How Suite It Is For Savings-And-Loan Fraud Suspect

If you're mad as hell and aren't going to take the savings-and-loan crisis anymore, you probably don't want to hear about J. William Oldenburg.

Your angry letters to the editor, your excited talk-show calls and your threats to throw the rascals out are the emotional side of the crisis.

William Oldenburg, 51, is the reality.

His multimillion-dollar savings-and-loan empire, along with his professional football team, collapsed six years ago. The federal government thinks bank fraud was involved and that he used a Washington state corporation to pull it off.

But Oldenburg remains free to walk the well-heeled streets of Mercer Island, where he claims now to live. Although he says he is broke and cannot pay his bills or his attorney - the former mayor of San Francisco - he still managed to spend a few nights recently in what is called the grandest hotel suite in America.

At $6,600 a night, his tab for the Ben Swig Suite at the Fairmont Hotel in San Francisco came to $15,075, including $226 for room service.

Oldenburg, a vacuum-cleaner salesman who rose to become what he called a self-made billionaire, was checked into the suite on the same day he filled out a federal-court affidavit insisting he was indigent and in need of a taxpayer-supported public defender.

The hotel wouldn't say who paid the bill and the public defender said he suspects it was picked up by former business associates who feel sorry for Oldenburg.

A U.S. attorney suspects otherwise and has undertaken an investigation. But then, the federal government has been doing that for years, to little avail.

It is one thing to demand that accused savings-and-loan looters be put away. It is quite another to understand how difficult that process can be.

As Attorney General Dick Thornburgh reported to Congress recently, only a paltry percentage of the $55.6 million in nationwide fines assessed against savings-and-loan criminals has been paid, and the Justice Department is having trouble finding any assets to seize.

Of course, before confiscation even begins, there must be conviction. And the Oldenburg case is an example of that government frustration.

In 1984, about the same time his Los Angeles Express pro-football team financially floundered (he eventually lost the now-defunct United States Football League franchise) Oldenburg was allegedly looting his Utah savings-and-loan company to pay off mounting debts at his San Francisco-based real-estate brokerage.

In 1989, the Justice Department charged that Oldenburg, who bought State Savings and Loan for $10.5 million (which he borrowed from another thrift), conspired with three others to defraud the bank of $26.5 million and caused its collapse.

According to the grand-jury indictment, Oldenburg's thrift bought Park Glen Estates, a 363-acre development in Richmond, Calif.

The purchase was handled through Empire State West Inc., a Washington state real-estate financing corporation solely owned by Oldenburg. The money was then run through another Oldenburg enterprise, International Mortgage Services. The result, said prosecutors, was an artificially inflated cost for the $26.5 million hilly stretch of land Oldenburg had bought five years earlier for less than $1 million.

In a trial last year, Oldenburg's attorney, former San Francisco mayor Joe Alioto, claimed that the true value of the development was as much as $85 million, and that Oldenburg actually fought to keep the property rather than conspiring to sell it.

Two former associates and co-defendants pleaded guilty to lesser charges and testified against Oldenburg, asserting he indeed defrauded the thrift.

But after a five-week trial, a federal jury found the ex-tycoon guilty of only one of seven fraud charges - intending to deceive a bank examiner - reportedly deadlocking, 9 to 3, on the other charges.

The jury foreman told reporters the element of intent was not demonstrated beyond reasonable doubt - not an uncommon problem in trapping well-insulated white-collar criminals.

Four months later, that single conviction was reversed by a federal judge who ruled there was simply far too little evidence that Oldenburg knew of the deception - another example of the difficulty in convicting someone who is alleged to have held up a bank with a pen as opposed to a gun.

The government, perhaps in part due to the thrift scandal's public outcry, says it will try Oldenburg again - in December. If convicted, he could face up to 42 years in prison.

Meanwhile, the prosecutors, like the taxpayers, are wondering where the money went.

The man who once drove a Rolls-Royce, flew in his private jet, owned a fancy estate and threw lavish parties attended by celebrities from Orson Welles to Wayne Newton today says he is down to $500 in cash.

In court papers, he claims he hasn't worked since 1984 and has debts totaling $42 million.

His Washington corporation, headed by a Bellevue attorney but with an all-California board of directors, was folded up five years ago by the state for non-payment of fees.

Prophetically, the incorporation papers show, under principal place of business: none. It is unclear if the Mercer Island residence the New-York born Oldenburg now lists is permanent or temporary (it apparently belongs to friends). Oldenburg himself couldn't be reached for comment.

He likely still believes, however, as attorney Alioto said earlier, that his troubles are the result of government witch-hunting and ``the most devastating, vicious, cruel journalistic persecution of any man I have ever known.''

Of course, that was before Alioto got stiffed for his fees, too.