Hardly Stodgy, This Thrift Had Uzis, English Butler : S&Ls;: Probes of Columbia S&L; and its former chief, Thomas Spiegel, also unveil bomb shelters, bodyguards and jets.

Many strange tales have surfaced in the nation’s thrift debacle. Those of Columbia Savings & Loan and former chief executive Thomas Spiegel may top them all.

Take Spiegel’s obsession with security. Columbia’s still-unfinished headquarters building in Beverly Hills comes equipped with two anti-terrorist bomb shelters. A $9-million hangar at the Van Nuys Airport built for Columbia’s corporate jets included an electronic map that showed recent terrorist activity throughout the world.

Spiegel and his family at times had 19 security personnel protecting them, some assigned to “chase cars” loaded with automatic weapons that would trail Spiegel whenever he rode through the streets of Beverly Hills. Columbia collected an arsenal of weapons that included more than 100 rifles, shotguns, assault weapons and Uzi submachine guns, prompting some executives to joke that the thrift’s deposits were insured by “Smith & Wesson and Uzi” and to suggest that its name should be changed to “Colombia Savings & Loan.”

The James Bond-like security measures, extraordinary by any corporate standards, are just a few of the eye-popping details about Spiegel’s 13-year reign at Columbia that are only now surfacing. The revelations, the result of an internal investigation, a government probe and interviews with former Columbia employees, portray a thrift where spending ran amok. The allegations are especially ironic in view of the fact that Columbia for years boasted in television commercials that surveys showed it was the best-managed savings and loan in America.

Columbia was lionized as an example of deregulation unshackling S&Ls.; Chicago real estate deal-maker Sam Zell once said that “if the entire S&L; business had been run by guys like Tom Spiegel, then this country would be a couple of hundred billion bucks richer.”

But civil allegations filed last week by the federal Office of Thrift Supervision accuse Spiegel of using the thrift--and its taxpayer-insured deposits--as his personal piggy bank.

“This is a case of great importance. In money terms, it is the largest case,” said Harris Weinstein, chief lawyer for the OTS.

All told, regulators allege, Spiegel went on a $19-million spending spree that included such abuses as buying the guns, taking personal trips on Columbia’s corporate jet, extensive use of Columbia-owned condominiums in Wyoming, Utah and California, and even buying $7,840 in Michael Jackson concert tickets. Regulators are seeking $24 million from Spiegel, including a $5-million fine. They also are seeking to bar him from the thrift business for life.

Papers filed by the OTS last week show a bizarre tug of war between Spiegel and Columbia’s current management over the $55,000 in guns. Of the approximately 100 guns, Spiegel allegedly is refusing to turn over 55, including four rifles, 18 revolvers, 24 automatic pistols and nine shotguns. Forty of the guns are missing.

Spiegel denies the allegations and vows to fight them. In a statement, he said he is being made a scapegoat by inept federal regulators. He accuses them of conducting a “trial by press release” without allowing him to tell his story.

Spiegel, 44, has declined to publicly address the specific charges. He declined to comment for this article. In a recent deposition he refused to answer questions.

But New York criminal defense lawyer Robert G. Morvillo, who represents him, said the expenditures will be shown to have been made for legitimate business purposes. Morvillo said the government also is ignoring the fact that, at the time most of the expenditures were made, Columbia was one of the nation’s strongest and most profitable thrifts.

As for the security measures, he said, Spiegel was one of the nation’s most visible and highest-paid executives at the time, so such concerns were justified. Finally, he said, some Spiegel expenses were legitimate, but may have lacked proper documentation.

“Whenever you get a guy who was as busy as he was, you rely on other people to get the paper work done. I can’t say the paper work in all cases got done, but the spirit in which he conducted himself was at all times proper,” Morvillo said.

Much is riding on the Spiegel case. Thrift regulators have elevated him to the big leagues of alleged S&L; abusers--with the likes of Charles H. Keating Jr., former head of Lincoln Savings & Loan in Irvine, and David L. Paul, former head of CenTrust Bank in Miami.

Also, the Spiegel charges come as regulators are being criticized for moving too slowly against S&L; abusers, although Weinstein denied that the criticism influenced the timing of the Spiegel announcement. The OTS investigation could lead to criminal charges against Spiegel. Morvillo said he believes that the agency’s findings have already been forwarded to prosecutors in Los Angeles.

Columbia, still controlled by Spiegel and his family, is hanging by a thread to independence. Its net worth was wiped out over the past year after it suffered $1 billion in losses in its risky junk bonds. In the 1980s, the bonds made Columbia, the biggest buyer of junk bonds among thrifts, wildly profitable.

Columbia’s only hope of preventing a federal takeover is selling its bonds. This Monday, it will formally accept bids from eight prospective buyers for the bonds, worth about $3 billion now. The list, outside sources familiar with the transaction said, include several well-financed groups, including the New York banking firm Bankers Trust; Loews Corp.; the Pritzker family of Chicago; a group led by Canadian Imperial Bank of Commerce; the Los Angeles financial services firm Broad Inc., and one group that includes the investment firm Odyssey Partners, banking giant Citicorp and the Wall Street firm Salomon Bros.

Columbia Savings was formed in 1974 by Spiegel’s father, Abraham, who still serves as Columbia’s chairman. Thomas Spiegel, Abraham’s second son, became president and chief executive in 1977.

In the early 1980s, Columbia, like most thrifts, faced the prospect of going out of business because high interest rates meant it paid more for funds than it got back in return by making loans. But deregulation in 1982 allowed thrifts to place taxpayer-insured deposits into nontraditional investments such as real estate and junk bonds.

Spiegel figured that he could attract deposits from sophisticated Wall Street investors by paying exceptionally high rates, then invest the money in junk bonds to earn an even more exceptional return. This “spread” between the two rates for a while made Columbia a money machine.

Forbes magazine at one point published a statistical-based survey that called Columbia the top-managed thrift in the nation. Columbia made that claim the cornerstone of its advertising campaign.

The key influence on Spiegel this time was Michael Milken, the former Drexel Burnham Lambert junk bond whiz whom Spiegel met at a party. Columbia became one of Drexel’s best customers, and Spiegel and Milken became close friends.

The relationship extended to a partnership formed to buy a luxury Gulfstream IV, and build the airplane hangar at Van Nuys. Spiegel frequently used the jet to fly to Palm Springs 100 miles away for weekend getaways at a Columbia condominium in Indian Wells that he is alleged to have used exclusively. He has claimed the trips were to check on a Columbia development project in Indian Wells.

In another case, Spiegel allegedly spent $250,000 having Columbia’s jet sent to London to fetch him and take him to Switzerland. He has claimed that the jet brought annual reports and slides to potential Swiss investors. In one case, regulators assert, Columbia designated a condominium in a ski area of Wyoming for the exclusive use of Milken and his brother, Lowell.

In 1985, when Columbia was among the nation’s most profitable thrifts, Spiegel earned a staggering $9 million--nearly 20 times what other major thrift chief executives earned. Spiegel’s huge paychecks irked regulators, who forced him to give back $600,000 of his $3-million bonus in 1988. Regulators last week filed actions to force him to give back the remaining $2.4 million, saying Columbia’s lackluster profits that year did not warrant such a bonus.

It was about this time that Spiegel apparently began showing concerns about his security. Some acquaintances believe that Spiegel may have felt vulnerable to attacks by anti-Semitic groups because of his family’s support for Jewish causes. He and his wife Helene each took shooting lessons, and inventory records of Columbia’s guns show that many were kept in safes in Spiegel’s Beverly Hills home.

As Spiegel rode the junk bond wave, his political influence grew. He gave generously to politicians. Former House Majority Whip Tony Coelho (D-Merced) resigned after disclosures about a $50,000 Spiegel-arranged loan that allowed him to buy a $100,000 junk bond. And Abraham has long enjoyed close ties to Mayor Tom Bradley.

As Columbia’s profits grew, spending was lavish. Columbia employed an English butler and a martial arts instructor. It rented a Beverly Hills apartment for a relatively low-level assistant who balked at relocating here from New York, picking up the tab when she wanted to fly home.

According to government papers, Spiegel spent $2,205 on tips alone during two trips to Europe in 1988 and 1989, and ran up a $2,197 hotel and room-service bill for a four-night stay for him and his wife at London’s Dorchester Hotel in 1987. Other alleged expenditures of Columbia money included $4,876 for towels, $5,290 for Pratesi cashmere throws and $738 for two cases of wine.

Some former Columbia executives say Spiegel often gave expensive gifts to clients or business associates. The Michael Jackson tickets, they say, were given to investment bankers or business school graduates that Columbia was recruiting.

But OTS attorney Weinstein says the alleged expenses were for the personal benefit of Spiegel and his friends, not for any corporate purpose.

Bonuses were generous as well. Last year, Columbia lost nearly $600 million. Still, it paid top executives $4 million in bonuses, including one executive who received $1.2 million even though his job--to arrange financing deals--was rendered moot by federal legislation last year.

Then there was Columbia’s new corporate headquarters, a $55-million white elephant that has been behind schedule and plagued by huge cost overruns. In addition to the bomb shelters, the office featured limestone walls, stainless-steel floors and two kitchens, one to have been used by Spiegel and another for his father.

To outsiders, the thrift was run by a group of seven relatively young executives, dubbed “partners,” who worked as a team. In reality, Spiegel called the shots, frequently unnerving executives with his unorthodox style.

One management method Spiegel used frequently was something former executives jokingly called an “est” style, referring to the self-help Erhard Seminars Training theories popular in the 1970s. Inspired by a company psychologist used by Drexel, Spiegel would ask an employee to confide in him what he or she thought of another executive. He then would share those comments with the executive he had asked about. Former executives say it caused bitter feelings among many, who thought it was divisive and promoted back-stabbing.

Those in Spiegel’s favor clearly wielded more power. Those who did not left under bitter terms. That happened when Spiegel attempted to discipline Columbia and turn it into more of a traditional thrift by hiring banker Lawrence K. Fish in 1988 as his second in command. Fish lasted less than two years, resigning last fall.

The public story was that Fish quit because in reorganizing Columbia he had effectively eliminated his own job. But company insiders say Fish alienated the other partners. In one case, Columbia’s real estate head exploded when Fish questioned the need to buy about $25,000 in computer equipment. Ultimately, top executives bypassed Fish, who found no support from Spiegel. Fish, who did not return calls seeking comment, now heads troubled Bank of New England in Boston.

About the time Fish resigned, three things happened that put Columbia and Spiegel in the jam they are in today.

Congress passed last year’s massive thrift-reform package, requiring S&Ls; such as Columbia to sell their junk bonds in five years. Ironically, junk bond guru Milken sensed a shift in the political winds and urged Spiegel to sell the bonds well before the thrift bailout bill passed.

At the same time, the junk bond market collapsed. Because Columbia had to sell its bonds, accounting rules required it to recognize its bond losses immediately.

But junk bonds weren’t Columbia’s only problem. Some were due to bad deals. Columbia sunk $70 million into the Hyatt Newporter in Newport Beach, which it is trying to unload now. Real estate experts believe Columbia will be lucky to get half that price. In addition, Columbia faces major losses on problem office developments in Orange County.

As Columbia’s losses mounted, Spiegel’s spending habits came under scrutiny. When Fish left, two senior executives initiated an internal investigation. Ironically, it was Spiegel who tipped off regulators about this internal probe; that in turn prompted the government to launch its own investigation.

In November, Spiegel’s top executives told him he should resign. They feared he might be indicted for his role in buying bonds from Milken, and that regulators might seize Columbia if he didn’t leave. Spiegel stepped down at the end of December, but remained as a consultant. He later cut virtually all of his ties to Columbia.

Junk bonds have recovered part of their values in recent weeks. Columbia could conceivably sell them at a healthy price and even regain its solvency if it gets attractive bids next week. That would at least save taxpayers from having to bail out the thrift.

Meanwhile, government actions against Spiegel could take years. In any event, it’s unlikely that Spiegel will be taking any shopping sprees soon. Most of his spending these days is on lawyers.

THE UNRAVELING OF COLUMBIA SAVINGS 1985

Thomas Spiegel receives $9.03 million in compensation, making him the third-highest-paid corporate executive in the United States and the highest-paid savings and loan executive in the history of the industry.

After two years of fighting regulators who called the payment “unreasonable,” Spiegel was allowed to keep the money. But his salary would be subject to review by outside experts in the future to ensure that it is not excessive.

Although his salary was much less in subsequent years, Spiegel continued to be the industry’s best-paid executive.

1987

Feb. 3: Columbia Savings posts peak earnings of $194 million in 1986--primarily because of its investments in junk bonds--prompting Forbes magazine to rate the company as the best-managed major savings and loan in the nation.

Oct. 28: Citing the stock market crash, Columbia says it stands to lose $25 million in the fourth quarter of 1987, the first sign of trouble at the company that advertised itself as a rock-solid financial institution.

1988

May 11: Losses on securities sales resulting from writedowns in its bond portfolio contribute to a 95% dive in first-quarter earnings from the same period in 1987.

1989

May 27: Former House Majority Whip Tony Coelho says he will resign rather than face a House probe into his personal finances. Coelho failed to disclose a $50,000 loan from Columbia used to help purchase a $100,000 junk bond on Thomas Spiegel’s recommendation.

Sept. 28: A federal grand jury in Los Angeles opens a criminal investigation into the personal finances of Mayor Tom Bradley, including his association with the Spiegel family and Columbia Savings.

Dec. 31: Thomas Spiegel resigns as chairman, chief executive, president and director of Columbia. Spiegel had been president and chief executive since 1977.

1990

March 12: Edward G. Harshfield is named chief executive.

March 14: Harshfield announces plans to sell the thrift’s $3.5-billion junk bond portfolio.

April 1: Columbia Savings says it is insolvent, after losing $575 million from October, 1989, through February, 1990. The thrift had posted losses of $591 million for 1989.

July 5: The Office of Thrift Supervision files civil charges against Thomas Spiegel for improperly diverting $19 million of the thrift’s funds and seeks a $5-million fine from Spiegel for “recklessly and knowingly” causing loses to Columbia Savings. Regulators also want Spiegel to repay an additional $2.4 million plus interest of his 1989 $2.8-million bonus, saying the bonus was unjustified. Spiegel had earlier returned $600,000 of his bonus to Columbia.

Los Angeles Times