FBI to Take Its Time in Lincoln Case
The top FBI agent in Phoenix said Thursday that it may take his office several weeks to evaluate allegations against Irvine-based Lincoln Savings & Loan and its parent company and decide whether to launch the criminal investigation requested by federal regulators.
Herb Hawkins, the special agent in charge, said his office must discuss the matter with the U.S. attorney’s office in Phoenix and the FBI in Los Angeles to determine whether the allegations, “even if true, amount to anything the FBI is interested in pursuing.”
Lincoln’s parent company, Phoenix-based American Continental Corp., filed a U.S. Bankruptcy Court petition on April 13 to reorganize its debts under Chapter 11 of federal bankruptcy laws. Federal regulators seized Lincoln the next day, alleging that American Continental was dissipating the S&L;’s $5.3 billion in assets and operating it in an unsafe manner.
The Federal Home Loan Bank Board, which oversees federally insured S&Ls;, has asked federal authorities in Phoenix and Los Angeles to investigate allegations that American Continental officials illegally profited from their operation of Lincoln. A federal official said Tuesday that the alleged misdeeds include improper insider loans, fraudulent land sales and manipulation of stock prices, but he declined to disclose specific transactions.
Charles H. Keating Jr., chairman of American Continental, has denied that he or other executives at the company or the S&L; engaged in illegal acts.
The Phoenix FBI office had hoped to make a decision on the bank board’s request this week. But Hawkins said it will take more time to evaluate the complex case carefully.
He said he would not want to commit resources to the Lincoln case unless there is substantial evidence of serious violations of federal laws.
The investigation would be a complex one requiring help from FBI personnel in Washington, he said.
“You have to sort out things like who did what and if Lincoln did something, did American Continental know about it,” he said.
And any investigation would have to be coordinated with the Los Angeles office of the FBI to avoid unnecessary duplication of work, he said.
Hawkins said he and his staff hope to meet in a week or so with FBI agents in Los Angeles to discuss the case.
Hawkins emphasized that criminal referrals from the bank board should not be construed as anything more than requests from citizens to investigate possible criminal activity.
Both bank board officials and American Continental executives also played down the effectiveness of referrals, saying such referrals are “evidence of nothing.”
A. Melvin McDonald, an attorney for American Continental, said he recently asked federal authorities in Los Angeles to investigate bank board regulators in Washington for alleged violations of federal laws that prohibit the public disclosure of confidential information on an S&L;’s financial condition.
