Fraud Inquiry Into Failed Santa Ana S&L; Under Way

The FBI and the state attorney general’s office said Wednesday that they are investigating possible fraud and embezzlement involving up to $20 million at North America Savings & Loan Assn., the Santa Ana institution that was seized by regulators on Jan. 16.

The state’s investigation, which the state Department of Savings and Loan sought after it seized the $219-million S&L;, is focusing on the role played by the owner’s close friend and business confidante, Janet F. McKinzie, in the institution’s activities, according to government sources involved in the inquiry.

Meanwhile, a will and trust documents signed by the owner, Duayne D. Christensen, just three days before his death have been filed in a Douglas County, Nev., court. The documents show that he left all of his assets to McKinzie.

FBI spokesman Fred Reagan said it was too early in his agency’s investigation to identify any suspects, but he confirmed that the FBI has “opened an investigation on possible bank fraud and embezzlement.”

The former president of North America Savings, Brooks A. Miller, said an FBI agent called him Wednesday morning to ask about boxes of files suspected to be missing from the office McKinzie used. Miller said McKinzie, a paid consultant to the S&L;, often brought “three, four, five briefcases” to work as well as boxes of files. She also took work home with her, he said. He said he did not notice anything out of the ordinary occurring.

McKinzie, through a guard outside her gated community in Newport Beach, said Tuesday that she was under a doctor’s care and could not talk to reporters. Her attorney could not be reached for comment.

Steve Adler, chief of the state attorney general’s major-fraud unit in San Diego, said his office was gathering evidence when federal regulators put the S&L; into receivership last Friday. He said he will be turning over the information he has to the U.S. attorney’s office and will offer “any assistance that’s appropriate.”

Christensen, 56, was killed in a single-car crash on the Corona del Mar Freeway just 9 1/2 hours before state regulators seized the S&L; and put it in conservatorship. Federal regulators moved in last Friday to put the S&L; into receivership. The coroner’s office has tentatively ruled his death an accident.

Christensen had a noon deadline on Jan. 16 to raise $6 million to prop up his institution’s sagging capital base. The S&L; lost $8.9 million in the first 11 months of last year and had a negative net worth of $1.5 million by the end of November. State regulators recently put the net worth at a negative $6.5 million.

Both the will and the trust were filed at the Douglas County district court clerk’s office in Minden, Nev., on Jan. 21, the day Christensen was buried in a Newport Beach cemetery. McKinzie signed a document Jan. 20 stating that she will serve as trustee under the terms of the trust. She also was named as executor of the will.

One of his three children--Duayne Daniel Christensen, who has admitted in court documents to using narcotics and has been convicted of armed robbery, burglary and lesser charges--was left out of the will and trust. His other two children, a daughter and another son, eventually may receive some of the property in their father’s estate through the trust. After McKinzie dies, Virginia Walker of Elk Grove, another close friend of Christensen, will inherit what is left of the property, and Christensen’s daughter and son are to receive what is left when she dies.

Besides giving McKinzie, 37, his assets under the will and the trust, Christensen deeded a posh Newport Beach home to her in June, 1984. She also owns a 1985 Mercedes-Benz and a 1986 Rolls-Royce.

The elder Christensen, a Westminster dentist, had said in a financial statement given to Imperial Bank last spring that his net worth was $62.5 million. But his real net worth is not yet known, as state and federal regulators and investigators continue to look into what one state S&L; regulator called the “most massive fraud” he had ever seen in an S&L;’s operations.

The younger Duayne Christensen, 31, is awaiting trial in Orange County Superior Court for six counts of armed robbery, including holdups of three banks and a San Juan Capistrano country club golf shop, that were committed in a four-week period last May and June. He had been returned to state prison for violating the terms of parole on an earlier armed robbery conviction when Orange County authorities linked him to the 1986 robberies, according to Deputy Dist. Atty. Arnold Westra.

In conservatorship papers filed with the court, the state S&L; agency said Christensen falsified records, forged signatures and made questionable payments totaling more than $4 million to himself and McKinzie.

Imperial Bank has sued McKinzie, alleging that she aided the dentist in getting loan extensions based on falsified documents, which included a fake $2.7-million certificate of deposit in Christensen’s name at North America Savings. State regulators said more than 160 fake CDs are involved in their investigation.

In Alaska, where the S&L; was heavily involved in real estate loans, the First Interstate Bank of Alaska was holding phony stock certificates, supposedly worth $1.4 million, for shares in North America Savings owned by McKinzie’s sister, Rebecca Thrall, according to documents filed by the state S&L; agency. The documents said Thrall used the stock certificates as collateral on a loan, which went into default.

Thrall, a mortgage broker in Anchorage, had put together numerous loans for the S&L;, Miller said. Because of the oil glut, dozens of homeowners and developers walked away from mortgage payments and real estate projects, leaving the institution with up to $30 million in potential losses, a state S&L; official said.

William J. Crawford said that since he became the state S&L; commissioner two years ago he had been grappling with Christensen over a condominium project in the Lake Tahoe area that the association was trying to turn into a vacation time-share resort while it also was trying to sell it.

Crawford’s chief deputy, William Davis, said Christensen had built the 20-unit luxury condo project for $1.8 million and contributed it to the S&L;’s capital base at more than $14 million, which would allow the institution to inflate assets dramatically. Davis said the state argued that the structure was worth no more than about $3 million.

Times staff writer Mark Landsbaum contributed to this article.