Ex-Thrift Official to Plead Guilty in Brookside S&L; Case
The former vice chairman of failed Brookside Savings & Loan will plead guilty to three federal felony counts stemming from a real estate investment scam, his lawyer said Thursday.
The U.S. Attorney’s Office in Los Angeles announced Thursday that Arthur M. Pastel, a Los Angeles real estate investor, was charged with three felony counts, carrying a combined maximum possible sentence of 12 years in prison and a $260,000 fine.
Pastel was the vice chairman and a 50% shareholder in Brookside, a four-branch Los Angeles-based thrift, from July, 1984, to June, 1985. He has been under investigation for some time, and the charges lodged against him were the result of negotiations between federal prosecutors and his lawyer.
The first two counts arise out of transactions in which Pastel, 64, secretly sold his interest in a large San Antonio apartment complex to Brookside. The charges state that Pastel concealed his interest in the property by using a third party who posed as the seller of the property and funneled the proceeds to Pastel.
Brookside lost $853,000 as a result of the Texas deal, according to a criminal information filed Thursday by Steven E. Zipperstein, assistant U.S. attorney.
The third criminal count against Pastel alleges that he recruited a third party to sign loan documents submitted to Brookside to conceal Pastel’s financial interest in another transaction in Washoe County, Nev. He did this in September, 1986, according to court documents, because two months earlier the Federal Home Loan Bank Board, which then regulated S&Ls;, had ordered Brookside to refrain from engaging in any business transactions with Pastel.
Pastel’s attorney, Jan L. Handzlik, said his client will plead guilty Monday to all three charges. “Mr. Pastel has cooperated with the government’s investigation of Brookside. He intends to admit guilt and continue his cooperation,” Handzlik said. The charges filed against Pastel state that he was involved with other persons in these illegal deals, but they are not named.
Last December, federal regulators took over Brookside, which got into trouble because of problems with real estate loans and property owned in Arizona, Nevada and Texas.
At the time, the government announced that Brookside would operate business as normal, with the federal Resolution Trust Corp. as receiver. The thrift, declared insolvent by the Office of Thrift Supervision, had $630 million in assets and $574 million in deposits at the time of the seizure.
In late June, Lawrence G. Lawler, special agent in charge of the FBI’s Los Angeles office, said Brookside was one of seven failed thrifts given high priority by the FBI and the OTS as part of the Bush Administration’s coordinated effort to push for criminal prosecutions in thrift fraud cases.
Thursday, U.S. Atty. Lourdes G. Baird said her office is continuing its investigation of Brookside and related entities.
“This should have happened four years ago,” said a businessman familiar with Brookside’s operations. “Art was a real estate developer who was allowed to buy an S&L.; Regulators didn’t do a lot of investigation,” said the businessman, who spoke on condition of anonymity. He said he felt that the acquisition of Brookside by Pastel and another real estate investor was a paradigm of the problems that have plagued thrifts.
