Carl Zimmerman, the driving force of a defunct Del Mar-based investment firm that allegedly bilked investors out of an estimated $40 million, was indicted by a federal grand jury here Thursday on 51 counts of mail fraud.
Zimmerman was chairman and chief executive of American Principals Holdings, a firm that took in $90 million in investor funds through the sale of 80 limited partnerships in real estate, leasing, research and development, and wind power.
APHI has been in receivership since June, 1984, shortly after the Securities and Exchange Commission was granted an injunction barring APHI from certain investment activities. APHI had revealed publicly in April, 1984, that the firm had commingled investor funds from one partnership with those of others.
In a suit filed in September, 1986, the SEC charged Zimmerman and his associate Hugh Sackett with fraud in connection with the sale of unregistered securities and misuse of investor funds totaling $10 million. Sackett was not named in the Thursday indictment.
The indictment, which carries a maximum penalty of 5 years in prison and a $1,000 fine per count, charges Zimmerman with failing to disclose to investors "massive commingling of funds" and improper diversion of new investor funds to cover obligations and partnerships of earlier investors.
The indictment also charges Zimmerman, 55, with taking unauthorized loans from APHI investor funds totaling $132,000 to finance the remodeling of his Rancho Santa Fe home, said Elizabeth Hartwig, deputy California attorney general and also a special assistant U.S. attorney. She said the indictment caps a 3-year investigation.
Funds raised from investors that were to have been lent as "bridge financing" were in fact used to make payments on the APHI building in Del Mar, to pay for Zimmerman's residence, and to repay prior general partner advances to limited partnerships, the indictment said.
Zimmerman "lulled the investors into a false sense of security," the indictment said.
About $40 million of APHI investor funds were lost, according to Michael Aguirre, a San Diego attorney who led a class-action investor lawsuit against firms related to APHI. About 2,000 plaintiffs in the class-action so far have received $19 million in settlements from Coopers & Lybrand, APHI's accounting firm; its law firm, Rogers & Wells; National Union Fire Insurance and others, Aguirre said.
The investors have also settled with Crown Life Insurance of Canada, which bought APHI's Private Ledger Financial Services broker-dealer firm in 1985 under the auspices of the receiver.
Zimmerman is scheduled to be arraigned and bail set today in U.S. Magistrate Roger C. McKee's courtroom.