2 Tried on Loan Shark Charges : Attorney Says Body of Borrower Used as Collateral

Joseph Matranga and a co-defendant, on trial on federal loan-sharking charges, made loans at 10% a month interest and used the body of the borrower as “collateral,” U.S. Atty. Charles Gorder charged in an opening statement Wednesday.

Matranga, 63, and his brother-in-law, Michael S. Polizzi, 61, are charged with 14 counts of loan sharking stemming from what Gorder said were several loans made by the two men to Harry Hall, including a $300,000 loan made in 1979 that Hall allegedly never repaid.

Gorder said that when Matranga and Polizzi made the loans to Hall the interest rate was 10% a month and “the security would be Harry Hall’s body.” According to the government’s charges in the case, Hall had borrowed large amounts from Matranga and his friends at the same interest rate, but those loans were repaid.

Gorder said that Hall was convicted of fraud in 1982 in a Los Angeles federal court, and called him “basically a white-collar criminal . . . a wheeler-dealer.”

Hall was sentenced to a five-year prison term on the 1982 conviction but served less than two years after agreeing to testify against Matranga and Polizzi. He is expected to be the government’s star witness against the pair.

Joseph D’Agostino, who had been charged with Matranga and Polizzi, pleaded guilty to the charges on Tuesday and is expected to be sentenced in April, Gorder said.

In 1979, when he borrowed the $300,000, Hall “began to have substantial problems paying the money back and came under substantial pressure from the defendants,” said Gorder. According to Gorder, Hall continued to make sporadic payments on the loan until he was imprisoned in 1982 for defrauding an Ethiopian living in Los Angeles.

Gorder said that Hall perpetrated the fraud in a desperate attempt to repay Matranga, who was threatening him. But Eugene Iredale, Matranga’s attorney, argued that Hall stole $380,000 from the Ethiopian in a real estate scam.

The government attorney described Matranga as having ties to the Mafia, telling jurors that Matranga and Polizzi are married to daughters of John Priziola. Before his death in 1979, Priziola was said by the FBI to be the Mafia’s No. 2 man in Detroit.

Iredale described Matranga as a “sucker and victim” of Hall and as a kindly, understanding man who entered the bar and restaurant business despite having only a fourth-grade education.

“Hall is a con man. He has eight felony convictions, mostly for fraud and forgery, and his first contact with the law was in 1934,” said Iredale.

The defense attorney listed several frauds that Hall is alleged to have engineered. Among them are the defrauding of Taiwanese businessman Wellington Chang, who allegedly paid Hall $500,000 for a phony U.S. visa.

Hall is also alleged to have borrowed $1.3 million from two unidentified businessmen and offered phony certificates of deposit as security for the loan.

After reading to the jury a list of accusations against Hall, Iredale said, “There was no loan-sharking transaction. There was no loan. Harry Hall stole $625,000 from Joe Matranga.”

According to Matranga’s version of the case, in 1977 he borrowed $100,000 from his father-in-law to enter into a business deal with Hall. Matranga borrowed an additional $525,000 from Tijuana restaurateur Guiseppe DiCarlo-Stassi and gave the $625,000 to Hall. Hall was to use the money to buy surplus television sets from the U.S. government and sell them at a profit, sharing the receipts with Matranga.

At the time Matranga had no reason not to trust Hall, who was a close friend, said Iredale. According to Iredale, Hall never purchased the sets and failed to pay back all of the money.

While still in prison, Hall agreed to testify against Matranga, and federal prosecutors arranged for Hall to be released on occasional furloughs. The FBI bugged Matranga’s office and phone at the Showboat Lounge, a downtown San Diego topless bar. Agents said they recorded a March 9, 1982, meeting between Hall and Matranga at which Matranga threatened to kill Hall if he did not pay back the loan. Agents also said they recorded conversations between Matranga and Polizzi where the two discussed the possibility of having Hall killed.

Iredale acknowledged that “on that date (March 9), Mr. Matranga sounds terrible.” But Iredale labeled Matranga’s threats as “the frustration of five years and lies (by Hall) coming to the fore, and Mr. Matranga said some things he shouldn’t have.”

If put in context, Iredale argued to the jury, Matranga’s comments will “not be the vicious mutterings of a loan shark.” Instead, “he was speaking as a victim speaks when they’re tired, or when they want justice to be done.”

Neil Fink, a Detroit attorney, is representing Polizzi, who is also from Detroit. Federal prosecutors charged that Polizzi provided some of the money that Matranga is alleged to have loaned Hall. Fink said that his client is a produce grocer and has never been involved in loan sharking.