A federal grand jury yesterday indicted the former president of Riggs National Bank of Maryland and First Fidelity Bank, charging him with conspiracy to misapply bank funds and to deceive bank regulators. A former Riggs vice president also was indicted.
John E. Donahue, 52, of Alexandria, Va., conspired with two employees between 1986 and 1989 so that he could write checks that would not be charged to his accounts, prosecutors said.
The purported scheme began when Mr. Donahue was president of First Fidelity and continued after the bank became Riggs National in 1987.
Through the arrangement, Mr. Donahue could write checks regardless of whether he had sufficient funds to cover them.
Although he later made good on some of the checks, Riggs suffered losses of more than $70,000, according to an FBI investigation.
Two other former Riggs employees were charged with conspiring with Mr. Donahue and with other offenses.
Former Riggs Vice President Tonie M. Cockrell, 40, of White Plains, was charged with two counts of misapplication of bank funds. Ms. Cockrell, who oversaw the bookkeeping and accounting department at First Fidelity, allegedly "blocked" her checking account from 1986 to 1989 by preventing the checks she wrote to be charged to her account. The bank suffered losses of about $30,000 as a result, prosecutors said. She also was charged with illegally transferring more than $16,000 in bank operating funds to the account of a friend.
Also charged was former bank employee Edward L. Celenza, 32, of Germantown, and Charles R. Sherman, 52, of Frederick.
Mr. Celenza allegedly blocked the checking account of Mr. Sherman's company, Alliance Auto Leasing & Rental, resulting in bank losses of at least $190,000.