The Mafia in the S&Ls?

Jonathan Kwitny

September 12, 1990|By Jonathan Kwitny

ATTY. GEN. Richard Thornburgh and the Federal Bureau of Investigation both say they have no evidence of any large-scale involvement of organized crime in the savings and loan disaster. But how would they know? From what the FBI told me, it never took the first logical step to find out.

The same goes for evidence now coming from the Houston Post of looting by at least some people with CIA affiliations. The government says there's no big problem, but apparently nobody with subpoena power has bothered looking.

Back in 1987, I was contacted by two California reporters, Steve Pizzo and Mary Fricker, who were looking into a rash of failures in the savings and loan industry. They had found footprints of mobsters I had written about in years past. I was getting similar calls from a Texas legislator.

Among other things, some mob-connected companies had persuaded many savings institutions to accept large deposits on the condition that much of that money would be lent to pre-specified borrowers. These big loans generally would have been forbidden at federally-insured S&Ls before deregulation. One glaring example of these deposits-for-loans dealers was Mario Renda, a Long Island man whose office was staffed by a Teamsters Union official and a muscular gunman from -- police said -- the Lucchese Mafia family.

The reporters found that Renda's scheme was hatched at meetings at the Teamsters-funded La Costa resort in California and in a Las Vegas suite provided by Morris Shenker, a big Teamsters moneyman and the late Jimmy Hoffa's lawyer.

Renda sent agents, including convicted criminals, around the country luring growth-mad thrift executives into shady deals, placing $6 billion in deposits at 3,500 institutions. Some of Renda's "borrowers" were members of the Civella Mafia family, based in Kansas City, a family that helped control Las Vegas and the Teamsters. The loans were regularly rolled over, including interest, instead of being repaid.

Other bad-news borrowers had ties to Carlos Marcello's gulf states Mafia family, which at the time of President Kennedy's assassination employed Jack Ruby and friends and relatives of Lee Oswald, and also has been tight with the Teamsters.

In Florida, Renda worked with Michael Rapp, who had entered the federal witness protection program as Michael Hellerman. Hellerman had worked for John "Johnny Dio" Dioguardi, a Lucchese family captain, who used pay-offs, extortion and murder to create illegal cartels in the food, clothing, trucking and securities industries.

Indicted for fraud in three federal districts, Renda copped a plea for five years in prison and restitution of a paltry $10 million, without incriminating any big-fish borrowers.

Surely, the FBI should have immediately traced every loan Renda arranged at every institution he dealt with. Agents should have followed the money trail to whatever assets can be located. The same tactics should have been applied to all other suspicious loans.

But the FBI apparently didn't do that. A bureau spokesman in Washington says that if agents looked into the loans, they would have been in the New York office. That office says it just sent leads on Renda to FBI offices around the country.

This is amazing. This is our money. Why doesn't the FBI hire agents to trace those unrepaid loans and try to get our money back? Obviously, a lot of S&L money was grabbed by crooks other than those in the Mafia. But it is unacceptable not even to know who the cooks were.

Last fall, Pizzo, Fricker and another reporter, Paul Muolo, published their findings in a book that is now on the bestseller list. How can the attorney general continue to ignore the evidence? Thornburgh isn't keen on outside commissions or congressional committees butting in, but somebody has to subpoena the records and trace our cash.

Instead of finding the loot or reimposing conservative lending standards on federally-insured fiduciaries, the administration wants to cut back on deposit insurance itself. The Federal Deposit Insurance Corporation was the government's gift to the ordinary depositor who simply wants to keep ahead of inflation and protect his savings. Instead, it's the cheats who are getting protected.

Jonathan Kwitny is a freelance journalist and formerly the host of "The Kwitny Report" on PBS.

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