Account Executives’ Suit Claims FCA Forced Rate Bias

Six account executives of Financial Corp. of America filed a $61-million lawsuit against the Irvine-based financial institution Tuesday, claiming that the firm forced them to offer higher deposit rates to out-of-state customers.

FCA and its subsidiaries, including American Savings & Loan, forced the six to “discriminate against California citizens and institutions” by making them offer higher interest rates on savings to non-California customers, according to the suit, filed in Los Angeles Superior Court.

FCA reacted angrily to the charges, calling them “inflammatory, irresponsible and without cause. It appears this action was aimed at defaming a publicly owned financial institution, and there is a law in this state against that. We are investigating legal remedies to this situation.”

An FCA spokesman confirmed that the firm has at times offered higher savings rates to out-of-state customers but noted that it is common industry practice to vary rates between geographic areas depending on prevailing rates within those regions.

Plaintiffs in the suit are Thomas R. Jones, Robert Young, Edward Earle, R. Andrew Murray, Richard Oladapo and Carmen McKay Carson.

Since early 1986, all six have been “wrongfully demoted . . . without good cause,” the suit said. Former account executive Albert E. Thomka also sued FCA earlier this month, charging that he had been “wrongfully discharged . . . without good cause.”

Five of the plaintiffs in the latest suit were hired from 1982 to 1984, when FCA was aggressively raising out-of-state deposits of more than $100,000--so-called jumbo deposits not insured by the Federal Savings & Loan Insurance Corp.

The strategy eventually backfired when American Savings sustained a deposit run of $6.84 billion in the third quarter of 1984. Most of those were jumbo funds withdrawn by large depositors when they learned that FCA was in serious financial trouble.