INSTITUTION: "52745 SECTION B TO BE COMPLETED IN REFERRAL CASES WHERE SUSPECTED CRIMINAL ACTIVITY INVOLVES PROBABLE LOSS BEFORE REIMBURSEMENT OR RECOVERY) OF $10,000 OR GREATER OR IN ALL CASES, REGARDLESS OF AMOUNT, INVOLVING AN AFFILIATED PERSON WITHIN THE MEANING OF 12 C.F.R.Sc 561.29. 1. Give a chronological and complete account of the suspected violation. (If necessary, use Continuation Sheet.) -Relate key events to document and attach copies of those documents. -Explain who benefited, financially or otherwise, from the transaction, how much and hou. -Furnish any explanation of the transaction provided by the suspect and indicate to whom and when it was given. -Furnish any explanation of the transaction provided by any other person. -Furnish any evidence of cover-up by the suspect or evidence of an attempt to deceive federal or state examiners or others. -Indicate where the suspected violation took place(e.g. main office, branch, other). -Recommend any further investigation that might assist law enforcement authorities in fully examining the potential violation. See Section A.6. and attached summaries of interviews of former officers of 2. Indicate whether the suspected violation appears to be an isolated incident or whether it relates to other transactions. (Explain) It is likely that similar incidents exist at the institution. 3. 4. Exclusion of Information from the Referral: Has any pertinent information been excluded from this referral as a result of any legal or other restraint? [ ] Yes [X] No If yes, why? N/A Have the excluded information and/or documents been segregated for later retrieval? [ ] Yes [ ] No N/A Witnesses: List any witnesses who might have information about the suspected violation and describe their position or employment. Indicate whether they have been interviewed. S. ANSTATUTION: 745 Position: Bus. address: Bus. phone: Please contact the individuals noted Discovery and Reporting a. Who discovered the suspected violation and when? The suspected violation(s) were discovered during the May 31, 1989 b. Has the suspected violation been reported to the Board of Directors? [ ] Yes [X] No c. Has the Board of Directors taken action? [ ] Yes [X] No. If so, what and when? The Board has not been notified d. Has the suspected violation previously been reported to federal or local law enforcement authorities or to any federal or state supervisory agency? [ ] Yes [X] No 7. Has the suspected violation had a material impact on or otherwise affected the financial soundness of the institution? [X] Yes [ ] No If yes, please explain. If the institution is found to be guilty of any criminal wrongdoing, and REV: June 1988 Page No. 6 We have received and reviewed your letter of November 20, 1989, requesting a reconsideration of our previous directives of CenTrust not to pay dividends on its preferred stock and to discontinue`repurchasing the preferred stock. The pending application filed by Great Western to purchase 63 branches and approximately $2,400,000,000 of CenTrust's core deposits, together with the related restructuring of CanTrust, is currently being reviewed by this office and other regulatory authorities. transaction will have a material impact on CenTrust's capital compliance and future earning capacity. This The complexity of the proposed transaction and its potential impact on CanTrust's future viability require that we carefully analyze the sale to insure that the purported benefits are not outweighed by risks which would disadvantage the institution and the insurance fund. Accordingly, we are not in a position to approve the reduction of CanTrust's capital through the payment of dividends or the use of cash to repurchase preferred stock, even if that might change the character of the capital base at this time. The regulators' documents - called crimi- Less landfill use The amount of waste being recycled has nearly doubled in the last to bribe the mayor of Miami Beach, to buy In strongly worded explanations of the doc- "This misuse of position and corporate Please see CENTRUST 6A Conciliation Former CenTrust Paur's flamboyant Soviet President Mikhail Gorbachev, right, reaches to shake hands with political rival and Russian They added that Paul's "pattern of self dealings for personal benefit has contributed to CenTrust's deteriorated financial condition." The regulators' investigative documents are believed to have been sent to the FBI and U.S. Attorney's Office in Miami at the beginning of the year. They are merely a first step in a process that may or may not lead authorities to pursue criminal charges. They are not an indication of guilt, and no charges have been filed against Paul. Paul denies any wrongdoing. His attorney said the case against the former CenTrust chairman appeared flimsy. "If that's what they're looking at to possibly indict him. I'm a little relieved," said Sanford Bohrer, Paul's attorney. "I keep waiting for them to come up with some senous stuff." Already, Paul's flamboyance marked by his artwork, yacht and CenTrust's 47-story office tower are a well-known chapter in the story of the high-flying S&L executives involved in the huge thrift scandal. The entire bailout could cost taxpayers as much as $500-billion over the next 30 one of t bave tions-that Federal officials with the U.S. Attorney's Office, FBI and Office of Thrift Supervision declined to disclose if the art case or others had been referred. They also refused to elaborate on the allegations in the other 10 referrals. The accusations say thate Paul is suspected of illegally "parking" $25-million in securities in the Bank of Credit and Commerce international (BCCI). In an unrelated case this year, BCCI pleaded guilty in Tampa to lausdering cocaine profits. BCCI helped out CenTrust when the thrift was unable to sell all of the $150-million in high-risk securities it issued in May 1988. regulators say. BCCI agreed to buy $25-million in CenTrust securities, regulators say, so that other investors wouldn't be worried about CenTrust's financial health. CenTrust repurchased the securities for $25-million two months later. "It is highly likely that this transaction was consummated only to preserve investor perceptions of CenTrust's ability to sell the entire $150 million jocus" the remuls. Some CenTrust extravagances When regulators reviewed CenTrust's books last year, they reported finding thousands of dollars worth of extravagances that thrift chairman David Paul billed to the S&L or its affiliates. CenTrust purchases that federal regulators listed in a 1989 examination report include: $150.088 in CenTrust assets that were kept at Paul's home. The merchandise included a dehumidifier, a deep fryer and mobile telephones. $35.662 from Tiffany and Co. for such items as engraved calling cards, matches, a $278 baby gift for an executive of Drexel Burnham Lambert and $434 for a wedding gift to Miami Beach Mayor Alex Daoud. $20.952 for linens from a Paris vendor. $33.988 in limousine service from February 1987 to Janu buy Daoud's "favorable consider ation" of a zoning variance. The payments were allegedly made in 1988 and 1989. Paul needed a permit to build a huge teak dock for his 90-foot yacht outside his Miami Beach home. Daoud ended up supporting the dock, though he denies he did so because of the CenTrust fee. If the accusation is true, "the payments take the form of a gratuity paid Mr. Daoud and are considered a misapplication of bank funds by Mr. Paul for his own personal gain, the regulators wrote. The accusation is bolstered by a statement that Roland Baker, the former head of CenTrust's insurance subsidiary, made to the regulators. Baker told regulators that. Paul ordered him to pay Daoud, but that be initially refused because he thought the fee was unusual. "Mr. Paul then called personally and demanded it be taken care of right away or jobs would be termi nated. Mr. Baker then complied," according to an account of Baker's interview. Paul had a CenTrust subsidiary pay $54,736 to cover the insurance on his yacht, called the Grand Cru and for credit-card bills and moving expenses of the yacht's captain. In addition, he is accused of spending the subsidiary's money to pay the salaries of yacht crew members. Paul has partly reimbursed the subsidiary, regulators reported. Paul's employees were "strongly encouraged" to contribute to CenTrust political action committees (PAC) that gave campaign money to members of Coogress, Florida state Comptroller Gerald Lewis and others. "In fact, several former officers have alleged that participation in the PAC is directly or indirectly a requirement for continued employment, high salaries and bonuses," the regulators' document says. The House Banking Committee found earlier this year that CenTrust, its PAC and CenTrust employees gave $328.628 to cam paigns in the 1980s. Several politicians also were entertained by Paul on his yacht or given the use of his jet. For example, Lewis, Florida's chief banking regulator, once attended a party in his honor at Paul's home, according to a statement Florida banker T. J. "Ted" Hoepner gave the regulators. "He (Hoepner) said Lewis appeared nervous and said, "Should I be here?' Hoepner said be jokingly replied. 'Should I be here.' regulators reported. the Lewis has since taken action against CenTrust, accusing Paul of operating the thrift as if it were Paul's "own personal piggy bank." At Paul's direction, a CenTrust subsidiary spent $232.355 for a 40-foot sailboat called the Bodacious in 1989. The regulators called the expenditure a misuse of corporate money and claimed Paul tried to hide the purchase from examiners. Paul has denied wrongdoing in this instance, though he conceded the boat was purchased to entertain clients. Paul used CenTrust money and workers to do extensive renovations on his $8.6-million Miami Beach home, according to former CenTrust officers. The regulators reported that the officers told them Paul " "was diverting funds from the construction of CenTrust Towers to fund the major renovations (at his home). "The former officers stated that Mr. Paul often bragged of his successful acquisition of the institution and his personal yacht at no personal cost," the regulators' statement says. The regulators say that the expenditures were intentionally concealed from bank examiners in the mid- to late 1980s. CenTrust bought $208,000 in Oriental rugs that regulators allege were used in Paul's home. He also was given 20 cases of Baccarat crystal from the CenTrust-financed Stanhope Hotel in New York City after the hotel filed for bankruptcy, they reported. Inventory of stolen art ordered Ask ab protec for Ha dry-cle loose! 2714 |