Ex-Columbia S & L Chief Settles Suit : Thrifts: Thomas Spiegel agrees to pay $275,000 of the $40 million he allegedly owed. Government drops ban demand.

Ending the saga of one of the most prominent thrift failures of the past decade, former Columbia Savings chief Thomas Spiegel on Friday settled his longstanding civil dispute with federal regulators, agreeing to pay restitution to taxpayers of up to $275,000--a fraction of the $40 million the government had initially sought.

In a significant concession, the U.S. Office of Thrift Supervision also dropped its demand that Spiegel be banned from the banking and thrift industry. Spiegel, in exchange, dropped his claims of $1.9 million in back pay and legal expenses against the government.

Authorities acknowledged that their civil case was weakened by Spiegel’s Dec. 12 acquittal on criminal charges arising from the 1991 failure of the Beverly Hills-based thrift.

A Los Angeles jury took two hours to find Spiegel innocent of the three criminal charges that remained from the original 55-count indictment.

The terms of Friday’s settlement, taken alongside the criminal acquittal, call into question what the government has to show for its five-year pursuit of Spiegel, which a Wall Street Journal editorial once referred to as the case of “U.S. vs. the 1980s.” The government has been criticized for its management of the financial crisis that engulfed the savings and loan industry beginning in the late 1980s.

The Office of Thrift Supervision, the primary thrift industry regulator, brought its civil case against Spiegel in June, 1990, accusing him of self-dealing, breach of fiduciary duty and unsafe and unsound practices in his management of Columbia, which regulators seized as insolvent and liquidated at a cost to taxpayers that the agency estimated at $1.1 billion.

The charges arose from Columbia’s loans to a luxury auto dealership that went sour at a cost of more than $5 million, the construction of a lavish headquarters that regulators sold at a loss of more than $20 million, Spiegel’s receipt of a $3-million bonus in 1989 and his alleged use of company funds for personal airplane travel, a gun collection and furnishings for a $1-million Palm Springs condominium.

Spiegel, in his settlement, neither admitted nor denied the charges, many of which paralleled those in his criminal case. He said in a statement that despite his confidence that he would have won at trial, he agreed to settle “in order to avoid another expensive legal battle and to finally end what has been a very difficult and unfair ordeal for me and my family.”

Regulators defended their decision to press the civil case against Spiegel.

“The agency certainly was justified in bringing these charges against Mr. Spiegel at the time, and there’s nothing in this settlement that changes that,” Richard Stearns, the Office of Thrift Supervision’s deputy chief counsel for enforcement, said Friday.

Spiegel throughout has portrayed himself as a scapegoat for incompetent federal officials whose policies and mismanagement caused much of the damage in the thrift crisis.

He continued that theme Friday, saying that if the government had not panicked and forced the thrift to sell its huge portfolio of high-yield junk bonds and other securities at a crippling loss, “Columbia would be one of the most profitable savings and loans in the country today.”

Under the settlement, Spiegel is required to pay $200,000 and to transfer securities valued at $60,000 to $75,000 to the Resolution Trust Corp., the agency that Congress created in 1989 to supervise and fund the liquidation of failed thrifts.

He also agreed to drop claims for more than $1 million in legal bills he incurred fighting the criminal and civil charges, plus $800,000 in fees from a consulting contract he had with Columbia after his resignation as chief executive.

The deal leaves Spiegel free to become an owner, board member or employee of a federally insured depository institution, subject only to the conditions that he follow the law and disclose the terms of the settlement before accepting such a position.

“I now want to resurrect my reputation and become a real asset to the community,” Spiegel said Friday night.

“As to the future, this is the first time in five years that I have allowed myself to even think about having a future.”

I now have my freedom and my integrity back, and I want to enjoy that for a short time before I make any announcements.”

In crafting the settlement, Office of Thrift Supervision officials said they took into account Spiegel’s current finances.

“We believe he doesn’t have the resources to pay a substantial monetary judgment,” an agency spokesman said Friday.

With Spiegel at the helm, Columbia became the nation’s most profitable thrift in the mid-1980s. Spiegel and family members owned about half of Columbia’s stock, a stake once worth $350 million and now worth zero.