CenTrust Bank Scandal
CenTrust, first called Dade Federal Savings and Loan, was founded in 1934 during the Great Depression and eventually became a stalwart of the South Florida business establishment. By the early 1980s, Miami had a corporate community that any city would envy. The companies were large and growing. They contributed mightily to local causes. They virtually invented a skyline where none existed as late as the early 1980s. CenTrust Bank and David Paul gave huge sums of money and much effort toward founding the New World Symphony in the 1980s. But the local corporate world was shaken badly at that time. In South Florida, home of fragile physical, social and economic climates, big business became an endangered species. Prominent in the downtown skyline were buildings built by financial institutions that had failed or were in serious trouble. By November 1983, CenTrust had losses of $500 million and was headed toward insolvency and federal takeover. David Paul, pledging little more than some real-estate holdings, gained control and quickly remade and personalized the institution. Before long, the company's stock-ticker symbol became DLP, Paul's initials. At the end, as senior managers deserted him, David Paul held the posts of chairman, president, chief executive officer and chief operating officer.
South Florida became a center of risky banking practices in the 1980s, and CenTrust was one of hundreds of thrifts traumatized by inflation and soaring interest rates.
Through this time, Drexel's former junk king Michael Milken, sold billions of dollars of high-yield junk bonds to cooperative companies with big piles of cash such as CenTrust Bank, Columbia Savings & Loan, Imperial Corp. of America and First Executive. The companies were loyal b ...