Commission Probes Relationship Between Heritage, RISDIC
PROVIDENCE, R.I. (AP) _ A special commission on Monday was to begin probing the tangled relationship between a small Providence bank and a private deposit insurance fund whose collapses were a prelude to the state’s banking crisis.
Investigators reportedly have focused in recent months on the relationship between the heads of the insurance fund and the president of Heritage Loan and Investment Co. during the late summer and early fall of 1990.
The results of secret inquiries began trickling out over the weekend as the RISDIC Commission prepared to start its second round of public hearings on the 10-month-long Rhode Island banking crisis.
RISDIC, the Rhode Island Share and Deposit Indemnity Corp., was the private insurer of Heritage and 45 other banks and credit unions. When Heritage failed in November 1990, RISDIC’s $25 million insurance fund was so badly depleted that it collapsed less than two months later.
Gov. Bruce G. Sundlun closed 45 institutions Jan. 1; 11 of them still have not reopened. That has frozen an estimated $1.2 billion in savings and other investments belonging to nearly 200,000 depositors, although the state did begin mailing partial refunds Monday to depositors in three institutions.
State and federal arrest warrants for Heritage President Joseph Mollicone Jr. allege he embezzled at least $13 million from the bank, causing it to go out of business. He was last seen Nov. 8, 1990.
State investigators want to know why the alleged embezzlement was not disclosed earlier. RISDIC examiners were sent into Heritage on July 2, 1990, just days before state regulators were scheduled to examine the bank.
RISDIC President Peter Nevola reportedly persuaded state Banking Superintendent Susan Hayes to postpone her exam. Investigators have said RISDIC examiners quickly discovered undocumented loans and suspected an embezzlement.
But the investigators charge that Nevola and RISDIC Chairman Joseph Bellucci - both close to Mollicone because they were fellow RISDIC board members - ordered the RISDIC examiners to help Mollicone reconstruct his bank’s records.