Banking Probe Targets Brown’s Former Partner

The Federal Deposit Insurance Corp. and Resolution Trust Corp. are investigating possible bank fraud in connection with three loans made by failed savings and loans to companies owned by Nolanda S. Hill, the former business partner of Commerce Secretary Ronald H. Brown, according to sources familiar with the investigations.

FDIC investigators issued subpoenas this week for many records of Hill’s principal business, Corridor Broadcasting Corp., the sources said. The RTC’s Denver office and a private debt collection firm working for the agency are conducting a separate investigation of Corridor.

Government sources said the RTC and FDIC are investigating whether Hill improperly diverted money from Corridor, which failed to repay debts of more than $40 million held by FDIC and RTC.

George Terwilliger III, Hill’s attorney, denied any wrongdoing and said: “It’s an absolute outrage that that kind of information is being leaked. It’s patently unfair to any citizen to be subject to allegations and innuendo in the press, particularly so where in the end, the individual is determined to be innocent.”

Brown knows nothing of the RTC and FDIC investigations, a Commerce Department spokesman said. He is not a target of the investigations, the sources said.

Between 1991 and 1994, Corridor did not make any payments on its debts to the RTC and FDIC while, records obtained by government investigators show, it paid more than $600,000 to First International Communications Corp., a company owned by Hill and Brown.

At the same time, Corridor paid for many of Hill’s personal expenses, including apartments in Washington and Boston, bills from expensive clothing stores, a Corvette and a pair of matching Harley Davidson motorcycles, former Corridor employees said.

Terwilliger has said there were no improper expenses.

The investigators are looking into whether Hill violated loan agreements that required Corridor’s debts held by government be paid ahead of other creditors and defrauded lenders by using money lent to Corridor for other purposes.