Probe of Failed S.D. Thrifts to Look for Fraud
Saying the recent failures of San Diego financial institutions may have offered “ripe opportunity” for fraud, federal authorities announced Wednesday that they had assembled an expert team of government agents and lawyers to probe those failures and prosecute executives who did wrong.
Stressing that no particular bank or thrift had already been targeted, federal prosecutors said they believe they have an “obligation” to investigate whether fraud contributed to the downfall of even such longtime San Diego institutions as Imperial Savings, Great American Bank and HomeFed Bank. But any bank or thrift might be investigated, authorities said.
No single incident nor any one failure prompted the formation of the task force, U.S. Atty. William K. Braniff said. Instead, he said, he was impressed by the success of a similar project in Dallas and recruited its director, Assistant U.S. Atty. Richard M. Fishkin, to come to San Diego to set up shop.
Fishkin said Wednesday he is driven by a professional curiosity about “transactions that don’t seem to make sense” and bookkeeping irregularities that show panicked executives trying to “cook the books.”
No criminal prosecution is imminent, Fishkin said. In Dallas, where he was director of what was called the Dallas Bank Fraud Task Force, it typically took three years to ready a case for indictment, he said.
“Here I would expect the same kind of thing,” Fishkin said. “These cases take a long time to put together and a long time to prosecute.”
Over the past few years in Dallas, Fishkin said, prosecutors have indicted 181 executives for financial fraud and convicted 134, about 75%.
In San Diego, however, prosecutions for financial fraud have been “periodic,” Braniff said, largely because prosecutors have been focused elsewhere, primarily on the so-called “war on drugs.” Six of every 10 felony prosecutions at the San Diego federal court involve drug crimes, according to a recent court report.
With Fishkin on the scene, the Federal Bureau of Investigation, the U.S. Secret Service and the Internal Revenue Service have all agreed to pitch in, Braniff said. Three deputy federal prosecutors in San Diego and nine lawyers from the Department of Justice in Washington will join Fishkin.
In a statement announcing the formation of Fishkin’s task force, Braniff specifically pointed to Great American, Imperial Savings and HomeFed as examples of failed institutions that might merit scrutiny.
But he said at a press conference Wednesday that, although those three “certainly will be looked at,” they had by no means been identified as priority investigations.
Federal regulators seized Great American last year and Imperial Savings in 1990. Regulators have announced they intend to seize HomeFed later this year, possibly this month.
