By Clarence Cromwell
The former owner of now-defunct Saratoga Savings and Loan could get 30 years in prison and fines of up to $1 million following his conviction for fraud and other charges.
Jess A. Rodrigues was found guilty on 19 counts by federal jurors in San Jose, U.S. Attorney Michael Yamaguchi announced March 18.
Rodrigues cashed a tax return belonging to the San Jose-based thrift in 1992, accepted property illegally during the 1980s and tried to cover up some of the transactions, Yamaguchi said.
In a June 10 forfeiture hearing, U.S. District Judge Ronald M. Whyte could confiscate millions in property and cash already seized by court order. The 1989 Financial Institution Reform, Recovery and Enforcement Act lets the federal government seize personal assets if they're found to be proceeds of white-collar crime, said Stephen Katsanos, a spokesman for the Federal Deposit Insurance Corp.
The judge will consider funds from two Santa Cruz County houses sold by court order, a Monterey County house held by a court order until the forfeiture hearing, $2 million in cash now safeguarded by the U.S. Marshal, a promissory note for $916,000 guaranteed by the deed of trust on a Modesto hotel, and a diamond, the value of which is unreported in court papers.
Sentencing is set for June 24 before Judge Whyte.
Five of the counts stem from Rodrigues' taking a $3.4 million tax refund in 1992 that belonged to Saratoga Savings. Federal regulators had dissolved the thrift two years earlier because it was on the verge of insolvency. Four of the counts stem from misappropriation of the tax refund, including bank fraud, embezzlement, bank larceny and impeding the function of the Resolution Trust Corp., according to court records.
The jury additionally found that Rodrigues violated an order by the Office of Thrift Supervision removing him from the savings and loan association and barring him from participating in its activities or those of its parent company, California Housing.
The remaining 14 counts relate to four real-estate transactions that took place when Rodrigues was operating Saratoga Savings and Loan. The deals brought him $1 million in cash and land that he hid from regulators between 1985 and 1989, Yamaguchi said.
For those actions, jurors found Rodrigues guilty of 12 counts of corrupt or fraudulent receipt of property and of two counts of lying to federal regulators in 1987 and 1989.
The federal Office of Thrift Supervision placed Saratoga Savings in regulators' hands in November 1989. The Resolution Trust Corp. ran the association until its assets were liquidated in May 1990. The liquidation is unrelated to the criminal charges against Rodrigues.
Saratoga Savings was on the verge of failing in 1989, said Bill Fulwider, spokesman for the thrift supervision office, because the institution wrote numerous "unsafe and poorly underwritten nonresidential loans" and engaged in "risky equity investments." The association got into trouble when many borrowers defaulted on the loans.
"That was the problem at a lot of these institutions in those days," Fulwider said.
Congress created the Resolution Trust Corp., the federal savings-and-loan bailout agency, in 1989 to clean up 262 failing thrifts around the country. Saratoga Savings and Loan, more stable than some associations, wasn't among those initially bailed out by the RTC, but came into the picture three months later.
Saratoga Savings' deposits were transferred to Pacific Western Bank. The RTC refunded depositors' money by selling its assets and using federal funds to cover the difference. In total, taxpayers contributed $30 million to cover a shortfall in refunds to Saratoga Savings' depositors.
Saratoga Savings and Loan was not affiliated with the National Bank of Saratoga.
This article appeared in the Saratoga News, April 10, 1996.
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