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Sunday, June 8, 2014

Defense attorneys fight assertions against their gangster clients




He wasn't a gangster. He was a turnaround expert.

And if the government had just left him alone, Salvatore Pelullo would have turned FirstPlus Financial, a struggling Texas mortgage company, into a profitable business enterprise.

Do the math!

That was the message, accompanied by nearly 100 slides and a heavy mixture of passion and sarcasm, that Pelullo's lawyer, Michael Farrell delivered to a federal jury today in a highly charged summation that offered a decidedly different view of the testimony and evidence from the one presented by the prosecution during the five-month trial.

The government, Farrell said repeatedly, failed to back up its charge that Pelullo and mobster Nicodemo S. Scarfo looted the company after secretly taking control of its board of directors in the summer of 2007.

"The government never gave these people a chance and they want you to convict them of crimes," said Farrell, the first of seven defense attorneys to offer closing arguments. Farrell will be back in front of the jury when the trial resumes Monday. He is expected to take most of the day to complete his summation.

"This is a guy with a track record of immense business success," Farrell said of his client, pointing to businesses Pelullo had started in the past, to a newspaper article identifying him as one of the top 40 businessmen under 40 and personal financial records that listed properties and assets that at times exceeded $1 million.

Farrell described Pelullo, 46, as a high school dropout with intuitive business acumen who had developed a "business model" for taking distressed companies and turning them into successful operations. He was, Farrell added, a "risk taker" who had run afoul of the law in the past. Pelullo has two prior fraud convictions.

But the defense attorney, contradicting a major premise in the prosecution's case, said there was never any attempt to hide Pelullo's role as a consultant to FirstPlus or to defraud the company.

"Loot the company?" he nearly shouted at one point. "They were trying to grow the company."

Farrell's summation came after Assistant U.S. Attorney Stephen D'Aguanno wrapped up nearly six hours of closing arguments shortly after the lunch break today. D'Aguanno described Pelullo as the "central figure" in a scam built around "a fraudulent set of legal and consulting agreements."

He said Pelullo and Scarfo use fear, intimidation and the reputation of the mob and their links to it to advance a scheme that netted them millions while running the company into the ground. Both Pelullo and Scarfo, through companies they controlled, had consulting contracts with FirstPlus. A third defendant, lawyer William Maxwell, had a legal contract with the firm.

Maxwell was being paid $100,000-a-month plus expenses. The government contends he set up consulting contracts for Pelullo, at $100,000-a-month, and Scarfo, at $33,000-a-month, as part of an insider move to siphon cash out of the company.

Other defendants on trial are Maxwell's brother, John, the CEO of FirstPlus, and lawyers David Adler, Gary McCarthy and Donald Manno.

Using slides and charts that flashed on large screens around the courtroom, Farrell challenged the goverment's contention that after Pelullo and Scarfo took control of the company board of directors, its assets dropped from about $11 million to $1,700. In fact, he contended, companies that were purchased by FirstPlus had tangible value of millions and were not the straw entities that the prosecution alleges.

The purchases -- the government has charged that Pelullo and Scarfo controlled most of the companies that FirstPlus bought -- were part of a plan to turn the company around, part of a business model that Pelullo had developed and used successfully over the years.

Farrell also chided D'Aguanno and FBI Agent Joe Gilson, the lead investigator in the case. The defense attorney implied that the two law enforcement officials lacked the financial background and training to accurately assess what was taking place.

He said the FBI targeted Scarfo, the son of jailed Philadelphia mob boss Nicodemo D. "Little Nicky" Scarfo, because of his suspected mob ties. The younger Scarfo was on probation in 2007 after serving more than three years in prison for a conviction in an orgnaized crime gambling case. He has another conviction for racketeering.

The organized crime investigation into Scarfo, dubbed "Son Block," morphed into a probe of white collar corruption, Farrell said, and went off track because the government didn't understand the financial world.

The government "wants you to believe Scarfo was a mobster," Farrell told the jury. The evidence and testimony indicate he was "a computer nerd," the lawyer said.

Both Pelullo and Scarfo had criminal records and were cognizant of the fact that those records could create problems with government regulators and shareholders. But neither attempted, as the government alleges, to hide their involvement as consultant to the company, he said.

"They had strikes against them," he said of their criminal pasts. "They had obstacles. But they believed they could succeed."

Returning to another theme that has been part of the defense throughout the trial, Farrell said a series of FBI raids in May 2008 in which FirstPlus records were seized and Pelullo and Scarfo were identified as targets thwarted any attempt for the company to succeed. It wasn't fraud, but the government's actions, he argued, that deep sixed FirstPlus Financial.

He urged the jury not to buy into the government's arguments.

"They believe you'll convict solely because of the Mafia smoke," he said. But it's smoke, he said, with "no fire."

http://www.bigtrial.net/2014/06/mafia-smoke-no-fire-in-fraud-case.html#L7r8rFDUuvGvBxZr.99


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