S&L; Defendant Guilty : McKinzie Convicted in ’87 Failure

A federal jury in Santa Ana today found Janet Faye McKinzie guilty of racketeering, conspiracy and fraud in connection with the 1987 failure of North America Savings & Loan.

The verdict came after a 2 1/2-month trial in U.S. District Court in which the defense argued that McKinzie was duped into carrying out the fraud because she was involuntarily intoxicated by drugs provided by the thrift’s chairman.

McKinzie was a confidante of the thrift’s former chairman, Dr. Duayne Christensen, a dentist who mysteriously died in a car accident hours before federal regulators took over the thrift. The institution’s collapse cost taxpayers more than $120 million.

The six-man, six-woman jury deliberated for nearly two weeks before finding McKinzie guilty on 22 counts of racketeering, conspiracy, wire fraud, bank fraud and interstate transportation of stolen property.

McKinzie wept when the verdict was read. She and her attorney declined comment.

Assistant U.S. Atty. Paul Seave said he is “pleased with the verdict.” He declined further comment.

McKinzie faces a possible sentence of up to 180 years in prison. The jury will also decide whether she must forfeit a $10-million pay-out from an insurance policy made after Christensen’s death.

During the trial, McKinzie’s attorney, Texas defense lawyer Richard (Racehorse) Haynes, tried to persuade the jury that Christensen was the mastermind behind the looting of North America.

Christensen and McKinzie lived a lavish lifestyle, spending freely on everything from extravagant parties with entertainers to expensive trinkets. According to trial testimony, both abused drugs.

Although Haynes argued that McKinzie was in a drug-induced haze, encouraged by Christensen, the prosecution countered that she was fully aware of what she was doing.

In closing arguments, Haynes called Christensen the “Jim Jones” of the savings and loan industry, a reference to the cult religious figure who led more than 900 followers in a mass suicide in Guyana.

Christensen “was able to make people believe things that weren’t true,” Haynes said. “He could make them put the cyanide in the Kool-Aid. That was Dr. Christensen.”

But the prosecution dismissed the defense’s arguments as fiction.

“The bottom line is Dr. Christensen was a crook and the defendant was his right-hand man,” Seave said in his closing arguments.

He told jurors that McKinzie was completely aware of what she was doing and took the lead in two schemes to defraud North America of more than $16 million. He produced numerous documents that the prosecution has said were falsified at McKinsie’s instruction to cover up the fraud.

The failure of North America was one of the most unusual in a series of savings and loan collapses in Orange County in the 1980s. The collapse of more than a dozen thrifts will ultimately cost taxpayers billions of dollars.