Janet F. McKinzie, the subject of an FBI investigation and a civil lawsuit alleging that she helped defraud North America Savings & Loan Assn. out of $43 million, could soon lose her attorneys as well as her plush Newport Beach home.
McKinzie's attorneys, including lawyers in the Houston office of Richard (Racehorse) Haynes, said they have not been paid because her assets have been frozen by court order and have asked U.S. District Court Judge Harry Hupp in Los Angeles to allow them to stop representing her.
A hearing on their request is scheduled for Oct. 19.
McKinzie, meanwhile, has until Tuesday to pay off $94,000 in overdue mortgage payments and foreclosure costs or sell her house, which was deeded to her in 1984 by the late Duayne D. Christensen, owner of North America Savings, according to court and county documents.
McKinzie could not be reached for comment.
If McKinzie can sell the house and realize profit from it, she will probably use the proceeds for legal fees, said Robert Berke, her Los Angeles attorney.
McKinzie was Christensen's confidante, business manager and sole heir. He died in a car crash on Jan. 16, hours before his Santa Ana savings institution was seized by regulators.
The lawyers' complaint is based on a March court order that freezes McKinzie's assets and places them under the control of a court-appointed receiver.
"It's economic capital punishment," said Berke, who joined with the Houston attorneys in their motion to leave the case. "You can't attach all her assets and deprive her of the ability to live or to pay her lawyers."
A separate court-ordered bank account holds the proceeds from a $10-million life insurance policy McKinzie took out on Christensen's life. His three children and several creditors allege that they are entitled to receive all or portions of the proceeds, while the Federal Savings and Loan Insurance Corporation says the money belongs to North America Savings.
The receiver, David L. Ray, has told Hupp that the value of the assets assigned to the receivership has not been as much as the court initially expected. The receivership's latest statement, filed two weeks ago, showed just $16,000 in remaining asset value.
Berke, however, said the receivership had sufficient funds to pay $290,000 in receiver's fees to Ray and his staff for the last seven months.