As officials sift through the assets of Hill Williams Development Corp., investors have been bombarded with a constant stream of : Conflicting Letters

At least once a week, Stacy Jones can expect to find in her mailbox a letter concerning the saga of Hill Williams Development Corp.

The missives began in January with the company’s abrupt announcement that it had halted monthly dividend checks to its investors. A series of vague updates followed, ending with notification that Hill Williams had filed for liquidation.

Then came an onslaught of correspondence from attorneys offering to represent the jilted investors in lawsuits. In turn, brokers who sold Hill Williams securities sent out their own letters to investors lambasting the suits that name them as defendants.

“When yet another letter arrives, I think, ‘OK, what’s the story of the hour?’ ” Jones said. “It would be pretty humorous if not for the anguish.”

After Jones’ husband died of cancer in 1989, leaving her with three young sons, she invested nearly $30,000 in Hill Williams, an Anaheim Hills home builder that said the money would go toward development. Today, the status of that investment appears bleak.

Over three years, Hill Williams raised $90 million from about 5,000 investors who were promised a 15% annual return. Last month, the state Department of Corporations charged Hill Williams with operating a Ponzi scheme in which the company used new layers of investor funds to meet commitments to previous clients.

The U.S. Postal Inspection Service, the Orange County district attorney’s office and the state attorney general’s office are conducting a joint criminal investigation of the company.

As bankruptcy trustees sift through the assets of Hill Williams--mostly raw land in the Southern California desert--investors have been left in limbo, their only information the constant stream of conflicting letters.

“It’s pretty confusing,” said Jones, 36, a Laguna Hills homemaker who recently remarried. “Everybody seems to have a finger in the pie.”

Frances Rigas has given up on trying to make sense out of the letters. “I quit reading them,” said Rigas, 74, a retired assembly-line worker who lives in North Hills in the San Fernando Valley. “I’m in poor health--I just had open-heart surgery--and all these letters shake me up. They’re confusing and annoying.”

She is especially offended by letters from the affiliate businesses that promoted Hill Williams. “How could the brokers who got us into this bad investment in the first place think we should listen to them?” Rigas asked.

Colton Financial--the Newport Beach underwriter that peddled Hill Williams’ fund-raising partnerships to brokers--and Tustin brokerage Titan Value Equities Group have sent pleas to investors to shun the lawsuits that include them as defendants. The two companies filed a joint suit against Hill Williams in February.

“Those guys have already duped us once, and now they’re trying to dupe us again by telling us not to sue them,” said Bill Thomas, 49, a Costa Mesa real estate broker who invested $85,000 of his father’s nest egg in Hill Williams.

But Titan President Frank King, who maintains that his firm was misled into recommending Hill Williams as a sound investment, said his periodic letters serve to “keep investors aware of any information we are able to obtain.”

And David Colton, president of Colton Financial, noted that on April 1 he became general partner of two of the four fund-raising partnerships, according to their prospectuses.

“If anybody should be communicating with the investors, it should be me,” he said. “I think it’s the solicitation by some of these law firms that’s unethical.”

Two law firms, Pollock & Colton in San Diego and Beigel & Sandler in Chicago, have bombarded investors with letters prompting them to join suits against Hill Williams and affiliated companies. The firms ask for retainer fees up front.

“We’re trying to address what has happened and who is responsible,” said attorney James Pollock, who has signed up about 500 investors in three separate mailings--spending thousands of dollars on postage in the process. “Handling a case like this is not an inexpensive proposition.”

He and Tim Cohelan, another San Diego attorney, both filed complaints against Hill Williams on Feb. 10 in Orange County Superior Court. Beigel & Sandler is preparing to file a suit representing about 30 investors, said Michael R. White, an attorney in the firm’s Los Angeles office.

While the California State Bar forbids attorneys from soliciting customers in person or over the telephone, the Supreme Court ruled in 1989 that lawyers have the right to conduct targeted mailings.

“It looks unseemly and unprofessional sometimes, but we can’t prohibit it,” said Riverside attorney Dallas Holmes, head of the State Bar’s discipline committee.

Cohelan’s typewriter has remained silent throughout--though not entirely by his choice. He has filed a class-action suit that, if certified by the court, would cover all investors except those who actively opt out. But the suit cannot be considered for certification until all defendants are served, and he has not yet managed to pin down Hill Williams’ president, Donald Williams Jr.

Meanwhile, Cohelan has sat on his hands while his competitors push their services. He said that sending out his own letter could jeopardize court approval of his class-action suit. “Joining the fray wouldn’t look good to the judge,” Cohelan said.

On Friday, Cohelan went to Superior Court in Santa Ana to seek a judge’s sympathetic ear. “This constant drumbeat of mail makes most political campaigns look tame,” he said. Cohelan proposed that the court “pre-certify” a letter from him explaining to investors that approval for a class-action suit is pending.

However, Roland C. Colton of Pollock & Colton argued that such a letter, “going out with the court’s blessing,” would put his firm at a disadvantage. Pollock & Colton and Beigel & Sandler assert that they can win more money for investors than would a class-action suit.

Superior Court Judge Marvin G. Weeks denied the motion, dismissing Cohelan’s contention that investors need to know about the possible option of a class-action suit.

“I’m not an advocate in this case to solicit more plaintiffs” for a class-action suit, Weeks said. “I don’t see how another letter would lessen the confusion.”