Ex-Chairman Moers Faces Felony Counts in Brookside Deals

Michael S. Moers, former co-owner and chairman of Brookside Savings & Loan, was charged Thursday with four federal felony counts stemming from alleged real estate investment scams and dealings with another failed Los Angeles thrift, Westwood Savings & Loan.

Calling the case one of the most important involving thrifts filed so far in Southern California, U.S. Atty. Lourdes G. Baird in Los Angeles added that investigations into Brookside and Westwood are a top priority of the federal government.

Bailing out Brookside, which has moved some of its executive offices to Pasadena, could eventually cost taxpayers as much as $75 million, and Westwood’s failure could cost as much as $350 million, regulators have estimated.

U.S. Atty. Gen. Dick Thornburgh said in a statement that some of Brookside’s and Westwood’s dealings “illustrate the means by which clever white-collar criminals were able to steal millions of dollars while temporarily concealing their fraudulent acts from federal regulators.”

Moers, 39, was chairman of the board of Brookside and owned 100% of the thrift from June, 1985, until it was seized by regulators in late 1989. The four felony counts against Moers--including misapplication of Brookside’s funds and making false entries in the thrift’s books--carry a combined maximum possible sentence of 20 years in prison and a $265,000 fine.

One of Moers’ attorneys declined to comment on the charges. Another did not return a reporter’s phone calls.

Arthur M. Pastel, who owned 50% of Brookside for about 10 months in 1984 and 1985, pleaded guilty to three felony charges Aug. 13 in connection with the thrift’s failure.

The charges announced Thursday claim that Moers used a variety of means to cover up money he made from dealings with Brookside and Westwood.

The first count, for example, stems from a deal in August, 1984, in which Moers and Pastel are accused of having secretly sold to Brookside their interests in a 322-unit apartment complex in San Antonio, according to a criminal information filed Thursday by Steven E. Zipperstein, assistant U.S. attorney.

The charges claim that Moers and Pastel had a third party pretend to own the interests in the complex then pass on the $1.67 million that Brookside paid for them to the two men. Moers collected $813,000 from the sale, according to the criminal charges.

The criminal information said that if Moers’ and Pastel’s interests in the property had been known, it would have raised conflict-of-interest problems and that regulators might have blocked the deal.

The second and third charges arise from allegations that Moers, along with associates at Westwood Savings & Loan, concealed his interest in a prime 7-acre parcel near Pico Boulevard and Roxbury Drive in West Los Angeles, which was then bought by a joint venture of the two thrifts.

The charges claim that in 1984 Moers again had someone else pose as the seller of the interest--in this case, an option to buy the property--and pass on the $3.48 million Westwood and Brookside paid for the option to Moers and his associates.

Moers kept $476,000 of the sales price, according to the criminal information.

The last count stems from charges that Moers and some associates at Westwood hid $155,000 in fees that Westwood had paid him by funneling it through an attorney, who filed phony bills for legal work. Moers was allegedly owed the money for consulting services in connection with a real estate project in Austin, Tex.

Westwood wanted to hide the fees from federal and state regulators who were examining Westwood in the spring of 1985, according to the information.

Last week, Pastel pleaded guilty to hiding his interest in the San Antonio apartment complex and to concealing his interest in another transaction with Brookside, one made after regulators ordered Brookside to stop doing business with Pastel.

Pastel’s attorney said at the time that he would cooperate with the investigation of Brookside.

Moers’ case was originally referred to criminal investigators by the San Francisco district of the Office of Thrift Supervision, said T. Timothy Ryan Jr., the agency’s director, in a statement released Thursday. Baird, the U.S. attorney, said her office is continuing to investigate both Westwood and Brookside.