Investor Sues Bankrupt Newport Securities Firm

A San Diego investor on Thursday sued bankrupt Comark, a Newport Beach securities firm, for fraud, breach of fiduciary duties and misrepresentations in the sale of securities.

Investor Melvin W. Knyper alleged that San Diego Sockers’ majority owner Robert Bell and two other general partners in the firm diverted some funds for their own personal use and for “other unauthorized uses.” Knyper also sued the Los Angeles accounting firm of Oppenheim, Appel, Dixon & Co. and Los Angeles attorney John Pennish for legal and professional malpractice.

Limited Partnership

Knyper could personally lose as much as $2 million, depending on the outcome of an Internal Revenue Service review, according to Michael J. Aguirre, Knyper’s attorney. Knyper’s lawsuit, filed in San Diego Superior Court, was the first legal action against Comark by a former investor, Aguirre said.

Comark, which filed for Chapter 7 liquidation bankruptcy in 1982, was formed in 1977 as a limited partnership for the sale of commodities. Its general partners collected about $40 million from approximately 170 investors.

The company was accused last year by the state Department of Corporations of commingling customer and company funds.

Bell and general partner E. Keith Owens reached a settlement with state officials in December and were permanently prohibited from violating various Department of Corporation laws that require keeping accurate books and records, the filing of annual reports and maintaining minimum net capital reserves.

State officials will eventually proceed against the other Comark officials, according to senior corporations counsel George Crawford.

The trustee in charge of the Comark bankruptcy is reportedly close to settling his litigation against former Comark officials, according to a source familiar with the case.

Bell said Thursday that he left Comark in 1979, although legally he remained a general partner, and “turned over all management to Keith Owens.”

He blamed Comark’s demise on “computer problems and other things.”

Attorney Pennish said he has represented several former Comark investors in civil litigation with the IRS. He said he was unaware of Knyper’s lawsuit and would not comment on the action.

The lawsuit claims that Pennish has an attorney/client relationship with Knyper and that he has served as attorney for Bell. In those capacities, the lawsuit claims, he gave tax advice in connection with the purchase of Comark partnership interests as well as an IRS inquiry into the tax treatment of partnership interests.