Tuesday, April 23, 1996 | 11:59 a.m.
Culinary Union leaders have stepped up their attacks on two Las Vegas banks caught in the middle of intense labor wars.
Union officials have complained to state banking authorities that Community Bank of Nevada and Commercial Bank of Nevada may have skirted federal banking laws while making "insider" loans to their directors and shareholders.
Within the past year, Community Bank Director Margaret Elardi, owner of the strike-ridden Frontier hotel-casino, has received a $962,000 loan. And Commercial Bank Director Sue Lowden and her husband, Santa Fe hotel-casino owner Paul Lowden, have benefited from a $772,500 loan. The Lowdens are locked in a bitter organizing war with the union at the Santa Fe.
Both banks strongly deny wrongdoing and contend they have been abiding by federal laws designed to limit insider loans.
And L. Scott Walshaw, commissioner of the state Financial Institutions Division, said today his office has not yet found any violations.
But he added the union's allegations, some of which were based on faulty facts, would be taken into consideration during the next regularly scheduled examination of the banks.
Last month, Culinary officials sent letters to Walshaw raising concerns about the loans and other possible financial irregularities.
The Culinary is attacking the banks as a way to pressure the Elardis and Lowdens to resolve their labor disputes.
Regarding Community Bank, union research analyst Theresa McGuire told Walshaw her review found that in the past year nine real estate loans were made to directors or shareholders totaling $4.4 million, or 17.8 percent of the total funds extended by the bank for land deals.
Besides Elardi, bank director Jim Saxton, a local developer, received a $1.3 million loan.
McGuire told Walshaw: "We continue to be concerned that the large proportion of funds loaned to shareholders and the loans to single borrowers in apparent excess of 25 percent of the bank's capital, raise questions about the bank's internal policies for preventing conflicts of interest and could indicate that a small group of borrowers have undue access to the bank's loan desk."
Walshaw responded in a March 12 letter that "appropriate action" would be taken if any violations of state or federal laws are substantiated.
At Commercial Bank, union research analyst Courtney Alexander wrote Walshaw March 21, complaining about recent in-house transactions involving companies owned by the Lowdens.
A key concern of Alexander's was the $772,500 loan to the Santa Fe Mining Co., owned in part by the Lowdens, this year that may have exceeded federal limits designed to restrict insider lending.
But Walshaw wrote back March 28 disputing her claim, saying the loan appeared to fall within the limits.
And Commercial Bank President John Gaynor insisted in an interview with the SUN that the loan to Santa Fe Mining was aboveboard.
"All I can tell you is the loan went through a federal bank examination recently, and it was not criticized in the least," Gaynor said.
Community Bank President Ed Jamison said the allegations the union has raised about its dealings are "unfounded."
"They're yelling fire when there's no fire," he said. "We've done all of our loans appropriately and according to regulations and the statutes."
Jamison expressed frustration at being caught in the middle of the union's labor war with Elardi.
"I don't know why we even have to deal with this issue," he said. "All we're doing is trying to run a community bank."
Union leaders, meanwhile, haven't been pleased with the responses they've received from Walshaw.
They contend Walshaw asked the attorney general's office to investigate the union's practice of distributing fliers critical of Commercial Bank's finances after the union refused to back off its insider loan allegations.
Walshaw denied conspiring in any way with the banks.
A top deputy attorney general, nevertheless, wrote to union leaders March 14 threatening criminal action if the union didn't stop distributing the leaflets outside Commercial Bank.
But several days later, the union filed suit against Attorney General Frankie Sue Del Papa, alleging she was trying to restrict its free speech rights. The suit is being heard in the courtroom of U.S. District Judge Lloyd George.
Culinary Staff Director D. Taylor suggested the attorney general's threats were lodged because the union was hitting the banks too close to home about the insider deals.
"I think the actions taken to suppress the leafleting at the banks, which we've been doing for quite some time, has something to do with the lending practices of the banks to insiders," Taylor said.
"I don't think the attorney general understands all the facts. If she does, we'd hope she do a full investigation of their inside lending practices and other questionable business practices."
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