U.S. Sues American Diversified Leaders
Less than a week after seizing American Diversified Savings Bank, federal regulators have filed a $76.6-million lawsuit against Ranbir Sahni, American Diversified’s controversial majority owner and former chairman, and Lester Day, the S&L;’s former president, alleging that the two committed various acts of fraud and racketeering while officers of the failed S&L.;
The Federal Savings and Loan Insurance Corp. also has obtained a temporary restraining order freezing Sahni’s personal assets pending a jury trial on the suit, filed Wednesday in Los Angeles federal court.
Sahni, a former Indian Air Force and TWA pilot, owns 96% of Costa Mesa-based American Diversified’s stock and Day owns the remaining 4%. Although both have been fired as officers of the corporation, they retain their seats on American Diversified’s board.
According to documents filed with the court, the two men systematically engaged in activities that caused the S&L; to lose at least $60 million in recent years.
The two “were profiting at the association’s expense through self-serving transactions and flagrant violation of their fiduciary duties” to the S&L;, the suit alleged.
Sahni, the suit said, illegally obtained least $1.5 million in proceeds from a fraudulent real estate deal involving the purchases by American Diversified and by a limited partnership he controls in two office buildings in Colorado.
The FSLIC suit alleged that Sahni intentionally altered a title policy and withheld other documents so that he could inflate the purchase price of the building he was purchasing for the partnership. As a result, the suit says, he obtained a loan of $9.9 million, which was “at least a million dollars more than the true purchase price of the property.”
At the same time, the suit said, Sahni caused the price of an identical building being purchased by American Diversified Capital Corp., a subsidiary of his S&L;, to be inflated by $1.2 million, which was paid to an unidentified third party, who then kicked back $500,000 to Sahni.
In all, the suit seeks $60 million in compensatory damages for potential losses to American Diversified Savings Bank from the alleged illegal acts of Sahni and Day; $6.6 million in treble damages under federal racketeering statutes; $5 million each from Sahni and Day in punitive damages, and the return of $558,000 in bonuses paid to Day in late 1985 and early this year.
The suit says that the bonuses were paid to Day, whose annual salary was $195,000, in direct violation of a regulatory order that the S&L--because; of financial problems that began in 1985--not pay bonuses to any officer or director making more than $80,000 a year.
Petitions filed by FSLIC in support of its bid for a court order freezing the two men’s assets argued that “it is in the public interest that defendants Sahni and Day be prevented from dissipating assets and destroying documents and other documentary evidence.”
It was not immediately clear Thursday why Day’s assets were not frozen. Neither Sahni nor Day could be reached for comment.
Since it was formed as a state-chartered S&L; in 1983, American Diversified had been a constant irritant to Federal Home Loan Bank Board Chairman Edwin Gray, who disapproved of the institution’s unorthodox investment practices.
On Feb. 14, state and federal regulators declared American Diversified insolvent and seized the troubled S&L.; It is currently being run by a management team from Costa Mesa-based Pacific Savings Bank, under contract with the FSLIC.
