3 INVESTOR GROUPS IN CHAMPION-CAIN FRAUD CASE SETTLE

Judge needs to OK proposed $46.6M deal that would return 75% of losses to 130

Three groups of investors bilked in the Gina Champion-Cain Ponzi scheme have agreed to settle lawsuits against Chicago Title for a combined $46.65 million, which equates to recovery of about 75 percent of their net losses.

The proposed settlements, which must be approved by a judge, were revealed in filings in San Diego federal court on Thursday. The agreements cover loss claims by 130 investors, or roughly a third of all those caught up in the $400 million fraudulent liquor license loan gambit.

Approval of the agreements is not a slam dunk. A court-appointed receiver, working to recover funds from insiders and others involved in the scheme, has objected to portions of the settlements. U.S. District Judge Larry Burns has scheduled a hearing on the matter for April 5.

The receiver, Krista Freitag, has asked the court’s permission to sue Chicago Title on behalf of the business estate to recover lost funds. She claims the title company was complicit in the bogus liquor license lending scheme.

Chicago Title was the escrow company that restaurateur ChampionCain used for holding investor money she raised for to 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 her restaurants and other business interests. She pleaded guilty in July to criminal charges of conspiracy, securities fraud and obstruction of justice. Her sentencing is scheduled for March 31.

Burns has yet to give Freitag the go-ahead to pursue Chicago Title. A hearing is slated for April 12.

But since the ChampionCain Ponzi scheme collapsed in August 2019 amid legal action from the U.S. Securities and Exchange Commission, more than 10 groups of investors have sued Chicago Title in California Superior Court.

Burns has encouraged negotiations between Chicago Title and investors. Previously, the court approved a settlement with Synapse Investment Partners that paid 65 percent of net losses.

The proposed settlements filed Thursday involve the lawsuit known as

the Levin, Atherton and DH Claims cases. Levin and Atherton investors settled for more than $22.6 million each, while DH Claims agreed to about $1.4 million, according to court records.

“From what I have read, the best estimate of the losses is around $180 million” for all investors,” said Michael Kirby, a San Diego lawyer who, along with son Jason Kirby, represented the Levin group. “These are the two largest dollar settlements, and it is one-third of the whole group of investors out there. I would think the judge is going to be pleased with the settlements, and hopefully, they are going to be approved.”

Freitag calculates there were 491 investors in the Ponzi scheme, of which an estimated 349 lost a net $183 million. The rest — 142 — were deemed to have profited from the alcohol license lending program.

Altogether, Chicago Title claims it has settled $85 million in claims so far by 189 investors who lost money, according to court documents.