Constitution Federal S&L; Seized by U.S. Regulators

Constitution Federal Savings, a Monterey Park thrift in which beleaguered New York tax-shelter artist Barry Trupin holds a majority of shares, was seized by federal regulators Thursday.

Trupin was once one of the nation’s biggest sellers of real estate tax shelters. He owned a waterfront mansion on Long Island, had a collection of seven Rolls-Royces and was lauded in a 1984 New York magazine profile in which he claimed to be worth “more or less $300 million.”

But Trupin’s company, Rothschild Reserve Group, went out of business in 1987. Investors, claiming that they lost millions of dollars, sued him for fraud, alleging among other things that he misused Constitution.

Trupin had hoped to use Constitution to build a high-flying banking empire. But regulators in 1987 clamped down on him, barring him from being involved in the thrift’s operations.

One regulator familiar with Constitution said Trupin’s shares are being held in an escrow account pending a lawsuit Trupin filed against those who sold him the shares. He claims that Constitution’s financial condition was misrepresented to him. Milton Feinerman, a Los Angeles lawyer who has represented Trupin, confirmed that Trupin is still the owner of record of the shares but would not comment further.

Recent losses eroded Constitution’s financial condition. Regulators said the problems for Constitution, which has $68 million in assets, included excessive salaries and an inability to generate new loans. Customer accounts at the thrift, which was once based in Tustin, remain insured up to the $100,000 legal limit.