MIAMI — Testimony began Tuesday in the fraud and racketeering trial of David Paul, one of the most flamboyant of those who have come to symbolize the 1980s savings and loan scandals. Prosecutors wasted no time in portraying the former Centrust chairman as a man motivated by unbridled greed.
"This trial is about theft. It's about deception. It's about the abuse of trust," Assistant U.S. Atty. Allan J. Sullivan told jurors shortly before he showed them large color photographs of Paul's $7-million yacht and a diagram of his lavish waterfront estate.
Paul, 54, is charged with using $3.2 million in bank funds to finance an opulent lifestyle that included Old Master paintings, Baccarat crystal and silver service in the executive dining room and gold-plated fittings on his yacht. He once flew six French chefs to Miami from Paris to cook a dinner.
In all, Paul has been indicted on more than 100 criminal charges in connection with the 1990 bank failure, which cost taxpayers $2 billion. In the first of two federal trials he must face, he is accused of filing false tax returns, lying to bank regulators, obstructing justice and committing mail fraud while attempting to disguise work done on his houses and boats as related to the building of the $175-million Centrust Tower.
Paul took over Dade Savings, a Miami thrift, in 1983 when it was $525 million in debt. Six years later, Centrust had assets of $11 billion, the 41-story Centrust Tower had become a downtown Miami landmark, and Paul was a prominent civic booster of south Florida who helped found the symphony orchestra.
Then, as the empires of Charles H. Keating Jr. at Lincoln Savings & Loan and the investment house of Drexel Burnham Lambert began to collapse, so did Centrust. Seized by the government in 1990, it became the fourth-largest S&L failure in the United States.
Paul's defense attorney, Stephen C. Neal, also represented Keating. Keating is now in prison, having been convicted in January on 73 counts of racketeering, conspiracy and fraud in U.S. District Court in Los Angeles. He was sentenced to 12 years and seven months in prison.
Neal, in his opening arguments to the jury, described Paul as a self-made man who invested his own fortune in bankrupt Dade Savings, turned it into the profitable Centrust and was then betrayed by the same government that had given him 25 years to pay off the debt.
Neal did not deny that Paul could be demanding and arrogant or that he enjoyed lavish living. Paul lived "on a piece of property that most of us would never even dream of living in, to be sure," said Neal.
And, Neal added, some invoices for work done on that property and on Paul's 95-foot yacht, the Grand Cru, may have "slip(ped) through the cracks" and been paid out of Centrust funds. But did Paul "knowingly and intentionally defraud Centrust Bank?" asked Neal. "Absolutely not."
Among the scores of witnesses expected to testify for the prosecution is Alex Daoud, a former Miami Beach mayor who has pleaded guilty to taking bribes from a Centrust subsidiary for winning approval of a teak dock that Paul built behind his La Gorce Island home. Daoud is awaiting sentencing.
The trial is expected to last two months. Next year, Paul faces trial on charges of securities fraud in connection with deals with Keating, the Bank of Credit and Commerce International and junk bond king Michael Milken.