By Jerry Lynott firstname.lastname@example.orgBusiness Writer DUNMORE – A First National Community Bank director behind a stalled townhouse development in resigned from the board weeks after the lender said it would write off more than $4 million in loans defaulted on by project developer W-Cat Inc.
In a prepared statement, the bank’s parent company said Michael G. Cestone, president of S.G. Mastriani Construction Co., left on good terms Wednesday when he stepped down and thanked him for his service. Cestone, 47, of Dalton, builder of the Sanctuary in Wright Township, guaranteed the loans along with two former Luzerne County judges and others charged in the ongoing public corruption probe. A director since 1988, he had been reelected to the board last month with a yearly compensation of $55,000 plus other benefits. On June 2, he sold 4,000 shares of bank stock at $10 a share, according to a bank filing with the Securities and Exchange Commission. He still owned 33,029 shares, according to the filing. The bank stock dropped $1.50 to close at $8.75 a share on Friday. His father, Michael J. Cestone Jr., chief executive officer of the Mastriani firm, has been secretary of the publicly traded bank since 1971. “The resignation was not the result of a disagreement with the corporation on any matter relating to the corporation’s or bank’s operations, policies or practices,” said the filing by First National Community Bancorp Inc. A message left for Michael G. Cestone at the construction company was not returned Friday. An e-mail sent to J. David Lombardi, chief executive officer and president of the bank, also was not returned. The younger Cestone and his wife signed on as guarantors of the bank loans with former judges Mark A. Ciavarella and Michael T. Conahanand their spouses, attorney Robert Powell and his wife and former county prothonotary Jill Moran, who was the head of W-Cat. Conahan also resigned from the bank board in January a day after he and Ciavarella were charged by federal authorities with taking $2.6 million in kickbacks for the construction of two juvenile detention centers and the placement of youths in the facilities. They are free and awaiting sentencing. Powell had been co-owner of the detention facilities and a former co-owner of W-Cat. He was charged earlier this month with concealing the crimes committed by the former judges and assisting them in order to prevent their arrests. Along with his law partner Moran, who has not been charged with a crime, Powell is cooperating with authorities in the ongoing probe. Another bank board member, businessman Louis A. DeNaples, voluntarily stepped down from the chairman role last year when he was charged with perjury for allegedly lying to Pennsylvania Gaming Control Board officials about his connection to organized crime figures when he was seeking a license for his Mount Airy Casino Resort. Those charges were dropped in April in exchange for DeNaples turning over his ownership interest in Mount Airy to a trust in the name of his daughter, Lisa DeNaples , the chief operating officer of the facility. W-Cat received $4.5 million in 2005 from the bank to build the 84-unit project along Church Road. But only seven have been built. The developer obtained a fourth and final extension to complete the project later this year from the township. W-Cat paid some interest on the loans, but owed nearly $4 million on the principal. In February the bank obtained confessions of judgments against the guarantors for the loan defaults. But in May, it said it placed the outstanding loans on non-accrual status, expecting that they would not be paid in full.