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                                                                  EXHIBIT 10.224

                             COMPENSATION AGREEMENT


        THIS COMPENSATION AGREEMENT ("Agreement") is entered into by and between
Carol Sullivan, an individual residing at 8653 Robinson Ridge Drive, Las Vegas,
Nevada, 89117. ("Sullivan") and Preferred Equities Corporation, a Nevada
corporation with its principal address being 4310 Paradise Road, Las Vegas,
Nevada 89109 ("PEC").

                                     RECITAL

        As of January 8, 2001, Sullivan is employed as the Senior Vice President
and Chief Financial Officer ("CFO") of PEC. In her role as CFO, Sullivan is
responsible for arranging financings, lender relations and supervision of the
Trust Deed and Portfolio Management departments and other financial and back
office duties assigned to her from time to time by the Chief Executive Officer
of PEC. Sullivan reports to the Chairman of the Board and Chief Executive
Officer of PEC, Jerome J. Cohen. Sullivan and PEC desire to enter into this
Agreement in order to reduce to writing Sullivan's compensation arrangement with
PEC for such period of time as Sullivan is employed by PEC as CFO or until
modified by mutual agreement of the parties. In consideration of the foregoing,
the parties hereto agree as follows.

1. TERM. The term of this Agreement shall be for a period of one year and shall
expire on January 7, 2002, unless earlier terminated in accordance with the
provisions contained herein.

2. BASE SALARY. Sullivan shall be paid a base salary of Two hundred thousand
dollars ($200,000.00) per annum payable bi-weekly as part of the regular PEC
payroll. Base salary payments shall be subject to ordinary withholding for taxes
and withholding for items designated by Sullivan such as for 401(k)
contributions.

 3. EXECUTIVE BONUS POOL. Sullivan shall be eligible to participate in the
Executive Incentive Compensation Plan of Mego Financial Corp. with awards
thereunder at the discretion of the Incentive Compensation Committee of the
Board of Directors of Mego Financial Corp., PEC'S parent.

 4. STOCK OPTIONS. Sullivan may receive stock options under the Stock Option
Plan of , Mego Financial Corp., at the discretion of the Board of Directors of
Mego Financial Corp.

 5. TRAVEL AND BUSINESS EXPENSE. Sullivan shall be reimbursed for usual business
and travel expenses. Sullivan shall be entitled to fly first class on any flight
or combination of flights longer than two hours in scheduled duration.

  6. OTHER BENEFITS. Sullivan shall be eligible for all benefits afforded to PEC
executives from time to time provided Sullivan meets any eligibility
requirements set forth



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for employees participating therein.

7. VACATION. Sullivan shall have three (3) weeks paid vacation during each PEC
fiscal year.

8. TERMINATION.

        (a)     PEC shall have the right to terminate the Agreement at any time
                with Thirty days written notice to Sullivan.

        (b)     If Sullivan's employment is terminated by PEC for any reason
                other than for Cause during the term of this Agreement, or if
                PEC gives Sullivan notice that PEC does not intend to renew the
                Agreement pursuant to Section 9., Sullivan shall receive base
                salary as set forth in Sections 2. to the date of termination
                and a severance payment in the amount of One Hundred Thousand
                Dollars ($100,000.00). If Sullivan resigns or terminates her
                employment by PEC she will only be entitled to her base salary
                to the date of such termination.

9. RENEWAL. This Agreement shall be renewed from year to year provided that
neither party has given written notice to the other party of her or its
intention not to renew, at least thirty (30) days prior to the expiration of the
then term of the Agreement. In the event that the Agreement has been renewed for
a term following the initial term then the severance payment set forth in
Section 8.(b) shall be Two Hundred Thousand Dollars ($200,000.00).

10. DEFINITION OF CAUSE. "Cause" shall mean any one of the following acts of, or
omissions by, or actions of others relating to, Sullivan:

        (a) Conviction of a felony, whether or not such conviction is appealed.

        (b) Deliberate and premeditated acts against the best interests of PEC.

        (c) Sullivan is found guilty of or is enjoined from violation of any
        state or federal security laws, state or federal laws governing the
        business of PEC, or rules or regulations of any state or federal agency
        regulating any of the business of PEC.

        (d) Misappropriation of PEC funds or property.

        (e) Habitual use of alcohol or drugs to a degree that such use
        interferes in any way with Sullivan's performance of her duties.

11. COVENANT NOT TO SOLICIT. Sullivan agrees that so long as she is employed by
PEC and for a period of one year after termination of her employment by PEC with
or without Cause, or resignation or termination of her



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employment by Sullivan, Sullivan will not solicit or encourage other employees
or officers of PEC to terminate their employment by PEC for any purpose
whatsoever.

12. NOTICE. All notices under this Agreement shall be in writing and shall be
given by personal delivery, certified United States mail or by facsimile, to the
address set forth below:

            If to Sullivan:                     Carole Sullivan
                                                8653 Robinson Ridge Drive
                                                Las Vegas, NV 89117

                                                Facsimile #  702-804-5699

            If to PEC:                          Preferred Equities Corporation
                                                4310 Paradise Road
                                                Las Vegas, NV 89109
                                  Facsimile #   702-369-4398
                                  Attn.         Jerome J. Cohen
                                                President


13. MISCELLANEOUS.

        (a) This Agreement is personal to Sullivan and the duties and
        responsibilities hereunder may not be assigned by Sullivan.

        (b) This Agreement shall terminate except, to the extent applicable, on
        the date of termination of Sullivan's employment by PEC, or Sullivan's
        resignation, her termination of employment, death or permanent
        disability.

        (c) This Agreement may only be modified by mutual written agreement of
        the parties.

        (d) The headings to this Agreement are for convenience of reference only
        and are not to be considered in the interpretation of this Agreement.

        (e) This Agreement shall be governed by the laws of the State of Nevada.

        (f) This Agreement constitutes the entire agreement between the parties
        and there are no other agreements, representations or warranties other
        than as set forth herein.



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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
8th day of January, 2001.

Preferred Equities Corporation


-----------------------------               -----------------------
Jerome J. Cohen                             Carol Sullivan
President



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