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Thursday, February 13, 2014

A corporate takeover mafia style


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It was mood music for a corporate takeover.

A few hours after a rowdy shareholders meeting formalized what federal authorities allege was Salvatore Pelullo's secret takeover of FirstPlus Financial, Pelullo hosted a celebratory dinner for company officers and members of the board of directors at a posh steakhouse in Dallas.

As he sat at the head of a long table in a private dining room at DelFrisco's on that night in October 2007, a violinist serenaded Pelullo repeatedly with the same song, said Robert O'Neal, then chairman of the board and president of FirstPlus.

O'Neal, testifying for the prosecution at the racketeering trial of Pelullo, mobster Nicodemo S. Scarfo and five other defendants, said the song was all too familiar and somewhat ominous.

"It was the theme from The Godfather," he said in response to a question from Assistant U.S. Attorney Adam Small.

O'Neal was the second FirstPlus official to take the stand in the now month-old trial. Among other things, he told the jury that his signature had been forged on at least two company documents authorizing the $1.8 million purchase of a financial company.

That purchase was one a several gambits the government alleges Pelullo and Scarfo orchestrated after taking behind the scenes control of FirstPlus in June 2007. The racketeering indictment alleges that Scarfo and Pelullo siphoned $12 million out of the struggling, Texas-based mortgage company, using the funds to support high flying lifestyles that included expensive cars, lavish homes and a yacht they christened "Priceless."

Scarfo, 47, has been identified as a member of the Lucchese crime family in North Jersey. He is the son of jailed Philadelphia mob boss Nicodemo D. "Little Nicky" Scarfo. Pelullo, 45, of Elkins Park, has been identified as a mob associate.

O'Neal, a chiropractor from Beaumont, Tx., said he was brought into FirstPlus by William Maxwell, an attorney and friend who had been named special counsel to FirstPlus. Maxwell's brother John was the CEO of the company. The Maxwell brothers are co-defendants in the case along with three other attorneys, including Donald Manno of Cherry Hill, Scarfo's longtime defense attorney.

O'Neal is expected back on the stand when the trial resumes Thursday. Court is in recess tomorrow.

Earlier today David Roberts, another former FirstPlus official, completed his fourth day on the witness stand. Roberts testified that he was threatened by Pelullo and that while Pelullo was listed only as a "consultant," he was in fact the person running the company.

"What was said was what was done," Roberts said of Pelullo.

Roberts said Pelullo used fear and intimidation, including allusions to his mob connections, to bully him and others in the company. In earlier testimony, he told the jury that shortly after taking control of FirstPlus Pelullo warned Roberts and the Maxwell brothers that if they ever cooperated with the government, "our wives would be raped by niggers and his children would be sold as prostitutes."

Roberts, who said he had two daughters aged three and five, said he was frightened by the threat and decided, "I wasn't going to be a problem. I was going to do what I had to do."

During cross-examination, defense attorneys hammered away at Roberts' credibility and motives for cooperating, pointing out among other things, that he had lied on his resume -- Roberts conceded that he had "embellished" -- and that he borrowed $38,000 from Pelullo even while claiming he feared him.

Roberts served as secretary of the company and was a member of the board of directors from the summer of 2007 until early in 2008. He was also vice president of a FirstPlus subsidiary. He said he earned an annual salary of $150,000.

The FBI first questions him in September 2008, he said, about six months after his job had been terminated. He said he wasn't surprised to get a visit from federal investigators because he had had concerns about the way FirstPlus was operating.

"From the inside it did not look like what I envisioned a public company would look like," he said.

O'Neal told a similar story about the way FirstPlus was run. He said he was brought into the company by William Maxwell and introduced to Pelullo as a "consultant." He said he was unaware that Pelullo had two prior convictions for fraud, facts that would have impacted his decision to get involved.

He said William Maxwell later boasted about criminal appeal work he was going to do for "Little Nicky" who he later learned was jailed Philadelphia mob boss Nicodemo D. Scarfo. The elder Scarfo has been jailed since 1988 on racketeering and murder charges for which he was sentenced to 55 years in prison.

Testimony and evidence introduced at the trial has records of Pelullo and the younger Scarfo visiting the mob boss in prison in Atlanta and taped phone conversations from prison in which Scarfo and his son discuss what the government alleges was the FirstPlus takeover.

O'Neal said he twice traveled to the Philadelphia - South Jersey area with William Maxwell. On both
occasions, he said, they met with Sal Pelullo and on one occasion they went to an Italian restaurant where he was introduced to the younger Scarfo.

Maxwell, he said, pointed to Scarfo who was standing in front of the restaurant and said, "He's the man. He's the money." O'Neal said he assumed Scarfo was "the Godfather."

O'Neal said after he became president of FirstPlus he was "very concerned about the leadership of the company." He said William Maxwell assured him that Pelullo would not be involved in the operations, but O'Neal said that assurance was hollow and that Pelullo remained very active in the decision making process. O'Neal said he opted to resign early in 2008, claiming he did not have the time to commit to the job as president.

In fact, he said, he lied about why he wanted to step down. His real reason, he said, was his concern about organized crime.

"I didn't want to make anyone mad," he said. "I just wanted to get out."

On cross-examination by Scarfo's lawyer, Michael Riley, O'Neal admitted that anything he knew about the Mafia came from movies and news reports. He said he had had very little contact with Italian-Americans in Texas.

Throughout the trial, the defense has hammered away at two themes -- FirstPlus was a failing company that floundered not because of fraudulent business deals, but because of its weak financial position; and the introduction of the spectre of organized crime into the case is an attempt by the government to sensationalize and hype an otherwise complicated and boring story of a financial collapse.

Returning to the dinner at DelFrisco's and The Godfather music, Riley asked O'Neal if it would be unusual to hear Mexican music being played in a Mexican restaurant. He also asked him if his perceptions of Pelullo and Scarfo weren't clouded by "the stereotype that Italian-Americans" from the northeast part of the United States were Mafia.

Isn't that the same, Riley asked, as northerners who believe everyone from Texas "wears a cowboy hat, drives a pickup truck and has cows."

O'Neal said it wasn't just The Godfather theme, but "the way it was done."

"He was playing it directly to Mr. Pelullo," said O'Neal, adding that the violinist played the theme three or four times in succession. He also said John Maxwell's two sons, one in high school and the other in college, acted as "body guards" for Pelullo, accompanying him whenever he got up from the table.

Riley asked incredulously if O'Neal wanted the jury to believe that "two boys, one in college and the other in high school" where providing security for a Mafia figure? O'Neal struggled with the answer, but said that's what he seemed like to him.

While not part of today's testimony, other government documents and records indicate that the October 2007 shareholder's meeting was the focal point of the takeover of FirstPlus. The government alleges that Pelullo threatened officials to get shareholder votes in line and used intimidation to thwart a rival group of shareholders who opposed the new board of directors that the government said Pelullo had put in place.

The dinner at DelFrisco's was to celebrate the victory, but O'Neal said he was taken aback as were other company officials who attended.

As a final question, Riley asked O'Neal, "Do you wear a cowboy hat, drive a pickup truck and have cows?"

"Two out of three," said the witness.

http://www.bigtrial.net/2014/02/jurors-hear-of-serenade-for-takeover.html#r9MKXhHXfbUKmF8M.99


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