Publisher is linked to Culver bank

The Indianapolis Star
Sun, Jul 10, 1983
By RICHARD E. CADY Star Staff Reporter

Plymouth, Ind. A controversial newspaper publisher is caught up in legal disputes over an unusual loan arrangement with a northern Indiana bank now under investigation by the FBI.

Publisher John P. McGoff of Williamston, Mich., has sued the State Exchange Bank of Culver and its president, Alan H. Cummins. McGoff, in turn, is being sued by the bank.



The disputes involve part of $1.8 million in loans made to Forlow Travel Corp., a vacation and tour package company of which McGoff is chairman of the board. Forlow has offices in Indiana and Illinois.

McGOFF REPORTEDLY invested recently in a Culver luxury condominium project being developed by a former bank loan officer and former bank lawyer. McGoff and officials of the condominium company were unavailable for comment.

The publisher has been a target of the Securities and Exchange Commission because of allegations that he acted as an agent of the South African government. The SEC said McGoff used funds from South Africa to buy a California newspaper. McGoff has denied any wrongdoing.

Forlow Travel, formed in Indiana in 1960, was a loan customer of the Culver bank before McGoff and some of his business associates bought into the company in the 1970s.

ACCORDING TO bank records, Forlow owed the bank or its sister company, State Exchange Finance (SEFCO), $1,865,000 on 10 promissory notes when it made an agreement with bank officials last September to pay $800,000 to reduce the debt temporarily. Bank officials allegedly agreed to relend the $800,000 within 30 days.

The purported agreement was made Sept.8, say lawsuits filed in Marshall Circuit Court here. At the time, state and federal examiners were studying the books of State Exchange Bank and SEFCO after one officer resigned and another was fired.

It is believed the $800,000 Forlow transaction was one of a number that former bank officials made or attempted at the time to raise cash and simultaneously deal with various loans that were problems or potential problems.

PROBLEM LOANS were one of the factors that forced SEFCO to seek bankruptcy shelter in December. In January, Fred E. Adams, the chairman of ' the board of the bank and SEFCO, committed suicide.

The FBI has been investigating various transactions that Adams and other former officers were involved in before the bankruptcy filing.

Some of the loans to Forlow were issued through the bank, others through the finance company.

Forlow's lawsuit against the bank and Cummins maintains that the bank breached a contract by refusing to relend the $800,000 to the travel agency within the promised 30 day period.

THIS CAUSED "severe financial hardship" because the money was needed, in part, for brochures decribing tour packages essential to the travel firm's seasonal business, the suit contends.

South Bend lawyer William I. Kohn, representing the bank, countered that there was no "contract" to relend the funds.

In a countersuit, the bank said McGoff had defaulted on a $775,000 promissory note due last May and refused to pay under a $1.5 million bond he personally signed in 1981.

Kohn said he did not know any other particulars of the loan arrangements, and Cummins declined comment.

McGoff could not be reached for comment, and his Washington, D.C., lawyer, Raymond G. Larocca, was unavailable.

SEVERAL CULVER sources said it is believed McGoff bought as much as 40 percent of Harbour Development Corp. of Culver within the last several months. Harbour Development is building luxury condominiums on Lake Maxinkuckee.

The corporation was formed in 1981 by John J. Deery, who was senior loan officer of State Exchange Bank and SEFCO at the time, and Alfred E. McClure, a Lafayette lawyer who assisted the bank.

McClure, who has since filed for bankruptcy protection, received a SEFCO loan to buy land from Deery on behalf of Harbour Development.

McGoff owns the Sacramento (Calif.) Union and formerly owned five newspapers in Michigan.

HIS NAME figured in a 1979 report by the South African government on a secret $37 million propaganda campaign conducted by former South African officials. The report said McGoff received $11.5 million from a secret government fund, tried unsuccessfully to buy the now-defunct Washington Star and used part of the money to buy the Sacramento paper.

No charges have been filed, and McGoff has strongly denied being an agent or front for South Africa.