Rhode Island banking crisis
[5] When Mollicone learned authorities had caught on to his illicit activities, he fled the state, disappearing on November 8, 1990, after getting on a plane at Logan International Airport in Boston.
[7][8] The state attorney general, Arlene Violet, made several attempts to draw attention to RISDIC's vulnerability without success.
[7][8] In the late 1980s, government budget cuts moved the responsibility for conducting examinations of the insurer from the Department of Business Regulation (DBR) to RISDIC itself, further reducing outside and independent oversight.
[8] According to Pulkkinen and Rosengren, "That RISDIC did not fail earlier was attributable to its political clout and its ability to mask severe financial difficulties within its underlying membership.
[5] The outgoing DiPrete administration prepared a plan to switch RISDIC-insured institutions to federal insurance, but did not act on it because, according to the Providence Journal, "it would be presumptuous for him to do so in the waning days of his term.
"[12] The incoming administration of Bruce Sundlun planned to act on it in the days or weeks following his inauguration, but action hastened after a letter was delivered from the RISDIC board of directors.
"[12][6] A retrospective analysis by Walker F. Todd in Economic Commentary found similarities in the failures of the Ohio, Maryland, and Rhode Island systems.
They were, however, to pay their own employees as applicable, and to submit plans for continued operation to Maurice C. Paradis, the new business regulation director in the Sundlun administration.
[12][15] The state created a central phone hotline through the Department of Business Regulation, which had difficulty keeping up with the high call volume.
[18] Sundlun's administration, including later state Superior Court justice Michael A. Silverstein, set up the Depositors Economic Protection Corporation (DEPCO), which sold bonds in order to repay those whose money had been lost.
The Governor announced a plan to allow depositors to withdraw up to half of the funds in their accounts up to a certain amount, but repayments to clients of still-closed banks did not begin until six months after the initial closure.
[21] After a year, only 36 of the 45 institutions had reopened, and most of the biggest remained closed, including Rhode Island Central, the state's second largest credit union.
[14] State representatives worked to make arrangements with federal agencies to ensure those who rely on direct-deposited government checks would receive them directly.
[28] Some protests regarded specific developments, such as when the governor's office decided to release a list of all depositors with at least $100,000 locked up in one of the closed banks.
The rationale was that it was in the public interest, to foster debate around a new bailout plan which would reimburse up to that number, with funds above $100,000 recouped only after liquidation of banks' assets.
A Newsweek article noted there were more elderly participants than one would expect to see at most protests, while UPI wrote that "the demonstrators ranged from people in fisherman's hats to three-piece suits and full-length fur coats.
"[6] The state Legislature formed a nine-person panel to look into the collapse of RISDIC and, in particular, how certain insiders managed to withdraw hundreds of thousands of dollars just before the announcement of the crisis, exacerbating the problem.
According to The New York Times, the hearings "transfixed the state" and, although the last-minute withdrawals were not themselves the cause of the closures, it gave "Rhode Islanders a focus for their frustration.
[31] Though affected citizens held regular protests and demonstrations from the beginning of the crisis, several noteworthy events occurred in the weeks following the hearings.
[6] In August 1991, about 250 angry depositors met outside the Rhode Island Central Credit Union on Jefferson Boulevard in Warwick, demonstrating and obstructing traffic for about two hours.
[26][23][32] Seven people were arrested for disorderly conduct, including husband and wife Donald and Raymonde Wolstenholme, recent retirees whose savings were frozen at a credit union in Woonsocket.
[23] In one event in September 1991, more than 500 chanting protesters gathered at the Statehouse and dumped teabags in front of the Governor's office, symbolizing being on the verge of a revolt by referencing the Boston Tea Party.
[6] Though he received criticism at the time from affected depositors and other segments of the public, some of whom called for his impeachment, Sundlun was elected to a second term and continued to stand by his decisions years later.
[20] Among several other concerns Arlene Violet raised about Heritage Loan & Investment were those about its links to prominent figures in the Patriarca crime family.
Police Captain Brian Andrews told The New York Times that the year before the crisis, Mollicone had reported that vandals had entered the bank illegally, but that he would "take care of it myself," citing his connection to Luigi "Baby Shacks" Manocchio, a major figure in the Patriarca network.
[2][9] In an interview with The New York Times, Lee Blais, former director of investigations for the state Attorney General, said that in 1985 he told then-Governor Edward DiPrete (who, years later, would plead guilty to 18 counts of racketeering, extortion, and bribery unrelated to the bank crisis) about connections between Heritage and organized crime, and gave to him a report detailing problems with RISDIC, but nothing was done.
[2] When talking about the financial crisis, Attorney General Arlene Violet frequently referenced what she called "the network," which she described as "just like organized crime except for one thing: they make what they do legal.
[1][20] He took the name of an acquaintance who died just before he fled, John Fazzioli, and according to the Providence Journal "lived under the persona of a Boston jewelry manufacturer who had come to Utah to ski and relax.
"[24] The Superior Court Judge, Dominic Cresto, responded by saying that Mollicone had "considerable talents and persuasive manipulative abilities through the use of charm and guile," and said he had "a conscious, systematic scheme of plundering bank assets entrusted to him.
[41] In 2009 a judge granted the Internal Revenue Service (IRS) permission to take legal action against Mollicone and to seize any assets he has in order to pay $33 million in taxes and associated penalties and interest from the time he was still working at Heritage Loan & Investment.
