Dustin Rose Resigns as Crown Bancorp Chief

Crown Bancorp Chairman Dustin Rose, who for months wrestled corporate controversies both from within and without, on Tuesday resigned as chairman of Crown and of its two subsidiaries, Bank of Coronado and Capital Bank of Carlsbad--the second Crown chairman to resign in the past 14 months.

Two other Crown directors also resigned Tuesday.

Coronado physician Philip Akre was elected chairman of both Crown and the Bank of Coronado. Akre likely will also be elected chairman of Capital Bank of Carlsbad when that bank’s directors meet in the next week to select a replacement for Rose, according to Crown sources.

In the past six months, Crown and the Bank of Coronado have been besieged with controversies, including the indictment of a San Ysidro branch manager on charges of money laundering, a cease-and-desist order from regulators, the forced resignation in July of Crown President James G. Klingensmith and a near-proxy battle that was sparked by Klingensmith’s departure.

Rose and Crown appeared to have weathered those corporate storms. However, Rose’s role in a controversial loan by the bank, a loan that he had guaranteed, sparked litigation and what several Crown sources described as “bad publicity.” And it was that publicity, teamed with the other events, that led to Rose’s departure, sources said.

“It was hurting the bank,” Rose, a 45-year-old Coronado attorney, said in an interview Tuesday. “And it’s important to get the community bank out of the bad press.”

Also stepping down was director Frederick M. Swenson, a founding board member, and Scott Morgan, a director of Capital Bank of Carlsbad who was elected to the Crown board only last Thursday.

Swenson is a sales representative at the Coronado Shore Co., which is owned by former Crown Chairman Richard Maitland. Maitland resigned in mid-1984 after experiencing “philosophical differences” with other directors over the potential sale of the company to outside investors.

Like Rose, Swenson said he “resigned for the good of the bank. There was too much in-fighting and pointing fingers at one another. It’s better to get away. (The board) can do a good job--let them make their own choices rather than be forced to make choices.”

The loan controversy surrounding Rose involves a $500,000 loan made to a Saudi Arabian to buy a house in Laguna Beach. The loan later went into default. But Rose and two others, including one of his clients, had guaranteed the loan and pledged to pay the bank $105,000 in the event of a default.

Only Rose paid his $35,000 share. The bank has sued the other guarantors, and one of them has counter-sued the bank, charging that he was “deceived” into signing the promissory note. (The house was later sold for $495,000.)

In addition, it was revealed in the San Diego Union on Tuesday that Rose had been named last year in a lawsuit brought by a family trust against Bank of America. The suit alleged that the bank acted improperly by selling a piece of Coronado property to a partnership headed by Rose for $600,000 and then buying it back a year later for a reported $1.5 million.

Rose’s resignation all but eliminates the possibility of former Capital Bank president Ed Schmidt becoming Crown president, according to bank sources. Schmidt was seen as an ally of Rose.