Ferrante Still Firing Away at Bank Regulators as They Tighten the Noose
It was and still is my husband’s policy to take extreme risks with money, even to the point of nearly being murdered because of its use. --Los Angeles Superior Court declaration by Carol Suzanne Ferrante
Real estate developer Robert A. Ferrante was working in his Redondo Beach office around midnight on April 12, 1982, when he heard a noise and went outside to investigate. A gunman leaped out, and a barrage of bullets sliced through the darkness.
Six .22-caliber bullets pierced Ferrante’s body, one bullet lodging dangerously near his heart.
A friend working with him took Ferrante to Little Company of Mary Hospital in Torrance. In the emergency room, Ferrante refused to talk to police officers until his lawyer appeared at his side. Although Ferrante described his assailant as a husky, 200-pound six-footer, he offered little information about who might have wanted him killed, according to Police Officer Brian Buffer, who responded to the call that night.
In a recent interview, Ferrante brushed off the significance of the shooting, saying that he thought he might have startled a burglar trying to break into his garage to steal his car.
Thirteen months after the shooting, a fully recovered Ferrante obtained a state charter to open Consolidated Savings Bank. While promoting itself as a small, community bank, Irvine-based Consolidated quickly began lending money to customers as far away as New York and Hawaii.
A little more than two years later, on May 22, 1986, state and federal regulators declared Consolidated insolvent and shut it down. Regulators now say that Ferrante’s actions and those of certain executives directly caused about $30 million in losses to the savings bank.
“They bled this institution dry,” said one federal official summing up the allegations contained in Federal Savings and Loan Insurance Corp.’s lawsuit against Consolidated. The savings bank was primarily run by Ferrante for the benefit of his relatives and friends and himself, the suit alleges. At its peak, Consolidated boasted $79 million in deposits. “The acts we’ve seen (at Consolidated) are as bad as anyone has ever seen,” one regulator said.
Labyrinth of Deals, Suits
The rapid rise and fall of Consolidated left a wake of unanswered questions, a labyrinth of real estate deals and acrimonious lawsuits.
The FSLIC has filed a $28-million lawsuit against Ferrante and certain officers and directors, alleging fraud and breach of fiduciary duty. On Aug. 29, FSLIC appointed a receiver to begin liquidating Consolidated because, as one official put it, the S&L; was “hopelessly underwater.”
But in response to the FSLIC lawsuit, Ferrante filed his own suit seeking to regain control of the bank. The suit alleges that the Federal Home Loan Bank Board, the parent agency to the FSLIC, orchestrated a “systematic strangulation,” which ultimately drove Consolidated to ruin. Ferrante’s action alleges that the bank board “caused great expense and prevented Consolidated from recognizing in excess of $20 million in profits and net worth.”
But as the tangled litigation continues, FSLIC attorneys and auditors continue to review Consolidated’s books and records.
The results of the government’s efforts so far reveal some unusual loans and business relationships.
The lawsuit alleges that Consolidated’s board not only failed to properly document some of its loans but made $6 million in loans to a “corporation whose sole stockholder, Charles Bazarian, has been convicted of mail fraud.” Bazarian is one of eight individuals named in FSLIC’s action against Consolidated.
Bazarian, whose C.B. Financial operates from Oklahoma City, was convicted on mail fraud charges in 1978. The charges stemmed from a mail-order insurance company he operated. Bazarian, who pleaded no contest to the charges, agreed to cooperate with federal investigators and received a four-year suspended sentence, according to court records.
New York Indictment
A Brooklyn, N. Y., grand jury is investigating a series of loans and related transactions involving another of Consolidated’s clients, Mario Renda, according to a grand jury subpoena dated June 16, 1986, which has been obtained by The Times.
In September, Renda, a Garden City, N. Y., money broker was indicted by a federal grand jury in Orlando, Fla., on charges that he took part in a fraudulent scheme that caused the failure of Florida Center Bank in Orlando. Renda, who pleaded not guilty to the mail fraud and bank fraud charges, is now on trial in an Orlando federal court. A spokesman for one of his companies declined to comment on any of the lawsuits against him or the grand jury’s investigation.
Bazarian pleaded not guilty to the same charges and is also on trial in Orlando. An attorney for his company said he would have no comment on any of the legal actions against Bazarian.
The Brooklyn grand jury’s subpoena called for Consolidated to produce records pertaining to accounts held by Mario and Antoinette Renda, five other individuals and eight corporations for the period between Jan. 1, 1980, and May 31, 1986.
Bruce Maffeo, special assistant U.S. attorney in Brooklyn, declined to comment on the grand jury’s investigation.
Eric C. Bronk, Ferrante’s personal attorney, said he was unaware of any grand jury investigation and could not comment on it.
7 Times Net Worth
According to court records, the S&L; allegedly overvalued the real estate which served as collateral for its loans and exceeded its regulatory lending limits. For example, the suit lists eight loans, which amounted to more than seven times Consolidated’s net worth. “Two of the largest loans were extended to entities in which Ferrante had a controlling or substantial interest, one was a loan to Ferrante’s sister and her husband, one was a loan to one of Ferrante’s business associates and two were made to corporations of dubious worth engaged in the financing of highly speculative out-of-state real estate development projects,” the suit said.
But like other executives of failed institutions the principals of Consolidated maintain that their problems with regulators had more to do with form than substance.
Brian C. Lysaght, a Santa Monica attorney handling Ferrante’s federal litigation, said the bank board had it in for Ferrante and Ottavio A. Angotti, former president of Consolidated, because the two maverick bankers were “rude and threatening” to the bank board staff. But Lysaght insists that was not reason enough to shut down Consolidated.
Ferrante, an impeccable dresser who favors monogrammed shirts, says he and longtime friend Angotti, who formerly worked for Bank of America, decided to open their own S&L; because they were tired of watching their business deals make money for other lenders.
They wanted to take advantage of S&L; industry deregulation which had attracted other real estate developers to the field, Ferrante said in an interview.
From the beginning, Ferrante said the bank board was biased against Consolidated because he and Angotti are Italian-Americans--a puzzling allegation since the president of the Federal Home Loan Bank of San Francisco, James M. Cirona, is also of Italian descent. “This agency doesn’t make any decisions based on any ethnic background,” said FSLIC trial attorney James H. Lauer Jr. “It (the lawsuit) had to do with the egregious conduct of the individuals.”
Forum for Criticism
Angotti said he believed that he antagonized regulators by running for a seat on the board of directors of the San Francisco bank board in the fall of 1985. Angotti lost the election but gained a forum to criticize the board and its reigning philosophies.
FSLIC’s Lauer said the litigation division was not aware of Angotti’s bid for the FHLBB office.
About a year before its closure, a series of audits and examinations prompted the bank board to issue a supervisory order severely limiting Consolidated’s operations. Ferrante blames seven months of inaction and delays by the bank board for leading to Consolidated’s collapse. He said every request and business proposal submitted by Consolidated to the staff in San Francisco was met with delay and indifference.
“It became apparent that the bank board and supervisory staff were not negotiating in good faith but instead were embarked on a predetermined course to interfere with business operations, obstruct remedial proposals, place the institution in conservatorship and gather information for the purpose of drafting a $28-million lawsuit against the very management personnel with whom they were speaking,” Consolidated’s suit said.
Or as Ferrante said in a recent interview: “We were a little bank with little earnings. There is a concerted effort to put the little guys out of business, to absorb them.”
In a final attempt to lift the restrictions placed on it, Consolidated’s board of directors prepared to file a lawsuit against the bank board. On May 22, the same day Consolidated’s board was scheduled to approve the filing of the lawsuit, FSLIC moved in and closed down the troubled S&L;, Ferrante said.
Bronk’s Allegations
Since then, his attorney, Bronk, has also filed a lawsuit in Los Angeles federal court seeking $8 million in damages from FSLIC and various outside attorneys who participated in the Consolidated takeover. Bronk also alleges that the government violated his constitutional rights by seizing bank records housed in his Irvine law office. The regulators maintain that Bronk’s office was part of the S&L;’s operations.
The FSLIC, in turn, added Bronk and 21 other defendants to its action against Ferrante and accused the lawyer of fraud and racketeering. Bronk denies the allegations.
Meanwhile, the attention focused on the downfall of Consolidated has spilled over onto Ferrante. Although he keeps a very low profile and generally avoids contact with the press, his personal wealth and flamboyant life style have become topics of discussion among state and federal regulators.
Ferrante said he was born and raised in Orange County. He attended law school but did not graduate and never practiced law. He lives in a Newport Beach condominium and drives a Ferrari, which is owned by one of his many corporations. Another of his corporations owns an interest in a 105-foot charter yacht, the Avanti, which is berthed in Newport Harbor. He has been separated from his wife for the past three years.
In an earlier interview, Ferrante estimated his personal wealth at $11 million.
He said he began doing real estate deals with his father-in-law and later branched off on his own. His major projects included Brookside Village, a condominium conversion project in Redondo Beach, and a 50% interest in North Coast Village, a condo project in Oceanside.
Council Influence Charged
In 1983, Ferrante was in the news when Redondo Beach City Councilman Walter L. Mitchell Jr. was indicted on mail fraud charges by a Los Angeles federal grand jury. Mitchell, a painting contractor, was later convicted and sentenced to 18 months in prison for tax evasion and fraud. Evidence introduced during the trial showed that Mitchell had accepted $108,000 in work from companies controlled by Ferrante in exchange for influencing the City Council to approve Ferrante’s condo conversion project.
Ferrante, who was never charged or called into court, said the whole affair was a mix-up.
Although Ferrante’s estranged wife, Carol Suzanne, declined to be interviewed, she describes his personal business philosophy in documents filed in their Los Angeles Superior Court divorce suit.
“In his business dealings, my husband has always used multiple corporations, general and limited partnerships in other person’s names and other techniques to disguise the exact extent of his holdings,” wrote Carol Suzanne Ferrante in a declaration filed in court.
Among those business interests is Pyrotronics Inc., an Orange County fireworks maker once controlled by convicted political corrupter W. Patrick Moriarty. Records filed in the Pyrotronics’ bankruptcy case detail numerous transactions between the company and the S&L.;
And new allegations involving Pyrotronics were added to the FSLIC suit against Consolidated in documents filed on Nov. 17 in federal court.
“Ferrante, acting through various intermediaries, planned to acquire effective control over Moriarty’s fireworks company at a greatly reduced price because Ferrante was in a position to ensure that Consolidated would provide the financing, which was then desperately needed by Pyrotronics,” according to the amended complaint filed by FSLIC.
Federal Finance Set Up
The complaint alleges that Consolidated lent the ailing fireworks company millions of dollars to get through the July 4, 1985, fireworks season. Pyrotronics, which filed for Chapter 11 bankruptcy protection in June, 1986, still owes Consolidated about $1 million.
After the bank board issued a Sept. 26, 1985, cease-and-desist order prohibiting Consolidated from making new commercial loans, the complaint alleges that Ferrante and his associates set up a company called Federal Finance to “funnel funds” from the bank to Pyrotronics. Individuals were instructed by Ferrante and his associates to borrow the money and turn it over to the company, the complaint said.
“On this basis, in excess of $1.3 million was disbursed by Consolidated . . . to Pyrotronics during the 1986 fireworks season,” according to the complaint.
Lysaght, Ferrante’s attorney, said there was nothing illegal about the individuals borrowing money from Consolidated by mortgaging their homes and lending it to Pyrotronics because it desperately needed cash to get through the 1985 fireworks season.
“Who are they (FSLIC) to say you can’t take the money and give it to Pyrotronics?” asked Lysaght.
Besides, he notes in his court papers, the FSLIC does not allege that the borrowers failed to pay back the loans.
INSTITUTION: Consolidated Savings Bank, Irvine THE BEGINNING: Opened Feb. 28, 2984, with $2 million in capital THE GROWTH: Grew to $97 million in assets with one office during 1986 TAKEN OVER: Seized May 22, 1986. Assets at $84.3 million. Closed Aug. 29, 1986
