A former director of First National Community Bank who defaulted on $4 million in loans is counting on $60,000 of deferred compensation with the bank.
But he is not likely to collect it.
The bankruptcy filing of Michael G. Cestone lists "FNCB Directors Deferred Compensation" of $60,230 as an asset. FNCB comes up again as Mr. Cestone's major creditor, with three loans totaling $4,156,974, debts which Mr. Cestone hopes to have discharged by a judge.
Officials at the Dunmore-based FNCB said Mr. Cestone has not been paid any of that deferred compensation and, given his defaulted loans with the bank, is unlikely to receive any of it.
The bank has been operating under a consent order with the Office of the Comptroller of the Currency, which put a host of limits and requirements on the bank's operation. One of those prohibitions, said Joseph Earyes, first senior vice president of the bank, includes a stop on paying deferred compensation to former directors.
"Until that is resolved with OCC, no one is getting deferred compensation," he said.
Even when the OCC permits the bank to pay deferred compensation, the bank is unlikely to remit anything to Mr. Cestone, given his $4.1 million obligation to the bank, Mr. Earyes said.
"Unless legal authorities opine on this and say he is entitled to (the deferred compensation), our position is that this money will not be paid so long these outstanding loans are out there," Mr. Earyes said. "He may count it as an asset of his, but we would dispute that."
Mr. Cestone is represented in his Chapter 7 bankruptcy in U.S. Bankruptcy Court in the Middle District of Pennsylvania by Scranton attorney Marjorie DeSanto Barlow.
Ms. Barlow could not be reached for comment, nor could attorney James Tressler, a friend to and attorney of Mr. Cestone, to respond to the bank's intention to not pay Mr. Cestone deferred compensation earned during his service on the bank's board of directors.
The Dalton man, filing with his wife, Nanci L. Cestone, claimed assets of $510,146 and liabilities of $5,512,827.
Mr. Cestone filed for a Chapter 13 bankruptcy earlier in 2012, but withdrew the bankruptcy due to what appeared to be an error in the filing, which claimed liabilities between $100 million and $500 million. At the time, Ms. Barlow declined to comment on the unusually high liabilities claimed in the case, but withdrew the bankruptcy filing a few weeks later.
Mr. Cestone had been involved in the construction industry through a number of family-owned businesses and partnerships. He was owner and president of the now-defunct S.G. Mastriani Construction Management Co. and Cestone Custom Homes. He joined the FNCB board in 1988. During his time as director, he created a joint venture, W-Cat Inc., with a fellow FNCB board member, then-Luzerne County Judge Michael Conahan, and attorney Robert Powell to build townhomes in the Mountaintop area. Mr. Conahan and Mr. Powell were central figures in the juvenile justice scandal in Luzerne County and are currently serving prison terms for their roles.
While Mr. Cestone had no role in the scandal, he ended up being the last person holding the bag as far as W-Cat's debt was concerned. The recession and its impact on the housing and construction market diminished Mr. Cestone financial prospects. Despite having defaulted on the loans. Mr. Cestone had FNCB bank's shareholders confidence, easily earning re-election to the bank's board of directors in 2009. But he resigned from the board a few months later.
FNCB wasn't the only Dunmore bank to which Mr. Cestone owns money. He lists three loans totaling $274,000 from Fidelity Bank, FNCB's competitor. Also listed is the state Department of Revenue with $35,132 in liens for unpaid taxes. Unsecured claims, including credit card debt, civil lawsuits and other loans total $1,026,838, according to the bankruptcy documents, the largest piece of which is an Small Business Administration loan of $736,951.
From a family of accomplished golfers, Mr. Cestone is now operating Cestone Golf Academy from a Blakely building that had been occupied by Robert Mellow when Mr. Mellow was a state senator.
Contact the writer: dfalchek@timesshamrock.com