The widow of millionaire industrialist J. Robert Fluor believes that California Canadian Bank misappropriated $6 million from a trust created by her late husband, according to documents filed in Orange County Superior Court.
Lillian B. Fluor also contends that a claim for $2.8 million in delinquent loans for the purchase of race horses, made by the bank that owns California Canadian, is "highly questionable in nature and circumstances."
The widow of the chairman of Fluor Corp., the worldwide engineering and construction concern based in Irvine, made the allegations in documents filed in Fluor's estate case. They are part of her request to hire Philip F. Belleville as special counsel to defend her against the bank claims.
"This is our best shot at what we think the situation is now," Belleville said. "The bottom line is a dispute about how California Canadian Bank as co-trustee handled the Fluor family trust."
Canadian Imperial Bank of Commerce, headquartered in Toronto, is the parent firm of California Canadian Bank. Fluor named California Canadian Bank, where he served as a director, and his wife as co-trustees of a family trust into which most of his estate was transferred by his will.
Earlier this year, Canadian Imperial sued Lillian Fluor in a San Francisco court, seeking $2,838,335 in overdue loans to her late husband. There has been no response filed to that suit, which was transferred last week to Orange County Superior Court.
In an attempt to satisfy its claim, the bank is trying to seize Lillian Fluor's Corona del Mar home.
The value of Fluor's estate in probate court was set at $4,193,020 in August, 1985. The family trust was set up to hold other assets of the late industrialist before his death, and their value is not reflected in court records.
Canadian Imperial officials could not be reached for comment.
The Canadian Imperial suit, filed in April, contended that California Canadian had for a number of years "made a series of advances" to Fluor "primarily to finance their investments in and purchases of race horses."
According to the lawsuit, the loans, with an interest rate matching the prime rate, totaled $9,151,054 when Fluor died on Sept. 9, 1984.
The total indebtedness was reduced to $2,838,355 by early 1985, according to documents in Fluor's probate case.
A sworn statement from Gerald K. Branch, senior vice president of California Canadian, stated that the debts were secured by 326,315 shares of Fluor Corp. stock.
"The collateral has since been liquidated at the direction of Mrs. Fluor and the proceeds paid to the bank," according to Branch's statement.
But in her court documents Lillian Fluor termed Canadian Imperial's claim for $2.8 million "questionable," saying that "there may have been repayments exceeding any principal borrowed."
Bank officials stated that their business relationship with Fluor was two decades old and may have involved some borrowing for which no records now exist, according to a statement made in April by Al Gibb, senior vice president for special loans for Canadian Imperial. Gibb stated that he previously held the same position for California Canadian Bank.
"The bank's records reflect a great many draws against the Fluors' line of credit, extending back 20 years," according to Gibb's statement filed in the Canadian Imperial lawsuit.
"It is my understanding that documentation for many of these borrowings, especially the earlier ones, has been destroyed pursuant to the bank's normal document retention practices," he added.
Gibb stated that bank reports showing credit extensions to Fluor secured by stock indicate a debt of "at least" $3,391,351.
Belleville said his firm is still preparing its formal answer to the bank's claim.
"Canadian Imperial came along and took trust assets which were exempt--assets which they could not legally reach--and applied them to reduce the balance of the alleged indebtedness," Belleville said.
California Canadian Bank is no stranger to controversy. The bank has been plagued with financial scandals, principally surrounding its relationship with W. Patrick Moriarty, the former Orange County fireworks manufacturer who was convicted on political corruption charges.
Earlier, Floyd Walden, an officer of California Canadian, was sentenced to four years in prison for evading taxes on a $230,000 kickback he received from Moriarty.
The bank sued Moriarty and others in July, 1984, claiming that they owed $20 million in loans. Three other California Canadian officers were fired as a result of the Moriarty scandal.