CenTrust Bank
| Public | |
| Traded as | American Stock Exchange: DLP |
| Industry | Savings & Loan |
| Fate | Insolvency |
| Successor | Great Western Bank |
| Founded | 1934 |
| Defunct | February 2, 1990 |
| Headquarters | Miami, Florida, US |
|
Key people
|
David Paul |
CenTrust Bank, A State Savings Bank was a Miami, Florida-based savings and loan. Its failure in 1990 was one of the largest and costliest failures of the savings and loan crisis.
Dade Savings & Loan Association opened in 1934. In 1983, the failing thrift, with 32 branches and $2.2 billion in assets, was acquired by real estate developer David L. Paul for $32 million and the following year was renamed CenTrust Savings & Loan Association. It grew rapidly to become the largest thrift in the southeastern United States, with over $9 billion in assets at its peak in 1989.
The bank was placed into government conservatorship in February 1990, with Great Western Bank acquiring the bank's assets in June 1990. CenTrust had $8.2 billion in assets at that time and was the 23rd largest thrift in the country. The failure resulted in an estimated $1.7 billion loss to the government at the time it was seized.
Chairman and CEO David Paul was convicted in November 1993 in federal court on 68 counts of tax fraud, obstruction of justice and misapplication of bank funds. He was sentenced to 11 years in prison and required to pay $60 million in restitution and a $5 million fine. He later pled guilty to 29 counts of securities violations. He was released from prison in 2004. The government charged that Paul had used bank funds for personal reasons such as making improvements on his home and paying the expenses on his $7 million yacht "Grand Cru." In addition the bank had also bought the sailboat "Bodacious" for $233,000. The bank acquired a $29 million art collection, including the Peter Paul Rubens painting "Portrait of a Man as the God Mars" for $13.2 million, which Paul kept at his house.
The bank's headquarters were located in the newly built CenTrust Tower (now Miami Tower), a Miami landmark designed by I. M. Pei and featured in the opening credits of the television series "Miami Vice." CenTrust's executive offices were opulent, featuring gold-plated plumbing, gold-leaf ceilings, a $1 million Italian marble staircase, and a bulletproof shower door.
When the Financial Institutions Reform, Recovery and Enforcement Act of 1989 was passed it banned the purchase of junk bonds by thrifts and required them to dispose of their holdings by 1995. They were also required to carry the bonds on the bank's books at market value, not face value. The act also disallowed supervisory goodwill by phasing it out through 1995. This resulted in the bank becoming insolvent.
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Wikipedia