Sane Borrower

Red were the faces of several proud Manhattan bankers last week when they were exposed in Federal Court not for evil but for folly. In Judge William Bondy's courtroom, Michael ("Mike") Pecoraro, 39, a confessed swindler with at least 19 aliases, received an 18-month penitentiary sentence for having obtained $15,563 in 19 different loans from the National City Bank and Manufacturers Trust Company on 19 pieces of real estate he did not own.

Because the Federal Housing Administration is a partial guarantor of modernization loans made by banks under Title I of the National Housing Act, Mike Pecoraro's methods came under Federal scrutiny. His methods were simple. A short, smartly-dressed man with a police record as a forger and thief, Mike would walk into a branch of big National City or Manufacturers Trust, submit an FHA loan application signed by Otto Corneau (or one of 18 other names) with his right hand and the wife's name penned with his left. Then he returned to a rented apartment, waited for and answered the bank's telephone call regarding the loan. Thus ''investigated," Mike hastened to substantiate the references he had given. Scurrying to a public telephone in a corner drugstore, he became his own employer when the bank made inquiries. "Yeah,'' Mike would tell the bank, "Otto Corneau works here. Makes 50 bucks a week." All Mike had to do then was wait for the check, usually for $700 or $1,000.

Most amazing of Mike's activities were his return visits to two branches of National City where he had been successful. In each case he was interviewed by the same employe who had seen him before under a different name. He got four loans in four calls at two banks.

Mike was "Pasquale Cassotta" when special agents of FHA caught up with him last June at a mailbox waiting for a check. It was an anonymous letter from "A Citizen," not the banks, which gave the Federal men their first knowledge of his activities. Mike began operations a year ago, but went South for the worst of the winter, resuming his bank calls in the spring.

Before sentencing Mike last week, Judge Bondy asked if he were sane. When the prosecutor pointed out that he got the money. Mike grinned. Snorted Judge Bondy: "Well, is the bank sane then? . . . It's incredible."

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