Pioneer Investors Win a Crucial Court Ruling

Attorneys representing several hundred Pioneer Mortgage investors Monday won a crucial court ruling when U.S. District Judge Samuel P. King agreed to grant class certification to a lawsuit claiming fraud on the part of now-bankrupt Pioneer’s banks, accountants and attorneys.

The class certification was important because it could expand the suit, which initially was brought by a few hundred investors, to include a majority of Pioneer’s 2,500 investors. The court ruling does not, however, affect hundreds of similar suits that Pioneer investors have filed in state Superior Court in San Diego.

Before entering Chapter 11 bankruptcy proceedings in January, Pioneer had arranged $200 million in real estate loans for 2,000 investors. A majority of those loans are no longer current, and investors fear that they will not recoup most of their investment. The firm’s failure generated hundreds of lawsuits by individual investors against Pioneer and its business partners.

“This (ruling) gets us over a major procedural hurdle,” said Michael Aguirre, an attorney who represents Pioneer investors in the U.S. District Court suit. “The judge agreed that there are real and substantive reasons for this case to go forward.”

The ruling, which came after a daylong court hearing in U.S. District Court is “a very positive development that could help speed the overall resolution of this case,” Aguirre said. “It makes it possible for us to try and move toward the ultimate resolution in a more expeditious way.”

The ruling means “there will be two parallel lawsuits, from a practical standpoint, in both state and federal courtrooms,” said Pioneer Mortgage President Dennis Schmucker. “For the company it could mean added expenses and the added burden of dealing with two court suits.”