WASHINGTON - A Pittsburgh law firm and two former officials of American Savings of Florida have agreed to pay $11.2 million in restitution to settle an Office of Thrift Supervision action.

The law firm, Kirkpatrick & Lockhart, is paying $9 million of the award. It also consented to a cease-and-desist order.

A Washington-based partner, Alan J. Berkeley, agreed not to serve any federally insured depository institution in any capacity for three years, the OTS said Monday.

The two former American Savings executives agreed to be permanently banned from banking.

They are Richard Grassgreen, who was chairman and chief executive of Enstar Group Inc., which owned 50% of the Miami-based American; and Harris Friedman, the Florida thrift's former chairman and chief executive.

To Be Counted as Income

Mr. Grassgreen is contributing $1.5 million of the restitution, to be paid in five annual installments of $300,000. Mr. Friedman will pay the remaining $700,000.

American, the second-largest thrift in Florida with $3.4 billion in assets at yearend 1991, said its net receipts from the restitution will be added to its income as received.

Neither the law firm nor the individuals admitted or denied OTS charges that they caused $23 million in losses to American because of conflicts of interest in a 1990 "collateral substitution scheme." They agreed to cooperate with the agency to avoid litigation, the OTS said.

Conflict-Resolution Procedures

Kirkpatrick & Lockhart agreed to adopt procedures for identifying and resolving potential conflicts of interest in future dealings with savings institutions.

"We believe the advice we gave to our client was correct and proper," said Ronald W. Stevens, a partner with the Pittsburgh firm. "Had that advice been followed, there would have occurred no loss."

The law firm said the facts in the action don't hold up because they were already considered in a suit brought by American Savings in Florida, and were dismissed on two occassions.

Kirkpatrick & Lockhart represented Enstar from 1987 to 1990 and provided legal services to American during much of that time.

Collateral Switched for Cash

In 1990, senior officials of American and Enstar, including Mr. Friedman and Mr. Grassgreen, devised a plan to substitute collateral of unknown value from an Enstar retail subsidiary for $45 million in cash held by American, according to the OTS.

A total of $38 million was channeled to the Enstar subsidiary from American.

The collateral substitution was approved at an Enstar board meeting on June 8, 1990, but American's directors were not advised of the plan.

According to the OTS, Mr. Berkeley reviewed draft minutes of meeting, but deleted the description of the collateral substitution plan.

On the day a letter about the plan was sent to OTS, Enstar withdrew $29 million in cash from American's collateral account.

In August, when OTS informed American that the Enstar subsidiary's was not acceptable as collateral, $38 million more had already been withdrawn.

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