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Crusader Savings Bank is out of business, but its legacy lives in on in the courts and in banking regulatory filings because of alleged wrongdoing by a former executive, a prominent Chinese businessman who headed one of its subsidiaries,
The Office of Thrift Supervision recently slapped a cease-anddesist order against Haiching Zhao, a former assistant vice president at Crusader, as well as president and chief operating officer of National Chinese Mortgage Corp., a unit of Crusader set up in 1997.
The order prohibits Zhao from serving as an officer or director of any insured bank or holding company; it also prevents Zhao from engaging in mortgage servicing while employed as a mortgage broker without prior OTS approval.
The OTS alleges Zhao - who in the early 1990s helped Chinese students demonstrating in Tiananmen Square obtain political asylum in the United States - didn't properly maintain records and paid himself without appropriate documentation.
Meantime, Crusader Holding Corp., which sold its $400 million in assets to Royal Bancshares of Pennsylvania for $42.7 million last June, has sued Progressive Casualty Insurance Co. of Mayfield Village, Ohio, in U.S. District Court in Philadelphia.
The lawsuit contends Progressive refused to pay a claim related to an alleged embezzlement by Zhao of nearly $1.5 million.
Crusader Holding President Bruce Levy said he couldnt comment on the situation because of the ongoing legal action. Company attorney James J. Bee didnt return telephone calls seeking comment.
Zhao couldn't be reached for comment.
Zhao's lawyers say he is being used as a scapegoat by Crusader, which had regulatory issues of its own at the same time. Zhao is a third-party defendant in the suit.
"Dr. Zhao denies any allegation of wrongdoing and will vigorously defend himself," said attorney James F. Hibey of Howrey, Simon, Arnold & White in Washington, D.C.
"Crusader Bank tried...