Failed Dallas Thrift’s Chief Pleads Guilty

The former president of a Dallas thrift whose failure could cost taxpayers $2 billion agreed to plead guilty to fraud charges and pay $16 million in penalties and restitution, the Justice Department said today.

The Justice Department’s plea agreement with Edwin T. McBirney III, former president and chairman of the Sunbelt Savings Assn., was made public a day after a federal court jury convicted another Texas S&L; operator, Don L. Dixon.

“Federal prosecutors have dealt a one-two punch to the savings and loan crooks this week,” Atty. Gen. Dick Thornburgh said in a statement.

“McBirney’s agreement to plead guilty, coupled with yesterday’s conviction of Don Dixon, caps a year of relentless and unprecedented pressure on thrift thieves,” Thornburgh said.

McBirney, who was indicted in July on 17 counts, agreed to plead guilty to four counts of bank fraud, filing a false corporate tax return, causing a false statement to be filed by Sunbelt and misapplying $250,000 in Sunbelt funds.

The bank fraud count stems from a $700-million deal to finance the purchase of real estate in Southern California by a Sunbelt subsidiary.

McBirney agreed to admit that he arranged a fraudulent $30-million reciprocal loan arrangement with Western Savings Assn., another Dallas thrift, to help finance the real estate deal, the Justice Department said.

He could be sentenced to up to 15 years imprisonment under the terms of the guilty plea. McBirney, 37, also agreed to pay $7.5 million in restitution and $8.5 million to settle civil claims by the Federal Deposit Insurance Corp.

Sour loans made by Sunbelt, and its merger in 1988 with a healthier S&L;, are expected to cost the government $2 billion in bailout funds, regulators say.