Owners Deny Charges : The Two Heads of TMI Have Different Visions of the Future

When Maurice B. Shuman and James R. Martin bought Teachers Management & Investment Corp. in 1987, its prosperity seemed assured.

The Newport Beach company owned $700 million in California real estate and had on its payroll hundreds of teachers who had invested in TMI themselves, then signed on to moonlight as sales agents for its limited partnerships.

Also, in the booming real estate market of the mid-1980s, it was unthinkable that TMI might end up where it is today--with six of its more than 40 real estate partnerships in bankruptcy, investors’ funds having lost at least $100 million of their value, and Shuman and Martin accused in a lawsuit of fraud, racketeering and conspiracy, charges that the two men vehemently deny.

When Shuman and Martin took the reins at TMI, the two men, both accountants, were also both experienced investors, having been involved in a variety of ventures from gold mines to cattle ranches. The two had complementary temperaments too--Shuman, gregarious and energetic, was the entrepreneur, while the reserved Martin was the quintessential accountant.

Martin, now 55, and Shuman, 56, met in the 1960s in Seattle, where both were accountants--Martin with Peat Marwick & Co. and Shuman with Arthur Andersen & Co.

An avid fly fisherman and photographer, Shuman grew up in the Northern California town of Martinez.

After graduating from Golden Gate College in San Francisco, he joined accounting firm Arthur Andersen & Co. He left the company in 1965 to work as an independent consultant and put together business deals in Washington and California.

Shuman made headlines in the early 1980s when a lawsuit was filed against a company he had owned since 1972.

The suit, filed in 1980 by the state of Washington’s Consumer Protection Agency, alleged that Funeral Homes of Washington, a Seattle company that sold funeral plots, had failed to abide by a state law requiring that it set aside money in a trust fund for people who had prearranged purchase of cemetery plots.

The court ordered Shuman to pay $200,000 in restitution and prohibited him from selling funeral plots again, state officials said.

Shuman said last week that the company had financial difficulties that surfaced only after he acquired it. And he portrayed the court decision as “a different interpretation of the law.”

After that venture, Shuman moved to Southern California. In the mid-1980s, he said, he sold oil and gas limited partnerships. State Department of Corporations records show that he was also president of half a dozen small companies based in Newport Beach. Among them was N.B. Equities apartment complex in San Diego and at least three fishing boat ventures.

Martin, who grew up in Seattle, took a more conservative route. After graduating from the University of Washington with a law degree, he went to New York University for a master’s degree. He joined Peat Marwick in Seattle, later transferring to the firm’s Newport Beach office.

In 1986, after 20 years with the accounting firm, Martin retired to concentrate on his personal investments, which included beef cattle and a wine importing venture.

TMI was not the first joint venture by Shuman and Martin. The two went together in 1980 to buy four scallop fishing boats that they sold in 1985. They were also investors in a Nevada gold mine that went bust, Shuman said.

But steering TMI out of its troubles may prove to be their toughest challenge yet, and the two do not necessarily agree on the best way to do that.

When asked in a recent interview if the company will still exist in five years, Martin immediately replied, “Absolutely.”

Shuman, however, took a different view: “I think we’re winding down,” he said.