Agreement to settle a dispute regarding sales practices at California City

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FOR IMMEUI/\TE RELE!\SE:

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1 March 8, 1973 ·'

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Denver, Colorado.:. California Att0rney General Evellc J. Younger,

r.cal Estate Corr.missioner Robert W. :.arpe, and Grea_t Hestern Cities,

lnc. (GWC). today announced they have reached agreement in settling

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a dispute regarding sales practices at California City. The

settle-ment was contained in a consent order fil~d today in the Los Angeles

Superior Court, and provides ·for a refund conmitment, including

interest, of u~ to approximately $4 million. The agreement resolves

claims by 1:he Attorney Ge;neral and the Commissioner of alleged

mis-representations made in connection \'lith certain sales at C;ilifornia

Ci-ty~ pri:marily -bet;:ieen -.1966 and 1970. California City was acquired

by· Great WE:st8rn United Corporation, parent of GHC,

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Under the t~rms of the settlement, GWC has consented to the

~ntry of a permanent injunction from false or misleading advfrtising

or deceptive sales practicei. GWC and the Attorney General· have

·"identified certain purchaser:; of land who will, if they so eiect,

receive a refund of principal payments aggregating up to about S2.3

million.

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those payments t~ e class cf other·p~rchasers.

Refunds will be paid ~artly in c~sh and partly in secured

promissory notes. Becal!se th~ n::ites may have to be registered under

federal or sti\te securities 1,Ms, off~rs of refund will be made only

by a prc5p~ctus or offering cir...:ular, clnd it_ is ar.ticii)Jted that

offers will l'ie made later this year. GHC he~ a1so ag,~cd to implc111en'i:

a progrJm to settle future disp~tes \vith purcl1t1sers.

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News Release Great Hes tern Ci t.ics March S, 1973

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Officials of Gwt·noted that this settlement \'las the last of several steps taken by current management in response to the request of California regulators. Earlier GWC had arranged for a letter of credit, up to $5 million, to assure availability of funds for the installation of off-site improvements. Also,

engineering studies indicate th~t the City now has. access to water

s6urces sufficient to service anticipated fut,re growth •

Sales began in the eastern Kern County project in -1958 by

N. K. Mendelsohn, the original developer.

As previously announced, two purported class actions have

been filed against GWC r~cently in connection with land sales

in California. Great Western United Corporation, which is the

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parent of Great Western Cities, was named with others as a defendant

in one -0f the suits •

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