Lawyers for federal regulators operating North America Savings & Loan Assn. now believe the Santa Ana institution was defrauded out of $30 million to $40 million--nearly twice the amount they previously had believed was missing.
The Federal Savings and Loan Insurance Corp., which put the S&L into receivership Jan. 23, already has filed a lawsuit accusing the S&L's late owner, Duayne D. Christensen, and his confidante and business manager, Janet F. McKinzie, of fraudulently siphoning $20 million from the institution.
The FSLIC, through its Los Angeles lawyers, the firm of Mayer, Brown & Platt, has seized truckloads of material in three counties and uncovered hundreds of phony certificates of deposit, forged documents and other records allegedly indicating that illegal and improper actions occurred at North America Savings.
"With each document (we find), we discover more money that went down with North America," Michael B. Lubic, a Mayer, Brown lawyer, said in a recent court hearing.
Where FSLIC lawyers once thought Christensen operated about 60 companies, they now have come up with more than 100 shell corporations with interests from Saudi Arabia to Indonesia, Lubic said.
State regulators already have called it the largest fraud involving an S&L in California in recent memory.
Lubic also said the agency's attorneys and McKinzie's lawyers have reached an agreement to appoint a receiver over McKinzie's assets and Christensen's estate. McKinzie had been named as the executrix and beneficiary of Christensen's will and trustee and beneficiary of his trust--both of which were signed three days before his death--and the owner and beneficiary of a $10-million insurance policy on his life.
The agreement, however, is not final yet, and McKinzie's Los Angeles lawyers would not comment on it.
The receiver would conserve, maintain and protect the value of the assets, as well as look for more assets, according to a source in the case.
Court records claim that McKinzie and her Elk Grove company, JC-2 Inc., which does business as Plaza Group, has various deposit accounts at seven banks and North America Savings. She also owns eight real estate properties in California, Nevada, Alaska and Texas, her home state, as well as five trust deeds and mortgages with a total unpaid balance of $218,961, court records show.
McKinzie's Houston attorneys, looking out for her interests in criminal investigations by the FBI and the California attorney general's office, have put her 1986 and 1987 Rolls-Royce automobiles, her jewelry and furs into storage in the Sacramento area, subject to a previous court order freezing her assets. Only her plush Newport Beach home, which Christensen deeded to her in 1984, is not subject to any court-ordered freeze.
Under Christensen's will and trust, McKinzie also controls the Westminster property where his dental office and other businesses began, stock in New York Stock Exchange companies worth $85.5 million, the apparently worthless stock in the failed S&L and the bankrupt Ruby Valley Ranch. The ranch's only remaining asset was a $5.2-million Harbor Island home in Newport Beach that reverted to the noteholder in a foreclosure sale Tuesday.
Christensen died in a single-car crash on Jan. 16, hours before state regulators determined that his institution was operating in an impaired condition and seized it. The S&L was declared insolvent a week later and turned over to the FSLIC.