Editorials

Oakland exec in PinnFund case to settle

The Associated Press
Saturday December 08, 2001

SAN DIEGO — An executive with an investment fund accused of bilking investors has agreed to forfeit nearly $47 million in cash and assets in an agreement with regulators. 

James L. Hillman reached the tentative agreement with the Securities and Exchange Commission as part of civil proceedings against PinnFund USA, officials said Thursday. 

“Basically, we get everything except some very limited stuff,” said Charles La Bella, a former federal prosecutor appointed by the court to recover PinnFund assets. “It’s a very good deal for us. The bottom line is it provides money more quickly for investors.” 

The settlement, which still must be approved by SEC officials in Washington D.C. and a federal judge in San Diego, is the largest to date against Pinnfund, the Carlsbad-based company accused of bilking 160 investors out of $330 million, according to the SEC. 

Hillman, who was president of the fund and its second-highest ranking executive, is cooperating with a separate criminal investigation into PinnFund and its chief executive officer, Michael Fanghella, said Hillman’s lawyer, Pamela Naughton. 

Hillman agreed to turn over $15 million to $17 million in cash and to liquidate private investments valued at $8 million to $10 million. He will also turn over as much as $20 million in federal tax refunds he is seeking for taxes paid on commissions from PinnFund. 

In exchange, he will retain his home in Oakland, his retirement account, a 1993 Ford Explorer and a 1996 Volvo sedan. 

PinnFund allegedly promised investors 17 percent returns from investments it said would be used to fund mortgage loans for borrowers with poor credit. The SEC claims the money was never loaned, but used to fund Fanghella’s lavish lifestyle, which included the purchase of a $1 million yacht, luxury cars, and expensive gifts for his ex-girlfriend, a former porn star.