Road Building Alert for Headwaters February 29 Pacific Lumber/MAXXAM has proposed cutting eight acres of ancient redwoods in the 3300 Headwaters forest to build a logging road. A hearing is set for March 5. HEADWATERS DEBT-FOR-NATURE SWAP On December 26, 1995, in a move heralded by environmentalists as <B>long</B> overdue, the Federal Office of Thrift Supervision (OTS) filed charges against MAXXAM Inc., of Houston Texas, MAXXAM Chairman Charles Hurwitz and several other parties the agency says contributed to the failure of United Savings association of texas, Houston, in 1988. That failure cost the federal government's insurance fund in excess of $1.6 billion. One of MAXXAM's prime assets is the property which contains the Headwaters forest, the 3000 acre plot of land which is the largest unprotected redwood grove in the world, located just east of Eureka, California, where numerous protests by environmentalists and concerned citizens over the scheduled forest destruction have taken place in recent months. OTS filed 13 separate claims against the respondents for violations of numerous federal regulations and for multiple unsafe and unsound practices. The agency is pursuing an unspecified amount of restitution. In addition, OTS is seeking $889,000. in civil money penalties, and the prohibition of all six individuals charged, including Hurwitz. Others named in the action included Barry Munitz (whose unethical actions were no deterent to Governor Pete Wilson, who appointed him president of the California State University system), Jonard Gross, Arthur Berner, Ron Huebach and Michael Crow, all present and former directors and/or officers of United Savings and its holding company, United Financial Group. Also charged in the case is Federated Development Co., a New York business trust. Veteran North coast environmentalists say they pleased that the US taxpayers will have an opportunity for financial restitution from those guilty of Savings and Loan raids in the 1980's. In addition, they are hopful these charges will add further fuel to the proposed "debt for nature" swap being pursued in order to preserve the Headwaters forest. They would also be pleased to see the Department of Justice recognize the various felonies as violation of federal banking laws and file formal criminal charges and criminal indictments of the MAXXAM executives. Hurwitz controls MAXXAM, Federated and United Financial, which in turn, controlled United States Savings from at least 1985 until its failure. United Federal is currently in involuntary bankruptcy. United Savings, with assests of $4.6 billion, failed and was placed in receivership on December 30, 1988. At that time, United Savings was more than $500 million short of its minimum regulatory capitol requirement. OTS charged that United Financial did not live up to a written agreement to maintain the net worth of United savings at required levels. The agreement had been a condition for regulatory approval in 1983 of the merger of United Savings and Houston First American of Texas, another Houston thrift. As a result of failing to comply with the condition of approval, United Financial consented on December 13, 1995, as part of a joint settlement with the Federal Deposit Insurance Corporation (FDIC) and the OTS, to a cease and desist order and to pay at least $9.45 million in restitution, subject to approval by bankruptcy court. In one of the thirteen charges, OTS accused certain respondents of unsafe and unsound compensation practices. As United Savings' condition deteriorated, the respondents caused United Savings and United Financial to initiate lavish bonuses and severance plans for themselves and others. In April, 1988, at a time when the repondents knew full well that United Savings was failing to meet its minimum capitol requirement, United Savings paid $793,115. in bonuses to 42 employees, including Berner, Crow, Munitz and Gross. The thrift also became obligated to pay an additional $849,000. in future bonuses. Gross also benefited from a separate bonus plan that relievd him of paying off a $761,250. note. OTS also charged that the respondents also had United Financial and United Savings enter into employment agreements with a number of senior management directors, including Gross, Munitz, Berner, and Crow. They were to be given two years' salary plus two times their previous year's bonus if United Savings failed. In October 1988, the regulator advised United Savings' directors that the employment contracts violated federal regulations because they provided excessive compensation and severence payments and were unsafe and unsound because United Savings was insolvent. The regulator also instructed United Savings not to pay promised future bonuses. The respondents' severance claims cost more than $900,000, money that could have been used to help satisfy the net worth obligation. WHAT YOU CAN DO Write the Board of Forestry, PO Box 944246, Sacramento, CA 94244-2460, Fax: (916) 653-0989. Phone: (916) 653-8007. For more information contact: Call EPIC, (707) 923-2931; fax: (707) 923-4210. Mendocineo Environmental Center (707) 468-1660; e-mail: epic@igc.apc.org Bay Area Coalition for Headwaters (510) 835-6303. For e-mail alerts send a mesage to majordomo@igc.apc.org and include the phrase: subscribe epic-saves-forests" followed by your e-mail address.
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