David L. Paui, Chairman and Chief Executive Officer of CenTrust Bank, a
State Savings Bank (CenTrust) is suspected of parking securities with
the Bank of Credit and Commerce International (BCCI), Luxembourg. At
the time of the suspected securities parking, Ghaith Pharzon (who
owns 28% of CenTrust stock), was also a major shareholder in
Inter-Redec, the broker handling the repurchase from BCCI. Also,
according to newspaper articles, Mr. Pharoan was at one time a
principal of BCCI and may still be affiliated in some manner.
1989. BCCI was indicted for money laundering.

in early

The securities "parking noted above may constitute a violation of
Title 15, sections 78ff, 78, 774, and 77x of the United States
Criminal Code. Also, the failure of CenTrust to report this activity
to regulatory authorities may violate Title 18, section 1006 of the
United States Criminal Code. These statutes are shown below:

Title 15 U.S.C. sec. བའ༔༔ 91776 and 77< Criminal violations of

securities laws.

Title 18 U.S.C. sec. 1006 Faise entries and reports or statements,
including material omissions, made with intent to injure or defraud an
insured institution or deceive an Office of Thrift Supervision
examiner: receipt of any benefits by an officer, agent or employee of
the institution from a transaction of the institution with intent to
defraud by the individual.

d. Relationship to the financial institution. Mark all applicable box(es):

OFFICE OF THRIFT SUPERVISION

CRIMINAL REFERRAL FORM (OTS 366)

OTS DOCKET NUMBER OF THE
FINANCIAL INSTITUTION: 22745

e. Is person still affiliated with the financial institution? [<] Yes [ ] No If no, [ ] Terminated [ ] Resigned

If no, describe circumstances:

N/A

Date: N/A

(Month Day Year)

f. Prior or related referrals? [X] Yes [ ] No If yes, please identify:

Several 366's were filed on this date

g. Is person affiliated with any other financial institution? [ ] Yes [X] No or business enterprise? [X] Yes [ ] No If yes to either or both, please identify.

According to records maintained by the State of Florida, the
following is a list of corporations affiliated to David L. Paul.
licensed to conduct business in the State of Florida. This list
is not believed to be a complete list of Mr. Paul's affiliated
enterprises. It is near certainty that Mr. Paul is affiliated with
numerous other business enterprises licensed in other states.
information has been requested from Mr. Paul, and will be forwarded.

This

• The Symphony Hall Foundation

7.8

d. Relationship to the financial institution. Mark all applicable box(es):

[ ] Officer

[ ] Director

..

[ ] Employee

[ ] Borrower

Is person still affiliated with the financial institution? [X] Yes [ ] No [ ] Terminated [ ] Resigned Date: N/A

If no,

If no, describe circumstances:

N/A

(Month Day Year)

f. Prior or related referrals? [ ] Yes [X] No If yes, please identify:

g. Is person affiliated with any other financial institution? [X] Yes [] No or business enterprise? [X] Yes [ 1 No If yes to either or both, please identify.

According to public records the following is a list of companies
(including financial institutions) that Mr. Pharaon is affiliated
with in some manner as either a principal or a major shareholder.
This list is not believed to be complete. It is probable that Mr.
Pharaon is affiliated with numerous other companies, both domestic
and foreign.

UPFILE OF THRIFT SUPERVISION CRIMINAL REFERRAL FORM (OTS 366)

OTS DOCKET NUMBER OF THE
FINANCIAL INSTITUTION: 02745

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 how.

-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.

In May, 1988, CenTrust issued $150 million of subordinated debentures, underwritten by Drexel Burnham Lambert. However, due to the apparant high level of risk perceived by investors, the institution was not able to sell the entire issue. Therefore, it is believed that BCCI agreed to purchase $25 million of the issue with a verbal agreement that CenTrust would repurchase the debt at par. BCCI purchased the $25 million at or about the same time it was issued by CenTrust (May 1988).

Subsequently, on July 27, 1988 (two months after issue), CenTrust repurchased the $25 million of subordinated debentures from 8CCI at 100% par value. The broker handling this repurchase was Inter-Redec, a company in which Ghaith Pharoan, a 28% shareholder of CenTrust Bank, reportedly has a substancial interest.

It is highly likely that this transaction was consummated only to preserve investor perceptions of Centrust's ability to sell the entire $150 million issue. CenTrust temporarily placed $25 million of the issue with BCCI, and then repurchased the debentures at par after selling the remaining $125 million (out of the $150 million total issue). This transaction was not disclosed to federal regulators. However, during the May 31, 1989 examination, the transaction was uncovered by the examiners.

CenTrust sustained a loss of approximately $1.4 million due to deferred issuance costs which were associated with this $25 million in debt.

2.

Indicate whether the suspected violation appears to be an isolated incident or whether it relates to other transactions. (Explain)

There are other activities that CenTrust actively engages in that may be in violation of the Internal Revenue Service Code.

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

Uitnesses:

List any witnesses who might have information about the suspected violation and describe their position or employment. Indicate whether they have been interviewed.

5.

Name:

Position:
Address:

Phone No:

Bus. address:

Bus. phone:
Interviewed:

Please contact the individuals noted
in Section A, Item 9 of this form for
specific information on witnesses.

Discovery and Reporting

a. Who discovered the suspected violation and when?

The suspected violation(s) were discovered during the May 31, 1989
examination conducted by the Office of Thrift Supervision, Atlanta
District (f/k/a Federal Home Loan Bank of Atlanta) and the State of
Florida, Office of the Comptroller, Division of Banking.

b. Has the suspected violation been reported to the Board of Directors? [ ] Yes [ ] No

By whom and when? The minutes of the Board of Directors do not reflect this transaction. However, it is unknown if Mr. Paul reported this activity to the Board, or to any member of the Board.

c. Has the Board of Directors taken action? [ ] Yes [X] No. when? see above

If so, what and