In Short Seller’s Crosshairs: A Former VP Dan Quayle And Trump Billionaire Ally Ernest Garcia
Ernest Garcia II has a net-worth of $8.9 billion as the founder of Drive Time Auto and biggest shareholder of used car dealer Carvana, making him Arizona's richest and No. 278 in the entire world.
That put him significantly ahead of the next wealthiest Arizonan, Mark Shoen, son of U-Haul founders L.S. and Anna Mary Shoen, who came in at No. 612 globally with $5 billion. Mark Shoen's net worth was $4.9 billion last year, when he clocked in as the richest Arizonan.
In October 1990, Ernest García, then a Tucson-based real estate developer pleaded guilty to a felony bank fraud charge for his role as a straw borrower in the collapse of fellow real estate developer Charles Keating's Lincoln Savings and Loan Association.
Real estate developer bank fraud and bankruptcy - smells like Trump Spirit. - en.wikipedia.org
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New York Times - 31 October 1990 - An Arizona real estate developer pleaded guilty today to participating in a fraudulent land deal involving the Lincoln Savings and Loan Association and agreed to cooperate in the Government's investigation of Lincoln and its former owner, Charles H. Keating Jr.
The guilty plea by Ernest C. Garcia 2d to one count of bank fraud was the first in the Federal criminal investigation into the collapse of Lincoln. It appears to give a significant boost to Government prosecutors in the case.
Mr. Keating and three associates were indicted last month in California on state charges relating to the sale, through Lincoln's branches, of high-yield "junk bonds" issued by the savings institution's parent company, the American Continental Corporation. Mr. Keating and his associates pleaded not guilty to the state charges.
Bonds Became Worthless
The bonds became worthless after Lincoln collapsed and American Continental entered bankruptcy proceedings. Lincoln's failure is expected to cost taxpayers at least $2 billion.
The state charges did not directly address the collapse of Lincoln or Mr. Keating's management of the institution. In an administrative action similar to a civil lawsuit, Federal regulators have accused Mr. Keating and other Lincoln and American Continental executives of looting Lincoln through a series of transactions intended to create profits for American Continental.
The criminal case against Mr. Garcia involves one transaction that Federal regulators, in their action against Mr. Keating and the other executives, called fraudulent.
Documents filed in connection with the criminal case in Federal District Court here today said Mr. Garcia, along with officers and directors of American Continental not named in the documents, arranged for Mr. Garcia to borrow $30 million from Lincoln. In return, Mr. Garcia arranged for the purchase from Lincoln of 1,000 acres in a planned housing development near Phoenix called Hidden Valley, the documents said. The purchase price was $14 million.
A 'Straw Man'
The documents said Mr. Garcia and the unnamed American Continental executives had defrauded Lincoln by creating the false impression that there was no link between the loan and the land sale. The documents did not provide any further detail on the transaction. But in the administrative action against Mr. Keating, regulators asserted that Mr. Keating and his colleagues arranged for Mr. Garcia to borrow the $30 million so that he could act as a "straw man" in the deal.
The action accused Mr. Garcia of using $3.5 million of the loan to finance a down payment on the Hidden Valley land by the West Continental Mortgage and Investment Corporation, an Arizona company with a net worth of only $31,000. The regulatory action accused Mr. Garcia of negotiating the transaction directly with Mr. Keating. Mr. Keating has denied all the charges in the action.
The administrative action also asserted that the $14 million sale price was inflated by improper appraisals of the land's value.
Mr. Garcia, who is 33 years old, faces up to five years in jail and a $250,000 fine. He is free on $5,000 bond and is scheduled to be sentenced in April. |
