Feds barred bank role for DeNaples

DUNMORE – The deal to withdraw perjury charges against Louis A. DeNaples earlier this year led federal regulators to bar the businessman and casino owner from returning to his role as a bank chairman.

Saying the agreement was “based on a crime that involves dishonesty or a breach of trust,” the Office of the Comptroller of the Currency prohibited DeNaples from playing any role in the conduct of the affairs of First National Community Bank for at least 10 years.

Banking law permits the regulator to impose the penalty in the event an individual enters an agreement in connection with the prosecution of a crime.

Calls left Tuesday with DeNaples at his Dunmore auto parts business and J. David Lombardi, acting chairman of the bank, were not returned.

The regulator’s decision was separate from that of Dauphin County District Attorney Edward M. Marsico Jr. “We did not require that Mr. DeNaples be prohibited from resuming his position with the bank,” Marsico said.

The OCC contacted the prosecutor’s office after the terms of the agreement for withdrawal of charges were filed on April 15, he said.

DeNaples, 68, had been charged with lying about his relationship to organized crime figures in his testimony to the Pennsylvania Gaming Control Board when applying for his license for the Mount Airy Casino Resort. The agreement called for DeNaples to transfer his ownership to a trust for his daughter, Lisa DeNaples, chief operating officer of the Monroe County casino.

The elder DeNaples voluntarily stepped down from his bank chairman role shortly after he was charged on Jan. 23, 2008. The OCC suspended him on Feb. 11, 2008 pending final disposition of the case or until the regulator terminated the suspension.

Two days after the agreement to withdraw the charges was filed in April, the OCC notified DeNaples by letter it was barring him from “participating, directly or indirectly, in any manner in the conduct of the affairs” of the bank, as well as its holding company First National Community Bancorp. The regulator’s enforcement action carried a maximum $1 million a day fine and imprisonment for up to five years for violating the ban.

The Times Leader obtained a copy of the correspondence through the Freedom of Information Act.

A copy of the letter was sent to other regulators and stated DeNaples must obtain approval from them to participate in the affairs of the bank.

The OCC’s action still allows DeNaples to be a bank customer and to own stock.

DeNaples had been on the bank’s board of directors since 1972 and chairman since 1998, according to the annual proxy statement filed with the Securities and Exchange Commission on April 10. His term expires in 2011.

The statement listed him as one of the principal beneficial owners of the bank, holding 1.65 million shares or 10.2 percent of the outstanding common stock as of March 31 of this year.

His brother Dominick, the other principal owner, held 1.4 million shares or 9 percent of the stock.

Yet another family member sits on the board. Dr. Louis A. DeNaples Jr., the former chairman’s son, was recently re-elected as director at a shareholders’ meeting in May.

But another director re-elected with him stepped down last week. Michael G. Cestone of Dalton resigned on June 24. Cestone, president of S.G. Mastriani Construction Co., Dunmore, had backed $4.5 millions in loans issued by the bank for a townhouse project his company was building in Mountain Top. The project developer, W-Cat Inc., defaulted and the bank wrote off the loans.

The development, known as the Sanctuary, also was backed by another former bank director facing federal charges that grew out of the ongoing public corruption probe in Luzerne County. Former county judge Michael T. Conahan resigned from the board in January after he was charged with another former county judge, Mark A Ciavarella. The two men admitted taking $2.6 million in kickbacks from the builder and former co-owner of two juvenile detention centers for aiding the construction and placement of youths in the facilities. The judges’ wives also guaranteed the loans for W-Cat.