News Scrapbook 1986-1988

\981

~.., .........~~t:.~s-s-

,._,..,.~:;_..,.~.,a-

...,.,..~.,..~er t!-~~•

......

·--- -,;-: .. .. ..,.,..-,,.1:~~?;3;.~~:o~ ,- .,,.~.,.. .......... 3'3,::1 0°"' "' ~~i~~ 0 "i~l\"' "'~~ -~!:I o~-5'o~"';. -~"9.. o~ ...::- jy l·s-~f~i~ ........·:~- :~~s a-

1888

/

:~, .

•

;Vo

:

..

v'.,

':

; ~-:.. _....;~~i.,:z;~

--~~;ii,~~ao~-=-:, :- 0 ... -~ ...-,:.~ ~-.;~;;,

Sunday, August 9, 1987 ~;;fi;bixori: Noted San Diegans wooed

11

,L, ~o.J?__,.

-------------, ~--

....----..,..---,

"Osuna was a gentleman's gentle- someone who was on the same social level with the owner, but handles all the financial affairs of the household," Rosenblatt said. However, court records show that even Osuna's salary was paid by Ver- man - In January, 1985, a checking ac- count was established at Vernon Sav- ings in the name of Ernest A. Osuna, entitled the Del Mar House account. Asecond account was established at Rancho Santa Fe National Bank with Dana Dixon as the signatory, accord- It was through those two accounts that almost $1 million of Vernon Sav- ings' money flowed to pay for the Dixons' living expenses in Del Mar - with Osuna writing most of the checks to cover household expenses a nd Mrs. Dixon paying for furnish- ings and home improvements. Osuna could not be reached for comment. Expenses included groceries, televisions, stereos, liquor, appli- ances, repairs, maid and cooking ser- vices, mobile telephones, utilities, pool service, gasoline, cable televi- sion, catering and flowers, court records show. Dixon and the lender San Diego's only independently owned mortgage banking company, Lenders Corp., also was dragged into Vernon's affairs when Vernon ac- quired the company in 1985 Lenders President Scott Ferguson, who cur- rently owns 50 percent of the compa- ny, said Lenders was only a subsidi- ary of Vernon Savings for less than six months. However, court records show that during that period, Lenders wa used to transfer $214,000 from Vernon Savings to an entity owned by Don Dixon personally for no considera- tion. Vernon's money then allegedly was used !licitly to pay for construc- tion on xon's personal residence in Rancho Santa Fe. Ferguson said Lenders received a request to fund the money from its parent company, "and we funded ." At the time, Ferguson believed the Dixon entity - Dondi Associates - was another subsidiary of Vernon Savings. Ferguson and his partner, James Shadlaus. bought Lenders back from Vernon on Jan. 4, 1986, for the same amount Vernon had paid for it. The multimillion-dollar Rancho Santa Fe home was never completed. ·Dixon and the old cars Dixon also used Vernon to bankroll his mterest in ant•que cars. In the spring of 1985, he caused Vernon to acquire Symbolic Cars of La Jolla Inc. On July 20, 1986, Sym- bolic conducted an auction of vintage cars. FSLIC has alleged the auction primarily benefited Dixon, who per- sonally sold eight cars for $1.8 mil- lion - roughly 80 percent of the sales proceeds from the entire auction. Symbolic incurred a net loss from the auction of more than $200,000. Dixon and the beach club Dixon and Vernon Chairman Wood, Lemons Jointly owned a con- dominium complex in Encinitas known as the Moonlight Beach Club. The FSLIC has alleged that Dixon and Lemon abused their positions of authority at Vernon by requiring cer- tain borrowers to jom the Moonlight Beach Club in exchange for loans from Vernon Savings. The borrowers non Savings and Loan. ing to court records.

Continued from 1-1

~

ience because he had ousiness in Rome and in Dublin, Ireland. Eagen said he accompanied the bishop be- It was during this 1985 trip that the bishop introduced Dixon to the Pope. Dixon and his third wife, Dana, gave the pontiff a $40,000 painting from :lV!ngs' collection of West- ern art. IL was titled, "Night Sentry," by El Cajon artist Olaf Wieghorst, and now hangs in the Vatican Muse- um, according to the diocesan news- paper, The Southern Cross. The FSLIC has been attempting to find several pieces of art missing from Vernon's collection that appar- ently were given to borrowers and lenders, court records show. Dixon and the developer Douglas Manchester nearly was taken advantage of in a complicated transaction with Dixon's Vernon in- volving the Hotel Inter-Contmental and some money-losing Texas condo- miniums, court records show. Adding to Manchester's embar- rassment is the knowledge that the Hotel Inter-Cont '1ental now has had relationships with two bankrupt lenders - Beverly Hills Savings and Vernon Savings. In January 1986, a Vernon Savings subsidiary bought what is effectively a 5 percent equity interest in Man- chester's troubled hotel for $19.8 mil- lion. In October 1985, the failed Beverly Hills Savings had agreed to write off $20 million of an earlier $30 million loan to the hotel, but required Man- chester to $17 million of his own money into the hotel project. With the Vernon capital contribution made less than three months later, Manchester was able to pull out his personal equity. One source close to the investiga- tion into the Beverly Hills Savings' failure noted that the FSLIC had al- ready had one $20 million loss from Manchester's loans. and if the Hotel Intercontinental failed now, the FSLIC would lose another $19.8 mil- lion on Vernon's interest. "I didn't ruin Beverly Hills Savings and I didn't ruin Vernon. It's not our fa.ult that two of our lenders went bank upt,'' Manchester said, adding that it has become more difficult to deal with the FSLIC, which is now his business partner on two Hotel Inter-Continental transactions. Manchester's hotel financing was supposed to be packaged in a part- nership with a number of money-los- ing Texas condominiums on which Vernon Savings allegedly had made phony loans in the past. The deal al- legedly was designed by Dixon to save the previous borrowers from the responsibihty of repaying the in- flated loans and to eliminate the loans from Vernon's delinquency list, court records show. Manchester said he balked at buy- ing the condominiums in February 1986 when Dixon failed to send the necessary appraisals and ownership and partnership agreements in order for Manchester's company, Torrey Enterprises, to make a judgment on the properties. But before the deal was off entire- ly, Vernon sent $3.3 million to make interest payments on the condo proj- ects to La ,Jolla Pacific Savings Bank, which was owned by Manches- ter at the time. Manchester ordered Vernon cause it was his job.

M~·,t,· ,liiift:l

/R•...,.......,...._

L--.:...........

m..:..;....::...a..

a.;i;.__~_....,..

Scott Ferguson

Earl Gagosian

Hotelier burned by Vernon

ff ·

D .

Dragged into 1xon a airs

the money sent back to accounts that Vernon designated, he said. However, court records show that . "Torrey Enterprises accounts were used - whether knowingly or un- knowingly - as way stations in the laundering of this money (the $3.3 million) from Vernon Savings to illic- it accounts," said Federal Home Loan Bank Board trial attorney Charles McDonald. Manchester contends it was un- knowingly. Dixon and the politician Court records reveal that Dixon held a $7,238 campaign fundraiser for Rep. Lowery at his Del Mar beach house, took Lowery on trips on the Vernon corporate jet and held parties for Lowery's benefit on Ver- non's yacht, the High Spirits - all of which were charged to Vernon Sav- ings and Loan, court documents show. In each case, Lowery reimbursed Dixon, who he believed owned the yacht, aircraft and Del Mar home, for the amount billed. There 1s no evidence that Dixon ever repaid Ver- non the amount sent to him by Lowery for use of Vernon's assets. Lowery aide Haddad said the con- gressman "was shocked" that all his expenses were charged to Vernon Savings, including two $2,000 in-kind· contributions from Don and Dana Dixon. "We are not allowed to take corpo- rate donations. If the corporation is taking a hit (loss) on this, we may have to reimburse the corporation or our defense will be fraud," Haddad said. Dixon and the consultant San Diego thrift consultant Larry Taggart met Dixon in February 1985, and Vernon later hired the former Califorma S&L Commissioner to lobby on its behalf in Washington, D.C Taggart said he believed strongly that because of the state's disastrous economy, the Texas thrifts were under regulatory siege. If the insol- vent FSLIC received too much new capital, it would begin a wholesale closure of Texas thrifts that might be able to recover ID time on their own. So Taggart sought to defeat a pro- posed $15 billion FSLIC recapitaliza- tion bill. Congress recently passed a $10 billion plan. Both Taggart and Manchester said they believed that Dixon to some ex-

tent was a victim of circumstances. The Texas economy was hit with problems in both the agricultural and oil sectors when Vernon went down. However, the federal bank board's McDonald said the problems of the Texas economy merely uncovered the alleged fraud. "Vernon Savings would have failed whether the Texas economy went down or not. The delinquency rates in Vernon's non-Texan loans and its Texan loans were identical - 96 per- cent," he said. Dixon and publisher John N. Elliott, a former Rancho Santa Fe publisher who now sits in a London jail, charged with stealing 111,400 pounds from a British pub- lishing concern, was a "fixture" in Don Dixon's Del Mar beach house in 1985, according to former Ranch and Coast magazine publisher Richard D. Rosenblatt. And the person who was then El- liott's live-in associate, Jane Ander- son Herman, did a number of real estate deals for Dixon, according to interviews with Rosenblatt and oth- ers. In fact, through Herman, who later married Elliott, Dixon offered to ex- change Rosenblatt's Rancho Santa Fe horse farm for a group of condo- miniums in Texas. Court records show that they were among the money-losing condos Vernon was trying to unload from its delinquency lists. Rosenblatt turned the deal down. Rosenblatt said he got a glimpse into the life of the Dixons in Del Mar when he was invited to the political fundraiser for Lowery on Dec. 7, 1985. "My wife and I felt very strange about them. Everything was too lav- ish, too big. It seemed to us if they were real they wouldn't be so social- ly and politically aggressive," Rosen- blatt said. He said the relationship with the Elliotts also was disturbing to him. Dixon and the loyal aide Attached to Dixon was his major- domo. Ernie Osuna, who has been de- scribed as "a very loyal, faithful em- ployee" and a descendant of the orig- inal Osuna Ranch family, which once owned all of Rancho Santa Fe. Rosenblatt said Osuna's "old roots· were useful to Dixon.

Olaf Wieghorst's painting, "Night Sentry," formerly in the Vernon Savings & Loan collection, is now in the Vatican.

were required to pay Lemons and Dixon between $77.500 and $155,000 each to join the Club, while Dixon and Lemons paid only $2,500 each to join, court records show. Dixon and the hotelier Listed among Vernon's delinquent borrowers is San Diego hotelier Earl Gagosian's Hotel Properties Inc. of La Jolla. Gagosian's newest seven- hotel chain, the Continental Inns, was built with financing from Vernon Savings. G"gosian said Hotel Properties is hsted as a delinquent borrower be- cau though it made its payments on time, Vernon fa!led to pay the other participants on the loan Also. he said, Vernon made him assume a

$1 million liability on a building near his Sacramento hotel based on the promise that Vernon would fmance Gagosian's next five hotels. When Vernon was closed, Gago- s1an was left with a $1 milbon bab1h- ty, no title to the unde lying propert~ and a now-worthless promise to finance five more hotels He is disputing the $1 million hab1hty. "They said if you want future loans, you have to take care of our delinquent loan," Gagos1an said, add- ing that he regarded the liability as part of the "cost of domg busm ' Gagosian earlier started anotncr chain of 69 hotel~ based m San Diego called the Royal In of Amenca Royal Inns fell mto bankrupt ID the 19i0s after Gago ian's departure.

•