Judge Allows Medical Testimony in Fraud Trial

A federal judge on Monday ruled that Janet Faye McKinzie can call medical experts in her criminal trial to support her contention that the late owner of North America Savings & Loan plied her with drugs to help him manipulate a massive fraud on the Santa Ana thrift.

U.S. District Court Judge Alicemarie H. Stotler said McKinzie can try to prove that her mental capacity in regard to racketeering, conspiracy and other crimes was diminished by constant drug use.

McKinzie is preparing to defend herself in a criminal trial scheduled to start Jan. 9 in what federal prosecutors once called the worst case of insider fraud in the history of the state’s thrift industry. She also faces charges, at a later criminal trial, of bank fraud and making false statements.

She and five others were indicted in April on 40 counts of racketeering, conspiracy, bank fraud, wire fraud, making false statements and transporting stolen funds across state lines.

McKinzie, 40, was the confidante, business manager and fiancee of Duayne D. Christensen, 57, a Westminster dentist who opened North America Savings in 1983. She also is the sole beneficiary of his will, trust and record $10-million life insurance policy, though the proceeds of the policy are being held in a court-ordered escrow account.

State regulators seized the S&L; in January, 1987, only hours after Christensen died in a single-car crash on the Corona del Mar Freeway. They closed the thrift in June, 1988, paying $210 million in insured deposits to account holders.

Regulators immediately began uncovering bogus deposit accounts, falsified records and forged signatures in the S&L;’s files. They filed a civil lawsuit against McKinzie, Christensen’s estate and others, seeking $40 million. The criminal case accuses the defendants of siphoning more than $16 million from the S&L.;

In Monday’s pretrial hearing, Richard (Racehorse) Haynes of Houston, McKinzie’s lead defense attorney, said Christensen gave his client a wide variety of drugs almost daily and even had a cook sprinkle drugs on McKinzie’s food. The dentist turned a vibrant 115-pound woman into an emaciated 89-pound hospital patient, he said.

While Judge Stotler ruled that Haynes can present much of the medical evidence in the trial, she did prohibit him from presenting evidence that McKinzie was, in essence, a battered woman who was manipulated by Christensen with drugs to commit fraud.

Haynes, a nationally known lawyer, has a reputation for raising every possible issue and every bit of evidence he can at trials.

Nancy Wieben Stock, the assistant U.S. attorney prosecuting the case, had argued that the medical evidence Haynes wants to bring to trial would prove “confusing and potentially distracting” to jurors. She called the prospective evidence “soap opera-type” information that would turn the trial into an “incredible circus.”

Haynes disputed her characterizations of the evidence and the trial, and Stotler decided McKinzie had a right to put on her defense.