Ex-Pioneer Chief Pledges to Pay Firm $1 Million to Avoid Suits
Former Pioneer Mortgage President Gary Naiman volunteered Thursday to turn over more than $1 million in cash to the company and forgive millions of dollars of claims he and his family hold against the now-bankrupt, La Mesa-based mortgage banking company.
In exchange, Pioneer would drop any legal claims against the Naiman family, which owns and formerly operated the investment firm that entered bankruptcy in January. The agreement, if approved, would not release Naiman from any criminal charges or prevent disgruntled investors from suing Naiman.
Before entering Chapter 11 bankruptcy proceedings, Pioneer had arranged $200 million in real estate loans for 2,000 investors. About $150 million of those loans are no longer current, and investors fear that they will not recoup most of their investment.
The move is designed to provide “peace for myself and my family,” Naiman said in a statement released through an attorney. Naiman said he agreed to the proposed settlement, which now must be approved by U.S. Bankruptcy Judge James Meyers, because it “avoids lengthy and expensive litigation which has proven only to cost everyone more money.”
“We are giving to Pioneer what I earned from years and years of 60-hour workweeks,” Naiman said in the statement. “I feel badly for the people who depend on a monthly check (from Pioneer) and for people who are hurt by the delays in payoffs.”
It was uncertain Thursday, however, what kind of immediate effect the proposed agreement would have on Pioneer’s ailing loan portfolio.
Naiman’s statement suggests that his family would “relieve” Pioneer of more than $21 million in claims against the company.
Pioneer President Dennis Schmucker said the $1 million could immediately be used to help safeguard the troubled portfolio. But Schmucker was “hesitant” to accept the $21-million estimated value of Naiman’s claims and other assets because “the values are so fluid right now.”
Naiman, who resigned in January, had served as the company’s president since 1975, when he purchased the company from a relative. The company grew quickly in recent years, largely through the efforts of Naiman, who took a personal role in courting most of the company’s investors.
Naiman’s four-page release marked his first public comment about his role in the failure of Pioneer.
In his statement, Naiman said that publicity generated by Pioneer’s failure “has hurt us, and our children, tremendously.” Naiman said the deepest pain has been caused by former friends who have “attacked and vilified us publicly.”
Although Naiman said many of those investors have recouped their investments “several times over,” he acknowledged that they were hurt badly when the economy soured and the real estate market collapsed.
Schmucker said the proposed agreement, which will undergo careful scrutiny by Pioneer investors and other interested parties, pledges “substantially all” of the Naiman family’s personal assets to Pioneer.
Naiman is “giving back all that he earned (in recent years) . . . to help run (Pioneer) and help repay people,” said Bob Rose, Naiman’s attorney. “He’s divesting himself of what he, his wife and family trust own. . . . He’s giving it back to company management, subject to court approval.”
Rose said that Naiman and his wife, Sherry, would retain a home on Mt. Helix, two old automobiles, an apartment in Israel and part of his pension plan. Schmucker said a continuing audit indicates that the value of Naiman’s remaining assets “is somewhere between $120,000 and $150,000, net of the California Homestead Exemption.”
The proposed $1-million cash payment would come from Naiman’s pension plan, Schmucker said.
“We will look at this agreement very closely to determine whether it is in the best interest of the estate,” said Ali Mojdehi, an attorney for the official creditors committee that represents Pioneer investors. “If it is, we will fully support approval of the proposed settlement.”
The committee’s “analysis will determine what could be retrieved (from Naiman) through litigation, the costs involved with litigating . . . balanced against what the settlement provides,” Mojdehi said.
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