Grand Jury to Start Lincoln Inquiry in Van Nuys Today
A special state grand jury in Van Nuys will begin hearing testimony today into possible criminal wrongdoing in the collapse of Irvine-based Lincoln Savings & Loan and its parent company.
The grand jury investigation is expected to focus on the sale of $200 million in debt securities by Lincoln’s parent, American Continental Corp., at the thrift’s 29 Southern California branches.
About 22,000 bondholders, most of them elderly, lost their money when Phoenix-based American Continental filed for bankruptcy April 13, 1989. Federal regulators seized Lincoln the next day. They have said the thrift’s failure could cost taxpayers up to $2 billion.
In its probe, the grand jury will look primarily at whether the thrift committed fraud by making false statements to bond buyers, said Lynn L. Miller, the special prosecutor heading the grand jury inquiry.
Many bondholders have said in civil litigation that they were led to believe that the bonds were insured or were as safe as their insured deposit accounts at Lincoln.
Los Angeles County Dist. Atty. Ira Reiner requested the grand jury after being named by Atty. Gen. John K. Van de Kamp as a special attorney general to investigate Lincoln. The investigation is expected to take six to nine months.
