FBI Enters Probe of Failed Consolidated Savings Bank

The FBI said Friday that it is looking into charges of criminal wrongdoing at the failed Consolidated Savings Bank in Irvine.

FBI agents were part of a team that helped state and federal regulators take over the small institution Thursday afternoon.

“I would hesitate to call it an investigation. It’s more an inquiry to determine the validity of the allegations made by the Federal Home Loan Bank Board,” said Fred Reagan, special agent for the FBI’s office in Los Angeles.

The bank board, which regulates savings institutions insured by the Federal Savings and Loan Insurance Corp., also filed a federal court suit Friday against Consolidated’s sole owner, Newport Beach developer Robert A. Ferrante; its maverick chairman and chief executive, Ottavio A. Angotti, and more than a dozen other bank officers. The suit seeks to recover more than $28 million in allegedly improper loans on projects Ferrante and his associates controlled. Since opening in February, 1984, Consolidated made loans totaling more than $35 million on developments owned by Ferrante or his associates, the bank board’s suit alleges.

U.S. District Judge Richard A. Gadbois Jr. issued a temporary order Friday to prevent the transfer of any of Consolidated’s assets.

Ferrante, 36, has had financial ties to W. Patrick Moriarty, the former Anaheim fireworks magnate now serving a seven-year prison sentence for political corruption. Consolidated made several loans to Moriarty’s Pyrotronics Corp. in Anaheim, a spokesman for the S&L; said.

Ferrante also was identified by prosecutors in a 1983 political corruption case as the source for part of $40,000 in hidden payments made to former Redondo Beach City Councilman Walter Mitchell, allegedly to help win approval for a condominium project Ferrante wanted to build. Mitchell was sentenced to 18 months in prison on corruption and tax fraud charges in 1983. Ferrante was never charged.

In seizing Consolidated on Thursday, the bank board claimed that the S&L; was violating federal regulatory laws by making large insider loans, exceeding its lending limit for a single borrower and failing to obtain adequate real estate appraisals.

The regulator, claiming that Consolidated was dissipating its assets of $84.3 million and its year-end earnings of $2.6 million, turned over operation of the 2-year-old institution to a management team from Household Bank, a Newport Beach-based S&L.;

The bank board reportedly sought help for a fraud investigation from the U.S. Justice Department, which, in turn, summoned the FBI. Reagan said it was “not uncommon” anymore for agents to look into the causes of bank failures.

However, the Justice Department and the FBI are rarely called in on savings and loan failures.

Consolidated was the 16th S&L; in the nation, sixth in the state and second in Orange County to be taken over by regulators this year. American Diversified Savings Bank in Costa Mesa was taken over on Feb. 14.

Ironically, one insider said, it was a real estate deal between Ferrante and American Diversified’s chairman and majority owner, Ranbir Sahni, that became a major stumbling block to Consolidated’s continued viability. Neither could be reached for comment.

According to Eric Bronk, a consultant for Consolidated, the deal involved a 157-acre commercial-office parcel on a contaminated former dump site in Carson on which Moriarty and an associate had an option to buy for $9 million.

The bank board’s suit claims that Consolidated gave a Ferrante partnership a $20-million loan last year to buy the property. But Bronk claims that the complicated arrangement was really a direct investment, not a loan to Ferrante, because Ferrante had assigned to Consolidated the rights to the property.

Despite the bank board’s claim in the lawsuit that $20 million was loaned to the Ferrante group, Bronk claimed that the total of the loan, fees and other expenses was $16 million. Sahni, claiming an ownership interest in the Carson property, threatened to sue Ferrante and Consolidated, Bronk said. To avoid litigation, Consolidated sold the property last fall to Sahni, who paid $3 million down, assumed a $16-million loan and signed promissory notes to pay $22 million more, Bronk said. But when American Diversified was taken over last February, Sahni decided to peddle the property, Bronk said. Ferrante and Angotti helped to find a buyer. But that deal fell through when regulators failed to take action on the bank’s request to approve the deal, Bronk said. He said it would have added about $12 million to the S&L;’s net worth if the bank board had approved the deal.

A bank board spokeswoman would not comment on the deal.

Ferrante’s partnership, which planned an industrial center for the land, later filed for bankruptcy.

Bronk, who was speaking for Angotti, said Sahni still is current on payments due to Consolidated on promissory notes and a loan totaling $38 million.