Investors’ Attorney Asks for $780 Million From Prudential : Securities: He tells judge to reject $90.7-million class-action settlement because more evidence of fraud has emerged.

NEW ORLEANS â€”  In what may be the closest thing to a public trial that investors in Prudential Securities’ limited partnerships ever get, a federal judge Wednesday heard sharply opposing arguments over whether he should approve a $90.7-million class-action settlement for customers of the biggest of the firm’s many failed partnership programs.

U.S. District Judge Marcel Livaudais Jr. is to decide if the settlement is fair to investors in Prudential’s Energy Income Funds oil and gas partnerships.

The package is far more generous than one he derailed nearly a year ago. But lawyers for some investors contend that evidence of massive fraud has emerged since then, including findings by the Securities and Exchange Commission that Prudential committed extensive wrongdoing. For that reason, they argue, investors deserve far more.

Attorney Stuart C. Goldberg argued Wednesday that $780 million would be a more reasonable sum. He contended that the firm lied in its prospectuses and returned investors’ own money to them disguised as profits.

Goldberg pledged to present evidence today that the partnerships were “a very complex Ponzi scheme� directed mainly at elderly customers.

In the firm’s first detailed defense in open court, Prudential lawyer Scott Muller contended that the pending settlement offer was the best investors could hope for, because they are not likely to win in a full-scale trial.

Muller insisted that the partnerships were sound investments that lost money only because of the unforeseen collapse of oil prices in 1986. In a seeming contradiction of the SEC’s October findings--which the brokerage at the time accepted without admitting or denying guilt--Muller denied that Prudential was guilty of any systemic fraud.

“There was no fraud at all,� he said.

A large group of class-action lawyers for investors--including most who had objected to the earlier offer as inadequate--joined Muller in urging Livaudais to approve this one. The lawyers stand to share more than $20 million in legal fees if he does.

For investors, the settlement now on the table would make whole less than 80% of their out-of-pocket losses, with no interest for the lost use of their funds. Overall, Prudential would pay $90.7 million, down from its earlier $120-million offer because nearly 16,000 investors have opted to pursue independent legal claims rather than participate in the class action.

Investors are automatically bound by the settlement terms unless they indicated their preference to opt out before last Sunday.

More than 130,000 investors put $1.44 billion into the Energy Income Funds from 1983 to 1990. The vast majority suffered heavy losses.