PORTLAND, Ore. -- A Dallas, Texas real estate consultant pleaded guilty Thurday to federal felony charges in connection with fraud at savings and loan associations in Corvallis, Ore., and Dallas that later collapsed.
Jack Dean Franks, 46, was one of six people indicted in May following a federal criminal investigation into the failure of State Federal Savings and Loan in Corvallis. The thrift collapsted in December 1985 and left a $150 million deficit for federal insurers to cover.
Franks pleaded guilty to a charge transfered from Dallas to Portland and to one count of a 54-count indictment filed in federal court in Portland.
He pleaded guilty in Oregon to fraud in obtaining $2 million from State Federal for University Roost, an apartment complex in Flagstaff, Ariz.
The loan was made to his wife, Jacqueline Olmstead Franks, who was recruited to act as the so-called 'straw' borrower for Edward Nevis, a Yuba City, Calif., real estate developer who allegedly borrowed $100 million either directly or through proxies and contributed to State Federal's collapse.
About $400,000 of the University Roost loan funds were diverted to Nevis loans coming due. According to court documents filed Thursday, at the time of the loan, Nevis owned 75 percent of the complex and Franks 25 percent.
However, Franks said in court Thursday that after going through bankruptcy, he and his wife were owners of University Roost and were making payments on the $2 million loan.
State Federal was closed in December 1985 by the Federal Home Loan Bank and reopened as Freedom Federal Savings and Loan.
The Texas charge to which Franks pleaded guilty involved fraud against the Vernon Savings and Loan Association of Dallas. It was closed in November 1987 by the Federal Savings and Loan Insurance Corp. and later reopened as the Montfort Savings Association in a collapse that cost the FSLIC $1.3 billion.
Out of a $1 million loan, $212,000 was earmarked for a former Vernon loan officer who helped swing the loan. Franks said he paid the loan officer all but about $20,000 of the $212,000.
The Oregon indictment charges that Nevis reached his loan limit with State Federal but continued to borrow from the institution through 'straw' proxies, some of whom used false information on loan applications.
Several bank officers were named in the indictment along with Nevis, Franks and Jacqueline Franks. A former secretary and legal counsel for State Federal, Ronald Lee Koos, 36, Albany, pleaded guilty Monday to making a false statement to influence the savings and loan to make a $12.2 million loan.
As part of his plea deal with the government, Franks will testify against Nevis and others in Oregon and in upcoming trials in Dallas. In exchange, the government dismissed the Oregon charges pending against Jacqueline Franks, will make no sentencing recommendation and will ask that any prison sentences run concurrently.
Chief U.S. District Judge Owen Panner set sentencing for Sept. 25. The trial for Nevis and others is set for May 2 before Panner.
