Financier Warner Faces Tough Questions From Creditors, U.S. Officials

Associated Press

Financier Marvin Warner, who has filed for reorganization under federal bankruptcy laws after claiming debts of $4.5 billion, was questioned Monday by creditors and the U.S. Trustee’s Office about his debts and assets.

Lynne England, assistant U.S. trustee, asked detailed questions of Warner about assets, partnerships and lawsuits resulting from the collapse of ESM Government Securities of Fort Lauderdale, Fla., and Home State Savings & Loan of Cincinnati.

“This is kind of where you open the door and start looking around,” said Robert L. Coley, acting U.S. trustee from Atlanta, in explaining the proceedings Monday. “This is where we begin our examination of the debtor and his petition and schedules.”

There was very little discussion of Home State and ESM, other than statements Warner made about myriad lawsuits against him and a mention of his legal problems.


“All of (the lawsuits) are very similar. They wish to place responsibility for their losses with me personally,” Warner said. “My posture is that I have been a victim.”

The similarity and the number of the lawsuits “led me to seek relief in this court,” he said.

Warner, who now lives on a ranch in Ocala, Fla., filed for reorganization last month under Chapter 11 of the U.S. Bankruptcy Code, claiming debts of nearly $4.5 billion, including nearly $2 billion in disputed debts to the state of Ohio.

Last week, he claimed assets of $384 million, including $364 million in claims against Ohio and others involved in the collapse of ESM and the failure days later of his Home State Savings.


When Warner filed for reorganization, he claimed that it was necessary to “bring order to this chaotic litigation.”

The state of Ohio and the trustee for ESM’s liquidation are among those who have sued the former banking magnate and U.S. ambassador to Switzerland, seeking reimbursement for money lost in the ESM-Home State collapse.

Warner controlled Home State and American Savings & Loan Assn. in Florida. Both thrifts lost millions of dollars when ESM was declared insolvent in 1985. Home State lost $144 million and also collapsed.

The failure of Home State resulted in a run on state-insured bank deposits in Ohio.

Warner was convicted in Ohio of illegally funneling Home State funds to ESM, sentenced to 3 1/2 years in prison and ordered to make $22 million in restitution. He is free while his case is on appeal.

“If you have to pay that $22 million, where would that money come from?” an attorney asked.

“I don’t know,” Warner said.

Throughout the day, Warner was asked to supply reams of additional documents and financial statements prior to a Dec. 7 creditors’ meeting.


In many cases, Warner replied that he didn’t know the answers to questions posed by creditors.

“I’d be happy to provide this at the next meeting,” he said.

Stephen A. Busey, an attorney representing Warner creditors, met late Monday afternoon with his clients to draft a list of documents they will request from Warner and his attorney, James Fischette.

Owed $182 Million

Listed among Warner’s assets are “contingent claims” of more than $100 million against ESM trustee Thomas Tew for alleged libel and slander. He also listed claims of $25 million each against Alexander Grant & Co. and Arthur Anderson, both national accounting firms.

Alexander Grant, now known as Grant Thornton, was ordered by a federal jury to pay more than $70 million to ESM for false financial statements prepared on behalf of ESM by one of the firm’s former accountants.

The financier also claims that he is owed $182 million by the state of Ohio and more than $25 million by the Ohio Deposit Guaranty Fund. Three other contingent claims total more than $7 million.

Also listed in his assets is personal property worth $8.23 million, including his Ocala home valued at $2.25 million and an Ohio residence worth $4 million. He claims bank deposits of $3.5 million, brokerage accounts of $1.2 million, money-market accounts of $836,350 and annuities of $3.2 million. He said that he is owed $4.3 million by his son Marvin Warner Jr. and Fred M. Cone Jr.


He listed 21 vehicles worth $102,500, livestock and farm equipment and a variety of household items including a grand piano and juke box.

In a statement of 1987 income released Monday, Warner listed income from Jan. 1 as $521,225.

The U.S. Trustee’s Office, a division of the Justice Department, is a program that began here in September to help with bankruptcy proceedings and appoint trustees in bankruptcy cases where one is needed, Coley said.