First Interstate Adds to Woes for Malcolm

State Coastal Commissioner David Malcolm, already under investigation for allegedly discussing ways to set fire to an expensive house and collect the insurance money, on Friday drew the wrath of giant First Interstate Bank for apparently violating an agreement to stop calling his partnership First Interstate Financial.

Bank officials said they will pursue “whatever remedies” are available against Malcolm and his associate, Dennis Schmucker, for continuing to call their partnership First Interstate Financial until mid-1984--two years after they had agreed to abandon the name.

The bank signed an agreement with Malcolm and Schmucker on June 22, 1982, that prohibited the San Diego businessmen from using the name First Interstate Financial, bank officials said Friday after being told by a Times reporter that the name had been used after that date.

According to documents on file at the county recorder’s office, however, Malcolm and Schmucker used the name for at least two years after that agreement was signed. Malcolm and Schmucker used First Interstate Financial as the general partner in a series of limited partnerships called F.I.F.

Malcolm is under investigation by the San Diego County district attorney for discussing in at least two taped conversations a plan to blow up an expensive Mission Hills house so he could collect on a $1-million insurance policy.

Malcolm and Schmucker took possession of the 7,200-square-foot house in early 1984, when one of their partnerships, F.I.F. Partnership No. 53, foreclosed on a $450,000 loan it had made to the owner, Chittenden Trust.

Malcolm and Schmucker, who is a court-appointed receiver for the downtown Executive Hotel complex, claim that the taped conversations are being used by a former representative of the trust to extort money from them.

Officially, First Interstate Financial no longer exists, according to the secretary of state’s office in Sacramento.

Malcolm changed the name of the firm Aug. 9, 1982, to Intrastate First Financial. Simultaneously, First Interstate Bank officials registered the name First Interstate Financial Corp. with the secretary of state to protect against anyone else using it.

Bank managers had been alerted to Malcolm and Schmucker’s partnership name in spring 1982 and challenged its use.

Malcolm said Friday that continued use of the First Interstate Financial name by the partnership was “obviously a mistake--First Interstate Financial doesn’t exist anymore.”

Several documents on file at the county recorder’s office show that Malcolm signed limited partnership certificates as general partner of First Interstate Financial at least until June 22, 1984--two years after agreeing with the Los Angeles-based bank to abandon the name.

The forms, Malcolm said Friday, “should have been filled out saying (we) used to be known as First Interstate Financial.”

First Interstate Bank’s Campbell said: “As far as I’m concerned, we have an executed agreement between Malcolm and Schmucker that they would no longer be using the First Interstate name in any capacity, such as letterhead, stationery, contracts and advertising.”

Campbell said the bank is prepared to “pursue whatever remedies we feel are important. He appears not to be complying with it.”

The bank, Campbell said, spends “a lot of money in advertising” to promote its name, and it’s “exactly these kind of situations we want to avoid.”

Times staff writer Ralph Frammolino contributed to this story.