Charges Fraud, ‘Corporate Waste and Self-Dealing’ : Investor Seeks State Approval to Sue Sun S
An investor in troubled Sun Savings & Loan on Friday asked state regulators for permission to file a lawsuit against some past and present Sun officials for defrauding shareholders and for “corporate waste (and) self-dealing.”
In a filing with the state Department of Savings and Loan, Orange County developer Robert Blake charged that former Sun Chairman Daniel W. Dierdorff made loans to friends and associates “without adequate security” and that those loans contributed to Sun’s $5.8-million loss in 1984.
Blake also charged that, while Dierdorff was “inducing” potential investors to buy shares of Sun stock, he was also trying to sell his own Sun stock and stock options at “inflated prices.”
In an interview Friday, Dierdorff called Blake’s allegations “fallacious, incorrect and untrue.”
Dierdorff resigned last fall after a bitter and controversial power struggle among members of the S&L;’s board.
He was paid $346,612 in salary last year and an additional $147,555 as part of his resignation settlement.
Blake’s action asks state regulators for permission to file a derivative suit--similar to a class-action lawsuit--on behalf of the corporation against former and current Sun officials.
State law requires that such a request be made before an investor can directly sue an S&L.;
The last such suit in California “must have been 20 years” ago, according to Alex Stein, chief counsel to the state savings and loan commissioner.
Call for Resignations
Sun’s annual meeting is scheduled for Monday, and Blake’s filing is certain to heat up what already promises to be a controversial gathering.
Blake said Friday that he would call for the resignation of Sun’s directors at the meeting.
In his filing, Blake also charged that Sun earlier this year reimbursed the legal fees of Dierdorff and two former dissident shareholders who were later elected to Sun’s board.
Chief Executive John McEwan called Blake’s allegations “frivolous” and “without merit.”
Blake also claimed that former Chairman Harry Summers sold his stock at $17 per share based on his “inside knowledge” of Sun’s “true financial state.”
Summers could not be reached for comment Friday.
At the end of the first quarter, Sun’s net worth dropped to $6.1 million, or only 1.25% of its $485 million in assets, and about $1 million short of the minimum net worth required by federal regulators.
Problem loans at the time reached $36.1 million.
Sun stock closed Friday on the American Stock Exchange at $5 per share, down 25 cents.
Meanwhile, a group represented by former state Savings and Loan Commissioner Lawrence J. Taggart two weeks ago proposed to buy all of Sun’s nearly 1.2 million outstanding shares for $10 per share, according to sources familiar with the proposal.
The deal soured when the board asked for a higher price and balked at some of the group’s demands, which included a partial management restructuring, according to the sources.
Sun now is reportedly negotiating with San Diego developer Victor Fargo for a cash infusion of about $4 million.
The deal would give him about 25% of Sun’s stock.
According to Sun sources, a Fargo investment would be tied to Sun’s moving its University City headquarters into a La Jolla building owned by Fargo.
Sun financed 10% of the $17.5-million building, which will be completed later this year.
No Business Ties
Fargo, who already holds some Sun shares, could not be reached for comment.
Dierdorff said Friday that he knows Fargo but that they have no business ties.
“I have no control over what’s going on (at Sun),” Dierdorff said.
Earlier this week, Sun announced that it would move its corporate headquarters into a building to be constructed near its current headquarters.
Sun owned that land until last Monday, when it sold the 8.6 acres to Nexus Development of La Jolla for $7 million.
