Former Bank of Irvine vice president Nelson Hallidy was indicted Thursday by a Los Angeles federal grand jury on charges that he helped Orange County businessman W. Patrick Moriarty launder $196,600 in bank transactions to avoid Internal Revenue Service reporting requirements.
The 61-year-old Hallidy could be imprisoned for 42 years and fined more than $3.5 million for the alleged scheme. He is scheduled to be arraigned May 20 on the 10-count indictment.
Moriarty was a co-founder of the bank and served on its board of directors until June, 1983. Its doors were closed by state banking authorities a year ago when its solvency was threatened by bad loans. It was immediately reopened by Security Pacific State Bank.
The indictment charges that Hallidy engaged in a conspiracy with Moriarty to keep transactions of $10,000 or more from being reported to the IRS as required under the federal law governing currency transactions.
Asst. U.S. Atty. Richard Drooyan said that when Moriarty wanted cash from the bank in amounts of more than $10,000, Hallidy would prepare multiple checks in smaller amounts and convert them to cash, thus circumventing the IRS reporting requirements.
The indictment lists seven instances between Nov. 24, 1981, and July 1, 1982, when Hallidy allegedly converted 24 checks to cash in amounts ranging from $21,600 to $50,000 and provided the money to Moriarty and two of his employees, John E. (Pete) Murphy and Tony Martello.
Hallidy is the second banker to be charged in the ongoing federal and state investigation of Moriarty and his associates. Floyd A. Walden, formerly a vice president with California Canadian Bank, has pleaded guilty to tax evasion and mail fraud in connection with taking more than $200,000 in kickbacks for approving loan applications submitted by Moriarty.