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Journal North: Home | Sports | Opinion | Obits | Entertainment
Saturday, October 03, 2009
Firm's Board Chair Resigns
By Mark Oswald
Of the Journal
Garrett Thornburg has resigned as board chairman of the now-bankrupt Santa Fe mortgage company that soared to national prominence under his name before crashing over the past two years.
But Thornburg apparently will continue to have a key role in the firm's management.
In a news release, Thornburg cited recent "shocking allegations" against his former co-executives at Thornburg Mortgage, which since its May Chapter 11 bankruptcy has changed it name to TMST, Inc.
Last month, longtime Thornburg Mortgage president and CEO Larry Goldstone and Clarence Simmons, the company's chief financial officer, resigned amid allegations that they've improperly used Thornburg Mortgage/TMST employees and resources to help start up a new company since the mortgage firm went bankrupt.
Goldstone and Garrett Thornburg founded the mortgage company in Santa Fe in 1993. It became the largest publicly traded company in New Mexico before it collapsed as part of the international crash in mortgage-backed securities. About 150 employees were laid off.
Friday, Garrett Thornburg announced his resignation from the Thornburg Mortgage/TMST board presidency in the news release issued by a New York public relations firm.
The release indicates, however, that he will continue in his position as chairman and president of Thornburg Mortgage Advisory Corp. (TMAC) — an entity employed by the Thornburg Mortgage/TMST board to manage operations of the mortgage company.
"I took this action because of the shocking allegations about former employees of Thornburg Mortgage Advisory Corporation (TMAC) who were also officers of TMST," Garrett Thornburg said in the release. "If the allegations prove to be true, they will cause damage to both TMAC and TMST."
"While unfortunate, my resignation was the prudent action to take, given my position as chairman and president of TMAC," he continued. "I wanted to avoid the appearance of any conflict of interest.
"I pride myself on doing the right thing and have always acted with the utmost transparency, ethics, and integrity. TMAC is now on the same side as TMST and will consider legal action to recover any damages done to TMAC resulting from any wrongful actions of any of its former officers."
Goldstone and Simmons resigned in mid-September after a branch of the U.S. Department of Justice filed a court motion that called for an independent trustee to take over the bankrupt mortgage firm. The motion said Goldstone and Simmons had improperly misappropriated assets for a new start-up company.
The diversion of Thornburg Mortgage/TMST resources "for the benefit of insiders constitutes a breach of fiduciary duties" for a debtor in a bankruptcy case, said the motion filed by the U.S. Trustee Program, which serves as a Justice Department watchdog in bankruptcy cases.
The motion, which is still awaiting action by a judge, said that "within days" of Thornburg filing for Chapter 11 bankruptcy in May, Goldstone and Simmons started a new company, SAF Financial, Inc., to continue exploring Thornburg's "prior strategy of acquiring a depository financial institution from which to build up an asset base for mortgage lending."
After starting SAF, Goldstone and Simmons "continued to be highly compensated" by Thornburg, the motion stated. A preliminary investigation indicates they also used "a number" of Thornburg employees to work on the SAF start-up "with no apparent benefit" to Thornburg, the motion maintained.
Also last month, Thornburg Mortgage/TMST filed notice with the federal Securities and Exchange Commission that said the resignations of Goldstone and Simmons "arose as a result of a disagreement between them and the company with respect to policies concerning the allocation and use of resources, including employees," between the bankrupt company and SAF Financial.
The Thornburg Mortgage/TMST board of directors "has determined that the policies implemented by Messrs. Goldstone and Simmons were not appropriate, and the Board has taken steps to abolish those policies, including implementing management changes," the SEC filing stated.
Anne-Drue M. Anderson, 48, a Thornburg director since 2003, was named the bankrupt firm's new president last month. She's being paid $65,000 a month, according to a more recent SEC filing.
A separate Thornburg company, Thornburg Investment Management, has continued to thrive. The Thornburg Cos. moved into a new office complex in northwest Santa Fe earlier this year.
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