8 Linked to Failed Consolidated Thrift Plead Not Guilty
The founder of Consolidated Savings Bank and seven fellow defendants pleaded not guilty Tuesday in U.S. District Court to charges that they looted the now-defunct Irvine thrift of about $13.5 million.
Robert A. Ferrante, a Newport Beach developer who started Consolidated in 1984, said he was innocent of charges in the indictment, including allegations of wire and mail fraud. Ottavio A. Angotti, Consolidated’s former chairman and president, also pleaded not guilty.
Ferrante, 42, is free on a $500,000 bond. Angotti, 54, was released from custody last week in San Francisco after arranging for $100,000 in bail.
U.S. District Judge Mariana R. Pfaelzer--having presided over eight civil lawsuits related to the thrift’s 1986 collapse--reluctantly agreed to hear the criminal case.
“This court has handled this matter for five full years,” she said. “I’m not anxious to take it.”
But Pfaelzer said she would preside over the criminal case to spare another judge the onerous job of learning the case from scratch. The judge said she will decide at a March 11 hearing when to begin the trial.
The Consolidated defendants are accused of using the thrift’s money to finance some of Ferrante’s failing business investments and of making insider loans to family and friends. The indictment, filed Feb. 14, charges the defendants with using an Oklahoma company as a cover to funnel $9.5 million of Consolidated’s money to an Austin, Tex., property development in which Ferrante had an interest. The development defaulted on the loan.
The defendants also allegedly used friends, family members and business associates as conduits to loan money to Pyrotronics Corp., an Anaheim-based fireworks company. Regulators had prohibited that loan, prosecutors said.
Ferrante formed Consolidated with a $2-million investment in 1984 and by taking advantage of the deregulated environment expanded the thrift rapidly. When regulators seized the thrift in 1986, it had $84 million in assets.
Consolidated’s failure is expected to cost taxpayers about $30 million. The collapse also prompted several civil lawsuits accusing Consolidated’s top officials of wrongdoing. Ferrante and others fought back with countersuits, alleging that the regulators improperly seized the thrift. Those suits have since been settled, although most of the details of the settlements have not been disclosed.
