Downey Financial Corp.'s lead subsidiary is being sued by a California county government agency for allegedly cheating an 80-year-old widow out of a large portion of her husband's estate.
In a jury trial that started last week in Santa Clara County Superior Court, the agency accused the manager of Downey Savings' Los Altos, Calif., branch of "unduly influencing" Terry Mosher to name him executor of her estate.
The Santa Clara County Public Guardian's Office, which manages conservatorships and guardianships for disadvantaged people such as the elderly, is seeking nearly $11 million in punitive and general damages against the thrift, court papers said.
The county alleges that Downey Savings violated the California Elder Abuse Act, a state law aimed at preventing caretakers and health-care professionals from cheating elderly people out of their savings.
The suit says branch manager Mark Asplund persuaded Ms. Mosher, who was an alcoholic and had Alzheimer's disease, to transfer nearly $300,000 into accounts in which he and his wife were co-signatories.
In addition, Ms. Mosher paid off a $41,000 line of credit for Mr. Asplund's parents and transferred $70,000 to his family, court papers said.
Mr. Asplund and Ms. Mosher became acquainted in the early 1990s. After her husband died in 1992, Ms. Mosher began to rely on Mr. Asplund's financial guidance. Ms. Mosher died in 1995.
Downey refused to comment on the case; Mr. Asplund, who is on personal leave from the thrift, was unavailable. But in papers filed with the court they denied any wrongdoing.
Newport Beach, Calif.-based Downey became a target of the suit by "failing to take reasonable and timely steps to determine the likelihood of its liability to Terry P. Mosher, by failing to terminate ... Mark Asplund for his misconduct, and by failing to return the money," the suit says.
The county government says Downey Savings should have taken action against Mr. Asplund in 1994, after being alerted to the problems with Ms. Mosher by the Santa Clara County district attorney.
The suit is expected to be decided "within several weeks," according to a Santa Clara County official.
Judy Julian, a spokeswoman for $6 billion-asset Downey, said that Santa Clara Superior Court Judge Joseph F. Biafore, who is presiding over the case, asked those involved not to speak to the press.
"The case is being tried, and the facts need to come out," Ms. Julian added.