First Pension Receiver Sues Ex-Lawyers : Investment: Suit charges U.S. Rep. Christopher Cox, state Commissioner Gary Mendoza of aiding Irvine firm in fraud case.


The court-appointed receiver for now-defunct First Pension Corp. has sued Orange County Congressman Christopher Cox and California Department of Corporations Commissioner Gary Mendoza, charging that they helped cover up the company's fraudulent activities when they were attorneys representing the firm in the 1980s.

In twin suits filed late Wednesday in Los Angeles County Superior Court, receiver Donald W. Henry accused Cox, Mendoza, two large law firms and four other lawyers of helping William E. Cooper, founder of the First Pension in Irvine, and his top two cohorts plan the investments that eventually bilked investors out of $136 million between 1984 and 1990.

Cooper, Robert Lindley and Valerie Jensen pleaded guilty to felony charges and were sentenced earlier this year to prison terms.

The lawsuit accuses Cox (R-Newport Beach) of deliberately misrepresenting facts about the company and its investments and "attempting to use his influence with more senior officials at the DOC [Department of Corporations] to circumvent the objections" being raised in 1985 within the department.

The suit also alleges that Mendoza represented one of First Pension's officers in a Securities and Exchange Commission investigation and along with Cox and others, "knew, consciously avoided knowing or [was] reckless in not knowing of the underlying scheme and other material facts which should have been disclosed to investors."

Cox on Thursday denied the charges, calling them a "baseless rehash," and said they were politically motivated.

"The purpose of including me as a defendant," he said in a telephone interview from Washington, "is to exploit my name and reputation to attract press attention in hopes of embarrassing the other parties and thus extorting settlements from them."

Mendoza did not respond Thursday to repeated requests for comment.

Mendoza and Cox were lawyers at the firm of Latham & Watkins, which was also named in the suit. Spokesmen for the Los Angeles firm and for New York-based Rogers & Wells, named in the second suit, also called the charges groundless.

The suits seek the total amount defrauded from investors, plus $500,000 in fees that Cooper paid to the law firms.

The Cox suit quotes liberally from a letter Cox wrote to the Department of Corporations on Feb. 22, 1985, in support of a proposed First Pension Corp. investment offering.

In the letter, Cox characterizes the proposed investment as "over collateralized" and "low risk."

Cox also argued against a proposal for an independent appraisal of First Pension assets, claiming that the cost would "unreasonably harm the investors' rate of return."

Cox, however, said that the letter, written in 1985, referred to an offering that wasn't scheduled to be made until 1987.

"These statements were not about past or current transactions but proposed future transactions," he said. "My former law firm was engaged for a 1987 offering [by First Pension Corp.] and my last legal work on the draft proposal was in December, 1985.

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