First Pension Investors Sue Developer, Others - Courts: The group contends in a class-action suit that Buck Johns knew of irregularities.
By CHRIS WOODYARD, TIMES STAFF WRITER 
March 18, 1995
SANTA ANA — A group of investors in failed First Pension Corp. sued Orange County developer Buck Johns and others Friday, alleging that they knew about financial irregularities in nine real estate limited partnerships and should have done something to stop them.
The class-action lawsuit, filed in Orange County Superior Court, alleges that Johns and other defendants "knew of the ongoing commingling and diversion of investor funds" in the partnerships, which included Johns and First Pension founder William E. Cooper.
The suit contends that Johns had a responsibility to look out for the interests of limited partners when he became a general partner in a series of deals with Cooper. Instead, the suit alleges, Johns and other defendants "ratified the fraud and are therefore liable for all damages."
Reached for comment Friday, Johns said he could not respond to the allegations because he had not seen the lawsuit yet.
"I don't think there's a lot of substance to the thing," he said, adding that he has been absolved of responsibility in real estate deals with First Pension and that "we're trying to protect investors as best we can."
Irvine-based First Pension collapsed last April under the weight of what investors and authorities charged was a pyramid scheme in which money from recent investors was used to pay earlier investors. About 8,000 people, many of them elderly, lost a total of $136 million in the company's failure.
The civil lawsuit names as defendants Johns, Cooper and Cooper's longtime associates Valerie Jensen and Robert E. Lindley. Inland Group, owned by Johns, and its Cactus Valley Development Inc. subsidiary also are named.
The lawsuit, which alleges securities fraud, breach of fiduciary duties, fraud, deceit and negligence, was filed on behalf of 15 investors who put from $1,229 to $20,000 each in real estate limited partnerships being offered by Cooper and Inland Group. Damages are not specified in the lawsuit.
Cooper pleaded guilty to mail fraud and was sentenced last month to 10 years in prison and ordered to pay $73.1 million in restitution. Jensen and Lindley also have pleaded guilty to criminal charges. Lindley was sentenced to nine years in prison, and Jensen was given four years, three months.
Johns, a prominent Republican, has denied that any of his investors' funds were commingled in the limited partnership dealings with First Pension. He said last year that if any funds were borrowed from the partnerships, they had been repaid.
 

O.C. Developer Is Named in $10-Million Fraud Suit - Courts: Buck Johns has denied wrongdoing in land deals with owner of failed First Pension Corp. of Irvine.
By DEBORA VRANA, TIMES STAFF WRITER 
May 13, 1995
SANTA ANA — A $10-million civil suit filed this week by a court-appointed receiver charges that Orange County developer Buck Johns committed fraud and deceit in connection with the commingling of funds between his land deals and companies run by the owner of failed First Pension Corp.
The suit, filed Thursday in Orange County Superior Court, alleges that Johns, who was a general partner in 10 land deals with First Pension founder William E. Cooper, "made intentional false representations, concealed facts and failed to disclose facts."
The suit accused Johns of engaging in transactions that posed a conflict of interest, failing to disclose the conflicts to investors with money in his land partnerships, and not supervising the partnerships' books to ensure that funds were safeguarded.
Filed by Woodland Hills attorney Donald Henry, the suit said Johns "was, or should have been, aware of . . . diversions to and from" the Johns-Cooper land partnerships and various companies operated by Cooper.
Henry was appointed by the court last July as a receiver to examine all deals made by Cooper. His appointment came after the U.S. Securities and Exchange Commission and the U.S. attorney's office in Los Angeles accused Cooper of engineering a massive pyramid scheme that a year ago left thousands of mostly elderly investors with losses of $136 million from phony mortgages. Most of those investors used Irvine-based First Pension to invest their retirement money.
Cooper, who founded First Pension, pleaded guilty to the scheme last summer. He was sentenced in February to 10 years in prison and ordered to repay $73.1 million.
Henry said Friday that more than $2 million was diverted from land partnerships jointly controlled by Johns and Cooper, although some of it was later returned.
More than 400 investors, Henry said, put about $7 million into the land deals controlled by the two men. The deals raised money between 1987 and 1990 to develop raw land. The properties cover nearly 100 acres, mostly in Moreno Valley.
Although most of the money raised from investors was used to buy land, Henry alleged that some was commingled with the accounts of Cooper's pension management firm.
Johns, one of Orange County's most influential citizens and a Republican powerbroker, did not return phone calls seeking comment on Friday. In the past, he has denied any wrongdoing. Johns previously said that his business relationship with Cooper had been "straightforward," that Cooper "had the checkbook," and that he was "just as shocked as anyone" when First Pension began to unravel. He previously denied any knowledge of commingling.


First Pension Land Fund Role Denied by O.C. Builder
By DEBORA VRANA, TIMES STAFF WRITER 
October 14, 1994
NEWPORT BEACH — Millions of dollars invested in land deals controlled by Orange County developer Buck Johns and the owner of scandal-plagued First Pension Corp. were improperly diverted through the pension management firm, a court-appointed receiver has found.
Receiver Donald W. Henry said he will present his findings in federal court in the next few months after he completes his investigation of investments run by First Pension founder William E. Cooper, who for more than 10 years operated an elaborate pyramid scheme with his clients' retirement funds.
Johns, one of Orange County's most influential citizens and a Republican power broker, vehemently rejects Henry's allegations, and neither the receiver nor any government authority has accused Johns of wrongdoing.
"It is our opinion that no funds were commingled," Johns said. "Those funds, if they were commingled, were then replaced back into the partnership accounts."
Johns, 52, described his business relationship with Cooper as "straightforward."
"Cooper had the checkbook," Johns said in an interview Thursday. "We had no access to any of those funds."
Clients of Orange-based First Pension lost $121.5 million by investing in mortgages that never existed. Cooper agreed in August to plead guilty to two counts of federal mail fraud.
Henry, a Woodland Hills attorney appointed by government securities regulators in July to examine investments controlled by Cooper, estimated that more than $2 million was diverted from partnerships jointly controlled by Johns and Cooper, though some of the money was subsequently returned. The receiver would not say where the money was transferred or who moved it.
"The Buck Johns partnerships may have liabilities to other investors in the First Pension case," said Henry, who has 20 years' experience as a specialist in real estate-related bankruptcies. "Some of the investor monies put into his partnerships were misdirected and taken by other Cooper entities."
More than 400 investors, Henry said, put about $7 million into land deals controlled by the two men and sold from 1987 to 1990. The properties involved cover nearly 100 acres, mostly in Moreno Valley.
While most of the cash raised from investors for the partnerships was used to buy land, other money originally set aside to pay bills and conduct other operations was diverted, Henry said.


Fraud Charges Filed in O.C. Pension Scam - Crime: Three to plead guilty in alleged $121.5-million mortgage pool scheme operated by Irvine-based firm.
By DEBORA VRANA, TIMES STAFF WRITER 
July 26, 1994
Federal prosecutors filed mail fraud charges Monday against the three operators of First Pension Corp., the failed Irvine pension management company accused of running a $121.5-million Ponzi scheme. The three, who have already agreed to plead guilty, face maximum prison terms of 10 years and fines of up to $500,000 each. They will be arraigned Monday in U.S. District Court in Los Angeles on two counts of mail fraud each.
The charges were filed against against businessman William E. Cooper, 50, of Villa Park and his two long-term associates: Robert E. Lindley, 51, of Laguna Niguel and Valerie Jensen, 47, of San Juan Capistrano.
"This is one of the longest-running and most elaborate schemes I have ever seen," Assistant U.S. Atty. John Libby said. "To a certain extent they had to fool their own employees as well as investors."
Also Monday, the U.S. Securities and Exchange Commission asked the court to appoint Donald W. Henry, a Woodland Hills attorney, as receiver for the mortgage pools operated by First Pension and other related companies. The receiver would refund any recovered money to investors.
Attorneys for the three said their clients are cooperating with authorities and will plead guilty at next week's arraignment. Cooper is represented by Los Angeles lawyer Robert C. Bonner, former chief of the federal Drug Enforcement Agency and onetime federal judge.
Officials allege that, beginning in 1982, the three operated an elaborate pyramid scheme that misled clients into investing in mortgages that did not exist. An unknown number of First Pension's 8,000 clients lost $66.7 million they had invested and another $54.8 million in interest lost.
The two counts of mail fraud relate to quarterly account statements mailed to First Pension clients on Dec. 31, 1993, and March 31, 1994, U.S. attorneys said.
As an example of the level of deceit, prosecutors allege that in 1990 Cooper hired an actress to portray an auditor for the state Department of Corporations after an employee confronted Cooper with charges that no trust deeds existed in the mortgage pools.
The actress was given a phony Corporations Department business card and then sat in the offices of Vestcorp Securities, the brokerage arm of First Pension, where she pretended to review files for three weeks, U.S. attorneys said. A letter was then drafted on bogus Corporations Department stationery stating that the files were in order.

3 First Pension Principals Plead Guilty to Fraud
By DEBORA VRANA, TIMES STAFF WRITER 
August 02, 1994
LOS ANGELES — Expressing "incredible remorse" at cheating thousands of investors out of $121.5 million in retirement funds, prominent Orange County businessman William E. Cooper on Monday acknowledged that the fraud engineered by his company began only one year after it was founded in 1982.
Losses at First Pension Corp. in Irvine were so substantial, Cooper said, that "it was clear we had violated laws and were violating laws and at that point we invested in other businesses in an attempt to bring money back into the business."
While exhibiting little emotion after pleading guilty to fraud before U.S. District Judge John G. Davies, Cooper, 50, broke down and cried in a courthouse hallway after the proceedings. His voice breaking as he removed his glasses to clumsily wipe tears from his eyes, "I feel incredibly bad."
"It's something you can't live with," said Cooper, who until recently was a politically connected real estate investor and Villa Park resident who was a frequent contributor to Republican political campaigns.
Cooper and his two longtime business partners, Robert E. Lindley, 51, of Laguna Niguel and Valerie Jensen, 47, of San Juan Capistrano, each entered guilty pleas to two counts of mail fraud in connection with what has been described as one of Southern California's most elaborate and longest running investment scams.
The three were accused of creating a pyramid scheme that bilked many of First Pension's 8,000 clients out of $66.7 million in direct investments and $54.8 million in interest that would have otherwise accrued. Investors were enticed into phony second trust deed mortgage funds, which the defendants admitted Monday were shams from the start.
Each faces prison terms of up to 10 years and a $500,000 fine. Davies scheduled sentencing of the trio for Oct. 6, when he will decide how much restitution each must make to investors.
A handful of former clients who came to watch the proceedings were far from sympathetic.
"I would like to see him dragged away in handcuffs," said Joseph Elia, 63, of Redondo Beach, who blames Cooper for the $100,000 he said he lost through First Pension. "What I can't understand is how can he live now? These actions must be burned into his conscience forever, if he has one."
Lindley, a former accountant, told the judge that the three principals continued to operate the scheme in an attempt to become profitable and return money to investors. He said he was pleading guilty "because I was involved in this scheme to hide losses from investors. I'm sorry I did it."