Spiegel Found Not Guilty of Looting S & L

Thomas Spiegel, former chief executive of the failed Columbia Savings & Loan, was found not guilty Monday of federal charges that he looted the Beverly Hills-based thrift--charges that a defiant Spiegel said “never should have been brought.”

After a seven-week trial, a U.S. District Court jury in Los Angeles took only two hours--with a weekend intervening--to acquit Spiegel.

It was a crushing defeat for the federal government, whose intensive investigation of Spiegel produced a 55-count indictment in June, 1992, a year after the thrift had been seized as insolvent and liquidated at a cost to taxpayers of $1.2 billion.

The government has been accused of botching its rescue effort in the thrift crisis that swallowed Columbia and more than 1,000 other savings and loans across the country. It also has been criticized for failing to put many thrift swindlers in jail or win significant restitution for taxpayers.

On the other hand, critics have said the government improperly targeted Spiegel for criminal charges because he was well known and made an easy scapegoat.

By the time the jury of seven men and five women got the case, the list of charges had been pared to only three, and jurors said they were not much impressed with those.

“There was no real argument,” jury foreman Joseph Sullivan of Granada Hills said of the deliberations, adding: “We kicked it around for a while, but it was unanimous.”

Spiegel’s chief prosecutor defended his office’s actions and branded as “absolute hogwash” the suggestion that Spiegel was a scapegoat for federal regulators who objected to his high pay and his aggressive investments in high-yielding, low-rated junk bonds.

“I have no doubt that it was the appropriate thing to do to bring this case, and in fact it had to be brought,” Assistant U.S. Atty. John F. Walsh said. He said he could not estimate how much money the government had spent on its criminal investigation and trial.

Spiegel still faces civil charges in a lawsuit that federal regulators brought against him after he was pressured to resign from Columbia at the end of 1989.

The government is seeking $40 million to $50 million restitution from Spiegel. The case has been on hold pending the outcome of the criminal trial. Meanwhile, Spiegel’s assets are under the control of a trustee.

Spiegel, 48, wearing a navy blue suit and a dark print tie, clasped his hands in his lap Monday as the jury handed the paper containing the verdict to Judge Robert M. Takasugi at 10:35 a.m. When Takasugi read the not-guilty verdicts, Spiegel rose and hugged his two lawyers, Brad D. Brian and Richard Marmaro.

In the hallway outside the fifth-floor courtroom, Spiegel embraced his wife, Helene, and was surrounded by his two sons, his sister and his father, Abraham, who had been chairman of Columbia. Spiegel family members together owned about half of the thrift’s stock--a stake once worth $350 million and now worth zero.

Spiegel, in an interview Monday afternoon, said he had rejected at least a dozen plea-bargain offers from prosecutors, including three or four in the weeks just before trial. The offers involved his pleading guilty to at least one felony and serving some jail time.

“I never committed a crime and was not going to be pressured into pleading guilty to any felony,” he said.

Spiegel believes he became a high-profile target for regulators and prosecutors because he stood at the nexus of two of the biggest financial events of the 1980s: the savings and loan crisis and the corporate takeover explosion, fueled in large part by Michael Milken and his junk-bond finance department at Drexel Burnham Lambert in Beverly Hills.

In the mid-1980s, Spiegel had transformed Columbia into the nation’s most profitable thrift through an aggressive and unorthodox strategy of investing in junk bonds and other securities connected with leveraged buyouts, many of them financed by Drexel and Milken.

With the success came high pay and lavish perks, such as Spiegel’s use of a luxury jet to fly to Columbia’s $1-million Palm Springs condominium.

In 1986, Spiegel got a $9-million bonus, pegged to Columbia’s performance, which made him the highest-paid thrift executive in America. He said yesterday that that eye-popping paycheck probably triggered what his lawyers have called a vendetta against him by federal regulators.

Brian, in his closing argument Friday, read the jury an excerpt from a 1990 electronic mail message sent by an official of the U.S. Office of Thrift Supervision, the primary banking regulator for savings and loans.

The sender was speculating as to why the Resolution Trust Corp., the agency that Congress created to supervise liquidations of failed thrifts, was firmly opposed to a particular plan for salvaging Columbia.

“Bill (another regulator) said he felt it seemed the RTC . . . might have a vendetta against Tom Spiegel,” the thrift supervision official wrote in a message that Judge Takasugi made available to the jury over the government’s objections.

But Walsh, the prosecutor, Monday resisted any notion that the criminal charges had anything to do with regulators’ ire, Columbia’s failure or Spiegel’s pay.

“We don’t work for RTC or OTS,” he said, adding: “We brought these charges after carefully reviewing the evidence,” he said “I’m sorry we couldn’t persuade the jury, but I accept the result. That’s our system.”

The original charges against Spiegel included allegations that he had used Columbia loans as a means of gaining a 50% interest in a Santa Barbara auto dealership, that he had caused Columbia to purchase and lavishly furnish the Palm Springs condo and that he had increased his personal gun collection with thousands of dollars worth of firearms bought with Columbia’s money. All the counts connected with those three sets of allegations were dismissed before or during the trial.

The three charges that remained when the case reached the jury concerned Spiegel’s alleged attempt to line his own pockets by pursuing for himself an investment opportunity that should have been Columbia’s. The $130,000 that Spiegel invested from his own funds eventually grew into $7 million. Later, on the advice of Columbia’s corporate counsel, Kenneth Heitz, Spiegel turned over the gains to the thrift.

The jury agreed with Spiegel’s defense lawyers that no crime was committed.

“There were discussions on some of the points of law, but we were pretty convinced the government hadn’t proved its case beyond a reasonable doubt,” juror James George of Inglewood said.

The federal government has had mixed success in criminal prosecutions of executives of failed thrifts, but obtained convictions in three well-known cases:

* Charles H. Keating Jr., former chief of Irvine-based Lincoln Savings & Loan, which collapsed in America’s most expensive thrift failure, was convicted of fraud last year and sentenced to 12 years in prison and restitution of $122 million.

* David L. Paul, who headed failed Miami-based CenTrust Bank, was convicted on 49 counts of bank fraud last year and sentenced last month to 11 years in prison.

* Don Dixon, owner of Vernon Savings Assn. in Dallas, was sentenced in 1990 to five years in prison for conspiracy and misuse of the failed thrift’s funds.

More on Spiegel

* Reprints of a Times article profiling Thomas Spiegel and his controversial stewardship of failed Columbia S&L; are available. Call Times on Demand, 808-8463 and press *8630. Select option 1. Order Item 2814. $2.95.