American Commerce Chairman Seen as an Executive With an Iron Fist : Banking: Regulators closed the seemingly healthy Anaheim bank and are investigating Gerald Garner's business practices.


By most accounts, it was a rowdy night at the old Dal Rae restaurant as players for the Comanches flag football team and their sponsors ate and drank their way through a boisterous meal.

During that December, 1986, evening, the adult players intimidated other customers, confronted armed guards and kicked down an office door as a hulking 6-foot-3, 230-pound Gerald J. Garner directed some of the action.

Garner, though, was no football coach. He was a banker--chairman of American Commerce National Bank in Anaheim, a team sponsor. He also was a director of the company that owned the Fullerton restaurant, now called the Del Rae, and had been trying all month to seize physical control from the company's president.

Garner's interests in the Dal Rae and other restaurants are among a number of insider deals now under scrutiny by banking regulators who closed American Commerce on April 30.

The federal takeover was the nation's first-ever closing of a well-financed, seemingly healthy bank. The Office of the Comptroller of the Currency alleged that insider abuses and other violations of banking laws were so pervasive that it no longer could trust Garner or the bank's "weak, abusive and self-serving" officers and directors.

In more than a dozen lawsuits, affidavits and interviews with former associates, Garner's reputation as a charitable executive and well-known Orange County fund-raiser is tarnished by assertions that he bullied his staff, manipulated bank accounts and ran roughshod over quiescent bank directors and inexperienced business associates.

Though magnanimous at times, Garner also would stoop to petty retribution. He caused one employee who left the bank to be fired from a new job, and he tried to bad-mouth other workers who left, said other Orange County bankers.

Garner even took a former teller to small claims court over a $1,000 discrepancy at her teller station.

He lost the case.

"This man is a menace," said Dr. Donald J. Daniel, a former American Commerce board member. The physician clashed with Garner in 1987 and said he lived in such fear of the onetime New York lawyer that he carried a .38-caliber handgun for several years.

The doctor alleges that Garner once threatened him by saying that he had represented organized crime figures in New York and still knew them.

Last year, Garner was disbarred in New York for lying to banking regulators about previous disciplinary action against him, including a 1984 suspension from practicing law for using false names of adoptive parents in notarized legal documents.

The 56-year-old founder of American Commerce, a one-branch bank, would not agree to be interviewed for this story or comment about accusations by bank regulators, former employees and associates or the civil lawsuits filed against him.

Shareholders like Santa Ana lawyer Frank P. Barbaro can't believe that someone as hard-working and diligent as Garner was involved in so much litigation and could face such drastic action by the federal government.

"The newsletters we were getting from the bank were glowing," he said. "The bank was doing good things too, like sponsoring youth events and programs for the elderly and minority groups."

Among Garner's business relationships under federal scrutiny is his chairmanship of Coast Plaza Doctors Hospital in Norwalk, where two American Commerce directors and a major bank shareholder are physicians. His wife, Joan, and his brothers, Danny and Harvey, also recently took staff positions at the hospital.

While Garner's philanthropy has been much publicized, his banking and litigation woes have escaped media attention.

Several lawsuits involve restaurant and real estate deals in which Garner found partners to organize and run operations or buy into existing companies. The suits allege that he then would wrest away control, sometimes accusing his new partners of theft and mismanagement.

Typically, regulators said, the comptroller's office never knew that Garner or other directors had stakes in the restaurants or that the bank's loans to these companies were benefiting insiders.

Three Garner-controlled restaurants were the Dal Rae, Uncle Gee'z in Fullerton and Maloney's Fine Dining in Yorba Linda. All went bankrupt.

At the Dal Rae, Garner arranged a $250,000 loan in 1985 to help Alfred H. Stuetzle buy the restaurant out of bankruptcy. But Stuetzle had to give up 51% of the ownership to five shareholders picked by Garner.

Two restaurant shareholders were also bank directors--Garner's wife and Santa Ana lawyer Duffern H. Helsing--and one was a close Garner associate at Coast Plaza hospital, Dr. Sheldon S. Zinberg. Stuetzle was president and manager, but Garner was chief executive and one of the directors, according to court records. The Garner shareholders received $500 a month in director's fees.

Soon, Garner was accusing Stuetzle of skimming money from the restaurant. Stuetzle claimed that Garner took receipts, refused to cash checks written on the company's account and siphoned money and services out of the restaurant through unpaid dinner parties and donations to various charities.

In December, 1986, Fullerton police were called to the Dal Rae four times--twice in one day--to quell disturbances as Garner tried to eject Stuetzle physically.

On Dec. 29, Garner led the Comanches and others--23 in all--into the restaurant for what the players later said was a postseason banquet.

As the group went into the restaurant, some players banged on a locked office door downstairs, and Stuetzle told a guard to put his shotgun on the office table where it could be visible. Three players, in their joint affidavit, said placing the weapon on the table provoked them.

One customer said in an affidavit that a player threatened him. Employees and other customers said that players tried to break into restaurant offices and that Garner had directed a few players to go upstairs. The players acknowledged that they broke down an office door, only to be confronted by an armed guard.

Zinberg told one frightened waitress not to worry, according to an affidavit: "All you need tonight is a bulletproof bra."

Police were at the restaurant for more than an hour that evening. They said they considered the football players to be Garner's security guards and figured that both sides were armed. No arrests were made.

As the players finally left, according to affidavits in lawsuits over control of the restaurant, Garner passed out business cards, thanked them and said: "I'll pay you later for showing up tonight."

Garner's lawyer, Neil F. Kligman, said last week that as a member of the party, he didn't hear Garner promise any payment, but he said Garner did pay money to the team as a sponsor.

In settling the lawsuits, Stuetzle won control of the restaurant, but when he later defaulted on the company's loan from American Commerce, Garner took over operations and eventually put the restaurant in bankruptcy.

At another Fullerton restaurant, Uncle Gee'z, Garner installed his wife and the wives of two other directors--Dr. Galal Gough and jeweler Eugene Alterman--as directors. He soon ousted a young, inexperienced John Georges as part owner and operator.

Evidence in the lawsuit brought by Georges and others showed that the women received three years of tax write-offs--totaling more than $100,000 for Joan Garner alone. The bank paid $350,000 to settle the case.

The comptroller's office alleges that Garner used the bank to pay his personal legal bills and judgments, an accusation that is part of the agency's overall assertions that he concealed records, misled regulators about loans and insider deals and wasted the bank's finances.

One case regulators are reviewing involved a former director, Dr. Donald Daniel. In 1987, Daniel sued Garner, Joan Garner and others over money missing from his pension account, which Garner managed along with investments for other doctors. A year later, Garner caused the bank to sue Daniel and his lawyer for defamation. Both suits were settled later, with the bank paying Daniel $450,000.

From the bank's opening in February, 1984, regulators were wary of Garner, a transplanted New York lawyer with no banking experience and an uncommon business plan. The plan relied on a fleet of couriers to visit business customers--mainly physicians--on daily rounds stretching from northern Los Angeles County to San Diego to handle deposits, withdrawals and loans.

The comptroller's examiners conducted seven audits in the bank's first 40 months of operation. They learned more about Garner.

He had, for instance, failed to abide by the bank's original stock offering, which limited each investor to a 5% ownership stake. Through his wife and family trusts, Garner controlled 11% of the stock from the start and soon bought out other investors to raise his control to 17%.

He also had failed to disclose that his New York law license was suspended. The comptroller ordered him to disclose both his ownership interest and his suspension to shareholders. It also prohibited his acting as the bank's president.

Garner, though, remained in control of American Commerce as chairman. His brother Danny, instead of the bank president, ruled when Garner wasn't available, according to former employees.

Only Garner and his brother had the authority to approve loans, according to sworn statements collected by the comptroller's office. Loan committee hearings were not much more than a feast for committee members. They ate catered food while Garner, who sometimes scooped potato salad from the bowl with his fingers, did the talking, former committee members said.

Garner's iron fist at American Commerce also was felt by the employees.

When a loan officer quit for a job at rival El Camino Bank in Anaheim in the mid-1980s, Garner called El Camino's chairman, Stanley Pawlowski.

"Garner said he would not give (him) a good reference," Pawlowski said last week. "He said he didn't think the guy would be good for my company. That made us rethink the situation, and we decided not to hire him."

Pawlowski said Garner gave no concrete reasons why the loan officer shouldn't be hired, but the way he spoke was a "banker's code" for warning an employer about possible trouble with a new hire. When the former employee arrived for work at El Camino, he was fired.

"That incident made everybody afraid to quit because they feared being blackballed from the industry," said a former employee, who said she feared for her safety if her name were used.

The fear didn't stop another loan officer, Rebecca A. Holmes, from leaving. A number of former bank employees said that Garner, angry that he was losing her, grabbed her by her hair while she was on the telephone with a customer and pulled her head back, staring at her.

When she went to California City Bank in Orange, Garner called the bank's president, Harvey Ferguson, and bad-mouthed Holmes. But Ferguson, who worked previously with Holmes, kept her and even hired a few more people from American Commerce.

"Garner was upset that we were trying to take his people away," Ferguson said last week. "He said I should have called him first and he would have told me which employees I could have and which I couldn't have."

Many others who know Garner only as a fellow fund-raiser for charitable events declined to talk about him. Some, like Elaine Ornitz, who owned 30% of Ocean Pacific Sunwear Ltd., extolled his charitable contributions and knew him as "a nice man and a family man."

At his synagogue, Temple Beth Tikvah in Fullerton, Garner elicits strong support from some and dislike from others, said David Tractman, a member who served for a time with Garner on the temple's board.

"I view him as a very philanthropic man, who was always there to help," Tractman said. "Even those who dislike him say he's helped the temple and is philanthropic."

Rabbi Haim Asa said Garner, who was president of the temple for two years, saved the temple from a burdensome, high-interest mortgage loan by refinancing it at a lower rate at American Commerce. Garner continued to help the temple--as well as other Jewish causes--with a variety of fund-raisers, the rabbi said, and attracted a number of depositors from the membership for his good deeds.

Oddly, Garner changed his name from Goldberg in the 1960s to hide his Jewishness. In an interview five years ago, he said that he had wanted to avoid anti-Semitism where he worked in Westchester County, north of New York City.

Times staff writer Davan Maharaj contributed to this report.

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