Tuesday, December 26, 2006

Maxxam Files Response to FDIC Appeal in the S&L Case

Here's an article from the Houston Business Journal

This story dates back to the Savings and Loan scandals when Maxxam ceo Charles Hurwitz and his associate Michael Milken scammed U.S. taxpayers by causing the failure of United Savings Association of Texas. This cost taxpayers $1.6 billion.

Hurwitz then used some of this money in his hostile takeover of Pacific Lumber in the 1980's. He has been liquidating the companies assets ever since. This includes thousands upon thousands of acres of ancient Redwood and Douglas Fir forests. The company is now on the verge of bankruptcy and has fired hundreds of workers and begun selling land to make debt payments. A mere fraction of the Oldgrowth forests within PL holdings remain and the mills used for these large trees have closed.

The FDIC (Federal Deposit Insurance Corp.) sued Hurwitz, saying that he was responsible for the failure of United Savings. In 2002 they dropped the case after "imnumerable run-ins with Judge [Lynn] Hughes", "unquestionably the Houston federal judge most likely to challenge the government's position in any case" -source.

Hurwitz then countersued for damages. In 2005, Judge Hughes ruled that the case lacked merit and that the FDIC needed to pay Maxxam and Hurwitz $72 million to cover their legal expenses during the court battle.

The FDIC appealed the judgment once again presenting the facts of their case. Now Maxxam has responded to their appeal.


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