Judge Leaves Winery Under Control of TMI Operators

Citing no findings of “looting,” a judge on Wednesday declined to appoint a receiver to take over operation of a winery controlled by Teachers Management & Investment Corp., a Newport Beach fund marketed to California teachers.

“I’m not satisfied that there is looting taking place here,” Orange County Superior Court Judge Francisco F. Firmat said during a hearing packed with more than 50 spectators, mostly elderly people who had invested in real estate partnerships marketed by TMI.

Four investors filed a lawsuit in August alleging that TMI operators fraudulently lost $100 million of clients’ funds. In October, Firmat appointed Dennis B. Schmucker as manager for most of TMI’s 38 real estate partnerships. Several partnerships, including Parducci Winery Ltd., which owns a winery in Mendocino County in Northern California, were left under TMI control.

On Wednesday, the judge again left the winery under TMI control, despite a report Schmucker prepared for the court last week detailing the removal of about $578,000 of investor funds from Parducci by TMI to pay various management and other costs, “in apparent violation of the partnership agreement.”

In the report, Schmucker, a longtime real estate trouble-shooter, cited an examination made by accounting firm Kenneth Leventhal & Co. in Newport Beach. His report found a “disturbing pattern of apparent violations or distortion of the traditional transactions permitted under the terms of the partnership agreement.”

David Grant, attorney for TMI owners Maurice B. Shuman and James Martin, said in court Wednesday that the report’s finding were “not supported by fact” and “will not hold water.”

In his action, Firmat said he was “not convinced that money is being pulled out (of Parducci) for the benefits of individuals.” He is scheduled to take the matter up again on Jan. 19.