Carl Zimmerman Pleads Guilty to Two Counts of Mail Fraud

Carl Zimmerman, a key figure in a Del Mar investment syndication firm that was closed down in 1984 by the Securities and Exchange Commission after allegedly bilking investors out of $48 million, pleaded guilty to two counts of mail fraud in U.S. District Court here Wednesday.

At his sentencing scheduled for Jan. 9, the 56-year-old Zimmerman could receive a maximum of 12 1/2 years in prison, $2,500 in fines and be forced to pay up to $2 million in restitution to investors, said Elizabeth Hartwig, a special assistant U.S. attorney and also deputy state attorney general.

Zimmerman, who was indicted last January on 51 counts of fraud, also pleaded guilty Wednesday to one count of being an accessory to mail fraud. Reached at his home in Rancho California on Thursday, Zimmerman refused to comment on his plea. He remains free on a $200,000 surety bond.

As chairman of American Principals Holdings Inc., Zimmerman oversaw 82 limited partnerships that were formed to invest in real estate, wind power, research and development and short-term financing projects. All told, more than 2,300 investors put between $80 million and $90 million into APHI deals.

According to the indictment, Zimmerman failed to disclose to investors that much of the funds collected from various partnerships were commingled, or lumped together in common accounts, in violation of securities laws.

In documents filed with the court, prosecutors alleged that APHI used new investor funds to bail out existing partnerships. Zimmerman “was engaged in an overall scheme to defraud investors in a variety of ways by failing to disclose important information or by using half-truths or by concealing the financial status of APHI partnerships generally,” Hartwig said.

In June, 1984, the Securities and Exchange Commission was granted an order transferring control of the troubled firm to a court-appointed receiver.

The SEC filed suit against Zimmerman and his APHI associate Hugh Sackett in September, 1986, alleging fraud in connection with the sale of unregistered securities and misuse of $10 million in investor funds.

Of the $48 million lost by APHI investors, about $20 million has been recovered through a class-action suit by investors, according to APHI receiver Ashley S. Orr. What remains of the recovered funds after legal fees are paid will be disbursed to 1,800 investors starting later this year, Orr said.

The recovered funds have come from settlements by various professional firms employed by APHI and later named in the class-action suit, including the law firm of Rogers & Wells and the accounting firm of Coopers & Lybrand. In addition, Crown Life Insurance--which acquired Private Ledger Financial Services, an independent network of securities brokers, from APHI--was also named in the class-action suit and later settled out of court.