2 Former Owners of Defunct Ramona S&L; Plead Not Guilty to Fraud

The two men who once owned defunct Ramona Savings & Loan in Orange pleaded not guilty Monday to criminal fraud charges stemming from activities that regulators say helped to destroy the S&L.;

John Lee Molinaro, the S&L;’s former chairman, and developer Donald P. Mangano Sr. entered their pleas before U.S. District Judge David V. Kenyon in Los Angeles. The 36-count indictment charges them with bank fraud, conspiracy and submitting false documents.

The two men allegedly engineered several complex transactions involving straw parties to transfer a Palm Springs condominium complex called Cherokee Village from the S&L; to Mangano and then back to the S&L.;

The upshot of the transactions was that Ramona loaned $29 million to a series of straw parties and corporations that purchased Cherokee, an ailing 173-unit condo project, from the thrift.

Investigators believe that the deals were designed to give Mangano a chance to develop Cherokee Village into a hotel. It also gave Molinaro relief from Federal Home Loan Bank Board regulators who were pressuring him to end the thrift’s reliance on real estate investments.

Meantime, in the court’s Santa Ana branch on Monday, U.S. District Judge Alicemarie Stotler said she will rule Wednesday on a defense request to postpone proceedings in a $40-million civil suit against them and others until the criminal trial is completed. The criminal proceeding is scheduled to begin Sept. 13.

While Molinaro awaits trial on the indictment at Terminal Island federal prison, where he is serving a two-year sentence for passport fraud, his criminal defense attorney faces legal problems of his own.

Chester L. Brown of Tarzana, the third attorney to represent Molinaro in the case, was convicted May 28 on two counts of felony obstruction of justice stemming from advice he gave to clients in an April, 1986, criminal case. Brown said he is asking the trial judge to overturn the jury verdict and, failing that, will appeal the convictions.

Mangano is free pending trial.

Times staff writer James S. Granelli contributed to this story.