S&L Liquidation Agency Lawsuit Targets Millionaire Yugoslav Premier- to-Be With AM-Yugoslavia
LOS ANGELES (AP) _ As a California capitalist, Milan Panic made millions. But American regulators regard Yugoslavia’s prime minister-designate as a deadbeat who defaulted on an $8.4 million loan.
The Resolution Trust Corp., the agency that inherited the wreckage of failed savings and loans, filed a lawsuit in San Diego federal court last year accusing Panic of stopping payments in November 1990 on a loan used to finance his purchase of a motel in a San Diego suburb.
The Serbia-born American, who built a pharmaceutical empire from scratch in Orange County after fleeing communism, contends he’s not liable. The loan was made by Progressive Savings Bank of Alhambra, seized in May 1991.
Panic said he was hoodwinked by developer Richard J. Carroll, who sold him the 233-room Budget Motel in Mission Valley in 1985. Carroll, who built the motel, is serving a prison term for bankruptcy fraud.
Panic (pronounced PAHN-ich) becomes prime minister of war-shattered Yugoslavia on Tuesday.
Panic inherited the $8.4 million loan, now swelled to $9 million with back interest and penalties, when he bought the motel and a similar one Carroll had built in nearby Encinitas.
One of Panic’s lawyers, Jonathan Klar, said Carroll agreed to lease back the motel for 20 years, paying Panic enough to more than cover the loan payments, upkeep and other costs. ″It was a typical real estate investment that on paper made sense,″ Klar said.
There was just one problem - Carroll personally guaranteed the lease with a financial statement indicating a $25 million net worth, Klar said.
As it turned out, ″Carroll was about bankrupt, he was insolvent at the time,″ Klar said.
In wrangling over the Resolution Trust lawsuit for the past seven months, Klar’s law firm contends that officials of Progressive Savings must have known of Carroll’s severe financial problems and concealed them from Panic.
In any case, Carroll never made a single rent payment after closing the sale of the motels to Panic in late December 1985. He filed for Chapter 11 bankruptcy protection in May 1986.
″Panic was nothing more than a victim from Day 1,″ Klar said.
Carroll, serving a five-year sentence in Lompoc federal prison, did not immediately return a telephone call seeking comment.
RTC spokesman Kevin Shields said Panic’s reasons for defaulting were legally insufficient. Shields said the motel was worth far less now than the amount owed, but added that the RTC would like to settle the case through arbitration instead of trial. He wouldn’t describe settlement offers.
Panic, of Pasadena, didn’t return telephone calls placed Monday through his company in Costa Mesa, ICN Pharmaceuticals Inc., and through aides in Yugoslavia.
Panic, who defected in 1955, is lionized by anti-communists in Yugoslavia for his mastery of market economics. ICN, which he founded in 1960 with $200, became a $460 million international drug company. He earned $6 million in salary and benefits in 1991.
Along the way, critics - including shareholders and securities regulators - have contended he was too aggressive in promoting drugs like L-dopa and ribavirin, and misused corporate assets.
Klar said Panic believes the Resolution Trust lawsuit will be settled through arbitration. He said Panic put up at least $1 million in cash when he bought the motel.