The former owners of Foothill Financial have served a $4.7 million notice of claim on Utah officials and lawmakers, blaming the state for the thrift's demise.

Local real estate developers Richard S. Prows and Robert W. Wood charge the state with negligence, breach of contract and fraud in connection with their purchase of the thrift and efforts to get it federally insured."I am not surprised it came, I am just surprised it took this long," Associate Deputy Attorney General Paul Warner said of the notice of claim.

Warner declined to comment.

The notice, served on Utah officials and legislative leaders, including Gov. Norm Bangerter, Senate President Arnold Christensen, R-Salt Lake, and House Speaker Glen Brown, R-Coalville, gives the state 90 days to accept or reject the claim. If the claim is rejected, Foothill could then file a lawsuit against the state.

Earlier this week, Foothill filed an $11 million lawsuit against KSL-TV, charging the station's news reports contributed to the thrift closing its doors under pressure of a run on deposits last year.

The notice said state officials and lawmakers made misrepresentations and didn't keep the promises that would have allowed Foothill to obtain federal deposit insurance.

Prows and Wood acquired the thrift in 1985 through their company Foothill Federated Corp. The notice said Prows and Wood were told by the state Financial Institutions Commissioner Elaine B. Weis that they had two years to obtain federal deposit insurance and Foothill's deposits would be backed by the Industrial Loan Guaranty Corp. during the interim.

But the Industrial Loan Guaranty Corp. a private guaranty created by lawmakers in 1975 to insure industrial loan deposits was declared insolvent in July 1986 and seven of the guaranty fund's industrial loan companies were taken over by the state. State regulators didn't take over Foothill, but allowed it continue its quest for Federal Deposit Insurance Corp. coverage, until a depositor run April 3, 1987, forced Prows and Wood to sell the thrift to Zions First National Bank.

The lawsuit against KSL claims the station's news reports about Foothill operating without federal insurance caused the run.

When they bought the thrift, the notice said, Prows and Wood relied on representations and promises of Weis and state lawmakers that the Industrial Loan Guaranty Corp. would guarantee thrift deposits.

The notice is similar to others filed against the state by depositors who stand to lose money because of the Industrial Loan Guaranty Corp. failure, in that it claims state regulators operated the corporation and allowed it to become insolvent. It further alleges that Weis "failed and refused to notify the Salt Lake County attorney of known or probable ILGC violations."

Foothill's owners were not aware of the corporation's financial condition, the notice said, and because of the state's "acts and omissions" the thrift didn't have two years to obtain federal insurance nor were its deposits guaranteed.

The notice said Foothill Federated Corp. had to sell its assets and those of Foothill Financial to Zions in order to prevent depositor losses. The sale also required a $4.9 million guaranty by Foothill and its owners.

"Charges against these guarantees already exceed $2.7 million," the notice said.

In listing damages against the state, the notice said, "Foothill suffered damages in the loss of a profitable thrift and loan company valued at approximately $4.7 million."