Nearly 1 1/2 years after San Diego businesswoman Gina Champion-Cain was charged with securities fraud and her assets frozen, much of her once formidable portfolio of restaurant, retail and other commercial holdings has been sold off, so far generating close to $15 million in net proceeds from sales.
While that sum doesn’t come close to the nearly $200 million that hundreds of investors are estimated to have lost in a $400 million Ponzi scheme operated by Champion-Cain, the court-appointed receiver in the fraud case has vowed to go after third parties she believes were complicit in the operation.
In her latest status report filed this week in federal court, receiver Krista Freitag documented her progress to date in trying to sell various properties, restaurants, shops, vacation rentals and other entities in Champion-Cain’s complex maze of financial holdings
Most of her eateries, including the Patio chain of restaurants, have closed, with just two — Saska’s and La Mesa Surfrider — still operating under their original names, although they are now under different ownership. One of the Champion-Cain restaurants, Patio on Lamont, had been put up for sale but the offers that were received weren’t high enough to pay off the remaining debt, Freitag said.
The restaurant closed last March following the shutdown order related to the pandemic and never reopened. The Pacific Beach property later went into foreclosure, which was completed last month, Freitag reported.
“As only a few properties remain to be sold, the Receiver’s property management related activities have been significantly reduced,” Freitag stated in her report. “Based upon the best information currently available, the Receiver currently estimates the total net sales proceeds from the assets ... to be on the higher end of the previously estimated $13 million to $15 million range, over $11 million of which has been recovered as of the date of this report.”
Freitag cautioned, however, that because of the “extensive secured debt encumbering the assets,” the net proceeds from the sale of most of the assets have been relatively small.
Among the assets being sold are liquor licenses associated with Champion-Cain’s former restaurants, something of an irony given that alcohol licenses were at the root of the long-running scheme she conceived. The receiver’s report shows five liquor license sales that netted nearly $539,000.
Champion-Cain was first accused more than a year ago by the Securities and Exchange Commission of bilking dozens of investors who she enticed to make high-interest loans to individuals seeking liquor licenses. But instead of using their funds for that purpose, she directed the bulk of the money to companies she controlled — American National Investments and its subsidiary ANI Development.
She has since pleaded guilty to criminal charges of conspiracy, securities fraud and obstruction of justice and is due to be sentenced Jan. 19.
Freitag noted that since June 30, she has closed on the sale of 16 assets — seven during the third quarter of this year and nine more in the fourth quarter. Only three properties and one liquor license of any value remain to be sold, she said.
At one time, Champion-Cain owned or operated as many as 16 restaurants and coffee shops around the county. One of her more high profile restaurants, Saska’s in Mission Beach, was sold earlier this year for $2.3 million, but the sale netted just $54,393 because of a more than $2 million loan on the property.
In addition to disposing of the myriad assets, Freitag also plans to go after those investors who profited from the Champion-Cain liquor license lending operation in hopes of recovering more money for losing investors. Still on hold is a request she’s filed in federal court to sue Chicago Title, who she and others have accused of being complicit in the Ponzi scheme.
In a previous legal filing, she asserted that Chicago Title had knowledge of the fraudulent scheme and that two of its escrow officers were aware that Champion-Cain was forging escrow forms and operating the accounts in such a way that led investors to believe they were depositing millions of dollars into separate escrow accounts when instead “Chicago Title was transferring money to Cain at her request and within her sole discretion.”
The company already has settled with some investors and has mediated with others who have sued Chicago Title in hopes of recovering a percentage of their losses.
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December 25, 2020 at 07:39AM
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Last of Champion-Cain restaurants closed or sold, reports court-appointed receiver - The San Diego Union-Tribune
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