Franklin National Bank
Encyclopedia
Franklin National Bank, based in Franklin Square
in Long Island
, New York
was once the United States
' 20th largest bank. On October 8, 1974, it collapsed in obscure circumstances, involving Michele Sindona
, renowned Mafia
-banker and member of the irregular freemasonic
lodge, Propaganda Due
. It was at the time the largest bank failure in the history of the country.
joined the bank in 1934 as head teller and became president in 1946. Under his leadership, Franklin National Bank introduced many banking innovations, such as:
In 1964, Franklin opened branch offices in New York City, and in 1967 merged with Federation Bank & Trust Company. In 1968, Roth was removed as CEO by his protege, Harold Gleason, after the bank developed loan problems. In 1970, Roth lost his position as Chairman and was pushed off the board of directors. Gleason then became Chairman and Chief Executive Officer, inviting Laurence Tisch
to join as Vice Chairman as he was a 22% shareholder.
, a banker with close ties to the Mafia
, the purportedly bogus Freemasonic lodge P2, and the Nixon administration, purchased controlling interest in Long Island
's Franklin National Bank, from Laurence Tisch
, Chairman of Loews Corporation
, which owned hotels in Italy. Later the U.S. Comptroller of the Currency declared Tisch an unqualified director for reasons of conflict of interest, paving the way for Sindona to take over Franklin. Sindona paid more than Tisch had paid for the stock. Tisch was later sued by the Federal Deposit Insurance Corporation
(FDIC) for breach of fiduciary duty with respect to the sale of his shares to Sindona.
As a result of his acquisition of a controlling stake in Franklin, Sindona finally had a money laundering operation to aid his alleged ties to Vatican Bank and the Sicilian drug cartel. Sindona used the bank's ability to transfer funds, produce letters of credit, and trade in foreign currencies to begin building a banking empire in the U.S. Allegedly Sindona used his influence in the Republican Party
and the Nixon administration to ensure that his background did not inhibit has ability to become Vice Chairman and largest stockholder in the bank. In mid-1974, management revealed huge losses and depositors started taking out large withdrawals, causing the bank to have to borrow over $1 billion from the Federal Reserve Bank
. On 8 October 1974, the bank was declared insolvent due to mismanagement and fraud
, involving losses in foreign currency speculation and poor loan policies.
In 1975, Peter Shaddick, the former executive vice-chairman of the bank's international division, pled guilty to fraud. Following their 1979 trial in Federal District Court in New York
, Gleason, Paul Luftig, the bank's former president and chief administrative officer, and J. Michael Carter, a former senior vice president, were convicted of falsifying financial records. The Italian lawyer and liquidator of Sindona's Italian financial empire, Giorgio Ambrosoli
, provided the US Justice Department with evidence to convict Sindona for his role in the collapse of the Bank. Ambrosoli was killed by a Mafia hitman commissioned by Sindona in July 1979.
In 1980, "mysterious Michele" was convicted in the United States and in 1984 was extradited to Italy
. In March 1986, he died of cyanide poisoning while serving a life sentence. Some sources indicate he was murdered, while others indicate he committed suicide. Franklin's assets were later purchased by European American Bank, itself later acquired by Citigroup
.
Franklin Square, New York
Franklin Square is a hamlet in Nassau County, New York, United States. The population was 29,320 at the 2010 census...
in Long Island
Long Island
Long Island is an island located in the southeast part of the U.S. state of New York, just east of Manhattan. Stretching northeast into the Atlantic Ocean, Long Island contains four counties, two of which are boroughs of New York City , and two of which are mainly suburban...
, New York
New York
New York is a state in the Northeastern region of the United States. It is the nation's third most populous state. New York is bordered by New Jersey and Pennsylvania to the south, and by Connecticut, Massachusetts and Vermont to the east...
was once the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
' 20th largest bank. On October 8, 1974, it collapsed in obscure circumstances, involving Michele Sindona
Michele Sindona
Michele Sindona was an Italian banker and convicted felon. Known in banking circles as "The Shark", Sindona was a member of Propaganda Due , a secret lodge of Italian Freemasonry, and had clear connections to the Mafia...
, renowned Mafia
Mafia
The Mafia is a criminal syndicate that emerged in the mid-nineteenth century in Sicily, Italy. It is a loose association of criminal groups that share a common organizational structure and code of conduct, and whose common enterprise is protection racketeering...
-banker and member of the irregular freemasonic
Freemasonry
Freemasonry is a fraternal organisation that arose from obscure origins in the late 16th to early 17th century. Freemasonry now exists in various forms all over the world, with a membership estimated at around six million, including approximately 150,000 under the jurisdictions of the Grand Lodge...
lodge, Propaganda Due
Propaganda Due
Propaganda Due , or P2, was a Masonic lodge operating under the jurisdiction of the Grand Orient of Italy from 1945 to 1976 , and a pseudo-Masonic or "black" or "covert" lodge operating illegally from 1976 to...
. It was at the time the largest bank failure in the history of the country.
History and banking innovations
The bank was founded as Franklin Square National Bank in 1926 (but changed its name to Franklin National Bank in 1947). Arthur T. RothArthur T. Roth
Arthur Thomas Roth was an American banker.Known as "Mr. Long Island", Arthur Roth played a key role in the development of Long Island banking from 1926 through the 1970s. Roth started as a messenger at the Manufacturers Hanover Trust Company at age 17 and rose quickly through the ranks...
joined the bank in 1934 as head teller and became president in 1946. Under his leadership, Franklin National Bank introduced many banking innovations, such as:
- Junior savings accounts (1947)
- The drive up teller window (1950)
- The bank credit card (1951)
- A no-smoking policy on banking floors (1958)
- Installed outdoor teller machines at branch banks (1968)
- Franklin Savings Bond which later developed into the Certificate of Deposit. (1969)
In 1964, Franklin opened branch offices in New York City, and in 1967 merged with Federation Bank & Trust Company. In 1968, Roth was removed as CEO by his protege, Harold Gleason, after the bank developed loan problems. In 1970, Roth lost his position as Chairman and was pushed off the board of directors. Gleason then became Chairman and Chief Executive Officer, inviting Laurence Tisch
Laurence Tisch
Laurence Alan "Larry" Tisch was an American businessman, Wall Street investor and self-made billionaire. He was the CEO of CBS television network from 1986 to 1995...
to join as Vice Chairman as he was a 22% shareholder.
Collapse
In 1972, Michele SindonaMichele Sindona
Michele Sindona was an Italian banker and convicted felon. Known in banking circles as "The Shark", Sindona was a member of Propaganda Due , a secret lodge of Italian Freemasonry, and had clear connections to the Mafia...
, a banker with close ties to the Mafia
Mafia
The Mafia is a criminal syndicate that emerged in the mid-nineteenth century in Sicily, Italy. It is a loose association of criminal groups that share a common organizational structure and code of conduct, and whose common enterprise is protection racketeering...
, the purportedly bogus Freemasonic lodge P2, and the Nixon administration, purchased controlling interest in Long Island
Long Island
Long Island is an island located in the southeast part of the U.S. state of New York, just east of Manhattan. Stretching northeast into the Atlantic Ocean, Long Island contains four counties, two of which are boroughs of New York City , and two of which are mainly suburban...
's Franklin National Bank, from Laurence Tisch
Laurence Tisch
Laurence Alan "Larry" Tisch was an American businessman, Wall Street investor and self-made billionaire. He was the CEO of CBS television network from 1986 to 1995...
, Chairman of Loews Corporation
Loews Corporation
Loews Corporation is a holding company run by the Tisch Family whose subsidiaries are engaged in the following lines of business:*property and casualty insurance...
, which owned hotels in Italy. Later the U.S. Comptroller of the Currency declared Tisch an unqualified director for reasons of conflict of interest, paving the way for Sindona to take over Franklin. Sindona paid more than Tisch had paid for the stock. Tisch was later sued by the Federal Deposit Insurance Corporation
Federal Deposit Insurance Corporation
The Federal Deposit Insurance Corporation is a United States government corporation created by the Glass–Steagall Act of 1933. It provides deposit insurance, which guarantees the safety of deposits in member banks, currently up to $250,000 per depositor per bank. , the FDIC insures deposits at...
(FDIC) for breach of fiduciary duty with respect to the sale of his shares to Sindona.
As a result of his acquisition of a controlling stake in Franklin, Sindona finally had a money laundering operation to aid his alleged ties to Vatican Bank and the Sicilian drug cartel. Sindona used the bank's ability to transfer funds, produce letters of credit, and trade in foreign currencies to begin building a banking empire in the U.S. Allegedly Sindona used his influence in the Republican Party
Republican Party (United States)
The Republican Party is one of the two major contemporary political parties in the United States, along with the Democratic Party. Founded by anti-slavery expansion activists in 1854, it is often called the GOP . The party's platform generally reflects American conservatism in the U.S...
and the Nixon administration to ensure that his background did not inhibit has ability to become Vice Chairman and largest stockholder in the bank. In mid-1974, management revealed huge losses and depositors started taking out large withdrawals, causing the bank to have to borrow over $1 billion from the Federal Reserve Bank
Federal Reserve Bank
The twelve Federal Reserve Banks form a major part of the Federal Reserve System, the central banking system of the United States. The twelve federal reserve banks together divide the nation into twelve Federal Reserve Districts, the twelve banking districts created by the Federal Reserve Act of...
. On 8 October 1974, the bank was declared insolvent due to mismanagement and fraud
Fraud
In criminal law, a fraud is an intentional deception made for personal gain or to damage another individual; the related adjective is fraudulent. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and also a civil law violation...
, involving losses in foreign currency speculation and poor loan policies.
In 1975, Peter Shaddick, the former executive vice-chairman of the bank's international division, pled guilty to fraud. Following their 1979 trial in Federal District Court in New York
New York
New York is a state in the Northeastern region of the United States. It is the nation's third most populous state. New York is bordered by New Jersey and Pennsylvania to the south, and by Connecticut, Massachusetts and Vermont to the east...
, Gleason, Paul Luftig, the bank's former president and chief administrative officer, and J. Michael Carter, a former senior vice president, were convicted of falsifying financial records. The Italian lawyer and liquidator of Sindona's Italian financial empire, Giorgio Ambrosoli
Giorgio Ambrosoli
Giorgio Ambrosoli was an Italian lawyer who was killed while investigating the malpractice of banker Michele Sindona.-Liquidating Sindona’s financial empire:...
, provided the US Justice Department with evidence to convict Sindona for his role in the collapse of the Bank. Ambrosoli was killed by a Mafia hitman commissioned by Sindona in July 1979.
In 1980, "mysterious Michele" was convicted in the United States and in 1984 was extradited to Italy
Italy
Italy , officially the Italian Republic languages]] under the European Charter for Regional or Minority Languages. In each of these, Italy's official name is as follows:;;;;;;;;), is a unitary parliamentary republic in South-Central Europe. To the north it borders France, Switzerland, Austria and...
. In March 1986, he died of cyanide poisoning while serving a life sentence. Some sources indicate he was murdered, while others indicate he committed suicide. Franklin's assets were later purchased by European American Bank, itself later acquired by Citigroup
Citigroup
Citigroup Inc. or Citi is an American multinational financial services corporation headquartered in Manhattan, New York City, New York, United States. Citigroup was formed from one of the world's largest mergers in history by combining the banking giant Citicorp and financial conglomerate...
.
External links
- Beware Dead LinkBreaking the Bank Roth Built by George DeWan, Newsday Long Island History Site