Lawsuit Seeks to Follow the Money
About 1,000 investors who lost their life savings in the collapse of Hill Williams Development Corp.--which became one of Orange County’s costliest real estate scams--have filed a lawsuit accusing one of the firm’s former promoters of hiding assets in order to avoid a $23-million judgment.
The suit, filed in Orange County Superior Court, contends that David A. Colton fraudulently shifted his assets, including $4 million in ill-gotten profits, to his wife and several real estate companies after it became clear that Hill Williams was starting to unravel.
Colton, an Orange County developer, eventually filed for bankruptcy, but a judge nevertheless ordered him to repay more than $23 million to investors. To date, no money has been repaid, according to the suit.
Neither Colton nor his wife, Linda, responded to phone messages left Thursday at their Irvine-based firm, Colton Co.
The suit contends Colton has resumed his real estate career and now controls stakes in several valuable commercial buildings in Orange County. Investors hope to seize his interests in the real estate, according to Roland Colton, the investors’ attorney, who is not related to David Colton.
David Colton “is attempting to camouflage and hide his identity in his new empire,” the attorney said.
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About 4,000 investors, mostly Southland senior citizens, lost nearly $90 million by investing in the Hill Williams funds, which collapsed in 1993. Investors were promised 15% returns. Their investments were supposed to be used to build affordable housing.
The company’s founder, Donald Hill Williams Jr., was sentenced last year to 37 months in prison for running a Ponzi scheme, in which he used money from new investors to pay those who invested earlier.
No criminal charges were filed against Colton.
The suit also seeks to nullify a 1992 postmarital property agreement between the Coltons, in which David Colton transferred ownership of properties in Corona del Mar, Newport Beach and Huntington Beach to his wife.
“David A. Colton, in order to conceal and insulate his property from collection, transferred away virtually (all) of his assets, including his personal property, community property and the $4 million in ill-gotten profits from his fraudulent investment schemes, keeping only debt and worthless investments,” the lawsuit alleges.
Colton also transferred some assets to a variety of companies and real estate endeavors, which he and his wife continue to control. They include the ownership of several office buildings in Newport Beach and Irvine, the suit contends. The investors are seeking to attach the assets of those entities and appoint a trustee to oversee their operation.
Among the other companies named in the suit are Colton Capital Corp., Colton Real Estate Corp., Integrity Fund I and II, Provider Fund, Advantage Fund, and Discovery Fund.
