4 Sentenced in Santa Ana S&L; Failure

A federal judge Friday sentenced an Arkansas businessman to a year in prison, another defendant to 90 days of work release and two others to probation for their roles in the failure of North America Savings & Loan Assn.

The sentences handed down by U.S. District Judge Alicemarie H. Stotler paled next to the 20-year prison term recently given to Janet Faye McKinzie, a North America consultant and confidante of the thrift’s chairman, for her role in looting the institution.

The judge said the four defendants sentenced Friday were bit players in contrast with McKinzie in the fraud against the Santa Ana-based S&L.; The four, who entered bargained guilty pleas, testified at McKinzie’s lengthy trial.

The heaviest sentence was dealt to Arkansas businessman David L. Morgan, who had entered a guilty plea to charges of bank fraud and conspiracy. He was ordered to spend a year and a day in federal prison.

Morgan was a good friend of McKinzie’s, to whom she turned in one particular scheme to defraud the institution of $11 million, according to testimony.

McKinzie told the thrift’s officials that Morgan needed escrow money to buy real estate. The money deposited in the escrow account was almost immediately returned to McKinzie and the S&L;’s late owner, Duayne D. Christensen. Morgan participated in a cover-up by signing false and misleading documents and going to Salt Lake City to pose as a serious real estate buyer.

At the sentencing, Morgan expressed remorse. “I’m sorry that I was involved,” he told the court.

The only other defendant to be ordered to prison was Victoria R. Walker, who was responsible for transferring funds from McKinzie’s and Christensen’s bank accounts. Stotler gave her 90 days in a work-release program, a $5,000 fine and three years of probation. The judge said Walker had “acted, in a great part, out of friendship” with McKinzie.

“I am so sorry for what I have done,” Walker said in asking for leniency. “I know I’m a good person, and I’m not a threat or a risk.”

McKinzie’s secretary, Kathleen A. Taormina, received three years of probation, a $5,000 fine and was ordered to perform 300 hours of community service. She created phony invoices and check requests, typed the Morgan escrow scheme cover-up documents at McKinzie’s house and maintained phony escrow files at McKinzie’s direction.

Thomas C. Clarke was sentenced to two years of probation, 200 hours of community service and ordered to pay a $50 assessment fee. Clarke accepted deposit of an $891,755 check into his bank account, then kicked all but $25,000 back to McKinzie and Christensen.

Stotler did not fine him because he paid $50,000 to the Federal Deposit Insurance Corp.