A creditor in a multi-million-dollar bankruptcy case involving a San Rafael lending operation has sued to block the discharge of his debt.
David Robert Stone, doing business as Cornerstone Financial Services, filed for Chapter 7 bankruptcy on April 15. Chapter 7 of the bankruptcy code provides for the sale of a debtor’s nonexempt property and the distribution of the proceeds to creditors.
Stone has reported more than $70 million in liabilities and about $24.9 million in assets. Many of his creditors are Marin County residents.
One of those creditors, Janet Simkins, who lived with her husband Harry Simkins in Novato for 21 years, sued in bankruptcy court to prevent the discharge of Stone’s debt. Simkins also seeks more than $1 million in compensatory damages and an unspecified amount in exemplary damages.
Simkins accuses Stone of fraud, larceny and elder abuse by enticing her and her husband to invest more than $1 million in his business. Approximately half of the money came from her retirement account. Harry Simkins died in 2003. His widow now lives in San Diego County.
Stone denies the allegations in a motion to dismiss Simkins’ complaint. “A more implausible theory of fraud could not be contrived,” his filing says.
Stone’s bankruptcy filing, however, is coming under increasing scrutiny.
Another creditor, Fairfax resident Robert Vogl, said the trustee who oversees the bankruptcy court has appointed an attorney for the U.S. Department of Justice to gather evidence to determine if the case should be referred to the U.S. Attorney General’s Office.
Legal documents also show that the U.S. Securities and Exchange Commission has issued subpoenas to Columbia Bank, formerly Pacific Premier Trust, seeking documents concerning securities issued by Cornerstone Financial Services and other entities associated with Stone. The others are Stoneway Capital Corp. and Calzona Truck Sales Inc.
The Cornerstone Financial Services website promotes its ability to invest retirement funds through its “self-directed IRA facilitator, Pacific Premier Trust.” Simkin’s lawsuit states that she invested more than $550,000 from her self-directed retirement account into Stone’s business via Pacific Premier Trust, formerly known as Pensco Pension Services.
Vogl, who invested $450,000, is one of about 60 “secured” creditors, 20 of whom are Marin residents. According to the bankruptcy filing, the secured creditors’ claims alone total more than $62.8 million. Most of these claims are secured by only about $12.6 million in loans owed to Cornerstone.
Eight of the secured creditors invested through Pacific Premier Trust, according to the bankruptcy filing. The money owed to them exceeds $5.1 million.
Simkins’ complaint alleges that Stone lured her and her husband in with marketing materials and a prospectus that touted the size of returns and the safety of investments with Cornerstone Financial Services.
According to Stone’s motion to dismiss, he used investors’ money to purchase “big rig” trucks and then leased those trucks “to truckers with not such great credit, across the country at rates in the range of around 40%.” Investors received 10% interest on their investment.
Stone’s filing states that the finance agreements with truckers were non-cancellable, with terms up to three years. When a lessee defaulted, Cornerstone Financial Services would repossess the truck and either re-lease it or consign it to a related entity, Calzona Truck Sales, depending on the condition of the truck. The finance agreements were pledged as collateral to private lenders in provisions contained in promissory notes.
Simkin’s states in her filing that it was the belief that she and her husband were purchasing specific equipment finance agreements that gave them the confidence to invest. The complaint asserts, however, that the “representation was false” and that Stone knew it.
Her suit alleges that following her husband’s death, at Stone’s urging, she repeatedly rolled over her investment and increased it incrementally instead of asking for the return of her principal. In addition to the finance agreements, she was reassured by numerous guaranties issued by Stone. The suit quotes from a 1998 version that provided a guaranty “against a financial setback of any kind.”
The complaint states that Stone convinced Simkins to roll over her investment yet again and invest another $200,000 last fall, when, she now believes, other investors were beginning to resist rolling their notes over and asking for their principal back.
In his motion to dismiss, Stone asserts that the finance agreements were legitimate collateral when issued, but lost their value after their three-year terms expired. The document states that Simkins has been paid interest of approximately $25,000 per year over 18 years for a total of at least $450,000.
According to the filing, Stone operated his business successfully for nearly 50 years through 2024, but “due to COVID, changes in law and government regulations, the lack of potential lessees, extraordinary rate of defaults exceeding 20% and the inability to procure new staffing,” he was unable “to generate sufficient new finance agreements to keep pace with the demands by private lenders that arose in 2025 for the return of their principal.”
The case is filed in U.S. Bankruptcy Court for the Central District of California in Riverside. A status hearing is set for Jan. 21.
In his bankruptcy filing, Stone lists his place of residence as Palm Desert.