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Internal Bank Board Probe Finds ‘No Criminal Activity’

April 1, 1988

WASHINGTON (AP) _ The federal agency that regulates savings institutions said Thursday that an internal investigation has found no criminal activity by a subsidiary agency that manages property from bankrupt S&Ls.

However, the report, by Federal Home Loan Bank Board Inspector General Paul Gibbons, did reveal ″ineffective business practices″ by the Federal Asset Disposition Association.

The investigation was requested in September by Rep. James Florio, D-N.J., after a critic of FADA complained that he was being investigated by a private detective.

William T. Juliano, a Mount Laurel, N.J., developer who was threatening a lawsuit against FADA, charged that the agency, through its law firm, hired a detective agency to probe his financial affairs.

Juliano, according to Florio, reported that his office was broken into on Sept. 14 and that eavesdropping equipment was found in the ceiling.

Gibbons, however, said New Jersey State Police had found no evidence of wiretapping at Juliano’s office and local police had closed their break-in investigation for lack of evidence.

Jon Shure, a spokesman for Florio, said the congressman had just received the report and had not had a chance to review it.

But, he added, ″We are still pursuing our own look into FADA. It is still very much a live issue. Nothing would be in that report that would make us say, ’OK we’re not interested in FADA anymore.‴

Shure said there has been no result reported from a parallel investigation of the charges by the Justice Department. He said Florio has asked Congress’ investigative arm, the General Accounting Office, to review the bank board report.

Karl Hoyle, a bank board spokesman, said the report made no judgment about the propriety of hiring a private detective agency, whose investigators in questioning Juliano identified themselves as representing a firm selling credit card.

Hoyle said the detective agency was hired without the knowledge of bank board officials and that the board subsequently directed that no investigators be hired without its permission.

The bank board report also found no evidence to support allegations leveled by two others: Pasquale Verona, a Fort Myers, Fla., real estate investor, and Joe R. Dobson, a Austin, Texas, developer.

Verona charged that FADA officials offered him a bribe, in the form of a consulting fee, if he would back off from complaints he made to members of Congress about the agency.

Dobson, according to Florio, said his office was broken into and ransacked after he told FADA officials he had secretly taped his conversations with them.

Members of Congress, real estate investors and others have criticized FADA for being too sluggish in selling property from bankrupt S&Ls, thus depriving the cash-short federal fund that insures S&L deposits of money. They have said the agency is riddled with conflicts of interest and wastes money.

Among the poor business practices acknowledged by the bank board report were failure to return telephone calls to investors interested in buying property managed by FADA and poor dissemination of bidding information.

The House Banking Committee, meanwhile, has been preparing its own, broader report on FADA, which according to an industry newsletter is being held up by the committee chairman, Rep. Ferdnand G. St Germain, D-R.I.

The March 28 issue of Bank Letter cited unidentified sources who said St Germain, in the wake of a federal court ruling that raised questions about congressional immunity, feared the highly critical report might draw a slander suit.

Congressional sources, who spoke on condition of anonymity, confirmed the newsletter’s account adding that Republicans on the committee were blocking publication of the report in the Congressional Record, which would be immune to a libel suit.

Rick Maurano, an aide to St Germain, said the congressman was unavailable Thursday evening to comment on the FADA investigation. House Banking Committee aides did not return telephone calls on the subject.

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