4 Defendants to Pay $10 Million in American Principals Lawsuit
Four of the defendants in a class-action lawsuit filed by investors in American Principals Holdings Inc. have agreed to settle investor claims by paying an aggregate sum of more than $10 million, attorneys representing APHI investors said Friday.
Crown Life Insurance of Canada, its San Diego-based subsidiary Private Ledger Financial Services, La Jolla-based law firm Dale & Lloyd and San Diego accountant William Fates have each agreed to make cash settlements, plaintiff attorneys Michael Aguirre and James Krause said.
The attorneys, who represent about 2,000 APHI investors, declined to break out the individual payments made by the defendants but said “partial settlement checks” will soon be mailed to members of the suit. The checks will be the first restitution made to many APHI investors since the Del Mar investment firm collapsed amid scandal in 1984.
“Deep pocketed” defendants--including Coopers & Lybrands accountancy firm, Rogers and Wells law firm, Imperial Bank, La Jolla Bank & Trust and First Nationwide Bank--have not settled and plan to contest the lawsuit in court, Aguirre said. Defense attorneys were unavailable for comment Friday.
National Union Fire Insurance Co., which wrote a liability policy for APHI officers and directors, has “agreed in principal” to settle with investors, the attorneys said.
About 2,500 investors put $80 million to $90 million into 80 real estate, leasing and research-and-development limited partnerships organized by APHI in 1979-84. Many of the partnerships are now insolvent or bankrupt; investor losses have been estimated at about $60 million.
More than 2,000 investors have joined the class-action lawsuit, which alleges APHI management fraudulently comingled the funds of various partnerships and ran a pyramid scheme by which old investments were kept current with dollars taken in from new investors. The Securities and Exchange Commission has sued the firm and its principals, alleging securities fraud.
In addition to APHI officers and directors, the investors’ suit names APHI’s legal counsel and accountants as defendants, alleging they knew or should have known of and disclosed the alleged fraud.
In a separate development, District Judge Gordon Thompson Jr. dismissed some of the allegations made in the suit against APHI defendants. Each defendant originally named is still “in the case,” Krause said.
