Wealthy Entrepreneur-Turned-Yugoslav Leader Accused of Loan Default With PM-Yugoslavia, Bjt
LOS ANGELES (AP) _ Milan Panic, the U.S. entrepreneur taking over as Yugoslavia’s prime minister, defaulted on an $8.4 million loan, according to a lawsuit filed by the federal savings and loan liquidation agency.
But as the Serbia-born American prepares to begin his new job in the war- torn country today, his lawyer portrayed him as a victim of a developer who has been imprisoned for fraud.
″He is like the last guy at the end of the row, being left holding the proverbial bag here,″ lawyer Jonathan Klar said in a telephone interview Monday.
The Resolution Trust Corp. lawsuit, filed in San Diego federal court last year, accuses Panic of stopping payments in November 1990 on a loan used to finance his purchase of a motel in a San Diego suburb.
The RTC inherited the loan from Progressive Savings Bank of Alhambra, which was seized in May 1991.
Panic, who built a pharmaceutical empire in Orange County after fleeing communism, contends he was bamboozled 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 five-year sentence in the Lompoc Federal Prison Camp for bankruptcy fraud. He did not immediately return a telephone call on Monday.
Panic (pronounced PAHN-ish) 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.
Klar said Carroll agreed to lease back the motel for 20 years, paying Panic more than enough to cover the loan payments, upkeep and other costs. ″It was a typical real estate investment that on paper made sense,″ Klar said.
But while Carroll guaranteed the lease with a financial statement indicating a $25 million net worth, he in fact was insolvent and filed for bankruptcy protection a few months later, Klar said.
Klar’s law firm, sparring with the RTC, 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 in late December 1985. He filed Chapter 11 bankruptcy papers in May 1986.
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, adding that the RTC would like to settle the case through arbitration instead of trial.
Panic did not return telephone calls placed Monday through his company in Costa Mesa, ICN Pharmaceuticals Inc., and through an aide in Yugoslavia.
He was in Yugoslavia for a confirmation vote today by Yugoslavia’s Serb- dominated parliament.
Klar said Panic believes the case will be settled soon through arbitration. Neither he nor Shields would describe proposed settlement terms.
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 some drugs and that misused corporate assets.
Without admitting guilt, ICN twice settled Securities and Exchange Commission lawsuits. ICN’s directors forced him to reimburse the company $123,000 in 1979 after shareholders sued over such things as personal use of a company-owned jet and house in Lake Tahoe.