The court-appointed receiver for 30 partnerships that once made up Teachers Management & Investment Corp. has sued the financially troubled company and its accountants and lawyers for $50 million.
The lawsuit filed by Dennis B. Schmucker, the receiver who controls 30 of the Newport Beach investment company's limited partnerships, accuses TMI of fraud and its professional advisers of negligence and breach of fiduciary duties.
Others named in the suit, filed in Orange County Superior Court on Wednesday, are the Big 6 accounting firm of KPMG Peat Marwick and the Newport Beach law firm of Bruck & Perry.
Peat Marwick performed year-end audits of the real estate partnerships, and Bruck & Perry worked on legal matters involving the partnerships.
TMI was set up to help teachers throughout the state save for retirement by investing in real estate partnerships. Its managers, Maurice B. Shuman and James Martin, have maintained that California's plummeting real estate values, not fraud, hurt TMI's portfolio.
But investors accused the pair in a separate lawsuit filed in August, 1994, of siphoning their quarterly payments and profits for other ventures. Last month, Shuman and Martin settled that class-action suit for $4 million without admitting any liability.
In Schmucker's suit, the receiver asserts that "Peat Marwick assisted, participated in and aided and abetted the fraudulent scheme" with its audits of the various TMI real estate partnerships. Martin is a former partner with Peat Marwick.
Peat Marwick officials could not be reached for comment. Neither could TMI's attorneys.
According to the suit, Peat Marwick "knew, recklessly disregarded or should have known that the market value of California real estate had dropped precipitously, and yet the real estate held by the partnerships was reflected at cost in their financial statements."
On Thursday, the investors' class-action lawsuit was amended to include Peat Marwick, Bruck & Perry and Metrobank in Los Angeles as the new owner of TMI's bank, National Bank of Long Beach.
"The responsibility they have cannot be escaped," said Ronald Rus of Irvine, attorney for the investors.