First Pension Investors Hear More Bad News : Bankruptcy: Trustee tells raucous meeting that principals are not cooperating. Only 30% of funds in Denver trust located.

In a raucous session punctuated by angry outbursts, about 150 investors in failed First Pension Corp. packed a U.S. Bankruptcy Court hearing room here Tuesday to demand that officials tell them where their money went.

The investors received little satisfaction. Trustee James Joseph could report only that a new administrator may take over the accounts of the Irvine pension management firm.

A court-appointed overseer of Denver-based Summit Trust Services, a company created to handle the funds invested by First Pension’s clients, told investors that only about $9 million, or less than 30% of an estimated $32 million in its care, could be located.

The main purpose of Tuesday’s hearing had been 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,” said Joseph, who 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 alleges 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. In all, First Pension had accounts once valued at about $350 million.

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 become custodian of the First Pension 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 operated by First Pension’s parent company, First Diversified Financial Services Inc. in Irvine, went away angry and frustrated.

“I didn’t get a single answer today,” said Mary Ann Newfield of Hollywood, who said she had invested $120,000 in pension money and an inheritance through First Diversified.

“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.”

Investor James Desselle, 69, said he and 20 other investors in the allegedly fraudulent mortgage pools expect to hire an attorney to represent them in a joint lawsuit. Desselle said the attorney wants to charge him 4% of his original investment and an additional 30% of what is recovered.

Desselle, who had $90,000 invested in the mortgage pools, said he is now living on social security, which is about $900 a month.

“We’ve decided to get our own attorney. We’re all retirees and we need this money,” Desselle said.

Some investors had flown in from as far way as Northern California, Arizona and Colorado. Patricia Wuertzer traveled from Seattle to determine what happened to $45,000 she had in a self-directed IRA.

“At this point I am just puzzled,” Wuertzer said. “I just want to get some answers.”

First Pension filed Chapter 7 bankruptcy on April 22, just as many of its investors discovered that substantial sums were missing from their accounts. The day before the filing, Colorado banking regulators had seized Summit Trust Services.

Andrew C. Snyder, trustee for Summit, came to the hearing to ease investors’ concerns. He asked investors to remain patient, telling those who had not put money into the mortgage pools that he would try to assist those who wanted changes in their accounts.

“If people wish to conduct business on those accounts, we will try to conduct business on those accounts,” Snyder said, adding that he did not want to be deluged with transfer requests since he had a very small staff of employees. He suggested investors continue to contact him by mail.

Snyder said Summit held both a financial institution bond to cover up to $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.

A second bankruptcy court hearing is slated for June 28.