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Pacificor, Michael Klein's estate sued for $30M

By   /   Tuesday, November 25th, 2008  /   Comments Off on Pacificor, Michael Klein's estate sued for $30M

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Santa Barbara hedge fund Pacificor – once headed by Michael Klein, who was killed in a plane crash in Panama nearly a year ago – has been sued for $30 million by the one-time owners of Quality Home Loans.

The lawsuit joins hundreds of millions of dollars being sought in legal proceedings surrounding Pacificor and Klein’s estate.

John and Kitty Gaiser, former owners of Quality Home Loans, filed an amended complaint in the most recent lawsuit Nov. 19 in Los Angeles County Superior Court. The Gaisers’ lawsuit also names Michael Klein’s estate as a defendant.

A “hard money” mortgage lender, Quality Home Loans filed for bankruptcy last year shortly after Pacificor attempted to the buy the company. Pacificor eventually succeeded in buying Quality Home Loans while the lender was in Chapter 11 proceedings, the Gaisers said in their complaint.

The lawsuit alleges that Klein and Pacificor “misused a position of trust and control in order to attempt to take control of and to acquire – without compensation – John and Kitty Gaiser’s ownership of Quality Home Loans,” according to release issued by the Gaisers’ law firm.

“It is our hope that this lawsuit will rectify the massive damage done to the Gaisers by the named defendants,” John Edgar, attorney for the Gaisers, said in the release. “We will be looking forward to proving these damages at trial.”

“The Gaisers’ claims against Pacificor are specious,” Wayne Flick, attorney for Pacificor, said in e-mail interview with the Business Times. “The lawsuit is an attempt by the Gaisers to seek to recover losses caused, not by the actions of any of the defendants, but by the precipitous decline in the mortgage industry that has resulted in the downfall of numerous mortgage lenders over the last 18 months.”

Flick added, “Pacificor is eager to present the court with substantial evidence – which it appears the Gaisers have not shared with their own counsel – which demonstrates the absurdity of their claims.”

Pacificor also has been involved in several other high-profile legal proceedings this year.

Santa Barbara businessman Steve Sorensen, the founder of Select Staffing, filed a $24 million lawsuit against the hedge fund.

Klein’s daughter died along with him in the plane crash Dec. 23, 2007. A friend of Klein’s daughter who was with them was the only survivor. Both families have filed lawsuits against Pacificor and Klein’s estate asking for as much as $525 million.

This story was updated at 5:21 p.m. Nov. 25.

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