Tentative Deal Arranged in Fraud Case : Out-of-Court Settlement for $1.98 Million Reached

An Escondido lawyer who represented bankrupt Common Sense Capital Corp. on Wednesday tentatively agreed to a $2-million payment as part of an out-of-court settlement with former Common Sense investors.

In a settlement hearing before U.S. District Judge J. Lawrence Irving, attorney Jeffrey Cheyne, who represented Common Sense and its executives, agreed to pay $1.98 million to 68 property owners of an uptown office building.

Attorney Michael J. Aguirre, representing the investors, filed a lawsuit four years ago claiming that his clients were defrauded out of their money.

A trial on the issue was to start next week.

Previously, Common Sense Vice President James T. Stewart and Treasurer Chester W. Niebrugge agreed to pay $325,000 to investors who had poured money into Common Sense Capital, and Vice President Kenneth H. Williams agreed to pay $35,000.

Another company, Financial Planning Granite Equities, previously agreed to pay investors $120,000.

A final agreement is expected to be approved by Irving sometime next week.

The office building houses the San Diego Daily Transcript, which purchased the facility out of bankruptcy in 1984. The current ownership is not involved in the litigation.

Common Sense and other affiliates raised about $7.8 million in real estate limited partnership funds, according to the lawsuit. However, the suit alleged that the money was offered and sold in violation of various state and federal securities regulations.

Common Sense Capital President Lawrence J. Brophy and Daniel L. Pulvers, corporate secretary, were not involved in Wednesday’s settlement and remain defendants in the lawsuit.