Express America got out of the mortgage business 10 months ago, but it is still dealing with some leftover issues.
The Phoenix company has been slapped with a lawsuit by the Resolution Trust Corp., charging that Express America conspired with other defendants to buy a failed thrift's mortgage unit for less than what it was worth.
Express America, which has shifted its focus to managing mutual funds, will try to settle the matter out of court, said James Hennessy, senior vice president. He declined to comment further.
The complaint against Express America was filed Dec. 8 in the U.S. District Court for Arizona. It was one of the federal agency's final housekeeping items. Set up in 1989 to dispose of assets of failed thrifts, the RTC is closing its doors on Dec. 31.
The RTC maintains that two of its own financial advisers - Rauscher Pierce Rafsnes Inc. and Smith Barney - colluded with Express America to fix the bidding on Wesav, the mortgage subsidiary of defunct Western Savings and Loan Association.
Express America won the bidding for the unit in 1991. The RTC claims the sale price of $25.6 million was $15 million less than market value.
The RTC had hired Smith Barney to oversee the sale of mortgage assets from failed thrifts. Smith Barney, in turn, recommended Rauscher Pierce as a co-broker for the Wesav sale.
The suit alleges that Rauscher Pierce and a senior executive, Robert W. Brown, misled the agency throughout the bidding to sell Wesav. Mr. Brown was in charge of the bidding process.
Smith Barney and Rauscher withheld information about bids that were higher than Express America offered, the RTC alleged.
A spokeswoman at Interregional Finance Group of Minneapolis, Rauscher's parent company, said the suit lacks merit. She said the firm will defend itself and Mr. Brown vigorously.
A spokesman at the RTC said the agency does not comment on pending litigation. A Smith Barney spokeswoman.
