Bank of New England Officials Say They Reprimanded Accused Subordinate
Feb. 10, 1986
BOSTON (AP) _ Two top officials of the Bank of New England testified in federal court Monday that they warned a former bank manager she would be fired if she failed to report any more cash transactions exceeding $10,000.
But the government charged that the reprimand, made six weeks after a grand jury had returned an indictment alleging that the bank violated a money- laundering statute, was too little, too late.
The Bank of New England, reputed bookmaker James V. McDonough and two former head tellers are on trial in U.S. District Court, charged with hiding McDonough's transactions in violation of a law requiring banks to alert the Internal Revenue Service to customer transactions exceeding $10,000.
Karen Hurst and C. Bernard Fulp, senior vice presidents at the bank, both testified that they disciplined Carole Cohen, former manager of the Prudential Center branch, for failing to report McDonough's cash transactions exceeding $10,000 and totalling $817,200 from May 1983 to July 1984.
In a memo about an April 1985 meeting with Cohen concerning the McDonough matter, Hurst said:
''A person managing the branch would have to have known that something strange was going on. Bernie (Fulp) and I warned Carole that a similar incident ... would be grounds for removal from her position. Carole said she understood that this could never happen again.''
But federal prosecutor John Markham has charged that the bank's tardy response to the problem makes the bank equally liable with its employees in the current criminal action.
The bank could be fined a maximum of $18 million, or $500,000 for each of 36 counts of willfully failing to file transaction reports.
Cohen, 40, has been charged with committing perjury before the 1985 grand jury which investigated McDonough's dealings with the bank. Her trial is scheduled to begin shortly after the current one concludes. She faces a maximum of five years imprisonment and a fine of up to $250,000.
Fulp testified that in 1984 he was unaware of McDonough, whom he said was not considered ''an important or significant customer.'' He said that in 1984, total deposits at the Bank of New England, the second largest bank in the region, amounted to $3.2 billion. There was an average of 500,000 checks or other financial instruments processed daily.
Last week, former teller Simona Wong testified that she did not report McDonough's transactions on orders from former head teller Patricia A. Murphy, one of the defendants.
Wong said Murphy told her not to fill out a currency transaction report on McDonough ''because he's a good customer, because he will get mad.''