It’ll Be Business as Usual at Mola, Executive Says : Thrifts: The failure of Charter Savings Bank will have ‘no effect’ on Newport Beach-based Mola Development Corp., its former parent company, Peter von Elten says.

The failure of Charter Savings Bank last week will have “absolutely no effect” on the continuing operations of its former parent company, Mola Development Corp., an executive with the Newport Beach real estate firm said Monday.

Mola will continue to conduct business “as usual,” said Peter von Elten, Mola’s executive vice president and a former Charter director.

The company is awaiting final approval on a controversial 149-acre $200-million residential project in Seal Beach for which it has already spent between $8 million and $10 million to develop plans. A favorable court hearing Wednesday and City Council approval on Monday are the final hurdles, Von Elten said.

Mola also is working out a financing deal to start construction on its high-rise Mola Centre in Irvine, a $300-million mixed-use project that has been in the planning stages for three years.

Von Elten said Mola and Charter executives expected the takeover of the thrift, especially after Mola decided not to invest any more money in Charter. But he denounced federal regulators for saying they had asked the U.S. Justice Department to look into the possibility of criminal wrongdoing at Charter, which has its headquarters next door to Mola.

When they seized Charter on Friday, regulators said they made a “number of referrals” to the Justice Department.

“There certainly shouldn’t be any criminal allegation against any individual or executive here,” Von Elten said. “Mola never used Charter to finance its projects. We’ve conducted ourselves properly.”

The referrals for a criminal inquiry “seems to be an action they’re taking with each and every institution” they seize, he said.

The call for a criminal investigation also took state regulators by surprise.

“We certainly didn’t have any inkling of this,” said William D. Davis, acting commissioner of the state Department of Savings and Loans. He described Mola’s owner, Frank J. Mola, as a “very reliable person.”

One industry source knowledgeable about the referrals said the request centers on two sets of loan transactions. The source would not elaborate.

Both Davis and Von Elten said Charter’s 1988 acquisition of failing Merit Savings & Loan in Los Angeles became an albatross, especially after the federal thrift rescue law, enacted last year, set up tough capital standards.

“The Merit acquisition just killed them,” Davis said. “It had a drastic effect on their operating ability. They had monthly operating losses that were significant. Couple that with the new law’s dictates on capital and net worth, and they were just not able to recover.”

Von Elten also objected to comments made Friday by the Office of Thrift Supervision that Charter was plagued by poorly documented files and bad management and that it was operating in an unsafe and unsound manner.

In routine examinations, he said, federal agents always praised Charter for its clean operations. And any unsafe operating claim is based solely on the thrift’s low level of capital, its final reserve against losses, he said.

Regulators determined that, under the tougher standards, Charter had run out of capital. They also rejected Mola’s offer to add $4 million in capital.

After the new law changed the rules, Von Elten said, “the only question was whether we wanted to put more capital into Charter.”

“We looked at it real carefully, and we decided we had no further interest in being in the S&L; industry,” he said.

Mola Development, incorporated in 1976, started out by specializing in residential projects. During the last six years, it has expanded to commercial and industrial developments as well.

It acquired Orange Coast Savings & Loan in 1984, changed the name and increased the thrift’s assets from $125 million to $450 million. Charter had $308.6 million in assets at the end of April.

“We saved taxpayers money by taking over Orange Coast Savings, which had a heck of a lot of problems, and by acquiring Merit without federal assistance, and we turned that around,” Von Elten said. “The irony is that if regulators had not permitted us to acquire Merit, there would have been no problem at Charter.”