Judge Orders Molinaro to Pay FSLIC Nearly $2 Million Out of Discovered Funds

A judge on Monday ordered one-time Orange County financier John L. Molinaro to pay almost $2 million to receivers of Ramona Savings & Loan, 18 months after Molinaro was first accused of plundering the now-defunct thrift.

The order marks the first time that assets controlled by Molinaro have been paid to the Federal Savings and Loan Insurance Corp., which took over Ramona as receiver in 1986.

Federal regulators claim that Molinaro siphoned off $40 million from Ramona and to date have won judgments for about $8.4 million.

The $2 million in question Monday was kept in business trust accounts in two Caribbean Island bank havens--the Cayman Islands and the Turks and Caicos islands.

The existence of the funds was discovered only last summer, when Molinaro was arrested while attempting to leave the United States using a fake passport. A large cache of records seized when he was arrested revealed the cash, Lee said.

Molinaro is now serving a two-year sentence for fraud stemming from his attempt to secure a passport under a fake name. He has also pleaded guilty to fraud in connection with Ramona, which he headed, but has recently attempted to withdraw that and plead not guilty.

Regulators declared Ramona insolvent and seized it Sept. 12, 1986, but hired managers to continue operating the S&L; while it sought alternatives to liquidation. But regulators gave up nine days ago and closed the S&L;, saying Ramona’s deficit had grown to $65.7 million.

The order to pay the money to FSLIC came as one of a series of actions taken Monday by U.S. District Judge Alicemarie H. Stotler.

Stotler turned down a request by Molinaro that she exempt $500,000 from his seized assets that he claims he needs to pay his lawyer, Ron W. Rose, in the criminal fraud case. Rose described that money as “absolutely clean and not criminally derived.”

Rose, who had filed the motions seeking to withdraw Molinaro’s guilty plea, said Stotler’s decisions mean “I’m not going to be his lawyer.”

“I think he will have to take a (federal) public defender to represent him,” Rose said.

FSLIC lawyers failed in their attempt to seize the contents of a trust fund set up for Molinaro’s three children. Molinaro once claimed that the trust was worth $4.2 million. Federal regulators believe that about $1.1 million remains in the trust.

FSLIC lawyers claimed that the trust was one of many places Molinaro transferred personal assets plundered from Ramona in a frenzied effort to hide his gains as state and federal authorities closed in on him in late 1986.

Molinaro insists that the trust was properly set up.

Stotler decided to determine the ownership of the trust at trial, which has yet to be set.

The first Molinaro funds returned Monday had been held in accounts in the names of six mysterious business trusts in Caribbean banks. Mark S. Lee, an attorney for FSLIC, and at least one defense lawyer said they had not been able to determine if the trusts actually existed.

FSLIC lawyers won orders from Caribbean courts last July prohibiting withdrawals from the accounts. Then as part of Molinaro’s guilty plea last fall, he agreed not to object to the return of the funds to California.