TMI, Managers to Pay Investors $4 Million Cash
Financially troubled Teachers Management & Investment Corp. and its two managers agreed Wednesday to pay investors $4 million in cash to settle accusations that they misappropriated real estate partnership funds and caused more than $200 million in losses.
The settlement, which is subject to court approval, is the first in a case stemming from an operation designed originally to help teachers throughout the state save money for retirement. The Newport Beach investment company even used a few hundred of the 20,000 investors to sell partnership interests to other teachers.
The investors accused TMI operators Maurice B. Shuman and James Martin of siphoning quarterly payments and diverting them to affiliated companies that the TMI managers owned. Shuman and Martin, who didn’t admit any liability in settling the case, have maintained that California’s plummeting real estate values--not fraud--crushed TMI’s portfolio.
TMI’s insurer, National Union Fire Insurance Co. of Pittsburgh, will pay $3.8 million, and TMI will turn over $200,000 in profits and commissions expected in the sale of various properties it still controls.
The teachers, many of whom lost their life savings, will revise their pending lawsuit to name a series of new defendants, said their lawyer, Ron Rus of Rus, Miliband, Williams & Smith in Irvine. They had invested more than $230 million to buy units in 38 ventures, mostly in vacant land.
“What money they took has long been dissipated,” Rus said. “This is a significant recovery on behalf of teachers from individuals who appear to be unable to pay any judgment.”
Shuman and Martin, however, figure they now have put their troubles behind them.
“TMI and the principals are moving on,” said their lawyer, David C. Grant of Grant & Laubscher in Irvine. “They’re pleased with the settlement, and I hope the plaintiffs are pleased.”
Since the suit was filed in August, 1994, Grant pointed out, “there hasn’t been one finding against the principals or the company.”
