Accountant describes disarray in Thomas' finances

Robert LaSaracina, the Norwich accountant authorized to handle personal finances for Michael Thomas, the former chairman of the Mashantucket Pequot Tribal Council, testified in New London Superior Court Friday that Thomas regularly overspent tens of thousands of dollars a year on his tribal credit card and often could not cover those expenses.

Sovereign Bank, which called LaSaracina to the stand before Judge Joseph Q. Koletsky, sued Thomas in January of 2008 for allegedly defaulting on an unsecured $1 million line of credit taken out in 2004, which grew to $5.2 million by the end of 2007. Thomas' lawyer, Lawrence Rosenthal of the Hartford law firm Rogin Nassau, has alleged that the bank violated federal law by loaning the money "with the intent to influence or reward an agent of an Indian tribal government."

Contrary to Thomas' testimony Thursday, LaSaracina said he himself has no power of attorney and is not a financial adviser for Thomas, but handles one Dime Bank checking account, bookkeeping, bills, and tax returns.

Overspending on the tribal credit card, which was provided for business expenses, included things like $2 Internet downloads or thousands of dollars for a hotel room, for example, LaSaracina said.

"There were many occasions when there was a certain amount due the tribe for use of the credit card and there wasn't enough money (in the Dime checking account) to pay back the tribe," LaSaracina said.

Norwich Realtor Bill Hadley, Thomas' business adviser, sometimes repaid the tribe on Thomas' behalf, LaSaracina said.

As chairman, Thomas' net income after taxes, housing expenses and the like, was about $260,000 a year, not including bonuses, LaSaracina said. Asked by Hadley's attorney, Paul Geraghty of the New London law firm Geraghty and Bonnanno LLC, if overspending totaled as much as $90,000 a year, LaSaracina said that figure could be off by 25 percent "one way or the other."

The unsecured line of credit with Sovereign Bank for a commercial revolving loan was taken out in 2004, and an additional $3 million was borrowed later for 20 acres of land in Groton with the unrealized aim of selling it quickly for a profit, witnesses have said. LaSaracina didn't learn of either until 2006.

Asked by Sovereign attorney Joseph Burns of the Hartford law firm of Rome McGuigan what he said to Thomas when told of the transactions,

LaSaracina said he asked - "not politely" - why he wasn't told. Thomas told him that he thought Hadley had informed him about it, LaSaracina said.

Asked by Burns if he was upset at not being told, LaSaracina answered, "I was upset for other reasons. I didn't think the debt obligation should have been taken on."

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

LaSaracina also had no knowledge until Friday, he said, of the checking account within the Sovereign line of credit, from which bank statements were directed to Hadley, and not to Thomas.

LaSaracina also did not work closely with Hadley; any responsibilities the two may have had for Thomas' affairs were separate, LaSaracina said. However, LaSaracina was aware that Hadley "did a lot of things for Michael Thomas," from getting automobiles financed, to paying medical insurance, and in one instance, handling the sale of a property Thomas owned in New Hampshire.

When LaSaracina had a meeting with Thomas, Hadley and others about the "trouble" with the bank in late 2007, LaSaracina said, "Michael did request to Hadley and myself, just take care of it and do whatever you have to do."

Asked by Burns if LaSaracina would expect Thomas to handle the line of credit himself, LaSaracina said, "No, Michael got involved in very little detail with anything."

Geraghty also elicited testimony from another witness, Sovereign Bank loan administrator Cristina Apuzzo, that a check for $328,000 made out to the Hadley Real Estate Group for the closing on a piece of property known as Lantern Hill in Ledyard, and other checks made out to Hadley, were used to pay Mystic Investors LLC, a real estate vehicle for which Thomas is the principal.

Rosenthal, Thomas' attorney, also elicited testimony from LaSaracina when presenting evidence about a People's Bank checking account that Hadley, who was listed as a manager of Mystic Investors, actually is not the manager. Connecticut Secretary of State records lists Thomas as the group's member. LaSaracina said he did not know the checking account existed.

Cross-examination of LaSaracina continues in court at 10 a.m. on Aug. 10.