1045 Preliminarily, it appears TELS System and FDIC examiners are currently ascertaining Lincoln to its subsidiaries or to ACC. the extent of any illegal or fraudulent transfers of assets fros that the instances of potential fraud cited in the media and on contained in our current examination. The FELB System examiners assigned to Lincoln Savings up to the time we placed it inte which referrals were previously made resulted from findings transfers among other items to try to immediately alert us to any conservatorship were directed to monitor the institution's wire funding program in place is adequate to ensure Lincoln Saving's Inappropriate activities. liquidity. In the meantime, we believe the Again, we will be happy to further discuss this situation with you and your committee. very truly yours, Laclosure M. Danny Wali Chairman 2628 INVESTIGATION OF LINCOLN SAVINGS & LOAN ASSOCIATION HEARINGS BEFORE THE COMMITTEE ON BANKING, FINANCE AND HOUSE OF REPRESENTATIVES ONE HUNDRED FIRST CONGRESS FIRST SESSION PART 3 OCTOBER 31 AND NOVEMBER 7, 1989 Printed for the use of the Committee on Banking, Finance and Urban Affairs 206 For sal U.S. GOVERNMENT PRINTING OFFICE WASHINGTON : 1989 Office WHEREAS: Pursuant to Section $152 of the California Financial Code ("CC"), the Commissioner of the Department of Savings and Lan, State of California (the "Commissioner"), has received information resulting from the examinations of the practices and operations of Lincoln Savings and Loan Associati ("Lincoln") and American Continental Corporation (ACC). ("Lincoln" and "ACC shall be understood to include all of their subsidiaries unless & contrary meaning is apparent.) Included in the information received by Commissioner were the following facts: 1. Lincoln is authorized to operate California savings and 100 association under the supervision of the Commissioner: 2. ACC, an Ohio corporation, is a registered Savings and Loan Holdin Company of Lincoln under the supervision of the Commissioner: 3. Charles R. Keating, Jr., is chairman of the board of directors of ACC owns 22% of its stock, and is a director of a number of subsidiaries of Lincoln; and 4. Charles R. Keating III is executive vice president of and owns 13% N the stock of ACC, and is an officer and/or director of a number of ACC's subsidiaries, including Lincoln and its subsidiaries. ommissioner finds Based on the above-referenced examinations and reports, the that the following practices and operations, when taken as a whole, result in Lincoln and ACC engaging in unsafe and unsound business practices. Transaction with Affiliated Persons Through its subsidiary), Lincoln funded a $20 million unsecured loan to a limited partnership (Hotel Pontchartrain Limited Partnership, hereinafter "Pontchartrain"), of which another Lincoln subsidiary was the only general Phoenician Financial Corporation, a wholly-owned subsidiary of Lincola, incorporated in California. 2 The Crescent Hotel Group of Michigan, Inc., a wholly-owned 2nd tim subsidiary of Lincoln, Incorporated in Nichigan. INVESTIGATION OF LINCOLN SAVINGS & LOAN ASSOCIATION. HEARINGS BEFORE THE COMMITTEE ON BANKING, FINANCE AND URBAN AFFAIRS HOUSE OF REPRESENTATIVES ONE HUNDRED FIRST CONGRESS FIRST SESSION PART 1 OCTOBER 12 AND 17, 1989 Printed for the use of the Committee on Banking, Finance and Urban Affairs Serial No. 101-59 LINCOLN SAVINGS AND LOAN OF CALIFORNIA Fritts, Paul, Head of Supervisory Operations, Federal Deposit Insurance Cor- Prepared statements: Fauntroy, Hon. Walter E.. APPENDIX Gonzalez, Hon. Henry B.. Seidman, L. William ADDITIONAL Material SubMITTED FOR THE RECORD American Continental Corporation and Lincoln Savings & Loan Association, background information 286 American Continental Corporation: Officers and directors salaries.. 290 Subsidiaries organizational chart.. 304 Kaptur, Hon. Marcy, letter from a holder of defaulted ACC bonds...... 323 Lincoln Savings & Loan Association: Cash upstreamed by American Continental (ACC) through alleged tax scheme.. 293 Financial profile. 294 Selected financial data. 292 Phoenician Resort: Information and rate schedule. 305 (m) |