Remembering RISDIC: Lasting legacy

By Brian Crandall

Joseph Mollicone Jr. is the face of Rhode Island's credit union crisis.

He stole $13 million from the bank he headed and then disappeared.

"We put a lot of resources into finding him. A lot of nighttime surveillances and focused on the friends he may have been in contact with," said state police Col. Brendan Doherty, who was a detective during the crisis.

Mollicone was gone for nearly a year and a half. With word Mollicone might have been in Europe, then Gov. Bruce Sundlun hired an outfit that included former CIA agents to track him down.

But in the end, the fugitive banker agreed to return from hiding in Utah.

Jim O'Neil, who was state attorney general at the time, said the deal for Mollicone to turn himself in was on-again, off-again for weeks.

When the time came to make the pickup in Johnston, O'Neil said his team scrapped plans to surround the home when they spotted Mollicone in the window.

"We just drove in. It was like Avon's calling," O'Neil said.

Then it was off to the ACI. The perp walk was captured on video. It is an indelible moment in Rhode Island history.

The state's most wanted fugitive at the time was finally locked up.

"Put him in. Cell door closed. I said, 'Take care of yourself.' And that was it," O'Neil said.

After a conviction in 1993, Mollicone spent 10 years behind bars.

"It wasn't as though you'd won the game because the damage was done. That was the sad part about it. You've got one individual in custody. But the pain and suffering the people of the state went through was incredible," O'Neil said.

And the crisis wasn't just about Mollicone.

By most accounts, the Rhode Island Share and Deposit Indemnity Corp. -- the private insurer that was made up of its member credit unions and banks -- was flawed.

RISDIC's leader back then was Peter Nevola. He declined an interview with NBC 10.

Former state bank examiner Steve Cayouette said it was known that some of the institutions were on shaky ground.

"The reports were raising the red flags. There's no question about that. They just weren't going anywhere," Cayouette said.

Was it because the heads of the credit unions and RISDIC were connected?

"I think that played a part in it, absolutely," Cayouette said.

"The paramount problem as I see it was the inside game and inside people getting loans. They were scratching each others' backs," O'Neil said.

Some have laid the blame on then-Gov. Ed DiPrete.

Critics have implied people at RISDIC had political connections and that nobody really wanted to deal with it.

"They had them. They were in the General Assembly," DiPrete said.

DiPrete said he didn't interfere with bank oversight and had previously pushed for all banks to carry federal insurance. The measure died in the legislature.

"There were some issues, and given the choice -- when it comes to people's life savings -- given the choice of being insured by the federal government or by a private institution, you've got to go with the federal government," DiPrete said.

That's one clear change that came out of the crisis. No more RISDIC, just federal insurance for Rhode Island banks.

"I think it scared enough people that there are mechanisms in place where I just don't see it happening again," said Joseph Dube.

Dube's money from Wickford Gourmet was frozen in Davisville Credit Union. He was left with the cash in his registers, which amounted to a few hundred dollars at the outset of the crisis.

"When it did happen, you're saying to yourself, 'My god, this is what it must have been like during the Depression," Dube said.

To recoup money lost in the failed financial institutions, the state floated hundreds of millions of dollars in bonds. The sales tax was raised -- supposedly temporarily -- to help fund the bailout.

But you're still paying. The tax has not been lowered in the years following the crisis.

"When is this going to stop?" said depositor Joe Zenga.

And in the end, did the state learn its lesson?

"I don't know the answer to that. Doesn't look that way to me. We seem to spill money out of this state. That doesn't seem to be checks and balances to me," O'Neil said.

"We learned the connections and the political factions should not have a part in the banking regulations," Doherty said. "They needed more oversight. We learned from that, and it won't happen again."

Cayouette retired just a few months ago as the state's chief bank examiner. He said there weren't enough examiners to get the job done before the crisis. While the number of examiners was drastically increased afterward, the number has again dwindled.

"I didn't feel there were still enough resources to do the job." Cayouette said.

The current director of the state Department of Business Regulation, which oversees local banks, said he wants to fill three examiner positions but can't due to the budget. Though he also points out that the state doesn't need as many inspectors because there are fewer state-chartered banks than there used to be.

As for Mollicone, he declined to talk on camera. He said to do so would "just be reliving a terrible event I'm largely responsible for."

Mollicone now works for a manufacturing company in Providence. Ordered to pay back millions, he has a few thousand dollars taken out of his paycheck each year.

close video ad
Unmutetoggle ad audio on off