Ex-Owners of Defunct S & L Indicted on Fraud Charges

Two men who once owned now-defunct Ramona Savings & Loan in Orange were indicted Thursday by a federal grand jury on counts of fraud and filing false documents allegedly part of a scheme to use $29 million in bank loans to buy real estate in Palm Springs.

John Lee Molinaro and developer Donald P. Mangano Sr. each face 36 counts of bank fraud, conspiracy to defraud, filing false documents and doctoring books at the thrift. If convicted, each could be sentenced to 180 years in prison and fined $9 million.

The indictment accuses Molinaro and Mangano of engineering several complex transactions involving straw parties to transfer a Palm Springs condominium complex from Ramona to Mangano and then back to Ramona.

Both men are also targets of a lawsuit filed by federal regulators who took over Ramona last year and claimed that mismanagement and fraud had cost the institution $40 million. Lawyers for the Federal Savings & Loan Insurance Corp. have won court orders requiring Molinaro to pay more than $8 million so far.

Mangano is not in custody. Arrangements for his surrender are not complete, according to Assistant U.S. Atty. Harriet Beegun Leva. Molinaro is serving a two-year sentence for passport fraud, and still faces six fraud charges involving unrelated Ramona transactions in a separate criminal case.

Loan of $29 Million

In the latest case, investigators believe that the deals, obscured by false bookkeeping at Ramona, were designed to give Mangano a chance to develop the Palm Springs property, Cherokee Village, into a hotel. It also gave Molinaro, who was then the sole owner of Ramona after buying out Mangano, relief from Federal Home Loan Bank Board regulators who were pressuring him to end the thrift’s financial reliance on real estate investments.

The upshot of the transactions was that Ramona loaned $29 million to a series of straw parties and corporations which purchased Cherokee, an ailing 173-unit condominium project, from the thrift, according to the indictment.

Grand jurors charged that Mangano controlled the straw parties and quickly acquired the property in 1985. The transactions--Ramona to straw parties to Mangano--allegedly occurred on the same day, according to Leva.

Less than a year later, Ramona repurchased the property, reversing the process, for about $1 million, according to prosecutors.

Mangano was a 50% owner of Ramona from April, 1984, to May, 1985. Federal regulators, already alerted to the financial problems which ultimately led to Ramona’s collapse, would probably have opposed any sale of Cherokee to Mangano, Leva said.

The deal left Mangano with $29 million to convert the condominiums to a resort hotel--a project that apparently never took place. The money was interest free for three years, under the original loan documents and a later revision, according to grand jurors.

Mangano and Molinaro allegedly hired three men to act as straw borrowers, buffering the two former partners from direct dealing. The three were promised land worth $50,000 if they would take part, according to the indictment.

Ramona loaned the funds to corporations that the three straw borrowers set up to purchase Cherokee. Then Mangano bought the three firms, acquiring the property and the loan proceeds, according to the indictment.

The indictment identified the three straw parties as Molinaro’s high school buddy John Dariano Jr.; Frank DeCarlo, Dariano’s father-in-law; and Dariano’s attorney, Donald Calvello.

Each member of straw parties had to sign more than 3,000 documents--taking more than eight hours--to set the scheme in motion, according to the indictment.

Molinaro doctored thrift books to conceal the true nature of the transactions from both Ramona directors and regulators from the Federal Home Loan Bank Board, the indictment alleges.