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Affidavits Say Banker Traded Cash for Checks : Investigation: Documents allege Garner, ousted from post at Anaheim facility, used transactions to 'get rid of' money.

May 08, 1993|JAMES S. GRANELLI | TIMES STAFF WRITER

Anaheim banker Gerald J. Garner, ousted last week by federal regulators when they seized his bank, passed large amounts of cash to directors in return for checks to his various companies because he had to "get rid of some money," according to affidavits obtained by The Times.

Sworn statements given to banking regulators as part of their investigation of American Commerce National Bank, which was closed April 30, also allege that Garner fabricated written minutes of directors and loan committee meetings that never occurred. The documents also accuse him and other top officers and directors of a host of other questionable activities.

Meantime, a Norwalk hospital that Garner also controls apparently is facing financial problems. Paychecks, to be drawn last week from an American Commerce account, never arrived for about 200 workers at Coast Plaza Doctors Hospital.

Garner, who is chairman of the 126-bed facility, talked to doctors and employees Thursday to ease their fears, and checks arrived Friday. But some employees said they were worried about whether there would be enough cash to make payroll next week. Hospital officials did not return telephone calls.

Garner, reached late Friday, refused to discuss issues raised in the sworn affidavits or problems at the hospital. But he did say the problems stemmed from actions by the Federal Deposit Insurance Corp., the federal agency that insures deposits and liquidates banks.

"Coast is a customer of American Commerce, and the FDIC just froze all the checks when they took over last week," Garner said. "I don't want to make any other statements until I get counsel."

Other companies that were bank customers also have had problems meeting payroll after the Office of the Comptroller of the Currency, which regulates national banks, shut American Commerce. Insured deposits were transferred to Southern California Bank, but $10 million in mostly business accounts exceeded the insured limit of $100,000 per account holder, and the FDIC is taking a hard line in granting exceptions.

The comptroller's action was the first time regulators have used a 1991 law to seize an institution with strong capital--shareholder money and profits that serve as its final cushion against losses. In an unusually strongly worded press release, the comptroller charged that Garner and other executives concealed records, lied and wasted the bank's finances. It also is seeking to ban directors and top officers from the industry for their alleged "weak, abusive and self-serving" activities.

The affidavits were part of the documentation that provided regulators with the ammunition to seize the bank.

Dr. Donald Daniel, a former American Commerce director who once sued Garner over money missing from the physician's pension fund, alleged in one statement that on three occasions Garner approached him with bundles of cash and asked him to write checks for the same amounts to companies Garner owned or controlled. The affidavit states that the trades were for $10,000, $5,000 and $4,000.

The affidavit also said Garner would stash the cash in his socks and trade it for the checks from time to time because he had to "get rid of some money."

In another statement, a former bank employee said William Kavanagh, an executive vice president ousted in the regulators' purge last week, also explained that such checks-for-cash swapping occurred between Garner and various directors.

Garner and the bank were linked earlier this year to loans for former Orange County Supervisor Don R.Roth, convicted in an influence-peddling investigation, and to Anaheim Hills developer Donald Hill Williams, accused in lawsuits of defrauding investors of $90 million.

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