Ex-Chief of Family S&L; Convicted of Fraud, Conspiracy
A federal jury on Tuesday convicted the former chairman of Family Savings & Loan of 14 criminal counts stemming from a secret scheme in which he bought control of the Los Angeles-based thrift in 1987 using its own money.
The conviction of Oliver A. Trigg Jr. in U.S. District Court in Los Angeles comes more than three years after a Times investigation first detailed elaborate, phony real estate transactions that provided Trigg with $1.7 million. Of that amount, $1.24 million was used by Trigg to buy a 51% interest in Family, one of the nation’s largest black-owned S&Ls.;
The Times’ story, which ran in October, 1987, resulted in a 2 1/2-year investigation by the FBI, Internal Revenue Service and U.S. Attorney’s Office. Federal authorities on Tuesday called the Trigg case “one of the top priority savings and loan prosecutions nationwide.”
“The case is important for a couple of reasons,” said Asst. U.S. Atty. Maurice A. Leiter, who prosecuted the case. “First, the fraud went all the way up to the top of the organization to the chairman. . . . And the percentage of the bank’s money that was involved in the fraud was very high.”
Leiter said Family lost $3 million as a result of Trigg’s scheme, or about half its net worth at the time. Separately, Leiter added, a Family Savings board member testified during the trial that customers withdrew another $3 million out of fear that the thrift would collapse in the wake of the scandal.
Trigg, 40, of Los Angeles, was found guilty of conspiracy, bank fraud, money laundering, making false statements and tax fraud. Separately, the jury also found James Cottle, 45, of Stockton, a former Union Bank vice president in Beverly Hills, guilty of bank fraud and conspiracy for allegedly giving Trigg a phony letter committing the bank to making Trigg a loan.
Leiter said Trigg faces a maximum of 94 years in prison and a $4-million fine. Cottle faces a maximum sentence of 10 years in prison and a fine of $500,000.
Trigg declined to comment to reporters after the verdict was read. His lawyer, Harriet Hawkins, could not be reached for comment, but earlier told reporters Trigg is innocent and plans to appeal.
Trigg’s scheme centered onreal estate transactions involving the Friendly Hills Estates tract in Whittier. Prosecutors alleged Trigg used William Powell of Los Angeles as a “straw buyer” for the property.
He then persuaded Family Savings’ directors to invest $2.5 million in the Whittier project, which he said would be used by Powell to build expensive homes. As it turns out, Trigg actually owned the property through a shell company.
Through a dummy company and Powell, Trigg sold land to Family for a $2.7-million profit and then purchased control of the thrift within days using $1.7 million that authorities alleged he retained. Trigg hid the scheme from regulators, claiming that the money to buy the Family stock came from the sale of a contract to build 96 housing units in Hawthorne for people displaced by construction of the Century Freeway.
Powell pleaded guilty in November to three felony counts for his role in the scheme. Trigg’s former accountant, James E. Williams, pleaded guilty to one count. Both Powell and Williams cooperated in the investigation, Leiter said.
Trigg was forced out by regulators in 1988 in the wake of The Times’ investigation and as federal authorities stepped up their probe. He has had no involvement with the thrift since that time, and Family officials have worked hard to distance the thrift from the Trigg scandal.
“That’s behind us and it’s been taken care of. Family itself is now in very good shape,” said Wayne-Kent A. Bradshaw, Family’s current chief executive.
Family nearly failed in the wake of the scandal, but was saved when Opportunity Funding Corp., a minority-owned venture capital firm from Washington, bought a majority stake in Family in early 1990.
U.S. District Judge Manuel L. Real is scheduled to sentence Trigg on April 15. The jury returned the verdict after a seven-day trial and five hours of deliberations over two days. Leiter said the investigation into the Trigg transactions is continuing, although he declined to be more specific.
BACKGROUND Based in the Crenshaw section of Los Angeles, Family Savings was listed last year as the nation’s third-largest black-owned thrift by Black Enterprise magazine. Former Chairman Oliver A. Trigg Jr., a Harvard MBA who once worked as an engineer at the Jet Propulsion Laboratory in Pasadena and developed real estate, was hailed as a savvy businessman and entrepreneur when he bought control of the S&L.; But he was forced out in 1988, with new management and owners taking over.
