Three groups of investors defrauded in the Gina Champion-Cain Ponzi scheme have agreed to settle the Chicago Title lawsuit for a combined $ 46.65 million, which is equivalent to recouping about 75 percent of their net losses.
The proposed settlements, which must be approved by a judge, were revealed Thursday in documents filed in federal court in San Diego. The deals cover the claims of 130 investors, or about a third of all those involved in the fraudulent $ 400 million liquor license loan bet.
Approval of agreements is not a slam dunk. A court-appointed receiver, working to recover funds from insiders and others involved in the scheme, opposed parts of the settlements. U.S. District Judge Larry Burns has scheduled a hearing in the case for April 5.
The receiver, Krista Freitag, applied to the court for permission to sue Chicago Title on behalf of the company’s estate to recover the lost funds. She claims that the securities company was complicit in the bogus liquor license loan program.
Chicago Title was the escrow company that restaurateur Champion-Cain used to hold investor money it raised for the purported purpose of making short-term, high-interest liquor license loans.
The loans were never made and Champion-Cain was accused of funneling the money into his restaurants and other business interests. She pleaded guilty in July to criminal charges of conspiracy, securities fraud and obstruction of justice. His sentencing is scheduled for March 31.
Burns has yet to give Freitag the green light to pursue the Chicago title. A hearing is scheduled for April 12.
But since the Champion-Cain Ponzi scheme collapsed in August 2019 amid a lawsuit by the United States Securities and Exchange Commission, more than 10 investor groups have sued Chicago Title in court. superior of California.
Burns encouraged negotiations between Chicago Title and investors. Previously, the court had approved a settlement with Synapse Investment Partners that paid 65% of net losses.
The proposed settlements filed Thursday involve the lawsuit known as the Levin, Atherton and DH Claims cases. Investors in Levin and Atherton have settled for more than $ 22.6 million each, while DH Claims has accepted around $ 1.4 million, court records show.
“From what I’ve read, the best estimate of losses is around $ 180 million” for all investors, “said Michael Kirby, a San Diego lawyer who, along with his son Jason Kirby, represented the Levin group. “These are the two biggest settlements in dollars, and it’s a third of the entire investor group. I think the judge will be happy with the rules and hopefully they will be approved. “
Freitag calculates that there were 491 investors in the Ponzi scheme, of which around 349 lost $ 183 million net. The rest – 142 – were deemed to have taken advantage of the liquor license loan program.
In total, Chicago Title says it has so far settled $ 85 million in claims by 189 investors who have lost money, according to court documents.