Secrets Come to Light : Dead Banker’s Past Reveals a Troubled Man

Duayne Day Christensen was a very private man, as men of wealth often are.

The Westminster dentist had built a financial empire out of his dental practice that included ownership of North America Savings & Loan Assn. in Santa Ana, extensive stock holdings, international investments and cattle ranches in Nevada and Arizona.

Christensen, 56, who liked to be called “Doc” even though he had not practiced dentistry for several years, typically invested as a limited partner or through other parties. That way he escaped the scrutiny that public records might provide and kept his affairs secure even from friends and business associates.

Yet the secretive Newport Beach resident became so desperate last fall to prevent the collapse of his empire that he bared his soul in four letters to state and federal regulators in an apparent effort to buy time for his savings institution.

But the S&L; eventually fell to regulators Jan. 16, just 9 1/2 hours after Christensen died in a car crash.

Turned to Confidante

Letters, court records and conversations with associates reveal that Christensen’s financial world and personal life had been crumbling around him for the last several years.

And as the pieces began to fall, he turned increasingly to Janet F. McKinzie, 37, his constant companion, confidante and business manager. McKinzie, who had been working with Christensen for the past 7 1/2 years, began heading up some of his 60 or so companies and eventually inherited his estate through a will and trust signed just three days before Christensen’s death.

In the wake of North America Savings’ collapse, the FBI and the state attorney general’s office have said they are investigating possible fraud and embezzlement involving up to $20 million at the S&L.; State officials said their investigation focuses on the role McKinzie played in the institution’s activities.

Both McKinzie and her lawyer declined to be interviewed for this story.

“She had a tremendous amount of influence,” said Brooks A. Miller, former president of North America Savings. “The man absolutely idolized the ground she walked on.”

Obtaining Loans

In the last few years, Christensen and McKinzie kept the dentist’s financial world afloat through promises, questionable deals and sales of some assets, court records show. State and federal regulators, however, say in court papers that the pair also used phony S&L; and bank accounts worth millions of dollars to get loans.

His home life became equally troubled. Christensen was divorced three years ago and became estranged from one of his three children, Duayne Daniel Christensen, an admitted narcotics user, convicted burglar and armed robber who is awaiting trial in Orange County on six armed robbery charges. Those charges stem from the alleged holdups of three banks and a country club golf shop.

The son was disinherited in his father’s will but only after his legal problems put a substantial strain on the elder Christensen’s financial resources.

Those outside Christensen’s tightly controlled world began to get a glimpse of his troubled life when North America Savings began to falter. He had put $6.37 million into the S&L; so it could open, originally in Huntington Beach, in September, 1983.

But within a year, he and regulators were at odds over how to value a Lake Tahoe condominium that he had built earlier for $1.8 million. Christensen contributed the project to the S&L;’s capital base, initially claiming its value was $14.5 million and eventually increasing it to more than $18 million.

Over the next few years, as attempts to sell the 20-unit luxury structure failed, regulators forced him to write down the value to $10 million, putting a severe strain on minimum regulatory requirements for the S&L;’s safety and soundness.

Meanwhile, Christensen, with McKinzie’s aid, promised to pump a large amount of capital into the 7H Ranch outside Elko, Nev. He was buying the 1,200-head cattle ranch for $3.6 million with $500,000 down, said Ray Connelly, branch manager of the Sierra Nevada Production Credit Assn. that loaned Christensen $1.2 million.

The dentist bought the ranch through his Nevada Cattle Co., and McKinzie became the head of the firm in 1985, Connelly said. Christensen defaulted on his annual $281,000 loan repayment in the spring of 1985, and he and McKinzie sought to transfer the debt on the ranch to another newly formed company, Ruby Valley Ranch Ltd., the credit association officer said.

In November, 1985, he said, the credit association foreclosed on the ranch. Ruby Valley Ranch filed for bankruptcy last Aug. 15, listing only a Newport Beach mansion on Harbor Island that it had bought for Christensen in December, 1984, as its sole asset.

During the summer of 1985, Christensen’s son was accused with another inmate of a murder in the men’s prison at Folsom, where the son was serving time for a prior felony conviction.

The elder Christensen had been close to the son, who was called Danny, and he hired one of the nation’s premier criminal trial lawyers, Richard (Racehorse) Haynes of Houston, to defend his son.

‘Substantial’ Fee

The lawyer would say only that his fee, along with hotel, food and rental car expenses for 12 weeks of trial, was “substantial.” William Davis, chief deputy commissioner of the state Department of Savings and Loan, said Christensen had told him the legal expenses were burdensome.

After evidence showed that prison guards had fabricated initial reports of the murder, prosecutors asked the judge to dismiss the case, Haynes said.

“Danny loved his father,” the lawyer said. “He talked about him all the time. And his father loved him, but they just could not communicate. The boy got off into the world of nonviolent crime through (use of) drugs at a very early age and graduated from one institution to another until he got to the world’s worst, Folsom.”

“I’m sure he died loving Danny . . . and lamenting the fact he had been unable in his lifetime to do anything about (Danny’s) character traits he found not so laudable,” Haynes said.

Still, at one point last summer, according to Davis, Christensen said he had to hire bodyguards to protect him and McKinzie around the clock from his wayward son, who he feared might try to kidnap or harm him or McKinzie to get money. The son currently is represented by a public defender. The son could not be reached for comment in an Orange County Jail.

Haynes described Christensen as “a very caring, sensitive man.”

Lawyer’s Assessment

“If he had not been in the world of finance, he’d probably have been a philosopher,” he said. “He looked for the good character traits and overlooked the frailties in other people.”

He said he found McKinzie “intellectually gifted, a high-energy person, an achiever.”

By early 1986, McKinzie appeared to be doing quite well. She lived in a posh Newport Beach home that Christensen had deeded to her. She owned a 1986 Rolls-Royce--with license plates that read XTACI--and a 1985 Mercedes Benz.

She had her own realty company, Plaza Group in the Sacramento area, and she billed herself at one point as the assistant to the chairman of North America Savings. Miller, the former president, said he told her to stop using North America stationery and business cards with that title. Miller said she was a paid consultant only, not an employee.

Christensen, meantime, was becoming increasingly embroiled with regulators, particularly Davis and William J. Crawford, the state savings and loan commissioner.

In the spring, regulators began issuing orders for him to increase the S&L;’s capital base. He always promised he would--through four personal letters, at least five telephone calls and letters from his lawyer and his accountant.

He was trying to raise up to $5 million through the sale of “overseas” investments and had to go to Panama to sign documents to get some of the money, according to the letters, which are part of the court files established by regulators in the takeover of North America Savings.

Bared Personal History

In his letters to the regulators, Christensen seemed awkward and desperate as he bared his most personal history in an attempt to persuade regulators of his sincerity.

Saying in an Oct. 2 letter that he will be placing “multimillion dollars” into the S&L; “within days,” Christensen goes on to indicate why he will not sell stock given to him by his parents to raise the funds.

He described his father as “a private man” who “operated a streetcar all his life.” Christensen said his father was unaccustomed to the sudden wealth that an inheritance brought him and refused to change his standard of living. His parents continued to live in a “$10,000-$12,000” mobile home, though they could afford better quarters.

Christensen said he went to work at age 13 “washing dishes at Los Angeles General Hospital to help pay the household expenses,” while his mother worked nights cleaning floors in schools to help put him and his brother through dental school.

“I’m a bit uncomfortable sharing such personal information with you, but I’m just trying to be honest and give you the whole picture,” he said after explaining about his father’s strokes and $6,000-a-month medical and convalescent home bill.

“As their health began to fail, they began transferring stocks to me, many times without my prior knowledge,” he wrote. “I would feel as if I were a traitor to my mother to sell any stock at this time.”

Cash Never Came

Continually, Christensen promised to raise the cash needed, eventually conceding that he would sell the stock.

“You have my word that I will provide you with what you have requested just as quickly as I can get my mother in the right frame of mind,” he said in a Dec. 10 letter.

But the cash never came.

At the end of the year, the institution reported a $9-million net loss for the year and a negative net worth of more than $1.5 million. After seizing the S&L;, regulators determined the net worth was closer to a negative $6.5 million.

Regulators also allege in court documents that from his office--”1,200 square feet of the most lavish wood-paneled office,” as one visitor noted--Christensen, with McKinzie’s help, masterminded an elaborate scheme to falsify records and forge documents to prop up the S&L;’s financial condition and pad their own pocketbooks.

In court documents, regulators claim that the S&L; set up more than 160 phony deposit accounts, had six fake certificates of deposit worth $11.5 million supposedly drawn on a Sacramento bank, gave McKinzie $1.75 million in “advance commissions” and $434,000 in undocumented expenses and issued fabricated stock certificates.

The court papers also allege that Christensen and McKinzie used some of those phony accounts as collateral for $2 million in loans and loan extensions and that McKinzie’s sister, Rebecca Thrall of Anchorage, used stock certificates worth $1.4 million as collateral for a loan. The stock certificates later proved to be fake, according to court documents.

Christensen, who was working through the night of Jan. 15 to come up with the money his S&L; needed, was killed instantly at 6:30 a.m. when his 1985 Jaguar slammed into an abutment on the northbound Corona del Mar Freeway. His death has been tentatively ruled an accident.