A St. Louis banker and publisher of the newsletter Regulatory Watchdog received a 46-month prison sentence on July 8.
Edward L. Morris, 51, was found guilty of defrauding customers who bought $10 million in junk bonds at Germania Bank in St. Louis. Mr. Morris was chairman and chief executive of Germania when it sold the bonds in 1987. Former Missouri state Rep. Steven Gardner, 46, received the same sentence. He was Germania's president when it was seized by the government in 1990.
Mr. Morris said he will appeal the decision this week and predicted that he will prevail. "I've never done anything wrong," he said. "I'm calm-about it."
Although the bonds were uninsured, federal prosecutors said Germania called the bonds "guaranteed" and marketed them to depositors looking for safe investments for retirement. In internal memos, the bank nicknamed the bonds "schnotes."
When Germania failed, the investors lost their money. The victims are not expected to recoup any of their losses.
Mr. Morris is now president of Fortune Group, a corporate finance firm in St. Louis. But he's better known in the industry as the publisher of a monthly newsletter, Regulatory Watchdog: Guarding Against Thrift and Bank Regulatory Abuse. The publication includes legal advice and updates on savings and loan lawsuits and congressional decisions.
Since Germania went bust, Mr. Morris has built a national reputation as a crusader, helping S&L officials defend themselves against government lawsuits. In addition to publishing the newsletter for the past three years, Mr. Morris has held annual watchdog conferences.
A new publisher will take over the newsletter until July 1995 when it will cease publication, said Mr. Morris. Regulatory Watchdog is winding down as the Resolution Trust Corp. nears the end of its operations.
"The sunset of the RTC will mean the sunset of the newsletter," Mr. Morris said.