The management style of Ranbir Sahni, American Diversified's unconventional and reclusive chairman, has created a plethora of personnel difficulties apart from the company's clashes with federal regulators.
In the past two years, about a dozen executives have left the company, citing deep conflicts with the iron-fisted way Sahni rules the company he created, owns and controls.
Current and former executives, as well as a number of other people familiar with Sahni and his companies, paint a picture of Sahni as an autocratic leader and relentless workaholic.
They say that he is intensely involved in nearly every aspect of the company's operations.
Associates say that Sahni works around the clock, frequently calling colleagues in the middle of the night to discuss business matters. Sahni also holds lengthy executive meetings on Saturdays at the corporate headquarters.
Sahni's apparent reluctance to delegate authority has created serious clashes with several top executives.
Breach of Contract Suits
According to Orange County Superior Court records, three former top-level executives, including a former general counsel and the former president of the company's equity group, have filed breach of contract lawsuits against American Diversified.
Two of the former executives, Jerry Zamos, a former general counsel, and Barry Shulman, former president of American Diversified Equity Corp., allege in the lawsuits that they left the company because Sahni ordered them to violate state and federal securities laws.
Shulman's suit, filed Dec. 12, 1983 in Orange County Superior Court, claims he was terminated "because he refused to conduct the business operations of American Diversified Equity Corp. in violation of state and federal securities laws."
The third executive, Ronald Struck, filed a breach of contract suit after Sahni failed to name him president of the savings bank, according to his lawsuit.
Lester Day, president of American Diversified Savings Bank, said that he was personally "incensed" about the lawsuits but declined to discuss the details other than to say that the company denies the allegations.
Day also rejects claims, by former employees and others who know Sahni, that much of the personnel problems--and other troubles in which American Diversified has found itself enmeshed--stem from Sahni's management style.
He said that Sahni delegates authority because he cannot possibly be directly involved in every aspect of the company's operations. Day said Sahni, who declined to be interviewed, does have a special interest in the equity operation.
In fact, Sahni obtained a securities dealer's license so he could be more involved in that aspect of the business.
Does Delegate Responsibility
Even when Indian-born Sahni does delegate responsibility, people who know him well say that he bristles at being told he cannot do something that he believes will be profitable and good for the company.
Associates, including some who have filed lawsuits, say that Sahni's feeling about the state and federal regulations governing American Diversified is that the rules exist, but creative managers should be able to find lawful ways to work around them.
Some former employees complained to the staff of the Securities and Exchange Commission, which, following a lengthy investigation, issued an order prohibiting the sale of some American Diversified investment packages.
According to company sources and outside sources close to the investigation, the SEC objected to the fact that some members of American Diversified's sales staff were not properly licensed to sell the type of securities the company was offering to investors.
American Diversified and the SEC still are negotiating a final settlement, but sources say the issues left to resolve are minor.
Irving Einhorn, the SEC's Los Angeles regional administrator, said that he could not comment on any ongoing proceedings between the agency and the company.
Day, however, said: "I don't think there are any outstanding differences (between the company and the SEC). It is resolved as I see it."