2 Who Defrauded N. America S&L; Avoid Jail Terms

By GREGORY CROUCH

Sept. 25, 1990 12 AM PT

TIMES STAFF WRITER

SANTA ANA —

The final two defendants in the North America Savings & Loan scandal were each sentenced Monday to serve one month in a halfway house and ordered to pay $35,000 in restitution and fines for laundering $1.5 million stolen from the now-defunct thrift.

Armando J. Vasquez, 53, and Frederick Youngdahl, 55, were convicted last month of bank fraud for submitting phony invoices to North America and then returning the money they received--minus a $25,000 laundering fee--to thrift Chairman Duayne D. Christensen.

U.S. District Judge Alicemarie H. Stotler denied a request by federal prosecutors to imprison the two, agreeing with the defense that they were bit players in a fraud that caused the failure of the thrift.

“I am extremely sorry that my actions, however small, hurt the public,” said Vasquez, a Costa Mesa architect. “I am ashamed.”

Youngdahl, a Newport Beach engineer, declined to comment in court.

North America was seized by regulators in 1987, and its failure is estimated to cost taxpayers $120 million. The case was described by federal authorities as particularly egregious because the masterminds behind the fraud--Christensen and consultant Janet Faye McKinzie--spent much of the thrift’s money on extravagances like Rolls-Royces and lavish parties.

McKinzie was convicted in March on 22 of 26 counts that included racketeering, conspiracy, bank fraud, wire fraud and interstate transportation of stolen property. Stotler sentenced McKinzie to 20 years in jail, the harshest punishment meted out in California and the second-longest nationwide for an insider involved in the nation’s savings and loan debacle.

The former real estate agent and high school dropout had pleaded that she was temporarily insane because she was under the influence of prescription drugs as well as Christensen himself, whom her attorney characterized as “the Jim Jones of the savings and loan industry.”

Vasquez and Youngdahl claimed that they, too, were taken in by Christensen, a major client of both men. Christensen was an unindicted co-conspirator in the North America trials. He died in a mysterious car accident just 9 1/2 hours before regulators seized North America.

Youngdahl’s attorney, Richard G. Hirsch, said his client was still in something of a fog about the transactions that got him into trouble.

“Mr. Youngdahl to this day is still somewhat under the spell of Dr. Christensen,” Hirsch said.

Assistant U.S. Atty. Paul L. Seave told Stotler he didn’t believe the defendants’ stories.

“Each defendant, a successful entrepreneur, portrayed himself as an innocent dupe, totally ignorant of any wrongdoing--or even the possibility of wrongdoing--by Christensen,” Seave said in his sentencing recommendation. “The defendants’ stories, in the government’s view, were wholly incredible.”

Stotler denied a federal recommendation that the two men pay millions of dollars in restitution, saying the $13.5 million that McKinzie was ordered to return in restitution and fines would cover the money stolen through the money-laundering scheme.

“I do believe Mr. Vasquez when he says it won’t happen again,” Stotler said.

Monday’s sentencing marked the end of the federal government’s criminal prosecution of those involved in the North America fraud. Altogether, seven people were convicted of crimes ranging from racketeering to making false statements.

“Christensen and McKinzie used other people, including their good friends, to accomplish a massive looting of the savings and loan,” Seave said after the sentencing. “It’s sad they not only stole from the taxpayers but exploited their friends for their own greed.”

THE NORTH AMERICA S&L; SCANDAL

North America Savings & Loan in Santa Ana was seized by regulators in 1987 and its collapse is expected to cost taxpayers $120 million. Seven people connected with the S&L; were convicted, including thrift consultant Janet Faye McKinzie. She received 20 years in jail in July, the stiffest sentence ever meted out in California and the second- longest nationwide for a S&L; insider involved in the country’s thrift debacle. Below is a tally of the punishments issued against others involved in North America’s failure. Defendant: Janet Faye McKinzie

Conviction: Racketeering, conspiracy, bank fraud, wire fraud, interstate transportation of stolen property

Sentence: 20 years jail; $13.5 million restitution

Defendant: David L. Morgan

Conviction: Bank fraud and conspiracy

Sentence: 1 year, 1 day jail

Defendant: Frederick Youngdahl

Conviction: Bank fraud

Sentence: 1 month halfway house; $35,000 restitution and fines

Defendant: Armando J. Vasquez

Conviction: Bank fraud

Sentence: 1 month halfway house; $35,000 restitution and fines

Defendant: Victoria R. Walker