the Offering. The Members acknowledge that the Company is relying on
this notice in issuing the Units, and each Member shall indemnify the Company if
he fails to so notify the Company and the Company suffers any damages, losses or
expenses, or any action or proceeding is brought against the Company due to the
issuance of Units to the Member.

8.5 Changes or Termination of the Plan. The terms and conditions of the Plan
may be amended, supplemented, suspended or terminated for any reason by the
Manager at any time by mailing notice thereof at least thirty (30) days before
the effective date of the action to each participating Member at his last
address of record.

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ARTICLE 9
BOOKS AND RECORDS, REPORTS AND RETURNS

9.1 Books and Records. The Manager shall cause the Company to keep the
following:

9.1.1 Complete books and records of account in which shall be entered
fully and accurately all transactions and other matters relating
to the Company;

9.1.2 A current list setting forth the full name and last known business
or residence address of the Manager and each Member which shall be
listed in alphabetical order and stating his respective Capital
Contribution to the Company and share in Profits and Losses;

9.1.3 A copy of the filed Articles of Organization, and all amendments
thereto;

9.1.4 Copies of the Company's federal, state and local income tax
returns and reports, if any, for the six (6) most recent years;

9.1.5 Copies of this Agreement, including all amendments thereto; and

9.1.6 The financial statements of the Company for the three (3) most
recent years.

All books and records shall be maintained at the Company's principal place of
business and shall be available for inspection and copying by, and at the sole
expense of, any Member, or any Member's duly authorized representatives, during
the Company's normal business hours.

9.2 Annual Statements.

9.2.1 The Manager shall cause to be prepared at least annually, at the
Company's expense, audited financial statements prepared in
accordance with generally accepted accounting principles and
accompanied by a report thereon containing an opinion of an
independent certified public accountant. The financial statements
will include

(a) an audited balance sheet, statements of income or loss,
Members' equity, and a statement of cash flow;

(b) a statement as to any transactions with the Manager or its
Affiliates, and of fees, commissions, compensation and other
benefits paid or accrued to the Manager or its Affiliates from
the Company for the fiscal year completed, showing the amount
paid or accrued to each recipient and the respective services
performed; and

(c) a report identifying distributions from (i) Cash Flow during
that year, (ii) Cash Flow for prior years that had been held
as reserves, (iii) Net Proceeds, (iv) lease payments on net
leases with builders and sellers, and (v) reserves from the
gross proceeds of the Offering originally obtained from the
Members. Copies of the aforementioned financial statements and
reports shall be distributed to each Member within 120 days
after the close of each taxable year of the Company.

9.2.2 The Company's accounts will itemize the costs of any verification
performed by them and may be reimbursed to the Manager by the
Company only to the extent that the reimbursement when added to
the costs for administrative services rendered does not exceed the
competitive rate for the services as determined in the above
paragraph.

9.2.3 Notwithstanding the 120-day period specified in Section 9.2.1
above, the Manager shall cause to be prepared and distributed to
the Members not later than 75 days after the close of each fiscal
year of the Company all Company information necessary in the
preparation of the Members' federal income tax returns.

9.3 Special and Quarterly Reports.

9.3.1 For each quarter in which the Company bought or invested in a
Mortgage Loan or it or a borrower incurred origination or
evaluation fees, and for so long as the proceeds of the Offering
are not fully committed and/or returned to investors, at the
Company's expense, the Manager shall cause

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to be prepared a special report (which may be included in the
quarterly report described below) which shall contain a statement
listing:

(a) the amount of the Mortgage Loans purchased or invested in;

(b) the material terms of the loans;

(d) the real property securing the Mortgage Loan and the
appraised value of that real property.

Copies of the statements shall be distributed to each Member
within sixty (60) days after the end of the quarterly period.

9.3.2 The Manager will supply to each Member the information required by
Form 10-Q (if Form 10-Q is required to be filed with the
Securities and Exchange Commission) within 45 days of the end of
each quarterly period.

9.3.3 If the Company is registered under Section 12(g) of the Securities
Exchange Act of 1934, as amended, the Manager shall cause to be
prepared, at Company expense, a quarterly report for each of the
first three quarters in each fiscal year containing unaudited
financial statements (consisting of a balance sheet, a statement
of income or loss and a statement of cash flow) and a statement of
other pertinent information regarding the Company and its
activities during the period covered by the report. Copies of the
statements and other pertinent information shall be distributed to
each Member within 60 days after the close of each quarter. This
report may be combined with the delivery of information described
in the immediately preceding Section 9.3.2, subject to the 45-day
period described therein.

9.4 Filings. The Manager, at Company expense, shall cause the income tax
returns for the Company to be prepared and timely filed with the appropriate
authorities. The Manager, at Company expense, shall also cause to be prepared
and timely filed with and/or delivered to appropriate federal and state
regulatory and administrative bodies and/or the Members applicable, all reports
required to be filed with or delivered to those entities or Members under
applicable law, including those described in the Company's undertakings in any
securities filing. The reports shall be prepared using the accounting or
reporting basis required by the relevant regulatory bodies. The Company will
provide a copy of the reports to each Member who requests one, without expense
to the Member. The Manager, at Company expense, shall file, with the
Administrators for the states in which this Company is registered, as required
by these states, a copy of each report referred to this Article 9.

9.5 Suitability Requirements. The Manager, at Company expense, shall maintain
for a period of at least six years a record of the documentation indicating that
a Member complies with the suitability standards set forth in the Prospectus.

9.6 Fiscal Matters.

9.6.1 Fiscal Year. The Company has previously adopted the Fiscal Year
for tax and accounting purposes. Subject to the provisions of
Section 706 of the Code and approval by the Internal Revenue
Service and the applicable state taxing authorities, in the
Manager's sole discretion and without the approval of a Majority,
from time to time the Manager may change the Company's fiscal year
to a period to be determined by the Manager.

9.6.2 Method of Accounting. The Company shall continue to use the
accrual method of accounting for both income tax purposes and
financial reporting purposes.

9.6.3 Adjustment of Tax Basis. Upon the transfer of an interest in the
Company, the Company may, at the sole discretion of the Manager,
elect under Code Section 754, to adjust the basis of the Company
property as allowed by Sections 734(b) and 743(b) thereof.

9.6.4 Tax Matters Partner. The Manager shall act as the "Tax Matters
Partner" ( "TMP ") and shall have all the powers and duties
assigned to the TMP under Sections 6221 through 6234 of the Code
and the Treasury Regulations thereunder. The Members agree to
perform all acts necessary

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under Section 6231 of the Code and Treasury Regulations thereunder
to designate the Manager as the TMP.

ARTICLE 10
TRANSFER OF COMPANY INTERESTS

10.1 Interest of Manager. A successor or additional Manager may be admitted
to the Company as follows:

10.1.1 With the consent of all Managers (should there be any manager
other than the Manager) and a Majority, a manager may at any time
designate one or more Persons to be a successor to it or to be an
additional manager, in each case with the participation in the
Manager's Interest as they may agree upon, so long as the Company
and the Members shall not be adversely affected thereby.

10.1.2 Upon any sale or transfer of a manager's Interest, if there is an
additional or successor manager of the Company, the successor
manager shall succeed to all the powers, rights, duties and
obligations of the assigning Manager hereunder, and the assigning
Manager shall thereupon be irrevocably released and discharged
from any further liabilities or obligations of or to the Company
or the Members accruing after the date of the transfer. The sale,
assignment or transfer of all or any portion of the outstanding
stock of the Manager, or of any interest therein, or an
assignment of the Manager's Interests for security purposes only,
shall not be deemed to be a sale or transfer of the Manager's
Interests subject to the provisions of this Section 10.1.

10.2 Transfer of Member's Interest. To the extent any of the following
restrictions is not necessary to the Company, in the discretion of the Manager
reasonably exercised, the Manager may eliminate or modify any restriction.
Subject to the immediately preceding sentence, no assignee of the whole or any
portion of a Member's Interest in the Company shall have the right to become a
substituted Member in place of his assignor, unless the following conditions are
first met:

10.2.1 No Member may transfer a fractional Unit, and no Member may
transfer Units where, as a result of the transfer, the Member
would thereafter, own fewer than two hundred (200) Units, except
where the transfer occurs by operation of law;

10.2.2 The assignor shall designate its intention in a written
instrument of assignment, which shall be in a form and substance
reasonably satisfactory to the Manager;

10.2.3 The transferring Member shall first obtain written consent of the
Manager to the substitution. The Manager shall not unreasonably
withhold its consent, but the Manager will withhold its consent
to the extent necessary to prohibit transfers that could cause us
to be classified as a publicly traded partnership. The Manager
will also withhold consent if it determines that the sale or
transfer will otherwise jeopardize the continued ability of the
Company to qualify as a "partnership" for federal income tax
purposes or that the sale or transfer may violate any applicable
securities laws (including any investment suitability standards);

10.2.4 The assignor and assignee named therein shall execute and
acknowledge any other instruments as the Manager may deem
necessary or desirable to effect the substitution, including, but
not limited to, a power of attorney;

10.2.5 The assignee shall accept, adopt and approve in writing all of
the terms and provisions of this Agreement as the same may have
been amended;

10.2.6 The assignee shall pay or, at the election of the Manager,
obligate himself to pay all reasonable expenses connected with
the substitution, including but not limited to reasonable
attorneys' fees associated therewith; and

10.2.7 The Company has received, if required by the Manager, a legal
opinion satisfactory to the Manager that the transfer will not
violate the registration provisions of the Securities Act of

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<PAGE>
1933, as amended, or any applicable state securities laws, which
opinion shall be furnished at the Member's expense.

Assignments complying with the above shall be recognized by the Company not
later than the last day of the calendar month in which the written notice of
assignment is received by the Company.

10.3 Further Restrictions on Transfers. Notwithstanding any provision to the
contrary contained in this Agreement, the following restrictions shall also
apply to any and all proposed sales, assignments and transfer of Interests, and
any proposed sale, assignment or transfer in violation of same shall be void and
of no effect:

10.3.1 No Member shall make any transfer or assignment of all or any
part of his Interest if said transfer or assignment would, when
considered with all other transfers during the same applicable
twelve month period, cause a termination of the Company for
federal or Nevada state income tax (if any) purposes;

10.3.2 Notice to California residents:

IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY, OR ANY
INTEREST THEREIN OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR
WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF
CALIFORNIA, EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES.

10.3.3 Appropriate legends (including the legend above) under applicable
securities laws shall be affixed to certificates evidencing the
Units and issued or transferred to purchasers in other states.

10.3.4 No Member shall make any transfer or assignment of all or any of
his Interest if the Manager determines that the transfer or
assignment would result in the Company being classified as a
"publicly traded partnership" with the meaning of Section 7704(b)
of the Code or Regulations. To prevent that:

(a) The Manager will not permit trading of Units on an
established securities market within the meaning of
Section 7704(b);

(b) The Manager will prohibit any transfer of Units which would
cause the sum of percentage interest in Company capital or
profits represented by Interests that are sold or otherwise
disposed of during any taxable year of the Company to exceed
two percent (2%) of the total Interests in Company capital or
profits; and

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<PAGE>

ARTICLE 11
DEATH, LEGAL INCOMPETENCY, OR WITHDRAWAL OF A MEMBER;
WITHDRAWAL OF THE MANAGER

11.1 Effect of Death or Legal Incompetency of a Member on the Company. The
death or legal incompetency of a Member shall not cause a dissolution of the
Company or entitle the Member or his estate to a return of his Capital Account.

11.2 Rights of Personal Representative. On the death or legal incompetency of
a Member, his personal representative shall have all the rights of that Member
for the purpose of settling his estate or managing his property, including the
rights of assignment and withdrawal.

11.3 Withdrawal of Members Other than Managers. With the sole discretion of
the Manager reasonably exercised, the Manager may modify, eliminate or waive any
such limitation on the withdrawal rights of a member as set forth below, on a
case by case basis or by class so long as the modifying, waiving, or elimination
of the limitation does not: (a) adversely effect rights of the other members as
a whole; or (b) result in the Company being classified as a "publicly traded
partnership" within the meaning of Section 7704(b) of the Code of Regulations.
To withdraw, or partially withdraw from the Company, a Member must give written
notice thereof to the Manager and may thereafter obtain the return, in cash, of
his Capital Account, or the portion thereof as to which he requests withdrawal,
within sixty-one (61) to ninety-one (91) days after written notice of withdrawal
is delivered to the Manager, subject to the following limitations:

11.3.1 Except with regard to the right of the personal representative of
a deceased Member under Section 11.2 above, no notice of
withdrawal shall be honored and no withdrawal made of or for any
Units until the expiration of at least one year from the date of
purchase of those Units in the Offering, other than purchases by
way of automatic reinvestment of Company distributions described
in Article 8 of this Agreement;

11.3.2 To assure that the payments to a Member or his representative do
not impair the capital or the operation of the Company, any cash
payments in return of an outstanding Capital Account shall be
made by the Company only from Net Proceeds and Capital
Contributions;

11.3.3 A maximum of one hundred thousand dollars ($100,000) may be
withdrawn by any Member during any calendar year;

11.3.4 The Member shall have the right to receive distributions of cash
from their Capital Accounts only to the extent that funds
described in Subsection 11.3.2 are available; the Manager shall
not be required to establish a reserve fund for the purpose of
funding the payments; the Manager shall not be required to use
any other sources of Company funds other than those set forth in
Section 11.3.2; the Manager shall not be required to sell or
otherwise liquidate any portion of the Company's Mortgage
Investments or any other asset in order to make a cash
distribution of any Capital Account under this Section 11.3;

11.3.5 Subject to Section 7.3, during the ninety (90) days following
receipt of written notice of withdrawal from a Member, the
Manager shall not refinance any loans of the Company or reinvest
any Net Proceeds or Capital Contributions in new loans or other
non-liquid investment unless and until the Company has sufficient
funds available in cash to distribute to the withdrawing Member
the amount that he is withdrawing from his Capital Account;

11.3.6 Subject to the restrictions on withdrawal contained in this
Agreement, the amount to be distributed to any withdrawing Member
shall be an amount equal to the amount of the Member's Capital
Account as of the date of the distribution, as to which the
Member has given a notice of withdrawal under this Section 11.3,
notwithstanding that the amount may be greater or lesser than the
Member's proportionate share of the current fair market value of
the Company's net assets;

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<PAGE>
11.3.7 In no event shall the Manager permit the withdrawal during any
calendar year of total amounts from the Capital Accounts of
members that exceeds ten percent (10%) of the aggregate
Interests, except upon the vote of the Members to dissolve the
Company under this Agreement;

11.3.8 Requests by Members for withdrawal will be honored in the order
in which they are received by the Manager. If any request may not
be honored, due to any limitations imposed by this Section 11.3
(except the one year holding limitation set forth in Subsection
11.3.1), the Manager will so notify the requesting Member in
writing, whose request, if not withdrawn by the Member, will be
honored if and when the limitation no longer is imposed; and

11.3.9 If a Member's Capital Account would have a balance of less than
two thousand dollars ($2,000) following a requested withdrawal,
the Manager, at its discretion, may distribute to the Member the
entire balance in the account.

11.4 Withdrawal by Manager. The Manager may withdraw from the Company upon
not less than 120 days written notice of the same to all Members, but only with
the affirmative vote or consent of a Majority, as noted in Section 3.2. The
withdrawing Manager shall not be liable for any debts, obligations or other
responsibilities of the Company or this Agreement arising after the effective
date of the withdrawal.

11.5 Payment to Terminated Manager. If the business of the Company is
continued as provided elsewhere in this Agreement upon the withdrawal, removal,
dissolution, or bankruptcy of the Manager, then the Company shall pay to the
Manager a sum equal to all amounts then accrued and owing to the Manager. The
Company may terminate the Manager's interest in the Company by paying an amount
equal to the then-present fair market value of the Manager's interest in the
Company, which the Company and Manager acknowledge is the outstanding Capital
Account as of the date of the removal, withdrawal, dissolution or bankruptcy. If
the business of the Company is not so continued, then the Manager shall receive
from the Company the sums it would have received in the course of dissolving the
Company and winding up its affairs, as provided in Section 12.2 below.

The method of payment to any terminated Manager must be fair and must protect
the solvency and liquidity of the program. Where the termination is voluntary,
the method of payment will be deemed presumptively fair where it provides for a
non-interest bearing unsecured promissory note with principal payable, if at
all, from distributions which the terminated Manager otherwise would have
received under this Agreement had the Manager not terminated. Where the
termination is involuntary, the method of payment will be deemed presumptively
fair where it provides for an interest bearing promissory note coming due in no
less than five years with equal installments each year.

ARTICLE 12
DISSOLUTION OF THE COMPANY

12.1 Events Causing Dissolution. The Company shall dissolve upon occurrence
of the earlier of the following events:

12.1.1 The expiration of the term of the Company as stated in Section
1.6 of this Agreement;

12.1.2 Upon the written consent of the Manager and any other Person who
is then a manager, and the affirmative vote or consent of a
Majority;

12.1.3 The withdrawal, removal, dissolution or bankruptcy of the
Manager, unless, if there is no remaining manager, a Majority
agree in writing to continue the business of the Company and,
within six months after the last remaining manager has ceased to
be a manager, admit one or more managers who agree to such
election and join the Company as managers.

12.2 Winding Up. Upon the occurrence of an event of dissolution, the Company
shall immediately be dissolved, but shall continue until its affairs have been
wound up according to the provisions of the Nevada Statutes. Upon dissolution of
the Company, unless the business of the Company is continued as provided above,
the Manager will wind up the Company's affairs as follows:

12.2.1 No new Mortgage Investments shall be invested in or purchased;

A-22

<PAGE>

12.2.2 The Manager(s) shall liquidate the assets of the Company as
promptly as is consistent with recovering the fair market value
thereof, either by sale to third parties or by servicing the
Company's outstanding Mortgage Investments in accordance with
their terms;

12.2.3 All sums of cash held by the Company as of the date of
dissolution, together with all sums of cash received by the
Company during the winding up process from any source whatsoever,
shall be distributed in accordance with Section 12.3 below.

12.3 Order of Distribution of Assets. If the Company is dissolves under
Section 12.1 above, the assets of the Company shall be distributed in accordance
with Nevada Statutes Section 86.521.

12.4 No Recourse to Manager. Upon dissolution and winding up under the Nevada
Statutes, each Member shall look solely to the assets of the Company for the
return of his Capital Account, and if the Company assets remaining after the
payment or discharge of the debts and liabilities of the Company are
insufficient to return the amounts of the Capital Account of Members, Members
shall have no recourse against the Manager or any other Member. The winding-up
of the affairs of the Company and the distribution of its assets shall be
conducted exclusively by the Manager. The Manager is hereby authorized to do any
and all acts and things authorized by law for these purposes. If the Manager
becomes insolvent or bankrupt, dissolves, withdraws or is removed by the
Members, the winding-up of the affairs of the Company and the distribution of
its assets shall be conducted by the person or entity selected by a vote of a
Majority, which person or entity is hereby authorized to do any and all acts and
things authorized by law for such purposes.

12.5 Compliance With Timing Requirements of Regulations. If the Company is
"liquidated" within the meaning of Treasury Regulation Section 1.704-
1(b)(2)(ii)(g):

12.5.1 Distributions shall be made under this Article 12 (if such
liquidation constitutes a dissolution of the Company) or Article
7 hereof (if it does not) to the Manager and Members who have
positive Capital Accounts in compliance with Treasury Regulation
Section 1.704-1(b)(2)(ii)(b)(2); and

12.5.2 if the Manager's Capital Account has a deficit balance (after
giving effect to all contributions, distributions, and
allocations for all taxable years, including the year during
which such liquidation occurs), the Manager shall contribute to
the capital of the Company the amount necessary to restore such
deficit balance to zero in compliance with Treasury Regulation
Section 1.704-1(b)(2)(ii)(b)(3).

ARTICLE 13
ROLL-UPS

13.1 Roll-Up Transactions: Appraisal. If the Company proposes to enter into a
Roll-Up transaction, an appraisal of all Company assets shall be obtained from a
competent, Independent Expert. If the appraisal will be included in a Prospectus
to offer the securities of a Roll-Up entity to the Members, the appraisal shall
be filed with the Securities and Exchange Commission and the states as an
exhibit to the Registration Statement for that offering. The Independent Expert
will appraise the assets of the Company on a consistent basis, and conduct the
appraisal based on an evaluation of the Company's assets as of a date
immediately before the announcement of the proposed Roll-Up. The performing the
appraisal, the Independent Expert shall assume an orderly liquidation of the
Company's assets over a 12-month period. The terms of the engagement of the
Independent Expert shall clearly state that the engagement is for the benefit of
the Company and its Members. The Company shall include a summary of the
Independent Expert's appraisal, indicating all material assumptions underlying
the appraisal, in a report to the Members regarding the proposed Roll-Up.

13.2 Members' Rights in a Roll-Up. If a Roll-Up is effected as to the
Company, the Roll-Up Entity making the offer to the Company shall offer to each
Member who votes against the Roll-Up the choice of

13.2.1 accepting the securities of the Roll-Up Entity that were offered
in the proposed Roll-Up, or

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<PAGE>

13.2.2 either (a) remaining as a Member of the Company and preserving
its interests therein unchanged; or (b) receiving cash in an
amount equal to the Member's pro-rata share of the appraised Net
Asset Value of the Company.

13.3 Limitations on Roll-Ups. The Company's ability to participate in a
Roll-Up is also subject to the following:

13.3.1 The Company shall not participate in any proposed Roll-Up which
would result in Members having voting rights in the Roll-Up
Entity which are less than those provided in Section 6.2 of this
Agreement.

13.3.2 If the Roll-Up Entity is a corporation, the voting rights of the
Members shall correspond to the voting rights provided in this
Agreement to the extent reasonably possible.

13.3.3 The Company will not participate in any proposed Roll-Up which
includes provisions which would operate to materially impede or
frustrate the accumulation of shares, units or other equity
interests, however denominated, by any purchaser of the
securities of the Roll-Up Entity (except to the minimum necessary
to preserve the tax status of the Roll-Up Entity).

13.3.4 The Company will not participate in any proposed Roll-Up which
would limit the ability of a Member to exercise the voting rights
of the securities of the Roll-Up Entity on the basis of the value
of the Interest held by the Member.

13.3.5 The Company will not participate in any proposed Roll-Up in which
the Members' rights as securities holders to access to the
records of the Roll-Up Entity will be less than those provided
for in this Agreement or in which any of the costs of the Roll-Up
transaction would be borne by the Company if the Roll-Up is not
approved by necessary vote of the Members.

ARTICLE 14
COMPENSATION TO THE MANAGER AND ITS AFFILIATES

The Company shall pay the Manager the compensation and permit the Manager to
charge and collect the fees and other amounts from borrowers as set forth in the
Prospectus. In addition to the foregoing, under no circumstances may the Manager
receive any compensation not permitted under the NASAA Guidelines. Without
limiting the foregoing, all expenses of the Company shall be billed directly to
and paid by the Company. The Company shall pay the Manager an annual management
fee up to 0.25% of the aggregate capital contributions. No reimbursement shall
be paid to the Manager or its Affiliates for any general or administrative
overhead expenses incurred by the Manager or its Affiliates or for any other
expenses they may incur.

ARTICLE 15
MISCELLANEOUS

15.1 Covenant to Sign Documents. Each Member covenants, for himself and his
successors and assigns, to execute, with acknowledgment or verification, if
required, any and all certificates, documents and other writings which may be
necessary or expedient to form the Company and to achieve its purposes,
including, without limitation, any amendments to the Articles of Organization
and any filings, records or publications necessary or appropriate under the laws
of any jurisdiction in which the Company shall conduct its business.

15.2 Notices. Except as otherwise expressly provided for in this Agreement,
all notices which any Member may desire or may be required to give any other
Members shall be in writing and shall be deemed duly given when delivered
personally or when deposited in the United States mail, first-class postage
pre-paid. Notices to Members shall be addressed to the Members at the last
address shown on the Company records. Notices to the Manager or to the Company
shall be delivered to the Company's principal place of business, as set forth in
Section 1.3 above or as hereafter changed as provided herein.

15.3 Right to Engage in Competing Business. Nothing contained in this
Agreement shall preclude any Member from purchasing or lending money upon the
security of any other property or rights therein, or in any

A-24

<PAGE>

manner investing in, participating in, developing or managing any other venture
of any kind, without notice to the other Members, without participation by the
other Members, and without liability to them or any of them. Each Member waives
any right he may have against the Manager for using for its own benefit
information received as a consequence of the Manager's management of the affairs
of the Company. This Section 15.3 shall be subject in its entirety to the
fiduciary duty of the Manager set forth in Section 3.4.

15.4 Amendment. This Agreement is subject to amendment by the affirmative
vote of a Majority in accordance with Section 6.2; provided, however, that no
amendment shall be permitted if the effect of such amendment would be to
increase the duties or liabilities of any Member or materially adversely affect
any Member's interest in Profits, Losses, Company assets, distributions,
management rights or voting rights, except as agreed by that Member. In
addition, and notwithstanding anything to the contrary contained in this
Agreement, the Manager shall have the right to amend this Agreement, without the
vote or consent of any of the Members, if, in the reasonable judgment of the
Manager, such amendment does not adversely affect the rights of the Members,
including an amendment:

15.4.1 to grant to Members (and not solely the Manager in its capacity
as a Member) additional rights, remedies, powers or authority
that may lawfully be granted to or conferred upon them;

15.4.2 to cure any ambiguity, to correct or supplement any provision
which may be inconsistent with any other provision, or to make
any other provisions for matters or questions arising under this
Agreement which will not be inconsistent with the provisions of
this Agreement;

15.4.3 to conform this Agreement to applicable laws and regulations,
including without limitation, federal and state securities and
tax laws and regulations, and the NASAA Guidelines;

15.4.4 in the form of a revision to or updating of Schedule A in
accordance with Section 5.2 hereof; and

15.4.5 to elect for the Company to be governed by any successor Nevada
statute governing limited liability companies.

The Manager shall notify the Members within a reasonable time of the adoption of
any amendment.

15.5 Entire Agreement. This Agreement constitutes the entire Agreement
between the parties and supersedes any and all prior agreements and
representations, either oral or in writing, between the parties hereto regarding
the subject matter contained herein.

15.6 Waiver. No waiver by any party hereto of any breach of, or default
under, any provision of this Agreement by any party shall be construed or deemed
a waiver of any breach of or default under any other provision of this
Agreement, and shall not preclude any party from exercising or asserting any
rights under this Agreement for any future breach or default of the same
provision of this Agreement.

15.7 Severability. If any term, provision, covenant or condition of this
Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the provisions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.

15.8 Application of Nevada law. This Agreement and the application or
interpretation thereof shall be governed, construed, and enforced exclusively by
its terms and by the law of the State of Nevada.

15.9 Captions. Section titles or captions contained in this Agreement are
inserted only as a matter of convenience and for reference and in no way define,
limit, extend or describe the scope of this Agreement.

15.10 Number and Gender. Whenever the singular form is used in this Agreement
it includes the plural when required by the context, and the masculine gender
shall include the feminine and neuter genders.

15.11 Counterparts. This Agreement may be executed in counterparts, any or
all of which may be signed by Manager on behalf of the Members as their
attorney-in-fact.

15.12 Waiver of Action for Partition. Each of the parties hereto irrevocably
waives during the term of the Company any right that it may have to maintain any
action for partition for any property of the Company.

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<PAGE>

15.13 Defined Terms. All terms used in this Agreement which are defined in
the Prospectus shall have the meanings assigned to them in said Prospectus,
unless this Agreement shall provide for a specific definition in Article 2.

15.14 Binding on Assignees. Each and all of the covenants, terms, provisions
and agreements herein contained shall be binding upon and inure to the benefit
of the successors and assigns of the respective parties hereto, subject to the
provisions of Section 10.2, which control the assignment or other transfer of
Company Interests.

A-26

<PAGE>
EXHIBIT B

BY EXECUTING THIS SUBSCRIPTION AGREEMENT, AN INVESTOR IS NOT WAIVING
ANY RIGHTS UNDER THE FEDERAL SECURITIES LAWS.

SUBSCRIPTION INSTRUCTIONS

A. Completion of Subscription Agreement

(1) Subscription and related undertakings, representations and
warranties: Please read carefully pages B-1 to B-4.

o Initial the representation contained in Section 6(c) on page B-2.

o Indicate in section 13 on page B-3 whether you want to reinvest
distributions by purchasing additional Units.

o Indicate in section 14 on page B-4 how you will own the Units.

(2) Questionnaire(s):

o Individual Subscribers. Complete page B-5.

o Entities other than Employee Benefit Plans. Complete page B-6.

o Employee Benefit Plans. Complete pages B-7 and B-8.

(3) Registration Information. Complete all information on page B-9.

(4) Signature Page. Complete and sign page B-10.

(5) Existing Members Only (for use after initial acquisition of Units).
After acquiring Units, you only have to complete the one page form
entitled "Additional Subscription Request" at page B-11.

B. Payment. All subscriptions should be for at least $2,000, corresponding to a
minimum of 200 Units.

<TABLE>
<CAPTION>
<S> <C>
Payment by Bank Check or Certified Check: Make payable to the order of "DM
Mortgage Investors, LLC"

Payment by Wire Transfer: DM Mortgage Investors, LLC
Account No. 153790228677
Bank Routing No. [121201694]
</TABLE>

C. Questions. If you have any questions in completing this Subscription
Agreement, please call Vestin Capital Inc. at (702) 247-1332.

D. Return of Documents. The Subscription Agreement should be returned to the
following address:

Vestin Mortgage, Inc.
2901 El Camino Avenue, Suite 206
Las Vegas, NV 89102

<PAGE>

BY EXECUTING THIS SUBSCRIPTION AGREEMENT, AN INVESTOR IS NOT WAIVING
ANY RIGHTS UNDER THE FEDERAL SECURITIES LAWS.
SUBSCRIPTION AGREEMENT AND POWER OF ATTORNEY
DM MORTGAGE INVESTORS, LLC

1. SUBSCRIPTION. The undersigned investor ("Investor") hereby applies to
become a member in DM Mortgage Investors, LLC, a Nevada limited liability
Company (the "Company"). The Investor subscribes $ for the purchase of
units of limited liability interest in the Company (the "Units"), the
price being $10.00 per Unit (with a 200 Unit minimum purchase). The undersigned
agrees to purchase the number of Units stated above in accordance with the terms
and conditions of the Operating Agreement (the "Operating Agreement"), a copy of
which is found at Exhibit A of the Prospectus of the Company to which this
agreement forms Exhibit B (the "Prospectus"). The Units which the Investor
offers to purchase shall not be deemed issued to, or owned by, the Investor
until: (a) the Investor has fully paid by certified or bank check or by wire
transfer for such Units, and (b) the Manager has in its sole discretion accepted
all or any portion of Investor's offer of purchase.

2. PAYMENT OF SUBSCRIPTION. The amount of the Investor's subscription set
forth above either (a) has already been delivered by wire transfer, to the
account set forth below, or (b) is enclosed in the form of a certified or bank
check.

The Investor hereby authorizes and directs Vestin Capital, Inc. to deliver
this Subscription Agreement to the Manager. The Investor acknowledges that the
Manager can accept or reject all or any part of this subscription in its sole
discretion, and that this offering may be terminated at any time by the Manager.
If the Investor's subscription is rejected in part, the funds delivered
herewith, to the extent the application is so rejected, will be returned to
Investor as soon as practicable without interest or deduction, except to the
extent of any interest actually earned.

3. The offering by the Company will continue to seek to distribute a total of
10,000,000 Units for $100,000,000.

4. REPRESENTATIONS BY THE INVESTOR. The Units as an investment involve a
high degree of risk. Please read the "Risk Factors" beginning on page 7 of
the Prospectus. In connection with the Investor's investment described in
Section 1 of this Agreement, the Investor represents and warrants to the
Company and any relevant broker-dealers that the Investor:

(a) has received the Prospectus;

(b) understands that no federal or state agency has made any finding or
determination as to the fairness for public investment in, nor any
recommendation nor endorsement of, the Units;

(c) ILLIQUID INVESTMENT: understands that there will be no public market for
the Units, that there are substantial restrictions on repurchase, sale,
assignment or transfer of the Units, and that it may not be possible
readily to liquidate this investment;

PLEASE CONFIRM THE REPRESENTATION SET FORTH IN
SECTION 4(C) BY PLACING YOUR INITIALS HERE: ______

(d) meets the following criteria:

(i) if financial suitability standards (i.e., based on net worth or
income levels) are provided in Appendix A to this Subscription
Agreement for the state in which the Investor is domiciled, the
undersigned meets those financial suitability standards;

(ii) IF NO FINANCIAL SUITABILITY STANDARDS ARE INCLUDED IN APPENDIX A
FOR THE STATE IN WHICH THE INVESTOR IS DOMICILED, ONE OF THE
FOLLOWING IS TRUE:

(A) the undersigned has a minimum net worth (exclusive of home,
furnishings, and automobiles) of $45,000, and an annual gross
income of at least $45,000;

B-2

<PAGE>
(B) the undersigned has a minimum net worth (exclusive of home,
furnishings, and automobiles) of $150,000; or

(C) the undersigned is purchasing in a fiduciary capacity for a
person meeting the requirements of either (i) or (ii) above;
or

(e) is under no disability with respect to entering into a contractual
relationship with the Company, and, if the Investor is an individual,
has attained the age of majority (as established in the state in which
domiciled);

(f) if a trustee, is the trustee for the trust on behalf of which it is
purchasing the Units, and has due authority to purchase Units on behalf
of the trust;

(g) fully indemnifies and holds harmless the Company, the Manager, and its
affiliates from any and all claims, actions, causes of action, damages,
and expenses (including legal fees and expenses) whatsoever which may
result from a breach of any of the representations by Investor contained
herein;

(h) has investment objectives that correspond to those stated in the
Prospectus, i.e., to preserve the capital of the Company and to provide
monthly distributions of cash to the members;

(i) understands that the Company intends to be taxed as an association
(partnership) and not as a corporation, and that, among other things,
this may result in taxes being payable by the Investor even though the
Company may not have distributed cash to the Investor.

(j) understands that an investment in the Company will not, in itself,
create a retirement plan (as defined in the Internal Revenue Code of
1986, as amended) for any investor and that, in order to create a
retirement plan, an investor must comply with all applicable provisions
of the Code.

5. PURCHASE BY FIDUCIARY. If the Investor is purchasing the Units subscribed
for hereby in a fiduciary capacity, the above representations and warranties are
to be deemed to have been made on behalf of the person(s) for whom the Investor
is so purchasing except that such person(s) need not be over 18 years of age.

6. ADOPTION OF OPERATING AGREEMENT. The Investor hereby adopts, accepts, and
agrees to be bound by all terms and provisions of the Operating Agreement
(Exhibit A to the Prospectus) and to perform all obligations therein imposed
upon a member with respect to Units to be purchased. By signing and completing
the signature page of this Subscription Agreement, the undersigned agrees to
become a Member in the Company upon acceptance of this Subscription Agreement by
the Manager on behalf of the Company, and to pay the subscription price in full.

7. LIMITATION ON ASSIGNMENT. The Investor acknowledges that the Units may be
assigned only as provided in the Operating Agreement and further acknowledges
the restrictions on the Company's repurchase or the Investor's resale, transfer,
or assignment of the Units set forth in the Operating Agreement and as described
in the Prospectus.

8. SPECIAL POWER OF ATTORNEY. The Investor hereby makes, constitutes, and
appoints the Manager of the Company to be such person's true and lawful
attorney-in-fact with full power and authority for him, and in his name, place
and stead, to execute, acknowledge, publish and file, as necessary or
appropriate:

(a) the Operating Agreement and the Articles of Organization, as amended to
date, as well as any and all additional amendments thereto required
under the laws of the State of Nevada or of any other state or which the
Manager deems advisable to prepare, execute and file;

(b) any other certificate, instrument or document, including Fictitious
Business Name Statements, which may be required to be filed by the
Company by any governmental agency or by the laws of any state or other
jurisdiction in which the Company is doing or intends to do business, or
which the Manager deems advisable to file; and

(c) any documents which may be required to effect the continuation of the
Company, the admission of an additional or substituted member, or the
dissolution and termination of the Company, provided

B-3

<PAGE>
such continuation, admission, or dissolution and termination are in
accordance with the terms of the Operating Agreement.

The foregoing grant of authority:

(i) is a Special Power of Attorney coupled with an interest, is
irrevocable, survives the death of the Investor and shall not be
affected by the subsequent incapacity of the Investor;

(ii) may be exercised by the Manager for each member by a facsimile
signature of or on behalf of the Manager or by listing all of the
members and by executing any instrument with a single signature
of or on behalf of the Manager, acting as attorney-in-fact for
all of them; and

(iii) shall survive the delivery of an assignment by a member of the
whole or any portion of his interest; except that where the
assignee thereof has been approved by the Manager for admission
to the Company as a substituted member, the Special Power of
Attorney shall survive the delivery of such assignment for the
sole purpose of enabling such person to execute, acknowledge, and
file any instrument necessary to effect such substitution.

9. NOTIFICATION OF MANAGER. The Investor agrees to notify the Manager
immediately if any of the foregoing statements made herein shall become untrue.

10. OPERATING AGREEMENT GOVERNS. In the event of any conflict between the
provisions of the Operating Agreement and any instrument or document executed,
acknowledged, filed or recorded by the Manager pursuant to this special power
of attorney, the Operating Agreement will govern.

11. REINVESTMENT OF DISTRIBUTIONS. The Company maintains a Distribution
Reinvestment Plan (the "Plan") under which distributions of income of the
Company may be reinvested for the purchase of additional Units, rather than
being received in cash. See Prospectus, under "Summary of Operating Agreement,
Rights of Members and Description of Units---Distribution Reinvestment Plan." So
long as Investor meets the suitability standards established by the Company and
by the securities law administrator of the state in which Investor is domiciled,
and subject to possible suspension or termination of the Plan by the Manager, as
set forth in the Operating Agreement, the Investor will continue to participate
in the Plan. The Investor may change his election at any time by written notice
to the Company. Please choose one or the other of the two options by a check
mark in the appropriate blank. If you check neither blank, you will be
considered to have elected to receive your distributions in cash (Option B).

_____ A. Investor elects to participate in the Plan and receive additional
Units rather than cash as distributions of Net Income from the
Company.

_____ B. Investor elects not to participate in the Plan and to receive
distributions of Net Income in cash.

12. OWNERSHIP OF UNITS. The Investor's Units will be owned and should be
shown on the Company's records as follows:

Check one: |_| Individual Ownership
|_| Joint Tenants with Right of Survivorship
(all parties must sign)
|_| Tenants in Common (all parties must sign)
|_| Community Property (one signature required)
|_| Custodian
|_| Trustee
|_| Corporation
|_| Partnership
|_| Nonprofit Organization

If you have any questions in completing this Subscription Agreement,
please call
Vestin Capital, Inc. at

(702) 247-1332

or Vestin Mortgage at

(702) 227-0965

B-4

<PAGE>

INDIVIDUAL INVESTORS MUST COMPLETE THIS PAGE

Name: _____________________________________________

Date of Birth _____________________________________

Occupation ________________________________________

Marital Status (check one) Single ____ Married ____

Citizenship U.S. ____ Other ____

Investment Objective:

Preservation of capital and monthly income distributions
(check)

Other (please explain) ______________________________________________________

Investor's Financial Status and Suitability:

Investor's Net Worth, exclusive of home, furnishings, and automobiles (check
appropriate range):

<TABLE>
<S> <C> <C>
___ under $45,000 ___ $45,000-$49,999 ___ $50,000-$59,999

___ $60,000-$64,999 ___ $65,000-$124,999 ___ $125,000-$149,999

___ $150,000-$199,999 ___ $200,000-$224,999 ___ $225,000-$249,999

___ $250,000 or greater
</TABLE>

Investor's Annual Income (check appropriate range)

___ under $45,000 ___ $45,000-$49,999 ___ $50,000-$59,999

___ $60,000-$64,999 ___ $65,000-$124,999 ___ $125,000-$149,999

___ $150,000-$199,999 ___ $200,000-$224,999 ___ $225,000-$249,999

___ $250,000 or greater

</TABLE>

Describe your investments in the last five years and discuss who made the
relevant investment decisions (you, your financial adviser, broker, accountant
or attorney): __________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________

Please provide any other information that would help the Manager determine
whether the Investor has sufficient knowledge and experience in financial and
business matters to evaluate the merits and risks of an investment in the Units.
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________

Are you subject to any regulatory or other constraints that may preclude or
limit your participation in any potential Company investment?

___ YES ___ NO

If yes, please describe: ______________________________________________________

B-5

<PAGE>
LEGAL ENTITIES (NON-BENEFIT PLANS)
TO COMPLETE THIS PAGE

Name of Investor: ______________________________________________________________

Type of Legal Entity:

______ corporation (if so, provide jurisdiction of incorporation) ___________

______ partnership or limited liability company (provide jurisdiction of
organization) __________________________________________________________________

______ trust (provide state in which formed and date of trust indenture) ____

______ other (describe) _____________________________________________________

Principal place of business ____________________________________________________

Investment Objective:

Preservation of capital and monthly income distributions ______ (check)

Other (please explain) ______________________________________________________
________________________________________________________________________________

Total assets (as indicated on the most recent balance sheet) of the Investor:
$___________

Describe the Investor's investments in the last five years and discuss who made
the relevant investment decisions (director, officer, financial adviser, broker,
accountant or attorney): _______________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________

Is the Investor subject to any regulatory or other constraints that may preclude
or limit the Investor's participation in any potential Company investment?

____ YES ____ NO

If yes, please describe: _______________________________________________________

B-6

<PAGE>
EMPLOYEE BENEFIT PLANS
TO COMPLETE PAGES B-7 AND B-8

Name of Investor (the "Plan "): ______________________________________________

Investment Objective:

Preservation of capital and monthly income distributions ______ (check)

Other (please explain) ______________________________________________________
________________________________________________________________________________

Total assets (as indicated on the most recent balance sheet) of the Investor:
$______________

Does this investment exceed 10% of the Plan's assets?

____ YES ____ NO

Is the Plan an "employee benefit plan" within the meaning of Title I of ERISA
(an "ERISA Plan") with a fiduciary as defined in Section 3(21) of ERISA which is
a bank, insurance company or registered investment adviser (other than an
affiliate of the Manager), which fiduciary will decide whether to purchase
Units?

____ YES ____ NO

If yes, provide details _____________________________________________________
________________________________________________________________________________

Is the Plan an employee benefit plan other than an ERISA plan?

____ YES ____ NO

If yes, provide details as to the nature of the Plan (IRA, Keogh, etc.) and
the person making investment decisions on behalf of the Plan __________________
________________________________________________________________________________

Does the Plan permit participants to direct the investment of the contributions
made to the Plan on their behalf?

____ YES ____ NO

Additional Plan Representations and Warranties:

The undersigned authorized signatory of the Plan hereby represents and warrants
on behalf of the Plan that the answers to the following questions are true:

Does the Manager or any of its employees or affiliates manage any part of the
Plan's investment portfolio on a discretionary basis?

____ YES ____ NO

Does the Manager or any of its employees or affiliates regularly give
investment advice to the Plan?

____ YES ____ NO

Does the Manager or any of its employees or affiliates have an agreement or
understanding, written or unwritten, with the investment director of the Plan
under which the latter receives information, recommendations and advice
concerning investments which are used as a primary basis for the Plan's
investment decisions?

____ YES ____ NO

Does the Manager or any of its employees or affiliates have an agreement or
understanding, written or unwritten, with the investment director of the Plan
under which the latter receives individualized investment advice concerning
the Plan's assets?

____ YES ____ NO

B-7

<PAGE>

IF THE ANSWER TO ANY OF THESE IS "YES," INDICATE WHETHER ALL OF THE
REPRESENTATIONS AND WARRANTIES BELOW ARE TRUE BY INITIALING BELOW.

The investment director of the Plan has studied the Prospectus and has made
an independent decision to purchase Units solely on the basis thereof and
without reliance on any other information or statements as to the
appropriateness of this investment for the Plan.

All the obligations and requirements of ERISA, including prudence and
diversification, with respect to the investment of "plan assets" in the
Company have been considered by the investment director of the Plan.

The investment director and, if different, authorized signatory of the Plan
understand that neither the Manager nor any of its affiliates: (a) has
exercised any investment discretion or control with respect to the Plan's
purchase of any Units, (b) have authority, responsibility to give, or have
given individualized investment advice with respect to the Plan's purchase of
any Units, or (c) are employers maintaining or contributing to such Plan.

An investment in the Company conforms in all respects to the governing
documents of the Plan.

The person executing this Subscription Agreement on behalf of the Plan is a
"fiduciary" of such Plan and trust and/or custodial account (within the
meaning of Section 3(21)(A) of ERISA); the execution and delivery of this
Subscription Agreement with respect to the Plan and trust and/or custodial
account have been duly authorized; and investment in the Company conforms in
all respect to laws applicable to the Plan and to the Plan documents; and in
making this investment, the Plan, its fiduciaries and its investment director
are aware of, and have taken into consideration, among other things, risk
return factors and the anticipated effect of an investment in the Company on
the diversification, liquidity and cash flow needs of the Plan and the
projected effect of the investment in meeting the Plan's funding objectives
and have concluded that this investment is a prudent one.

The Plan's governing documents do not prohibit the Company from investing in
specific securities or issues, including, but not limited to, securities
which would be deemed to be "employer securities" with respect to the Plan as
defined in Section 407 of ERISA.

The Plan's proxy voting guidelines do not apply to securities held by the
Company.

The Plan, its investment director and, if different, the person executing
this Subscription Agreement fully understand the tax considerations and risks
of this investment.

ARE THE FOREGOING RESPRESENTATIONS AND WARRANTIES TRUE?

__ YES __ NO

Please provide any other information that would help the Manager determine
whether the Investor has sufficient knowledge and experience in financial and
business matters to evaluate the merits and risks of an investment in the
Units.
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________

B-8

<PAGE>
REGISTRATION INFORMATION FOR THE INTERESTS

<TABLE>
<S> <C>
$
___________________________________________________________________________________________________________________________________
(Subscriber Name(s)) (Subscription Amount)
___________________________________________________________________________________________________________________________________
(Street Address) (State/Zip Code)
___________________________________________________________________________________________________________________________________
(Telephone and Facsimile Numbers) (e-mail---Optional)
</TABLE>

The full address to which any communications, distribution checks, and
redemption checks, if applicable, should be sent (if different from registered
address furnished in response to the preceding requirement) is:

<TABLE>
<S> <C> <C>
___________________________________________________________________________________________________________________________________
(Name (s))
___________________________________________________________________________________________________________________________________
(Street Address) (City) (State/Country)
___________________________________________________________________________________________________________________________________
(Telephone and Facsimile Numbers) (e-mail---optional)
</TABLE>

If the proceeds of distributions or redemptions, if any, are to be wired rather
than sent by check, the account to which such proceeds should be wired is:

<TABLE>
<S> <C>
___________________________________________________________________________________________________________________________________
(Name of Financial Instution)
___________________________________________________________________________________________________________________________________
(Routing ABA Number---if a Bank)
___________________________________________________________________________________________________________________________________
(Address of Financial Instituion)
___________________________________________________________________________________________________________________________________
(Financial Institution Account Name and Number)

_______________________________________________________________________________________ U.S. Citizen or Resident ___ YES ___ NO
Social Security No./EIN (Entity)

_______________________________________________________________________________________ Existing Partner ___ YES ___ NO
Plan Number (if applicable)
</TABLE>

B-9

<PAGE>
SIGNATURE PAGE

BEFORE SIGNING THIS PAGE, HAVE YOU: (a) initialed the representation
contained in Section 6(c) on page B-2, (b) indicated in section 13 on page B-4
whether you want to reinvest distributions by purchasing additional Units, and
(c) indicated in section 14 on page B-4 how you will own the Units? If not,
please do so.

<TABLE>
<S> <C>
INDIVIDUAL(S):

___________________________________________________________________________________________________ Date: ______________________
(Signature of Subscriber)
___________________________________________________________________________________________________
(Print Name of Subscriber)
___________________________________________________________________________________________________ Date: ______________________
(Signature of Co-Subscriber)
___________________________________________________________________________________________________
(Print Name of Co-Subscriber)

ENTITIES (other than Plans):

___________________________________________________________________________________________________
(Print Name of Subscriber)
By: _______________________________________________________________________________________________ Date: ______________________
(Signature of Authorized Signatory)
___________________________________________________________________________________________________
(Print Name and Title of Signatory)
By: _______________________________________________________________________________________________ Date: ______________________
(Signature of Required Authorized Co-Signatory)
___________________________________________________________________________________________________
(Print Name and Title of Co-Signatory)

Plan Entities:
___________________________________________________________________________________________________ Date: ______________________
(Signature of Individual Plan Participant) (Print Name)
___________________________________________________________________________________________________ Date: ______________________
(Signature of Custodian or Trustee) (Print Name)
___________________________________________________________________________________________________ Date: ______________________
(Signature of Other Authorized Signatory) (Print Name)

FOR USE BY THE COMPANY ONLY

Subscription has been: _____ Accepted _____ Accepted in Part _____ Rejected _____ Other

Subscription Amount: $ __________________________________________________ Dated: __________________________________________________

Signed: Vestin Mortgage, Inc., Manager

By: _____________________________________________________________
Name:
Title:
</TABLE>

B-10

<PAGE>
ADDITIONAL SUBSCRIPTION REQUEST

(To Be Completed By Existing Investors Instead of Subscription Agreement)

Name of Investment Fund:________________________________________________________

Name of Subscriber(s):__________________________________________________________

Additional Subscription Amount: $_______________________________________________

The undersigned hereby subscribes for the additional amount set forth above
upon the terms and conditions described in the Confidential Private Offering
Memorandum. The undersigned restates all of the covenants, representations and
warranties made in the undersigned's original Subscription Agreement as if they
were made on the date hereof and certifies that all of the financial information
set forth in the undersigned's original Subscription Agreement remains accurate
and complete on the date hereof.

INDIVIDUAL SIGNATURES:
_________________________________________________________ Date: _______________
(Signature of Subscriber)
_________________________________________________________ Date: _______________
(Signature of Co-Subscriber)

ENTITY AND PLAN SIGNATURES:

By: ______________________________________________________ Date: _______________
(Signature of Authorized Signatory)
_________________________________________________________
(Print Name and Title of Signatory)

By: ______________________________________________________ Date: _______________
(Signature of Required Authorized Co-Signatory)
_________________________________________________________

(Print Name and Title of Co-Signatory)

================================================================================

FOR USE BY THE COMPANY ONLY

Subscription has been: _____ Accepted _____ Accepted in Part _____ Rejected
_____ Other

Additional Subscription Amount Accepted $ ______________________________________

Dated:__________________________________________________________________________

Signed: Vestin Mortgage, Inc., Manager

By: ____________________________________________________________
Name:
Title:

B-11

<PAGE>
APPENDIX A

STATE REGULATIONS
("Blue Sky" Law)

Various states have established suitability standards for individual
investors and subsequent transferees different from and/or in addition to those
set by the Company. These requirements are set forth below:

<TABLE>
<CAPTION>
State Suitability Standards Requirements
----- --------------------- ------------
<S> <C> <C>
NV Same as in body of agreement. Minimum investment is $5,000.

OH, PA Same as in body of agreement, except that We will make no sales in these states
in addition, the amount an Investor pays until we receive proceeds of at least
for units may not exceed 10% of the $5,000,000. PENNSYLVANIA RESIDENTS:
Investor's net worth (without including BECAUSE THE MINIMUM CLOSING AMOUNT IS
the Investor's home, home furnishings and LESS THAN $10,000,000, INVESTORS ARE
automobiles) CAUTIONED TO CAREFULLY EVALUATE THE
COMPANY'S ABILITY TO
FULLY ACCOMPLISH ITS
STATED OBJECTIVES AND
TO INQUIRE AS TO THE
CURRENT DOLLAR VOLUME
OF PROGRAM
SUBSCRIPTIONS.

AZ, AK, Investors must have either (i) a minimum The following may appear on
CA, IA, net worth (without including an Investor's certificates issued to California
MA, MS, home, home furnishings, and automobiles) residents: IT IS UNLAWFUL TO
MO, TN of $60,000, and an annual gross income of CONSUMMATE A SALE OR TRANSFER OF THIS
at least $60,000; or (ii) minimum net SECURITY, OR ANY INTEREST THEREIN, OR
worth (exclusive of home, furnishings, and TO RECEIVE ANY CONSIDERATION
automobiles) of $225,000 or (iii) are THEREFOR, WITHOUT THE PRIOR WRITTEN
purchasing in a fiduciary capacity for a CONSENT OF THE COMMISSIONER OF
person meeting the requirements of either CORPORATIONS OF THE STATE OF
(i) or (ii) above. CALIFORNIA, EXCEPT AS PERMITTED IN
THE COMMISSIONER'S RULES. There are
restrictions on the transfer of the
Units in California, which are set
forth in the statute included in
Appendix B on the following two
pages.

ME Investors must have either (i) a minimum
net worth (without including an
Investor's home, home furnishings, and
automobiles) of $50,000, and an annual
gross income of at least $50,000; or (ii)
minimum net worth (exclusive of home,
furnishings, and automobiles) of $200,000
or (iii) are purchasing in a fiduciary
capacity for a person meeting the
requirements of either (i) or (ii) above.
</TABLE>

B-12

<PAGE>
<TABLE>
<CAPTION>
State Suitability Standards Requirements
----- --------------------- ------------
<S> <C> <C>
SC Investors must have either (i) a minimum
net worth (without including an
Investor's home, home furnishings, and
automobiles) of $65,000, and an annual
gross income of at least $65,000; or (ii)
minimum net worth (exclusive of home,
furnishings, and automobiles) of $150,000
or (iii) are purchasing in a fiduciary
capacity for a person meeting the
requirements of either (i) or (ii) above.

NH Investors must have either (i) a minimum
net worth (without including an
Investor's home, home furnishings, and
automobiles) of $125,000, and an annual
gross income of at least $50,000; or (ii)
minimum net worth (exclusive of home,
furnishings, and automobiles) of $250,000
or (iii) are purchasing in a fiduciary
capacity for a person meeting the
requirements of either (i) or (ii) above.

DC, LA, These jurisdictions do not have
NE, ND, quantified suitability requirements.
RI Accordingly, in addition to assuring
compliance with the guidelines set forth
in the body of this agreement, dealers
are instructed to review, and investors
should provide any other relevant
information that they believe is
necessary to making an assessment of
suitability.
</TABLE>

B-13

<PAGE>
APPENDIX B

RESTRICTIONS ON TRANSFER SET FORTH
IN RULE 260.141.11 OF
THE CALIFORNIA CODE OF REGULATIONS TITLE 10, CHAPTER 3 (The "Code ")

(a) The issuer of any security upon which a restriction on transfer has been
imposed pursuant to Section 260.102.6, 260.141.10 or 260.534 shall cause a
copy of this section to be delivered to each issuee or transferee of such
security.

(b) It is unlawful for the holder of any such security to consummate a sale or
transfer of such security, or any interest therein, without the prior
written consent of the Commissioner (until this condition is removed
pursuant to Section 260.141.12 of these rules), except:

(1) to the issuer;

(2) pursuant to the order or process of any court;

(3) to any person described in Subdivision (i) of Section 25102 of the Code
or Section 260.105.14 of these rules;

(4) to the transferors ancestors, descendants or spouse or any custodian or
trustee for the account of the transferor or the transferors ancestors,
descendants or spouse; or to a transferee by a trustee or custodian for
the account of the transferee or the transferees ancestors, descendants
or spouse;

(5) to the holders of securities of the same class of the same issuer;

(6) by way of gift or donation inter vivos or on death;

(7) by or through a broker-dealer licensed under the Code (either acting as
such or as a finder) to a resident of a foreign state, territory or
country who is neither domiciled in this state to the knowledge of the
broker-dealer, nor actually present in this state if the sale of such
securities is not in violation of any securities law of the foreign
state, territory or country concerned;

(8) to a broker-dealer licensed under the Code in a principal transaction,
or as an underwriter or member of an underwriting syndicate or group;

(9) if the interest sold or transferred is a pledge or other lien given by
the purchaser to the seller upon a sale of the security for which the
Commissioner's written consent is obtained or under this rule is not
required;

(10) by way of a sale qualified under Sections 25111, 25112, or 25113, or
25121 of the Code, of the securities to be transferred, provided that
no order under Section 25140 or Subdivision (a) of Section 25143 is in
effect with respect to such qualification;

(11) by a corporation to a wholly owned subsidiary of such corporation, or
by a wholly owned subsidiary of a corporation to such corporation;

(12) by way of an exchange qualified under Section 25111, 25112, or 25113 of
the Code, provided that no order under Section 25140 or Subdivision (a)
of Section 25148 is in effect with respect to such qualification;

(13) between residents of foreign states, territories or countries who are
neither domiciled nor actually present in this state;

(14) to the State Controller pursuant to the Unclaimed Property Law or to
the administrator of the unclaimed property law of another state; or

(15) by the State Controller pursuant to the Unclaimed Property Law or to
the administrator of the unclaimed property law of another state, if,
in either such case, such person (i) discloses to potential

B-14

<PAGE>

purchasers at the sale that transfer of the securities is restricted
under this rule, (ii) delivers to each purchaser a copy of this rule,
and (iii) advises the Commissioner of the name of each purchaser;

(16) by a trustee to a successor trustee when such transfer does not involve
a change in the beneficial ownership of the securities, provided that
any such transfer is on the condition that any certificate evidencing
the security issued to such transferee shall contain the legend
required by this section.

(c) The certificate representing all such securities subject to such a
restriction on transfer, whether upon initial issuance or upon any transfer
thereof, shall bear on their face a legend, prominently stamped or printed
thereon in capital letters of not less than 10-point size, reading as
follows:

IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY, OR ANY
INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR
WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA,
EXCEPT AS PERMITTED IN THE COMMISSIONERS RULES.

B-15