Five Ohio S&Ls; Reopen, More May Open Today

From Times Wire Services

Five of 69 state-chartered savings and loans still under a closure order by the state were open for business Thursday and, although lines formed at some branches, officials reported no shortages of cash.

At the same time, Ohio Atty. Gen. Anthony Celebrezze Jr. appointed a special prosecutor to look into the collapse of Home State Savings Bank of Cincinnati--which triggered runs by depositors at some other S&Ls; and led to Gov. Richard F. Celeste's order to close the thrifts.

The special prosecutor, Lawrence A. Kane, a 55-year-old Cincinnati lawyer who has taught criminal law and served as a county prosecutor, said he would seek indictments, if necessary, and look for possible regulatory deficiencies. (The head of the SEC testified on ESM Government Securities, whose collapse triggered the closure of Ohio S&Ls.; See story, Page 4.)

Brian Usher, Celeste's press secretary, said more institutions might open for full service today or Monday with "most, if not all" to be open for limited withdrawals today.

An emergency law enacted Wednesday allows the closed institutions to reopen if they apply for federal insurance on deposits, are owned or have agreed to merge with a company already federally insured or demonstrate to the satisfaction of the state superintendent of savings and loans, Thomas Batties, that the interests of depositors will not be jeopardized.

The institutions that opened Thursday were Century Savings, with offices in Columbus, Newark, Toledo and Cincinnati; Savings One Assn., with offices in Dresden and Mansfield; Southern Ohio Savings Assn. of St. Bernard, and Federated State Bank of Lockland. Columbia Savings & Loan of Cincinnati had reopened without incident Monday.

Century Savings was open for full service Thursday, Vice President William D. Connelly said. Savings One was open for limited service Wednesday afternoon and was open again Thursday.

Southern Ohio Savings and Federated State Bank also opened for limited service.

Thrifts open for limited service will allow customers to make deposits or withdrawals up to $750. Those that open for full service will allow unlimited deposits and withdrawals.

Batties was expected to file regulations governing such procedures this morning with the secretary of state.

At least 24 of the institutions, which previously had been privately insured, had applied for federal insurance coverage, the governor's office said.

Outside the Century Savings office in Cincinnati, a line formed before the doors opened at 10 a.m. But only one of the first 10 customers closed an account, and another made a deposit.

"I need the money, but I'm only going to take out a little," said Sarah Bach, first in line outside the office. "I think it's safe now with the federal insurance."

In the Columbus suburb of Upper Arlington, about a dozen depositors lined up to do business when the Century Savings branch there opened. Officials said business was normal except for the crush of reporters and photographers.

But in Toledo, Century Savings branch manager Donna Flack said about 20 to 30 customers had closed accounts by midday, compared to one or two on a normal business day.

Bill Matthews, treasurer of Savings One, estimated that the Mansfield branch handled "several hundred" customers Wednesday when it opened from 2:30 p.m. until about 7 p.m. He said most customers were making withdrawals, but one customer in Dresden made a $15,000 deposit.

In a related story, a federal judge Wednesday froze the assets of an accountant whose former firm audited the books of ESM Government Securities Inc. after the Securities and Exchange Commission charged that the man took bribes from officials of the collapsed securities company.

U.S. District Judge Jose Gonzalez also delayed action on a request by the court-appointed receiver for ESM to put it into bankruptcy proceedings.

ESM, based in Fort Lauderdale, was closed by the SEC on March 4 and was accused of bilking more than $300 million from its investors, including 15 cities and half-a-dozen savings and loan associations, including Cincinnati's Home State Savings Bank.

Assets Frozen

Gonzalez froze the assets of Jose Gomez, an independent accountant who had been a partner of Alexander Grant & Co., which audited ESM's books, after SEC attorney Bernard J. Barrett Jr. alleged that Gomez took payments totaling $125,000 last year from ESM officials.

Barrett claimed that $100,000 of those alleged payments came from former ESM President Ronald R. Ewton and principal George C. Mead.

"Mr. Gomez participated in a fraud through securities laws through holding himself out as an independent auditor," Barrett alleged.

Gomez, who was not in court, could not be reached for comment.

After Wednesday's hearing, Richard E. Brodsky, an attorney representing Chicago-based Alexander Grant, released a statement from the company saying that Gomez "is no longer a partner."

He said Gomez had been a managing partner of ESM's Miami-Fort Lauderdale office since 1983. Alexander Grant has 335 partners.

Copyright © 2019, Los Angeles Times
EDITION: California | U.S. & World