Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: WEDNESDAY, July 11, 1990                   TAG: 9007110392
SECTION: NATIONAL/INTERNATIONAL                    PAGE: A1   EDITION: METRO 
SOURCE: GEORGE KEGLEY BUSINESS EDITOR
DATELINE:                                 LENGTH: Medium

THEFT AT THRIFT DISCLOSED

The loss has been referred to federal authorities, who may seek criminal prosecution of at least one former employee.

The bank, disclosing the matter to the public, said the fraud occurred when the employee apparently diverted money deposited by a small number of customers, mainly in certificates of deposit.

The theft may have gone on for as long as eight years, said E.L. Byington, chairman of the Bristol-based thrift.

Byington said the matter has been referred to the FBI. The former employee, who worked in Charter Federal's Jefferson Street office, was not identified because charges have not been filed, Byington said.

The company's attorney, William B. Poff, said bank authorities are not certain that only one person was involved.

The FBI declined to comment. Will Garrett, a spokesman in the Richmond office, said his agency will announce any arrest.

The U.S. attorney's office would not confirm a report that the embezzlement will be considered when a U.S. District Court grand jury meets later this month.

Embezzlement is one of the most embarrassing things that can happen to a bank, Byington said. The action is "very stressful" for everyone concerned, he added.

Although savers' deposits appear to be protected by insurance, it is uncertain whether the company's stockholders will suffer losses.

Byington said the savings bank "will pursue every reasonable avenue to minimize its losses as a result of this embezzlement."

Claims for the loss will be filed with the company's insurers, he said, although litigation is expected over the insuring company's responsibility.

That's because the bank changed fidelity bonding companies within the past year and both the present and previous bonding firms have declined to accept coverage for the embezzlement losses, Byington said.

Any denial of coverage will be "vigorously resisted," he said.

Depositors will not lose money, but that doesn't mean stockholders won't if the bonding company does not provide coverage, Poff said.

Normally, a savings bank would be covered by a bond and an embezzlement would not have an impact, said Darryl Booth of the Federal Deposit Insurance Corp. in Atlanta.

Byington would not speculate on the effect of the losses on the savings bank's earnings. Patricia Forsyth, a spokeswoman for the Atlanta district office of the U.S. Office of Thrift Supervision, said she presumes such a loss "would eventually affect the capital requirements."

Charter Federal will sue to recover losses from the perpetrator or perpetrators, Byington said.

Charter Federal has had a host of problems recently.

Earlier this year, the company laid off more than 75 employees as part of a downsizing plan to meet new federal capital requirements. Charter directors canceled their acceptance of a sellout to a California investor because they were unable to reach a definitive agreement last year.

In May, the company reported its first profit in almost two years. But the profit came as the result of selling its credit card accounts.