Ex-CenTrust Chairman Walks Out of Trial

Ousted CenTrust Savings Chairman David Paul walked out of his trial on federal civil charges Monday after lecturing the judge for 45 minutes about the proceedings, which he later called a “charade.”

The Office of Thrift Supervision, which is supervising the savings and loan bailout, is seeking $3 million in fines for Paul’s allegedly improper money transfers and his failure to comply with its orders since his thrift’s $1.7-billion failure in February, 1990.

Paul, who had no attorney at the hearing, told Administrative Law Judge Walter Alprin that he had no plans to participate and only wanted to make a 23-page statement in court.

OTS attorney Jules Kirsch said Paul’s refusal was “unique in my experience. This is brand new.”

Paul became a symbol of extravagance and abuse in the S&L; industry as a free-spending millionaire at the helm of Florida’s largest thrift. He now faces a 100-count criminal indictment over CenTrust’s collapse, expected to go to trial late next year. OTS has orders seeking $59 million in fines and restitution and has frozen his assets.

In court, Paul said: “I can only conclude that there is an agenda which this tribunal and OTS must accomplish, and you are totally and utterly without respect for the principles upon which this country was formed and the rules governing us.”

Outside court, Paul said: “This is outrageous. This is a charade. This is a media event. That’s what it is. Why should I give (it) credibility?”

After Paul’s departure, Alprin found he had committed the violations alleged.

With that issue settled, the government called a single witness to explain how the dollar figure for the fine was reached.

Calling Paul’s behavior before the trial unprecedented, OTS witness Kathryn Haney, who recommended the amount of his fine, said: “I find this situation almost a first of its kind in this agency.”

The five-count civil case seeks fines for Paul’s failure to post any part of a $31-million bond mandated by OTS, failing to turn over liquid assets and transferring $200,000 to Israel and $50,000 to an attorney.

Even if Alprin agrees with the fine amounts, Kirsch said prospects for payment appear dim.

In Paul’s criminal case, he is accused of raiding CenTrust accounts for $3.2 million in home improvements, running sham junk bond trades with junk bond king Michael Milken and Lincoln Savings’ Charles H. Keating Jr., and illicit bond dealings with the Bank of Credit and Commerce International.

CenTrust was Florida’s biggest S&L; before regulators seized control in February, 1990.