Failed S&L;’s Owner, His Confidante Removed Papers, Regulators Claim
State and federal regulators assert in court documents unsealed Thursday that the late owner of North America Savings & Loan Assn. and his confidante and business manager, Janet F. McKinzie, removed documents from the failed Santa Ana institution to hinder government investigations.
The business records, which regulators charge that McKinzie has refused to return, are needed to help the government operate the $219-million institution, which state regulators seized Jan. 16 and which federal regulators later declared insolvent and took over.
The court papers also reveal the growing extent of what a state regulator has called the “most massive fraud” he has seen at a savings institution. Previously, regulators released some details of falsified records, forged documents and questionable payments totaling $4 million to the S&L;’s late owner, Duayne D. Christensen, and McKinzie.
The papers, which had been sealed by an Orange County judge but were opened to public view Thursday at the request of The Times, show that:
- The S&L; had six phony certificates of deposit worth $11.5 million supposedly drawn on the Bank of Alex Brown in Sacramento. The bank has no record of issuing the CDs or receiving the funds.
- State regulators ordered the S&L;, among other things, to stop doing business with McKinzie or any firm she operates as of Dec. 31. Regulators have questioned “advance commissions” of $1.75 million and $434,000 in undocumented expenses paid to McKinzie.
- Christensen ordered S&L; employees to establish more than 160 fake deposit accounts. The documents show that Christensen told his staff that any release of information about the accounts “would result in immediate termination.” Regulators said they do not believe the employees were told the accounts were fraudulent.
The FBI and the state attorney general’s office have said they are investigating possible fraud and embezzlement involving up to $20 million at North America S&L.; State officials said their investigation focuses on McKinzie and the role she played in the institution’s activities.
McKinzie, who has said she is under doctor’s care, could not be reached for comment Thursday. Her attorney has not returned telephone calls for three days.
Christensen, 56, a Westminster dentist, died in a car crash early Jan. 16, about 9 1/2 hours before his institution was taken over by state regulators. The Orange County coroner’s office has tentatively ruled his death an accident.
Under a will and a trust he signed three days before his death, Christensen’s estate goes to McKinzie. The probate papers were filed in a Nevada court on Jan. 21, the day he was buried.
The papers unsealed Thursday include court orders obtained by the Federal Savings and Loan Insurance Corp. that seek North America S&L; documents believed to be at four locations: McKinzie’s Newport Beach residence; McKinzie Realty, a firm operated by McKinzie in Elk Grove, Calif., a Costa Mesa public storage facility and the Pasadena offices of North America S&L;’s accountant and auditor, Jeffery, Palazzola and Co.
Before Christensen’s death, he and McKinzie “wrongfully removed” the books, records and documents from the S&L; office “to impair any investigation into the (savings and loan) association’s activities and to hinder the continued operation of the association,” William Davis, deputy commissioner of the state Department of Savings and Loan, said in a court declaration.
“McKinzie is wrongfully withholding them from their rightful owner, the association,” Davis said. The state did not demand that McKinzie turn over the documents when seizing the savings and loan because regulators feared that such an action might “result in their alteration, destruction, removal or other impairment,” Davis said. Regulators sought court action when the documents were not found in the S&L; offices.
The regulators claim that Jeffery, Palazzola and Co. has some of the S&L; documents, although they do not claim that those records were improperly removed or withheld.
No one at the accounting firm could be reached for comment Thursday.
McKinzie was a consultant to North America S&L; but “acted at times as its de facto executive assistant to the chairman and is the personal representative of (Christensen’s) estate,” according to the documents. Other court documents reveal that she sent letters on North America stationery identifying herself as the assistant to the chairman.
