Roland Arnall, 68; founder of subprime specialist Ameriquest

Billionaire Roland E. Arnall, whose widespread philanthropy and extraordinary political friendships stood in contrast to repeated investigations into alleged lending abuses at his giant subprime company, Ameriquest Mortgage Co., died Monday. The longtime Holmby Hills resident was 68.

Arnall, a Holocaust survivor who co-founded the Simon Wiesenthal Center, had resigned as President Bush’s ambassador to the Netherlands on March 7, returning to Los Angeles to be with a seriously ill son, the family said.

The senior Arnall was diagnosed Wednesday with esophageal cancer that had metastasized and died early Monday at UCLA Medical Center, a spokesman for the family said.

Intensely private about his business and charitable affairs, Arnall was personally a gregarious character known for befriending service workers he encountered, along with some of the most powerful politicians in California and the nation.

Earlier donations went mostly to Democrats, including statewide races by Tom Bradley, John Van de Kamp and current state Atty. Gen. Jerry Brown, to whom Arnall lent $25,000 for his 1978 gubernatorial bid.

When Gray Davis ran for governor in 1998, Arnall advised him that he would need 20 backers good for $250,000 each -- and stepped in as the first, according to Davis strategist Garry South, who told The Times in 2005: “Roland was responsible for Gray becoming governor.” When Arnall married his second wife, Dawn, two years later, Davis officiated at the ceremony.

A few years later, the Arnalls became major backers of President Bush and Gov. Arnold Schwarzenegger, both Republicans. Since 2004, the couple had given more than $12 million to GOP causes and candidates, becoming the heaviest donors to the 2004 election cycle, including the Republican National Convention and Bush’s inaugural celebration, campaign finance records showed.

Arnall said Bush won his support because of his pro-Israel stance. He maintained that he supported individuals, not parties, and continued to donate to certain Democrats, including many members of the Latino Caucus in the state Legislature. Even while giving $1.4 million to Schwarzenegger and his campaign committees, the Arnalls donated $130,000 to Davis, plus $100,000 more to oppose Davis’ recall.

“He had an upbeat and indefatigable personality -- sort of an Energizer Bunny -- and he infused other people with that same confidence,” South said Monday.

Arnall’s December holiday parties were command performances for generations of politicians, South said, recalling one at which former California Govs. Pete Wilson and Davis joined Gov. Arnold Schwarzenegger, Massachusetts Gov. Mitt Romney and Pennsylvania Gov. Edward G. Rendell -- along with various Arnall drivers and aides and lesser political luminaries.

Schwarzenegger lauded Arnall’s work to promote peace and understanding through the Wiesenthal Center. Attending the museum’s groundbreaking with Arnall in 2004 “was one of my most precious memories,” Schwarzenegger said in a statement.

Born March 29, 1939, on the eve of World War II to Eastern European Jews who had fled to Paris, Arnall spent his early childhood in a French village where his family pretended to be Roman Catholics.

He wasn’t told he was Jewish until after the war. His family soon relocated to Canada and then to the United States, where he had his first business selling flowers on the streets of Los Angeles.

Over the years, Arnall amassed huge interests in apartments and other businesses. But he was chiefly known as a pioneer of lending to high-risk, or subprime, borrowers. Using databases to identify customers and set loan terms, he partnered with Wall Street firms that provided funding and bundled his loans into mortgage-backed bonds -- the business whose recent meltdown has shaken the global financial system.

His direct-to-consumer lending company, Ameriquest Mortgage, and sister companies including Argent Mortgage Co., which made loans through independent brokers, had become the nation’s largest subprime lenders by the middle of this decade. Ameriquest advertised heavily on television, sent blimps soaring above stadiums bearing the company’s name and Liberty Bell logo, and sponsored a Super Bowl halftime show and a Rolling Stones tour.

But the company that called itself the “proud sponsor of the American dream” was dogged by allegations from government authorities, community groups and angry customers. Former employees said Ameriquest ran “boiler rooms” of loan agents who socked borrowers with hidden fees and higher-than-promised interest rates while steering customers into loans they couldn’t afford. Arnall blamed the problems on rogue agents who were terminated.

After The Times ran a series of articles detailing the allegations in 2005, Ameriquest disclosed that it was under investigation by a task force of state attorneys general. Arnall’s confirmation as ambassador was held up in the Senate until his company agreed to pay $325 million to settle with 49 states and the District of Columbia.

Ameriquest Mortgage shut down its lending last year, an early casualty of the subprime meltdown. Its loan servicing, or bill collection, arm was later sold to Citigroup Inc., along with the lending systems used by Argent, the affiliate that worked through brokers. The remains of Arnall’s lending empire are “being wound down,” a spokesman said.

Even Arnall’s harshest critics acknowledged difficulty in reconciling the complaints with the man they knew as a benefactor of animal shelters, a 16-year trustee of the California State University system and a diplomat who strove to build bridges to the Islamic community in Europe and the United States.

“Roland Arnall was a distinguished philanthropist in the Jewish community and general community as a whole, with a commitment to education and supporting those in need in hospitals and those who are disabled in the U.S. and around the world,” said Rabbi Marvin Hier, dean of the Wiesenthal Center.

“He played a leadership role in the Simon Wiesenthal Center and Museum of Tolerance since its inception in 1977 and served as co-chair of its board until he resigned to become U.S. ambassador to the Netherlands,” Hier said. “This is a great loss.”

In addition to his wife and son Daniel, Arnall’s survivors include a daughter, Michelle; nephew Adam Bass, former vice chairman of Ameriquest; and a brother, Claude.

Memorial services were pending.

Instead of flowers, the family requested that well-wishers make contributions to the American Friends of Shalva, a support group in New York for disabled children.

scott.reckard@latimes.com