Banker in Moriarty Investigation Sues Former Employer

The banker who said fireworks manufacturer W. Patrick Moriarty provided prostitutes to bankers and political figures filed a $5.6-million civil suit Thursday against his former employer, California Canadian Bank, saying it made him a “scapegoat” because Moriarty and his associates were defaulting on nearly $20 million in loans.

Jonas T. Gislason, a Canadian citizen and 31-year employee of Canadian Imperial Bank of Commerce, parent corporation of California Canadian, was fired Feb. 22, 1984. In a letter dismissing Gislason, the bank accused him of violating its policies by accepting prostitutes from Moriarty and filing a fraudulent expense reimbursement claim for products actually supplied by a Moriarty associate.

In his suit filed in Orange County Superior Court in Santa Ana, Gislason accused California Canadian of making him the “scapegoat who could publicly take the blame” for a series of alleged improprieties in making the loans to Moriarty and associates.

All of the loans are in default, and California Canadian is seeking insurance company reimbursement for the lost funds.

No Officials Named

No bank officials were named in the suit. Six bank officers have been fired or suspended or have retired since a probe began 18 months ago into the background of Moriarty-related loans. No charges have been brought against any of the bank officers.

Bank officials in Canada said they would have no comment until they receive a copy of the suit.

The Times previously reported that in 1980, Moriarty showed up on property records as the owner of a $350,000 Menlo Park house occupied by Floyd Walden, a former bank vice president for commercial credit who resigned before the probe began.

According to Moriarty, Walden provided the money to buy the house and Moriarty simply had his name recorded as owner as a favor to Walden.

Walden Never Charged

Walden has not been charged with any offense in the yearlong federal and state probe of Moriarty’s business, banking and political activities.

In 1980, Walden, who had been an officer at California Canadian’s branch in the City of Orange, was transferred to San Francisco, where his duties included overseeing some of the loan work done by Gislason and others. Gislason was manager and vice president of the branch in Orange from April, 1980, to October, 1981.

Former Moriarty associate John E. (Pete) Murphy, in a series of interviews with The Times during the last year, said he has told federal and state investigators of personally delivering hundreds of thousands of dollars in cash from Moriarty to Walden while Walden was working for California Canadian in San Francisco.

Murphy said Internal Revenue Service investigators traced more than 20 trips that he made from Southern California to meet with Walden, each time carrying cash in a briefcase or a jacket pocket.

$750,000 Delivered

Murphy said that, based on bank records and IRS research, he delivered about $750,000 to Walden between about 1980 and 1982, usually meeting him at an airport. Before each trip, Murphy said, he would go to the bank at Moriarty’s request and cash a large check.

“It was all in cash,” Murphy said. “It either came from the Cal Canadian Bank or the (now defunct) Bank of Irvine (where Moriarty was a director). And I hauled . . . it to Floyd. . . .

“A lot of times I had a little plastic briefcase (to carry the money). And sometimes if I was going up to stay, I had a bigger briefcase, like an overnight bag, and I threw it in my bigger briefcase.”

Murphy said he once was stopped while going through a baggage X-ray machine at an airport and was asked by a security officer what was in the briefcase.

‘Valuable Papers’

“I said, ‘Oh, they’re invitations to a party’ ” and continued without any further trouble, Murphy said.

He said Moriarty never told him what the money was for and referred to the parcels simply as “valuable papers.”

Moriarty is scheduled to stand trial in Los Angeles federal court next week on racketeering and mail fraud charges related to the licensing of the California Commerce Club, a poker parlor he built in the City of Commerce.

Moriarty’s lawyer, Jan Lawrence Handzlik, declined to comment on Gislason’s suit and said he did not want to discuss anything else that might be part of the investigation.

‘Nothing to Say’

When Murphy’s allegations were recited over the phone to him, Walden replied, “I have nothing to say” and hung up.

In his suit, Gislason accused unnamed bank officials of using their influence to get the Orange County district attorney’s office to file a public affidavit quoting Gislason as saying that he accepted prostitutes from Moriarty and on one occasion had seen former Los Angeles Fire Chief John C. Gerard with prostitutes.

The affidavit was filed Feb. 14, 1984, in support of the district attorney’s request for a search warrant used to obtain an appointment book from Gislason’s house.

Gislason’s suit says the search warrant was unnecessary because he already had been granted full immunity from prosecution and was planning to give the date book to his lawyer to turn over to authorities.

Questioned Propriety

The suit also says that despite receiving prostitutes, Gislason questioned the propriety of some loans to Moriarty and his associates and that because of those questions he was demoted by unnamed superiors.

Gislason also claimed that all the loans to Moriarty and his associates were in excess of $200,000, far beyond his personal lending authority at the bank of $50,000.

Gislason said that even after he no longer had anything to do with Moriarty’s accounts, the bank loaned Moriarty nearly $5 million.

In his suit, Gislason asked for $5 million in punitive damages, $50,400 in lost earnings and $500,000 for “humiliation, mental anguish and emotional and physical distress.”