Another Texas Thrift Chief Is Accused by U.S. : Bailout: The ex-chairman of Sunbelt Savings in Dallas was charged with fraud; his thrift’s collapse cost taxpayers more than $2 billion. The S&L; disaster continues.

WASHINGTON —  Moving against one of the nation’s costliest savings and loan failures, a federal grand jury indicted the former chairman of a Texas thrift Wednesday on charges of bank fraud, misapplying funds and making false statements arising from a $700-million Southern California real estate purchase.

The defendant, Edwin T. McBirney III, resigned as chairman of Sunbelt Savings Assn. under pressure from federal regulators in 1986. The Dallas institution was consolidated with seven other insolvent thrifts two years later in a bailout that cost taxpayers more than $2 billion.

In a 1984-86 deal characterized by U.S. Attorney Marvin Collins in Dallas as a case of “you scratch my back and I’ll scratch yours,” McBirney allegedly offered another Dallas thrift, Western Savings Assn., a $6-million profit on any property it wanted to sell.

In return, Western agreed to provide approximately $30 million needed by a Sunbelt subsidiary, Sun Cal, to complete the purchase of the Southern California property.

The indictment did not specify the location of the real estate or the eventual outcome of the transaction. But Paul Coggins, McBirney’s attorney, said that the real estate included the Hilton hotel at Los Angeles International Airport and about 12 other properties in the Los Angeles area.

The allegedly fraudulent reciprocal loan arrangement led to others as well as to false statements by McBirney to hide the transactions from regulatory authorities, the grand jury charged.

To generate the promised $6-million profit, Western chose a 708-acre tract of land in Denton County, Tex. McBirney lined up a California real estate broker, not identified in the indictment, to buy the land for $21.1 million.

McBirney allegedly represented to the buyer that the property was worth more than $23 million and was suitable for residential development, and that Sunbelt would be interested in making loans to prospective home buyers.

The indictment said that McBirney did so without benefit of an appraisal or other relevant information and without conducting an investigation into the true value and potential of the property. McBirney also caused Sunbelt to extend a loan to the buyer without required documentation, according to the indictment.

To keep the loan out of default and to prevent federal and state regulators from learning the true nature of the transaction, McBirney allegedly made additional loans to third parties and diverted proceeds from them, according to the indictment.

The grand jury charged that McBirney deceived his own employees to block regulators from obtaining correct information about the complex financing.

“In spite of the great lengths to which people went . . . to deceive the regulatory authorities and hide their criminality, today’s indictment demonstrates that even these complex schemes can be penetrated through an aggressive, long-term investigative effort,” U.S. Attorney Collins said.

Coggins, McBirney’s attorney, said his client would plead not guilty at his arraignment next week. He said that prosecutors have “sliced a single transaction into 17 different counts, and it’s government overkill.”

The attorney added that there is no allegation that McBirney personally profited from the transactions.

If convicted on all counts, McBirney would face up to 85 years in prison and $4.25 million in fines.

The indictment made no mention of McBirney’s high-flying style in running Sunbelt, which came to be known as “Gunbelt Savings” because of its quickness to extend loans.

Collins said that he sought to keep the indictment “lean and small” so that jurors could understand the highly complex transactions.