Family S&L; Sues Former Chairman, Alleging Fraud
Family Savings & Loan, the nation’s second-largest black-owned thrift, on Thursday filed suit against its former chairman, Oliver A. Trigg Jr., in a bid to wrest control of the thrift from the unconventional, embattled former banker.
The 32-page lawsuit, filed in U.S. District Court in Los Angeles, charges that Trigg defrauded the Los Angeles-based thrift by setting up a complicated real estate deal that enabled Trigg to buy a 51% stake in the thrift using $1.2 million of Family Savings’ own money. The suit asks that the court award Family Savings $2 million in damages as well as the 51% of Family Savings shares held by Trigg.
Trigg, a 37-year-old real estate investor who preferred blue jeans to business suits and drove a black Ferrari, could not be reached for comment. But his attorney, Arthur H. Barens, denied that Trigg was involved in any wrongdoing.
“I can say that there was no fraud,” Barens said, adding that he couldn’t comment further on the suit because he hadn’t seen it.
Real Estate Deals
But an internal investigation of Trigg’s stint at Family “led to the inescapable conclusion that a wrong had been committed and that action was necessary to protect the association’s interest,” said William E. Shearer, current chairman of Family Savings. “We probably would still be in the red had he (Trigg) not been chairman, but certainly not to the degree we are now.”
The lawsuit alleges that Trigg committed fraud against the thrift in a series of complicated real estate transactions involving eight acres of undeveloped land in Whittier’s exclusive Friendly Hills Estates.
In December, 1986, a company formed by Trigg purchased the Whittier property from millionaire oilman Jack Urich for $2.7 million, the suit alleges. Later, Trigg’s company sold the land to his friend, Inglewood developer Willie A. Powell, for about $5 million. Trigg’s bank, Family Savings, helped finance the purchase to the tune of $2.7 million.
Powell, in turn, sold the Whittier land to Family Savings for $5.5 million.
Family Savings’ suit alleges that the sale was designed to give Trigg a secret profit of about $2.7 million, of which he used $1.2 million to buy control of Family Savings. But Powell has said he sold the land because he changed his mind about building luxury houses there.
Control Given to Trust
Trigg bought control of Family Savings in July, 1987. However, he turned control of his shares over to a voting trust under pressure from federal thrift regulators last June after relinquishing his post as chairman and chief executive of the S&L; a month earlier.
He has since appeared before a federal grand jury in Los Angeles that is investigating allegations of fraud. Those allegations are believed to have taken place during Trigg’s stint as chairman of Family Savings, as well as other claims of financial impropriety apparently unconnected with the thrift, Family Savings officials and lawyers say.
Trigg’s lawyer said Trigg hasn’t been asked for compensation. And Shearer of Family Savings said that although the thrift has sold about 80% of the lots that made up the eight-acre tract, it has incurred major losses because of its inability to quickly find buyers willing to purchase property at its appraised value.
Before Trigg took over as chairman in 1987, Family Savings had built a reputation as a pillar of conservative banking, focusing almost solely on making home mortgages.
Under Trigg, however, the thrift expanded into consumer and business lending.
The new strategy initially proved highly lucrative. Family Savings reported a record profit of $1.56 million in 1986. But later, profits deteriorated. Family Savings earned just $430,000 in 1987 and expects a $2.1-million loss for 1988, Shearer said.