It's been dubbed the "Planes, Trains and Automobiles" case.
After nearly two years, Thomas Spiegel is scheduled to face an administrative hearing in Pasadena today on allegations by thrift regulators that he improperly used such perks as luxury cars and corporate jets in the late 1980s while chief executive of Columbia Savings & Loan in Beverly Hills.
Regulators are seeking millions of dollars in restitution from Spiegel, who has denied wrongdoing in the past. The failure of Columbia is expected to cost taxpayers $1.2 billion, putting it in the big leagues of savings and loan collapses.
The proceedings will begin by focusing on the charge that Spiegel improperly received luxury cars from a Santa Barbara auto dealer and friend of his at the same time Columbia was recklessly lending the dealer $23.5 million at favorable rates.
The hearings will later move on to other issues, including charges relating to Spiegel's use of a Columbia corporate jet, his purchase of an arsenal of guns for the thrift and expensive travel abroad. The proceedings could stretch over several months.
Neither Spiegel nor his lawyers returned calls seeking comment.
The exact amount regulators are seeking is unclear. When the civil charges were originally filed in July, 1990, regulators said they were seeking $19 million in restitution and a $5-million fine from Spiegel. Later charges accused Spiegel of causing Columbia to lose $29.2 million on its lavish headquarters in Beverly Hills. But regulators did not disclose whether they are seeking the $29.2 million as supplemental restitution.
The hearing is a reminder of the free-wheeling era of the 1980s that have since passed. Columbia's name disappeared after it failed under the weight of its shaky junk-bond portfolio a year ago, and its branches were sold to American Savings Bank. Michael Milken, the former Drexel Burnham Lambert junk-bond wizard who befriended Spiegel and cultivated Columbia as one of Drexel's best customers, is now in federal prison for securities fraud.
Once one of the most controversial thrift executives, Spiegel has been out of the business and has kept a low profile for more than two years.
Spiegel has spent much of his time fighting his legal problems, which include an ongoing investigation by a federal grand jury in Los Angeles into his activities at Columbia. Sources familiar with the case said that federal prosecutors expressed their dismay that thrift regulators are going ahead with the hearing this week, since many of the same issues in the criminal investigation overlap with subjects in the hearing.
The first part of today's administrative hearing will be devoted to his relationship with the auto dealer, Howard Schneider. Papers filed portray a loose lending relationship forged by Spiegel in which Schneider's Gregg Motors was allowed to borrow at below market rates of interest without standard safeguards.
During that time, thrift regulators allege, Schneider provided Spiegel with a virtual fleet of luxury cars for his personal use, including a 1988 Mercedes-Benz, a 1989 Range Rover, a 1988 BMW and a 1989 Bentley. They also allege that Spiegel bought a separate 1988 Mercedes-Benz from Schneider at a steep discount.
The regulators accuse Spiegel of preventing Columbia personnel from checking into the validity of the financial information Schneider provided the thrift and into the value of his collateral. The allegations also accuse Columbia--at Spiegel's direction and against the wishes of other Columbia executives--of spending $3.5 million to buy an option for half of the dealership's stock that Columbia could not exercise.
Spiegel is one of a number of former thrift executives, including former Lincoln Savings & Loan owner Charles H. Keating Jr. and former CenTrust Chairman David Paul, the agency has accused of excessive spending.
Two weeks of hearings have been scheduled in Pasadena and Los Angeles.