VESTIN FUND III LLC - FORM 10-K

Attached files

file	filename
EXCEL - IDEA: XBRL DOCUMENT - VESTIN FUND III LLC	Financial_Report.xls
EX-10.13 - DEED IN LIEU - VESTIN FUND III LLC	deedinlieuagreement.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark one)

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2011

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to _________

Commission File Number 333-105017

VESTIN FUND III, LLC

(Exact name of registrant as specified in its charter)

NEVADA		87-0693972
(State or Other Jurisdiction of		(I.R.S. Employer
Incorporation or Organization)		Identification No.)

8880 WEST SUNSET ROAD, SUITE 200, LAS VEGAS, NEVADA 89148

(Address of Principal Executive Offices) (Zip Code)

Registrant’s telephone number, including area code 702.227.0965

Securities registered pursuant to Section 12(b) of the Act:

None		None
(Title of each class)		(Name of each exchange on which registered)

Securities registered pursuant to Section 12(g) of the Act:

None

(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes [ ] No [X]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes [ ] No [X]

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Sec. 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [ ] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (Sec. 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer [ ]	Accelerated filer [ ]

Non-accelerated filer [ ]	Smaller reporting company [X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes [ ] No [X]

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter. Not applicable.

As of March 16, 2012, the Company had 2,024,424 units outstanding.

TABLE OF CONTENTS

			Page
PART I
	ITEM 1.	BUSINESS	1
	ITEM 1B.	UNRESOLVED STAFF COMMENTS	3
	ITEM 2.	PROPERTIES	3
	ITEM 3.	LEGAL PROCEEDINGS	4
	ITEM 4.	REMOVED AND RESERVED	4

PART II
	ITEM 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	4
	ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	5
	ITEM 8.	FINANCIAL STATEMENTS	14
	ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	41
	ITEM 9A.	CONTROLS AND PROCEDURES	41
	ITEM 9B.	OTHER INFORMATION	42

PART III
	ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	43
	ITEM 11.	EXECUTIVE COMPENSATION	44
	ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	44
	ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	45
	ITEM 14.	PRINCIPAL ACCOUNTING FEES AND SERVICES	46

PART IV
	ITEM 15.	EXHIBITS, FINANCIAL STATEMENT SCHEDULES	46
		EXHIBIT INDEX	47
		SIGNATURES	48

PART I

ITEM 1.

BUSINESS

General

Vestin Fund III, LLC was organized in April 2003 as a Nevada limited liability company for the purpose of investing in commercial real estate loans (hereafter referred to as “real estate loans”) and income-producing real property. In this report, we refer to Vestin Fund III, LLC as “the Company,” “our Company,” the “Fund,” “we,” “us,” or “our”.

We commenced operations in February 2004. Prior to March 2007, we invested in revenue-generating commercial real estate and loans secured by real estate through deeds of trust or mortgages (hereafter referred to collectively as “deeds of trust” and as defined in our Operating Agreement as “Mortgage Assets”). On March 5, 2007, a majority of our members approved the Third Amended and Restated Operating Agreement, which limited the Company’s investment objectives to investments in real estate loans.

At a special meeting of our members held on July 2, 2009, a majority of the members voted to approve the dissolution and winding up of the Fund, in accordance with the Plan of Complete Liquidation and Dissolution (the “Plan”) as set forth in Annex A of the Fund’s proxy statement filed with the Securities and Exchange Commission (the “SEC”) pursuant to Section 14(a) of the Securities and Exchange Act of 1934 on May 11, 2009. The Plan became effective upon its approval by the members on July 2, 2009. As a result, we have commenced an orderly liquidation and we no longer invest in new real estate loans. We anticipate that the liquidation will be substantially completed by the second half of 2014. However, because of numerous uncertainties, the liquidation may take longer or shorter than expected. Because the liquidation of the Fund was not imminent, as of December 31, 2011, the financial statements are presented assuming the Fund will continue as a going concern. Pursuant to the Plan, we will make liquidating distributions to members on a quarterly basis as funds become available, subject to a reasonable reserve established to provide for payment of the Company’s ongoing expenses and contingent liabilities. Our members no longer have the right to have their units redeemed by us and we no longer honor any outstanding redemption requests effective as of July 2, 2009.

On January 26, 2010, April 8, 2010, September 17, 2010 and May 25, 2011, we made liquidating distributions to all Fund Members, in the aggregate amount of approximately $1.0 million, $0.9 million $0.3 million and $0.3 million, respectively, in accordance with the Plan. The amounts distributed to each Member of the Fund were calculated based upon the percentage ownership interest of such Member in the Fund. See Note H – Members’ Equity of the Notes to the Financial Statements included in Part II, Item 8 Financial Statements of this Annual Report on Form 10-K.

We are not a mutual fund or an investment company within the meaning of the Investment Company Act of 1940, nor are we subject to any regulation thereunder.

Vestin Group, Inc. (“Vestin Group”), a Delaware corporation, owns a significant majority of Vestin Mortgage, LLC, a Nevada limited liability company, who is our manager (the “manager” or “Vestin Mortgage”). On January 7, 2011, Vestin Mortgage converted from a corporation to a limited liability company. Michael Shustek, the CEO and managing member of our manager and CEO, President and a director of us, wholly owns Vestin Group, which is engaged in asset management, real estate lending and other financial services through its subsidiaries. Our manager, prior to June 30, 2006, also operated as a licensed Nevada mortgage broker and was generally engaged in the business of brokerage, placement and servicing of commercial loans secured by real property. On July 1, 2006, a mortgage broker license was issued to an affiliated company, Vestin Originations, Inc. (“Vestin Originations”), majority-owned subsidiary of Vestin Group. Vestin Originations continued the business of brokerage, placement and servicing of real estate loans. Effective February 14, 2011, the business of brokerage and placement of real estate loans will be performed by affiliated or non-affiliated mortgage brokers, which includes Vestin Originations and Advant Mortgage, LLC (“Advant”), both licensed Nevada mortgage brokers which are majority-owned by Mr. Shustek.

-1-

Table of Contents

Pursuant to our Operating Agreement and the Plan of Complete Liquidation and Dissolution approved by a majority of our members on July 2, 2009, our manager will continue to manage our operations during the liquidation process. Consequently, the orderly liquidation of our assets and our operating results are dependent upon our manager’s ability and performance in managing our liquidation. Because of numerous uncertainties, the liquidation may take longer or shorter than expected. Because the liquidation of the Fund was not imminent, as of December 31, 2011, the financial statements are presented assuming the Fund will continue as a going concern.

Vestin Mortgage is also the manager of Vestin Realty Mortgage I, Inc. (“VRM I”), as the successor by merger to Vestin Fund I, LLC, (“Fund I”) and Vestin Realty Mortgage II, Inc. (“VRM II”), as the successor by merger to Vestin Fund II, LLC, (“Fund II). These entities have been formed to invest in real estate loans.

During April 2009, we entered into an accounting services agreement with Strategix Solutions, LLC (“Strategix Solutions”), a Nevada limited liability company, for the provision of accounting and financial reporting services. Strategix Solutions also provides accounting and financial reporting services to VRM I and VRM II. The CFO of our manager and other members of our accounting staff are employees of Strategix Solutions. Strategix Solutions is managed by LL Bradford and Company, LLC ("LL Bradford"), a certified public accounting firm that has provided non-audit accounting services to us. The principal manager of LL Bradford was a former officer of our manager from April 1999 through January 1, 2005. Strategix Solutions is owned by certain partners of LL Bradford, none of whom are currently or were previously officers of our manager. As used herein, “management” means our manager, its executive officers and the individuals at Strategix Solutions who perform accounting and financial reporting services on our behalf.

On January 21, 2011, Eric Bullinger was appointed as CFO to our manager by their Board of Directors, pursuant to the terms of our agreement with Strategix Solutions, who was responsible for designating, subject to the approval of their Board of Directors, a new CFO for the manager. From May 21, 2010 until January 21, 2011, our current CEO of our manager, Michael Shustek, was acting as their interim CFO.

Business Objectives

As a result of our members’ decision to liquidate the Company, we will not make any new loans and are in the process of winding up our affairs by collecting outstanding loans, pursuing remedies with respect to defaulted loans and preparing for sale/selling of our real estate held for sale. Below is a brief description of our prior business activities.

Real Estate Program Objectives (Prior to March 5, 2007)

Prior to March 5, 2007, we sought to invest in income-producing multifamily residential units, office, industrial, and retail properties, assisted living facilities and other income-producing real property. Such properties could have included hotels and resorts, restaurants, parking lots, amusement parks or other leasehold properties. We intended to primarily lease the real property owned by us. We sought to hold our properties until such time as we believed it was the optimal time to enable us to capitalize on the potential for appreciation of our properties.

Real Estate Loan Objectives (Prior to July 2, 2009)

After March 5, 2007, we sought to invest approximately 97% of our assets in five real estate loan products consisting of commercial, construction, acquisition and development, land and residential loans. Approximately 3% of our assets were held as a working capital cash reserve. Generally, the collateral on our real estate loans is the real property that the borrower was purchasing or developing, along with a guarantee of the main principal of the borrower, with the funds that we make available. We sometimes refer to these real properties as the security properties. While we may have invested in other types of loans, most of the loans in which we invested were made to real estate developers. Our real estate investments are not insured or guaranteed by any government agency.

-2-

Table of Contents

The loans we invested in were selected for us by our manager from among loans originated by affiliated or non-affiliated mortgage brokers. When a mortgage broker originated a loan for us, that entity identified the borrower, processed the loan application and brokered and sold, assigned, transferred or conveyed the loan to us. We believed that our loans were attractive to borrowers because of the expediency of our manager’s loan approval process, which took about ten to twenty days. For additional information regarding our current loan and real estate held for sale activity see Note D – Investments in Real Estate Loans and Note F – Real Estate Held for Sale of the Notes to the Financial Statements included in Part II, Item 8 Financial Statements of this Annual Report on Form 10-K.

Employees

We have no employees. Our manager has provided, and will continue to provide, most of the employees necessary for our operations, except as described below regarding Strategix Solutions, LLC. As of December 31, 2011, the Vestin entities had a total of 12 full-time and no part-time employees. Except as hereinafter noted, all employees are at-will employees, and none are covered by collective bargaining agreements. John Alderfer, our former CFO, is a party to an employment, non-competition, confidentiality and consulting contract with Vestin Group, Inc., the parent company of our manager, through December 31, 2016.

During April 2009, we entered into an accounting services agreement with Strategix Solutions, LLC (“Strategix Solutions”), a Nevada limited liability company, for the provision of accounting and financial reporting services to us, VRM I and VRM II. The CFO of our manager and other members of our accounting staff are employees of Strategix Solutions. Strategix Solutions is managed by LL Bradford and Company, LLC ("LL Bradford"), a certified public accounting firm that has provided non-audit accounting services to us. The principal manager of LL Bradford was a former officer of our manager from April 1999 through January 1, 2005. Strategix Solutions is owned by certain partners of LL Bradford, none of whom are currently or were previously officers of our manager. As of December 31, 2011, Strategix Solutions dedicates to us a total of three employees.

Available Information

Our Internet website address is http://www.vestinmortgage.com/Products/Product_FundIII.aspx. Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all amendments to those reports are available through the SEC’s Electronic Data Gathering, Analysis and Retrieval website (“EDGAR”) at http://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001230634&owner=include, after such material is electronically filed with or furnished, pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, to the SEC. Further, a copy of this annual report on Form 10-K is located at the SEC’s Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. Information on the operations of the Public Reference Room can be obtained by calling the SEC at 1-800-SEC-0330. The SEC maintains an internet site that contains reports, proxy and information statements and other information regarding our filings at www.sec.gov. Information contained on our website does not constitute a part of this Annual Report on Form 10-K.

ITEM 1B.

UNRESOLVED STAFF COMMENTS

None.

ITEM 2.

PROPERTIES

Our manager shares office facilities in Las Vegas, Nevada through a sublease with its parent corporation, Vestin Group. In March, 2010, Vestin Group entered into a ten-year lease agreement for office facilities in Las Vegas, Nevada.

We previously owned an approximately 42,000 square foot office building in Las Vegas, Nevada, that was sold to an unrelated third party in November 2006. This building was leased to the parent company of our Manager, Vestin Group and the lease agreement governing this property expires in August 2014. For a discussion of litigation between Vestin Group and the building owner, see Note M - Legal Matters Involving The Manager in Part II, Item 8 Financial Statements of this Annual Report on Form 10-K.

-3-

Table of Contents

ITEM 3.

LEGAL PROCEEDINGS

Please refer to Note M - Legal Matters Involving The Manager and Note N - Legal Matters Involving The Company in Part II, Item 8 Financial Statements of this Annual Report on Form 10-K for information regarding legal proceedings, which discussion is incorporated herein by reference.

ITEM 4.

MINE AND SAFETY DISCLOSURE

None.

PART II

ITEM 5.

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

There is no established public trading market for the trading of units.

Holders

As of March 16, 2012, approximately 509 unit holders held 2,024,424 units in the Company.

Liquidation Distribution Policy

On January 26, 2010, April 8, 2010, September 17, 2010 and May 25, 2011, we made liquidating distributions to all Fund Members, in the aggregate amount of approximately $1.0 million, $0.9 million, $0.3 million and $0.3 million, respectively, in accordance with the Plan. The amount distributed to each Member of the Fund was calculated based upon the percentage ownership interest of such Member in the Fund. See Note H – Members’ Equity of the Notes to the Financial Statements included in Part II, Item 8 Financial Statements of this Annual Report on Form 10-K.

In accordance with the Plan as set forth in Annex A of the Fund’s proxy statement filed with the Securities and Exchange Commission (the “SEC”) pursuant to Section 14(a) of the Securities and Exchange Act of 1934 on May 11, 2009 we intended to make Liquidating Distributions on a quarterly basis. However, we did not have sufficient funds to make distributions on a quarterly basis in 2011 and at this time we do not anticipate we will have the funds available to make quarterly distributions in 2012. We will distribute to our members the net proceeds we receive from the payoff of our outstanding real estate loans and the net proceeds we receive from the sale of our real estate held for sale, in each case, less a reasonable Reserve established to provide for payment of the Company’s ongoing expenses and contingent liabilities. A final Liquidating Distribution will be made after we have completed the winding up of our business operations and made appropriate provision for any remaining obligations.

We anticipate that the liquidation process will be substantially completed by the second half of 2014. However, because of numerous uncertainties, the liquidation may take longer or shorter than expected. Because the liquidation of the Fund was not imminent, as of December 31, 2011, the financial statements are presented assuming the Fund will continue as a going concern.

There are a number of factors that could delay our anticipated timetable, including the following:

•

Delays in the sale of real estate held by us through foreclosures, which may take many years to complete due to the time required to resolve pending litigation and bankruptcy matters involving foreclosed properties and to identify suitable buyers and consummate the sale of such properties;

•

Delays in distributions resulting from defaults in the payment of interest or principal when due on our real estate loans;

-4-

Table of Contents

•

Lawsuits or other claims asserted by or against us;

•

Unanticipated legal, regulatory or administrative requirements; and

•

Delays in settling our remaining obligations.

See Note H – Members’ Equity of the Notes to the Financial Statements included in Part II, Item 8 Financial Statements of this Annual Report on Form 10-K.

Recent Sales of Unregistered Securities

None.

Equity Compensation Plan Information

None.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

None.

ITEM 7.

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

The following is a financial review and analysis of our financial condition and results of operations for the years ended December 31, 2011, and 2010. This discussion should be read in conjunction with our financial statements and accompanying notes and other detailed information regarding us appearing elsewhere in this Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q, Part I, Item 2 Management’s Discussion and Analysis of Financial Conditions and Results of Operations for the quarters ended March 31, 2011, June 30, 2011 and September 30, 2011. In light of the decision in July 2009 to liquidate the Company, our historical operating results should not be viewed as indicative of future operating results.

FORWARD-LOOKING STATEMENTS

Certain statements in this report, including, without limitation, matters discussed under this Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” should be read in conjunction with the financial statements, related notes, and other detailed information included elsewhere in this report on Form 10-K. We are including this cautionary statement to make applicable and take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Statements that are not historical fact are forward-looking statements. Certain of these forward-looking statements can be identified by the use of words such as “believes,” “anticipates,” “expects,” “intends,” “plans,” “projects,” “estimates,” “assumes,” “may,” “should,” “will,” or other similar expressions. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors, which could cause actual results, performance or achievements to differ materially from future results, performance or achievements. These forward-looking statements are based on our current beliefs, intentions and expectations. These statements are not guarantees or indicative of future performance. Important assumptions and other important factors that could cause actual results to differ materially from those forward-looking statements include, but are not limited to, those factors, risks and uncertainties described in this Annual Report on Form 10-K and in our other securities filings with the Securities and Exchange Commission (“SEC”). Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and involve inherent risks and uncertainties. Our estimates of the value of collateral securing our loans may change, or the value of the underlying property could decline subsequent to the date of our evaluation. As a result, such estimates are not guarantees of the future value of the collateral. The forward-looking statements contained in this report are made only as of the date hereof. We undertake no obligation to update or revise information contained herein to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

-5-

Table of Contents

RESULTS OF OPERATIONS

OVERVIEW

At a special meeting of our members held on July 2, 2009, a majority of the members voted to approve the dissolution and winding up of the Fund, in accordance with the Plan of Complete Liquidation and Dissolution (the “Plan”) as set forth in Annex A of the Fund’s proxy statement filed with the Securities and Exchange Commission (the “SEC”) pursuant to Section 14(a) of the Securities and Exchange Act of 1934 on May 11, 2009. The Plan became effective upon its approval by the members on July 2, 2009. As a result, we have commenced an orderly liquidation and we no longer invest in new real estate loans. Our historical operating results should not be viewed as indicative of future results as we implement the Plan. We currently anticipate that the liquidation will be substantially completed by the second half of 2014. However, because of numerous uncertainties, the liquidation may take longer or shorter than expected. Because the liquidation of the Fund was not imminent, as of December 31, 2011, the financial statements are presented assuming the Fund will continue as a going concern. Pursuant to the Plan, we will make liquidating distributions to members on a quarterly basis as funds become available, subject to reasonable reserve established to provide for payment of the Company’s ongoing expenses and contrast liabilities. Our manager has established a reserve to cover our on-going expenses and future obligations. As of December 31, 2011, our unrestricted cash was approximately $0.1 million.

On January 26, 2010, April 8, 2010, September 17, 2010 and May 25, 2011, we made liquidating distributions to all Fund Members, in the aggregate amount of approximately $1.0 million, $0.9 million, $0.3 million and $0.3 million, respectively, in accordance with the Plan. The amounts distributed to each Member of the Fund were calculated based upon the percentage ownership interest of such Member in the Fund. See Note H – Members’ Equity of the Notes to the Financial Statements included in Part II, Item 8 Financial Statements of this Annual Report on Form 10-K.

Under the terms of the Plan adopted by a majority of our members, our members no longer have the right to have their units redeemed by us and we no longer honor any outstanding redemption requests effective as of July 2, 2009.

Prior to the approval of the Plan, our primary business objective was to generate income while preserving principal by investing in loans secured by real estate. The loan underwriting standards utilized by our manager and Vestin Originations were less strict than those used by many institutional real estate lenders. In addition, one of our competitive advantages was our ability to approve loan applications more quickly than many institutional lenders. As a result, in certain cases, we made real estate loans that were riskier than real estate loans made by many institutional lenders such as commercial banks. However, in return, we sought a higher interest rate and our manager took steps to mitigate the lending risks such as imposing a lower loan-to-value ratio. While we may have assumed more risk than many institutional real estate lenders, in return, we sought to generate higher yields from our real estate loans.

Our historical operating results were affected primarily by: (i) the amount of capital we invested in real estate loans, (ii) the level of real estate lending activity in the markets we serviced, (iii) the interest rates we were able to charge on our loans and (iv) the level of non-performing assets, foreclosures and related loan losses that we experienced.

Our operating results have been adversely affected by increases in allowances for loan losses and increases in non-performing assets. This negative trend accelerated sharply during the year ended December 31, 2008 and continues to affect our operations. See Note F – Real Estate Held for Sale and Note D – Investments In Real Estate Loans of the Notes to the Financial Statements included in Part II, Item 8 Financial Statements of this Annual Report on Form 10-K.

Non-performing assets, net of allowance for loan losses, totaled approximately $1.8 million or 55% of our total assets as of December 31, 2011, as compared to approximately $2.1 million or 48% of our total assets as of December 31, 2010. At December 31, 2011, non-performing assets consisted of approximately $0.6 million of real estate held for sale and approximately $1.2 million of non-performing loans, net of allowance for loan losses. See Note F – Real Estate Held for Sale and Note D – Investments In Real Estate Loans of the Notes to the Financial Statements included in Part II, Item 8 Financial Statements of this Annual Report on Form 10-K.

-6-

Table of Contents

We believe that the significant level of our non-performing assets is a direct result of the deterioration of the economy and credit markets. As the economy weakened and credit became more difficult to obtain, many of our borrowers who develop and sell commercial real estate projects have been unable to complete their projects, obtain takeout financing or have been otherwise adversely impacted. These depressed conditions persist in 2011 as the weak economic recovery and the threat of a double dip recession has prevented a recovery of real estate values in our principal markets. Our exposure to the negative developments in the credit markets and general economy has likely been increased by our business strategy, which, until the approval of the Plan, entailed more lenient underwriting standards and expedited loan approval procedures. Moreover, real estate values in the principal markets in which we operate declined dramatically, which in many cases eroded the current value of the security underlying our loans.

We expect that the weakness in the credit markets and the weakness in lending will continue to have an adverse impact upon our markets for the foreseeable future. This may result in a further increase in defaults on our loans and we might be required to record additional reserves based on decreases in market values or we may be required to restructure loans. This increase in loan defaults has materially affected our operating results. For additional information regarding our non-performing loans see “Non-Performing Loans” in Note D – Investments In Real Estate Loans of the Notes to the Financial Statements included in Part II, Item 8 Financial Statements of this Annual Report on Form 10-K.

As of December 30, 2011, our loan-to-value ratio was 89.64%, net of allowances for loan losses, on a weighted average basis, generally using updated appraisals. Additional significant increases in loan defaults accompanied by additional declines in real estate values, as evidenced by updated appraisals generally prepared on an “as-is-basis,” will continue to have a material adverse effect on our financial condition and operating results. The current loan-to-value ratio has been affected by declining real estate values, which have eroded the market value of our collateral.

As of December 31, 2011, we have provided a specific reserve allowance for three non-performing loans and two performing loans based on updated appraisals of the underlying collateral and our evaluation of the borrower for these loans, obtained by our manager. For further information regarding allowance for loan losses, refer to Note D – Investments in Real Estate Loans of the Notes to the Financial Statements included in Part II, Item 8 Financial Statements of this Annual Report on Form 10-K.

As of December 31, 2011, our loans were in the following states: Arizona, Nevada, Oregon and Texas.

SUMMARY OF FINANCIAL RESULTS

The Year Ended December 31, 2011

Total Revenue:	2011		2010		$ Change			% Change
Interest income from investment in real estate loans	$	23,000	$	81,000	$	(58,000	)		(72	%)
Other Income		2,000		25,000		(23,000	)		(92	%)
Total	$	25,000	$	106,000	$	(81,000	)		(76	%)

Our revenue from interest income is dependent upon the balance of our investment in real estate loans and the interest earned on these loans. Interest income has been adversely affected by the level of non-performing assets in our portfolio and the cessation of new lending activity due to our plan of complete liquidation and dissolution. This trend is expected to continue in the future.

For additional information see Note D – Investments in Real Estate Loans and of the Notes to the Consolidated Financial Statements included in Part II, Item 8 Financial Statements of this Annual Report on Form 10-K.

-7-

Table of Contents

Total Operating Expenses:	2011		2010			$ Change			% Change
Provision for loan loss	$	219,000	$	309,000		$	(90,000	)		(29	)%
Interest expense		4,000		--			4,000			100	%
Professional fees		171,000		276,000			(105,000	)		(38	%)
Provision for doubtful accounts
related to receivable		--		(3,000	)		3,000			100	%
Other		35,000		53,000			(18,000	)		(34	)%
Total	$	429,000	$	635,000		$	(206,000	)		(32	)%

Operating expenses declined as a result of a decrease in provision for loan losses necessary during 2011 compared to 2010. Interest expense increased in 2011 due to a note payable obtained in late 2010 which has been paid off by its maturity date of December 2011. Professional fees have decreased due to a decrease in pending litigation.

See “Specific Loan Allowance” in Note D – Investments in Real Estate Loans, Note J – Notes Payable and Note N – Legal Matters Involving The Company of the Notes to the Financial Statements included in Part II, Item 8 Financial Statements of this Annual Report on Form 10-K.

Total Non-operating income (loss):	2011			2010			$ Change			% Change
Interest income from banking institutions	$	--		$	1,000		$	(1,000	)		(100	%)
Impairment of marketable securities – related party		(35,000	)		(275,000	)		240,000			(87	%)
Total	$	(35,000	)	$	(274,000	)	$	239,000			87	%

During 2011 and 2010 we recognized an impairment of our marketable securities – related party of approximately $35, 000 and $0.3 million, respectively.

See Note E — Investment In Marketable Securities – Related Party of the Notes to the Financial Statements included in Part II, Item 8 Financial Statements of this Annual Report on Form 10-K.

Total Discontinued operations, net of income taxes:	2011			2010			$ Change			% Change
Revenue related to real estate held for sale	$	--		$	1,000		$	(1,000	)		(100	%)
Net gain (loss) on sale of real estate held for sale		26,000			(5,000	)		31,000			620	%
Expenses related to real estate held for sale		(43,000	)		(69,000	)		26,000			(38	%)
Write-downs on real estate held for sale		(219,000	)		(149,000	)		(70,000	)		47	%
Total	$	(236,000	)	$	(222,000	)	$	(14,000	)		(6	)%

During 2011 we recorded net gains on sale of real estate held for sale for properties sold in prior periods due to payments on settlement agreements. The overall increase in losses from discontinued operations was primarily affected by an increase in write-downs on real estate held for sale, offset by a decrease in expenses related to real estate held for sale.

-8-

Table of Contents

Distributions to Members: The following is a schedule of distributions made to members for the year ended December 31, 2011 and 2010.

	For the Year Ended December 31,
	2011			2010

Distribution of net income available for distribution	$	--		$	--
Reduction to working capital due to net loss		(640,000	)		(1,025,000	)
Distribution in excess of net income available for distribution		938,000			3,176,000
Total distributions	$	298,000		$	2,151,000

Net Income Available for Distributions is a non-GAAP financial measure that is defined in our Operating Agreement as cash flows from operations, less certain reserves, and may exceed net income as calculated in accordance with GAAP. We have presented net income available for distribution because management believes this financial measure is useful and important to members. Distributions in excess of net income available for distribution will be treated as a return of capital for income tax purposes. This non-GAAP financial measure should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP or as an alternative to cash flows from operating activities as a measure of our liquidity. We compensate for these limitations by relying primarily on our GAAP results and using net income available for distribution only supplementally.

The most directly comparable GAAP measure to net income available for distribution is cash flows from operating activities. The following table reconciles net income available for distribution to cash flows from operating activities and presents the two other major categories of our statement of cash flows:

	For the Year Ended December 31,
	2011			2010
Increase (Reductions) to working capital		(203,000	)		(292,000	)
Provision of doubtful accounts related to receivables		--			8,000
Loss on sale of real estate held for sale		--			5,000
Change in operating assets and liabilities:
Interest receivable		236,000			(6,000	)
Accounts payable		(48,000	)		11,000
Due to related parties		21,000			(765,000	)
Other assets		2,000			(4,000	)
Net cash provided by (used by) operating activities	$	8,000		$	(1,043,000	)
Net cash provided by (used by) investing activities	$	6,000		$	1,711,000
Net cash used by financing activities	$	(346,000	)	$	(2,103,000	)

Stated Unit Value Adjustment: In accordance with Section 7.8 of our Operating Agreement, our manager reviewed the value of our assets during the three months ended December 31, 2011. Based on this review the value of members’ capital accounts was adjusted from $1.21 per unit to $1.12 per unit, as of January 1, 2012. The periodic review of the estimated net unit value includes an analysis of unrealized gains that our manager reasonably believes exist at the time of the review, but that cannot be added to net asset value under GAAP.

-9-

Table of Contents

Redemptions: At a special meeting of our members held on July 2, 2009, a majority of the members voted to approve the dissolution and winding up of the Fund, in accordance with the Plan as set forth in Annex A of the Fund’s proxy statement filed with the SEC pursuant to Section 14(a) of the Securities and Exchange Act of 1934 on May 11, 2009. The Plan became effective upon its approval by the members on July 2, 2009. Our members no longer have the right to have their units redeemed by us and we no longer honor any outstanding redemption requests effective as of July 2, 2009. As of July 2, 2009, the total redemptions made from inception were approximately $10.4 million. For additional information regarding members redemptions, see Note H – Members’ Equity of the Notes to the Financial Statements included in Part II, Item 8 Financial Statements of this Annual Report on Form 10-K.

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 general operating purposes. As a result of the decision to liquidate the Company, we no longer invest in new loans. Hence, subject to retaining sufficient funds to meet our obligations and conduct wind down operations, all available funds will be paid out to our members. We do not anticipate the need for hiring any employees, acquiring fixed assets such as office equipment or furniture, or incurring material office expenses during the next twelve months because our manager will manage our affairs.

During the year ended December, 2011, net cash flows provided by operating activities totaled $8,000. The receipt of funds from an outstanding Accounts Receivable balance affected operating cash flows. Cash flows used in investing activities totaled $6,000, and net cash flows used in financing activities totaled approximately $0.3 million during the year ended December 31, 2011.

At December 31, 2011, we had approximately $0.1 million in unrestricted cash, $0.1 million in marketable securities – related party and approximately $3.3 million in total assets. We believe we have sufficient working capital to meet our operating needs during the next 12 months.

Investments in Real Estate Loans Secured by Real Estate Portfolio

As of December 31, 2011 and 2010, we had investments in five real estate loans with a balance of approximately $2.7 million. In accordance with the Plan, we will no longer invest in new loans.

For additional information on our investments in real estate loans, refer to Note D – Investments in Real Estate Loans and Note F – Real Estate Held for Sale of the Notes to the Financial Statements included in Part II, Item 8 Financial Statements of this Annual Report on Form 10-K.

Asset Quality and Loan Reserves

As a commercial real estate lender who was willing to invest in riskier loans, rates of delinquencies, foreclosures and losses on our loans could be higher than those generally experienced in the commercial mortgage lending industry during this period of economic slowdown and recession. Problems in the sub-prime residential mortgage market have adversely affected the general economy and the availability of funds for commercial real estate developers. We believe this lack of available funds has led to an increase in defaults on our loans. Furthermore, problems experienced in U.S. credit markets from 2007 through 2009 have reduced the availability of credit for many prospective borrowers. While credit markets have generally improved, the commercial real estate markets in our principal areas of operation have not recovered, thereby resulting in continuing constraints on the availability of credit in these markets. These problems have made it more difficult for our borrowers to obtain the anticipated re-financing necessary in many cases to pay back our loans. Thus, we have had to work with some of our borrowers to either modify, restructure and/or extend their loans in order to keep or restore the loans to performing status. Our manager will continue to evaluate our loan portfolio in order to minimize risk associated with current market conditions.

-10-

Table of Contents

OFF-BALANCE SHEET ARRANGEMENTS

As of December 31, 2011, we do not have any interests in off-balance sheet special purpose entities nor do we have any interests in non-exchange traded commodity contracts.

RELATED PARTY TRANSACTIONS

Prior to July 2, 2009, we may have acquired or sold investments in real estate loans from/to our manager or other related parties. Pursuant to the terms of our Operating Agreement, such acquisitions and sales were made without any mark up or mark down. No gain or loss was recorded on these transactions, as it was not our intent to make a profit on the purchase or sale of such investments. The purpose was generally to diversify our portfolio by syndicating loans, thereby providing us with additional capital to make additional loans. From time to time, we may continue to sell performing investments in real estate loans to our manager or other related parties, without any mark up or mark down. No gain or loss will be recorded on these transactions. For further information regarding related party transactions, refer to Note G – Related Party Transactions of the Notes to the Financial Statements included in Part II, Item 8 Financial Statements of this Annual Report on Form 10-K.

CRITICAL ACCOUNTING ESTIMATES

Revenue Recognition

Interest income on loans is accrued by the effective interest method. We do not accrue interest income from loans once they are determined to be non-performing. A loan is considered non-performing when, based on current information and events, it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan agreement or when the payment of interest is 90 days past due.

The following table presents a sensitivity analysis, averaging the balance of our loan portfolio at the end of the last six quarters, to show the impact on our financial condition at December 31, 2011, from fluctuations in weighted average interest rate charged on loans as a percentage of the loan portfolio:

Changed Assumption	Increase (Decrease) in Interest Income
Weighted average interest rate assumption increased by 1.0% or 100 basis points	$	28,000
Weighted average interest rate assumption increased by 5.0% or 500 basis points	$	142,000
Weighted average interest rate assumption increased by 10.0% or 1,000 basis points	$	284,000
Weighted average interest rate assumption decreased by 1.0% or 100 basis points	$	(28,000	)
Weighted average interest rate assumption decreased by 5.0% or 500 basis points	$	(142,000	)
Weighted average interest rate assumption decreased by 10.0% or 1,000 basis points	$	(284,000	)

The purpose of this analysis is to provide an indication of the impact that the weighted average interest rate fluctuations would have on our financial results. It is not intended to imply our expectation of future revenues or to estimate earnings. We believe that the assumptions used above are appropriate to illustrate the possible material impact on the financial statements.

Allowance for Loan Losses

We maintain an allowance for loan losses on our investments in real estate loans for estimated credit impairment in our investment in real estate loans portfolio. Our manager’s estimate of losses is based on a number of factors including the types and dollar amounts of loans in the portfolio, adverse situations that may affect the borrower’s ability to repay, prevailing economic conditions and the underlying collateral securing the loan. Additions to the allowance are provided through a charge to earnings and are based on an assessment of certain factors, which may indicate estimated losses on the loans. Actual losses on loans are recorded as a charge-off or a reduction to the allowance for loan losses. Subsequent recoveries of amounts previously charged off are added back to the allowance or included as income.

-11-

Table of Contents

The following table presents a sensitivity analysis to show the impact on our financial condition at December 31, 2011, from increases and decreases to our allowance for loan losses as a percentage of the loan portfolio:

Changed Assumption	Increase (Decrease) in Allowance for Loan Losses
Allowance for loan losses assumption increased by 1.0% of loan portfolio	$	27,000
Allowance for loan losses assumption increased by 5.0% of loan portfolio	$	134,000
Allowance for loan losses assumption increased by 10.0% of loan portfolio	$	268,000
Allowance for loan losses assumption decreased by 1.0% of loan portfolio	$	(27,000	)
Allowance for loan losses assumption decreased by 5.0% of loan portfolio	$	(134,000	)
Allowance for loan losses assumption decreased by 10.0% of loan portfolio	$	(268,000	)

Estimating allowances for loan losses requires significant judgment about the underlying collateral, including liquidation value, condition of the collateral, competency and cooperation of the related borrower and specific legal issues that affect loan collections or taking possession of the property. As a commercial real estate lender, which had invested in loans to borrowers who may not meet the credit standards of other financial institutional lenders, the default rate on our loans could be higher than those generally experienced in the mortgage lending industry. We and our manager generally approved loans more quickly than other real estate lenders and, due to our expedited underwriting process there is a risk that the credit inquiries we performed did not reveal all material facts pertaining to a borrower and the security.

We may discover additional facts and circumstances as we continue our efforts in the collection and foreclosure processes. This additional information often causes management to reassess its estimates. In recent years, we have revised estimates of our allowance for loan losses. Circumstances that may cause significant changes in our estimated allowance include, but are not limited to:

Declines in real estate market conditions that can cause a decrease in expected market value;

Discovery of undisclosed liens for community improvement bonds, easements and delinquent property taxes;

Lack of progress on real estate developments after we advance funds. We customarily utilize disbursement agents to monitor the progress of real estate developments and approve loan advances. After further inspection of the related property, progress on construction occasionally does not substantiate an increase in value to support the related loan advances;

Unanticipated legal or business issues that may arise subsequent to loan origination or upon the sale of foreclosed upon property; and

Appraisals, which are only opinions of value at the time of the appraisal, may not accurately reflect the value of the property.

-12-

Table of Contents

RECENT ACCOUNTING PRONOUNCEMENTS

In May 2011, FASB issued ASU 2011-04 “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs.” The amendments in this update result in common fair value measurement and disclosure requirements in U.S. GAAP and IFRSs. Consequently, the amendments change the wording used to describe many of the requirements in U.S. GAAP for measuring fair value and for disclosing information about fair value measurements. For many of the requirements, the Board does not intend for the amendments in this update to result in a change in the application of the requirements in Topic 820. Some of the amendments clarify the Board’s intent about the application of existing fair value measurement requirements. Other amendments change a particular principle or requirement for measuring fair value or for disclosing information about fair value measurements. For public entities, the new guideline is effective for interim and annual periods beginning after December 15, 2011 and should be applied prospectively. The Company does not expect that the guidance effective in future periods will have a material impact on its consolidated financial statements.

In May 2011, the FASB issued ASC Update No. 2011-05, Comprehensive Income (Topic 820): Presentation of Comprehensive Income. Update No. 2011-05 requires that net income, items of other comprehensive income and total comprehensive income be presented in one continuous statement or two separate consecutive statements. The amendments in this Update also require that reclassifications from other comprehensive income to net income be presented on the face of the financial statements. We are required to adopt Update No. 2011-05 for our first quarter ending March 31, 2012, with the exception of the presentation of reclassifications on the face of the financial statements, which has been deferred by the FASB under ASC Update No. 2011-12, Comprehensive Income (Topic 820): Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income. Our adoption of Update No. 2011-05 will not impact our future results of operations or financial position.

In December 2011, the Financial Accounting Standards Board (“FASB”) released Accounting Standards Update No. 2011-10 (“ASU 2011-10”), Property, Plant and Equipment (Topic 360): Derecognition of in Substance Real Estate—a Scope Clarification (a consensus of the FASB Emerging Issues Task Force). ASU 2011-10 clarifies when a parent (reporting entity) ceases to have a controlling financial interest in a subsidiary that is in substance real estate as a result of default on the subsidiary’s nonrecourse debt, the reporting entity should apply the guidance for Real Estate Sale (Subtopic 360-20). The provisions of ASU 2011-10 are effective for public companies for fiscal years and interim periods within those years, beginning on or after June 15, 2012. When adopted, ASU 2011-10 is not expected to materially impact our consolidated financial statements.

-13-

Table of Contents

ITEM 8.

FINANCIAL STATEMENTS

INDEX TO FINANCIAL STATEMENTS

	Page

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	15

FINANCIAL STATEMENTS
Balance Sheets	16
Statements of Operations	17
Statements of Members’ Equity and Other Comprehensive Loss	18
Statements of Cash Flows	19
Notes to the Financial Statements	21

-14-

Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Members of

Vestin Fund III, LLC

We have audited the accompanying balance sheets of Vestin Fund III, LLC (the “Company”) as of December 31, 2011 and 2010 and the related statements of operations, members’ equity and other comprehensive loss, and cash flows for each of the two years in the period ended December 31, 2011. Vestin Fund III, LLC’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide 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 Vestin Fund III, LLC as of December 31, 2011 and 2010, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2011, in conformity with accounting principles generally accepted in the United States of America.

/s/ JLK Partners, LLP

Irvine, California

March 16, 2012

-15-

Table of Contents

FINANCIAL STATEMENTS

VESTIN FUND III, LLC

BALANCE SHEETS

ASSETS

	December 31, 2011		December 31, 2010

Assets
Cash and cash equivalents	$	101,000	$	445,000
Marketable securities - related party		145,000		165,000
Interest and other receivables, net of allowance for doubtful accounts of $102,000 at December 31, 2011 and $66,000 at December 31, 2010		1,000		237,000
Notes receivable, net of allowance of $358,000 at December 31, 2011 and December 31, 2010		--		--
Real estate held for sale		596,000		820,000
Investment in real estate loans, net of allowance for loan loss of $1,236,000 at December 31, 2011 and $1,017,000 at December 31, 2010		1,439,000		1,658,000
Due from related parties		992,000		1,012,000
Other assets		1,000		4,000

Total assets	$	3,275,000	$	4,341,000


LIABILITIES AND MEMBERS' EQUITY

Liabilities
Accounts payable and accrued liabilities	$	16,000	$	64,000
Note payable		--		48,000
Deferred income		985,000		985,000

Total liabilities		1,001,000		1,097,000

Commitments and contingencies

Members' equity
Members' units - 10,000,000 units, 2,024,424 units issued and outstanding at December 31, 2011, and 2010		2,274,000		3,247,000
Accumulated other comprehensive loss		--		(3,000	)

Total members' equity		2,274,000		3,244,000

Total liabilities and members' equity	$	3,275,000	$	4,341,000

The accompanying notes are an integral part of these financial statements.

-16-

Table of Contents

VESTIN FUND III, LLC

STATEMENTS OF OPERATIONS
	For the Year Ended

	12/31/2011			12/31/2010

Revenues
Interest income from investment in real estate loans	$	23,000		$	81,000
Other		2,000			25,000
Total revenues		25,000			106,000

Operating expenses
Interest expense		4,000			--
Provision for loan loss		219,000			309,000
Professional fees		171,000			276,000
Provision for doubtful accounts related to receivable		--			(3,000	)
Other		35,000			53,000
Total operating expenses		429,000			635,000

Loss from operations		(404,000	)		(529,000	)

Non-operating income (loss)
Interest income from banking institutions		--			1,000
Impairment of marketable securities - related party		(35,000	)		(275,000	)
Total non-operating loss, net		(35,000	)		(274,000	)

Income (loss) from real estate held for sale
Income related to real estate held for sale		--			1,000
Net loss on sale of real estate held for sale		26,000			(5,000	)
Write-down of real estate held for sale		(219,000	)		(149,000	)
Expenses related to real estate held for sale		(43,000	)		(69,000	)
Total loss from real estate held for sale		(236,000	)		(222,000	)

NET LOSS	$	(675,000	)	$	(1,025,000	)

Net loss allocated to members	$	(675,000	)	$	(1,025,000	)

Net loss allocated to members per weighted average membership unit	$	(0.33	)	$	(0.51	)

Weighted average membership units		2,024,424			2,024,424

The accompanying notes are an integral part of these financial statements.

-17-

Table of Contents

VESTIN FUND III, LLC

STATEMENTS OF MEMBERS' EQUITY AND OTHER COMPREHENSIVE LOSS


	Units		Amount
Members' equity at December 31, 2009		2,024,424	$	6,226,000

Comprehensive loss:

Net loss				(1,025,000	)

Recognition of unrealized loss on marketable securities - related party				275,000

Unrealized loss on marketable securities - related party				(81,000	)

Total comprehensive loss				(831,000	)

Distributions				(2,151,000	)

Members' equity at December 31, 2010		2,024,424	$	3,244,000

Comprehensive loss:

Net loss				(675,000	)

Recognition of unrealized loss on marketable securities - related party				35,000

Unrealized loss on marketable securities - related party				(32,000	)

Total comprehensive loss				(672,000	)

Distributions				(298,000	)

Members' equity at December 31, 2011		2,024,424	$	2,274,000

The accompanying notes are an integral part of these financial statements.

-18-

Table of Contents

VESTIN FUND III, LLC

STATEMENTS OF CASH FLOWS

	12/31/11			12/31/10
Cash flows from operating activities:
Net loss	$	(675,000	)	$	(1,025,000	)
Adjustments to reconcile net loss to net cash used in operating activities:
Provision for doubtful accounts related to receivable					8,000
Provision for loan loss		219,000			309,000
Gain related to pay off of real estate loan, including recovery of allowance for loan loss		--			5,000
Write-downs on real estate held for sale		219,000			149,000
Impairment of marketable securities - related party		35,000			275,000
Change in operating assets and liabilities:
Interest receivable		236,000			(6,000	)
Accounts payable and accrued liabilities		(49,000	)		11,000
Due to related parties		21,000			(765,000	)
Other assets		2,000			(4,000	)
Net cash provided by (used in) operating activities	$	8,000		$	(1,043,000	)

Cash flows from investing activities:
Proceeds related to real estate held for sale		--			312,000
Proceeds from loan payoff		--			699,000
Purchase of marketable securities - related party		(11,000	)		--
Proceeds related to real estate held for sale-extension fees		5,000			--
Changes in restricted cash		--			700,000
Net cash provided by (used in) investing activities	$	(6,000	)	$	1,711,000

Cash flows from financing activities:
Proceeds from note payable		--			48,000
Payments on notes payable		(48,000	)		--
Members' distributions, net of reinvestments		(298,000	)		(2,151,000	)
Net cash used in financing activities	$	(346,000	)	$	(2,103,000	)

NET CHANGE IN CASH		(344,000	)		(1,435,000	)

Cash, beginning of period		445,000			1,880,000

Cash, end of period	$	101,000		$	445,000

The accompanying notes are an integral part of these financial statements.

-19-

Table of Contents

VESTIN FUND III, LLC

STATEMENTS OF CASH FLOWS (CONTINUED)

	12/31/11			12/31/10
Supplemental disclosures of cash flows information:
Interest paid during the period	$	4,000		$	--

Non-cash investing and financing activities:
Adjustment to allowance for loan losses related to sale and payment of investment in real estate loan	$	--		$	1,284,000
Adjustment to interest receivable and related allowance associated with sale and payment of investment in real estate loan	$	--		$	224,000
Adjustment to note receivable and related allowance	$	--		$	202,000
Real estate held for sale acquired through foreclosure	$	--		$	451,000
Recognition of unrealized loss on marketable securities – related party	$	35,000		$	275,000
Unrealized loss on marketable securities - related party	$	(32,000	)	$	(81,000	)

The accompanying notes are an integral part of these financial statements.

-20-

Table of Contents

VESTIN FUND III, LLC

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2011

NOTE A — ORGANIZATION

At a special meeting of our members held on July 2, 2009, a majority of the members voted to approve the dissolution and winding up of the Fund, in accordance with the Plan of Complete Liquidation and Dissolution (the “Plan”) as set forth in Annex A of the Fund’s proxy statement filed with the Securities and Exchange Commission (the “SEC”) pursuant to Section 14(a) of the Securities and Exchange Act of 1934 on May 11, 2009. The Plan became effective upon its approval by the members on July 2, 2009. As a result, we have commenced an orderly liquidation and we no longer invest in new real estate loans. We anticipate that the liquidation will be substantially completed by the second half of 2014. However, because of numerous uncertainties, the liquidation may take longer or shorter than expected. Because the liquidation of the Fund was not imminent, as of December 31, 2011, the financial statements are presented assuming the Fund will continue as a going concern. In accordance with the Plan as set forth in Annex A of the Fund’s proxy statement filed with the Securities and Exchange Commission (the “SEC”) pursuant to Section 14(a) of the Securities and Exchange Act of 1934 on May 11, 2009 we intend to make Liquidating Distributions on a quarterly basis however, at this time we do not anticipate we will have the funds available to make quarterly distributions. Our members no longer have the right to have their units redeemed by us and we no longer honor any outstanding redemption requests effective as of July 2, 2009.

We are not a mutual fund or an investment company within the meaning of the Investment Company Act of 1940, nor are we subject to any regulation thereunder.

Vestin Group, Inc. (“Vestin Group”), a Delaware corporation, owns a significant majority of Vestin Mortgage, LLC, a Nevada limited liability company, who is our manager (the “manager” or “Vestin Mortgage”). On January 7, 2011, Vestin Mortgage converted from a corporation to a limited liability company. Michael Shustek, the CEO and managing member of our manager and CEO, President and a director of us, wholly owns Vestin Group, which is engaged in asset management, real estate lending and other financial services through its subsidiaries. Our manager, prior to June 30, 2006, also operated as a licensed Nevada mortgage broker and was generally engaged in the business of brokerage, placement and servicing of commercial loans secured by real property. On July 1, 2006, a mortgage broker license was issued to an affiliated company, Vestin Originations, Inc. (“Vestin Originations”), which Vestin Group owns a significant majority of, that continued the business of brokerage, placement and servicing of real estate loans.

-21-

Table of Contents

Effective February 14, 2011, the business of brokerage and placement of real estate loans will be performed by affiliated or non-affiliated mortgage brokers, which includes Vestin Originations and Advant Mortgage, LLC (“Advant”), both licensed Nevada mortgage brokers, the significant majorities of which are beneficially owned by Michael V. Shustek.

NOTE B — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Management Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) 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.

Cash and Cash Equivalents

Cash and cash equivalents include interest-bearing and non-interest-bearing bank deposits, money market accounts, short-term certificates of deposit with original maturities of three months or less, and short-term instruments with a liquidation provision of one month or less.

Restricted Cash

We had restricted cash, which related to a cash deposit held as collateral by a banking institution for an irrevocable stand by letter of credit to support rent payments on the property we sold during November 2006. The requirement for the deposit expires at the end of the lease on August 31, 2014; however this collateral was relinquished in 2010 pursuant to litigation between Vestin Group and the building owner. For a discussion of this litigation between Vestin Group and the building owner, see Note N - Legal Matters Involving The Company.

-22-

Table of Contents

Revenue Recognition

Interest is recognized as revenue on performing loans when earned according to the terms of the loans, using the effective interest method. We do not accrue interest income on loans once they are determined to be non-performing. A loan is non-performing when, based on current information and events, it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan agreement or when the payment of interest is 90 days past due. Cash receipts will be allocated to interest income, except when such payments are specifically designated by the terms of the loan as principal reduction. Interest is recognized on impaired loans on the cash basis method.

Deferred Revenue Recognition

Deferred revenue supports the amount of sales proceeds withheld on a sale of our building during November 2006, which we were required to establish an irrevocable stand by letter of credit which expires August 31, 2014. Revenue will be recognized at the expiration of the lease referred to above or when restricted cash is received. For discussion of litigation between Vestin Group and the building owner, see Note N – Legal Matters Involving The Company.

Investments in Real Estate Loans

Prior to July 2, 2009, we may have, from time to time, acquired or sold investments in real estate loans from or to our manager or other related parties pursuant to the terms of our Operating Agreement without a premium. The primary purpose was to either free up capital to provide liquidity for various reasons, such as loan diversification, or place excess capital in investments to maximize the use of our capital. Selling or buying loans allowed us to diversify our loan portfolio within these parameters. Due to the short-term nature of the loans we made and the similarity of interest rates in loans we normally would invest in, the fair value of a loan typically approximated its carrying value. Accordingly, discounts or premiums typically did not apply upon sales of loans and therefore, generally no gain or loss is recorded on these transactions, regardless of whether to a related or unrelated party.

Investments in real estate loans are secured by deeds of trust or mortgages. Generally, our real estate loans require interest only payments with a balloon payment of the principal at maturity. We have both the intent and ability to hold real estate loans until maturity and therefore, real estate loans are classified and accounted for as held for investment and are carried at amortized cost. Loans sold to or purchased from affiliates are accounted for at the principal balance and no gain or loss is recognized by us or any affiliate. Loan-to-value ratios are initially based on appraisals obtained at the time of loan origination and are updated, when new appraisals are received or when management’s assessment of the value has changed, to reflect subsequent changes in value estimates. Such appraisals are generally dated within 12 months of the date of loan origination and may be commissioned by the borrower.

The Company considers a loan to be impaired when, based upon current information and events, it believes it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. The Company’s impaired loans include troubled debt restructuring, and performing and non-performing loans in which full payment of principal or interest is not expected. The Company calculates an allowance required for impaired loans based on the present value of expected future cash flows discounted at the loan’s effective interest rate, or at the loan’s observable market price or the fair value of its collateral.

Loans that have been modified from their original terms are evaluated to determine if the loan meets the definition of a Troubled Debt Restructuring (“TDR”). When the Company modifies the terms of an existing loan that is considered a TDR, it is considered performing as long as it is in compliance with the modified terms of the loan agreement. If the modification calls for deferred interest, it is recorded as interest income as cash is collected.

-23-

Table of Contents

Allowance for Loan Losses

We maintain an allowance for loan losses on our investments in real estate loans for estimated credit impairment. Our manager’s estimate of losses is based on a number of factors including the types and dollar amounts of loans in the portfolio, adverse situations that may affect the borrower’s ability to repay, prevailing economic conditions and the underlying collateral securing the loan. Additions to the allowance are provided through a charge to earnings and are based on an assessment of certain factors, which may indicate estimated losses on the loans. Actual losses on loans are recorded as a charge-off or a reduction to the allowance for loan losses. Generally, subsequent recoveries of amounts previously charged off are added back to the allowance and included as income.

Estimating allowances for loan losses requires significant judgment about the underlying collateral, including liquidation value, condition of the collateral, competency and cooperation of the related borrower and specific legal issues that affect loan collections or taking possession of the property. As a commercial real estate lender willing to invest in loans to borrowers who may not meet the credit standards of other financial institutional lenders, the default rate on our loans could be higher than those generally experienced in the real estate lending industry. We and our manager generally approve loans more quickly than other real estate lenders and, due to our expedited underwriting process there is a risk that the credit inquiry we perform will not reveal all material facts pertaining to a borrower and the security.

Additional facts and circumstances may be discovered as we continue our efforts in the collection and foreclosure processes. This additional information often causes management to reassess its estimates. In recent years, we have revised estimates of our allowance for loan losses. Circumstances that have and may continue to cause significant changes in our estimated allowance include, but are not limited to:

Declines in real estate market conditions, which can cause a decrease in expected market value;

Discovery of undisclosed liens for community improvement bonds, easements and delinquent property taxes;

Unanticipated legal or business issues that may arise subsequent to loan origination or upon the sale of foreclosed property; and

Appraisals, which are only opinions of value at the time of the appraisal, may not accurately reflect the value of the property.

Real Estate Held for Sale

Real estate held for sale includes real estate acquired through foreclosure and will be carried at the lower of the recorded amount, inclusive of any senior indebtedness, or the property's estimated fair value, less estimated costs to sell, with fair value based on appraisals and knowledge of local market conditions. While pursuing foreclosure actions, we seek to identify potential purchasers of such property. It is not our intent to invest in or to own real estate as a long-term investment. We generally seek to sell properties acquired through foreclosure as quickly as circumstances permit. The carrying values of real estate held for sale are assessed on a regular basis from updated appraisals, comparable sales values or purchase offers.

-24-

Table of Contents

Management classifies real estate held for sale when the following criteria are met:

Management commits to a plan to sell the properties;

The property is available for immediate sale in its present condition subject only to terms that are usual and customary;

An active program to locate a buyer and other actions required to complete a sale have been initiated;

The sale of the property is probable;

The property is being actively marketed for sale at a reasonable price; and

Withdrawal or significant modification of the sale is not likely.

Classification of Operating Results from Real Estate Held for Sale

Generally, operating results and cash flows from long-lived assets held for sale are to be classified as discontinued operations as a separately stated component of net income. Our operations related to real estate held for sale are separately identified in the accompanying statements of operations.

Investment in Marketable Securities – Related Party

Investment in marketable securities – related party consists of stock in VRM II. The securities are stated at fair value as determined by the closing market price as of December 31, 2011. All securities are classified as available-for-sale.

We are required to evaluate our available-for-sale investment for other-than-temporary impairment charges. We will determine when an investment is considered impaired (i.e., decline in fair value below its amortized cost), and evaluate whether the impairment is other than temporary (i.e., investment value will not be recovered over its remaining life). If the impairment is considered other than temporary, we will recognize an impairment loss equal to the difference between the investment’s cost and its fair value.

According to the SEC Staff Accounting Bulletin, Topic 5: Miscellaneous Accounting, M - Other Than Temporary Impairment of Certain Investments in Debt and Equity Securities, there are numerous factors to be considered in such an evaluation and their relative significance will vary from case to case. The following are a few examples of the factors that individually or in combination, indicate that a decline is other than temporary and that a write-down of the carrying value is required:

The length of the time and the extent to which the market value has been less than cost;

The financial condition and near-term prospects of the issuer, including any specific events which may influence the operations of the issuer such as changes in technology that may impair the earnings potential of the investment or the discontinuance of a segment of the business that may affect the future earnings potential; or

The intent and ability of the holder to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in market value.

-25-

Table of Contents

Fair Value Disclosures

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e. “the exit price”) in an orderly transaction between market participants at the measurement date. In determining fair value, the Company uses various valuation approaches, including quoted market prices and discounted cash flows. The established hierarchy for inputs used, in measuring fair value, maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from independent sources. Unobservable inputs are inputs that reflect a company’s judgment concerning the assumptions that market participants would use in pricing the asset or liability developed based on the best information available under the circumstances. The fair value hierarchy is broken down into three levels based on the reliability of inputs as follows:

Level 1 – Valuations based on quoted prices in active markets for identical instruments that the Company is able to access. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgment.

Level 2 – Valuations based on quoted prices in active markets for instruments that are similar, or quoted prices in markets that are not active for identical or similar instruments, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets.

Level 3 – Valuations based on inputs that are unobservable and significant to the overall fair value measurement, which utilize the Company’s estimates and assumptions.

If the volume and level of activity for an asset or liability have significantly decreased, we will still evaluate our fair value estimate as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date under current market conditions. In addition, since we are a publicly reporting company, we are required to make our fair value disclosures for interim reporting periods.

Net Income Allocated to Members Per Weighted Average Membership Unit

Net income allocated to members per weighted average membership unit is computed by dividing net income calculated in accordance with GAAP by the weighted average number of membership units outstanding for the period.

Segments

We operate as one business segment.

Income Taxes

Limited liability companies (“LLCs”) are not liable for federal or state income taxes and, therefore, no provision for income taxes is made in the accompanying financial statements. Rather, a proportionate share of the LLC’s income, deductions, credits and tax preference items are reported to the individual members for inclusion in their tax returns.

NOTE C — FINANCIAL INSTRUMENTS AND CONCENTRATIONS OF CREDIT RISK

Financial instruments with concentration of credit and market risk include cash, marketable securities related party, accounts and notes receivable, and loans secured by deeds of trust.

We maintain cash deposit accounts and certificates of deposit which, at times, may exceed federally-insured limits. To date, we have not experienced any losses. As of December 31, 2011 and 2010, we had approximately $0 million and $0.2 million, respectively, in excess of the federally-insured limits.

-26-

Table of Contents

As of December 31, 2011 and 2010, 56% and 28% of our loans were in Oregon and Nevada, respectively. As a result of this geographical concentration of our real estate loans, the downturn in the local real estate markets in these states has had a material adverse effect on us.

At December 31, 2011 and 2010, the loan to our largest borrower represented 56.8%of our total investment in real estate loans. When funded in December 2007, this loan constituted approximately 7.0% of our total investment in real estate loans. The percentage of this loan increased due to the decrease in other loans through payments, sales, foreclosures and modifications. This commercial property real estate loan is located in Oregon with a first lien position and has an outstanding balance of approximately $6.0 million, of which our portion is $1.5 million. As of December 31, 2011, this loan was considered non-performing. Any additional defaults in our loan portfolio will have a material adverse effect on us.

A borrower’s ability to repay its real estate loan obligation in a large lump-sum payment may be dependent upon the borrower’s ability to refinance the obligation or otherwise raise a substantial amount of cash. With the weakened economy, credit continues to be difficult to obtain and as such, many of our borrowers who develop and sell commercial real estate projects have been unable to complete their projects, obtain takeout financing or have been otherwise adversely impacted. In addition, an increase in interest rates over the loan rate applicable at origination of the loan may have an adverse effect on our borrower’s ability to refinance.

Common Guarantors

As of December 31, 2011, one loan totaling approximately $7.2 million, of which our portion is $0.4 million, representing approximately 15.1% of our portfolio’s total value, along with two unsecured notes receivable totaling approximately $0.2 million, had a common guarantor. The two unsecured notes receivable were previously loans totaling approximately $0.3 million that were converted to unsecured notes receivable pursuant to a loan modification agreement executed on November 30, 2010. For additional information regarding the above loan modification agreement, see Note I – Notes Receivable.

No other loans in our portfolio have common guarantors at December 31, 2011.

For additional information regarding the above non-performing loans, see “Non-Performing Loans” in Note D – Investments In Real Estate Loans.

NOTE D — INVESTMENTS IN REAL ESTATE LOANS

As of December 31, 2011 and 2010, all of our loans provided for payments of interest only with a “balloon” payment of principal payable in full at the end of the term.

In addition, we invested in real estate loans that require borrowers to maintain interest reserves funded from the principal amount of the loan for a period of time. At December 31, 2011 and 2010 we had no investments in real estate loans that had interest reserves.

Loan Portfolio

Historically, we had five available real estate loan products consisting of commercial, construction, acquisition and development, land and residential. As of December 31, 2011, our remaining loans were commercial or construction loans. The effective interest rates on all product categories range from 3% to 15% which includes performing loans that are being fully or partially accrued and will be payable at maturity.

-27-

Table of Contents

During the second quarter ended June 30, 2010, the Trustee in a Bankruptcy case, involving one of our non-performing commercial loans in California, sold the assets of the Borrower to an unrelated third party for an aggregate amount of $4.1 million. The proceeds, net of all court costs, closing costs, trustee’s fees, real estate taxes and security guard services, totaled approximately $3.4 million. An unaffiliated lender was successful in claiming an interest in the proceeds of the bankruptcy sale, purportedly based on loans of approximately $0.9 million, secured by some of the equipment located at the property. A motion to determine the allocation of the sale proceeds was filed with the Bankruptcy Court. A settlement was reached with the unaffiliated lender and, as a result, we, VRM I and VRM II received $2.7 million, of which our portion equals $0.2 million on May 11, 2011.

Investments in real estate loans as of December 31, 2011, were as follows:

Loan Type	Number of Loans		Balance *		Weighted Average Interest Rate			Portfolio Percentage			Current Weighted Average Loan-To-Value, Net of Allowance for Loan Losses

Commercial		4	$	2,271,000		10.52	%		84.90	%		89.60	%
Construction		1		404,000		8.00	%		15.10	%		89.83	%
Total		5	$	2,675,000		10.14	%		100.00	%		89.64	%

Investments in real estate loans as of December 31, 2010, were as follows:

Loan Type	Number of Loans		Balance *		Weighted Average Interest Rate			Portfolio Percentage			Current Weighted Average Loan-To-Value, Net of Allowance for Loan Losses

Commercial		4	$	2,271,000		10.52	%		84.90	%		94.74	%
Construction		1		404,000		8.00	%		15.10	%		104.37	%
Total		5	$	2,675,000		10.14	%		100.00	%		96.06	%

*	Please see Balance Sheet Reconciliation below.

The “Weighted Average Interest Rate” as shown above is based on the contractual terms of the loans for the entire portfolio including non-performing loans. The weighted average interest rate on performing loans only, as of December 31, 2011 and 2010, was 4.49% and 6.16%, respectively. Please see “Non-Performing Loans” and “Asset Quality and Loan Reserves” below for further information regarding performing and non-performing loans.

Loan-to-value ratios are generally based on the most recent appraisals and may not reflect subsequent changes in value and include allowances for loan losses. Recognition of allowance for loan losses will result in a maximum loan-to-value ratio of 100% per loan.

The following is a schedule of priority of real estate loans as of December 31, 2011 and 2010.

Loan Type	Number of Loans		December 31, 2011 Balance *		Portfolio Percentage			Number of Loans		December 31, 2010 Balance *		Portfolio Percentage

First deeds of trust		2	$	1,924,000		71.93	%		2	$	1,924,000		71.93	%
Second deeds of trust		3		751,000		28.07	%		3		751,000		28.07	%
Total		5	$	2,675,000		100.00	%		5	$	2,675,000		100.00	%

*	Please see Balance Sheet Reconciliation below.

-28-

Table of Contents

The following is a schedule of contractual maturities of investments in real estate loans as of December 31, 2011:

Non-performing and past due loans (a)	$	1,920,000
January 2012 – March 2012		404,000
April 2012 – June 2012		--
July 2012 – September 2012		351,000
Thereafter		--

Total	$	2,675,000

(a)

Amounts include the balance of non-performing loans and loans that have been extended subsequent to December 31, 2011.

The following is a schedule by geographic location of investments in real estate loans as of December 31, 2011 and 2010:

	December 31, 2011 Balance *		Portfolio Percentage			December 31, 2010 Balance *		Portfolio Percentage

Arizona	$	200,000		7.48	%	$	200,000		7.48	%
Nevada		755,000		28.22	%		755,000		28.22	%
Oregon		1,520,000		56.82	%		1,520,000		56.82	%
Texas		200,000		7.48	%		200,000		7.48	%
Total	$	2,675,000		100.00	%	$	2,675,000		100.00	%

*	Please see Balance Sheet Reconciliation below.

Balance Sheet Reconciliation

The following table reconciles the balance of the loan portfolio to the amount shown on the accompanying Balance Sheets.

	December 31, 2011 Balance			December 31, 2010 Balance
Balance per loan portfolio	$	2,675,000		$	2,675,000
Less:
Allowance for loan losses (a)		(1,236,000	)		(1,017,000	)
Balance per balance sheet	$	1,439,000		$	1,658,000

(a)	Please refer to Specific Reserve Allowance below.

Non-Performing Loans

As of December 31, 2011, we had three loans considered non-performing (i.e., based on current information and events, it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan agreement or when the payment of interest is 90 days past due). These loans are currently carried on our books at a value of approximately $1.2 million, net of allowance for loan losses of approximately $0.7 million, which does not include the allowances of approximately $0.5 million relating to performing loans as of December 31, 2011. Except as otherwise provided below, these loans have been placed on non-accrual of interest status and may be the subject of pending foreclosure proceedings. At December 31, 2011, the following loans were non-performing:

-29-

Table of Contents

Loan Type	Number Of Non-Performing Loans		Balance at December 31, 2011		Number Of Non-Performing Loans		Balance at December 31, 2010

Commercial		3	$	1,920,000	$	2	$	1,720,000

Commercial – As of December 31, 2011, three of our four commercial loans were considered non-performing. The outstanding balance on the three non-performing loans was $31.8 million, of which our portion is approximately $1.9 million. As of December 31, 2011, these loans have been non-performing for 0 and 43 months. Our manager has commenced foreclosure proceedings on the three loans, and has proceeded with legal action to enforce the personal guarantees if necessary. As of December 31, 2011, based on our manager’s evaluations and updated appraisals, our manager has provided a specific allowance to these commercial loans of approximately $17.7 million, of which our portion is approximately $0.7 million.

Asset Quality and Loan Reserves

Losses may occur from investing in real estate loans. The amount of losses will vary as the loan portfolio is affected by changing economic conditions and the financial condition of borrowers.

The conclusion that a real estate loan is uncollectible or that collectability is doubtful is a matter of judgment. On a quarterly basis, our manager evaluates our real estate loan portfolio for impairment. The fact that a loan is temporarily past due does not necessarily mean that the loan is non-performing. Rather, all relevant circumstances are considered by our manager to determine impairment and the need for specific reserves. Such evaluation, which includes a review of all loans on which full collectability may not be reasonably assured, considers among other matters:

Prevailing economic conditions;

Historical experience;

The nature and volume of the loan portfolio;

The borrowers’ financial condition and adverse situations that may affect the borrowers’ ability to pay;

Evaluation of industry trends; and

Estimated net realizable value of any underlying collateral in relation to the loan amount.

Based upon this evaluation, a determination is made as to whether the allowance for loan losses is adequate to cover any potential losses. Additions to the allowance for loan losses are made by charges to the provision for loan loss. As of December 31, 2011, we have provided a specific reserve allowance for all non-performing loans and all performing loans based on updated appraisals of the underlying collateral and/or our evaluation of the borrower. The following is a breakdown of allowance for loan losses related to performing and non-performing loans as of December 31, 2011 and 2010:

-30-

Table of Contents

	As of December 31, 2011
	Balance		Allowance for loan losses *			Balance, net of allowance

Non-performing loans – related allowance	$	1,920,000	$	(705,000	)	$	1,215,000
Performing loans – related allowance		755,000		(531,000	)		224,000

Total	$	2,675,000	$	(1,236,000	)	$	1,439,000

* Please refer to Specific Reserve Allowances above.

	As of December 31, 2010
	Balance		Allowance for loan losses			Balance, net of allowance

Non-performing loans – related allowance	$	1,720,000	$	(456,000	)	$	1,264,000
Performing loans – related allowance		955,000		(561,000	)		394,000

Total	$	2,675,000	$	(1,017,000	)	$	1,658,000

Our manager evaluated our loans and, based on current estimates with respect to the value of the underlying collateral, believes that such collateral is sufficient to protect us against further losses of principal or interest. However, such estimates could change or the value of the underlying real estate could decline. Our manager will continue to evaluate our loans in order to determine if any other allowance for loan losses should be recorded.

Specific Reserve Allowances

The following table is a roll-forward of the allowance for loan losses for the years ended December 31, 2011, and 2010 by loan type.

Loan Type	Balance at 12/31/10		Specific Reserve Allocation		Sales		Loan Pay Downs		Transfers to REO		Balance at 12/31/11

Commercial	$	840,000	$	215,000	$	--	$	--	$	--	$	1,055,000
Construction		177,000		4,000		--		--		--		181,000
Total	$	1,017,000	$	219,000	$	--	$	--	$	--	$	1,236,000

Commercial – As of December 31, 2011, all of our commercial loans had a specific reserve allowance totaling approximately $20.1 million, of which our portion is approximately $1.1 million. The outstanding balance on these loans was approximately $34.2 million, of which our portion was $2.3 million.

Construction – As of December 31, 2011, our one construction loan had a specific reserve allowance totaling approximately $3.2 million, of which our portion is approximately $0.2 million. The outstanding balance on this loan was approximately $7.2 million, of which our portion is approximately $0.4 million.

-31-

Table of Contents

Loan Type	Balance at 12/31/09		Specific Reserve Allocation		Sales		Loan Pay Downs			Transfers to REO		Balance at 12/31/10

Commercial	$	1,941,000	$	181,000	$	--	$	(1,282,000	)	$	--	$	840,000
Construction		253,000		128,000		--		(204,000	)		--		177,000
Total	$	2,194,000	$	309,000	$	--	$	(1,486,000	)	$	--	$	1,017,000

Commercial – As of December 31, 2010, all of our commercial loans had a specific reserve allowance totaling approximately $19.3 million, of which our portion is approximately $0.8 million. The outstanding balance on these loans was approximately $34.2 million, of which our portion was $2.3 million.

Construction – As of December 31, 2010, our one construction loan had a specific reserve allowance totaling approximately $2.6 million, of which our portion is approximately $0.2 million. The outstanding balance on this loan was approximately $7.2 million, of which our portion is approximately $0.4 million.

Troubled Debt Restructuring

As of December 31, 2011 and 2010, we had three loans, totaling approximately $1.0 million, which met the definition of a Troubled Debt Restructuring or TDR. When the Company modifies the terms of an existing loan that is considered a TDR, it is considered performing as long as it is in compliance with the modified terms of the loan agreement. If the modification calls for deferred interest, it is recorded as interest income as cash is collected. Impairment on these loans is generally determined by the lesser of the value of the underlying collateral or the present value of expected future cash flows. The following is a breakdown of our TDR loans that were considered performing and non-performing loans as of December 31, 2011 and 2010:

As of December 31, 2011
	Total				Performing				Non-Performing
Loan Type	Number of Loans		Fund Balance		Number of Loans		Fund Balance		Number of Loans		Fund Balance

Commercial		2	$	551,000		1	$	351,000		1	$	200,000
Construction		1		405,000		1		405,000		--		--
Total		3	$	956,000		2	$	756,000		1	$	200,000

As of December 31, 2010
	Total				Performing				Non-Performing
Loan Type	Number of Loans		Fund Balance		Number of Loans		Fund Balance		Number of Loans		Fund Balance

Commercial		2	$	551,000		2	$	551,000		--	$	--
Construction		1		405,000		1		405,000		--		--
Total		3	$	956,000		3	$	956,000		--	$	--

Commercial –As of December 31, 2011 and 2010 we had four commercial loans, two of which, at each date, were modified pursuant to TDR. As of December 31, 2011 and 2010, two of these loans were secured by second deeds of trust and were considered performing prior to their restructuring, whereby they had their interest rates reduced. As of March 16, 2012, one of the loans continues to perform as required by the loan modifications, while the other loan is considered non-performing.

Construction – As of December 31, 2011 and 2010, we had one construction loan that was modified pursuant to TDR.

-32-

Table of Contents

Extensions

As of December 31, 2011, our manager had granted extensions on three loans that share a common guarantor, totaling approximately $21.4 million, of which our portion was approximately $1.0 million, pursuant to the terms of the original loan agreements, which permit extensions by mutual consent. Such extensions are generally provided on loans where the original term was 12 months or less and where a borrower requires additional time to complete a construction project or negotiate take-out financing. Our manager generally grants extensions when a borrower is in compliance with the material terms of the loan, including, but not limited to the borrower’s obligation to make interest payments on the loan. In addition, if circumstances warrant, our manager may extend a loan that is in default as part of a work out plan to collect interest and/or principal.

NOTE E — INVESTMENT IN MARKETABLE SECURITIES – RELATED PARTY

As of December 31, 2011 and 2010, we owned 123,510 and 114,117 shares, respectively, of VRM II’s common stock, representing approximately 0.90% of their total outstanding common stock.

At September 30, 2010, our manager evaluated the near-term prospects of VRM II in relation to the severity and duration of the unrealized loss. Based on that evaluation and current market conditions, we have determined there was an other-than-temporary impairment on our investment in VRM II as of September 30, 2010. We reversed our unrealized other comprehensive losses and realized a loss on our investment to its fair value of $1.48 per share as of September 30, 2010, totaling approximately $0.3 million and recognizing an impairment of approximately $0.3 million.

At December 31, 2011, our manager evaluated the near-term prospects of VRM II in relation to the severity and duration of the unrealized loss. Based on that evaluation and current market conditions, we have determined there was an other-than-temporary impairment on our investment in VRM II as of December 31, 2011. We reversed our unrealized other comprehensive losses and realized a loss on our investment to its fair value of $1.17 per share as of December 31, 2011, totaling approximately $0.2 million and recognizing an impairment of approximately $0.2 million.

NOTE F — REAL ESTATE HELD FOR SALE

At December 31, 2011, we held four properties with a total carrying value of approximately $0.6 million, which were acquired through foreclosure and recorded as investments in real estate held for sale (“REO”). Expenses incurred during the year ended December 31, 2011, related to our REO totaled approximately $0.2 million. These expenses included approximately $0.2 million in write-downs on REO. Our REO are accounted for at the lower of cost or fair value less costs to sell with fair value based on appraisals and knowledge of local market conditions. It is not our intent to invest in or own real estate as a long-term investment. We seek to sell properties acquired through foreclosure as quickly as circumstances permit taking into account current economic conditions. Set forth below is a roll-forward of REO during the year ended December 31, 2011:

Description	Balance at 12/31/10		Acquisitions Through Foreclosure		Write Downs			Cash Reductions			Seller Financed / New Loan		Net Cash Proceeds on Sales		Net Loss on Sale of Real Estate		Balance at 12/31/10

Land	$	820,000	$	--	$	(219,000	)	$	(5,000	)	$	--	$	--	$	--	$	596,000

Total	$	820,000	$	--	$	(219,000	)	$	(5,000	)	$	--	$	--	$	--	$	596,000

-33-

Table of Contents

Land

As of December 31, 2011, we held four REO properties, classified as Land, totaling approximately $0.6 million. These properties were acquired between May 2008 and October 2010 and consist of commercial and residential land. During the year ended December 31, 2011, our manager continually evaluated the carrying value of these properties and based on its estimates and updated appraisals these properties were written down approximately $0.2 million. Our manager is currently working with prospective buyers to sell these properties; however, no assurance can be given that these sales will take place.

Description	Balance at 12/31/09		Acquisitions Through Foreclosure		Write Downs			Cash Reductions		Seller Financed / New Loan		Net Cash Proceeds on Sales			Net Loss on Sale of Real Estate			Balance at 12/31/10

Land	$	716,000	$	451,000	$	(149,000	)	$	--	$	--	$	(198,000	)	$	--		$	820,000
Residential Building		119,000		--		--			--		--		(114,000	)		(5,000	)		--

Total	$	835,000	$	451,000	$	(149,000	)	$	--	$	--	$	(312,000	)	$	(5,000	)	$	820,000

Land

As of December 31, 2010, we held four REO properties, classified as Land, totaling approximately $0.8 million. These properties were acquired between May 2008 and October 2010 and consist of commercial and residential land. During the year ended December 31, 2010, our manager continually evaluated the carrying value of these properties and based on its estimates and updated appraisals these properties were written down approximately $0.1 million. Our manager is currently working with prospective buyers to sell these properties; however, no assurance can be given that these sales will take place.

In August, 2011, VREO XVIII, LLC, an entity owned by us, VRM I and VRM II entered into a purchase and sale agreement to sell one of the REO assets. The terms of the sale provided for an all cash transaction in the amount of $2 Million, with a closing to occur within 60 days. The date of closing was extended several times, but ultimately, the transaction cancelled, as the purchaser was unable to obtain financing. Non-refundable extension fees in the amount of $110,000 were collected, of which our portion was approximately $3,000.

Commercial Land – On April 27, 2010, we, VRM I and VRM II sold our commercial land REO property located in Texas to an unrelated third party for approximately $0.6 million, of which our portion was approximately $0.1 million. No gain or loss was associated with this transaction. During the year ended December 31, 2010, our manager continually evaluated the carrying value of our commercial land REO and based on its estimates and updated appraisals on these properties, both were written down approximately $87,000. As of December 31, 2010, we held two properties, classified as commercial land REO, located in Nevada totaling approximately $0.5 million.

Residential Land – On January 15, 2010, one property located in Nevada was sold to an unrelated third party for their approximate book value of a combined $1.3 million, of which our portion was approximately $0.1 million. No gain or loss was associated with these transactions. During the year ended December 31, 2010, our manager continually evaluated the carrying value of our residential land REO and based on its estimates and updated appraisals two of these properties were written down a total of approximately $62,000. As of December 31, 2010, we held two properties, classified as residential land REO, located in Arizona and California totaling approximately $0.3 million.

Residential Building

As of December 31, 2010, we had no REO properties classified as Residential Buildings. During the year ended December 31, 2010, our manager continually evaluated the carrying value of our Residential Building REO properties, and based on its estimates and updated appraisals, no write-downs were deemed necessary.

-34-

Table of Contents

Single Family Residential Properties –During April and May 2010, we, VRM I and VRM II sold the two remaining units on our REO property located in California to an unrelated third party for a total of $325,000, of which our portion was $6,000. These transactions resulted in approximately no gain or loss for us. As of December 31, 2010, we had no single-family residential properties.

Residential Apartment/Condo – On April 23, 2010, we, VRM I and VRM II sold the remaining unit on one REO property located in Nevada to an unrelated third party for its approximate book value of $81,000, of which our portion was $3,000. There was approximately no gain or loss associated with this transaction. On August 25, 2010, we, VRM I and VRM II sold a REO property located in Nevada to an unrelated third party for approximately $1.3 million, of which our portion was $0.1 million. This transaction resulted in a net loss for us of $4,000. As of December 31, 2010, we had no residential apartment/condo properties.

NOTE G — RELATED PARTY TRANSACTIONS

Transactions with the Manager

Our manager is entitled to receive from us a management (acquisition and advisory) fee up to 2.5% of the gross offering proceeds and up to 3% of our rental income. No management fees were recorded during the years ended December 31, 2011 and 2010.

During the year ended December 31, 2010, our manager received administrative fees of $0.5 million related to the sale of VRM I, VRM II, and our REO properties. Our pro-rata share of these fees totaled $7,000. There were no similar transactions in 2011. See Note F – Real Estate Held for Sale.

As of December 31, 2011 and 2010, our manager owned 54,863 of our units. During the year ended December 31, 2011 and 2010, we made liquidating distributions to our manager totaling $8,000 and $58,000, respectively, in accordance with the Plan.

In connection with the sale of an office building located in Las Vegas, Nevada, we arranged for a $985,000 letter of credit in favor of the purchaser of the building (the “Purchaser”), which could be drawn upon by the Purchaser should Vestin Group default on its lease obligations and is supported by our restricted cash. Vestin Group is currently engaged in litigation with the Purchaser and has not paid certain amounts allegedly due under its lease. In 2009, $285,000 of the letter of credit was drawn by the Purchaser. In November 2010, the Purchaser drew the final $700,000 from the letter of credit. In February 2011 the court granted judgment to the Purchaser. No written judgment or order has been issued by the court, as a hearing has yet to be set regarding offsets to the Purchaser’s damages. Vestin Group and Mike Shustek have provided us with a written agreement to fully indemnify and hold us harmless for any such withdrawals, including the full amount of the $985,000 drawn to date under the letter of credit. Vestin Group’s obligation is to make us whole no later than August 2014. However, Mr. Shustek has assigned all future liquidating distributions for the 292,681 units he holds directly and indirectly to the company to commence paying such obligation. For a discussion of litigation between us, Vestin Group and the building owner, see Note N - Legal Matters Involving the Company.

As of December 31, 2011 and 2010, we had receivables from our manager totaling approximately $1.0 million and, primarily related to the withdrawal of the letter of credit referred to above.

-35-

Table of Contents

Transactions with Other Related Parties

As of December 31, 2011 and 2010, we owned 123,510 and 114,117 common shares, respectively, of VRM II, representing approximately 0.90% and 0.87% respectively, of their total outstanding common stock.

As of December 31, 2011 and 2010, we had receivables from VRM II of approximately $13,000 and $37,000, respectively.

As of December 31, 2010, we owed VRM I $2,000. As of December 31, 2011, there were no payables or receivables to VRM I

As of December 31, 2011 and 2010, inVestin Nevada Inc., a company wholly owned by our manager’s CEO, (“inVestin”), owned 34,856 of our membership units representing approximately 1.72% of our total membership units. During the year ended December 31, 2011 and 2010, we made liquidating distributions to inVestin totaling $5,000 and $37,000, respectively, in accordance with the Plan.

As of December 31, 2011 and 2010, Shustek Investments, a company wholly owned by our manager’s CEO, owned 200,000 of our membership units representing approximately 9.88% of our total membership units. During the year ended December 31, 2011 and 2010, we made liquidating distributions to Shustek Investments totaling $30,000 and $213,000, in accordance with the Plan.

As of December 31, 2011 and December 31, 2010, Mr. Shustek’s spouse owned 2,963 of our membership units representing less than 1.0% of our total membership units. During the year ended December 31, 2011 and 2010, we made liquidating distributions of less than $1,000 and $3,000, respectively, to Mr. Shustek’s spouse.

NOTE H — MEMBERS’ EQUITY

Allocations and Distributions

In accordance with our Operating Agreement, profits, gains and losses are to be credited to and charged against each member’s capital account in proportion to their respective capital accounts as of the close of business on the last day of each calendar month.

Distributions were paid monthly to members; however, on August 27, 2008, we suspended payment of distributions as a result of our current losses.

Contingency Reserve

In accordance with the Plan, we established a contingency reserve of $300,000 for the payment of ongoing expenses, any contingent liabilities or to account for loan or other investment losses. Our manager will have the discretion to increase or decrease the amount of the reserve, but will ensure that the reserve is adequate to pay our outstanding obligations. The amount of the contingency reserve is based upon estimates and opinions of our manager or through consultation with an outside expert, if our manager determines that it is advisable to retain such expert. In determining the size of the reserve, our manager reviewed among other things, the value of our non-performing assets and the likelihood of repayment, our estimated contingent liabilities and our estimated expenses, including without limitation, estimated professional, legal and accounting fees, rent, payroll and other taxes, miscellaneous office expenses, facilities costs and expenses accrued in our financial statements.

Value of Members’ Capital Accounts

In accordance with Section 7.8 of our Operating Agreement, our manager reviewed the value of our assets during the three months ended December 31, 2011. Based on this review the value of members’ capital accounts was adjusted from $1.21 per unit to $1.12 per unit, as of January 1, 2012. The change in valuation is primarily for tax and capital account purposes and does not reflect the change in the value of the units calculated in accordance with GAAP. Accordingly, unit prices calculated under GAAP may be different than the adjusted price per unit.

-36-

Table of Contents

Liquidating Distributions

On January 26, 2010, April 8, 2010, September 17, 2010 and May 25, 2011, we made liquidating distributions to all Fund Members, in the aggregate amount of approximately $1.0 million, $0.9 million, $0.3 million and $0.3 million, respectively, in accordance with the Plan. The amounts distributed to each Member of the Fund were calculated based upon the percentage ownership interest of such Member in the Fund.

Redemption Limitation

In accordance with the Plan, our members no longer have the right to have their units redeemed by us and we no longer honor any outstanding redemption requests effective as of July 2, 2009.

NOTE I — NOTES RECEIVABLE

During July 2009, we, VRM I, and VRM II entered into a promissory note, totaling approximately $1.4 million, of which our portion is $82,000, with the borrowers of a construction loan, as part of the repayment terms of the loan. In addition, we received a principal pay off on the loan of approximately $0.3 million, which reflected our book value of the loan, net of allowance for loan loss of approximately $0.2 million. The promissory note accrues interest over a 60-month period with an interest rate of 7%, with the first monthly payment due on the 37th month. The remaining note balance and accrued interest will be due at maturity. Payments will be recognized as income when received. The balance of $82,000 was fully reserved as of December 31, 2011.

During July 2009, we, VRM I, and VRM II entered into a promissory note, totaling approximately $1.3 million, of which our portion is $74,000, with the borrowers of a construction loan, as part of the repayment of the loan. In addition, we received a principal pay off on the loan of approximately $0.2 million, which reflected our book value of the loan, net of allowance for loan loss of approximately $0.2 million. The promissory note accrues interest over a 60-month period with an interest rate of 7%, with the first monthly payment due on the 37th month. The remaining note balance and accrued interest will be due at maturity. Payments will be recognized as income when received. The balance of $74,000 was fully reserved as of December 31, 2011.

As of November 30, 2010, we had five loans totaling approximately $19.0 million, of which our portion is approximately $1.1 million, before allowances totaling approximately $4.2 million, of which our portion is approximately $0.2 million, and were guaranteed by common guarantors. Pursuant to agreements entered into on March 16, 2009 and July 2, 2009, which modified these loans, three of these loans continued to be secured by real property and two became unsecured due to the permanent financing being obtained for less than the outstanding balance on the loans. On November 30, 2010, we entered into additional agreements to modify the terms related to these five loans in order to further enhance our investment. Pursuant to these additional agreements, we obtained an additional guarantor, interest in operating profits and any aggregate sales proceeds of $10.4 million less operating profits previously received related to these properties. The new guarantor is the managing member of the borrowing entities who is also the principal manager of L.L. Bradford and was a former officer of our manager from April 1999 through January 2005. In the event the total proceeds from the operating profits and sales proceeds do not equal $10.4 million, each borrower will execute a promissory note to pay us the deficiency, which shall be guaranteed by the guarantors, including the new guarantor. In addition, we agreed to release our deeds of trust on two of the three loans secured by real estate totaling $9.0 million, of which our portion is $0.5 million. As a result of releasing our deeds of trust we classified these loans as unsecured notes receivable for the same amount and recognized a full allowance on this balance. On December 30, 2010, we received a payment totaling approximately $3.6 million from the receipt of permanent financing on one of the properties, of which our portion is approximately $0.2 million, which was applied towards the balances due.

NOTE J — NOTES PAYABLE

On December 3, 2010, we, VRM I and VRM II mortgaged a mixed-use land held for sale property for $1.6 million, of which our portion was approximately $48,000. The note has an interest rate of 9%, payable monthly and was paid in full on the maturity date of December 2, 2011.

-37-

Table of Contents

NOTE K — FAIR VALUE

As of December 31, 2011, financial assets and liabilities, utilizing Level 1 inputs included investment in marketable securities - related party. We had no assets or liabilities utilizing Level 2 inputs, and assets and liabilities utilizing Level 3 inputs included investments in real estate loans.

To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, our degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an asset or liability will be classified in its entirety based on the lowest level of input that is significant to the measurement of fair value.

Fair value is a market-based measure considered from the perspective of a market participant who holds the asset or owes the liability rather than an entity-specific measure. Therefore, even when market assumptions are not readily available, our own assumptions are set to reflect those that market participants would use in pricing the asset or liability at the measurement date. We use prices and inputs that are current as of the measurement date, including during periods of market dislocation, such as the recent illiquidity in the auction rate securities market. In periods of market dislocation, the observability of prices and inputs may be reduced for many instruments. This condition may cause our financial instruments to be reclassified from Level 1 to Level 2 or Level 3 and/or vice versa.

Our valuation techniques will be consistent with at least one of the three possible approaches: the market approach, income approach and/or cost approach. Our Level 1 inputs are based on the market approach and consist primarily of quoted prices for identical items on active securities exchanges. Our Level 2 inputs are primarily based on the market approach of quoted prices in active markets or current transactions in inactive markets for the same or similar collateral that do not require significant adjustment based on unobservable inputs. Our Level 3 inputs are primarily based on the income and cost approaches, specifically, discounted cash flow analyses, which utilize significant inputs based on our estimates and assumptions.

The following table presents the valuation of our financial assets as of December 31, 2011, measured at fair value on a recurring basis by input levels:

	Fair Value Measurements at Reporting Date Using
	Quoted Prices in Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance at 12/31/2011		Carrying Value on Balance Sheet at 12/31/2011
Assets
Investment in marketable securities - related party	$	145,000	$	--	$	--	$	145,000	$	145,000
Investment in real estate loans	$	--	$	--	$	1,440,000	$	1,440,000	$	1,439,000

-38-

Table of Contents

The following table presents the changes in our financial assets and liabilities that are measured at fair value on a recurring basis using significant unobservable inputs (Level 3) from January 1, 2011 to December 31, 2011. There were no liabilities measured at fair value on a recurring basis using significant unobservable inputs as of December 31, 2011 and 2010.

	Investment in real estate loans

Balance on January 1, 2011	$	1,660,000
Change in temporary valuation adjustment included in net loss
Increase in allowance for loan losses		(219,000	)
Temporary change in estimated fair value based on future cash flows		(1,000	)
Transfer to Level 1		--
Transfer to Level 2		--

Balance on December 31, 2011, net of temporary valuation adjustment	$	1,440,000

NOTE L — RECENT ACCOUNTING PRONOUNCEMENTS

-39-

Table of Contents

NOTE M— LEGAL MATTERS INVOLVING THE MANAGER

The United States Securities and Exchange Commission (the “Commission”), conducted an investigation of certain matters related to us, our manager, Vestin Capital, VRM I, and VRM II. We fully cooperated during the course of the investigation. On September 27, 2006, the investigation was resolved through the entry of an Administrative Order by the Commission (the “Order”). Our manager, Vestin Mortgage and its Chief Executive Officer, Michael Shustek, as well as Vestin Capital (collectively, the “Respondents”), consented to the entry of the Order without admitting or denying the findings therein.

In the Order, the Commission found that the Respondents violated Sections 17(a)(2) and 17(a)(3) of the Securities Act of 1933 through the use of certain slide presentations in connection with the sale of our units and units in Fund II, the predecessor to VRM II. The Respondents consented to the entry of a cease and desist order, the payment by Mr. Shustek of a fine of $100,000 and Mr. Shustek’s suspension from association with any broker or dealer for a period of six months, which expired in March 2007. In addition, the Respondents agreed to implement certain undertakings with respect to future sales of securities. We are not a party to the Order.

VRM I, VRM II and Vestin Mortgage (“Defendants”) were defendants in a breach of contract class action filed in San Diego Superior Court by certain plaintiffs who alleged, among other things, that they were wrongfully denied roll-up rights in connection with the merger of Fund I into VRM I and Fund II into VRM II. The court certified a class of all former Fund I unit holders and Fund II unit holders who voted against the mergers of Fund I into VRM I and Fund II into VRM II. The trial began in December 2009 and concluded in January 2010. On February 11, 2010, the Defendants were notified of a Tentative Statement of Decision, in their favor issued by the Superior Court for the State of California in San Diego following a trial. In the Tentative Statement, the Court found that there was no roll-up and therefore no breach of contract. The Court entered final judgment for the Defendants on March 18, 2010. Defendants and Plaintiffs agreed to a post-judgment settlement by which Plaintiffs agreed not to appeal the judgment in consideration of a waiver by the Defendants of any claim to recover actual court costs from the Plaintiffs. The Court granted final approval of this settlement of post-judgment rights on July 9, 2010.

VRM I, Vestin Mortgage, Inc. and Michael V. Shustek (“Defendants”) were defendants in a civil action filed by approximately 25 separate plaintiffs (“Plaintiffs”) in District Court for Clark County, Nevada (the “Nevada Lawsuit”). The Plaintiffs alleged, among other things, that Defendants: breached certain alleged contractual obligations owed to Plaintiffs; breached fiduciary duties supposedly owed to Plaintiffs; and misrepresented or omitted material facts regarding the conversion of Fund I into VRM I. The action sought monetary and punitive damages. The court dismissed the claim for punitive damages. On September 8, 2010, the parties agreed to settle the case. The Settlement Agreement provides for the settlement and complete release of all claims against the Defendants. The settlement was made without admission of liability by Defendants.

VRM II, Vestin Mortgage, Inc. and Michael V. Shustek (“Defendants”) were defendants in a civil action filed by 88 sets of plaintiffs representing approximately 138 individuals (“Plaintiffs”), in District Court for Clark County, Nevada (the “Nevada Lawsuit”). The Plaintiffs alleged, among other things, that Defendants: breached certain alleged contractual obligations owed to Plaintiffs; breached fiduciary duties supposedly owed to Plaintiffs; and misrepresented or omitted material facts regarding the conversion of Fund II into VRM II. The action sought monetary and punitive damages. The court dismissed the claim for punitive damages. On September 8, 2010, the parties agreed to settle the case. The Settlement Agreement provides for the settlement and complete release of all claims against the Defendants. The settlement was made without admission of liability by Defendants.

In addition to the matters described above, our manager is involved in a number of other legal proceedings concerning matters arising in connection with the conduct of its business activities. Our manager believes it has meritorious defenses to each of these actions and intends to defend them vigorously. Our manager believes that it is not a party to any other pending legal or arbitration proceedings that would have a material adverse effect on our manager’s financial condition or results of operations or cash flows, although it is possible that the outcome of any such proceedings could have a material impact on the manager’s net income in any particular period.

-40-

Table of Contents

NOTE N — LEGAL MATTERS INVOLVING THE COMPANY

The Company was a defendant in a civil action filed by Birkeland Family, LLC III and Birkeland Family, LLC V (“Plaintiffs”) in District Court for Clark County, Nevada. The Plaintiffs alleged as causes of action against the Company: Breach of Contract and Breach of the Implied Covenant of Good Faith and Fair Dealing regarding the sale of the office building commonly described as 8379 W. Sunset Road, Las Vegas, Nevada. The action sought monetary, punitive and exemplary damages. On January 18, 2011, summary judgment was granted in favor of the Company, with the Court finding that the Company was not part of the lease and, therefore, could not be held liable for damages.

From time to time, we may become involved in litigation in the ordinary course of business. We do not believe that any pending legal proceedings are likely to have a material adverse effect on our financial condition or results of operations or cash flows. It is not possible to predict the outcome of any such proceedings.

NOTE O — SUBSEQUENT EVENTS

The following subsequent events have been evaluated through the date of this filing with the SEC.

During January 2012 we, VRM I and VRM II modified one of our existing loans. The interest rate of this loan was changed from 3% paying monthly with 5% accruing to 7% paid monthly. The interest currently accrued on the existing loan of approximately $58,000 will be moved to notes receivable with the balance fully allowed for.

On February 7, 2012, we, VRMI and VRMII entered into a Deed in Lieu Agreement with a borrower for a second deed of trust loan that matured on December 31, 2011 with a balance of approximately $11.8 million, of which our portion was approximately $0.2 million. These assets are subject to a first trust deed of approximately $39 million. The property includes a 430 unit full service hotel located in Ft. Worth, Texas. The hotel includes operations which will be consolidated into our financial statements from the date of this agreement. The property will be held for sale and pursuant to the terms of the agreement the net proceeds from the sale shall be distributed as follows through July 31, 2012: (i) satisfy all amounts due on the first deed of trust, (ii) $11 million to us, VRMI and VRMII, (iii) $3 million to the former borrower and (iv) all remaining amounts will be divided with 50% going to us, VRMI and VRMII and 50% going to the former borrower. Following July 31, 2012, the net proceeds from the sale will be distributed similar to other real estate sale transactions.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A.

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to our manager, including our manager’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding required financial disclosure. In connection with the preparation of this Report on Form 10-K, our manager carried out an evaluation, under the supervision and with the participation of our manager’s CEO and CFO, as of December 31, 2011, of the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) under the Exchange Act. Based upon our manager’s evaluation, our manager’s CEO and CFO concluded that, as of December 31, 2011, our disclosure controls and procedures are designed at a reasonable assurance level and are effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our manager’s CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.

-41-

Table of Contents

Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues within our company have been or will be detected. Even effective internal control over financial reporting can only provide reasonable assurance with respect to financial statement preparation. Furthermore, because of changes in conditions, the effectiveness of internal control over financial reporting may vary over time. Our manager, including our manager’s CEO and CFO, does not expect that our controls and procedures will prevent all errors.

The certifications of our manager’s CEO and CFO required under Section 302 of the Sarbanes-Oxley Act have been filed as Exhibits 31.1 and 31.2 to this report.

Management’s Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting for our Company, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with accounting principles generally accepted in the United States. Internal control over financial reporting includes those policies and procedures that: pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of our Company; provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States, and that receipts and expenditures of our Company are being made only in accordance with authorizations of management and directors of our Company; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our Company's assets that could have a material effect on our financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Management has conducted an assessment, including testing, of the effectiveness of our internal control over financial reporting as of December 31, 2011. In making its assessment of internal control over financial reporting, management used the criteria in Internal Control -- Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on this assessment, management, with the participation of the Chief Executive and Chief Financial Officers of the Manager, believes that, as of December 31, 2011, the Company’s internal control over financial reporting is effective based on those criteria.

Changes in Internal Control Over Financial Reporting

As required by Rule 13a-15(d) under the Exchange Act, our management, including our manager’s CEO and CFO, has evaluated our internal control over financial reporting to determine whether any changes occurred during the fourth fiscal quarter of 2011 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Based on that evaluation, there has been no such change during the fourth fiscal quarter of 2011.

ITEM 9B.

OTHER INFORMATION

None.

-42-

Table of Contents

PART III

ITEM 10.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

We do not have a Board of Directors or any corporate officers. We are managed by Vestin Mortgage, a privately held company which is majority owned by Vestin Group, Inc. The powers, responsibilities and obligations of our manager are set forth in our Operating Agreement. The CEO and CFO of Vestin Group function as the equivalent of our CEO and CFO.

Vestin Group, Inc. was previously a publicly held company and maintained an audit committee consisting of independent directors. The Vestin Group audit committee previously functioned as the equivalent of our audit committee. Since May 2005, Vestin Group has been a privately held company and since March 2006, it no longer has any independent directors. Michael Shustek, the principal executive officer of our manager, is the sole director of Vestin Group, Inc. Accordingly, we do not have an audit committee or anybody that functions as the equivalent of an audit committee. Our units are not listed on any exchange and we are not required to have an audit committee which consists of independent directors and meets the other requirements of Section 10A(m) of the Securities Exchange Act of 1934 and the rules promulgated thereunder.

Our manager is responsible for overseeing management of the Company’s risks.

The following table sets forth the names, ages as of March 16, 2012 and positions of the individuals who serve as directors, executive officers and certain significant employees of Vestin Mortgage (our manager) or our affiliates:

Name	Age	Title

Michael V. Shustek	53	President, Chief Executive Officer and Chairman
Eric Bullinger (1)	41	Chief Financial Officer
Michael J. Whiteaker	62	Vice President of Regulatory Affairs

(1)

During April 2009, we entered into an accounting services agreement with Strategix Solutions, LLC (“Strategix Solutions”), a Nevada limited liability company, for the provision of accounting and financial reporting services to us, VRM I and VRM II. Our CFO and other members of our accounting staff are employees of Strategix Solutions. Strategix Solutions is managed by LL Bradford and Company, LLC ("LL Bradford"), a certified public accounting firm that has provided non-audit accounting services to us. The principal manager of LL Bradford was a former officer of our manager from April 1999 through January 1, 2005. Strategix Solutions is owned by certain partners of LL Bradford, none of whom are currently or were previously officers of our manager. As of December 31, 2011, Strategix Solutions dedicated to us a total of three employees, including Eric Bullinger, who acts as the equivalent of our CFO.

Directors, Executive Officers and certain significant employees of Vestin Mortgage (our manager), Vestin Group, Vestin Originations or our affiliates

Michael V. Shustek has been a director of our manager and Chairman of the board of directors, Chief Executive Officer and a director of Vestin Group since April 1999. In addition, Mr. Shustek has been a Director and the CEO of VRM I and VRM II since January 2006. In February 2004, Mr. Shustek became the President of Vestin Group. Mr. Shustek also serves on the loan committee of our manager and its affiliates. In 2003, Mr. Shustek became the Chief Executive Officer of our manager. 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.

-43-

Table of Contents

In 1997, Mr. Shustek was involved in the initial founding of Nevada First Bank, with the largest initial capital base of any new state charter in Nevada’s history. Mr. Shustek has co-authored two books, entitled “Trust Deed Investments,” on the topic of private mortgage lending, and “If I Can Do It, So Can You.” Mr. Shustek is a guest lecturer at the University of Nevada, Las Vegas, where he also has taught 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. As our founder and our manager’s CEO, Mr. Shustek is highly knowledgeable with regard to our business operations and loan portfolio. See Note M Legal Matters Involving The Manager in Part II, Item 8 Financial Statements of this Annual Report on Form 10-K for information regarding legal matters involving our manager and Mr. Shustek.

Eric Bullinger has acted as the equivalent of our Chief Financial Officer (CFO) since January 21, 2011. In addition, Mr. Bullinger was appointed as the Chief Financial Officer of Vestin Realty Mortgage I, Inc. (“VRM I”) and Vestin Realty Mortgage II, Inc. (“VRM II”). Mr. Bullinger’s services are furnished to us pursuant to an accounting services agreement entered into by our manager and Strategix Solutions. Strategix Solutions is managed by LL Bradford, a certified public accounting firm, and provides accounting and financial reporting services on our behalf. Mr. Bullinger is a Certified Public Accountant and has worked for LL Bradford for approximately 11 years. Mr. Bullinger has overseen various audit engagements of public companies, as well as private companies. He received a Bachelor of Business Administration degree in Accounting from the University of Wyoming.

Michael J. Whiteaker has been Vice President of Regulatory Affairs since May 1999. Mr. Whiteaker is experienced in the banking and finance regulatory fields, having served with the State of Nevada, Financial Institution Division 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. Mr. Whiteaker has previously served on the Nevada Association of Mortgage Brokers, Legislative Committee and is a past member of the State of Nevada, Mortgage Advisory Council.

Code of Ethics

As we do not have any executive officers we have not adopted a Code of Ethics. However, our manager has adopted a Code of Ethics.

ITEM 11.

EXECUTIVE COMPENSATION

We do not compensate any executive officers. We are required to pay our manager a management (acquisition and advisory) fee and certain other fees in accordance with the terms of our Operating Agreement. For the years ended December 31, 2011 and 2010, no such fees were paid. In addition, we may pay our manager or its affiliates for services rendered in selling properties acquired through foreclosure. We also pay a fee to Strategix Solutions which is based upon the wages of the employees providing the services.

ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Shown below is certain information as of March 16, 2012, with respect to beneficial ownership, as that term is defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), of number of membership units by the only persons or entities known to us to be a beneficial owner of more than 5% of the outstanding membership units. Unless otherwise noted, the percentage ownership is calculated based on 2,024,424 membership units as of March 16, 2012.

-44-

Table of Contents

Name and Address of Beneficial Owner	Amount and Nature of Beneficial Ownership	Percent of Class

Michael V. Shustek 8880 West Sunset Rd Ste 200 Las Vegas, NV 89118	Sole voting and investment power of 289,718 units & shared voting and investment power of 2,963 units held by his spouse	14.5%

The following table sets forth the total number and percentage of our membership units beneficially owned as of March 16, 2012 by:

each of our manager’s directors;

our manager’s chief executive officer and other executive officers; and

all of our manager’s executive officers and directors as a group.

Unless otherwise noted, the percentage ownership is calculated based on 2,024,424 units of our total outstanding membership units as of March 16, 2012.

		Common Shares Beneficially Owned
Beneficial Owner	Address	Number	Percent

Michael V. Shustek (1)	8880 West Sunset Rd Ste 200 Las Vegas, NV 89148	292,681	14.5%
All directors and executive officers of our manager as a group		292,681	14.5%

(1)

Includes 54,863 units held by our manager and 200,000 units held by Shustek Investments, 34,856 units held by inVestin and 2,963 units held by his spouse. Mr. Shustek is the Chairman, President and Chief Executive Officer of our manager and indirectly owns a significant majority of the membership units of our manager through Vestin Group, Inc. a company wholly owned by Mr. Shustek. Mr. Shustek is the sole owner, Chairman, President and Chief Executive Officer of Shustek Investments, Inc. Mr. Shustek is the sole owner, Chairman, President and Chief Executive Officer of inVestin Nevada, Inc. Mr. Shustek has sole voting and investment power in all these units, except for the units held by his spouse.

ITEM 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Please refer to Note G – Related Party Transactions in Part II, Item 8 Financial Statements of this Annual Report on Form 10-K, for information regarding our related party transactions, which are incorporated herein by reference.

-45-

Table of Contents

ITEM 14.

PRINCIPAL ACCOUNTING FEES AND SERVICES

During the years ended December 31, 2011 and 2010, JLK Partners, LLP (“JLK”) provided services to us as follows:

	December 31, 2011		December 31, 2010
Audit Fees	$	46,000	$	67,000
Audit Related Fees	$	--	$	--
Tax Fees	$	--	$	--
All Other Fees	$	--	$	--

JLK did not perform any non-audit services for us in the years ended December 31, 2011 and 2010.

Our manager has direct responsibility to review and approve the engagement of the independent auditors to perform audit services or any permissible non-audit services. All audit and non-audit services to be provided by the independent auditors must be approved in advance by our manager. Our manager may not engage the independent auditors to perform specific non-audit services proscribed by law or regulation. All services performed by independent auditors under engagements entered into on or after January 21, 2005, were approved by our manager pursuant to their pre-approval policy, and none was approved pursuant to the de minimis exception to the rules and regulations of the Securities Exchange Act of 1934, Section 10A(i)(1)(B), on pre-approval.

PART IV

ITEM 15.

EXHIBITS, FINANCIAL STATEMENT SCHEDULES

The following are filed as part of this Report:

(a) 1. Financial Statements

The list of the financial statements contained herein are contained in Part II, Item 8 Financial Statements on this Annual Report on Form 10-K, which is hereby incorporated by reference.

(a) 3. Exhibits

-46-

Table of Contents

EXHIBIT INDEX

Exhibit No.		Description of Exhibits
2.1(1)		Plan of Complete Liquidation and Dissolution
3.1(2)		Articles of Organization
3.2(3)		Certificate of Amendment to Articles of Organization
3.3(4)		Amended and Restated Operating Agreement (included as Exhibit A to the prospectus)
4.4(5)		Distribution Reinvestment Plan
10.9(6)		Office lease agreement dated March 31, 2003 by and between Luke Properties, LLC and Vestin Group, Inc.
10.10(7)		Indemnification agreement dated March 25, 2009 by and between Vestin Group, Inc. and Vestin Fund III, LLC
10.11 (8)		Agreement between Strategix Solutions, LLC and Vestin Fund III, LLC for accounting services.
10.12 (9)		Plan of Complete Liquidation and Dissolution
10.13		Deed in Lieu
31.1		Section 302 Certification of Michael V. Shustek
31.2		Section 302 Certification of Eric Bullinger
32		Certification Pursuant to 18 U.S.C. Sec. 1350

(1)		Incorporated herein by reference to our Schedule 14A Definitive Proxy Statement filed on May 11, 2009 (File No. 000-51301)
(2)		Incorporated herein by reference to our Pre-Effective Amendment No. 3 to Form S-11 Registration Statement filed on September 2, 2003 (File No. 333-105017)
(3)		Incorporated herein by reference to our Form 10-Q filed on August 16, 2004 (File No. 333-105017)
(4)		Incorporated herein by reference to our Schedule 14A Definitive Proxy Statement filed on January 29, 2007 (File No. 000-51301)
(5)		Incorporated herein by reference to Exhibit 4.4 of our Post-Effective Amendment No. 5 to Form S-11 Registration Statement filed on April 28, 2006 (File No. 333-105017)
(6)		Incorporated herein by reference to our Form 10-KSB filed on March 30, 2005 (File No. 333-105017)
(7)		Incorporated herein by reference to the Annual Report on Form 10-K for the year ended December 31, 2008 filed on March 27, 2009 (File No. 000-51301)
(8)		Incorporated herein by reference to the Quarterly Report on Form 10-Q filed on May 14, 2009 (File No. 000-51301)
(9)		Incorporated herein by reference to the Proxy Statement dated May 11, 2009 (File No. 000-51301)

-47-

Table of Contents

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Vestin Fund III, LLC
	By:		Vestin Mortgage, LLC., its sole Manager

	By:		/s/ Michael V. Shustek
			Michael V. Shustek
			Chief Executive Officer and Sole Director of the Manager
			(Principal Executive Officer of Manager)

	By:		/s/ Eric Bullinger
			Eric Bullinger
			Chief Financial Officer of the Manager
			(Principal Financial and Accounting Officer of the Manager)

Date: March 16, 2012

-48-

Table of Contents

Exhibit 31.1

CERTIFICATIONS

I, Michael V. Shustek, certify that:

1. I have reviewed this Form 10-K of Vestin Fund III, LLC;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: March 16 2012

/s/ Michael V. Shustek

Michael V. Shustek

Chief Executive Officer and Director of the Manager*

Vestin Mortgage, LLC, sole Manager of Vestin Fund III, LLC

* Michael V. Shustek functions as the equivalent of the Chief Executive Officer of the Registrant.

Table of Contents

Exhibit 31.2

CERTIFICATIONS

I, Eric Bullinger, certify that:

1. I have reviewed this Form 10-K of Vestin Fund III, LLC;

(a)

(b)

(c)

(d)

(a)

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: March 16 2012

/s/ Eric Bullinger

Eric Bullinger

Chief Financial Officer of the Manager*

Vestin Mortgage, LLC, sole Manager of Vestin Fund III, LLC

*Eric Bullinger functions as the equivalent of Chief Financial Officer for Vestin Fund III LLC pursuant to an accounting services agreement entered into between Vestin Fund III LLC and his employer, Strategix Solutions, LLC.

Table of Contents

Exhibit 32

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

Michael V. Shustek, as Chief Executive Officer and Director of Vestin Mortgage, LLC., the sole manager of Vestin Fund III, LLC (the “Registrant”), and Eric Bullinger, as Chief Financial Officer of Vestin Mortgage, LLC., hereby certify, pursuant to 18 U.S.C. Sec. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)

The Registrant’s Report on Form 10-K for the year ended December 31, 2011, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

Date: March 16, 2012

/s/ Michael V. Shustek

Michael V. Shustek

Chief Executive Officer and Director*

of Vestin Mortgage, LLC, sole Manager of the Registrant

Date: March 16, 2012

/s/Eric Bullinger

Eric Bullinger

Chief Financial Officer**

of Vestin Mortgage, LLC., sole Manager of the Registrant

* Michael V. Shustek functions as the equivalent of the Chief Executive Officer of the Registrant for purposes of 18 U.S.C. Section 1350.

**Eric Bullinger functions as the equivalent of Chief Financial Officer of the Registrant for purposes of 18 U.S.C. Section 1350, pursuant to an accounting services agreement entered into between Vestin Fund III LLC and his employer, Strategix Solutions, LLC

Table of Contents

VESTIN FUND III LLC - FORM 10-K - March 16, 2012

Attached files

VESTIN FUND III LLC Reports