Ex-Official of Thrift Guilty of Tax Evasion

A former Columbia Savings & Loan executive has been convicted of tax evasion for failing to report $200,000 in “hush money” allegedly paid to him by an Orange County businessman accused of defrauding more than $11 million from the Beverly Hills thrift, federal prosecutors said.

A federal jury Thursday convicted Gilbert Fuentes, 59, of San Diego after a three-day trial. He faces up to five years in jail and a $250,000 fine.

He was Columbia’s chief financial officer from 1979 to mid-1985.

Prosecutors said Fuentes received a $200,000 check from Newport Beach businessman Michael Parker in return for keeping quiet about an alleged equipment leasing fraud in which Parker and another Columbia Savings officer are facing trial.

Parker is accused of paying $1.5 million in kickbacks to Jeffrey S. Worthy, a former Columbia financial planning director. Both men have pleaded not guilty to charges including racketeering, money laundering, and bank and tax fraud.

“Once he had the ($200,000), Fuentes never reported the illegal kickbacks to Columbia or any criminal or regulatory authorities,” Assistant U.S. Atty. James R. Asperger said. “From a tax standpoint, whether it’s a settlement of business or legal disputes or hush money, it’s taxable.”

Fuentes was Worthy’s boss until Fuentes resigned from Columbia in July, 1985, to join a Parker-owned company, PNA Investment Corp.

Parker was chairman of Parker North American Corp. in 1989 when the company--which has since filed for bankruptcy reorganization--sold Columbia $166 million worth of leasing packages, in which Columbia bought office equipment such as computers and leased it back to users. Federal investigators allege that some of the leasing packages were bogus.

Fuentes allegedly wrote a letter to Parker in June, 1986, saying he knew of the kickback payments to Worthy and demanded $400,000 to remain silent.

Fuentes “immediately got Parker’s attention,” Asperger said. In just a few days, Parker paid Fuentes $200,000.

This “hush money,” Asperger said, plus $33,000 in salary Fuentes received from PNA Investment--which was also not reported to the Internal Revenue Service--would have raised his 1986 tax bill by about $80,000.

Fuentes’ attorney, federal public defender Dennis Landin, contended that the $200,000 was not “hush money.” He said the jury convicted Fuentes solely on his failure to pay taxes on $33,000 in salary he received from PNA Investment.

Parker, 43, and Worthy, 33, are scheduled to go to trial Sept. 3.

Meanwhile, Texas businessman Connie C. Armstrong Jr. resigned Friday as chairman and chief executive of Parker Automotive Corp., a auto-engine cleaning products company founded by Michael Parker. Armstrong and Parker have been struggling to control the Costa Mesa company.