Fugitive Blamed in Failure of Banking in R.I. Arrested

A fugitive banker accused of embezzling $13 million and setting off Rhode Island’s banking collapse surrendered early Sunday after 17 months on the run.

Joseph Mollicone Jr., 48, gave himself up to authorities at 1 a.m. at the home of attorney Thomas DiLuglio Sr., whose nephew is married to the banker’s daughter, state Atty. Gen. James O’Neil said.

The prosecutor said he and DiLuglio had negotiated the arrest for more than five weeks but could shed no light on where Mollicone had been since his disappearance Nov. 8, 1990.

“I frankly do not know where he was,” O’Neil said. “We perceive him as someone who had arrived from afar.”

Mollicone vanished shortly after auditors questioned him about $13 million in loans that were never entered in his Heritage Loan & Investment Bank’s computer system.

Auditors concluded that Mollicone, the bank’s president, had concocted phony loan and deposit records as part of the embezzlement. In his absence, he was charged in state and federal warrants.

O’Neil said Mollicone will be arraigned, possibly today, on the embezzlement charge and a charge of unlawful flight to avoid prosecution.

Mollicone, the subject of a worldwide manhunt, had last been seen by his son, who drove him to Logan Airport in Boston, presumably for a business trip in New Jersey. There is no evidence that he ever took such a flight.

Authorities speculated that Mollicone had been killed or that organized crime figures had aided his escape to France or Italy.

He was profiled on several television shows, including “America’s Most Wanted,” and was such an avid golfer that authorities printed his picture in ads in Golf Magazine asking readers to report sightings.

Mollicone’s attorneys, Julius and Jeffrey Michaelson, rode with O’Neil and police officials to DiLuglio’s home in Johnston outside Providence. After consulting briefly with the attorneys, Mollicone did not make any statements concerning his whereabouts to authorities, O’Neil said.

“His first words were, ‘Good evening, general,’ ” O’Neil said. “He had a good grasp of the situation. He seemed remorseful, but he wasn’t emotional.”

Authorities could see Mollicone in the window of the lawyer’s home as they approached, and he looked “fit and well-rested,” O’Neil said.

During the car ride from DiLuglio’s home to the state prison, where Mollicone was being held under tight security, “he was concerned about what would happen to him in prison,” said police Inspector Patrick McNulty. “He was really calm, almost in a relieved sort of way.”

Mollicone’s alleged embezzlement forced Heritage’s private deposit insurer, the Rhode Island Share & Deposit Indemnity Corp., to cover the loss, hastening the insurer’s collapse.

The corporation’s eventual failure forced Gov. Bruce G. Sundlun on Jan. 1, 1991, to close the 45 banks and credit unions insured by RISDIC. Nine institutions have yet to reopen.