Judge Reverses Convictions in State Savings Fraud Case

A federal judge Thursday overturned the conviction of financier J. William Oldenburg and his former lawyer on charges of lying on financial records in the $26-million State Savings & Loan fraud case.

The case was the first major trial in Northern California to test allegations of fraud stemming from the nationwide savings and loan crisis.

Oldenburg, 51, former owner of the L.A. Express football team, and his former attorney, Martin Mandel, were found guilty in December of failing to enter in the records a $10-million transfer of funds from State Savings associated with a 1984 property purchase.

Jurors deadlocked 9-3 in favor of conviction on six of the nine original counts against Oldenburg. Two counts were dismissed before the case was submitted to the jury.

U.S. Attorney Joseph Russoniello said he would seek a retrial of Oldenburg and Mandel--not only on the false records count but also on the six deadlocked charges.

“Now it is not so tough a decision--it will clearly have to be retried,” said Russoniello.

Judge Eugene Lynch’s decision “takes some of the doubt and mystery out of (the decision),” he said.

Richard Rosenberg, Oldenburg’s attorney, said: “This was a technical offense. I think the government should quit. They gave it their best shot. Russoniello tried it himself and got no conviction.”

Oldenburg faced five years in prison on the single count. He was scheduled for sentencing Friday.

During the five-week trial, Russoniello contended that Oldenburg bilked the collapsed State Savings of Salt Lake City, which Oldenburg controlled, by having the thrift buy a 363-acre parcel in Richmond, Calif., for $26.5 million in 1984.

The parcel was owned by another Oldenburg firm, San Francisco-based Investment Mortgage International, which was in financial trouble.

Oldenburg and Mandel were convicted of a single count of knowingly making a false entry in the minutes of the meeting of State Savings’ board of directors.

The minutes failed to mention the $10 million transmitted to Oldenburg’s IMI firm in San Francisco as part of the Richmond deal.

Rosenberg and former San Francisco Mayor Joseph L. Alioto, also an Oldenburg attorney, argued that the single conviction called for a new trial “in the interests of justice” because the evidence was insufficient.

Lynch concluded after “many hours reviewing the evidence in detail that this is just such an exception case where a new trial motion ought to be granted.”

“There is simply far too little evidence with respect to whether either defendant knew of the omission in the January 31 minutes for the court to allow the verdict to stand,” Lynch wrote.

Lynch emphasized that he did not dispute the jury verdict that a false entry was made and that both Oldenburg and Mandel had the intent to deceive the Federal Home Loan Bank Board about the $10-million transfer.

Oldenburg was originally indicted with three subordinates for conspiracy to misapply the money from State Savings, once Utah’s third-largest thrift. Two of the four, James Rossetti, 53, and Nicholas Muccino, 60, were senior vice presidents of Investment Mortgage International. They agreed to plead guilty and provided testimony against Oldenburg and Mandel.