Jeffrey S. Worthy pleaded guilty to federal charges of racketeering and tax evasion Tuesday, leaving only Newport Beach businessman Michael E. Parker to face trial in what prosecutors said was an $11-million fraud at Beverly Hills-based Columbia Savings & Loan Assn.
Federal prosecutors in Los Angeles said Worthy, 34, a former Columbia vice president, admitted accepting nearly $1.4 million in kickbacks from Parker in return for persuading the savings and loan to buy tax-shelter investments from Parker.
Some of the investments turned out to be phony or inflated, prosecutors said. Parker is accused of diverting more than $11 million of Columbia’s money to himself and others in what prosecutors have called one of the largest thrift fraud cases in Southern California.
Prosecutors would not say whether Worthy has agreed to testify against Parker at Parker’s Jan. 9 trial in federal court. However, Worthy’s sentencing was delayed from January until March 23, well after the Parker trial.
Worthy, who was Columbia’s director of financial planning, also pleaded guilty Tuesday to one charge of evading $123,000 in income taxes in 1985 by concealing some of the income derived from kickbacks. In return for his pleading to the two counts, prosecutors agreed to drop 41. He faces a maximum sentence of 25 years in prison, a $500,000 fine and restitution payments of $1.4 million.
Worthy has already forfeited $300,000 in assets as partial restitution, including his house in Downey and a condominium in Lake Havasu City, Ariz.
For reasons unrelated to the alleged fraud, Columbia has since been seized by federal regulators. The thrift had been a big investor in junk bonds when that market went sour.
Parker was chairman of a company called Parker North American Corp. in Newport Beach, which bought equipment from banks and thrifts and leased it back to them. Parker North American then sold the leases as tax shelters to Columbia and other companies. But in Columbia’s case, prosecutors contend, some of the tax shelters were bogus or their worth was vastly inflated.
Parker, 43, a flashy entrepreneur known for his lavish lifestyle and prominent political and charitable contributions, is charged with 49 counts of racketeering, tax fraud, money laundering, paying kickbacks and bank fraud. Parker’s attorney, Thomas E. Holliday of Los Angeles, said his client affirms his innocence and intends to go to trial in January.