O.C. Builder Goes Bankrupt : Finance: Donald Hill Williams Jr. lists more than 6,000 creditors in personal Chapter 7 filing. He faces county, state and federal criminal investigations.
Listing enough creditors to fill 992 pages, failed home builder Donald Hill Williams Jr. on Friday filed for liquidation of his personal assets.
In a filing under Chapter 7 of the U.S. Bankruptcy Code, Williams listed $210 million in debt against only $1.07 million in assets. The roll of more than 6,000 creditors includes several thousand people who invested nearly $90 million in his Anaheim Hills company, Hill Williams Development Corp.
“We put down everybody we could possibly think of who, for whatever reason, could claim Don Williams owed them something,” Newport Beach bankruptcy lawyer William Starrett said. “If you said he owed you a pen, we put that down.”
From 1989 until December, 1992, Hill Williams solicited money from the public for the stated purpose of building and selling houses. But earlier this year, the California Department of Corporations charged that the funds instead went toward keeping afloat a Ponzi scheme in which new investors covered the company’s obligations to those who came before them.
Williams’ personal bankruptcy filing was hardly unexpected. A few months ago, he plunged his company and its four fund-raising partnerships into bankruptcy liquidation. Numerous lawsuits on behalf of investors have been filed against the company since it suspended monthly dividend checks in January.
“It comes as no surprise,” attorney Tim Cohelan, who heads up a class-action suit against Hill Williams, said of the personal bankruptcy filing. “This will not affect our claims proceeding against a number of individuals we feel are secondarily responsible--such as the brokers and accountants.”
In the 2,300-page filing, Williams said his main assets are two houses with a combined value of $925,000. But Starrett described them as “underwater,” having little or no equity. Williams called his waterfront house in Newport Beach his homestead, which could exempt it from seizure.
Starrett said Williams filed for personal bankruptcy to fend off “the crush of state court litigation.” Chapter 7 relieves Williams from all claims made by lenders before the filing.
“This gives him a fresh start,” Starrett said. “Of course, some people are going to think that their claims should not be discharged, but that is for the court to decide.”
James Pollock, a San Diego attorney representing about 500 investors, said he plans to fight to keep his clients’ complaints against Williams alive. “Sure, we’ll move to make these obligations non-dischargable,” he said. “And I’m optimistic the court will grant us that because of the pervasive nature of the fraud.”
Cohelan, on the other hand, doubts that he’ll bother. “You can’t squeeze blood out of a turnip,” he said. “Our goal will be to recover investment losses from realistic sources. It was and is fraud, but we’ll leave the penalties to the district attorney’s office.”
The Orange County district attorney’s office, the state attorney general’s office, the U.S. Postal Inspection Service and the U.S. Securities and Exchange Commission have opened criminal investigations of Hill Williams. No charges have been filed.
The court-appointed trustees overseeing the estates of Hill Williams and its fund-raising partnerships said Friday’s bankruptcy filing will not affect their tasks.
“We’re not aware of any money Williams owes the corporation,” said Robert Goe, attorney to the trustee for the company’s estate. “Whether he misappropriated money from the company is another issue.”
