3 RICCI-LIKE LAWSUITS FACING PORTLAND BANK

Saturday, April 18, 1987

By Douglas M. Bailey, Globe Staff

Joseph Ricci's successful lawsuit against Key Bankshares of Maine, in which a jury Monday awarded him a record $15 million in damages, has raised the hopes of at least three other Maine business people who claim they were also harmed by the bank under similar circumstances.

Together the cases, which are interconnected with the same claims of discrimination, conflict of interest and unfair and illegal lending practices by the bank₁ are seeking more than $40 million in damages. However, the ante may be raised in the light of Ricci's record-setting award, attorneys say.

"There's no question about it,' said Richard E. Poulos, a Portland attorney who represents Ricci and two other plaintiffs against the bank. The Ricci verdict increases the price of poker in the state substantially."

All of the cases, including Ricci's, concern a dark period in the history of the bank, then known as Depositors Trust Co., when a scandal erupted over the business practices of its president, Marco DeSalle.

In October 1981, DeSalle was accused by bank officers of stealing a customer's business. Although charges were not brought, DeSalle resigned from the bank under a cloud of suspicion and another bank officer, Henry Lawson, was indicted for theft but was later acquitted in two separate trials related to the incident.

But Lawson, in a $10 million lawsuit filed in US District Court in Portland, charges he was set up by officials to be the bank's

scapegoat.

Poulos, who is also Lawson's attorney, says documents obtained through discovery motions show that bank officials knew DeSalle was engaged in improper business activities but wanted Lawson to take the fall to protect its ongoing negotiations to acquire Canal Bank and then later be acquired by Albany, N.Y.-based KeyCorp.

Moreover, Poulos says DeSalle's partner, ]ack Porter, gave damaging testimony against Lawson in exchange for having his $50,000 mortgage at Depositors excused.

It was during a bank audit, called after allegations against DeSalle arose, that the name of ]oseph Ricci surfaced and was mistakenly identified by an FBI agent as the subject of a criminal investigation. That information led the bank to cut off Ricci's $1 million line of credit.

"Ricci came to me because of my knowledge of the Lawson case," Poulos said. "The depositions we got in the Lawson case gave us a lot of information that helped his case."

At about the same time, DeSalle and the bank were charged with racial discrimination after it cut off the credit of one of its customers, Paul Reid. Reid, who is black, won a $600,000 judgment against the bank last year partly on the strength of damaging testimony from bank officers who attested to bigotry and racial discrimination among officials there. The judge in the case, however, reduced the damages to $100,000 and the judgment is being appealed.

DeSalle, through his attorneys, denied he took part in any scheme to damage either Reid and Lawson or take over anyone's business.

However, DeSalle, the bank and its attorneys are facing that very charge in another case filed by Catherine Duffy Petit, the owner of the Old Orchard Beach Pier Company, an amusement park. Petit says DeSalle and her lawyer at the time, Leonard Nelson, who was also a Depositors' director, conspired in a scheme to rob her of her beachfront property.

She says DeSalle and Nelson failed to disclose to her that the bank had approved her request for a $450,000 line of credit. She says they told her the bank had approved only $200,000, half of which had to be used to pay off an existing debt. The lack of financing forced Petit to file for protection from creditors under bankruptcy laws, she says.

Bank officials say there is no merit to Petit's claims.

Petit, however, is also suing Nelson's prominent Portland law firm,

Bernstein, Shur, Sawyer, Nelson, charging it with conflict of interest by representing her and the bank at the same time. (Ricci has a similar claim against the firm because his original lawyer, Gregory A. Tsalikas, was also with Bernstein, Shur. As a result of Ricci's complaint, the Maine Bar Association is investigating the firm and, in an unusual move, has called for a public hearing of the complaints. Both Ricci and Petit are expected to testify at the August hearings.)

Petit is seeking $25 million in damages from the bank and $75 million from the law firm.

"Cathy's case is different than Ricci's," says Petit's Boston lawyer, William F. Looney Jr. "But I think his case sent a message to the bank that the community is not going to put up with these kind of business tactics."

DBAILE;04/17 NKELLY;04/19,22:00 RICCI18