Ex-Columbia Chief May Face More Charges
Regulators plan to add to the civil charges against former Columbia Savings & Loan Chief Executive Thomas Spiegel that accuse him of squandering the thrift’s assets, Spiegel’s lawyers said Monday.
At a hearing before U.S. District Judge Stephen V. Wilson in Los Angeles, lawyers Dennis M. Perluss and Robert G. Morvillo said they have been told that regulators will amend civil charges filed on July 5 against Spiegel.
In that complaint, the federal Office of Thrift Supervision alleged that Spiegel wasted $19 million of the now-insolvent Beverly Hills-based thrift’s money on such things as corporate jets, condominiums, loans to a friend and concert tickets--all for his personal benefit.
The complaint, which seeks recovery of the $19 million plus a $5-million fine against Spiegel, is already the largest civil case brought against an individual by thrift regulators.
Neither of Spiegel’s lawyers specified what additional charges might be forthcoming.
The new charges could involve expenses for some of the elaborate security measures Spiegel used while he was Columbia’s chief executive. Investigators have found, for example, that Spiegel and his family used as many as 19 members of Columbia’s 28-member security detail for protection.
Morvillo declined to comment on the new charges during a recess. OTS lawyer William Black, who represented the agency at the hearing, also declined comment.
Spiegel resigned Dec. 31 as chief executive of Columbia, where he had served since 1977.
He has since cut his management ties to the firm, best known for its extensive investments in risky, high-yield junk bonds. Losses from the decline in value of its junk bonds rendered Columbia insolvent and in danger of being seized by regulators. Last week, Columbia agreed to sell its huge junk bond holdings for $3 billion to Gordon America, a Canadian-led partnership.
Monday’s hearing was to determine whether Spiegel would be required to place money into an escrow account to cover amounts the OTS is seeking. The agency argues that Spiegel’s assets may disappear unless an account is required.
Wilson made no decision Monday. He continued the hearing until today.
Spiegel’s lawyers argued that such an order would be improper and unnecessarily heavy-handed. They said the government has shown no evidence that Spiegel’s assets are disappearing.
One question raised is whether Spiegel has the money or whether his holdings are liquid enough to raise it. Spiegel and his family control two-thirds of Columbia’s stock, which is virtually worthless and was recently delisted by the New York Stock Exchange. Friends and associates say they believe that he still has some real estate interests along with some stocks and bonds.
“I can tell you Mr. Spiegel cannot simply write a check for $24 million and put it into escrow,” Perluss said. Morvillo went so far as to suggest that Spiegel might have to consult a bankruptcy lawyer if Wilson requires the former thrift executive to post the full amount.
OTS Director T. Timothy Ryan Jr. has said he believes that Spiegel has the money, based on information uncovered during the agency’s eight-month investigation.
