Ousted CenTrust Bank chairman David Paul, a man given to gold plated plumbing, oriental rugs and rare artworks, is facing a $30.8-million bill for what the U.S. government calls "insatiable vanity and greed." The Office of Thrift Supervision (OTS) announced Monday it wants to ban Paul from the banking industry and is asking restitution of $30.8-million he is said to have drained from Miami-based CenTrust.
The thrift was shut down in February and its bailout is expected to cost $1.7-billion.
"David Paul's extravagant lifestyle in which he enriched himself at the ultimate expense of depositors and taxpayers exceeds virtually anything this agency has encountered before," said Faith Hochberg, OTS senior deputy chief counsel. "This man even had gold leaf ceilings and gold-plated toilet pipes in his office."
That's not all. Included in the $30.8-million the agency is asking for:
$4.9-million that CenTrust gave to an executive retirement account set up primarily for Paul. The money, managed by a longtime Paul associate, is now being held overseas, OTS says.
$15-million in what OTS says is a legal defense "slush fund" to pay for lawsuits against Paul and other CenTrust directors.
$35,000 for 24-carat gold leaf ceilings in Paul's office, $1-million for his marble staircase and gold-plated pipes, faucets and sinks, $233,000 for his sailboat the Bodacious, and $2,000 for weapons and ammunition that Paul ordered.
A salary of $393,000 to Paul in October 1989, following a fiscal year in which CenTrust reported a $119-million net loss.
Losses from Paul's purchase of $30-million in paintings, oriental rugs and other expensive furnishings.
The $30.8-million in restitution wanted from Paul ranks second only to the $40-million sought from Charles Keating, who ran now-failed Lincoln Savings in California and also got five U.S. senators into ethics trouble. A regulatory hearing on the Keating case may begin early next year.
But beyond all the tough talk of the OTS officials, Paul's attorney says he may not be able to pay up. "David Paul, in my opinion, does not have $30-million," said Aubrey Harwell, his Nashville-based attorney.
The former thrift chairman is reported to be in Israel. Harwell said Paul will answer the charges made by OTS, adding, "He's certainly not going to duck his responsibility."
OTS officials said they will send their order to Paul's Miami home. They say he has until Nov. 1 to pay the $30.8-million or post a bond. Also, he has 20 days from Monday to contact OTS Chairman Timothy Ryan to argue why or why not the complete charges against him should be made public. After that, a date would be set for his case to go before an administrative judge.
CenTrust, once the Southeast's largest thrift, was purchased by Great Western Financial Corp. on June 29. Florida Comptroller Gerald Lewis already has obtained an agreement from Paul that bans him from the financial industry in the state of Florida, a spokesman said.
Earlier this year, the St. Petersburg Times reported that federal thrift regulators had prepared 10 potential criminal cases for the FBI alleging that Paul may have committed fraud, securities violations and bribery. Known as criminal referrals, the documents do not indicate a full blown investigation, and no charges have been filed against Paul.
The criminal referrals alleged Paul paid a gratuity to the mayor of Miami Beach, illegally kept millions of dollars in securities in an offshore bank and strongly encouraged CenTrust employees to make campaign contributions to politicians.
Paul, CenTrust and its affiliates gave more than $328,000 to members of Congress, Gerald Lewis, and other politicians, according to a study by the House Banking Committee.