Show B Standard-Examine- r Thursday October 20 1988 Misconduct blamed for y S&L failures: WASHINGTON (AP) — Fraud and misconduct touch one of every four savings and loan instituof tions and play a part in more than all SAL failures a congressional report concludes" “The US government is now confronting a epidemic of abuse misgrowing and long-terconduct and criminality in financial institutions said the study released Wednesday by a panel of the House Government Operations Committee The problem among commercial banks is serious but not as severe the report said It linked a third ' of all bank failures to misconduct William B O’Connell president of the US League of Savings Institutions acknowledged that fraud “played a significant role” in some past S&L three-quarte- rs m failures But he maintained that the report which covered the 3‘2 years between 1984 and June 1987 “does not portray the savings institution business of to- day” “Extensive background checks are now made to of our business Those who did slip in earlier in this decade are now ’J'i gone” he said The House study comes during the worst year for failures of both banks and S&Ls since the Depression and amid congressional debate over whether taxpayers will be required to bail out the fund in suring S&L deposits Federal regulators estimate it will cost $45 billion to $50 billion to restore the savings industry to health Private analysts put the price tag as high as! $100 billion a According to Rep Doug Barnard Jr chairman of the Government Operations subconv mittee on monetary affairs recent efforts by the Justice Department to combat bank fraud have been “severely hindered” since April when department officials transferred $11 million in travel money to one of former Attorney General Edwin Meese Ill’s favored projects an task keep the crooks and high fliers out Gary The Hilton Hotel is the cornerstone project of Ogden’s 25th Street Redevelopment District ClarkStandard-Examm- er Future brighter for Ogden Hilton By JIM SAWDEY Standard Examiner start OGDEN — The Ogden Hilton has run up a bill of $642000 in back taxes penalties and interest but hotel officials say improving revenues and occupancy rates will help them make good on their intentions to pay the full amount After suffering through a rough period since 1986 the Hilton is on its way back to financial health thanks to a boost in the per diem rate it can collect from government customers said a hotel spokesman “The problems have all but been resolved We have five years to make good on the taxes and our company has every intention of paying them” said Hilton manager Clayton Wyman The Ogden hotel owes three years in back taxes for 1985 through 1987 Another $168000 will come due Nov 30 said Gordon Flinders Weber County chief deputy treasurer State law allows property owners to go five years without paying taxes before the county can sell the property to recover property taxes he said Hilton’s property taxes pay for a large percentage of a tax increment bond that was issued when Ogden City formed the 25th Street Redevelopment District in 1981 The Hilton opened in 1982 Ogden City purchased the land the Hilton is built on formed the redevelopment district and sold the property to land owners within the district The property owners pay off the bond with their property taxes Wyman said the Ogden Hilton’s real financial troubles began in 1986 when Congress lowered the amount the government would reimburse its employees and contractors to $32 plus tax in the Ogden area while Salt Lake City’s per diem rate was set at $60 Government employees and contractors often went to Salt Lake City because the government would pay for nicer hotels “Eighty percent of our clients are government contracts The per diem rate of $32 basically signed our death warrants Now our future looks very good I don’t see any reason in the world why we won’t pay our property tax prior to the deadline” Wyman said Only 20 percent of Salt Lake City hotel customers come from government contracts he said The government announced last month that effective Oct 9 it would reimburse its contractors and employees staying in the Ogden area at the same rate set for Sale Lake Wyman said the Hilton’s occupancy rate has increased from 56 percent in 1986 at $32 per room to about 70 percent at $60 per room currently “Our new forecast says things are better than they have been in a long time Next year we’ll be able to pay our taxes and make a profit at the same time” he said The Ogden Redevelopment Agency owes an average of $165000 a year to retire the $21 million bond used for the Hilton project and other improvements in the surrounding area five-ye- ar 20-ye- ar Without the Hilton contribution in theory the bond would not be repaid Weber County records indicate that many other property owners within the redevelopment district also are late but the amount past due is a fraction of the bill owed by the Hilton which is the major property owner The district includes 25th Street both sides of Grant Avenue between 24th Street and 25th Street and part of 24th Street below Washington Flinders said the county pays the Ogden Redevelopment Agency on the assumption that all taxes are paid and then collects delinquent taxes in due course If five years elapse the property is auctioned by the county to collect taxes All services paid by property taxes are funded because the county collects property taxes and sets budgets on the assumption that a certain percentage of property owners won’t pay their taxes Because the Hilton is such a large taxpayer there have been some problems as a result of its delinquency but none that the county can’t handle he said Because the county’s payments to the city have continued despite the Hilton’s delinquency bond payments have been kept current protecting the city’s bond rating The Ogden Hilton is owned by Pearson Enterprises of Salt Lake City Wyman said the owners have been looking for partners to buy an interest in the hotel so the capital from the sale could be put back into the hotel D-G- ty force The report said Justice Department attorneys working on bank fraud cases have been forced to stop traveling to some cities The result has been a significant delay in investigations it said Business BRUEF ON 1 State regional The outlook in many areas of Montana’s economy may be bleak but for the metals mining industry the horizon sparkles in gold platinum and copper hues experts say “The future looks real good” said Joe Dewey general manager of Stillwater Mining Co the nation’s only platinum mine : National RJR Nabisco Inc announced today that top managers are considering offering to buy the er-products giant for almost $17 billion a deal that would be the largest corporate acquisition ever Wall Street apparently expected a higher offer for RJR Nabisco Consumers would get more details about the costs of credit cards — and get them sooner — than required by current federal and state laws under legislation being sent to President Reagan In the blink of an eye the House on Wednesday apt proved by voice vote legislation to require banks department stores and other issuers of credit cards to provide more information to consumers consum- Felony counts filed SALT LAKE CITY (AP) — The Utah Attorney General’s Office has filed 50 felony counts against C Dean Larsen owner of the bankrupt Granada Inc lThe charges filed Wednesday in 3rd Circuit Court allege unlawful dealing of property by a fiduciary offer and sale of unregistered securities theft and securities fraud The allegations involve $19 million a fraction of 'the money investors claim they lost in Granada !and related enterprises after the corporation filed ‘ for bankruptcy in the spring of 1987 ' ' More than 1000 investors and creditors have filed claims for nearly $48 million Meanwhile Peter Billings Jr the court-appoi- nt Investment corporations proposed By JIM SAWDEY Sianda'd Enammef stjff SALT LAKE CITY — It is imperative that Utah remove itself from a list of only eight states without a investment cor- and federal venthat provides private poration ture capital for promising businesses the director of the Small Business Administration small-busine- ( ss said Wednesday “Small business is the backbone of he state and nationally 97 percent of business is composed of small business What we need is not more capital but a kind of capital that helps new business get going” SBA Director Kent Moon told the Business and Labor interim legislative committee Moon’s proposal was one Leg- islative committees Wednesday In a separate meeting a spokesman for Utah industrialist Jon M Huntsman told the Economic Development Interim Committee that Huntsman has begun Granada case ed trustee of Granada filed a report with the US Bankruptcy Court Wednesday terming the company a “complex web of related entities operated primarily through general partnerships with itself as the sole general partner” Granada operated from 1971 until its bankruptcy last year It was founded by Larsen who associates said had developed numerous social and business relationships arising from his fraternity memberships at the University of Utah and his role as a lawyer for the Mormon Church in Europe in the 1960s Granada was a general partnership specializing in real estate development to set up professional retirement plans Scores of Utah professionals many p negotiating with “one of this country’s investment banking firms and leaders in capital fund management” Huntsman afflicted with a sore throat said in a statement read by Don Olsen that the unidentified firm had agreed to help establish and manage a venture fund of $20 million to $50 million Huntsman said the fund will provide seed start-u- p venture and expansion capital for “worthy Utah businesses" The SB1C would be a venture capital pool from which small businesses could draw during different stages of their development Once an entrepreneur has created an idea and a product that has great market potential he needs risk or venture capital for "gap financing" to take the business through more stages of development The information report given by securities broker Reo Cuttlcr State Tax Commissioner Joe Pacheco SBIC adviser Peter Cook and Moon asked the committee to consider legislation that would encourage institutions and individuals to invest in the privately licensed company SBICs are different from banks in that SBICs long-terprovide capital and expect high returns A bank provides short-tercapital k for companies and receives a low rate of return he said “I don’t think there’s an issue more important than this" said Cook to the committee members 7 he Associated Press contributed to this story blue-chi- gap-financi- high-ris- low-ris- of two heard by in k m of them doctors bought limited partnerships with the company “We have identified some 81 partnerships accounts or other entities in which Granada had some sort of an interest” Billings said in the trustee’s report Billings said earlier that most of the money was lost on development projects that were in bad financial condition The attorney general’s office said in its informad tion filed with the court that the Salt Lake Granada was a general partner or property manager for over 100 real estate limited partnerships Prior to filing bankruptcy Granada had raised over $94 million from investors City-base- ’ World Nissan Motor Co’s newest sports car a sleek Silvia with an acrodynamically designed exterior won top honors in the Japanese Trade Ministry’s prestigious “Good Design” awards pro gram today two-do- or Bank earnings figures deliver a mixed message on health By KRISTINE M LOOSLEY Standjfd E nammer GOOD QUARTER: KeyCorp earnings are up start earnings figures for the two largest banks give a mixed message about the health of the industry with one reporting losses of $84 million and the other showing earnings of $91 million Zion’s Bancorporation reported the loss equivalent to $143 a share for the quarter that ended Sept 30 First Security Corp on the other hand turned in its best quarterly performance in five years with earnings amounting to 71 cents per share Roy W Simmons chairman of Zions a bank holding company said the quarter loss resulted pris reserves and marily from additions to real estate from foreclosed of Zion’s Chief Financial Officer Gary Anderson exof foreplained this morning that the closed property was necessary because the Utah real estate market is bottoming out and the company wanted a more accurate picture of what the property was worth “We were aware the value of the property was not at the levels it had earlier been appraised at and so we looked at it again” Anderson said As values of property held and collateral dropped Third-quart- Utah-base- er d loan-los- 7B it became necessary to shore up loan loss reserves Anderson said Last year First Security suffered economic hardship similar to what Zion’s is now facing but a plan to build loan volume increase net interest margins and cut losses has contributed to the gradual improvement of earnings said Spencer F Ecclcs chairman and chief executive officer of First Security Corp earnings for First Security were reported as $242 million or 15 percent above 1987 earnings in the same period Third quarter 1987 earnings were $71 million or 28 percent lower 1988 earnings On a per share than basis earnings are $189 compared to 56 cents last year loss of $55 milZions has suffered a lion or 95 cents per share Last year the company suffered a $73 million loss in the first nine months or $128 per share First Security reports increased loan production volume achieved during 1988‘s third quarter as the major contributor to the company’s strong Year-to-da- te third-quartyear-to-da- er te year-to-da- te |