WASHINGTON - An administrative law judge has recommended throwing out Office of Thrift Supervision charges against a prominent industry consultant who served on the board of directors of a Florida thrift.
Arthur L. Shipe, the administrative law judge, said in a July 13 opinion that Donald M. Kaplan, by serving as a director of both American Savings of Florida and its parent company, the Enstar Group Inc., had put himself in "a troubling situation."
But the thrift agency had failed to show that Mr. Kaplan knew about the illegal shifting of $38.3 million from the thrift to another Enstar subsidiary in 1990, the administrative law judge said.
"Needless to say, I'm thrilled beyond words," said Mr. Kaplan, managing director of Washington-based Kaplan Associates Inc., a top mergers and acquisitions advisory firm.
The thrift agency charged Mr. Kaplan with breaching his fiduciary duties and engaging in unsafe and unsound practices. It asked for a $250,000 fine and $18.6 million in restitution to the thrift. The government also sought to ban Mr. Kaplan from working for a bank or thrift.
Mr. Kaplan, a former chief economist for the Federal Home Loan Bank Board, is not entirely in the clear. Jonathan Fiechter, acting director of the OTS, will decide within a couple of months whether to accept the administrative law judge's recommendation.
In June 1990, Enstar Specialty Retail Inc. - a shoe and clothing retailing subsidiary of Enstar - was short of money, and Enstar management proposed pledging the company's stock in return for cash from American Savings. Mr. Kaplan and other Enstar board members approved the plan, but Mr. Kaplan warned against transferring any money without OTS approval.
Management of Enstar and American Savings, however, moved $38.3 million from the thrift to the retailer without approval from the board or the agency.
In January 1991, Enstar Retail filed for bankruptcy. The parent company followed suit that May. The total loss to American Savings, which is now in the process of being acquired by First Union Corp., was $24.7 million.
American Savings chief executive Harris Friedman and Enstar chief executive Richard Grassgreen both have settled with the OTS and paid restitution to the thrift, as has the thrift's law firm, Kirkpatrick and Lockhart.