Trigg Indicted; Fraud Charged in Takeover of Black-Owned S

A federal grand jury Thursday indicted Los Angeles businessman Oliver A. Trigg Jr. on charges that he masterminded an elaborate scheme to buy Family Federal Savings Bank--one of the nation’s largest black-owned thrifts--with its own money.

Though the use of a dummy company and a straw purchaser, the indictment alleged, Trigg sold land to the Los Angeles-based thrift--then known as Family Savings & Loan--for a whopping $2.7-million profit. Trigg used $1.7 million of that to buy control of Family Savings, the complaint alleged.

Trigg’s lawyer, Arthur Barens, said his client will plead not guilty. “We were cooperative with the investigation and I am disappointed that the government decided to file an indictment,” he said.

Barens said Trigg, who no longer owns Family Savings, is in financial trouble as a result of the investigation. “The idea that Trigg got rich off Family Savings is preposterous,” he said.

The indictment, which also named three other Trigg associates who played minor roles in the alleged scheme, is the result of a federal investigation initiated three years ago. The investigation--by federal thrift regulators and the FBI--was prompted by an October, 1987, Los Angeles Times story that described Trigg’s dealings with the thrift.

The 15-count indictment charges Trigg with conspiracy, bank fraud, money laundering, false statements and tax fraud. Trigg, 39, has agreed to surrender to U.S. marshals and will be arraigned today. If convicted, he faces up to 94 years in jail and a fine of up to $1 million.

The investigation into Family Savings is one of the top-priority savings and loan fraud cases in the nation, Assistant U.S. Atty. Maurice A. Leiter said Thursday. He said the investigation is continuing.

Though the amount involved is small compared to such prominent cases as Columbia Savings & Loan and Lincoln Savings & Loan, the alleged fraud at Family had a devastating effect on the tiny thrift.

Family Savings eventually sold the land it bought from Trigg at a $2.2-million loss. That loss weakened its already fragile capital--the amount a savings and loan has available to cover losses.

Last year, Family Savings was $4 million below federal capital requirements and was in danger of being seized. The thrift was rescued by a black-owned venture capital firm from Washington, which agreed to pump $4 million into it in return for 93% of its stock.

The indictment brings to a climax three tumultuous years for Trigg, a bright, promising and articulate businessman. The son of an Army enlisted man, he got an MBA from Harvard Business School and went on to work for Xerox.

Tired of climbing the corporate ladder, Trigg quit Xerox to go into business for himself, but his first venture--an office equipment supply company--was a disaster.

Trigg--still in debt from his business failure--joined Family’s board and became its chairman in 1986. A year later, he bought control of the thrift for $1.24 million.

He attracted attention with his flashy style, and drove a black Ferrari as a symbol of his supposed success. He kept a personal computer in his office at Family Savings, which, he said, ran a secret program that made him rich by signaling when he should trade stocks.

Trigg, in past interviews, maintained that his money came from real estate successes and profits from stock trades. Trigg told federal regulators he got the money to buy Family from the $2.65-million sale of his interest in Hawthorne Terrace, a subsidized housing project that is part of the Century Freeway program, to a friend, Willie Powell.

But the indictment says Trigg never received the money, and the transaction was a smoke screen to hide the scheme to defraud Family.

According to the indictment, Trigg got the money in this way:

In December, 1986, O.T. Investments, a company formed by Trigg, bought eight acres in Whittier’s exclusive Friendly Hills Estates for a $2.7-million note. Trigg bought the land from oil magnate and business associate Jack R. Urich.

A few months later, Trigg sold the land to Powell, an Inglewood developer who was allegedly acting as a straw, or stand-in, buyer for Trigg. Powell borrowed $3 million to pay off Trigg’s $2.7-million note. Powell was also indicted Thursday for his role in the scheme. Neither he nor his lawyer could be reached for comment.

Then, Trigg--acting as chairman of Family Savings--allegedly had the thrift loan $2.5 million to Powell secured by the Friendly Hills Estates land. But $1.7 million of that loan was laundered through six bank accounts, ending up in Trigg’s hands, the indictment alleged. Trigg allegedly used $1.24 million of it to buy 51% of Family’s stock.

After Trigg got control of Family, he arranged for the thrift to buy the Whittier land. Family paid for the land by “forgiving” its $2.5-million loan to Powell and assuming Powell’s earlier $3-million loan.

In the end, according to the indictment, Family paid $5 million for land that cost Trigg only $2.7 million.

According to the indictment, Trigg rewarded Powell, 51, for helping him by having Family sell other properties to Powell, and loaning Powell $2.65 million to buy them.

Two others were indicted for minor roles in the alleged scheme. Former Union Bank Vice President James E. Cottle was indicted on two counts of fraud for allegedly giving Trigg a phony letter that said Union Bank would fund the Family purchase if the Hawthorne Terrace deal fell through.

Assistant U.S. Atty. Leiter said Cottle, 45, of Stockton, didn’t have the authority to approve the loan and Union Bank has no record of it. Cottle, who left the bank in May, 1987, couldn’t be reached for comment. But his lawyer, Peter Robinson, said the executive is not guilty.

The indictment also named Chino Hills accountant James E. Williams for allegedly preparing false tax returns for Trigg in connection with the Hawthorne Terrace and Family Savings transactions. Neither Williams, 44, nor his lawyer, could be reached.

Besides the indictment, Trigg faces other difficulties. Family Savings is suing him to recover its loss on the Whittier land and is about to foreclose on his home in the Ladera Heights section of Los Angeles, a fashionable, mostly black community. Wayne Kent Bradshaw, Family Savings’ president, said Trigg’s home is worth $440,000.