Hill Williams’ Case Attorneys Stage Turf Spat

SANTA ANA — Two attorneys who represent Hill Williams Development Corp. investors--though from different perspectives--waged a turf battle Wednesday in U.S. Bankruptcy Court. And the judge told them to find a meeting ground and shake hands.

The Department of Corporations had intended to spend the afternoon in Superior Court seeking a cease-and-desist order against Hill Williams. But on Friday, the trustee of the four Hill Williams fund-raising partnerships, which filed Feb. 26 for liquidation, remanded the case to the Bankruptcy Court in Santa Ana.

In a temporary restraining order granted March 4, the state accused Hill Williams of operating a Ponzi scheme in which it used new investors’ money to pay previous clients. Over a three-year period, the Anaheim Hills company raised nearly $90 million from about 5,000 investors, purportedly to build and sell homes.

Ronald Rus, attorney for the trustee, alleged Wednesday that the temporary restraining order gives the state, rather than the trustee, control over the partnerships’ properties. Mark Harman, attorney for the Department of Corporations, argued that the state’s civil complaint should be heard in state court rather than federal.

“We do not wish to affect or limit the trustees of the estates,” Harman said.

Bankruptcy Judge John E. Ryan told the sparring parties to reword the state’s action in a way agreeable to both sides so that the state can pursue its injunction in Superior Court.

Ryan let it be known that he does not want to see the complex Hill Williams case further complicated by legal infighting: “I think it’s important we don’t spend our time dealing with these conflicts.”