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Florida Federal's fraud trial delayed

Florida Federal Savings Bank's trial on fraud charges, slated to begin in Tampa next week, was delayed because the prosecutor handling the case, Charles Truncale, is ill. Senior U.S. District Judge Ben Krentzman granted the postponement until April 2. The delay was not opposed by Florida Federal's attorneys. Florida Federal and two former executives were accused last September of filing false documents in an attempt to collect reimbursements from the U.S. Department of Education on student loans Florida Federal made that later went into default. Florida Federal collected $18-million from the government before further reimbursements were halted in 1987, after the thrift discovered the violations.

Last year, it set aside $28-million in reserves to cover potential losses from the student loan problem.

However, if Florida Federal fails to negotiate a settlement or is hit with damages in court that exceed its loss provision, it would likely be taken over by federal banking regulators. The thrift is in violation of all the new standards of financial strength required under the savings and loan bailout Congress approved last summer.

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