Advertisement
YOU ARE HERE: LAT HomeCollectionsSettlements

Hill Williams Decree Puts End to State Lawsuit : Settlement: Developer agrees to never work at a stock brokerage or financial consulting firm. Authorities had originally demanded restitution to 5,000 investors.

September 04, 1993|SUSAN CHRISTIAN | TIMES STAFF WRITER

SANTA ANA — Without admitting or denying guilt, Donald Hill Williams Jr. Friday signed a consent decree that puts to rest a civil lawsuit brought by the California Department of Corporations accusing him of operating a multimillion-dollar scam.

In contrast to the seriousness of the state's charges--originally lodged against Williams last March--the settlement appears modest.

Williams agreed to never work at a stock brokerage or financial consulting firm, although his company had used outside brokerages to raise money for his development funds. However, Williams would still be allowed to sell securities through limited partnerships--the same method he used to raise $90 million from the public, allegedly to build homes, before filing for bankruptcy liquidation earlier this year.

While it doesn't prevent Williams from trying, however, the injunction could hinder his future efforts to sell securities, considering it is public information and is easily obtainable from the state Superior Court's registry.

The injunction does not preclude other agencies from pursuing criminal charges against Williams, who is is under investigation by the U.S. Securities and Exchange Commission, the U.S. attorney's office and the Orange County district attorney's office.

The Corporations Department does not have authority to press criminal charges, but can refer cases for criminal prosecution.

Though the settlement does not rule out other government actions, it means one less lawsuit hovering over Williams--who faces a half a dozen investor claims, including a class-action suit.

It also saves the Corporations Department from getting involved in what could have been a long and costly trial.

The agency's lawsuit against Williams demanded financial restitution for the 5,000 people who invested in his Anaheim Hills company, Hill Williams Development Corp. That request was dropped because the company and its partnerships petitioned the bankruptcy court to liquidate its assets at about the same time the Corporations Department filed its suit.

"The determination of the distribution of assets will be made in bankruptcy court," said Mark Harman, a department attorney.

During the 3 1/2 years it collected money from the public--promising investors an annual return of 15%--Hill Williams built only about 50 houses, instead of the hundreds possible with the amount of money raised. The company would buy land in Riverside and San Bernardino counties for little money down, then attach a second trust deed under a partnership's name.

Williams abruptly halted monthly distribution checks to investors in January, blaming the poor real estate market for his company's problems. Two months later, the Corporations Department accused him of running a Ponzi scheme, in which new investor money is used to pay off obligations to previous clients.

The developer's attorney, William C. Starrett of Newport Beach, said Williams feels vindicated by the settlement.

"He is delighted," Starrett said Friday. "We believe this is the first in what will be a series of decisions that justify Don's business dealings. It is the fresh start we were looking for."

Advertisement
Los Angeles Times Articles
|
|
|