Prosecutor Outlines Parker’s Alleged $11-Million Fraud

A federal prosecutor charged Wednesday that Newport Beach businessman Michael E. Parker orchestrated an $11-million fraud on now-defunct Columbia Savings & Loan partly because he thought he had to “break the rules” to succeed in business.

In opening statements at Parker’s criminal trial, Assistant U.S. Atty. James R. Asperger accused the former multimillionaire of selling bogus tax shelters to Columbia and, after the scheme was discovered, trying to cover it up by offering to buy back the shelters.

But Parker’s defense attorney, Thomas E. Holliday, asserted that the onetime operator of Parker North American Corp. in Newport Beach never knew at the time that many of the transactions were phony. He laid the blame on Parker’s former best friend, Brian W. Fink, who had been PNA’s vice president. Fink, who was indicted with Parker and Jeffrey S. Worthy, a Columbia vice president, has pleaded guilty and agreed to testify against Parker.

The 39-count indictment charges Parker with racketeering, conspiracy, fraud, money laundering and tax evasion.

As head of Parker North American Corp., Parker arranged for banks, S&Ls; and other companies to lease equipment, such as automated teller machines. He then sold both the leases and the equipment to investors, which typically were other banks and S&Ls;, in deals that provided the buyers with tax benefits.

A number of lease packages sold to Columbia, the indictment alleges, were based on contracts and equipment that didn’t exist or had inflated values.

Defense attorney Holliday told the jury of seven men and five women that Columbia, which touted itself in commercials as America’s best-run thrift, was greedy. Because it was making huge profits, the Beverly Hills-based thrift needed to shelter its income and began demanding more lease packages from PNA.

Thomas Spiegel, Columbia’s chief executive then, gave Parker the choice of providing the S&L; and its top executives such as Worthy with more tax shelters or facing ruination at the hands of the thrift, Holliday said.

When Parker learned that Fink had been falsifying documents to satisfy Columbia, the defense lawyer said, he tried to save Fink from possible criminal action by offering to buy back the shelters from Columbia for $10 million. Instead, Holliday said, both men wound up indicted. Fink “cut a deal” with prosecutors, he said, and fingered Parker as the mastermind.

But Asperger painted a very different picture of Parker, one of a high-living executive who dominated his company’s operations and tried to hide the proceeds from the sales of lease packages to Columbia.

Parker’s company sold 101 packages worth $166 million to Columbia for $36 million, Asperger said, and more than 60 contained inflated values or covered nonexistent equipment.

From the proceeds, the prosecutor charged, Parker siphoned $11 million and used $8 million for his own luxurious living, including a $1.4-million Big Canyon home in Newport Beach. The rest, Asperger said, was used as hush money, including $1.5 million to Worthy and $1 million to Fink.

At one point, Asperger said, Parker told an associate: “If you want to succeed, you’ve got to break the rules. If you don’t break the rules, you’ll never succeed in business.”

The trial continues today then recesses for a week before resuming. It is expected to last four weeks.