Albert Yarbrow, a Beverly Hills-based loan broker, was convicted on eight counts of conspiracy, wire and mail fraud and other charges, all stemming from his role in the largest financial institution failure in Oregon history.
Yarbrow was the last of four defendants to be tried for their roles in the 1985 collapse of State Federal Savings and Loan Assn. of Corvalis, Ore.
"The conduct of these people caused the failure of State Federal," said Lance Caldwell, a Portland-based U.S. attorney.
Regulators have previously estimated that State Federal, which had $550 million in assets when it failed, will cost the thrift industry's insurance fund $150 million.
The bulk of the thrift's problems stemmed from a series of loans made to Thomas Edward Nevis, a real estate developer introduced to the thrift by Yarbrow, according to the indictment.
Yarbrow, who collected fees on the loans State Federal made to Nevis, acted as a "straw borrower," applying for a $12.2-million loan on Nevis' behalf, according to the indictment. This fraudulent process allowed Nevis to fool savings and loan regulators, who would not allow thrifts to lend more than a specific amount to any one borrower.
Yarbrow escaped liability to repay the loan by creating a dummy corporation called Roswell Properties Inc., "which would have no assets and no purpose other than to be a nominee for Nevis on the Roswell loan," according to the indictment.
Meanwhile, Yarbrow collected a $200,000 fee for his role in getting Nevis the loan.
Yarbrow was also charged and convicted of mail fraud because of a deal he made with State Federal officers to conceal another loan brokerage fee. (Yarbrow collected nearly $900,000 in loan fees from State Federal over a two-year period, according to federal investigators.)
In this case, State Federal agreed to give Yarbrow an $88,000 Rolls-Royce in lieu of a fee, but Yarbrow convinced the thrift to send him a letter calling the payment a gift in order to avoid California income tax liability and Department of Motor Vehicle fees.
Yarbrow's attorney, Howard Gillingham, refused to comment about the case. Yarbrow could not be reached.
Yarbrow, whose conviction came last Friday in U.S. District Court in Portland, will be sentenced in early January, according to Caldwell.