Officials Praise Stiff Term in S&L; Fraud Case

The sentencing Friday of Janet Faye McKinzie to a 20-year prison term for her role in the collapse of North America Savings & Loan brought wide praise from thrift regulators and law enforcement authorities.

McKinzie’s sentence, which was coupled with an order to repay $14 million swindled from the now-defunct Santa Ana thrift, is one of the stiffest penalties in the nation for anyone charged with thrift fraud.

She was a consultant to North America, but, as a close associate of the S&L;’s late owner, Duayne D. Christensen, she was the thrift’s de facto head, regulators had charged.

Comments came from across the country:

“From the evening of Jan. 16, 1987, I have been certain of the mass fraud that was committed by Jan McKinzie and (Duayne) Doc Christensen,” said William D. Davis, commissioner of the state Department of Savings and Loan. Davis acted as conservator for the state when it seized the S&L; after Christensen’s death in a car accident.

“Her sentence fits the crime,” said William K. Black, counsel for the Office of Thrift Supervision’s district headquarters in San Francisco. “We’re delighted the court had the courage to impose a sentence commensurate with the incredible scope of criminal conduct at the S&L.; I think it sends a very important signal deterring people from this kind of conduct in the future.”

“Both portions of the sentence are excellent,” said Lawrence G. Lawler, special agent in charge of the FBI’s Los Angeles office. His seven-county district, which includes Orange County, is continuing to investigate further allegations at North America.

“This represents a dramatic increase in the length of sentences now being handed out to these white-collar criminals. It’s a reflection of an understanding on the part of courts about the public outcry on these financial fraud-related cases,” said Douglas Tillett, a Justice Department spokesman in Washington.

The order to repay $14 million is an “unknown factor,” Davis said.

“There was a lot of money that disappeared from that institution and nobody has been able to nail down where it went,” he said. “It wouldn’t surprise me that she would have access to those funds.”

Her stiff sentence is also part of a nationwide trend that federal authorities are beginning to see in prosecutions of white-collar criminals in the savings and loan scandal.

“Typically, we’ve seen a dramatic increase in the length of sentences,” Tillett said. Statistics to support the trend, however, were not available Friday.

Data provided by the Justice Department, however, does indicate that the days of the slap on the wrist as punishment for fraud are drawing to a close.

The agency has won convictions of 211 people in major thrift fraud cases since Oct. 1, 1988. Of that total, 153 people have been sentenced so far, and 78% of them--119--sent to prison, Tillett said.

The average jail time is a little more than three years, he said. But he estimated that about half the sentences meted out are three- to five-year terms and roughly 25% exceed 10 years.

While Black also sees a trend toward heavier sentences of thrift defrauders, he said a continuing problem remains--courts are inconsistent.