Couple Who Ran Failed Bank File for Bankruptcy

Former Anaheim banker Gerald J. Garner and his wife, Joan, whose assets were placed under control of a federal trustee recently, filed a bankruptcy petition Tuesday, an attorney said.

The Garners apparently are seeking to reorganize their assets under Chapter 11 of the bankruptcy code. Their bankruptcy attorney, Joseph A. Eisenberg, said the filing in U.S. Bankruptcy Court in Santa Ana is an effort to settle financial claims.

The Garners have been sued by federal regulators who allege the couple was grossly negligent in operating American Commerce National Bank in Anaheim, which failed in April 1993. Gerald Garner was the bank’s founder and former chairman. Joan Garner was a director.

As part of those proceedings, the Garners’ assets were frozen last month and a trustee appointed to prevent attempts to transfer property and thwart creditors.

At the time, federal judge George H. King said that the asset freeze was necessary because regulators were likely to prevail in their $10-million lawsuit and he suspected the Garners were hiding or disposing of assets.

A bankruptcy court now could assume jurisdiction over the couple’s assets as a result of the bankruptcy filing, said William Lobel, an Irvine bankruptcy attorney. Eisenberg declined to comment on how the filing might affect the federal litigation.

Federal regulators assert in their lawsuit that Garner and his wife funneled more than $13 million in excessive salaries, fees and loans from that bank to outside companies and trusts they controlled to maintain their lavish lifestyle. The bank’s failure in 1993 drew national attention because it was the first time that regulators had used a recent law allowing them to seize a healthy bank.

The Garners could not be reached for comment Tuesday. They have denied any wrongdoing and argue that regulators treated them unfairly and took down a healthy institution.

Eisenberg said the bankruptcy petition does not list all of the couple’s assets and liabilities. A complete list of creditors should be filed within the next 15 days, he said.