An Illinois judge’s ruling that two directors of the failed Independent Trust Co. are personally liable for losses of more than $68 million has not satisfied some investors, who are pressing ahead with a lawsuit in which they blame a state regulatory agency for the trust company’s downfall.

Cook County Circuit Court Judge Sophia H. Hall ruled on July 27 that Jack L. Hargrove and Laurence W. Capriotti breached their fiduciary duty as directors of the Orland Park company, which was seized by state regulators in April 2000 and put in receivership. The ruling means that the receiver, PricewaterhouseCoopers, which filed the suit against the directors, may go after their personal assets to repay investors and account holders.

“Because we have the judgment, we have post-judgment collection tools we can use” to try to recover the lost money, said Jonathan Bunge, an attorney representing PricewaterhouseCoopers.

Independent Trust Co., better known as Intrust, opened in 1984 and primarily handled individual retirement accounts. Its failure last year was the result of a bad investment in a Chicago company, Intercounty Title Corp. of Illinois, in which it lost $68.1 million over six years.

Mr. Hargrove and Mr. Capriotti were also directors of Intercounty Title, and receivers allege that they used Intrust’s investment for personal gain.

Still, some investors, who fear that they will never get back their money from the company or its directors, are suing the Illinois Office of Banks and Real Estate in hopes of recovering it.

The suit was filed in February by James Matkins, an investor from Rapid City, S.D., and Aztec Management Services Inc., a privately held investment firm in West Chester, Pa. The investors, who hope it will become a class action, allege that the regulator was negligent in its examination of $1.7 billion-asset Intrust.

Jeffrey C. Grant, a lawyer with the Grant Law Firm in Seattle, which represents Aztec, said last month’s ruling does not change his client’s plans. In fact it may strengthen Aztec’s contention that the state should have detected Intrust’s problems sooner, he said.

This lawsuit is the investors’ only chance to recover their money, Mr. Grant said. “It’s very unlikely that the chancery cases will produce any significant amount of money. That money is long gone.”

A spokeswoman for the Illinois Attorney General’s office said the status of the investors’ lawsuit had not changed since the ruling. State law requires that all the other suits that may lead to investors’ recovering assets be resolved before anyone can press claims against the state, she said.

The Attorney General’s office is still waiting for the Illinois Court of Claims to decide when it will hear the case.

Others involved with the failed trust company say they too are pessimistic about the chances of recovering any assets from the two directors.

“I don’t hold great hope” for that, said James A. Boyd, the chief executive officer of Millennium Trust Co. LLC, which bought Intrust’s assets.

Investors are eager to recover the missing $68 million because they must come up with the funds to replenish their customers’ accounts, Mr. Boyd said.

Some investors have tried to recover funds through the insurance policies of directors and officers, as well as through surety bonds. However, both CNA Financial Corp. and Kansas Banker Surety Co. have denied claims made against InTrust-related policies. PricewaterhouseCoopers has not filed suit against the insurers.

Mr. Hargrove’s attorney said his client planned to appeal the judge’s decision. Mr. Capriotti’s attorney would not say whether his client would do the same.

From Our Archive/Related Content Online

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.