Investors in real estate developer Harold E. Tobin’s housing projects alleged Monday that former bankers and contractors conspired with him to bilk them of more than $35 million.
The investors, many of whom lost their life savings, detailed their charges in an expanded lawsuit that accuses Tobin, his wife, his son, his bankers and others of racketeering and conspiracy, as well as fraud and negligence.
Investors were “lulled by assurances that Hal Tobin and his cohorts have been profitable and knowledgeable real estate developers,” only to find their funds “diverted and misappropriated,” the suit contends.
Tobin, who operated his Tobin Investment Corp. out of modest offices in Huntington Beach, could not be reached at his home in Rancho Mirage, where he and his wife, Carolyn, now live.
But his lawyer, Donald Segretti of Newport Beach, said that Tobin “is about as far from a true racketeer as one can be.” Segretti said his client did nothing intentionally wrong.
“Mr. Tobin was in business for many, many years in Huntington Beach and always tried to work with any of those individuals he did business with ethically and properly,” Segretti said. “But unfortunately, he got caught in the downturn in real estate. That’s really what happened.”
The 74-page amended lawsuit, filed in Orange County Superior Court, is the latest and furthest reaching action against the former USC fullback over his building business, which collapsed two years ago.
At the time, more than 300 investors, many of them longtime Tobin friends, were jolted by his letter informing them that his company had run out of capital and couldn’t continue building homes in Southern California and Nevada.
But in the suit, about 50 investors charge that Tobin moved funds through various projects, paid interest to earlier investors with new investor money and took money from the projects for his own use.
The suit also names as defendants Charles Hermansen and Kirk Bashore, former chairman and president, respectively, of Huntington National Bank in Huntington Beach. The bank has since been sold to First Bank & Trust of California.
The suit charges that Hermansen, who had interests in Tobin projects, and Bashore violated banking laws by allowing Tobin to transfer funds among various accounts and make large cash withdrawals of investor money. The bankers, the suit asserts, knew that Tobin was mishandling and misappropriating investor money.
Neither Hermansen, who has moved out of state, nor Bashore could be reached for comment.
State authorities revoked Tobin’s real estate license last October, and a group of federal agencies has been investigating possible criminal action against him.
Tobin has never had a plea bargain offered to him and now expects to be indicted soon, Segretti said.
Such a prospect would cheer many investors.
Beverly Teskey, 68, a Huntington Beach resident who started investing with Tobin in 1987, feels betrayed.
“At first, he did finish houses and they did pay off,” Teskey said Monday. But she and her late husband, Merlyn, were building for retirement and, persuaded by Tobin and his top salespeople, rolled their money over into new investments to provide retirement income.
“Now I have a house and a big motor home, but no income,” she said. “All I have is Social Security.”
Investor funds were supposed to be used to build homes, said James Jay Seltzer, an Emeryville lawyer for investors. But instead the money went elsewhere, Seltzer said, and little was done to the land. Now, lots are heavily encumbered and taxes are owed. Numerous investors on any one lot often can’t agree on what to do next with the property, so it sits, he said.
The “thrust of the case,” Seltzer said, is aimed at “institutional defendants"--the bank executives, contractor companies and their insurance companies.
Seltzer says he is looking for so-called deep pockets because there is little money that he can trace to Tobin.
A previous class-action failed, reportedly because plaintiffs’ lawyers couldn’t trace any of Tobin’s assets.
Tobin, who turned 57 on Saturday, is out of work. He and his wife live in a gated Rancho Mirage community overlooking a golf course that investors say Tobin plays nearly every day.
Carolyn Tobin, who still holds a broker’s license, works for a real estate firm in nearby Palm Desert. One of the Tobin’s sons, Richard, who was an executive in his father’s company, also is a real estate broker in the desert community.
(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)
What happened: In 1995, Harold “Hal” Tobin and his firm, Tobin Investment Corp., used promises of big returns to lure hundreds of people to invest in housing projects in Southern California and Nevada.
What went wrong: Tobin Investments closed abruptly in 1995 with no money to pay investors, who now accuse Tobin of diverting the funds for personal use and to pay off earlier investors. Tobin claimed his firm was a victim of the real estate downturn.
Status: A federal criminal task force is investigating Tobin and others involved with Tobin Investments. An investor lawsuit is still pending.
Source: Times reports