FDIC Files Suit on Collapse of Heritage Bank : Seeks $54 Million From 24 Defendants; Blames Management for Failure

The Federal Deposit Insurance Corp. filed suit Friday seeking at least $54 million from 24 defendants--five corporations and 19 former officers and directors of the failed Heritage Bank of Anaheim--and alleging that their mismanagement caused the bank’s failure a year ago today.

The action is one of the largest damage suits filed by the FDIC against directors of a failed bank, according to Richard Osborne, the Los Angeles attorney representing the regulatory agency.

The suit alleges negligence, breach of fiduciary responsibility and unjust enrichment against all 24 defendants, charging that their activities caused the failure of Heritage--which in mid-1982 was Orange County’s largest independent bank, with more than $260 million in assets.

Substandard Loans

The bank had a net worth of $31,000 and assets of $158 million, including at least $40 million in bad real estate loans, when it was closed by the state Banking Department last year.

The suit claims that the defendants drained the bank of its capital by approving substandard loans and, in some cases, by improperly diverting funds to themselves and other companies they controlled.

Among those named in the suit were Douglas E. Patty, the outspoken co-founder and former chairman and chief executive of the bank, who has claimed that the FDIC engineered the Heritage failure to punish him for his criticisms of the agency.

Patty said he intends to file a countersuit against the FDIC.

Other defendants include former Heritage director Roger Saevig and his Irvine law firm.

Saevig is named in a specific action charging him and his firm with draining Heritage of money by over-billing.

He also is charged in the suit with legal malpractice for variously advising the bank on matters outside of his area of expertise or not offering advice when he should have.

Return of Salaries

Former directors Kenneth Thompson and John Marconi, whom the FDIC ousted from the bank’s board, along with Patty, in mid-1983, also are named in the suit.

The suit seeks from all the defendants return of salaries and other payments received from the bank, money from all loans obtained and property or other assets bought with money received from the bank.

The suit seeks at least $40 million in actual damages from the defendants--it says the amount continually increases and a ceiling on the total cannot be established.

In addition, it asks $4 million in actual damages and $10 million in punitive damages from a group of defendants including Patty, Marconi, Saevig and two former Heritage presidents who it says conspired to illegally pay interest, in the form of goods and services, to certain depositors who kept large balances in demand accounts.

Under the law, such accounts may not earn interest.