When news broke last week that longtime developer and restaurateur Gina Champion-Cain was under investigation by federal regulators for defrauding investors, fans of her high-profile Patio eateries and Saska’s in Pacific Beach wondered whether they would soon be closing.

The answer is, probably not — at least in the short term. The fate of the San Diego businesswoman’s portfolio of more than a dozen eating establishments is now out of her hands, with the appointment this week of a receiver whose job it will be to oversee all of Champion-Cain’s businesses and launch a deep dive into their financial viability.

It is the latest step in a court case launched by the U.S. Securities and Exchange Commission, which announced last week that it is charging Cain and her investment company, ANI Development, with perpetrating a “multi-year $300 million scheme” that the agency says defrauded roughly 50 retail investors over the last several years.

Some in San Diego have likened it to one of the county’s biggest investment scandals in recent decades.


The SEC outlined the specifics in a complaint filed last week, alleging that ANI Development had fraudulently raised hundreds of millions of dollars since 2012 by claiming to investors that they could profit by issuing short-term, high-interest loans to people applying for alcohol licenses in California.

Instead of using the investors’ money to make those loans, Champion-Cain instead directed “significant amounts of investor funds” to a company that she controlled, according to the complaint.

In a preliminary injunction issued Tuesday by U.S. District Judge Marilyn Huff — and agreed to by Champion-Cain and ANI — all assets, including those of umbrella company, American National Investments Inc., which controls about 40 business interests, are now under a freeze.

Among those entities are the well-known Patio group of restaurants in Pacific Beach, Mission Hills and Liberty Station, plus the Patio Marketplaces, Surfrider Pizza outlets and Swell Coffee. Champion-Cain also has short-term rental properties and is an investor in the Casa del Zorro resort in Anza Borrego. Her Patio Group late last year took over management of the hotel and spa.


News of the SEC probe quickly prompted questions from some people on the NextDoor Pacific Beach site about the fate of Saska’s, a longtime eatery in the beach community. “I’ve been buying burgers from Saska’s since the mid-60s, will this alleged crime end that?” wondered one.

A recently hired spokesman for Champion-Cain said he doesn’t expect any of her restaurants to be affected by the SEC case.

“We do not anticipate any disruption to operations,” said David Oates of San Diego-based Public Relations Security, which was brought on last week to handle “crisis PR” for Champion-Cain’s firm. “That is part of the reason why American National Investments voluntarily agreed to a receiver coming in while the company fully cooperates with authorities on this civil litigation matter. Doing so maintains their commitment to doing right by its loyal customers and continue operating communities for people to relax, enjoy and share as before.”

While SEC officials directly involved in the San Diego probe have declined to comment on the ongoing investigation, the preliminary injunction sought by the agency offers a window into the next steps in the case. The court order outlines the responsibilities and reach of the receiver, who is Kristin Freitag, co-founder of San Diego-based E3 Advisors.


She is responsible for an accounting of all the assets owned or managed by ANI and its subsidiaries, as well as taking whatever steps are needed to preserve those assets. It is unclear how long that will take, but the court order states that Freitag should report back to the court and SEC as soon as she is able on the financial condition of ANI.

Securities experts say the main role of the receiver is to take whatever steps are necessary to maximize the existing income-producing properties with the end goal of returning as much money to investors as possible, should Champion-Cain and ANI be found liable. There also remains the possibility of selling restaurants or finding new operators.

“There’s also the possibility of third-party liability; that is, anyone who may have aided in the scheme may be looking at a lawsuit to make up the difference from what the receiver turns up and what investors are owed,” said attorney Mike Aguirre who specializes in securities law. “I’d say this is our first major fraudulent investor scheme of the 21st century in San Diego.”

Jack McGrory, a co-owner of Casa del Zorro, said this week that the ownership group has not yet made any decisions on whether the Patio Group will continue to manage the property. The first step, he said, is to reach out to the receiver. Champion-Cain is a more recent minority investor in the hotel, he added.


“I don’t think we should do anything until we talk to the receiver,” McGrory said. “The hotel is run very well, and the operation of the restaurants there are perfectly fine. All of us were completely unaware of (Champion-Cain’s) liquor license business, but with respect to the hotel, we’ve been pleased with her management, and we’re having a great year.”

Casa del Zorro is among dozens of businesses listed in the preliminary injunction that are barred from being transferred or sold as long as the court order is in place.

Even as the SEC continues its probe, there remains the possibility of more legal action. Berger Montague, a national law firm that specializes in securities and antitrust litigation has launched an investigation to determine, in part, whether there are others who may be complicit in the alleged investor fraud, said attorney Benjamin Galdston, managing partner of the law firm’s San Diego office.

The preliminary injunction currently prohibits potential claimants from suing Champion-Cain and her businesses, but if and when the injunction is lifted, outside legal action could proceed.


“We’re looking at what avenues are available to maximize recovery for investors harmed by this fraud,” Galdston said. “This is San Diego’s Bernie Madoff. The SEC doesn’t always go after everybody that has legal responsibility when frauds like this are uncovered and that’s where the private plaintiffs bar comes in.”

Galdston said that he has not only been contacted by ANI investors but also purveyors for some of the restaurants, claiming they are owed a great deal of money.