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2 Charged With Looting Fund of $2 Million

April 04, 1985|PAUL FELDMAN | Times Staff Writer

Two men were charged Wednesday with stealing more than $2 million from bank accounts of the Fund for Higher Education, a philanthropic organization that raises money from major corporations to provide grants for educational facilities at colleges across the nation and in Israel.

James Dean McCollum Sr., 52, of Anaheim was charged with 16 counts of grand theft and two counts of forgery and James Kirk Barry, 50, of Los Angeles, a former employee of State Savings & Loan Assn. (now American Savings & Loan Assn.), was charged with 14 counts of grand theft in a complaint filed by the district attorney's office in Los Angeles Municipal Court.

Neither Worked for Fund

The men, neither of whom worked for the fund, are accused of looting the money during a five-year period, primarily from certificates of deposit the fund had purchased at the State Savings & Loan Assn. office in Santa Monica. Smaller amounts were also stolen from fund accounts at offices of the Bank of Beverly Hills and the Bank of America, Deputy Dist. Atty. Mitchel Harris said.

"When a small foundation sustains this kind of loss, it has a very serious impact on the operation and viability of the foundation," the fund's president, William C. Spencer, said from New York in a telephone interview. "We'll do everything possible, obviously, to recover it and to move on."

The fund, with offices in Los Angeles, New York and Tel Aviv, raises much of its money through tribute dinners. In the past, it has honored such dignitaries as former U.S. Secretary of Treasury William Simon and Atlantic Richfield Co. Chairman Robert O. Anderson.

It raises $3.5 million to $4 million a year and has a net worth of about $8 million. Donations have been used for grants to dozens of higher education institutions, including Columbia University, USC, Massachusetts Institute of Technology and Hebrew University in Jerusalem.

According to authorities, McCollum in 1979 told a personal acquaintance who was a fund official that high interest rates were available at State Savings and that Barry was serving as an account officer for the financial institution.

Beverly Hills Bartender

McCollum and the fund official--secretary-treasurer Richard Segal--had met Barry when Barry was previously working as a bartender at a Beverly Hills restaurant.

After the fund's money was deposited at State Savings, authorities said, McCollum falsely represented himself as a fund official and took out loans on more than 20 occasions using the fund's accounts as collateral. When the loans--many of them payable to McCollum's firm, Transworld Tool and Electronic Corp.--fell delinquent, the fund's certificates were liquidated.

McCollum was also charged with withdrawing money directly from the fund's regular checking account at the Bank of America.

Harris said the theft was not discovered until late 1984 because the fund's auditors had previously received forms--signed by Barry on at least two occasions--stating that the money was still in the fund's accounts. It was finally found to be missing at the time of the organization's fiscal 1984 audit, Jeff Broker, the fund's attorney, said.

Civil Litigation Planned

Spencer said civil litigation is planned against McCollum, Barry and American Savings to recover the money. American Savings is a subsidiary of Financial Corp. of America, which this week announced losses of $590.5 million in 1984.

McCollum, on probation from a 1979 fraud conviction, is now in custody at Terminal Island Federal Prison in connection with a mail fraud case. In that case, McCollum is accused of mailing invoices to companies for ads they purportedly purchased in journals that apparently do not exist.

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