Founder of Failed Hill Williams Denies Intent to Defraud : Courts: Donald Williams Jr. tells bankruptcy judge that he expected to make ‘a ton of money’ for investors who fear they’ve lost $90 million in Ponzi scheme.
Donald Hill Williams Jr. acknowledged Wednesday in U.S. Bankruptcy Court here that several members of his family were on the payroll at his now-failed development company, that his mother lived in a company-owned house in Utah and that he continued to view Southern California’s real estate market with optimism even as it teetered on the edge of collapse.
But the founder and former president of now-bankrupt Hill Williams Development Corp. repeatedly stated that he never intended to defraud investors, who now fear that they have lost $90 million invested through the Anaheim Hills-based company before it filed for bankruptcy early in 1993.
“I was optimistic that we would prevail and make a ton of money at some time,” Williams said during a hearing before U.S. Bankruptcy Judge John Ryan. “I did everything I could do to protect the investors.”
Williams testified during an ongoing hearing that investors hope will lead to a court ruling that Hill Williams Development Corp. , failed because of fraud. A finding that Williams engaged in fraud, attorneys for investors said, would prohibit the businessman from using his 1993 personal bankruptcy filing to cancel millions of dollars in judgments against him.
On Tuesday, a San Diego-based accountant testified that a lengthy review of Hill Williams financial records led him to believe that the company was “operating a Ponzi scheme” by illegally using new investors’ funds to pay financial obligations to earlier investors.
David Marston, a partner with Coopers & Lybrand in San Diego, testified that only about $10 million of the $105 million that Hill Williams accumulated ever went to buy land or pay “hard” construction costs on projects related to four Hill Williams investment funds. The rest, Marston said, went to related Hill Williams companies, to pay off other investors and for projects not related to the four investment funds.
On Wednesday, a former Hill Williams chief financial officer said that, while he believed the company’s investment programs were “in technical compliance” with applicable state law during 1992, he would not have invested additional money with the company.
“I lost a lot of money in this deal personally,” Charles Rountree Jr. said. “But I believe the (investment operations) were technically in compliance.”
The hearing will continue today, then resume on Oct. 4. Ryan did not indicate Wednesday when he will rule on whether fraud was involved in the company’s failure.
