Grand Jury Says Broker Bilked Banks of $24 Million

Three Los Angeles-area banks, two of them in the San Fernando Valley, were bilked out of more than $24 million in a loan scam run by a Whittier insurance broker, the U. S. attorney’s office said Friday.

The scheme was outlined in a federal grand jury indictment accusing Clyde (Rocky) Hamblin, 48, of 21 counts of bank fraud and two income-tax charges.

Assistant U.S. Atty. Curtis B. Rappe said two of the defrauded banks, West Coast Bank in Encino and West Valley Bank in Woodland Hills, were forced to close after banking officials discovered their multimillion-dollar losses.

The indictment accuses Hamblin of submitting $12 million in fraudulent loan applications to West Coast Bank, $8 million in applications to West Valley Bank and more than $4 million in applications to Queen City Bank in Long Beach.

Regulators closed West Coast Bank in April, 1984. Two years later, a federal court jury also found that the bank and one of its former officers had violated federal civil fraud and racketeering laws in a gold bullion investment program.

Blame for Losses

The West Valley Bank was closed in February, 1985. At the time, Howard Gould, senior deputy banking commissioner, blamed most of the bank’s losses on its move into the insurance-premium financing business.

According to the government, Hamblin, owner of Pax Insurance Agency and Interstate Transport Insurance Agency, specializing in insurance for truckers, obtained loans from the banks by preparing phony loan agreements.

Hamblin is charged with representing that he was submitting the agreements on behalf of his clients to obtain loans to pay their insurance premiums when, in fact, there were no insurance policies. The indictment claims that Hamblin used forged authorization letters to persuade the banks to send the loans to Pax Insurance Agency.

Rappe estimated that the scheme netted more than $10 million, which Hamblin purportedly used to meet the expenses of his financially troubled business, to pay personal living expenses and to make real estate, stock and oil investments.

Hamblin is free pending a summons by the U. S. Attorney’s office, Rappe said.