FBI Probing Fraud Claims at Thrift in Orange County

The FBI said Friday that it is investigating claims of bank fraud and embezzlement at Universal Savings Bank, the Orange-based institution that was the taken over by the state last month but returned to the control of its Australian owner Wednesday by court order.

FBI spokesman Jim Neilson would not disclose what triggered the investigation or who the targets of the probe are but said that the investigation began about a month ago. On June 16, the state Department of Savings and Loan put Universal into conservatorship on claims by two directors of the firm that its owner, Unity Corp. Ltd. in Sydney, was planning to divert $10 million of the S&L;’s funds to a Unity executive.

But a Los Angeles Superior Court judge Wednesday threw out the state action, saying that regulators did not have enough evidence to support the seizure of the firm.

Unity claimed that the charges against it had been made by a disgruntled director who was himself under investigation by the board for allegedly participating in a kickback scheme.

In a three-page letter to the Federal Home Loan Bank Board on Friday, Universal Chairman Christopher Blaxland asked the regulators to allow him to fire that director--Christopher J. Gadsby, vice chairman of the board. Blaxland also is seeking to fire Serge B. Woodruff, Universal’s president, who joined Gadsby in making the claims to state regulators.

The letter said it is “desirable and necessary” to remove the pair because, it added, their conduct had “cast great doubt on the professional reliability of them both.”

The Federal Home Loan Bank Board issued a cease-and-desist order June 18 requiring Blaxland to keep the two directors in office--at least for the time being.

In addition, Blaxland said in the letter, Gadsby was “participating in unlawful kickback schemes” and was under “active investigation by outside investigative consultants.”

Blaxland said in a telephone interview Friday that he does not know who at Universal is being investigated by the FBI, though he is aware of the inquiry and plans to cooperate with the agency.

Gadsby’s lawyer, Michael L. Kadish of Los Angeles, said Gadsby “has not done anything improper at the bank” and was not aware of being under investigation by Universal at any time.

Woodruff could not be reached for comment. Kadish, who also represents Woodruff, said Woodruff’s actions in going to the state with the allegation of diversion of funds was “legally required.”

Blaxland also informed the bank board, which regulates savings & loan firms, of a separate FBI investigation that he believes may be related to the probe at Universal. The letter claims that the FBI had investigated a Universal commercial lending officer, Bruce I. Ellner, in connection with irregularities at Queen City Bank in Long Beach when Ellner worked there.

Ellner, who also once worked with Gadsby at First Pacific Bank in Beverly Hills, could not be reached for comment. Blaxland said Ellner was brought into Universal by Gadsby. Kadish said it takes an agreement by the board of directors to hire any officer.

FBI spokesman Neilson said the agency is conducting no current investigation of Queen City Bank and, under FBI policy, would not comment on the existence of any investigation of an individual.

Blaxland charged in the interview Friday that Gadsby had attempted to divert attention from an internal investigation of the loan activities of Gadsby, Ellner and others, by bringing to state regulators the charges of improper money diversion by Universal to its Australian parent.