Conference 7.286::dcu

    
    Reading the Globe article, one who think that Mr. Mangone's gambling
    streak has been going on since he was fired in April, 1991.  I have
    the Cape Code Time article written about the same court proceedings
    which provide a little more detail.
    
    Mr. Mangone made a number of gambling trips while he was President of
    DCU also.  I believe the numbers used were 26 trips in 18 months (7 or 8
    since he was sued).  I will try and enter the CCT articles tonight.  I
    am also in the process of getting more detailed info on his gambling
    junkets from the contempt proceedings.
    

    Re .1:
    
>   Mr. Mangone made a number of gambling trips while he was President of
>   DCU also.  I believe the numbers used were 26 trips in 18 months (7 or 8
>   since he was sued).
    
    That averages one trip every three weeks.  If there's any consolation
    that we DCU members might take from this, it is that the likelihood that
    Mr. Mangone has managed to keep large amounts of money hidden from view
    is distinctly lower than it would be if he were laying low.  We might
    not get a cent back from him, but at least we won't be subsidizing his
    retirement.

One bit of good news in this is that it appears that he does have 
financial resources that NCUA (and hopefully DCU) will be able to
extract after the court battle is settled.  One can always hope...

This just gets "curiouser and curiouser...."

./chris

    
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   [Re-printed without permission from the Cape Cod Times, April 7,1992]

		    "Credit union head gambled away funds"
				By Susan Milton
				   Staff Writer

	As he helped to drain and defraud a Hyannis credit union, Richard 
	Mangone of Norwell was gambling millions of dollars at a Las Vegas
	casino, federal regulators claim.

	When the Barnstable Community Federal Credit Union was collapsing 
	in March 1991, Mangone wagered more than $760,000 and lost more 
	than $240,000 in six days, they claim.  It was just one of 26 visits
	in 18 months in which he wagered more than $2.5 million , averaging 
	$100,000 in bets a visit at the Mirage, a Las Vegas hotel and casino,
	according to the National Credit Union Administration.

	At the time, Mangone was working full time as president of the Digital
	Employees' Federal Credit Union, based in Maynard.  He also was helping
	to create the faked loans that drained the Barnstable credit union,
	according to court records.

	Mangone, fired last April, has been gambling, using $263,400 in hidden
	money as he awaits trial on $47 million of alleged fraud at the 
	Barnstable credit union, NCUA attorneys say.

	By February, Mangone had paid at least $150,000 to the Mirage, including
	$120,000 in February alone.  At the time of such gambling, the court 
	had ordered Mangone to reveal his assets, live on a budget of $8,000
	a month, and clear any unusual expenses, according to court records.

	That is why NCUA attorneys want Mangone to be fined and/or jailed 
	for flouting last June's court-ordered limit on his spending.

	"While (federal regulators) labor to sort out the financial ruin left
	behind at (the credit union) by defendent Mangone and his co-defendents 
	and to recover funds looted from the credit union, Mangone has been 
	gambling away tens of thousands of dollars at the Mirage - a Las Vegas
	hotel and casino - dollars which ought to be used to repay (the credit
	union) and NCUA's insurance fund," charged the NCUA attorneys.

	Mangone has an unlisted telephone number.  His attorney has refused
	comment.  Parties are under judge's instruction not to comment on the 
	case outside of the courtroom.

	During eight trips to the Mirage since September 1991, Mangone, using
	the name of Charles Meyerson, bought $263,400 in chips to bet primarily 
	at blackjack and craps, as well as roulette and other games, according 
	to the casino's computer logs, subpoened by the NCUA.

	Often buying $50,000 in chips a visit, Mangone lost $77,750 and won 
	$67,975 in all since September.  Mangone, as one of the casino's 
	"gold" customers, was treated to $35,000 worth of airfares, 
	$500-per-night penthouse suites, meals, drinks, Las Vegas shows and
	boxing tickets, according to the NCUA.  

	Mangone's "disobedience of this court's order is plainly and utterly 
	contemptable," NCUA attorneys argued.

	NCUA's lawyers described Mangone's recent gambling sprees in documents
	filed last week in U.S. District Court in Boston.  It is the latest 
	twist in its civil suit that charges Mangone and four other defendents 
	with $47 million of fraud at the credit union, taken over a year ago 
	and closed since last June.

	The motion for a hearing to find Mangone in criminal contempt, 
	punishable by a $1,000 fine and/or six months in prison, was filed by
	trustee John Ottenberg, a lawyer from Boston.  Ottenberg was appointed 
	last June to keep the defendents from spending money that could be used 
	to recoup the credit union's losses.

	The harm in Mangone's spending, NCUA attorneys stated, is not just to 
	the court'sauthority but also to the often innocent people whom Mangone
	and other defendents recruited to act as stand-in borrowers, also 
	called straws, for the millions of dollars of faked loans at the Digital
	and Barnstable credit unions.

	Debts not repaid by Mangone and his co-defendents will "regretably,
	continue to be the responsibility of the large number of 'straw' 
	borrowersthey exploited and deceived," NCUA stated, adding that 
	some borrowers are in or on the verge of bankruptcy. 

	"Thus, having made shambles of dozens of lives in the community once 
	served by (the Barnstable credit union), Mangone now not only thumbs 
	his nose at this court's mandate," the attorney stated, "but shows 
	an even greater disregard for the people he has bankrupted."

	A hearing on the contempt motion, supported by NCUA, will be scheduled
	when Mangone responds to Ottenberg's claim.  The Digital credit union,
	Mangone's former employer, also is suing Mangone and others over 
	$18 million in related fraud in a civil suit in Plymouth Superior Court.

	The gambling information was unearthed by NCUA during its own 
	administrative investigation of the Barnstable credit union fraud.

	The casino's subpoenaed gambling logs, kept by computer, show a 
	customers length of stay and time spent gambling; his credit line; chips
	bought, the table and dealer; estimated average bets and estimated 
	winnings and loses.

	Mangone's gambling peaked in February, just before Judge William Young 
	fined him about $1,000 for failing to show up, as ordered, for 
	depositions to prepare for trial.

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   [Re-printed without permission from the Cape Cod Times, April 9,1992]

		    "Judge restricts travel for Mangone"
				By Susan Milton
				   Staff Writer

	BOSTON - A high-stakes gambler awaiting trial on charges of defrauding 
	a Hyannis credit union walked out of a court hearing yesterday with his
	freedom but constrained by travel limits that put states with casinos 
	off-limits.

	Richard Mangone of Norwell, one of the leaders of the now-closed 
	Barnstable Community Federal Credit Union, was ordered yesterday to 
	stay out of Nevada and new Jersey and other places that allow gambling,
	including casinos , Indian reservations in Connecticut, and riverboats.
	He also cannot travel outside the continental United States, Judge 
	William G. Young ruled.

	Mangone's attorney argued that the ban could affect his new job but 
	did not say what that job was.

	"If you enter this order, you will destroy his (new) livelihood.,"
	Mangone's attorney William Cagney, told Young yesterday in U.S. First
	District Court in Boston during a hearing on a request that Mangone be
	found in contempt.  "One of these states is where his employment is
	centered."

	But Young said the travel limit was appropriate, given evidence of 
	Mangone's eight gambling sprees since last September at the Mirage, 
	a Las Vegas casino.

	During that same time, Mangone was under Young's order to reveal his 
	assets, live on an $8,000 monthly budget and clear any unusual spending
	with a court-appointed trustee.

	According to the casino's computer logs, Mangone bought $263,000 in 
	chips and paid the casino $150,000 in all during the time period.

	Yesterday, Young did not order Mangone to jail immediately, as suggested
	by trustee John Ottenberg.

	Supplying the casino's computer logs of Mangone's spending, Ottenberg 
	and federal prosecutors last week asked that Mangone be found in 
	criminal contempt, subject to fines and jail, for flouting Young's 
	spending limits.

	Young agreed there was reason to think Mangone violated the court order.
	But he disqualified himself and said another judge should hear the 
	criminal charge.

	Cagney argued that prosecutors were mistaken and "one of the mistakes
	may be the origination of the gambled funds."

	He said the records eventually will show that the source of Mangone's
	gambling money was a line of credit, commonly given by casinos, and not
	assets covered by Young's order.  He suggested that Young make a new 
	ruling that clearly covers such credit lines.

	Approached after the hearing yesterday, Mangone shook his head from 
	side to side and, without speaking, moved away from a reporter.

	The court order is part of a $47 million suit against Mangone and four
	other former credit union insiders, as filed last year by the National
	Credit Union Administration.

	In the pending civil suit, the credit union insiders are accused of 
	draining money, via loans, from the Barnstable credit union and hiding
	their scheme by using 'straw' or stand-in borrowers and faking loans.

	The defendents are Mangone, former president of the Digital Employees'
	Federal Credit Union, based in Maynard, Barnstable developer 
	James K. Smith, former Hyannis lawyer Michael O'Neil, Wellesley lawyer
	Robert Cohen and former Osterville businessman Bruce Harris, now in 
	Florida.

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    Must be rough to live on only $8000 per month.
    
    Don

Why would the Judge have disqualified himself on hearing the criminal contempt
charge? Don't they usually disqualify themselves when the have a conflict of 
interest or relationship with one of the parties?

Bryan

	RE: .7

	In this case the Judge probably disqualified himself because he has
  already heard parts fo the case and in a criminal trial the case needs to be
  conducted and heard solely based on the evidence introduced.  Criminal trials
  do not allow certain types of evidence to be introduced, let alone heard, so
  what he has heard so far could be prejudicial to a fair trial.  In other words
  he doesn't want a conviction thrown out because of something heard on the
  civil side.

		Danny

    Re: .-1

    That's certainly true for juries, but I don't think it is true for
    judges.  After all, the judge has to hear the substance of the evidence
    before he can rule on its admissibility for a jury.  The judge is
    supposed to be sufficiently legally trained that he can hear evidence
    and then not consider it when he renders a decision, even assuming a
    non-jury trial.

    
    re -.1
    
    No, I think the judge would still [have to?] consider him/herself
    'tainted' by intimate knowledge of the other case. Same sort of
    thing if the same judge to hear a case in a lower court was then
    promoted to the next higher level and was assigned to hear the
    appeal of the same case.
    
    I just got off of Jury Duty in the Merrimack County Superior Court
    (which is the only level in New Hampshire at which jury trials are held),
    and in chatting with a couple of lawyers who were in the pool with me,
    they emphasized that the system is extremely sensitive about this
    kind of thing, whether or not a given case is being heard by a jury.
    
    

    Does it make sense for a judge who made a ruling to hear an appeal of
    that ruling?

    Re: .-1
    
    No.  And that's why judges excuse themselves if the situation arises.
    It has even happened for new Supreme Court judges.
    
    But I don't think an appeal was the situation described in
    .-<whatever>.

   It's not unusual (at least in Massachusetts) for a Judge in a criminal case
  to recuse himself because he's heard a motion (i.e. prior to the trial) on
  the case.

		Danny

    "Recuse"!  That's the word I was looking for!  Thank you.

    There's a long, but relatively content free, update to the Mangone
    suit in today's (9/8/92) Globe.

    Can you share any relevant facts?

       As .14 said, there wasn't much 'content'. It's all been covered in
    here before.
                                  Denny

	Investigators still probing alleged
		Credit union scam
	By John H. Kennedy, GLOBE STAFF

	Boston Globe, Tuesday, Sept 8, 1992 (page 37)

It was as if the credit union was their piggy bank, a piggy bank that
ultimately shattered, authorities say.

Regulators shut the Barnstable Community Federal Credit Union last
year after accusing Richard D. Mangone and other credit union
insiders with siphoning off more than $40 million in loans.
Investigators say they can recall alleged fraud on such magnitude in
few cases involving credit unions nationally.

Now, more than a year after the credit union was liquidated, the
shards are still flying.

The US Attorney's office is wrapping up a criminal investigation of
former credit union insiders, although no charges have yet been filed.

In addition, federal regulators are seeking a judgment on just a
portion of their civil suit filed in US District Court in Boston in
June of 1991 against five former officials, asking for nearly $20
million in damages.

"It is a monumental scheme of fraud and deceit," the National Credit
Union Administration said in documents filed late last month. "The
perpetrators were a group of... insiders who treated the credit union
as their private piggy bank."

Each credit union account was insured for up to $100,000 and no member
was believed to have lost money. But regulators still are not sure how
much money they will recoup, even if the legal effort against the men
is successful, aside from selling the real estate.

The most visible of the insiders is Mangone, of Norwell, the first
chairman of the credit union in Barnstable. His reputation as a Las
Vegas high roller who won or lost up to $40,000 per trip - but rated
him free penthouse suites and airline tickets from the Mirage Casino -
drew the wrath of regulators earlier this year.

The trail of his alleged fraud also led back to the Maynard - based
Digital Employees Federal Credit Union. That credit union flred him as
its president in April 1991, and has sued him in Plymouth Superior
Court over $18 million in bad real estate loans, some of them made in
conjunction with the Barnstable credit union, court documents say.

Regulators say the scheme at the Barnstable credit union began as
early as 1985, with Mangone, who helped found the credit union three
years earlier, and other directors abusing their positions of power.

They as bank insiders were signing off on their own loans, disguised
under the names of the "straw" borrowers and with falsified documents,
according to court documents. They sought the loans mainly for highly
leveraged real estate ventures, mostly on the Cape, that other
institutions following safe lending policies would have turned away,
regulators say.

The "straws," who served as trustees of real estate trusts, officials
say, were sometimes low-paid painters, construction workers, garbage
collectors and handymen who were given false financial portfolios.

In some cases, the credit union officials would "flip" the properties,
transferring them from one straw they controlled to another, using yet
another credit union loan to pay for the "sale," according to court
documents.

The properties were examined by selected appraisers who supported
false purchase prices contained in phony purchase and sales
agreements, one credit union insider has said in an affidavit. Robert
Cohen and Michael D. O'Neil, both lawyers, would act as closing
attorneys on many of the transactions, she said in the affidavit.

At flrst, the insiders were able to pay off the straw loans by
reselling the land, or "flipping" it to another straw, regulators
allege. But after 1987, they were exhausting their straws and ability
to re-sell the properties. So they would take out larger loans to pay
off older straw loans, and used less and less of the proceeds to
finance new construction, regulators said.

The civil lawsuit filed in US District Court by the credit union
administration names Mangone; O'Neil, a lawyer and former chairman;
James K. Smith, a Cape Cod builder and former vice chairman; Bruce N.
Harris, chairman of the credit union from 1987-1990, and Cohen, a
lawyer from Newton Center who often served as counsel to the credit
union.

When the credit union was chartered in 1982, Mangone, O'Neil and Smith
were among the original 10 subscribers.

Some say O'Neil and Smith made no secret of how they viewed the
institution, which had its offices in Hyannis and a branch in
Barnstable.  Some customers and employees of the builder referred to
the credit union as "Smith's bank," according to court documents.

Donna M. Donovan, who began working as O'Neil's secretary in 1988,
said she was briefed by his previous secretary.

"She told me that O'Neil `owned' Barnstable Community Federal Credit
Union," Donovan told regulators.

Until 1987, the credit union's board of directors - dominated by
Mangone and Smith - were said to have approved loans. When other
directors joined the board, the insiders sought to retain control by
forming a committee to review loans, made up of Mangone, Smith,
Harris, O'Neil and Lynn M. Vasapolle, who first met Mangone in 1975
and took a job as a loan officer at Barnstable at his urging, court
documents say.

Beneath the sweeping allegations of fraud, greed, deceit and trickery
are smaller, personal tales of financial failure. Some people alleged
to have served as "straws" for fraudulent loans, for example, now
appear tQ have been forced into bankruptcy court as result of it.

Smith, the well known home builder, was alleged to be successful in
recruiting straws, many of them his employees. Some of them were
offered up to $5,000 to sign documents, and they were later listed as
borrowers for loans that ran into the millions of dollars, regulators
say.

One of them was Fred Kistner, a 39-year-old man from Marstons Mills,
who went to work for Smith as a construction supervisor in 1989. By
signing loan documents, Kistner would get $500 per loan, he said in a
deposition. Three or four others he knew were doing the same thing, he
is [sic] in the court document.

And Kistner said he was told Smith would take care of the loans.  "He
said he'd be responsible for them all," Kistner said in the document.

Smith, of course, was not to be believed, regulators say.

Apparently none of the straws saw any of the loan money, but they are
now being held responsible for the loans because their names and
signatures are on documents.

Two construction workers who worked for Smith have been forced to seek
the protection of US Bankruptcy Court in Boston. (Their attorney,
Stanley Labovitz, did not return several phone calls.) Regulators are
seeking to block the discharge of the men's debts, saying as "straws"
they are responsible for the debt on the properties purchased through
the alleged credit union scheme.

In Charles T. Morgan's case, he is alleged to owe a total of $368,633
for three properties in Marstons Mills, Sandwich and Pocasset. In
Richard A. Mola's case, regulators day he's responsible for two loans
totaling $195,250.

Those troubles may pale in comparison with Mangone's.

As a target of the lawsuit to recoup some of the defunct credit
union's losses, Mangone been accused of living a high-roller's life.

In April, court-appointed trustee John C. Ottenberg recommended
Mangone be prosecuted on a contempt charge for allegedly violating a
court order to spend no more than $8,000 per month for "ordinary,
reasonable and usual personal expenses."

Mangone had allegedly frequented the Mirage Casino at Las Vegas at
least seven times since mid-1991, purchasing more than $250,000 worth
of chips, winning or losing as much as $40,000 per trip.

Mangone's lawyer, William C.  Cagney of Edison, N.J., has declined
comment, saying he would violate local court rules by discussing the
case. Lawyers for Smith, O'Neil and Cohen either declined comment or
could not be reached.

During depositions for the civil lawsuit, the five defendants decided
to answer few or no questions, invoking their constitutional right
against potential self-incrimination.

But Harris' attorney, Michael A.  Collora, asserted that his client
was duped, and "flatout denies" attending various bank meetings to
approve alleged fraudulent loans.

Harris, who has moved to Florida, has filed for bankruptcy liquidation
there, as has Cohen in Boston.  O'Neil has filed for Chapter 11
bankruptcy protection in Boston. Judges have agreed to consider
requests to hold them responsible for debts attributed to them by
federal regulators.

Questions have been raised as to whether the Barnstable credit union
could have been spared by more vigilant regulators.

The National Credit Union Administration had its examiners look at the
books annually, in addition to audits by outside firms hired by the
credit union itself.

Those questions were raised publicly as far back as 1987 by The Cape
Cod Times, which detailed the large number of loans made by the credit
union to entities controlled by Smith.  He left the board by the
spring of 1988, apparently because of the publicity.

"We hoped that if Smith left the board, the criticism would cease,"
said Vasapolle, the senior loan officer who became treasurer, in an
affidavit.

Layne Bumgardner, the NCUA's regional director, says such an alleged
conspiracy by network of insiders, lawyers and others is difficult to
crack.

"Fraud and collusion (by) a group of people agreeing to do something
so that it looks like something else, is difficult to pick up," he
said.

    
    Fugitive in credit union case reportedly has been sighted
    
    By Judy Rakowsky, Globe Staff
    
    Boston Globe, Thursday, July 20, 1995 (page 36)
    
    Five months after convicted embezzler Richard D. Mangone slipped off
    his electronic bracelet and disappeared into a snowstorm, US marshal
    deputies say the former credit union president has been sighted around
    metro Boston.
    
    A high-rolling gambler with champagne tastes, Mangone has been a 
    fugitive since early February, when he wangled a 24-hour headstart
    by disappearing when he was supposed to be visiting his lawyer in
    New York.
    
    Mangone, 50, of Norwell, fled a week before his sentencing for
    masterminding the nation's second largest credit union fraud scam,
    court records show.  He faced more than 15 years in prison.  Officials
    described him as an avid casino gambler, known to lose as much as
    $25,000 a day, and who often traveled with a body guard.
    
    Since June, deputies and the FBI say Mangone has been spotted on Cape
    Code, in Scituate, Weymouth, his native East Boston and in Springfield.
    
    "We're a lot closer to finding him than we were a few months ago,"
    said US Marshal Supervisory Deputy Steve Stafford.
    
    But why, authorities wonder, would Mangone turn up in the back yard
    of the two credit unions he was convicted of draining of $40 million
    to $75 million through serial land flips and straw sales?
    
    "It's in his nature to be a gambler; he likes the thrill of living on
    the edge," Stafford said.
    
    Digital Equipment Employees Federal Credit Union in Maynard has barely
    survived the scheme that already has sent two prominent developers
    and a Newton lawyer to prison and led to the insolvency of the
    Barnstable Community Federal Credit Union.
    
    Mangone is known for having ties to Mafia figures on the West Coast
    and having access to great stores of cash, authorities said.  Mangone
    also was known to buy cases of Dom Perignon at a Hyannis liquor store
    and insist on being shuttled from the airport to Las Vegas casinos in
    a stretch limousine.  Investigators said he told co-workers, "Regular
    limousines are for zeros."
    
    US District Judge William G. Young allowed Mangone to remain on home
    detention from his July 1994 conviction on money laundering,
    conspiracy, embezzlement and bank fraud until the Feb. 17, 1995, 
    sentencing.
    
    James Smith, a Cape Cod builder and cofounder of the Barnstable credit
    union with Mangone, is serving a 15-year sentence.  Rockport developer
    Ambrose Devaney is serving a 37-month sentence, and suspended attorney
    Rober Cohen is serving a 10-year sentence as a result of the case.
    Cohen and Smith were ordered to pay $20 million in restitution.
    
    Digital Employees Federal Credit Union is offering a $25,000 reward
    for information leading to his capture.
    
    
    

Who (names) were responsible for hiring this guy initially?

    I can't believe they said this:
    
    >> Digital Equipment Employees Federal Credit Union in Maynard has
    >> barely survived the scheme...
    
    I guess they didn't bother to check to see how we are doing lately.
    
    Elaine

I think the DCU BOD should write to the Globe in response to this.

			Steve