The man who built American Diversified Savings Bank into a $1-billion institution, only to have control wrested from him by the federal government, has sued the S&L for $270 million.
Ranbir S. Sahni, a former commercial pilot turned developer and banker, alleges that regulators are trying to cripple him financially by causing the Costa Mesa S&L he once headed and still owns to withhold from him interest earnings, fees and other income due from four dozen real estate investment syndicates he formed and merged into the S&L.
Sahni's complaint, filed in Orange County Superior Court, seeks $270.5 million in general and punitive damages from American Diversified Savings Bank and two related firms.
Sahni, who still owns 96% of American Diversified but is barred by regulators from exercising control, was deposed as the S&L's chairman in February, 1986, when state and federal regulators declared his institution insolvent and seized it.
The S&L had $977 million in assets but had amassed more than $14 million in losses at the time it was taken over.
The Federal Savings & Loan Insurance Corp. was appointed conservator of the S&L and hired new managers to run the far-flung business activities Sahni had started.
Rather than operating as a traditional S&L, American Diversified was essentially a land development company under Sahni. It owned and managed several thousand apartment units nationally and had major investments in such projects as a power-generation farm using wind turbines and an ethanol plant.
Sahni's complaint does not name the FSLIC as a defendant, primarily because he wants the case to be heard in state court and not be transferred to federal court in Los Angeles, said his lawyer, Ronald E. Gregg of Los Angeles.
Sahni Alleges Plot
The complaint alleges that the FSLIC "completely dominated and controlled the business affairs" of American Diversified and its subsidiary, American Diversified Investment Corp. and caused the S&L's new management to intentionally "pursue a calculated and cunning course of wrongful conduct designed to destroy (Sahni's) sources of income and economically cripple (him)."
The intent, the complaint says, was to make Sahni "financially unable" to defend himself in civil suits brought by the FSLIC or to file suits against the agency.
FSLIC officials declined comment on Sahni's suit.
Thomas Haupert, president of American Diversified, denied that the S&L is trying to harm Sahni financially and said he and other managers are simply trying to keep the S&L afloat.
At the end of the year, American Diversified had a negative net worth of $523.2 million, the lowest net worth of any S&L in the nation, according to the National Thrift News, a trade journal.
Haupert said the institution's net worth "hasn't drastically improved" since.
"We're saddled with a lot of non-earning assets--real estate projects that aren't complete or (are) not getting positive cash flow," he said.
"And we still have to make the payments" on the loans for those projects, he said.
The huge growth in American Diversified's assets came from Sahni's decision to merge into the S&L 48 real estate syndications he had formed and was managing. As part of that action, he set up American Diversified Investment Corp. as a subsidiary of the S&L to act as a general partner in another new company, American Diversified Partners, which administered the syndications. Sahni was the limited partner in ADP.
Now, according to his complaint, Sahni says errors were made in forming ADP. Therefore, Sahni alleges, the company should be dissolved and he should get back the $5 million he invested directly, plus the accrual of the limited partner's share of income generated by the syndicates' real estate investments.
But Haupert says ADP was formed solely by Sahni, acting both as an investor and as head of American Diversified Investment and as chairman and major owner of the S&L. Haupert questioned how Sahni could make mistakes when he was negotiating only with himself.
"What he wants to do is unwind his ($5 million) contribution to American Diversified Savings Bank," Haupert said. "It's our contention that once he made that contribution, he can't go back on it."
FSLIC, in fact, is trying to get more money out of Sahni. In a complaint filed days after it seized the S&L, FSLIC accused Sahni of fraudulently inflating the sales prices of at least two real estate properties, illegally obtained a $500,000 kickback and mismanaged American Diversified. That action seeks $76 million in damages.