R.I. Banking Collapse Figure Sentenced in Fraud Scheme
PROVIDENCE, R.I. (AP) _ The man whose fraudulent leasing schemes triggered Rhode Island’s banking collapse was sentenced Tuesday to the maximum five years in prison.
The collapse affected more than 300,000 depositors and involved more than $1.5 billion. Ten institutions remain closed because they have been unable to qualify for federal deposit insurance, and at least three will be liquidated.
After his release from prison, Michael A. Lolicata faces three years’ probation and will be barred from any banking or finance-related jobs, U.S. District Judge Francis Boyle said.
″If ever there was an instance that the punishment did not fit the crime, this is it,″ said Boyle, who had spent several months researching whether he could increase Lolicata’s sentence beyond federal guidelines.
″Instead of picketing the Statehouse, (depositors) should be picketing your house,″ he told Lolicata.
As part of a plea agreement, prosecutor Anthony DiGioia had recommended a term of 2 1/2 years to 37 months.
Lolicata, of Lincoln, admitted bilking $13 million from 280 private investors and $930,000 from Merrill, Lynch, Pierce, Fenner & Smith through phony equipment leases.
Jefferson Loan and Investment Bank held $4.5 million of Lolicata’s leases. When Lolicata’s companies failed, Jefferson collapsed in early 1990.
That put a strain on Jefferson’s private deposit insurer, the Rhode Island Share and Indemnity Corp.
A few months later, RISDIC collapsed when it was forced to cover losses from the failed Heritage Loan & Investment Co. because of an alleged $13 million embezzlement by its president. RISDIC took 45 banks and credit unions with it on Jan. 1, 1991.
Lolicata promised to make restitution ″to the best of my ability.″ He could have been fined almost $28 million, but the prosecutor said that would make no sense because his companies were bankrupt.