Saturday, April 13, 2002

From magnate to inmate, his fall hurt many

By Howard Wilkinson,
The Cincinnati Enquirer

        Home State Savings Bank was the linchpin of Cincinnati financier Marvin L. Warner's world — a world of lush horse farms, glittering homes, big business, political power and seemingly bottomless wealth.

        But when Home State collapsed in March 1985, touching off a statewide savings and loan crisis, it plunged Mr. Warner into a swirling vortex of criminal charges and civil lawsuits that wiped out his fortune and landed him in a prison cell.

[photo] A Hamilton County sheriff's deputy handcuffs Marvin Warner, who had been sentenced to 3 1/2 years for his part in the Home State collapse.

(Michael E. Keating photo)
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        Monday, the man who proclaimed loudly throughout his ordeal that he was the “biggest victim of them all,” died in Florida at the age of 82.

        He died of a heart attack at Cape Canaveral, where he had gone to watch the launching of the space shuttle Atlantis.

        Since his release from a central Ohio prison in August 1993, where he had served 28 months of a 3 1/2-year sentence for the Home State collapse, he had lived at the only major asset he had left — a 250-acre horse farm in the rich countryside near Ocala, Fla.

        Friday, Cincinnati financier Carl Lindner had kind words for Mr. Warner.

        “I knew him very well as an entrepreneur who had started with very little and built a very successful business,” Mr. Lindner said. “I remember that he was very generous to a number of organizations in our city, and had a wonderful family.”

        Mr. Warner's death marked the final chapter in a seemingly endless saga for the thousands who lived through it — the depositors whose savings were jeopardized, the prosecutors who went after Mr. Warner and his associates, the regulators and legislators who had to piece Ohio's savings and loan industry back together.

[photo] A crowd lines up to get into Home State Savings Bank at Fifth and Race streets downtown.
(Enquirer file photo)
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        “It was a sad, even tragic, period for Ohio,” said Kenneth Resnick, who was one of the young assistant prosecutors who made the criminal case against Mr. Warner.

        “But ... justice was done and he paid his debt,” said Mr. Resnick, who worked then for the Ohio special prosecutor in the Home State case, the late Lawrence Kane.

        Mark VanderLaan, another of Mr. Kane's assistants in the Home State prosecution, said Mr. Warner's insistence that he was the “biggest victim” of the savings and loan scandal never rang true.

        “It was clear that these were not just bad business decisions,” Mr. VanderLaan said. “What was clear was that Marvin Warner engaged in illegal activities. And he paid the price.”

        The price came in an 18-week trial in early 1987 in the Hamilton County Common Pleas courtroom of Judge Richard Niehaus. It attracted national media attention and ended in a conviction on six counts of unauthorized acts and three securities violations.

        “It was the most press-packed case I have ever been involved in,” Judge Niehaus said Friday. “It was intense.”

        Still, there are those who point to the fact that while Mr. Warner was convicted on criminal charges in a state trial here in Cincinnati, where thousands of Home State depositors lived, he was acquitted of similar federal charges a few months later in a trial that took place in Michigan.

        “Maybe Marvin was more guilty of poor business judgment than any kind of crime,” said former Cincinnati mayor and congressman Thomas A. Luken, a Warner friend.

        “There was a cry for justice in this city, and he became the person sacrificed,” Mr. Luken said.

        Mr. Warner's free fall after the 1985 collapse of Home State was dizzying.

        He had personal wealth — about $125 million before the Home State collapse — and political power, enough to help elect Democrats to statewide office in Ohio and earn him an appointment from President Carter as ambassador to Switzerland in the late 1970s.

        Born in Birmingham, Ala., the son of a baker, he earned a law degree from the University of Alabama that he never used.

        Instead, he came to Cincinnati as a young man in the early 1950s and launched a career as a developer. His mark on the city is obvious even today — he developed the housing tracts that became the city of Forest Park and built huge projects such as the Highland Towers, which dominates the Mount Adams landscape.

        In 1958, he branched out into finance, buying Home State Savings Bank. He quickly turned it into the dominant force in Ohio's savings and loan industry.

        Then, in the late 1970s, he met Ronnie Ewton.

        Mr. Ewton was the president of a Fort Lauderdale firm called ESM Government Securities Inc. He had a plan to sell bonds to local government, institutions and individuals that would guarantee overnight dividends.

        But to pay off its customers, ESM needed huge infusions of cash. Mr. Warner provided it, pouring hundreds of millions of Home State assets into ESM.

        In March 1985, when federal authorities charged ESM with fraud and word spread that Home State was ESM's major investor, a panic struck Southwest Ohio. Home State depositors formed long lines at branch offices trying to take their money out. Four days later, Ohio Gov. Richard Celeste — whose political career had been boosted by Warner cash — closed Home State.

        But because Home State was the dominant force in the Ohio Deposit Guaranty Fund, its collapse wiped out deposit insurance for all other state-chartered savings and loans.

        Thousands of depositors around the state had no access to their money for weeks. In the end, though, no depositor lost a dime.

        The Ohio General Assembly ended up passing legislation to spend $129 million for the bailout of Home State and found a buyer for the wrecked institution — Mr. Lindner, who folded Home State into his Hunter Savings Bank.

        The state of Ohio ended up recouping the money it spent on the Home State bailout and then some, in a series of court actions against Mr. Warner, ESM and its associates.

        Mr. Warner's personal fortune had allowed him to become not only a breeder of thoroughbred horses, but a sports magnate as well — at various times, he had ownership stakes in the New York Yankees, the Tampa Bay Buccaneers and the Birmingham Stallions, a team in the defunct World Football League.

        But the fortune dwindled to about $5 million by the time Mr. Warner was released from prison and retired to his Ocala farm, sheltered from creditors under Florida's “homestead” law.

        “He profited immensely from this,” Mr. VanderLaan said of Mr. Warner's partnership with ESM. “And, ultimately, he paid the price.”

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