Banker Takes Stand, Tries to Minimize Ties With Moriarty
A former banker, accused of failing to comply with federal bank reporting rules as part of an alleged money laundering scheme with W. Patrick Moriarty, took the stand in his own defense Thursday and tried to distance himself from Moriarty.
Nelson Hallidy, 61, former vice president in charge of loans at the now defunct Bank of Irvine, testified in federal court in Los Angeles that by 1982 he was on the “outs” with Moriarty, a confessed political money launderer who was a founding director of the bank. Hallidy said he “objected to some of the loans (Moriarty) was encouraging.”
Some of these loans, Hallidy said, were not repaid and contributed to the bank’s insolvency. State officials closed the bank in June, 1983, and it was taken over by Security Pacific State Bank.
Hallidy testified, for instance, that he objected to one $1.1-million loan to an unidentified friend of Moriarty, but the loan was approved anyway. The only collateral offered was “several acres of sand” near Palm Springs, Hallidy added, and the loan was not repaid by the time the bank closed.
But under cross-examination by Chief Assistant U.S. Atty. Richard E. Drooyan, Hallidy admitted that he approved the cashing of many checks in large amounts by Moriarty and Moriarty’s associates in 1981. He also testified that he told bank employees that it was not necessary to report these transactions to the IRS since Moriarty was an established client of the bank. Some of the checks were for $10,000, he said.
The IRS requires banks to report cash transactions of $10,000 or more and cash transactions exceeding $100,000 in any one-year period. These transactions include checks being cashed.
Hallidy testified that, as the bank’s principal loan officer, it was not his responsibility to report such transactions to the IRS. That responsibility, Hallidy said, belonged to the bank’s operations section.
The former banker said he and Moriarty were not close friends. But he said he was given free use of Moriarty’s condominium in Hawaii during a 1980 vacation.
Hallidy said he left the bank in 1983 after he was passed over by the bank’s board of directors, including Moriarty, for the bank’s presidency.
A federal grand jury indicted Hallidy on a charge that he conspired with Moriarty to launder more than $317,000 through the bank and on other charges that he failed to report cash transactions to the IRS as required.
He was acquitted of the conspiracy charge in a trial last month, but jurors in that case deadlocked on the charges alleging failure to report transactions.
He is being tried again on those allegations.
Moriarty, an Orange County businessman and fireworks manufacturer, allegedly funneled laundered money to political figures to secure passage of a state law prohibiting cities from outlawing so-called safe-and-sane fireworks. He pleaded guilty in March to seven counts of fraud in a plea bargain and agreed to testify against politicians he purportedly bribed.
Vetoed by Brown
The measure eventually was vetoed by then-Gov. Edmund G. Brown Jr.
Moriarty and an associate, John E. (Pete) Murphy both testified at Hallidy’s first trial that they often went to the bank with checks to exchange for cash in the alleged money-laundering scheme.
However, they were not called as witnesses at the second trial.
Murphy was reported to be seriously ill at his home in Northern California and U.S. District Judge Edward Rafeedie excused him from coming to Los Angeles to testify.
Drooyan, the prosecutor, declined to say why he did not call Moriarty. Hallidy’s defense attorney, Byron McMillan, speculated that the prosecution did not call Moriarty because Moriarty lacked credibility.
McMillan said Moriarty’s lack of credibility was a major reason for Hallidy’s acquittal at the first trial last month.
The case against Hallidy is expected to go to the jury today.
