Officials, Accountants of Failed S & L Sued by U.S.
Federal regulators have filed two lawsuits against officials of the failed San Marino Savings & Loan Assn. and a third against accountants that monitored the firm.
In addition to a lawsuit against the failed thrift’s senior loan officer filed in U.S. District Court, the Federal Savings and Loan Insurance Corp. also filed two Superior Court lawsuits on Friday, one of which sought $70 million in damages.
Regulators closed and liquidated the savings and loan last December because its loan quality was so poor that there was almost no equity left to preserve, according to Donald Crocker, the government-appointed conservator.
The $193 million in liquidation costs represented the largest loss ever absorbed by the FSLIC, a senior Federal Home Loan Bank Board official said last year.
‘Grossly Imprudent Loans’
The federal lawsuit, alleging breach of fiduciary responsibility, contends that the government was forced to shut down the firm because of $200 million in “grossly imprudent loans” approved by its former senior vice president, Stephen L. Goodman.
Goodman could not be reached for comment Friday.
During Goodman’s tenure as head of San Marino Savings’ lending department, the suit contended, the firm agreed to fund numerous condominium conversion projects for developers Frank Domingues and Jack Bona.
The value of the property that secured the loans was substantially less than the loan amounts, according to the suit filed by Los Angeles attorney David V. Babbe and attorneys from the federal loan agency’s headquarters in Washington.
Differing Appraisals
Apartment buildings that Bona and Domingues appraised at $180 million were acquired for $63 million but were worth $80 million, the suit contends.
Goodman received a $25,000 loan from Bona and Domingues during the period that their loans were being approved, the suit alleged.
Federal thrift regulators are seeking $1 million in punitive damages from Goodman, plus actual damages.
In one of the Superior Court suits, Babbe alleges that officers of San Marino Savings entered into financial arrangements with various companies that resulted in crippling losses. The suit seeks $50 million in compensatory damages and $20 million in punitive damages.
The other Superior Court suit, against the accounting firm of McGladrey, Hendrickson & Pullen, alleges that the company failed to report irregularities in the thrift’s records. The suit seeks unspecified damages.
A call to the accounting firm for comment, made after business hours, was not answered.
