Ex-S&L; Directors Win Legal Battle Against Regulators : Courts: Two former officials do not have to pay restitution in the aftermath of Delta’s failure. They also are free to re-enter the savings and loan industry.

Two former directors of failed Delta Savings Bank have won a rare victory against federal thrift regulators as a judge found that the government failed to prove that the directors caused any of Delta’s losses or knowingly violated any laws.

The directors--Michael Kim and Young Il Kim, who are unrelated--do not have to pay restitution for any loss at the Westminster thrift, and are not barred from the savings and loan industry, according to a decision by Administrative Law Judge Arthur L. Shipe.

Their victory is believed one of the few times that directors and officers of failed thrifts have turned back attempts by the Office of Thrift Supervision to seek restitution and bar them from the industry for life.

“This decision sends a clear message that the OTS cannot simply make blanket charges against every director who sat on the board of a failed institution,” said Terry O. Kelly, Michael Kim’s lawyer.

The Kims were among four Korean immigrants who bought the struggling thrift in late 1989, infused it with new capital and steered it to modest profitability by catering to the Asian community in Westminster.

It was a healthy, solvent S&L; meeting tough capital standards when it was seized in November, 1991. Regulators charged that its bookkeeping was in such disarray that they couldn’t confirm that the thrift was really financially sound.

The OTS turned the thrift over to the Resolution Trust Corp., the federal agency that manages failed thrifts, to liquidate Delta’s assets.

Young Kim was Delta’s president as well as a director.

Previously, two other former owners and directors--Minh Ngoc Dang and Yun Suk Seo, the former chairman--settled OTS charges against them.