Ramona Savings Fraud Trail Nears End

In the first criminal trial involving owners of a failed Southern California thrift, the prosecution told jurors Wednesday that the former top officials of Ramona Savings & Loan in Orange were engaged in deception and fraud “right from the get-go.”

“This was a federally insured savings and loan institution. We are not talking about some piggy bank or some toy,” Assistant U.S. Atty. Steven E. Zipperstein said during his closing arguments in U.S. District Court in Los Angeles at the end of an 11-week trial.

Ramona collapsed in September, 1986, and subsequently required a $65.5-million federal bailout of depositors.

John L. Molinaro and Donald P. Mangano Sr. each face more than 30 charges in U.S. District Court, including bank fraud and conspiracy in connection with a Palm Springs real estate deal that prosecutors allege led to the thrift’s collapse. Both men have pleaded innocent. Molinaro’s lawyer is scheduled to make closing statements today.

Mangano’s attorney Robert S. Horwitz began his closing arguments by questioning the truthfulness of some of the prosecution’s witnesses.

Mangano, a real estate developer, and Molinaro, a former carpet salesman, bought Ramona in April, 1984, and spent about $25 million, or a quarter of the thrift’s assets, building Cherokee Village condominiums.

The project, which the government alleges was designed to enrich the two men rather than Ramona, was a failure.

Zipperstein said Wednesday that Molinaro and Mangano dreamed up a complicated scheme to sell Ramona before the thrift became insolvent and Cherokee Village went bankrupt.

The government said their plan was to make Ramona, which recorded a $4-million profit on the deal, look healthier to a potential buyer. Molinaro took a $2-million dividend from Ramona around the same time.

But the defense said the government’s allegations were unfounded. Horwitz said the plan, which involved dummy corporations, was devised for tax reasons and because Mangano wanted to protect his credit-worthiness.

If convicted, Molinaro--the sole owner and operator of Ramona Savings at the time of its collapse--faces a maximum prison sentence of 165 years and $8.3 million in fines; Mangano could receive a 155-year setence and $7.8 million in fines.