Ex-S & L Official Indicted for Alleged Kickback : Executive Charged With Taking $750,000 for Approving Loans at Mercury

A former executive with Mercury Savings & Loan and a Northern California building contractor were charged Friday with arranging $38 million in construction loans in exchange for $750,000 in kickbacks.

Anthony Rowe of San Jose, former executive vice president and northern division manager for Huntington Beach-based Mercury, and Daniel Sheehan, owner of S.M.S. Builders Services in Fremont, were indicted by a federal grand jury on charges of misapplication of funds, making false statements in loan applications and conspiracy.

The indictment said Rowe took the kickbacks in exchange for approving construction loans to Sheehan’s company between September, 1983, and May, 1984, for housing developments in Alameda, Contra Costa and Santa Clara counties.

No Further Impact

Mercury wound up losing $15 million on the loans, and S.M.S. ran into financial trouble, said Assistant U.S. Atty. Joseph Burton. He said Rowe, whose office was in Cupertino, lost his job in 1984 after an investigation by the S & L.

Mercury finished writing off its losses from the transactions in 1986, and no further economic impact is expected, the S & L said in a prepared statement. Mercury’s chairman, Leonard Shane, was unavailable for comment.

Shane had said previously, though, that Mercury officials discovered the “apparently fraudulent” transactions and reported them to law enforcement immediately.

Rowe faces a maximum sentence of 45 years in prison and a $50,000 fine if convicted of all charges. Sheehan, who lives in the Placer County community of Lincoln, could be sentenced to 63 years and fined $95,000.

Burton said the men are to appear before a federal magistrate Sept. 2.