State Official and Cox Worked for First Pension : Employment: Department of Corporations commissioner and O.C. congressman once did legal analysis for now bankrupt firm.
U.S. Rep. Christopher Cox and Gary Mendoza, state Department of Corporations commissioner, once performed legal work for a company that operated one of Orange County’s longest running and most elaborate investment scams.
Though Cox and Mendoza both said Friday that they were unaware at the time that the company, First Pension Corp. in Irvine, was involved in any fraudulent activities, the men admitted to assisting in legal duties on behalf of the pension management company while they were attorneys at the Latham & Watkins law firm in Newport Beach during the mid-1980s.
First Pension was accused by the Securities and Exchange Commission in May of losing $121.5 million of investors’ money in what has been described by the U.S. attorney’s office as a Ponzi scheme--where money from new investors is used to pay earlier ones.
Cox (R-Newport Beach) worked for Latham & Watkins from 1978 to 1986 before leaving to become a lawyer on the White House staff. He said he performed legal analysis on a plan to sell investment shares that was later abandoned.
“At the time, I was simply talking to them about how it (the investment sale) would be done,” Cox said.
In an interview from his Washington office Friday, Cox said he was “astonished” when he first found out about First Pension’s misdeeds, which originally came to light in April.
The company, which had an estimated 8,000 clients and accounts valued at as much as $350 million, filed for bankruptcy liquidation on April 22.
William E. Cooper, the once prominent Orange County businessman who owned First Pension, pleaded guilty Aug. 1 to two counts of federal mail fraud in relation to the scheme. Fellow First Pension operators Valerie Jensen and Robert E. Lindley have also admitted to a federal judge that beginning as far back as 1982 they controlled an elaborate pyramid scheme that misled clients into investing in nonexistent mortgages. The three will be sentenced for their crimes on Nov. 10; a scheduled Oct. 6 court date was recently rescheduled.
Mendoza, whom Gov. Wilson appointed as Department of Corporations commissioner in July, 1993, said Friday that while he was an associate at Latham & Watkins in 1986 he performed work for another First Pension-related offering.
As corporations commissioner, Mendoza is responsible for leading his state agency in investigating and regulating California’s corporations.
Mendoza said he performed legal analysis on a proposed $50-million public offering that was a designed as an investment pool of first trust deed and second trust deed mortgages. The name of the First Pension-related investment fund was BMF Mortgage Income Fund.
That offering, filed with the Securities and Exchange Commission on Sept. 29, 1986, raised only about $5 million, according to attorney Don Henry, the court-appointed receiver who now is tracking the remaining assets.
“I was very surprised when I starting reading about First Pension--as surprised as many of the investors,” Mendoza said. “I did most of the grunt work on it (BMF). There was nothing out of the ordinary concerning that partnership. There was nothing I recall being unusual.”
As an attorney with Latham & Watkins, Mendoza said he worked on drafting documents for BMF Mortgage Income Fund, one of the few First Pension offerings that was filed with the SEC, if not the only one. Most of the mortgage pool investments sold by First Pension companies were private offerings and did not need to be registered, according to the SEC.
Victor Antola, a partner with Latham & Watkins in Los Angeles, said Friday the First Pension-related investment offering was a long time ago and said he was not aware of any problems with it. Latham & Watkins is currently representing a former First Pension principal in his federal criminal case.
