Travels inside a Bank Failure
The fall of Heritage Bank
Heritage Bank was our regional bank, and while the boom-time of the nineteen eighties lasted, it was the financial center of our town.
If you couldn’t get a loan elsewhere, you came to Heritage Bank. They came from Providence and Maine, from Ohio and Miami Beach.
One night developer Mike Sissman saw the three men who ended up being key players in the secret partnerships that did so much to ruin the bank having dinner one night at the Inn at Northampton. He realized right away that something was terribly wrong at Heritage Bank.
While I hid in the corner waiting for the receptionist to notice me, I read one of their brochures. I wondered how many people who attended these seminars in Boston and elsewhere knew that their resource person who was advising people on how to deal with banks calling in their loans was a convicted felon. I find that Donald Todrin is not in.
The Great Cummington Farms Disaster
In the ski business we call projects like Cummington Farms 'monuments.’ To make money, you can't spend too much on the building. All the floors and windows at Cummington Farms had to be replaced. If the Rockefellers or Donald Trump were funding the place, the work would have been perfect.
Mike Smith, check my warning lights!
When the banks lawyers came up here in l989 trying to check out these persistent rumors at the bank that Mike owned a condo in the Lake Sunapee area, they found nothing. There was no Mike Smith in the index at the courthouse but he had a condo. The title was held by The Dutchman, Inc. a New York Corporation having a usual place of business at 8910 Third Avenue, Brooklyn New York.
Heritage moved to their ultra-modern, boat-shaped tower in Holyoke in June of l989, at long last consolidating their offices in one place. Dick Covell wrote a preface to the 1989 annual report comparing the creation of his new bank to the founding of the United States. He compared the amalgamation of the seven banks to the more "perfect union" of the 13 original states.
In April Fridlington hired Alfred Dean, a former banker, to review his portfolio. Going through his desk, Dean discovered this whole bundle of checkbooks with a rubber band around them. The names on the checkbooks were relatives and friends of many of Manny’s biggest clients; the signature cards at the banks all had Manuel Duarte’s name as signing for these people.
The FBI Enters the Case
During the FDIC audit in August, there had been a slight falloff in the number of delinquencies, but then Fridlington told Gonzales about Duarte’s checkbooks and the massive losses that had just cropped up in the Worcester branch. Concerned that that they might have another Smith on their hands, Louis Gonzales thought that enough was enough. He told a discouraged Dick Covell that the bank was in apparent violation of minimum capital requirements and that, by definition, the bank was deemed to be engaged in an unsafe or unsound practice.