DALLAS, OCT. 24 -- Federal bank regulators have filed a $560 million lawsuit against the former owner of Western Savings Association, contending he defrauded the failed thrift of at least that much money.
The Federal Deposit Insurance Corp. also accuses Jarrett E. Woods Jr. of spending $7 million of depositors' money on himself during the thrift's final months in 1986.
The lawsuit, filed Friday, is one of the largest ever filed by the government against a savings and loan owner. In March, the FDIC filed a suit for the same amount against the accounting firm of Arthur Young, which audited Western's books. The latest suit accuses Woods and Western Capital, a corporation he controlled, of engaging in fraud and violating contracts.
"The losses suffered by the institution appear to exceed $1 billion, at least $560 million of which was the preventable result of the policies and practices implemented at Western by Jarrett E. Woods Jr. and Western Capital Corporation," the suit states.
Woods is accused of using thrift money to refinance his home, funneling millions into his children's trust funds, paying off a personal loan and paying himself an $800,000 bonus and a $41,667 monthly salary.
When federal regulators closed Western in 1986, examiners found "deficient or nonexistent appraisals, inadequate loan documentation, inaccurate accounting and shoddy record-keeping," the lawsuit states.
Woods claimed the thrift was solvent and that he had tried to find solutions to the examiners' concerns. He could not be reached for comment today.