That Time a Reputed Mob Banker Fled to Salt Lake City

by Peter

In 1990, banking investigators in Rhode Island began looking into the finances of a Providence bank, Heritage Loan and Investment Company. They quickly found that between $13 million and $15 million had been taken from the bank by its president, Joseph Mollicone, Jr out of a total of $22 million of deposits. Although he originally told investigators the improbable story that he had loaned out the money without requiring any documentation or collateral, and without keeping records, it quickly came out that Mollicone had been taking money out of the bank since at least 1986 and covering it up with the help of his vice president who helped him create fraudulent loans.

Mollicone also had connections to members of the Patriarca crime family, the head of the New England mafia and there was some suspicion that Heritage had been laundering money for the mob. In fact, the vice president who had helped Mollicone cover his embezzlement was later convicted of laundering money for a Columbian cartel.

The entrance to the Federal Hill neighborhood of Providence where Heritage was located. That's a pinecone hanging from the arch, although it is often mistaken for a pineapple. By Zigamorph [CC BY-SA 3.0 us (], from Wikimedia Commons.

With investigators closing in, Mollicone fled Providence. Although state investigators tracked down every lead they could find, including reports that he was attending the Olympics in Italy, they were unable to find him for 17 months until in 1992 he turned himself in to police. In the meantime, Heritage failed due to the embezzlement. Due to a series of interconnected problems, the failure of Heritage precipitated a run on the banks of Rhode Island and a full-blown banking crisis.

The private insurance firm that covered the Rhode Island banks and credit unions that served a third of the state's population, RISDIC, was well-connected to the Rhode Island political community. Only lax oversight was given of both RISDIC and community banks and credit unions and sweetheart loans were given to politicians. In fact, Mollicone served for a time as the vice chairman of RISDIC's board of directors. By 1990, the corporation was insuring over $750 million in deposits with only $25 million in reserves.

After Mollicone fled, depositors immediately attempted to withdraw $12 million from the bank. This, in combination with another bank failure the year before, pushed RISDIC into insolvency. The new governor of Rhode Island was forced to close every RISDIC-insured bank in the state, closing off access to $1.7 billion from 300,000 account holders. Although some banks were able to reopen after obtaining federal insurance, others remained closed. The state ended up floating hundreds of millions of dollars of bonds to repay depositors, raising the sales tax rate from 6% to 7%, where it remains to this day. After trail, Mollicone spent 10 years in prison and was then ordered to pay restitution of $12 million to the state. In 2016 he was reported to be repaying about $300 per month out of his social security checks. Although he never misses a payment, he is on track to repay the state in a little over 4,500 years.

The Utah connection in this story comes from the fact that when he fled Rhode Island, Mollicone chose Salt Lake City as his destination and hiding place, later saying that he chose it because he had flown there before.

In Salt Lake, Mollicone grew a beard and long hair which he wore in a pony tail. The married father of four rented an apartment in what one newspaper described as a "swank downtown condominium tower" for $750 a month and found a girlfriend. He represented himself as a semi-retired jewelry dealer from Boston. A neighbor said he would regularly make him spaghetti sauce. In the meantime, Mollicone's wife back in Providence lost her house and had to declare bankruptcy.

Mollicone also bankrupted his girlfriend by running up huge credit card debts to support his 'swank' lifestyle. After the money ran out, he returned to Rhode Island to face the music.


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