Investors Demand Answers on First Pension, Get None : Hearing: Principals in alleged fraud fail to show up for hearing, where they were to testify on what happened to $124 million.
In a raucous session punctuated by angry outbursts, about 150 investors in failed First Pension Corp. packed a U.S. Bankruptcy Court hearing room in Santa Ana on Tuesday, demanding that officials tell them where their money went.
They got little satisfaction. Trustee James Joseph could report only that a new administrator may take over the accounts of the Irvine-based pension management firm, which has filed for liquidation.
The main purpose of the hearing was to question the company’s top executives under oath. But none of the three principals--William E. Cooper, Robert E. Lindley and Valerie Jensen--attended.
“You’ve read that the principals are cooperating, but I can tell you they are not cooperating with me, despite numerous requests, and they will not talk to me,” Joseph said during a hearing that was interrupted frequently by questions shouted at him from the assembled investors and creditors. “Our knowledge is limited because people who know the story aren’t telling it.”
The Securities and Exchange Commission has alleged that First Pension’s owners operated an elaborate pyramid scheme, leading clients to invest in mortgages that did not exist. As much as $124 million of 8,000 investors’ money may have been lost to fraud and outright theft, investigators say.
Joseph said he is in discussions with California Central Trust Bank, a Costa Mesa trust company known as Cal-Trust that has about $155.7 million in assets, to take over management of the investors’ accounts.
That news, however, did little to ease investors’ concerns. Most of those in court Tuesday--especially those who invested in second trust deed mortgage pools--went away angry and frustrated.
“I feel like I’m walking out of here with no hope,” said Pia Mashour, who said she invested $60,000 through First Pension in the mortgage pools.
“I didn’t get a single answer today,” said Mary Ann Newfield, a Hollywood resident who invested $120,000 in pension money and an inheritance through First Pension’s parent company, First Diversified Financial Services.
“I feel sick,” said Newfield, who is unemployed. “I just want to get out a razor blade. This is all the money I’ve scrimped and saved in the world.”
Receivers have discovered two small insurance policies held by a First Pension affiliate that might cover some investor claims.
The court-appointed receiver for Summit Trust Services, a Denver-based firm established by Cooper to handle his clients’ money, said Summit held both a bond to cover as much as $1 million in forgery and theft claims and a $1 million policy to cover liability claims against the company’s directors and officers.
But investors who asked about those policies Tuesday were told it was still unclear who the beneficiaries would be. Further, Andrew C. Snyder, trustee for Summit Trust Services, said he has only about 30%--or about $9 million--of the estimated $32 million held by Summit for First Pension clients.
Another hearing on the case is scheduled for June 28.
