Trustee to Control Assets of Seized Bank’s Founder

A federal judge, finding that former Anaheim banker Gerald J. Garner and his wife have been transferring their property to thwart creditors, has appointed a trustee to take control of their assets.

U.S. District Judge George H. King gave the trustee sweeping powers to manage and conserve cash, securities, real estate and other property. The trustee can, for instance, investigate and seek to set aside “any fraudulent transfers” in the last 8 1/2 years.

King said in his order, issued Monday and mailed to lawyers, that regulators were likely to prove in their lawsuit that the Garners were grossly negligent in operating American Commerce National Bank, which failed in April 1993.

The bank’s failure drew attention because it was the first time regulators had used a 1991 law allowing them to seize a healthy institution. The FBI also is investigating possible bank fraud and embezzlement.

Garner, who was the bank’s founder and chairman and is representing himself, wasn’t available for comment Wednesday. A lawyer for Joan Garner, who was a director, couldn’t be reached.

Regulators assert in their lawsuit that the bank lost more than $13 million in cash and loans, much of which was funneled into Garner-controlled interests. The failure is expected to cost the federal deposit insurance fund about $24 million.

The Garners have denied any wrongdoing and argue that regulators treated them unfairly and took down a healthy institution.

King appointed Ronald L. Durkin as trustee. Durkin is a principal in Neilson, Elggrin & Durkin in Los Angeles, a forensic accounting firm that normally is used to reconstruct financial transactions.

Judge King’s ruling also grants a preliminary injunction that continues a month-old order freezing the Garners’ assets. The judge said the property, including at least $2 million worth of jewelry and fine art, wasn’t enough to cover a likely judgment.

King allowed the couple to receive $6,000 a month in income, two cars and two homes, one in Newport Beach’s gated Big Canyon enclave and the other in Palm Desert.

Court documents detail a long series of transactions that involve the Garners, their children, two relatives and American Commerce.