Swindler’s Testimony Shrugged Off : 2 Former S&L; Owners Unworried by Ties to Convicted Broker

Former owners of two defunct Orange County savings and loans said Tuesday that they have nothing to fear from a twice-convicted bank swindler who has agreed to testify about allegedly phony deals he had with their thrifts.

Charles J. Bazarian Jr., an Oklahoma loan broker already serving a two-year term for a 1987 bank fraud conviction, is expected to plead guilty today in Oklahoma City to charges he defrauded the two S&Ls; and the U.S. Department of Housing and Urban Development.

He is also implicated in pending civil racketeering suits brought by regulators against the owners of American Diversified Savings Bank in Costa Mesa and Consolidated Savings Bank in Irvine. Bazarian is a defendant in the Consolidated suit.

The FBI said Tuesday that its criminal bank fraud and embezzlement investigations into the failures of the two S&Ls; are still pending. A spokesman would not elaborate further on the probe.

Regulators declared both S&Ls; insolvent and seized them in 1986, closing tiny Consolidated later that year. American Diversified, a complex operation with interests in everything from real estate syndicates to ethanol plants, grew to $1 billion in assets before its collapse. Regulators closed it in June, 1988, refunding a record $1.14 billion to insured depositors.

Ranbir S. Sahni, who owned 96% of American Diversified, said he had no deals with Bazarian, though documents in the civil litigation indicate he turned to Bazarian in late 1985 when he needed help propping up his S&L;’s sagging net worth.

“I don’t have anything to worry about with Bazarian,” said Sahni, who operates a real estate business in Huntington Beach.

Robert A. Ferrante, who was sole owner of Consolidated, also does not expect Bazarian to say anything that could damage the Newport Beach businessman further, said Ferrante’s lawyer, Brian C. Lysaght.

“We know of no facts that would suggest any type of criminal culpability on the part of Mr. Ferrante and, therefore, would not expect any criminal action,” Lysaght said.

In the civil suit against Ferrante, Bazarian and 34 other defendants, regulators claim that Consolidated exceeded its authority in lending $9 million to C.B. Financial Corp., Bazarian’s wholly owned firm that was used to broker loans at S&Ls; throughout Texas, Oklahoma and California. The loans were made even though Bazarian had been convicted in 1980 of five counts of mail fraud, the suit states.

Those same loans--a $6-million loan secured by C.B.’s interest in seven mortgages and a $3-million loan secured by investor notes and letters of credit from C.B.’s limited partners--are part of the criminal charges filed Monday against Bazarian. Prosecutors claim Bazarian knew that the security for those loans was worthless.

In addition, the criminal and the civil allegations include similar claims that Bazarian transferred part of the money he received from Consolidated to a Texas limited partnership in which Ferrante had an interest.

Lysaght said Bazarian came to Consolidated; Ferrante didn’t seek out the loan broker.

Likewise, the criminal charges against Bazarian track allegations in documents that are part of the civil suit regulators have filed against Sahni.

In December, 1985, American Diversified purchased $15 million in fraudulent investor notes that Bazarian knew to be worthless as part of a secret agreement in which Bazarian would, in turn, buy $3.85 million in promissory notes held by the S&L;, according to the criminal complaint and information in the civil litigation.

At the time, regulators questioned the value of the notes, forcing Sahni to face a major devaluation in the S&L;’s assets. To prove the value and bolster American Diversified’s net worth, Sahni “sold” some of the notes to Bazarian to establish their value, according to the civil litigation.

$10 Million Recovered

Since the takeover of American Diversified, regulators and Sahni have been engaged in a court war involving a number of lawsuits and bankruptcy proceedings. Regulators have recovered about $10 million so far, but legal fees for litigating against Sahni and for unraveling a business debacle that included complex deals with little or no documentation has cost regulators more than $12 million.

The litigation against Ferrante has reached the settlement stage, Lysaght said, with court conference scheduled Thursday. In the past year, he said, lawyers have been concentrating on selling Consolidated’s assets, including $13 million in loans on a 157-acre former hazardous-waste dump in Carson.

Ferrante, who regained control last year of the bankrupt company that owns the Carson dump, has reached an agreement to sell the site for $48 million, Lysaght said, and will ask the U.S. Bankruptcy Court in Santa Ana on Sept. 26 to send out details of the proposed sale to the company’s creditors for their approval.

The sale would give Consolidated $28 million, more than doubling the S&L;’s loans on the property, and would help regulators to eliminate the S&L;’s total loss, the lawyer said. The loans, which had been a primary cause for the regulatory takeover, had violated a number of federal regulations, according to the civil lawsuit.

As a result of the sale, Lysaght said, the racketeering suit “is going to settle and settle quickly.”

THRIFT OWNERS NAMED IN RACKETEERING SUITS

Here is a summary of the accusations against Ranbir S. Sahni, who owned 96% of American Diversified Savings Bank in Costa Mesa, and Robert A. Ferrante, who was sole owner of Consolidated Savings Bank in Irvine:

Ranbir S. Sahni

Regulators say Sahni and others :

--Mismanaged American Diversified Savings Bank in Costa Mesa, wasting its assets and leading it into insolvency.

--Violated a series of federal regulations and orders, including a requirement to increase the S&L;’s capital base.

--Inflated the sales prices of at least two real estate properties, illegally obtaining a $500,000 kickback.

Robert A. Ferrante

Regulators say Ferrante and others:

--Flagrantly violated laws and regulations in a series of transactions that benefited Ferrante and his associates at the expense of Consolidated Savings.

--Approved eight loans amounting to more than seven times the S&L;’s net worth and more than 38% of its total assets.