TUSTIN — An Orange County brokerage that raised millions of dollars for failed Hill Williams Development Corp. has agreed to settle a lawsuit brought by 1,000 of the fraud-ridden Anaheim company's investors.
Terms of the settlement are being kept secret, but sources said that Titan Value Equities Corp. will pay about $1 million to the investors, whose losses in the Hill Williams debacle total $33 million.
The investment company, which sold about $30 million worth of limited partnership stakes for Hill Williams, will borrow the money for the settlement from a Florida brokerage, said Titan attorney Stephen McGinnis.
In return, the lender, Mutual Service Corp., will receive an option to buy a minority interest in Titan, McGinnis said. Mutual Service is a subsidiary of Pacific Mutual Life Insurance Co. in Newport Beach.
Hill Williams Development raised almost $90 million from investors and promised to use the money to build homes in Southern California. The company collapsed in 1993, and subsequent investigations have shown that founder Donald Hill Williams was running a Ponzi scheme, using new investors' money to pay dividends to earlier investors.
James E. Pollock, the San Diego attorney representing 600 of the investors who settled with Titan, said his clients are unlikely to ever recover more than 15% of their investment, despite huge judgments against Hill Williams and others involved in the case.
In all, he said, his clients and the 400 investors represented by another San Diego law firm have won judgments and settlement agreements for almost $100 million.
Many of the parties, including Hill Williams, are in bankruptcy and one, Irvine investment broker David A. Colton, is appealing a judgment.
The investors represented by the two San Diego law firms account for about 25% of the 4,200 people who bought into income funds that loaned their money to Hill Williams Development, allegedly for construction projects.
A lawsuit by the Bankruptcy Court trustee for the funds is scheduled for trial May 6. A lawsuit against Titan by the trustee overseeing the liquidation of the company was dismissed recently.