A shadowy group of political insiders tries to cover up a crisis. A mobbed-up banker vanishes after embezzling millions of dollars. And one renegade ex-nun saw the whole thing coming.
For a full list of credits, and more information about this episode, visit our website at crimetownshow.com.
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PROTESTERS: We want our money now! We want our money!
MARC SMERLING: It’s 1991 and Rhode Island is in the midst of a banking crisis. Dozens of state banks and credit unions have failed. Accounts are frozen. And people are cut off from their money.
PROTESTER: That’s right I haven’t slept in 4 nights. I’m a physical wreck. I’m a physical wreck.
REPORTER: Because of this?
PROTESTER: That’s right. It’s destroying my life.
MARC: And even worse, there are rumors that well-connected politicians and bankers got their money out …before the crash.
ARCHIVAL: Senator John Correa, who as a lawmaker has been accused of having a conflict of interest, and as a board member has been accused of getting insider treatment for loans.
MARC: Thousands of people march on the state capital.
PROTESTER: I can’t believe that you can stand there and tell me you didn’t know what was going on. You were on the board of directors. I find that hard to believe.
PROTESTER: You all say you have your money up there in the credit union up there with us, correct? Let me see your bank book so I can believe you — because I already don’t believe you. Show me your bank book — I want to see some of the money in it!
MARC: The crisis came as a shock for most people. But there was one person who actually predicted that all this would happen.
ARLENE VIOLET: Let me say from the outstart that we in Rhode Island have been dished up a steady stream of corruption in this state.
MARC: Arlene Violet is a former Rhode Island attorney general. And according to her, the banking crisis was caused by… the Network.
ARLENE: Who’s the Network? The Network in RI is just like organized crime, except for one thing. They make what they do legal.
They get rewarded with promotions, campaign contributions and in some instances, they get rewarded by transfers into private industry here in the state of RI. I’m here tonight to expose that to you.
MARC: In Rhode Island, organized crime infected every aspect of public life. It invaded City Hall. Spread into the courts. And in the early nineties, it brought down the entire state banking system…
ZAC STUART-PONTIER: Today’s episode: a shadowy network that caused a crisis. A worldwide manhunt for a mobbed-up banker. And the woman who saw the whole thing coming.
MARC: I’m Marc Smerling.
ZAC: And I’m Zac Stuart-Pontier. Welcome to Crimetown.
MARC: Before the banking crisis, and before she became Attorney General, Arlene Violet had another job: she was a nun.
ARLENE: I loved the spirituality.
Back in 1961, the idea was that women would get married pretty early in life and have the white picket fence, etc., and while there’s nothing bad about that, I wanted to do something with my life and try to make a difference, and I saw nuns as the people who could make that difference.
MARC: Arlene entered the Sisters of Mercy Convent and went to work in the poor neighborhoods of Providence.
ARLENE: With the Sisters of Mercy, the whole theory was, if you see an unmet need, you’re the person who’s supposed to meet it because no one has seen it yet. Well for me, as a nun, the unmet need was to get rights for victims of crime. So I went to my religious superiors and said, I want to become a lawyer, and lo and behold, they said sure, if you get into law school, so be it.
MARC: Arlene went to law school. She was one of the only women in her class. After she graduated, she returned to Providence, worked as a lawyer in poor neighborhoods, and eventually, to make a bigger difference, she decided to run for Attorney General.
One day while campaigning on Federal Hill, she came across an old man sitting in a lawn chair.
ARLENE: Raymond Patriarca happened to be outside his coin shop and he was smoking a little stogy cigar. And he knew who I was, and he knew I was running for AG, he said to me, hiya sister. Sistah. Hiya, sista. And I said to him, I’m no sister of yours, Mr. Patriarca, and just kept going.
MARC: Arlene was tough. So tough… she earned a nickname.
ARLENE: Attila the Nun. I loved that nickname.
MARC: After years of mob hits, heists and political corruption, the people of Rhode Island seemed to think that a nun might just be the answer. Arlene won the election, left the convent. And became the first female Attorney General…. in the country.
MARC: What was it like being a woman, the first woman attorney general?
ARLENE: it’s tough in the sense that it’s a man’s world and it was very hard breaking into that. I think I was helped by the fact that I had been a nun for a while because if you can walk and talk at the same time, they think you’re a big deal. I always used to joke that I loved the attorney general’s meetings, because there was never a line at the ladies’ room at the break.
MAC: Arlene went about her duties as Rhode Island’s new Attorney General. Prosecuting mobsters, taking on polluters, and advocating for the rights of victims.
And then one day, she went to a meeting…
ARLENE: I went to this thing called the Bank Board of Incorporation, whereby statute, the attorney general’s on that panel.
MARC: The Board was composed of politicians, state regulators, and bank directors. Their job was to oversee the state banking system.
ARLENE: I said, well this is going to be boring. And I arrived and I see all these credit unions and they were giving loans to politically connected people. The people never had to sign any personal guarantees for the loans. It was, you know, house of cards. It was gonna fall.
MARC: But Arlene quickly realized that the problems went deeper than just bad loans. The biggest problem was the state banking system’s insurer, known by the acronym RISDIC.
RISDIC COMMERCIAL: Rhode Island Share and Deposit Indemnity Corporation. Our commitment to protecting your savings is carved in stone.
MARC: RISDIC was a private insurance fund. It was supposed to protect the banking system if it got into trouble. But…
ROBERT STITT: Private insurance like RISDIC is not backed by any government. It has no access to any public treasury.
MARC: This is Robert Stitt, an auditor hired by Arlene. He said that RISDIC, with just $25 million in reserves, was woefully underfunded. So it wouldn’t be able to bail the banks out if they started to fail.
STITT: The difficulty is, if a run starts with Institution A, it spreads to B, C, and D, everybody is trying to get help, and the help just isn’t available, and RISDIC’s $25 million dollars will go a very short way.
MARC: So Arlene pushed for legislation that would prevent this kind of crisis from happening. The bill would require the banks to be federally insured.
But federal insurance would mean federal oversight, and that meant no more sweetheart loans for political insiders.
Arlene’s bill was voted down. And according to her, it was because of the coziness between state representatives and the bank directors.
ARLENE: The legislators who had the power to change this were intertwined with these credit unions. They themselves had loans. They were intertwined because they were getting campaign contributions. Also their friends were on the board or they were on the board of directors of these credit unions. It was an incestuous marriage all along. Because there were so many players who were politically connected.
MARC: And there was one player who really worried Arlene. His name was Joe Mollicone Jr. and he ran a bank on Federal Hill…Heritage Loan and Investment Company.
MARC: The history there is that Joe’s father was the banker for Raymond Patriarca. He was Puppy Dog.
ARLENE: Yeah, Mr. Mollicone was named Puppy Dog Mollicone. An appropriate name because he was a lap dog for organized crime and Raymond Patriarca so-called banker…
Heritage was on our list as a problem facility. Of course, its location near the organized crime headquarters of the New England mob had us concerned. There was intelligence to suggest bag money going in there from the various mob activities. When Raymond Patriarca died right before I became Attorney General, there was still a flow of money going into that bank.
ARCHIVAL: Joseph Mollicone Jr. had a lot of friends. And according to law enforcement sources, one of those friends was Louis “Baby Shanks” Manocchio.
MARC: Remember Louis Mannochio, from the episode about the Dr. Broad? He was close to Mollicone and was often seen hanging around Heritage.
ARCHIVAL NEWS REPORT: On August 7th last year, we observed monocchio walking up Atwell’s avenue after leaving the restaurant he runs. He entered the Heritage Bank a few blocks away and investigators want to know what dealings, if any, Mollicone had with Manocchio.
ARLENE: We knew that lots of cash was being deposited in that bank. There would be briefcases that mobsters didn’t generally have with their apparel, other than if they were carrying money, etc.
MARC: Arlene was right to be concerned about Heritage. Because… Joe Mollicone’s Bank was the spark that ignited… the entire Rhode Island banking system.
That’s after the break.
MARC: Welcome back.
When Arlene Violet was attorney general, she had a lot of concerns about the banking system.
But no one took her seriously. She lost her bid for re-election.
JIM O’NEILL: So I got a call from somebody at the Department of Business Regulations. He said there’s a problem here.
MARC: This is Jim O’Neil. He replaced Arlene as Attorney General. And one day, in 1990, he got a call about Heritage, that bank on Federal Hill run by Joe Mollicone.
O’NEILL: What’s the nature of the problem? The problem is that they had $13 million in offline loans. I said well, how do you define an offline loan? Well, that’s a loan where there’s no paper trail, there’s no documentation. So I mean, so someone stole $13 million bucks, right?
They did say, that they had talked to Joe Mollicone. And he indicated that he was going to a wedding in Connecticut over the weekend and the money would be back on Monday. And I said, well they better have a large fucking money tree at that wedding — if he’s gonna pay 13 million bucks back. Then he was gone.
ARCHIVAL NEWS: No one knows the whereabouts of Heritage president Joe Mollicone Jr. He was last seen November 8th and he is suspected of embezzling $13 million from Heritage. There is now a warrant out for his arrest.
O’NEILL: Ok, how do you find Joe Mollicone?
MARC: To track down Mollicone, Jim O’Neil worked with an investigator named Patrick McNulty.
PAT MCNULTY: We were looking for Joe Mollicone everywhere. I got word from O’Neill that he was in Italy at the Olympic games.
O’NEILL: A couple different locations in Italy — there was a point of in time where I had to make a decision whether to send some investigators to Italy to run that lead down.
MCNULTY: Of course, we were trying to figure out any way we could to go to the Olympic Games in Italy to find him.
O’NEILL: And I elected not to. I said it just wasn’t solid enough. It certainly wouldn’t be appropriate with me to go over there and come back with a case of vino and lot of pasta in my belly, you know?
MCNULTY: We saw some activity on credit cards. We even were talking with clothing companies to see if we could link up the clothing he was wearing, where he bought it. but we really couldn’t put it together. He literally fell off face of earth.
MARC: News of Mollicone’s embezzlement and disappearance was everywhere. RISDIC stepped in to pump millions of dollars into Heritage. And officials assured the public that the situation was under control.
PETER NEVOLA: RISDIC has met the task. We’ve taken control of institutions that have become problems and we’ve returned them to health and returned them to their operators. RISDIC is paying out those depositors. If they’re frightened, it’s because of what they read and hear.
INTERVIEWER: So the media is responsible then?
NEVOLA: Well, not necessarily, it’s again, what people hear and read.
MARC: People were hearing a lot of troubling news and many of them began to take their money out.
ARCHIVAL: We’re taking everything out! (You’re taking everything?)
ARCHIVAL: This was my bank for 20 years. You feel bad with something like this. (Is that why you’re taking out your money today?) Yes, I take it out. No feel no more secure, you know.
MARC: Before long, it was a bank run. So, on January 1st, 1991, a newly elected governor did something drastic.
GOVERNOR BRUCE SUNDLUN: I am declaring a bank emergency in Rhode Island.
MARC: He shut down all 45 institutions insured by RISDIC. More than 200,000 people couldn’t get their money. Everything that Arlene Violet had predicted was coming true.
ARCHIVAL: We want our money back! We want our money!
ED PARE: Once things started to unfold, it was — it was surreal.
MARC: This is Ed Pare. He was the superintendent of banking for the state. And it was his job to enforce the account shutdown.
PARE: I’m shutting down ATMs. Some people are walking up to ATMs, thinking they can access their account and i’ve shut off the system to allow that. I mean, it’s heartbreaking. You know that people are trying to pay their bills and they’ve written checks and we’re not gonna let them clear.
ARCHIVAL: I have a $780 rent check that I pay every month. I have a car payment to make, I have groceries I have to buy. I have charge cards that I pay.
PARE: There were a lot of very upset people who could easily reach desperation.
ARCHIVAL: What am I going to do for paying my bills? I got bills that I owe. Oh dear God.
PARE: There were threats, our windows were broken at times. I don’t know how many nights I appeared up on a stage, just, people vented. And frankly they had a right to do so.
ARCHIVAL: Do I have any faith in my state government? No. Am I angry? Yes. Am I disgusted? Yes.
MARC: Meanwhile… Attorney General Jim O’Neill was still hunting for the president of Heritage Loan and Investment, Joe Mollicone… One day, he got a call.
O’NEILL: I got a call from an attorney that said that Joe would like to come in.
I said well that’s good. When? He said soon. So I said okay, what do you mean by soon? Soon, I can’t tell you exactly when but he wants to come in. And here’s the conditions — he’ll only surrender to you and that’s it. I said well, that’s mighty noble of him. I said, we can arrange that.
MARC: A meeting was set… at the house of Mollicone’s attorney.
O’NEILL: We drove down the road. When we were driving up there we had country music playing. It was a foggy night, about 2 o’clock in the morning. It was like a scene out of the late movie, you know?
So we drove by the house and you could see him in the library. So we just said, let’s go right up to the door. So we rang the bell. It was like Avon calling. You know? BING BONG. We stepped in the house and looked in and it was Joe there. I said, how are you Joe? I’m okay. So I said you ready to go? Yep, I’m all set.
ANNOUNCER: Then it was off to the ACI, the perp walk captured on video. An indelible moment in Rhode Island history. O’Neill walked Mollicone in. The state’s most wanted, finally locked up.
MARC: So where was Joe Mollicone all this time? South America? The Caribbean? Sipping red wine in Italy? Nope. He was living as John Fazzioli…in Salt Lake City.
ARCHIVAL JOSEPH MOLLICONE JR. I had to pick a place and there was really no reason other than I’d flown there before. Nothing of consequence.
MARC: Years later, Mollicone talked with a reporter in prison. In the video, he sits in the library, wearing a green jumpsuit.
ARCHIVAL REPORTER: Why did you do it?
ARCHIVAL MOLLICONE JR.: Well I didn’t sit back one day and say well, I’m going to do this. It just increased and it just got out of control. It’s almost like you don’t want to get caught, but you hope you do get caught.
MARC: Mollicone was sentenced to 30 years. And nobody knows what really happened to the millions he stole. But there were rumors that a lot of it went to the mob.
MOLLICONE JR.: I never looked at it as though I was taking an individual’s money. I knew that the funds were insured and the people wouldn’t really lose the money. I had no idea there would be a banking crisis.
MARC: Mollicone became the fall guy for the financial crisis. But people also blamed the politicians. Again, Arlene Violet.
ARLENE: There were politicians who pulled their money out, unions that pulled their money out before it became public. They tend to pass it off as coincidence, not cause and effect.
MARC: So, of course, the politicians held public hearings…looking for someone else to blame.
BAILIFF: Do you solemnly swear that the testimony you’re about to give in this matter is the truth, the whole truth, and nothing but the truth so help you god?
ARLENE: I do.
BAILIFF: Would you state your name and spell your last name?
ARLENE: Arlene Violet, V-I-O-L-E-T.
MARC: Arlene Violet. The politicians went after her for not doing more while she was Attorney g=General. But Attila the Nun was the last person they should have messed with.
COURTROOM QUESTIONING: My question to you is the banking situation was a potential powder keg. Why did you not say That the economy of the state is in jeopardy. And you’ve got to help us get this legislation through. Why did you not do that?
ARLENE: First of all, your question is a joke. No sooner had we begun to get our ducks in order that it became very apparent to us that this bill was going to be killed, end of story. For heaven’s sakes! Virtually the entire time I was on that bank board, here’s the votes. They were all 4-1. Here’s me, Violet objects. Article after article. Great Providence inflated its assets, Violet charges. Here’s another one. Violet objects. I won’t bore you sir, but these are just some, in this big book, of my being in print, telling the people who should have been responsible that there were problems in the institution…
They know how to read. They heard what I was saying. They were seeing what else was happening in banking. There’s no question in my mind that RISDIC was there to prop up the rich and infamous in the state. And why? That’s the network.
MARC: RISDIC no longer exists. Nobody but Joe Mollicone went to prison for their role in the crisis. And it took some depositors years to get their money back.
ARLENE: Eventually people at least got back their money without the interest but the real victims were all those people in between who had no access and they were living on the basis of those monies they had on those accounts and couldn’t access them. And it ruined many, many people in Rhode Island.
MARC: Yeah. Did it change things, you think?
ARLENE: I wished and prayed that it would change things but people forget. And when you’re an Attorney General and you’re trying to clean up public corruption, you know, you hope you leave office, and you’ve made the place a better place. And I wish I could say I did make it a better place but I didn’t. It just all just comes roaring back again and the network just reassembles itself.
MARC: In places like Rhode Island, corruption becomes part of the culture. And it forces everyone to make a cruel choice: join in, or be a sucker.
So if you live here… how do you free yourself from that choice? You can vote for someone like Arlene Violet — a woman of unquestionable integrity and honesty. Or, if that doesn’t work…you can vote for this guy.
BUDDY CIANCI: I will be the best mayor this city has ever had.
MARC: It’s a new day and Buddy Cianci is once again…running for mayor.
CROWDS: Buddy! Buddy!
BUDDY: love the city of Providence. The people of the city of Providence owe me nothing and I owe them everything
ZAC: Hey Crimetown listeners, Buddy’s return is coming in two weeks. But don’t worry. Next week we’ll have a bonus episode for you, and bring back a couple people you might remember: a cat and a mouse.
BRIAN ANDREWS: I get information from an informant that Tony’s doing armored cars now. And he had already done one at the Emerald Square Mall.
Marc: Crimetown is me, Marc Smerling and Zac Stuart-Pontier
We are produced by Drew Nelles, Kaitlin Roberts, Austin Mitchell, and Mike Plunkett. Our associate producer is Laura Sim.
We’re edited by Alex Blumberg and Caitlin Kenney.
Fact-checking by Mick Rouse.
This episode of Crimetown was mixed, sound designed, and scored by Matthew Boll.
Additional mixing by Enoch Kim and Kenny Kusiac.
Our title track is “Run To Your Mama” by Goat.
The country music is ‘Shadows of You’ by Kenny Brent and Donna Harris – courtesy of Jack Fleischer.
The choir is the Providence Singers rendition of Hymn to the Virgin by Benjamin Britten
RISDIC archival courtesy of the Rhode Island State Archives
News archival courtesy of WPRI channel 12.
Original music by John Kusiak, Jon Ivans, Bobby Lourde, Billy Klein, Edwin and Bienart.
Our ad music is by Matthew Boll.
Our digital editor is Rob Zipko. Our design director is Ale Lariu.
Alex Blumberg is The Podfather… Show me your bank book, Alex.
This season of Crimetown is dedicated to the memory of Bill Malinowski.
If you want to know more about Arlene Violet, check out her autobiography – “Convictions: My Journey from the Convent to the Courtroom.”
Thanks to the Providence Journal, Julia Heymans, Emily Wiedemann, Lisa Newby, Tim White, Jim Taricani, Phil West, Ken Carlson, Ed DiMeglio at Retro Media, Sam Eilertsen, Kate Wells, Mary Murphy, Brian Andrews, Dan Barry and everybody who shared their stories with us.
For a full list of credits, and for bonus content from this episode, visit our website at crimetownshow.com.
You can find us on Twitter @crimetown, and on Facebook and Instagram @crimetownshow.
And if you’re enjoying Crimetown, leave us a rating and review on iTunes. It really helps others find out about the show. Thanks.
Providence is a special place, and we’re honored to tell a part of its story.