Dierdorff Draws 8-Year Term in S&L; Fraud Case
Daniel W. Dierdorff, 53, who pleaded guilty to two counts of fraud in connection with the July, 1986, demise of Sun Savings & Loan, was sentenced Monday to eight years in federal prison and ordered to pay $202,624 in restitution and a $10,000 fine.
U. S. District Judge John S. Rhoades allowed Dierdorff to remain free until March 27, when he must report to a federal prison at 8 a.m.
The government had charged that Dierdorff’s “questionable loan and business transactions” were directly responsible for $13 million of the $120 million in losses that Sun Savings accumulated before regulators closed the failed thrift in July, 1986. Dierdorff last July pleaded guilty to illegally transferring $200,000 in S&L; funds to a secret account and to forging a signature on a $2,000 check.
Defense Argued for Leniency
Defense attorney Peter Hughes had argued for leniency and said that the government’s request for a stiff sentence as a deterrent was “a fallacious argument.” Assistant U. S. Atty. Yesmin Saide had asked Rhoades to sentence Dierdorff to the maximum 10 years in prison as a deterrent to white-collar crime in the savings-and-loan industry.
Saide called Dierdorff a “greedy, ruthless, power-hungry man driven to fatten his own wallet” by making illegal loans to people who eventually defaulted, skimming S&L; funds and taking thousands of dollars in kickbacks from risky loans that he approved.
In arguing for leniency, Hughes said he expected Rhoades to impose a jail sentence. But, Hughes argued, the judge should keep in mind Dierdorff’s age and the fact that “he’s flat broke.” The defense attorney also argued vociferously against the prosecution’s call to make Dierdorff an example for other S&L; executives who are thinking of making insider loans to themselves and acquaintances.
“To say that we have to deter him is a rationalization that’s not rational,” Hughes said.
Breaks Down During Statement
Dierdorff read from a short prepared statement and broke down in tears when he said he never intended to “hurt anybody, including Sun Savings.”
Rhoades noted the contradictions in Dierdorff’s life--misuse of customers’ and stockholders’ funds on one hand while he was active in social and community groups--before imposing sentence. He said nothing he could do could “put Humpty Dumpty back together again. Sun Savings is kaput.”
Monday’s sentencing on the two criminal counts evidently ended the federal government’s action against Dierdorff, 53, a former collegiate wrestler who rose to become president of Sun Savings. The Federal Savings & Loan Insurance Corp. last week announced a negotiated settlement to a civil suit against Dierdorff and his wife, Mary.
Suits by Shareholders
Besides the federal government’s criminal and civil suits, Sun’s failure generated several civil suits filed by disgruntled shareholders against Sun’s board, its attorneys and accountants. Those suits will keep attorneys busy for the next five years, Rhoades said during a pre-sentencing hearing for Dierdorff last week.
Dierdorff’s prison sentence came despite the testimonials that friends and former business associates forwarded to Rhoades. About 60 San Diegans--including San Diego City Manager John Lockwood, former San Diego Charger Kellen Winslow and state Sen. Larry Stirling--sent letters that lauded Dierdorff’s past roles in San Diego athletic and civic organizations or that echoed Dierdorff’s plea that he be sentenced to community service in lieu of prison.
In recent weeks, perhaps driven by publicity about the federal government’s attempt to fix the troubled thrift industry, most of the letters accumulating in Dierdorff’s court file in the federal courthouse urged that Dierdorff be sentenced to prison.
Wrote as Private Citizen
“Very few people responsible for the failures ever see the light of justice,” wrote Rod Tompkins, a top executive of San Diego-based Great American First Savings Bank. The courts must look through the smoke screen of testimonials, according to Tompkins, whose letter made it clear that he was writing as a private citizen, not as a savings-and-loan executive who used to work with Dierdorff.
Similarly, California Department of Savings & Loan Commissioner William Crawford recently wrote that “white collar criminals do have many redeeming personal characteristics--otherwise they would not be able to ply their trade. (Dierdorff’s) activities at Sun Savings warrant stiff justice.” Crawford wrote that he was “amazed at the difficulties in obtaining convictions and penalties, despite the expenditure of millions of dollars” by the federal government. “Somehow a proper message has to be sent to members of the financial services community that wrongdoing will be dealt with sternly.”
“I find it very hard to imagine why so many San Diegans (some of whom are personal friends of mine) would support Dan Dierdorff,” wrote Tom Stickel, a San Diego businessman who founded a San Diego-based S&L.; Stickel once served on the board of Beverly Hills Savings & Loan, one of the state’s largest failed institutions, after the it was taken over by regulators.
‘Misguided Letters’
Stickel urged Rhoades to “discount the well-meaning but misguided letters” that Dierdorff solicited. “Mr. Dierdorff would do anything, including breaking the law, to gain a competitive advantage,” Stickel wrote.
During Thursday’s lengthy pre-sentencing hearing, Rhoades said the government failed to prove its allegation that Dierdorff caused Sun Savings to collapse. Rhoades also said the government failed to prove its allegation that Dierdorff’s “questionable loan and business transactions” were directly responsible for $13 million of the $120 million in losses that Sun Savings accumulated before failing.
“Whether Sun Savings went under because of Dan Dierdorff is impossible to say,” Rhoades said. “But there’s no doubt that what Mr. Dierdorff did did not help.”
Born in San Diego
According to court documents, Dierdorff, who was born in San Diego on Oct. 31, 1936, was the youngest of four boys born to a family that had lived in San Diego since the 1920s. Dierdorff was graduated from San Diego High School in 1954. He spent one year at an out-of-state Mormon college and eventually was graduated from San Diego State College, where he was a four-year varsity wrestler.
Dierdorff’s love of wrestling remains to this day: Lockwood’s letter to Rhoades noted that Dierdorff was known to be “the area’s most capable wrestling referee.”
After his forced resignation from Sun in 1985, Dierdorff officiated at high-school wrestling matches “earning all of $100 per day,” according to a deposition taken for a Federal Savings & Loan Insurance Corp.
Dierdorff began his career in the industry in 1962 when he joined Home Federal Savings & Loan, according to court documents. Dierdorff moved to San Diego Federal (now Great American First Savings Bank) in 1969 and had risen to vice president before being laid off in 1975.
Joined Sun in ’79
Dierdorff moved to First Federal S&L; before joining the newly created Sun Savings & Loan in 1979. He served as president until his resignation in 1985.
“It’s been a disaster since then,” Dierdorff said in a pre-sentencing report. “I’ve lost my friends, contacts and potential employers.”
In a letter to Rhoades, McSweeney, a former Central Savings executive who befriended Dierdorff shortly after Sun was closed, suggested that Dierdorff rose too quickly in the S&L; business. Dierdorff’s business naivete was evident, McSweeney said, in a business document that Dierdorff prepared in connection with a proposed wrestling camp. The pro forma statement was “totally amateurish,” according to McSweeney.
“He was in over his head,” McSweeney told Rhoades in the letter that suggested community service rather than a prison sentence for Dierdorff.
Dierdorff might have risen too fast, but some San Diegans believe he should pay for his offenses with a prison sentence.
Salary Status
“Please remember that his ill-gotten monetary gains were in addition to his very high salary and benefits which made him, in his heyday, the highest-paid financial industry executive in San Diego,” wrote one San Diego bank executive.
That high salary is in stark contrast to today: During the FSLIC deposition, Dierdorff said that his wife handles his finances: “I stay very, very far away from that.”
“I have fasted and prayed over (my) mistakes,” Dierdorff said during one court-related interview. “My family has been severely embarrassed and my reputation ruined. My career has been destroyed and our lives turned into shambles. Yes, I have done wrong. I made mistakes by compromising my own values. . . . there was never any intent to injure anyone.”
