Case Against Developer Dismissed : Courts: The judge says the government failed to prove its contention that the Westlake company tried to swindle a Costa Mesa bank.

A federal judge has dismissed civil fraud and embezzlement charges against a Westlake developer who was accused of trying to swindle an Orange County bank out of $84,000.

U.S. District Judge John G. Davies said the government had failed to prove its case that Jon B. Hedberg attempted to defraud now-defunct Costa Mesa-based Pacific Savings.

“The government’s case was hollow, empty and devoid of any credible evidence,” Davies said in his ruling issued last week. “I can’t understand why this case was filed.”

U.S. Atty. Faith A. Devine, the lead prosecutor in the case, said Tuesday she still believed she had a good case and will probably file an appeal.

Hedberg, who now operates JBH Development in Westlake Village, could not be reached for comment Tuesday.

But his attorney, Brian C. Lysaght, said Hedberg had been vindicated and that it would “be an even more egregious waste of the taxpayers’ money to appeal this case than it was to try it to begin with.”

The case surfaced in 1987 when Hedberg, then president of Pacifica Corp., a real estate subsidiary of Pacific Savings, was negotiating to buy the company from the bank, Devine said.

She said negotiations broke down when bank officials discovered through an audit that Hedberg was charging personal attorney and accounting fees associated with the proposed acquisition to Pacific Savings.

The bank fired Hedberg and began pursuing criminal and civil charges against him. He eventually agreed to repay the $84,000 and the criminal case was dropped.

But Devine said that although the money was repaid, it did not change the accusation that Hedberg had violated the law, and so a civil suit was filed in federal court in 1992. Devine argued that Hedberg intended to defraud the bank because he had tried to hide his personal expenses by attributing them to an unrelated construction project.

In his ruling released Friday, however, Davies said there seemed to be confusion over whether Pacific Savings had agreed to pay Hedberg’s personal expenses.

Although his client was forced to repay the money, Lysaght said Pacific Savings and Pacifica Corp. had willingly arranged to pick up Hedberg’s expenses. He said another Pacifica official--not Hedberg--had charged Hedberg’s expenses to another account “for whatever reasons, to make the books look good.”

Hedberg, however, had no knowledge about the accounting change, Lysaght said. “Jon Hedberg wouldn’t know one account from another.”

Pacific Savings, which at one point operated 60 branch offices, was taken over by federal regulators in February, 1989. The bank and its remaining 11 branches were sold to a Toronto firm that operates the financial institution under the name Pacific First Savings Bank.