Updated news on the Gambino, Genovese, Bonanno, Lucchese and Colombo Organized Crime Families of New York City.

Sunday, January 12, 2014

Feds outline case against mobsters accused of fleecing $12 million from a Texas financial company

A federal prosecutor Wednesday outlined the case against reputed mobsters charged with a massive racketeering scheme he claims looted $12 million from a Texas-based Financial Company.

"This is a case about lying, cheating and stealing," said Assistant Attorney General Howard Wiener at openings Wednesday. "They lined their pockets with the millions they stole and cost shareholders millions."

Nicodemo Scarfo, 45, son of infamous jailed Philadelphia mob boss "Little Nicky" Scarfo, is charged along with alleged mob associate Salvatore Pelullo in a 25-count indictment. Also charged are four attorneys who worked with the men and a former CEO of the publicly traded mortgage company, FirstPlus Financial.

Om Wednesday, Wiener described to jurors how through fraudulent transactions and layers of bank accounts and shell companies the men made off with millions in less than a year, beginning in the Spring of 2007, then used the money to purchase luxury cars, mini mansions, a yacht and in Scarfo's case, to pay owed organized crime debts.

Scarfo's attorney, Michael Riley, said in his opening that not only was the business legitimate but any mention of the mafia a misleading strategy to keep the case interesting and pre-convict his client. He said no money trail in the case leads to the mob.

"No one's gonna wake up with a horse in their bed, no one's going to go sleep with the fishes," Riley said of evidence jurors can expect. "This is not an organized crime case and to suggest it, is unfair. It's a distraction and it's offered to cloud your view."

The trial before a jury of 19, selected last year, some as early as October, is expected to last for at least three months.

In addition to Pelullo and Scarfo, attorneys Gary McCarty, David Adler and Donald Manno and brothers John and William Maxwell, executives with FirstPlus, are also on trial. Manno, a Cherry Hill attorney who has long represented Scarfo, is representing himself.

Prosecutors argue Scarfo and Pelullo controlled the scheme from the top, selling straw companies for millions and directing the defendants to knowingly cover up the fraud and launder the money. Manno is charged with having knowledge of the plan and helping Scarfo fraudulently secure a $500,000 mortgage from St. Edmond's Federal Savings Bank to purchase his Egg Harbor Township house.

The defense argues the company was ill-fated from the start having gone bankrupt in 2006 but that the investors and consultants, including Pelullo and Scarfo, were turning things around.

In court on Wednesday Pelullo's attorney, Troy Archie described Pelullo, 47, as a misunderstood, successful but brassy businessman who had partnered with Scarfo in the past running a company that sold vacation packages and a Philadelphia-based mortgage company, GlobalNet.

Archie said his client's past as a high school dropout with two fraud felonies, coupled with his irreverent and often "maniacal" attitude made him an easy target for FBI investigators. Archie even played a phone recording in which Pelullo is yelling and using profanity discussing a board of directors' vote in order to introduce jurors to his personality.

"This case is the government's belief that where there was mafia smoke there must be mafia fire. And now they have to masquerade that smoke as fire," Archie said.

For a case described as having mafia ties the evidence will be pretty dry - bank records, securities filings and money trails.

Jurors will also hear hours of recorded phone conversations - there were more than 8,000 wiretaps issued during the course of the investigation. They'll need to determine whether those exchanges, some of which are extremely crude, prove illegal activity or just demonstrate tough guy talk.

In one excerpt Wiener shared with the jury, Pelullo says of a dissenting board member, "if you ever rat, your wives will be (expletive) and your kids will be sold off as prostitutes."

The most critical testimony will likely come from Cory Leshner, 30, a West Reading lawyer and one of six people indicted who pleaded guilty.

Scarfo's cousin John Parisi and Scarfo's wife, Lisa Marie Scarfo, pleaded guilty in September. Howard Drossner pleaded guilty and admitted that at the direction of Pelullo, he created false tax returns to help Lisa Marie Scarfo qualify for a mortgage.

Prosecutors have also pointed to evidence Pelullo visited and communicated with Scarfo Sr., as evidence of direct mob involvement.

An interesting legal question arose before the trial started when Pelullo's attorney asked that reporter George Anastasia, present in courtroom to cover the case for the website BigTrial.net be barred from openings and testimony because he is on the witness list.

Anastasia, who covered the mob extensively for the Inquirer and has also written about the FirstPlus case, said he has no idea what testimony he would be asked to provide.

Anastasia said he's considering filing a complaint should the motion be granted since prohibiting him from the courtroom would also prevent him from doing his job writing about the case.

Opening arguments continue Thursday in Judge Robert B. Kugler's courtroom for the remaining defendants charged. Only Pelullo and Scarfo are in custody and both face 30 years to life in prison. In addition to the racketeering charge, Scarfo faces weapon charges. In 2008 the FBI found three handguns, two rifles, a shotgun, and more than 2,500 rounds of ammunition on Scarfo's yacht, called Priceless.



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