Suit by Investors Calls Partnerships’ Accounts Tainted

Attorneys representing some of the 3,000 investors of fraud-ridden American Principals Holdings on Friday amended their class-action lawsuit so as to detail alleged improprieties in dozens of limited partnerships that raised about $90 million.

The nearly 500-page amended complaint, filed in federal court, asks for principal damages of about $40 million and interest of about $15 million, according to Michael J. Aguirre, the lead attorney for the plaintiffs.

American Principals’ partnership funds were “inextricably commingled” and the “so-called trust accounts were used . . . for whatever current activities required funds,” the lawsuit alleged.

In an unusual disclosure in March, 1984, American Principals admitted that there were “irregularities” at the firm that had been uncovered during an internal investigation. A court-appointed receiver has since been selling off the firm’s remaining and over-leveraged partnerships.

American Principals was later sued by the Securities and Exchange Commission, and the U.S. attorney’s office is reportedly still investigating the company.

Named as defendants in Friday’s amended suit are former executives Carl Zimmerman, Hugh F. Sackett and Thomas Schueneman.

Also named were Private Ledger Financial Services, a former American Principals subsidiary, and the law firm of Rogers & Wells, which represented American Principals in various capacities from July, 1982, until it resigned the account in February, 1983.