WASHINGTON - After several years of trying to negotiate a settlement with Texas businessman Charles E. Hurwitz, the Federal Deposit Insurance Corp. hit him last week with a $250 million lawsuit.
The agency charged in U.S. district court in Houston that gross negligence and breach of fiduciary duty on Mr. Hurwitz's part led to the 1988 failure of United Savings Association of Texas.
Mr. Hurwitz, now chairman and chief executive officer of Maxxam Inc. of Houston, was a major shareholder of United Savings and, according to the FDIC, "functioned as an active member of the USAT board, if not its de facto chairman."
The FDIC alleged that under Mr. Hurwitz's oversight the thrift made risky investments in junk bonds and mortgage-backed securities, and, when the investments started to go bad, covered up the losses "by a pattern of deceptive financial reporting and balance sheet manipulation."
United Savings' collapse, one of the biggest of the 1980s' savings and loan crisis, cost the thrift insurance fund more than $1.5 billion.