Head of Bankrupt Hill Williams Is Interrogated by Angry Investors : Finance: On the hot seat at a meeting of creditors, Donald H. Williams Jr. defends his firm, now under investigation.

Donald H. Williams Jr., president of a company that raised $90 million from the public before filing for bankruptcy in March, had to answer to investors Tuesday at a meeting of creditors. And their questions were not friendly.

“Why did you continue soliciting funds right up to the brink of insolvency?” one man demanded.

Williams claimed that he had “a number of promising things going on” shortly before his company filed for liquidation under Chapter 7 of the U.S. Bankruptcy Code. “I had no intention of going out of business,” he said.

About 200 investors gathered at Santa Ana City Hall to interrogate the man who once seemed like their financial guardian angel. Hill Williams Development Corp. promised a 15% annual return on investors’ money, purportedly used to buy land and build houses.

From 1989 through 1992, the Anaheim Hills company attracted about 5,000 investors through four fund-raising partnerships, which also filed for liquidation earlier this year.

On Monday, Williams addressed Hill Williams Development creditors, including lenders who hold first deeds of trust on the 26 properties that the company purchased while raising public funds.

Tuesday’s meeting involved the partnerships’ creditors: investors, most of them elderly, who have second deeds of trust on the properties. Another meeting of the partnerships’ creditors will take place today.

In what appeared to be one of Williams’ more uncomfortable moments Tuesday, a woman insisted that he had personally told her that her money would be secured with first deeds of trust. After denying the charge, Williams smiled and shrugged.

The California Department of Corporations has accused Williams of operating a Ponzi scheme in which investor money was used to pay his company’s overhead and to provide returns to earlier investors rather than to develop real estate. The department is conducting a joint investigation of Hill Williams Development with the U.S. Postal Inspection Service and the Orange County district attorney’s office.

Williams is the subject of several civil lawsuits, including a class-action suit. No criminal charges have been filed.