Earlier allegations by federal regulators that North America Savings & Loan Assn. was defrauded of about $20 million were substantially understated, according to an amended federal lawsuit that said the S&L had been drained of about $43 million.
The Federal Savings and Loan Insurance Corp., receiver for the Santa Ana-based institution, alleged in the amended suit filed Monday in U.S. District Court in Los Angeles that the late Duane Christensen, owner of the S&L, teamed up with his business manager and confidante, Janet McKinzie, and many others to systematically defraud the S&L.
The defendants, most of whom were named for the first time Monday, used phony documents, false accounts and forged signatures to siphon funds, the suit alleged.
State regulators have already said that if even $20 million was fraudulently siphoned from the S&L, the North America Savings case would be the largest fraud in state S&L history.
As of Monday, none of the regulators could say what became of the bulk of the funds that the suit says was taken. And the court-appointed receiver for McKinzie's assets said she has just $16,000 left.
Separately, attorneys for McKinzie have said that the FBI is investigating criminal bank fraud and embezzlement in the collapse of the S&L, which was seized by regulators on Jan. 16, just hours after Christensen died when his speeding auto smashed into a bridge support on the Corona del Mar Freeway.
After taking over the S&L, federal regulators created a newly chartered federal association with the same name to take over assets and continue operatiions.
Monday's amended complaint detailed a long history of fraud allegations, primarily through Newport Equities Trust, a 1971 trust set up by Christensen for the benefit of his three children and others who invested in the trust.
Tahoe Condo Project
Many of the newly named defendants were associated with the trust and conspired to operate the S&L to divert funds for their own benefit, according to the amended complaint.
The first major aspect in the conspiracy allegations was the use of a Newport Equities subsidiary called Tahoe Bronze to buy a 20-unit condominium building in South Lake Tahoe for $3.65 million in 1982.
Within a year, the suit said, Christensen and McKinzie directed the the S&L to pay an artificially inflated $14.7 million for the building and then record the property as an asset worth $17.7 million.
But Tahoe Bronze and Newport Equities failed to pay off the original lender, and Christensen and McKinzie wrongfully diverted $5.6 million of S&L funds to make those payments, the suit alleged.
Among the defendants added to the lawsuit are former North America S&L directors Merrill E. Schmidt, Myron S. Mickelson, Roy A. Bonner, Thomas C. Stowe, J. Bernard Soto and Ronald B. Morgan.
Also named as a defendant in the amended suit was Brooks A. Miller, the S&L's former president.
In a separate U.S. District Court hearing Monday, McKinzie lost her bid to stall today's scheduled foreclosure sale of the exclusive Newport Beach home that Christensen deeded to her in 1984.
David Ray, the receiver appointed to manage McKinzie's assets, said the house is valued at $1 million to $1.2 million but has a $975,000 mortgage.
McKinzie has missed $94,000 in payments on the home, one of her attorneys said.