PinnFund USA, Inc.
On March 21, 2001, the SEC obtained
temporary restraining orders and asset freezes against Michael J. Fanghella,
James L. Hillman and entities they controlled. The SEC alleged that defendants
defrauded at least 166 investors of more than $330 million, purportedly to fund
a sub-prime mortgage business at PinnFund USA. Instead, the defendants
misappropriated the funds raised to support their extravagant lifestyle, to pay
for PinnFund's operational losses, to fund personal investments, to pay
themselves commissions and fees, and to make payments to investors as Ponzi-scheme
"yields." The SEC has posted numerous litigation releases. You can
find them by visiting the SEC's website
and inserting word "PinnFund" in the “search” box in the upper
right-hand corner of the screen.
The Court also appointed Charles G. La Bella as Receiver over PinnFund. In April 2001,
Hillman filed bankruptcy for the entities he controlled. Richard Kipperman was later appointed
bankruptcy trustee for the entities. The investors have so far received disbursements of nearly $70
million or about 31% of their allowed claim amounts. Mr. Kipperman is continuing to recover assets
and expects to make at least one more distribution to eligible investors.