FBI in Phoenix Joins Probe of Lincoln S & L

The FBI office in Phoenix has decided to open a preliminary inquiry into the affairs of Lincoln Savings & Loan and its parent firm, American Continental Corp., the special agent in charge of the office said Friday.

Arizona agents will coordinate their inquiry with a federal grand jury and the FBI office in Los Angeles, where a criminal investigation already has been launched, Special Agent Herb Hawkins said in Phoenix.

Hawkins said a preliminary inquiry is a routine step “to determine if further facts warrant a more detailed investigation” of Lincoln or American Continental, which filed for bankruptcy on April 13. Lincoln, an Irvine thrift with major operations in Arizona, was seized by federal regulators the next day.

A. Melvin McDonald, a Phoenix lawyer representing American Continental, said the Phoenix FBI office has asked for a list of corporate bondholders. About 22,000 investors bought around $200 million in bonds through Lincoln’s 29 branches in Southern California. Those bonds now are nearly worthless, and the bondholders are near the bottom of the list of American Continental creditors who hope to recover funds from U.S. Bankruptcy Court proceedings.

American Continental denies any wrongdoing and welcomes the FBI inquiry, McDonald said.

The Federal Home Loan Bank Board has asked for a criminal investigation into allegations that American Continental officials illegally profited from their operation of Lincoln. A federal official has said the alleged misdeeds include improper insider loans, fraudulent land sales and manipulation of stock prices.

The Securities and Exchange Commission also has been investigating the company.