Orange County Developer Says Shareholders Were Defrauded : Investor Asks OK to Sue Sun Savings’ Officials
An Orange County developer and investor in troubled Sun Savings & Loan Assn. on Friday asked state regulators for permission to file a lawsuit against some past and present Sun officials who, he says, defrauded shareholders and were responsible for corporate waste and self-dealing.
In a filing with the state Department of Savings & Loan, Robert Blake charged that former Sun Chairman Daniel W. Dierdorff made loans to friends and associates “without adequate security” and that these 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.”
Allegations Called Untrue
In an interview Friday, Dierdorff called Blake’s allegations “fallacious, incorrect and untrue.”
Dierdorff resigned last fall after a bitter and controversial board of directors power struggle. He was paid $346,612 in salary last year and another $147,555 as part of his resignation settlement.
Blake’s action asks state regulators for permission to file a derivative suit on behalf of the corporation against former and current Sun officials. State law requires such a request before an investor can directly sue an S&L.;
Sun’s annual meeting is scheduled for Monday and Blake’s filing is certain to heat up what already promised to be a controversial gathering. Blake on Friday said he would call for the resignation of Sun’s directors at the meeting.
Reimbursed Legal Fees
Blake in his filing 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 former Chairman Harry Summers sold his stock at $17 per share based upon 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.
Stock at $5
Sun stock closed Friday at $5 per share, down .
Meanwhile, a group represented by former state Savings and Loan Commissioner Lawrence 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 into the ailing S&L.; The deal would give him about 25% of Sun’s stock.
Investment Conditions
According to Sun sources, a Fargo investment would be tied to Sun 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.
Fargo, who owns some Sun shares, could not be reached for comment.
Dierdorff on Friday said he knows Fargo although they are not close friends and they have no business ties.
“I have no control over what’s going on (at Sun),” said Dierdorff.
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 Corp. of La Jolla for $7 million.
