Thomas faults business adviser in managing bank credit line

Michael Thomas, former chairman of the Mashantucket Pequot Tribal Council, testified Thursday in New London Superior Court that an unsecured $1 million line of credit grew to $5.2 million under the management of two personal advisers, one of whom kept important details from him.

Sovereign Bank, which called Thomas to the stand, has sued him for allegedly defaulting on the line of credit. Thomas' lawyer, Lawrence Rosenthal of the Hartford law firm Rogin Nassau, has alleged in court documents that the bank violated federal law by loaning the money "with the intent to influence or reward an agent of an Indian tribal government."

The Mashantucket Pequot Tribal Nation owns Foxwoods Resort Casino and MGM Grand at Foxwoods. Thomas, who was recently ousted after indicating he would defend tribal stipends despite the tribe's debt problems, is currently unemployed.

On the witness stand for a total of five hours Thursday before Judge Joseph Q. Koletsky, Thomas told the court that his financial adviser, Robert LaSaracina, a Norwich accountant, had the authority to pay his bills and act with his power of attorney. However, while Bill Hadley of Norwich, his business affairs adviser, had the authority to arrange real estate deals, he did not have the authority to execute those deals, Thomas said.

Moreover, any authority Hadley had was a matter of trust and not documented legally or in writing, Thomas said.

In prior testimony since the case began on July 20, various bank officials had testified that Hadley represented himself as Thomas' business adviser throughout the process of securing the line of credit. Sovereign Bank's relationship manager, Devin Hawthorne, who was directly responsible for opening and expanding that line of credit, has said he never met or spoke with Thomas, and dealt exclusively with Hadley.

The real estate deals executed with expansions of and withdrawals from the line of credit included $3 million for the purchase of Boulder Heights in Groton, which was to be "flipped," or resold quickly, for a profit, but never was; $335,000 for a parcel of land in Ledyard; and $800,000 for property in Lisbon that was intended to be used as a family compound.

Under questioning by Rosenthal, Thomas testified that while he knew Hadley had opened a checking account within the line of credit at Sovereign Bank, Thomas never signed off on a check for $328,000 made out to the Hadley Real Estate Group for action described as the closing on property known as Lantern Hill.

Another check drawn from the account and made out to Hadley for $149,000 did not bear Thomas' signature, and Thomas had no knowledge of why it was written, he testified. Thomas repeated his assertion for eight more checks withdrawn on the account ranging from $2,000 to $25,000, plus several more checks in evidence Thursday.

Regarding the bank statements on the checking account, Thomas said, "I assumed LaSaracina was getting those statements. I would assume what one got, they would be telling the other one about, or at least coordinating my interests." He also testified he worked up to 15 hours a day on tribal matters when chairman, and relied on the duo to represent his personal interests.

Thomas also testified that when he pressed Hadley for information on the Groton land deal, which he agreed to have put in a name other than his own so that he wouldn't gain unfair advantage from his elected position within the tribe, Hadley wouldn't tell him what the holding company was. He only learned later that it was put in the name of a limited liability company known as TAL Properties, whose member is Hadley's girlfriend, Tracy A. Laszloffy.

Thomas said Hadley told him, "'Oh, don't worry about it. It'll be flipped quickly.' He thought I was being overly concerned about something that would turn out to be beneficial."

Yet, when the bank went to take title to the property as a form of security for the line of credit in August of 2007, bank officials have testified they found the property was being held by the Salvatore Law Firm trustee for Liberty Investors, whose principal is Walter Lewis.

Liberty Investors agreed to give a mortgage for the Groton property to Sovereign Bank as long as the bank agreed not to call the loan, according to several bank officials, including, on Thursday, attorney Matthew Hoberman of the Hartford law firm of Rome McGuigan.

"Yet you continued to allow Mr. Hadley to act as your business representative," said Joseph Burns, the plaintiff's attorney.

"No, this was literally the last thing we collaborated on," Thomas said.

"At what point did you indicate to Mr. Hadley that he's no longer to be serving as your business representative?" Burns asked.

"Never," Thomas replied. "This lawsuit produced that outcome."

When Thomas' relationship with Sovereign Bank was clearly "in trouble" at the end of 2007, and Thomas' name was not on the Groton property, Thomas went to a friend, Daniel Gordon, looking for guidance and to try to figure out whether he was, as Thomas put it, "being taken to the cleaners."

Gordon, a Norwich native, pleaded guilty in 2003 to three felony counts related to a $43 million embezzlement from Merrill Lynch while he was a top energy trader for the firm.

Thomas then wrote a letter to Hadley dated July 31, 2008, "to make sure the property I was being sued for was actually mine" and seeking his help in transferring the property to a group known as AllStar Capital Inc. of Las Vegas, which, as Thomas would subsequently learn, had Gordon as its president and director. Hadley never replied to the letter, Thomas said.

Thomas wanted to transfer the property to AllStar Capital because he "believed it would help me resolve the Sovereign (Bank) issue with respect to clear ownership," he said.

"You were asking Bill Hadley to transfer the TAL mortgage to an entity you did not know," asked Hadley's lawyer, Paul Geraghty of the New London law firm Geraghty and Bonnanno LLC, in cross examination. "Don't you think knowing who the mortgage was being transferred to" would have been important?

"That's the kind of thing, historically, I would depend upon Mr. Hadley to advise me on, frankly," Thomas replied.

Hadley was not present at trial.

Thomas also testified that at least three signatures on bank documents purported to be his were not his.

Burns offered to challenge the veracity of one of the three claims, after showing the court that Thomas' assertion contradicted Thomas' own statement in the record as part of the bank deposition.

The trial resumes at 10 a.m. today in the Huntington Street courthouse.

p.daddona@theday.com