Former credit union executive sentenced to 24 years: Longest white-collar sentence in Massachusetts.

BOSTON--(BUSINESS WIRE)--Sept. 12, 1995--Richard D. Mangone, the former president of the Digital Employees Federal Credit Unioin and co-founder of the now-defunct Barnstable Community Federal Credit Union ("BCCU") has been sentenced to prison for 24 years, without parole.

This is the longest federal sentence ever given in a white collar case in Massachusetts. Mangone was also ordered to pay over $41 million in restitution, to repay the amounts lost by the two credit unions he defrauded. Mangone was a fugitive for 18 months until Aug. 29, 1995, when he surrendered to authorities.

U.S. Attorney Donald K. Stern announced that Richard D. Mangone, 51, formerly living at 273 River St., Norwell, Mass., was sentenced today on 22 counts of conspiracy, bank fraud, unlawful receipt by credit union officer and money laundering. Mangone was convicted on July 8, 1993, after a seven week trial on an indictment charging that he used his positions at the credit unions to commit massive real estate frauds, along with three other men.

In sentencing Mangone today, Judge Young referred to what he termed the "egregiousness" and "evilness" of Mangone's conduct. Judge young further commented, "Mr. Mangone, you've ruined people's lives, lots of lives, people you don't even know. Being sorry to these various financial institutions isn't the half of it."

U.S. Attorney Stern stated that Mangone's sentence is the longest federal sentence handed down for a white-collar crime in Massachusetts. Stern commented, "Richard Mangone justly deserves the long sentence meted out by the court today. Mangone's contempt for the Digital Credit Union depositors and the banking industry was reflected in his bragging that he was able to use the Barnstable Credit Union as his own personal "piggy bank." Now all four of the principals, and others who assisted their schemes, are paying the price for flagrantly disregarding the law."

Stern added, "BCCU represents one of the largest credit union frauds in history, with losses in excess of $40 million. In the course of feeding his own greed and lifestyle, Mangone placed at risk the life savings of thousands of innocent depositors and caused the collapse of BCCU."

Mangone was originally scheduled to appear for sentencing before U.S. District Judge William G. Young on Feb. 15, 1994, but fled four days before the hearing. His failure to appear earned Mangone a place on the U.S. Marshals' Most Wanted List. The Marshals Service and the FBI aggressively pursued Mangone and were closing in when he surrendered to federal authorities in Bowling Green, Ky., on Aug. 29 and was returned to Massachusetts.

Mangone's three co-defendants were also convicted at trial. Former attorney Robert Cohen was sentenced to 10 years in prison; former Cape Cod developer James K. Smith was sentenced to 15 years; and former North Shore real estate investor Ambrose L. Devaney was sentenced to three years. All three are currently serving their sentences in federal prison.

The convictions stem from fraudulent schemes to obtain real estate loans from BCCU, previously operating at Hyannis, Mass., and the Digital Credit Union, located in Maynard, Mass. From 1985 until BCCU was declared insolvent and placed under conservatorship by the National Credit Union Administration ("NCUA") in March of 1991, Mangone and his co-conspirators created various real estate trusts with names of straw borrowers in order to obtain multi-million dollar loans for purported real estate developments on Cape Cod and in Rhode Island and Maine. They used fraudulent certificates of trust beneficial interests, phony purchase and sale agreements, and bogus financial statements to defraud the credit unions and mislead federal examiners.

Stern said that Mangone is the seventh person sentenced in connection with the collapse of BCCU. In addition to Mangone, Cohen, Smith and Devaney, three others having lesser roles in the fraudulent schemes have been convicted and sentenced. Stern also noted that his office filed charges of conspiracy and fraud against two additional former officials of BCCU on Aug. 31, and those charges are pending. The investigation is continuing.

The criminal fraud investigation was conducted by agents of the Federal Bureau of Investigation and the Internal Revenue Service. Assistance was also provided by the National Credit Union Administration. The apprehension of Mangone resulted from the coordinated efforts of the U.S. Marshal Service and the FBI. The case was prosecuted by Assistant U.S. Attorneys Paul G. Levenson and Victor A. Wild of Stern's Economic Crimes Unit.

CONTACT: U.S. Department of Justice

Joy Fallon

or

Anne-Marie Kent

617/223-9445