Judge Allows Financier Molinaro to Withdraw Guilty Plea, Sets Trial

In a rare move, a judge Tuesday allowed one-time financier John L. Molinaro to withdraw his guilty plea to charges that he made false statements to the government and scheduled trial for May 31.

Noting that such motions are rarely granted, U.S. District Judge David V. Kenyon said he wanted Molinaro “to know in his heart that he got a fair shot.”

“You get to the point where your head and your heart and your experience come together and you say, ‘What the heck, if he wants it, give him a trial,’ ” Kenyon said.

Assistant U.S. Atty. Harriet Leva had no comment after the judge rejected her contention that Molinaro entered his guilty plea before Judge Kenyon last Nov. 25 with full knowledge of the meaning and consequence of his action.

“I get a fair trial. I guess this must be America,” said Molinaro as he was escorted from the courtroom by federal marshals to continue serving a two-year sentence for passport fraud.

Molinaro, 46, claims that he had no criminal intent when he told federal regulators about his plan to sell his majority interest in the now-defunct Ramona Savings & Loan Assn. in Orange.

Molinaro helped arrange for millions of dollars in loans to a third party who planned to use the funds to buy property from Donald Stump. The government alleged that the proceeds would have been used by Stump to buy out Molinaro.

Such a transaction--indirectly financed by the savings institution itself--violates federal Home Loan Bank Board policy, which has the power to block sales. The government has alleged that Molinaro, in failing to disclose that Ramona loans would have allowed the purchase, made false statements to the board.

“We have avoided a travesty of justice,” said Ronald Rose, Molinaro’s attorney. Rose said Molinaro has been “steamrollered” by federal bank regulators into “believing he was guilty.”

Ramona collapsed in 1986 and the Federal Savings and Loan Insurance Corp. was named receiver. FSLIC lawyers filed a civil suit against Molinaro claiming that he plundered the thrift before its demise. Earlier this month, $2 million in personal assets of Molinaro were ordered seized and returned to the FSLIC.

The hearing Tuesday, lasting nearly two hours, seemed largely ceremonial after Kenyon signaled at the outset that he felt that if Molinaro wants a trial, fairness demands that he get one.

Leva pointed to Molinaro’s repeated acknowledgements last November that he knew that full disclosure of the terms of the Stump sale would have alerted Home Loan Bank Board officials to block the deal. Knowing that the deal was in jeopardy if the truth had been told is enough to show Molinaro had the criminal intent needed for a conviction, Leva argued.

But Kenyon pointed to Molinaro’s “equivocation” when he entered the guilty plea.

“He kept pulling his foot back while he was pleading. He finally took the giant step . . . ,” Kenyon said.

“What’s the big deal? If there’s even the slightest sense of equivocation then and that remains true, put the witnesses on and let ‘em try it,” Kenyon said.

The man who had promised to be the star witness at the hearing, a fired Bank Board employee assigned to Ramona, testified briefly.

Roger E. Schulke testified that Molinaro had asked him about the planned sale to Stump before it was scheduled to take place.

Schulke testified that Molinaro asked if it would be proper for Stump to produce part of the purchase price by selling assets to persons who had borrowed from Ramona.

But under cross-examination by Leva, Schulke admitted that Molinaro “never mentioned that these loans were set up with the explicit purpose of buying the assets (of Stump).”

“I asked was he helping Stump directly to purchase the savings and loan. John said that he wasn’t,” Schulke testified.