O.C. S&L; Figure to Be Freed From Prison : Thrifts: North America’s Janet McKinzie served four years of original 20-year term for fraud. She is praised as model prisoner.

Janet Faye McKinzie, the first person convicted of federal racketeering in the thrift industry debacle, will be released from prison next week after serving barely four years for her role in the 1987 collapse of North America Savings & Loan in Santa Ana.

McKinzie, who helped North America owner Duayne (Doc) Christensen pilfer $13.5 million from the thrift and spend it on lavish gifts and parties, had won a reduction of her 20-year sentence to six years. As a model prisoner, she will be released Thursday from a federal prison in Arizona.

“Janet McKinzie threw all her talent and energy into being the best possible prisoner she could be, and she needs to be free,” said Richard (Racehorse) Haynes, the famed Houston lawyer who defended her at trial four years ago.

Robert Berke, a Santa Monica lawyer who helped to obtain the reduced sentence, said McKinzie came up with a number of ways to help inmates gain a better sense of worth.

She developed graduation ceremonies--complete with music, caps and gowns, food and photographs--for those passing high school equivalency tests. She initiated special church services to help those whose relatives or friends on the outside had died. She volunteered to clean bathrooms and work in laundries, and she organized talent shows and Thanksgiving dinners.

“She was regarded by inmates and staff as a person who neither hung her head nor felt that her life was over,” Berke said. She had no expectation when she started that her work would lead to an early release, he said, and she even tried to stop him from including some of her deeds in a petition to the court two years ago to reduce her sentence.

Even prison officials called her an extraordinary prisoner and thought her sentence should be reduced, federal prosecutors said. Assistant U.S. Atty. David Schindler said she also helped her cause by turning over bank accounts, all other property and her rights to a $10-million insurance policy on Christensen’s life.

Altogether, the government collected about $14 million, but the total cost for the failure of North America Savings, which was closed in 1988, is estimated at more than $120 million.

Christensen, the thrift’s sole owner, died when his car crashed into a bridge abutment in the middle of the Corona del Mar Freeway in January, 1987. Regulators, who were waiting for him to come up with more cash to stave off losses, seized the thrift hours later.

McKinzie, 44, is expected to return to Orange County after her release, said Haynes and McKinzie’s close friend, interior decorator Lois Harding of Orange.

“It’s been four long years,” said Harding, who helped to decorate North America’s offices on Harbor Boulevard, where massive floor-to-ceiling oak doors opened to Christensen’s office with the flick of a garage-door opener.

“I have no idea what she plans to do--I doubt she even knows--and I have no idea where she’ll be staying,” Harding said. She decried the bad publicity her friend has received and suggested instead that people cheer her return.

“I don’t know if she felt that she was a scapegoat for S&L; industry, but I certainly felt that she was,” Harding said.

McKinzie was once used to $1,000 cocktail dresses, Lalique crystal, private after-hours shopping at Nordstrom’s and a 1986 Rolls-Royce Corniche II with license plates proclaiming XTACI. Christensen brought in entertainer Sammy Davis Jr. for her birthday party one year.

All the money the couple spent came from North America, regulators and prosecutors said. The thrift was set up as a fraudulent enterprise in 1983, prosecutors said, and Christensen and McKinzie milked it through bogus deposit accounts, inflated land transactions, forged documents and phony stock certificates.

Regulators would not approve a top management spot for McKinzie, a high school dropout, so she acted as a consultant instead. Employees said she ran the thrift ruthlessly, hiring and firing employees while acting as Christensen’s second in command. She set her sister up in business in Alaska, where the thrift funneled millions of dollars in mortgages that went sour.

McKinzie was indicted and convicted in March, 1990, on 22 counts of racketeering, conspiracy, fraud and interstate transportation of stolen property.

During trial, Haynes portrayed her as a helpless victim duped into carrying out the fraud because she was being pumped full of prescription drugs by Christensen. As a dentist, employees have said, Christensen sent out for drugs weekly and doled them out to favored workers.

At the time of its failure, North America was considered one of the worst cases of insider abuse, and McKinzie received the second-longest prison term meted out to those who helped create the industry debacle.

But the thrift’s status swiftly paled in comparison to numerous other cases of industry fraud, including the scams perpetrated by Charles H. Keating Jr. and his associates at Lincoln Savings & Loan in Irvine. That 1989 failure will cost taxpayers $3.4 billion.