Bank Chief Says Robbins Received Imprudent Loans : Politics: Independence chairman says firm’s ex-president granted ‘not kosher’ credit to state senator.

In an unusual disclosure, the head of an Encino bank said his institution made more than $26 million in “not kosher” loans to state Sen. Alan Robbins (D-Tarzana), and asserted that the credit was granted largely without the usual collateral or financial review.

Fulvio V. Dobrich, chairman of Independence Bank, said the two dozen loans Robbins received between 1985 and 1990 were approved by a onetime Independence president who lobbied the lawmaker during that period on behalf of the banking industry. Robbins is a veteran member of the Senate committee that shapes laws governing California financial institutions.

The FBI recently began focusing on loans to Robbins from Independence and from a failed Orange County thrift as part of a wide-ranging federal investigation of his business and political activities, according to sources familiar with the probe.

Federal investigators have interviewed several present and former Independence executives about loans to Robbins and removed a thick stack of his loan files from the bank, sources said. The interviews began at least four months ago.

Robbins, a wealthy attorney and real estate broker who has built medical offices and apartment complexes with a succession of partners, has not been charged in the probe and has denied any wrongdoing.

In an interview with The Times, he denied receiving any special consideration on loans from Independence or performing any political favors for the bank.

Morton R. Michaels, who was Independence’s president when the Robbins loans were made, said he had done nothing improper. Michaels said “not all” loans to Robbins were secured, but that no loan was ever criticized by the bank’s auditors or by government examiners.

Independence has come under intense scrutiny recently by federal banking regulators for its links to the scandal-ridden Bank of Credit and Commerce International. Regulators charge that BCCI secretly acquired Independence in 1985. They ordered the Luxembourg-based bank in May to divest its interest in Independence.

Dobrich, who became Independence’s chairman in mid-1989, stressed that he was not accusing Robbins of anything illegal, and blamed former bank executives for making imprudent loans.

“These were not kosher loans,” Dobrich said. “They were not proper, they’re not what a prudent banker would do. It just makes you angry when you have to run a bank and deal with these kinds of loans.”

He said he decided to publicly reveal details of Robbins’ business with Independence, the San Fernando Valley’s largest bank, after The Times reported in September that a real estate partnership headed by Robbins had filed for bankruptcy.

Robbins’ venture, Marina East Holding Partnership, listed Independence as its biggest creditor in documents filed in U.S. Bankruptcy Court in Los Angeles. The bank holds a partnership in Marina East worth $3.4 million, the papers said.

Dobrich had declined comment when The Times contacted him for a story about the bankruptcy, saying customer business was confidential.

He later decided to discuss Robbins’ loans, he said, to clarify that the bank received the Marina East partnership as security on a $3.8-million personal loan to Robbins. Dobrich said the legislator stopped making payments on that loan in August and still owes $3.4 million on it.

Dobrich, who is struggling to rebuild Independence’s image in the wake of the BCCI scandal, said he wanted to dispel any notion that the bank “makes loans to bankrupt corporations.”

Dobrich said Robbins used the loans to buy real estate. During the mid- and late 1980s, Robbins and a partner assembled a 16-acre parcel of prime land near Marina del Rey that they sold to a developer for $45 million in 1989.

At the same time that he was receiving loans from Independence, Robbins undertook official action requested by the bank’s president, state records show. In 1986, Robbins urged state banking officials to investigate a New York bank after a complaint from Michaels, Independence’s president, about the out-of-state bank’s advertising practices.

Michaels told Robbins in an Oct. 17, 1986, letter that the New York bank may have been acting illegally by temporarily offering high interest rates in order to attract California depositors, according to documents obtained under the state Public Records Act.

Robbins subsequently wrote a letter urging then-state banking chief Louis Carter to investigate the ads, the documents said.

Carter responded that although the ads “certainly appear predatory,” banking department lawyers believed they stood little chance of halting them through the courts and therefore no legal action would be taken.

Robbins said he asked for the investigation because he believed the East Coast bank’s ads were illegal. He said he did not consider the action a favor to Independence because the two banks were not direct competitors.

Robbins said he was “amazed” that Dobrich released information on his personal banking affairs, calling it a breach of bank confidentiality laws.

Dobrich said he began reviewing Robbins’ portfolio after Michaels asked permission in 1989 to give Robbins more time to pay off a loan. Michaels, who became Independence’s president in 1984, resigned under pressure in December, 1989, and is now a private financial consultant.

Dobrich said loans like those made to Robbins are typically secured by trust deeds on property. But he said the bank got only one deed from Robbins, for a $3.6-million line of credit granted in early 1989.

In addition, Dobrich said, the loans were apparently made without any formal credit analyses by the bank. Such analyses are standard on real estate loans, Dobrich said.

Other banking executives contacted by The Times agreed that making unsecured loans in the amounts granted to Robbins was unusual. They also said banks rarely, if ever, grant credit without a thorough analysis of the borrower’s ability to repay.

“The lack of loan write-ups, if that’s true, that would be against the policies and procedures at every bank in the country,” said John Keating, chairman of California United Bank in Encino.

The bankers said the ultimate test of a loan’s soundness is whether it is repaid on time. They said banks sometimes make large unsecured loans to wealthy borrowers, but only if they have highly liquid assets and a history of repaying loans on schedule.

According to internal memos from Independence entered into the record during the recent federal conspiracy trial of one of Robbins’ business partners, the bank in 1986 granted Robbins a $2.2-million loan--without requiring any collateral--to buy land near Marina del Rey.

The loan was approved by the bank’s executive committee, which then consisted of Michaels and former Independence Chairman Kemal Shoaib, the documents said.

Independence recently filed a $42-million federal racketeering lawsuit against Shoaib, a Pakistani allegedly handpicked by BCCI to run the bank. The suit charged that Shoaib approved loans with “inadequate or unlawful” collateral. Shoaib has consistently declined to be interviewed by reporters.

Asked why he was able to get such a large loan with no collateral, Robbins said he has a history of “receiving large loans and paying them back with interest” and that Independence officials must have believed him creditworthy. According to the bank memos, he listed his net worth in 1986 as nearly $24 million.

But Dobrich questioned Robbins’ credit strength, saying the lawmaker pledged to pay off the $3.4-million debt by March, 1991, and has not made payments on it since August.

“Why isn’t his financial strength such that he can pay off a loan when it’s due?” Dobrich said.

Dobrich said Robbins had hoped to retire the loan with proceeds from the sale of property he co-owns in Thousand Oaks. Robbins said the sale was delayed when the buyers were unable to complete escrow.

Dobrich said he believes Robbins got so many loans from Independence because of his “personal relationship” with Michaels.

Dobrich said Michaels was “very active” in the California Bankers Assn., which lobbies the Legislature on issues affecting the banking industry.

To portray himself as an influential force in the association, Dobrich said, Michaels liked to show off his connections to Robbins, a longtime member of the Senate Banking, Commerce and International Trade Committee, which writes legislation governing financial institutions in California.

“I’ve basically seen Mort Michaels hanging onto the coattails of Alan Robbins at receptions in our branches,” Dobrich said.

In an interview, Michaels acknowledged that as a board member and volunteer lobbyist for the bankers association, he had “more than a passing” relationship with Robbins. But he denied that he approved any questionable loans to the lawmaker.

Michaels said that during the time he was president of Independence, he delivered campaign-contribution checks from bankers to Robbins and presented the association’s views on legislation affecting the industry.

Asked if it was a conflict of interest for him to sit on the banking committee and take millions of dollars in loans from a bank whose president was lobbying him on industry-related issues, Robbins replied:

“If it isn’t going to be proper for me to do my banking at a local bank in the San Fernando Valley, where in the world is it going to be proper for me to do my banking?”

Robbins further emphasized that he took no action that would have specifically benefited Independence.

Michaels said he attended a 1988 Robbins fund-raiser in which about 20 people flew to Singapore and boarded a cruise ship for a 10-day tour of Bangkok, Kuala Lumpur and other Far East capitals. Michaels said he could not recall how much the trip cost, but Dobrich said it was $20,000, part of which was paid by the bank.

Michaels termed “absolute drivel” the claim that he used his links to Robbins to advance himself in the bankers association. He said his work for the group was unpaid and that he did it “for the good of the industry.”

Times staff writers Paul Jacobs and Mark Gladstone in Sacramento contributed to this story.