Ex-Wilshire Financial Execs Win a Round

PORTLAND-Two former senior executives of Wilshire Financial Services Group won a round in court Friday when Multnomah County Circuit judge pro tem Jeff Kilmer threw out an improper distribution of funds charge. It wasn’t because Andrew Wiederhorn and Larry Mendelsohn did not divert some $6.8 million in unauthorized advances and bonuses to themselves in 1998. Kilmer ruled that Wilshire Financial forfeited the right to litigate the matter when its executives signed waivers releasing the two from liability when the company emerged from bankruptcy on June 10, 1999.

The charge was actually a counterclaim to a $20-million wrongful termination and defamation suit brought by Wiederhorn, the trial for which is scheduled to begin Oct. 2. Wilshire has not yet decided whether to appeal the counterclaim ruling.

Wilshire Financial fell into bankruptcy in March of 1999, and after debt restructuring, two of the company’s major creditors gained control of the board. Founder and CEO Widerhorn and his senior executive Mendelsohn were fired in August of that year but retain control of the publicly traded Wilshire Real Estate Investment Trust.