Santa Ana Thrift Figure Gets 20 Years

Janet Faye McKinzie, a high school dropout with a penchant for Rolls-Royces and $1,000 cocktail dresses, was sentenced to 20 years in prison Friday and ordered to pay $13.5 million in restitution for her role in looting the now-defunct North America Savings & Loan of Santa Ana.

U.S. District Judge Alicemarie H. Stotler called McKinzie “a pathetic person” before meting out the stiffest sentence ever in California and the second-longest nationwide for a savings and loan insider involved in the country’s thrift debacle.

Wearing white pumps and a mustard-colored jumper, McKinzie was handcuffed and led away from the courtroom in tears as family and friends watched. Even her attorneys seemed stunned at Stotler’s decision to immediately imprison McKinzie.

“She needs to be made an example, not because she is inherently a bad person, but because she is very responsible for the losses suffered at North America,” Stotler said. “I think she earned the maximum sentence.”

Federal prosecutors had portrayed McKinzie, 41, and the late Duayne D. Christensen, North America’s owner, as a modern-day Bonnie and Clyde, stealing millions of dollars from the savings and loan to enrich themselves.

They each had a Rolls-Royce; McKinzie’s had a license plate that read “XTACI” (for ecstasy). McKinzie shopped so frequently at Neiman Marcus--spending hundreds of thousands of dollars--that the upscale retailer used to open its doors after regular hours to the former real estate agent. The late Sammy Davis Jr. sang during a lavish party celebrating McKinzie’s 37th birthday.

Assistant U.S. Atty. Paul L. Seave said the sentence was “fair in light of the egregiousness of the crime” and said it would help deter similar crimes.

Woody Lemons, former chairman of failed Vernon Savings & Loan Assn. in Dallas, received the longest sentence stemming from the nation’s S&L; disaster. Lemons was sentenced in April to 30 years in prison for bank fraud. Vernon’s 1987 failure is expected to cost taxpayers $1.3 billion.

The U.S. attorney’s office said McKinzie’s sentence is the longest ever handed out to a thrift insider in California. The second-harshest term was given to Donald P. Mangano, co-owner of Ramona Savings & Loan Assn. in Orange. He was sentenced to 15 years in prison in February. Ramona’s 1984 failure is expected to cost taxpayers $65.5 million.

North America was seized by regulators in 1987 and is expected to cost taxpayers $120 million.

But McKinzie’s attorney, Richard (Racehorse) Haynes, said his client was made a scapegoat for the nation’s savings and loan crisis, which could cost taxpayers as much as $500 billion over 30 years.

“This is comparable to a single Japanese soldier during World War II being tried for the entire assault on Pearl Harbor,” Haynes said. “Janet McKinzie is paying the price for the entire savings and loan bailout.”

Stotler told a packed courtroom that the North America case was “bizarre, horrible and spectacular all at the same time,” and added that the fraud was so egregious and transparent that “regulators must have been asleep at the switch.”

Christensen was killed in a mysterious car accident just 9 1/2 hours before the thrift was seized. McKinzie--whose formal position with the thrift was as a consultant--had argued during the course of an eight-week trial that she was duped into carrying out the fraud because Christensen, a dentist, was plying her with prescription drugs.

Haynes portrayed McKinzie as not very bright, an individual with an IQ of 86 incapable of carrying out a fraud as complex as the one that unfolded at North America.

But a jury in March convicted McKinzie on 22 of 26 counts including racketeering, conspiracy, bank fraud, wire fraud and interstate transportation of stolen property. She had faced a maximum 175-year prison term, but prosecutors had asked for 20 years.

She is the first person to be convicted under the Racketeer Influenced and Corrupt Organizations Act in connection with a West Coast savings and loan failure.

Federal and state officials were quick to praise McKinzie’s sentence.

“We’re obviously pleased with this sentence,” said Douglas Tillett, a Justice Department spokesman in Washington. “This represents a dramatic increase in the length of sentences now being handed out to these white-collar criminals.”

McKinzie spoke only briefly in court Friday, deciding not to apologize or ask for mercy.

“I’m scared,” she said in a quivering voice, and then thanked the court for its time.

This response seemed to irk prosecutors.

“Not once has the defendant expressed any remorse. Not once has she acknowledged any wrongdoing,” Assistant U.S. Atty. David Schindler said.

Stotler rejected the notion that McKinzie should pay a $5-million fine but agreed that McKinzie must return the $13,445,369 she was accused of looting from North America. The money will most likely come from a court-supervised escrow account that includes a $10-million life insurance policy paid to McKinzie after Christensen’s death.

Stotler--against the pre-sentencing recommendation of state investigators--decided McKinzie should begin serving her time now while appealing the case. The judge said she thought McKinzie received a fair trial and that the evidence against her was “overwhelming.”

Christensen was an unindicted co-conspirator in the North America trial and some of McKinzie’s supporters said it was the former dentist--and not her--who should have been on trial.

Haynes did his best to lay the blame for North America’s failure on Christensen, depicting him as a manipulative man capable of turning his employees into “washed-out zombies.”

Once during the trial, Haynes called Christensen “the Jim Jones of the savings and loan industry,” a reference to the Peoples Temple religious cult leader who led 900 of his followers in a mass suicide in Guyana.

On Friday, Stotler agreed that Christensen was more to blame for North America’s failure than McKinzie, although the judge said she “many times overshadowed him.”

Christensen, who founded North America in 1983, was killed in January, 1987, when his Jaguar crashed into a bridge support on the Corona del Mar Freeway.

“The greatest crook as shown by the evidence is simply no longer with us,” Stotler said.

Outside the courtroom--his client out of reach--Haynes lashed out at Christensen.

“I’d like to dig him up and bring him into court,” said Haynes. He said every taxpayer “out for blood” because of the savings and loan mess “could come and stone the corpse.”

Some of McKinzie’s friends, including longtime supporter Lois Harding, said the sentence was excessive.

“It’s gross,” Harding said. “Talk about hanging up somebody to dry.”

Haynes said McKinzie was caught completely off guard, thinking she would remain free during her appeal.

“Did she bring a toothbrush?” he asked. “No.”

McKinzie is being held temporarily at the Metropolitan Detention Center in Los Angeles, but Stotler ordered that she be housed in a facility offering psychiatric care.

She will be eligible for parole in a little more than six years.

Stotler said the 20-year sentence is a punishment that fits the crime.

“The court’s sentence, in imposing a maximum sentence against Janet McKinzie, is really not made out of inflamed passion or even personal anger toward her, nor is it related to today’s newspaper headlines,” the judge said. “It’s more, ‘This is what she did, and this is the price that she must pay.’ ”