The top lawyer of the Federal Asset Disposition Association, whose real estate deals are being investigated by the FBI and the Justice Department, will resign his government job and give up his six-figure government salary Nov. 1.
FADA chief counsel Robert Axley yesterday confirmed that he told the government 10 days ago of his decision to "return to the private sector." The decision has not been publicly announced.
Officials at the Federal Home Loan Bank Board, the federal agency that regulates the savings and loan industry and that owns and operates FADA, said Axley was leaving for personal reasons.
Axley said yesterday that his departure was unrelated to the Justice Department investigation and that he had planned to stay in government only a year or two. Axley joined FADA 18 months ago.
Axley said the only contact he has had with Justice Department investigators was a telephone call he made offering to answer any questions they might have about his real estate transactions in Texas.
The Justice Department has launched a massive investigation into allegations of bank fraud and embezzlement among scores of S&L and real estate executives in Texas.
Among the transactions involving real estate bought and sold by S&Ls that have since failed are several connected to Axley and his long-time business partner, Richard Strauss.
Strauss is the son Robert Strauss, former chairman of the Democratic Party and a lead partner in the Dallas law firm of Akin, Gump, Strauss, Hauer & Feld.
FADA and Akin, Gump gained national attention two weeks ago when congressional investigators learned that the law firm had hired private detectives on FADA's behalf to probe a New Jersey man who has been publicly critical of FADA.
House Banking Committee Chairman Fernand J. St Germain (D-R.I.) is conducting an investigation of FADA, and Rep. James Florio (D-N.J.) has asked the Justice Department to determine if FADA broke any federal law when federal funds were used to hire detectives to investigate a private citizen critical of the government.
FADA was chartered by the Federal Home Loan Bank Board in 1985 with $25 million in federal funds. It is owned by the bank board, the federal agency that regulates the S&L industry.
FADA's purpose is to sell property and other assets the government inherits from failed savings and loans, but real estate developers and several congressmen say the government unit is riddled with conflicts of interest and self-dealing and, instead of bringing efficiency to the government's task of selling property on behalf of taxpayers, adds another layer of cost and red tape to the job.
In a statement inserted into the public record yesterday, St Germain said that "Mr. Axley's departure is long overdue."
St Germain said that Axley failed to file a financial disclosure form with FADA until Jan. 26 -- 10 months after he joined FADA. He also criticized Axley for failing to tell the bank board about his involvement with a loan from an Arkansas S&L that failed a year ago and was assigned to FADA to manage.
St Germain said his investigators also found that Axley limited his liability in several business deals that borrowed money from three S&Ls that have since failed. At least four real estate deals tied to Realty Development Corp., a company that was owned in part by Axley and Richard Strauss and then sold to a Texas S&L, "have resulted in significant losses for the S&Ls which provided funds" for the transactions, St Germain said.
Axley declined to comment directly on St Germain's charges yesterday, saying he had not yet seen the congressman's statement.
During an interview last week, Richard Strauss said that his father's firm, Akin, Gump, counseled Realty Development on all the company's real estate transactions. Axley said that while Robert Strauss is "my friend," FADA hired Akin, Gump only on the basis of merit.
Axley's salary at FADA is $145,000. He also received a $19,000 bonus for the 9 months he worked in 1986.
St Germain and other members of the House Banking Committee are also angry that FADA used federal funds to pay Akin, Gump for advice "on how best to deal with the Banking Committee's inquiry" into allegations of mismanagement and possible self-dealing at FADA.
FADA paid the legal bill with fees from the financially strapped federal fund that insures deposits at S&Ls. Congress recently approved a $10.8 billion bailout plan for the deposit insurance fund.