Corporations Chief Accused of Misleading Agency in ‘80s : Securities: Investors in failed First Pension say Gary Mendoza misrepresented partnerships while a lawyer. He calls charges ‘absurd.’

A group of investors in failed First Pension Corp. filed a complaint Friday alleging that, as a lawyer in the mid-1980s, state Department of Corporations chief Gary Mendoza misled the agency he now heads.

The complaint alleges that while he was a lawyer at the firm Latham & Watkins in Newport Beach, Mendoza prepared securities offerings for a First Pension entity and then provided misleading information on the offering to the Department of Corporations.

Mendoza, 39, commissioner of the agency that regulates and investigates securities sales in California, called the allegations “absurd and contemptible.”

The suit, filed in Orange County Superior Court by Karmele Murray and 17 other investors, also names Latham & Watkins; Glen Belka, a former employee of a company related to First Pension, and First Pension’s three operators: William E. Cooper, Robert E. Lindley and Valerie Jensen, all of whom admitted to fraud in the case in August.

First Pension, which had an estimated 8,000 clients and accounts valued at $350 million, filed for bankruptcy protection April 22. Company operators were accused in May by the Securities and Exchange Commission of losing $121.5 million of investors’ money by misleading them to make investments in mortgages that did not exist.

All defendants named in Friday’s complaint are charged with violation of California securities laws, breach of fiduciary duty and fraud. Steve Wilson, a partner with Latham & Watkins in Los Angeles, said he could not comment on the suit because he had not seen it. Belka could not be reached for comment.

Specifically, the suit alleges that Mendoza provided legal services to the operators of First Pension from 1992 until shortly before he was appointed by Gov. Pete Wilson to the Department of Corporations in July, 1993. In 1985, Mendoza had represented Valerie Jensen in connection with an SEC investigation, the suit alleges.

Even while he was commissioner, Mendoza continued to have business contact with Cooper, the suit alleges, including an effort to collect a delinquent bill owed to Mendoza’s former law firm, Riordan & McKinzie in Los Angeles.

Mendoza said Friday that he provided legal counsel to the First Pension principals and received document requests from the SEC related to a matter in which Jensen was involved.

Mendoza and the other defendants failed “to disclose facts concerning the true nature of the limited partnership units sold by the defendants” in documents provided to investors on a limited partnership offering sold in the mid-1980s, according to the lawsuit. The suit specifically names a partnership called BMF 1. Mendoza said Friday that he is not familiar with the partnership.

Mendoza, a graduate of Claremont McKenna College and Yale Law School, said he did do legal work on a proposed $50-million First Pension-related securities offering in 1986 but contends he saw nothing out of the ordinary.

“There was complete and full disclosure on the documents I worked on,” he said Friday.