About one year ago, the United States Securities and Exchange Commission sued former San Diego restaurateur Gina Champion-Cain for fraud in connection with an investment scheme she established. Now, the receiver in the case is requesting court permission to pursue Chicago Title to recover funds that Champion-Cain allegedly deposited with the company.
The SEC lawsuit alleges that Champion-Cain sold shares in a fund that was set up to loan money at high rates of interest to liquor license applicants in San Diego. However, instead of making the loans, Champion-Cain kept most of the investors’ money for herself. The receiver in the case is acting on behalf of two companies owned by Champion-Cain whose shareholders are trying to recover a portion of their investors.
The SEC complaint alleges that Champion-Cain used Chicago Title as a purported escrow agent for holding onto investor funds while she raised money from other investors. Instead of depositing investor funds into fiduciary accounts managed by Chicago Title, Champion-Cain used one her accounts at Chicago Title and that she withdrew money from that account with the full knowledge and agreement of escrow officers at Chicago Title. The receiver is claiming that the actions of the Chicago Title officials are fraudulent and that people who have claims against Champion-Cain have similar claims against Chicago Title. The hearing on the receiver’s motion for leave to sue Chicago Title will be held on July 13.
Individuals and corporations often find themselves enmeshed in schemes such as this one. Sometimes, the fraudulent nature of the various transactions does not become obvious until thousands of dollars have been “invested” and cannot be recovered. In such cases, an experienced business law firm can provide a helpful analysis of the various transactions and advice on the best method of recovering the funds.