By JOHN KOSTRZEWA
Journal-Bulletin Staff Writer
Wednesday November 21, 1990
Joseph Mollicone Jr. tried to stave off a
takeover of his bank, Heritage Loan and Investment Co., by telling
insurance examiners he had raised $1.15 million to ensure the
Mollicone, president and controlling stockholder
of the privately held bank, told examiners that he had sold stock
to new investors and had added another $200,000 in cash himself.
But, according to insurance and state regulators,
the stock sale was phony. People whose names appear on the stock
certificates said they did not invest with Mollicone, said Susan
D. Hayes, state superintendent of banking.
Peter A. Nevola, president and chief executive
officer of the Rhode Island Share and Deposit Indemnity Corp.,
the bank's private insurer, said the scheme went further.
Mollicone "appeared to make withdrawals
from some savings accounts and took those withdrawals to purchase
stock in the name of the people who had the deposits," Nevola
"But," Nevola said, "they
never authorized it."
State investigators, he added, are looking
into whether signatures on deposit slips were forged.
Hayes said two people whose names appear
on the stock certificates have signed affidavits swearing that
they never bought any Heritage stock. Those affidavits have been
turned over to state investigators.
A third person, Arthur Coia, whose name appears
on a stock certificate, said he never talked to Mollicone about
"I just heard from you something that
is totally foreign to me," said Coia, general secretary-treasurer
of the Laborers International Union, in a telephone interview.
Coia later met with investigators and told
the Journal-Bulletin his signature on the certificate was forged.
Since Nov. 13, a state grand jury has been
investigating criminal misconduct and possible embezzlement at
the small Providence bank.
Several people whose names appear on loans
at the bank told the Journal-Bulletin they testified yesterday.
They said they testified that they did not borrow the money, and
that the signatures on loan documents were not genuine .
Mollicone owns 70 to 75 percent of the bank's
stock and controlled its operation, said Nevola.
Mollicone, 47, of Providence, has substantial
real estate holdings in Rhode Island and is well known in political
and social circles. He has been missing for two weeks.
State regulators and insurance examiners
said that the last time they saw him was when he left the bank
at the close of business on Nov. 7. No one from Mollicone's family
has reported him missing to Providence police, said Capt. Bernard
RISDIC took control of Heritage on Oct. 18,
when RISDIC's examiners found millions of dollars of incomplete
or missing records.
RISDIC disclosed its seizure on Nov. 12,
sparking a run on deposits. During the next four days, depositors
withdrew $13.6 million.
The state, saying there were $13 million
in bogus loans on the bank's books, declared the bank insolvent
and won court approval Sunday to close the bank temporarily.
Fred J. Franklin, director of the state Department
of Business Regulation, said no reopening date has been set.
Franklin, the bank's court-appointed receiver,
said the $8.5 million still on deposit is safe and will earn interest
while the bank is closed. RISDIC looks at books
The problems at Heritage were uncovered during
a RISDIC examination that began June 28 - the first state or RISDIC
exam of the bank in about three years.
During the examination, Nevola said, examiners
sent verification requests to banks where Heritage said it had
investments, or where Heritage held accounts with money on deposit.
Nevola said examiners also asked the banks whether they had loaned
Heritage any money.
The verifications came back with lists of
loans that Heritage had taken out but never recorded on its books,
Examiners entered the loans on Heritage's
books and subtracted them from the bank's capital, its cushion
against loan losses. When those subtractions drained the bank's
capital below minimum requirements, Nevola said, Mollicone told
RISDIC he would raise additional funds.
Nevola said that in September, examiners
talked with Mollicone about the dwindling bank capital and loan
records they were still researching.
"He continually told us he knew the
loans were a mess but that he did have the documentation, and
he would make it available to us," said Nevola. "And
he started doing that. He started to bring us records that began
to make some sense, and he led us to believe he would continue
"He said he would provide documentation
to ultimately show he would not need new capital but said, 'I'll
put capital in to make you comfortable. I will find the documentation;
and ultimately, if it is determined the bank needs more capital,
I will put more capital in." "
According to Hayes, the superintendent of
banking, the names that appear on the apparently bogus stock certificates,
all dated Oct. 16, are Harry Harootunian, $350,000, 700 shares;
Coia, $450,000, 900 shares; Bernard Renzi, $150,000, 300 shares;
Paul or Gail Calenda, $200,000 for 400 shares.
Hayes said Harootunian and Calenda have told
regulators that money was withdrawn from their accounts at the
bank without their permission, and that they did not buy stock
in the bank.
"That is what they have represented
to us, and they have signed affidavits to that effect," said
Harootunian, president of Harootunian &
Associates in Warwick, told the Journal-Bulletin: "I'm not
discussing anything about the situation."
Calenda, president/treasurer of N.E. Industries
in Providence, and Renzi could not be reached for comment yesterday.
The fourth certificate was in the name of
"Arthur Coia, trustee," said Hayes.
Coia told the Journal-Bulletin that he works
for the union in Washington and is not a trustee of any unions
in Rhode Island. He said the international union had no assets
at the bank.
He said the Laborers local affiliates had
in various accounts at the bank about $450,000, the amount of
stock that appears on the certificate in his name.
"I am obviously concerned about the
safety of the money,'' he said.
He also said he had an "individual personal
savings account" at the bank, which he has withdrawn.
Nevola said the $200,000 cash infusion that
Mollicone told regulators he made is entered on the bank's books,
and that Mollicone did put a $200,000 certified check in the bank.
* * *
With staff reports from Kevin Sullivan.
Contents copyright 1982 to 1998 by The Providence Journal Co.