Settlement OKd in Teachers’ Suit Against Firm

An Orange County judge on Wednesday approved a $4-million settlement that had been pending for the last year between Teachers Management & Investment Corp. and the company’s investors.

Under the agreement, TMI and its operators, Maurice B. Shuman and James R. Martin, will pay the money--plus the possibility of at least $400,000 more in the future--to settle a lawsuit accusing them of fraud and negligence.

The defendants did not admit any liability in settling. Most of the money will be provided by the company’s insurance carrier.

About 20,000 teachers statewide sued TMI, Shuman and Martin two years ago, alleging that the company was insolvent, that it had lost more than $100 million and that its operators had diverted funds for their own use.

The teachers won a court order appointing a receiver over most of the real estate partnerships that TMI had formed as investment vehicles.

TMI, Shuman and Martin asserted that the long recession of the early 1990s had eroded property values and caused the losses. They denied any wrongdoing.

As part of the settlement, Superior Court Judge John C. Woolley approved a $1.2-million payment to cover legal fees and costs for investors and a $400,000 reserve to fund their pending litigation against TMI’s outside law and accounting firms that have been accused of wrongdoing.

TMI will remain as the general partner of five partnerships.

Formed in 1968 by a group of educators and real estate specialists, TMI promoted itself as a way for teachers to save for their retirement by investing in real estate. Some teachers saw 30% returns before the real estate market began to decline.