Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SATURDAY, March 16, 1991 TAG: 9103160224
SECTION: BUSINESS PAGE: A-8 EDITION: METRO
SOURCE:
DATELINE: DANVILLE LENGTH: Medium
A Danville attorney filed suit Friday on behalf of 79 investors who claim they are owed nearly $2.3 million. Another lawyer filed on behalf of 15 investors who alleged losses totaling $412,000.
Danville Finance & Loan Corp. closed Wednesday.
The first in a wave of filings in Danville Circuit Court began Thursday morning, when investor J. Carroll Collins alleged he lost $400,000. Collins said he was the largest single investor in Danville Finance. Twenty-nine other investors joined his suit, alleging they had lost just over $2.0 million.
Lawyer Randy Sinclair said he will sue on behalf of several other investors Monday, he said.
"That's what's so scary about this. No one knows how much money is in there," Sinclair said Friday night.
Sinclair said the loan company did not have federal deposit insurance but might carry some private insurance. The lawsuits seek access to the privately held firm's financial records.
"No one knows anything about the holdings and records of the company except [bank President Melvin L.] Jones and his family," Sinclair said.
Attempts to reach Jones by telephone Friday were unsuccessful.
On Thursday, Circuit Judge James Ingram ordered all the assets of Danville Finance frozen. He appointed attorney R. Lee Yancey as receiver.
Yancey said Friday he expects the company to file for bankruptcy sometime next week.
If the firm files for bankruptcy, the suits filed in Circuit Court will be transferred to federal bankruptcy court, Sinclair said.
Investors were lured to the firm because of very high interest rates, as high as 20 percent in some cases, Sinclair said.
"A number of people have more than $100,000 invested there. That's a lot of money to have in one business venture. These are mostly hard-working, everyday people who took their money down there," Sinclair said.
A few investors became suspicious when their March dividends did not arrive on time, but did not realize there was a serious problem until the firm shut down, Sinclair said.
A few investors who phoned the firm Thursday were told the firm could not refund their money, Sinclair said.
The investors' lawsuits do not allege the firm did anything illegal, Sinclair said.
by CNB