Texas S&L; Head Gets 30 Years for Kickbacks

The former chairman and chief executive of Vernon Savings & Loan Assn. of Texas was sentenced Thursday to 30 years in prison on charges of fraud, the stiffest sentence ever in the growing thrifts scandal.

Woody Lemons, the former executive, was handed the sentence by U.S. District Judge Robert Maloney in Dallas.

Lemons was convicted last December on all 13 counts of a grand jury indictment charging him with defrauding the bank. He was found to have schemed to get kickbacks from fees funded by Vernon in connection with a $46-million loan.

Vernon lost more than $18 million on the loan, used to finance the development and purchase of a major residential subdivision. Lemons received $221,000 in kickbacks.

The Federal Deposit Insurance Corp. said the sentence was the longest prison sentence to date in a thrift fraud case.

“It sends a signal that the judicial system intends to punish severely this type of crime,” said Steven Seelig, director of the FDIC’s Division of Liquidation.

The FDIC, which insures investor deposits, is seeking restitution from Lemons. A hearing to determine the amount is slated for April 18.

FDIC Chairman L. William Seidman wrote a letter to the court urging that Lemons be given a substantial prison sentence.

“While I have considered the fact that Mr. Lemons has a family, I have also taken into consideration his continuing attempts to hide and transfer assets and that virtually all the costs of Lemons’ criminal acts will be borne by the FSLIC Resolution Fund and ultimately the U.S. taxpayers,” Seidman wrote.

The bailout of the thrift industry, which was needed due to problem real estate loans, severe economic problems in the Southwest and fraud by thrift owners, is officially expected to cost taxpayers $159 billion.

But most experts agree that the costs will go much higher as more tottering thrifts collapse and are seized by federal regulators.