Prosecution Says McKinzie Looted Thrift : S&Ls;: The defense in the fraud trial calls her a drug addict with such a low IQ that she couldn’t have pulled off the scam.

The prosecution said she jet-setted around the West Coast, setting up phony deals and phony papers so she could steal millions of dollars from an Orange County thrift and spend it on fur coats, cocktail dresses and jewelry.

The defense said she was a drug addict with a low IQ, barely able to get out of bed in the morning, much less carry out a complicated scheme to loot some $16.6 million from now-defunct North America Savings & Loan in Santa Ana.

Those were the portraits painted Tuesday of Janet Faye McKinzie in opening statements in her bank fraud trial in U.S. District Court here.

McKinzie is facing 40 counts of bank fraud, conspiracy and racketeering in connection with the 1987 collapse of North America, which ultimately cost taxpayers some $120 million. If convicted, she could receive more than 200 years in prison.

The thrift’s founder and chairman--former Westminster dentist Duayne D. Christensen--is an unindicted co-conspirator in the case, having died in a mysterious car crash only 9 1/2 hours before regulators seized North America.

“North America with an American Eagle as its logo--a symbol of freedom and prosperity--instead became a company operated by two individuals who conducted its affairs through a pattern of racketeering,” Assistant U.S. Atty. Nancy Wieben Stock told jurors.

Stock said McKinzie spent hundreds of thousands of dollars of depositors’ funds on herself.

“First-class travel, first-class accommodations. Lear jet travel to wherever she wanted to go. McKinzie enjoyed all of the accouterments of power at North America,” Stock said.

McKinzie flew to such places as Utah and Arizona, allegedly as part of an elaborate fraud she perpetrated with Christensen.

Richard (Racehorse) Haynes--McKinzie’s attorney--said his client was innocent of any wrongdoing and pinned the blame for North America’s collapse on Christensen.

“The wrong person is on trial here today,” Haynes said. “Dr. Duayne Christensen should be seated in this seat.”

He characterized Christensen as a malevolent pill pusher, plying his client with prescription medication that turned McKinzie into “a robot” who simply followed the former dentist’s instructions.

Haynes said Christensen’s professional designation of D.D.S.--which is listed after a dentist’s surname--really stood for “dishonesty, deception and seduction.”

Haynes is using a “diminished capacity” defense, claiming that McKinzie was unwittingly duped into carrying out the alleged fraud because she was involuntarily intoxicated by drugs.

Stock, however, said it was McKinzie who was in control at North America rather than Christensen.

“It was well known at North America that what McKinzie says, goes,” Stock said.

She pointed to a two-phase condominium project in San Jose as proof. The government has alleged that McKinzie had more than $5.5 million worth of phony invoices and check requests intended to pay for supposed construction work on the second phase of the project, known as Summerton. The government claims that the construction was never done and that the money was used for fraudulent purposes, including McKinzie’s “personal enrichment.”

“Phase Two was nothing but dirt,” Stock said.

Just three days before his death, Christensen rewrote his will to name McKinzie as sole beneficiary. The proceeds from a $10-million life insurance policy have been frozen by a federal judge pending the outcome of several lawsuits against McKinzie.

Federal and state regulators say the life insurance proceeds were just the final chapter in a massive fraud, but Haynes tried to show the jury that it was just another move by Christensen to make McKinzie look bad.

“Even after death, Dr. Christensen was trying to manipulate the life of Janet Faye McKinzie,” Haynes said.

Haynes told jurors that his client was incapable of carrying out a massive fraud on her own, even without being on drugs.

“The evidence will show that the woman upon whom you sit in judgment, Janet Faye McKinzie, is a 40-year-old high school dropout with an IQ of between 86 and 97,” he said.

Haynes at one point compared Christensen to Pavlov, the Russian physiologist who trained dogs through a reward-and-punishment system.

After opening statements, former North America President Brooks A. Miller took the stand and testified about some of the thrift’s deals. Haynes is expected to cross-examine Miller today.