First Pension Investors Sue Developer, Others : Courts: The group contends in a class-action suit that Buck Johns knew of irregularities.
A group of investors in failed First Pension Corp. sued Orange County developer Buck Johns and others Friday, alleging that they knew about financial irregularities in nine real estate limited partnerships and should have done something to stop them.
The class-action lawsuit, filed in Orange County Superior Court, alleges that Johns and other defendants “knew of the ongoing commingling and diversion of investor funds” in the partnerships, which included Johns and First Pension founder William E. Cooper.
The suit contends that Johns had a responsibility to look out for the interests of limited partners when he became a general partner in a series of deals with Cooper. Instead, the suit alleges, Johns and other defendants “ratified the fraud and are therefore liable for all damages.”
Reached for comment Friday, Johns said he could not respond to the allegations because he had not seen the lawsuit yet.
“I don’t think there’s a lot of substance to the thing,” he said, adding that he has been absolved of responsibility in real estate deals with First Pension and that “we’re trying to protect investors as best we can.”
Irvine-based First Pension collapsed last April under the weight of what investors and authorities charged was a pyramid scheme in which money from recent investors was used to pay earlier investors. About 8,000 people, many of them elderly, lost a total of $136 million in the company’s failure.
The civil lawsuit names as defendants Johns, Cooper and Cooper’s longtime associates Valerie Jensen and Robert E. Lindley. Inland Group, owned by Johns, and its Cactus Valley Development Inc. subsidiary also are named.
The lawsuit, which alleges securities fraud, breach of fiduciary duties, fraud, deceit and negligence, was filed on behalf of 15 investors who put from $1,229 to $20,000 each in real estate limited partnerships being offered by Cooper and Inland Group. Damages are not specified in the lawsuit.
Cooper pleaded guilty to mail fraud and was sentenced last month to 10 years in prison and ordered to pay $73.1 million in restitution. Jensen and Lindley also have pleaded guilty to criminal charges. Lindley was sentenced to nine years in prison, and Jensen was given four years, three months.
Johns, a prominent Republican, has denied that any of his investors’ funds were commingled in the limited partnership dealings with First Pension. He said last year that if any funds were borrowed from the partnerships, they had been repaid.
