First Pension Investors Settle With Accountants
California investors who lost about $136 million in fraud-ridden First Pension Corp. in Irvine settled Monday with former accounting giant Coopers & Lybrand, one of the two remaining defendants in the 6-year-old case.
Terms of the agreement were not disclosed.
The settlement came a month after Coopers, now PricewaterhouseCoopers, and partner Hal Hurwitz were found liable by a jury of misrepresenting First Pension’s financial condition, concealing material information and abetting the company’s managers in the fraud.
By agreeing to settle with about 350 plaintiffs, mostly elderly investors, Coopers & Lybrand avoided the damages phase of the trial, which was scheduled to begin Monday in Orange County Superior Court.
About 300 investors appeared in court Monday to vote to accept the settlement.
“People were hugging and smiling and obviously happy,” investor and spokesman Harry Farrar said.
Their lawyers filed a civil suit in 1998 against the former New York law firm of Rogers & Wells, which represented First Pension and affiliated companies. The firm has since merged with two other law firms.
The suit accuses Rogers & Wells of preparing false and misleading documents used in the sale of fraudulent securities, said Michael Aguirre, the chief plaintiffs’ attorney.
Another defendant, the California Department of Corporations, has reached a nonmonetary settlement. Terms will be made public within two weeks, Aguirre said. The department allegedly failed to take action against First Pension after learning that the company engaged in deceptive practices, according to the complaint.
Among the more notorious allegations in the lawsuits that followed First Pension’s collapse was one that accused executives of hiring an actress to pretend to be a corporations agency investigator. After conducting an “investigation,” the actress allegedly forged documents that supposedly exonerated First Pension of wrongdoing, alleviating employee concerns that they might be engaging in fraudulent activities.
The company’s owner, William E. Cooper of Villa Park, admitted swindling investors out of their retirement savings for a dozen years before his financial empire crashed in April 1994. He poured investor money into real estate investments, many of which turned out to be phony deals.
He was sentenced the following year to 10 years in prison and ordered to repay $73.1 million, an amount since reduced by an appellate court.
Two executives, Valerie Jensen and Robert Lindley, also were sentenced to prison terms for their roles in what became a giant Ponzi scheme, taking money from new investors to pay back earlier ones. Altogether, about 8,000 people invested with First Pension.
Lindley, an accountant at Coopers & Lybrand before joining Cooper’s operation, is serving a nine-year sentence in federal prison. He was the liaison with Hurwitz, whose firm worked on dozens of auditing and accounting matters for Cooper’s companies.
Cooper used part of his ill-gotten money to make campaign contributions to California Republican leaders, including former Gov. Pete Wilson and Rep. Christopher Cox (R-Newport Beach). Wilson later refunded $8,000 in contributions Cooper made to his gubernatorial campaign. Cox returned $2,000 donated to one of his congressional elections.
