Judge weighs in on Kaiser purchase
Hurwitz victorious in case involving his failed S&L
John Stucke - Staff writer
Allegations that Houston financier Charles Hurwitz bankrolled his 1988 purchase of Kaiser Aluminum Corp. by illegally raiding his failing thrift are unfounded, an administrative law judge has ruled.
Judge Arthur Shipe late Wednesday recommended dismissal of the federal government's $826 million claim against Hurwitz and his company, Maxxam Inc.
"Judge Shipe's action represents the vindication of Maxxam and Charles Hurwitz that we have always said would be the case," said Maxxam lawyer Kent Friedman.
Bank regulators with the Office of Thrift Supervision sought to recover the money, which amounts to about half the $1.6 billion in costs taxpayers bore to cover Hurwitz's failed United Savings Association of Texas.
It was the third-largest bailout of the S&L fiasco of the 1980s.
The ruling is a major setback for the government. The OTS now must decide whether to accept the judge's recommendation to drop the 6-year-old case.
The case turned into a litigious thicket during the past couple of years as it became embroiled in the politics of ancient California redwood groves owned by Maxxam's logging subsidiary, Pacific Lumber Co.
The company argued that the case was a politically motivated ploy to seize the redwood stands in what Maxxam termed a debt-for-nature swap.
Last year, Maxxam filed a counterclaim, alleging the OTS and the Federal Deposit Insurance Corp. plotted against Hurwitz.
Those allegations of collusion were aired in a Congressional hearing.
"It's a shame that he's going to get away with it," said John Goodman, a Kaiser Steelworker and Hurwitz critic. "They dragged all this conspiracy stuff up, and it muddied the case. In the end, of course, taxpayers will end up eating all the costs."
Hurwitz paid $50 million in cash as part of his $930 million purchase of Kaiser in 1988. That's the same year his S&L collapsed.
In his ruling, Shipe ruled that the OTS, created to recover assets of failed S&Ls, should receive nothing from Hurwitz or Maxxam.