Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, April 1, 1990 TAG: 9004010227
SECTION: HORIZON PAGE: F1 EDITION: METRO
SOURCE: Nathaniel C. Nash The New York Times
DATELINE: LENGTH: Long
Some have been convicted, some have been acquitted and many have shifted their energies to other kinds of business.
Following are status reports on a few prominent figures in the financial debacle.
\ David Paul: The problems at Paul's CenTrust Bank of Miami came to light when federal investigators learned he had invested millions of dollars of the bank's money in fine art that decorated his home.
One was Rubens' "Portrait of Man as Mars," for which he paid $12 million but experts valued at about $7 million.
Paul, who built the largest savings institution in Florida, rewarded himself with more than $5 million in salary and other compensation over one 18-month stretch.
Early this year, the Office of Thrift Supervision seized CenTrust, finding that its losses on real estate lending and junk bond investments were likely to exceed $1 billion.
A criminal task force including the Federal Bureau of Investigation, the Justice Department and the Internal Revenue Service is investigating with an eye toward bringing both criminal and civil lawsuits, officials say.
Last week it was revealed that investigators are especially interested in $328,000 in political donations by Paul and in a number of meetings between Paul and key politicians, including several members of the Senate Banking Committee.
A top regulator says the CenTrust Bank's failure could rival the $2.5 billion collapse of Lincoln Savings and Loan Association.
Paul has put his house up for sale and has dropped out of sight.
\ Charles H. Keating Jr.: No other savings and loan operator has come to symbolize the breed like Keating, a brash, self-confident home builder who bought the Lincoln Savings and Loan Association of Irvine, Calif., in 1982 to finance land development.
His investment practices alarmed regulators early on, as he bought up junk bonds and became the largest land developer in Arizona.
As he tried to rebuff attempts by regulators to limit his investments, he turned to Congress, making large political contributions and seeking relief from government pressures.
When regulators finally seized Lincoln last year, they found it had losses of almost $2.5 billion, one of the costliest failures on record.
Keating is being sued by both the government and former depositors of Lincoln, who charged that he channeled depositors' funds from Lincoln to its parent company, American Continental Corp.
He remains chairman of that corporation, now in bankruptcy.
Keating is suing the government to get back control of Lincoln.
\ Thomas Gaubert: Banned from the industry by regulators in 1986 when his savings institution, Independent American Savings and Loan Association of Dallas, went bankrupt from bad real estate loans at a cost to the government of more than $500 million.
But he did not go out without trying to use his connections.
As a treasurer of the Democratic Congressional Campaign Committee, he was a friend of House Speaker Jim Wright and the House majority whip, Tony Coelho.
He got Wright to intervene with Edwin J. Gray, then the top industry regulator, in an attempt to gain reinstatement as chairman of Independent.
Gray refused, and regulators subsequently sued Gauber in a civil case charging loan fraud and seeking recovery of losses.
Gaubert also was indicted on criminal fraud charges in early 1988, but was acquitted.
He currently works in real estate, dealing particularly in distressed properties like vacant office buildings and condominiums.
\ Don Dixon: Bought control of Vernon Savings and Loan Association in Dallas in 1982 and built it from an institution with $82 million in assets to one with $1.4 billion four years later.
Vernon made huge construction loans and then resold them to scores of smaller institutions.
Almost all of the loans went bad, and when the government took over Vernon in 1987, it had more than $1.1 billion in losses.
The Justice Department has brought criminal charges against numerous Vernon officials, but not Dixon.
Regulators say they expect an indictment in his case soon.
Dixon epitomized the high-flying breed of thrift executive, living a fabulous lifestyle financed by Vernon, with a fleet of private jets and monumental travel expenses.
Dixon, who filed for bankruptcy in 1988, maintains an office in Dallas but industry experts say he spends most of his time in Southern California on development projects.
\ John Lee Molinaro and Donald Mangano: The Ramona Savings and Loan Association of Orange County, Calif., is not one of the largest savings failures.
But the prison terms given Mangano and Molinaro in February for bilking Ramona of $13 million are some of the longest to date for savings and loan fraud.
Mangano received a 15-year sentence, Molinaro, 12 years, and together they were ordered to pay $5.7 million in restitution.
Both are appealing the convictions.
The two former owners of Ramona were accused of setting up a construction company to build a luxury resort in Palm Springs and then siphoning off money and falsifying records.
That and other dealings bankrupted the institution two years after they bought control of it in 1984.
by CNB