Under the terms of a stipulated judgment, expected to become final this month, investors will state that Aldo Baccala did not commit fraud when he defaulted on loans he received over the past decade.
The investors also said they wouldn't pursue other legal action against Baccala and agreed to a payback schedule requiring the sale of assets that could take years.
"We have resolved the case," said the investors' lawyer, Michael Maloney. "My clients are happy. It's a long, drawn-out process."
Baccala's lawyer, John MacConaghy, said the agreement was reached March 16 in Santa Rosa at a mediation conference attended by Baccala and about 40 plaintiffs. Retired Napa County judge Scott Snowden presided.
Baccala, 68, agreed to resign from his management role in nursing homes in South Carolina and Georgia and plaintiffs could begin liquidating the properties when the real estate market rebounds.
The lawsuit sought $22 million from Baccala. Money will begin trickling back to investors immediately with balloon payments as soon as this summer of up to $1 million, Mac-Conaghy said.
"Mr. Baccala has always admitted he owed the money," MacConaghy said. "He was not prepared to admit he defrauded anybody."
It was not immediately clear if a criminal investigation of Baccala's business would continue. A spokeswoman for the Sonoma County District Attorney's Office said there have been no changes since prosecutors announced a probe in February.
"It's my understanding the resolution of the civil case does nothing to change any criminal investigation," Maloney said.
Signs of Baccala's financial problems surfaced in November when he wrote to investors saying he was suspending monthly payments on dozens of loans, some of which paid as high as 15 percent interest.
He blamed the credit crunch and the economic downturn coupled with the cost of the existing debt service, which he said left him without the liquidity to make payments.
Baccala said he would sell assisted living centers and refinance Premier Mushrooms LP in Colusa County to help reduce the debt within the next two years.
Investors filed the lawsuit in December, alleging Baccala defrauded the group out of about $22 million.
The suit claimed Baccala misrepresented business opportunities and the existence of collateral and sometimes secured multiple loans for the same project, all for his own personal profit.
You can reach Staff Writer Paul Payne at 762-7297 or firstname.lastname@example.org.