OTS Widens Its Net in S&L; Recovery Suits
The decision of the Office of Thrift Supervision to seek restitution from Michael E. Parker and two others for allegedly defrauding Columbia Savings & Loan indicates the agency is looking beyond the owners and chief operators of failed S&Ls; to recover losses.
OTS Director Timothy Ryan said Wednesday that the agency, which regulates the nation’s struggling thrift industry, will seek to recover $25 million in restitution from Parker, the founder of Parker North American Corp., Brian W. Fink, a former PNA vice president, and Jeffrey S. Worthy, a former director of financial planning at Columbia.
The administrative action is the third largest filed by the OTS since it began moving last year to recover funds from individuals accused of defrauding thrifts. The amount sought from Parker exceeds even the $21.3 million that the OTS wants from Columbia’s former chief executive, Thomas Spiegel.
U.S. Atty. Gen. Dick Thornburgh said the federal cases were developed as the result of an extensive investigation. And the combined civil and criminal efforts were designed to ease the taxpayer cost of the nationwide thrift debacle.
“The combined efforts of the federal authorities will deliver a solid one-two punch that enables us to prosecute corrupt financial services executives and at the same time, lessen the financial burden to the American taxpayer,” he said.
In the criminal case, Parker and Worthy are charged with racketeering, money laundering, paying and receiving kickbacks, and bank and tax fraud. Parker also was charged with tax evasion. In a related case, Fink is charged with conspiracy and tax evasion. The activities alleged reportedly resulted in the loss of more than $11 million to Columbia.
Parker’s dealings, however, are not believed to be directly related to those of Spiegel, whose risky investments and lavish spending contributed to the failure of the Beverly Hills institution on Jan. 25. The thrift suffered massive losses on its junk bonds investments.
In its administrative action against Spiegel, the OTS accuses him of squandering the thrift’s funds on such expenditures as personal travel, vacations and a collection of guns. The agency also accuses him of causing the thrift to lose $29.2 million by building a lavish headquarters that the thrift never occupied. Spiegel has strongly disputed the allegations.
In addition, regulators have sought criminal charges against Spiegel for removing an estimated $170,000 worth of office furnishings belonging to the S&L.;
With $6.6 billion in assets, the S&L; is the 16th largest thrift in the industry. It is expected to cost taxpayers $1.5 billion to clean up.
Parker is accused of defrauding Columbia by creating and selling about 101 bogus lease transactions involving equipment--typically automated teller machines. The agency said some of the equipment and leases did not exist or were vastly overvalued.
The leases were designed as tax shelters. But since many did not exist, Columbia is now liable for up to $13 million in additional taxes and penalties.
The $25 million in restitution is a combination of the money lost by the alleged fraud and the tax liability, officials said.
The OTS claim is exceeded only by the $41 million the agency is seeking from former Lincoln Savings & Loan owner Charles H. Keating Jr. and the $30 million it wants from the former operators of CenTrust Savings Bank in Miami.
The agency also wants to bar Parker, Worthy and Fink from the financial industry. The agency also filed a lawsuit in federal court in Los Angeles to freeze their assets while the administrative action is pending.