Pioneer Savings Dispute : S&L; Investors Sue Chairman, Law Firm

Six investors in Pioneer Savings & Loan Assn. filed suit Wednesday against the chairman and the lawyers for the Newport Beach institution in an effort to unravel a complicated deal that provided the initial $2 million in capital for the S&L; to open two years ago.

The investors, who seek the return of their money plus interest and $10 million in punitive damages, claim that Chairman James F. Deane, Ernest Leff and Leff’s Beverly Hills law firm misrepresented state and federal regulatory rules and failed to tell regulators about the funding arrangement.

The investors claim that the $2 million they gave Deane was backed by a loan agreement, a promissory note, a stock pledge agreement and a stock purchase agreement with Deane.

They provided the money, the suit says, under the belief that they could become part owners of the institution without the need to divulge personal net worth information to regulators or otherwise subject themselves to regulatory scrutiny.

None of the parties to the lawsuit nor their lawyers could be reached late Wednesday for comment. It was not clear if the suit would have any impact on the tentative agreement Deane has reached to sell the S&L; to the Hammond Co., a Newport Beach mortgage banking firm.

The investors suing Deane are William C. Ring of Corona del Mar, Robert J. Lucas of Newport Beach, David V. Whiting of Tustin, Jack Sioukas of Sacramento, James C. Gianulias of Corona del Mar and his brother, Gus C. Gianulias of Sacramento.

A seventh investor, Sheldon E. Medall, was named as a defendant only because he was part of the funding arrangement and because his consent to join the lawsuit “could not be obtained.”