RTC Accuses Builder of Hiding Assets : Lawsuit: The federal agency says Emerald Homes, a Lincoln S&L; borrower, fraudulently transferred $25 million worth of property.
The federal agency charged with cleaning up failed thrifts accused a developer funded by Lincoln Savings & Loan of hiding assets to avoid paying a possible judgment or settlement in the government’s pending $2.7-billion fraud and racketeering lawsuit.
The Resolution Trust Corp. asserts in a new lawsuit, filed in U.S. District Court in Phoenix late Monday, that Emerald Homes Inc. of Texas and its affiliates fraudulently transferred $25 million worth of property so that regulators would not find it.
The new suit also raises allegations of racketeering, fraud, breach of contract and other wrongs against Emerald Homes, Verit Industries of Texas and three Verit executives, among them Phillip J. Polich, who is also Emerald’s managing partner.
Emerald Homes is already a defendant in the 2-year-old original fraud and racketeering lawsuit pending against former Lincoln owner Charles H. Keating Jr. and the lawyers, accountants and other professionals who advised him. That suit is scheduled to go to trial in February.
Separately, the RTC said that the Atlanta law firm of Troutman, Sanders, Lockerman & Ashmore settled claims against it in the long-pending case for $20 million.
A onetime Troutman, Sanders partner was Lee Henkel, a major Lincoln borrower who, with Keating’s help, was appointed in 1986 to the three-member Federal Home Loan Bank Board, the industry’s top regulator at the time. Henkel soon resigned amid a conflict-of-interest investigation prompted by a regulation he proposed that would have benefited Lincoln.
Troutman was accused of knowing about four illegal transactions Keating concocted to loot Lincoln and of failing to take appropriate action. Among the transactions was a tax-sharing plan under which Lincoln improperly sent its parent company $95 million for federal income taxes that it did not owe.
Lincoln collapsed in April, 1989, and has become the industry’s biggest failure, costing taxpayers $2.6 billion. The settlement with Troutman, Sanders brings the total amount recovered by regulators to more than $105 million.
In the latest litigation, the RTC asserts that Emerald Homes tried to hide loans from Lincoln by fraudulently transferring property “around and out of the country after we sued them in the Keating case,” said Michael C. Manning, a Phoenix attorney for the agency.
Emerald is accused of using Verit to convey various property, including stocks, to shelf corporations in the United States and abroad, he said. Regulators recently traced the funds, providing the basis for the new lawsuit, he said.
The new suit also seeks to treble the $25 million in damages under federal and Arizona racketeering laws.
