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

Thursday, July 3, 2014

Jury finds Lucchese wiseguy Scarfo Jr guilty on all counts during financial fraud trial


Mobster Nicodemo S. Scarfo and his business associate Salvatore Pelullo were convicted today of looting more than $12 million from a Texas-based mortgage company through a series of phony business deals and bogus consulting contracts.

Scarfo, 48, the son of jailed Philadelphia mob boss Nicodemo D. "Little Nicky" Scarfo, was described by the government as the behind-the-scenes power in the secret takeover of FirstPlus Financial in 2007.

Pelullo, 46, an Elkins Park businessman with two prior fraud convictions, was the point man in the scheme, according to authorities. A wannabe wiseguy who quoted lines from The Godfather and brought a street corner swagger to business meetings, Pelullo was accused of using threats and intimidation to force company officials to do his bidding.

The anonymous chosen jury, which deliberated for parts of 10 days over two-weeks, also convicted former FirstPlus CEO John Maxwell and Maxwell's brother, William, a lawyer who worked for the firm.
The verdicts were announced shortly after 11 a.m. to a courtroom packed with friends and family members of the defendants and with government officials. The process took more than twenty meetings as Judge Robert Kugler read each of the 25 counts in the case and the jury foreman declared "guilty" or "not guilty" to each charge faced by each defendant.

Scarfo and Pelullo have been held without bail since their indictments in November 2011. They showed little emotion as the process played itself out. Scarfo heard the word "guilty" tied to his name 25 times. Pelullo charged with one less count, heard it 24 times.

Both men, because of their prior criminal convictions and because of their principal roles in the scam, face from 30 years to life when sentenced by Judge Kugler. The verdicts capped a federal investigation that began more than seven years ago and became public in May 2008 when the FBI conducted a series of coordinated raids in Philadelphia, South Jersey, Miami and Irving, Tx (where FirstPlus was based).

Authorities charged that the takeover of FirstPlus began in the spring of 2007 when Scarfo and Pelullo began to maneuver for control of the troubled mortgage company and at one point was a key player in the subprime lending business but had subsequently fallen into bankruptcy.

Scarfo and Pelullo were accused to using fear and intimidation to insert their own candidates on to the company board of directors in the summer of 2007and were controlling the company by that point, even though their names never appeared on any company documents or on filings with the SEC and other government agencies.

Full of bravado and bluster, according to witness testimony, Pelullo was involved in the day-to-day operations of the company and used his own arrogance and allusions to his organized crime connections to instill fear into those who balked at doing his bidding.

At one point, according to a company official who testified during the trial, Pelullo threatened the official, telling him his wife would be raped and his young daughters sold as prostitutes if the official didn't go along with Pelullo's directions.

Testimony from former employees, including Cory Leshner a top Pelullo associate who became a key prosecution witness, helped the government build its case which was also based on hundreds of secretly recorded phone conversations and thousands of pages of documents.

The jury verdicts were followed by the start of a forfeiture proceeding this afternoon. The government is seeking a yacht and an airplane purchased by Scarfo and Pelullo, a Bentley purchased by Pelullo and other assets and bank accounts tied to the probe.

The readings of the verdicts came in a tense courtroom where friends and relatives had become gathering earlier in the morning. The jury panel had sent a note to Judge Kugler late yesterday afternoon announcing that it was close to a consensus but wanted to sleep on its findings before announcing them.

The verdicts announced for the racketeering conspiracy count that topped the indictment set the stage for what was to follow. Scarfo, Pelullo and the Maxwell brothers were found guilty, but Adler, McCarthy and Manno were found not guilty. What followed was the recitation of the remaining counts and as the jury foreman declared "not guilty" again and again on separate fraud charges, friends and family members of Adler, McCarthy and Manno began to smile and quietly nod to one another.

One friend of McCarthy's offered a quiet fist pump as he sat in the third row of the packed courtroom as heard "not guilty" announced to a securities fraud charge, 17 wire fraud charges and one money-laundering charge that McCarthy faced.

The reaction was similar from friends and family members of the other defendants. Manno's wife, Rita, broke into tears of joy after the final "not guilty" was announced to one of the five charges her husband faced. One of her daughters sat next to her, gently rubbing her back.

"A six-year ordeal is finally over," said Manno, a veteran criminal defense attorney who had represented Scarfo for years.

Manno, who represented himself, said he never second-guessed his decision. He said it gave him a chance to "personalize" the defendant. Throughout the trial he spoke of himself in the third person and in a detailed closing argument he hammered home the key point in his defense: he was a lawyer trying to counsel Scarfo, not a member of the conspiracy. More important, he argued and the government's own wiretaps appeared to confirm, neither Scarfo nor Pelullo followed his advice.

Like the two other lawyers acquitted, Manno contended that he was lied to by Scarfo and Pelullo and was never fully aware of what they were doing behind-the-scenes at FirstPlus.

"They split the case the way we had argued for in a severance motion," Manno said of the jury's verdict, referring to a motion rejected by Judge Kugler who have Scarfo, Pelullo and the Maxwell brothers tried together and Ader, McCarthy and Manno tried in a second trial.

Adler declined to comment as he left the courtroom, but smiled and said any questions should be handled by his defense attorney Barry Gross.

Gross, himself a former federal prosecutor in Philadelphia, thanked the jury and the judge and said his client "looks forward" to returning to his legal practice. Adler, based in New York, specializes in SEC filings.

In a prepared release later in the day Gross, who works for the Philadelphia law firm of Drinker, Biddle&Reath, said in a statement released by the firm later in the day, "There was an enormous quantity of information that the government presented in this case, but the jurors clearly took their responsibilities very seriously and justice was finally achieved."

Manno said the same thing more succinctly. "It ended the way it should have," he said, before heading off with his wife, daughter and son-in-law to celebrate the outcome.

Neither Maxwell brother offered any comment. Both appeared to numb as the guilty verdicts, one after another, mounted against them.

Before the jury came in, John Maxwell, who despite his complaints about media coverage has consistently and graciously made himself available to the media, said "It is what it is...As a kid I used to do some bull riding. This can't be any harder than that."

Three other defendants, lawyers David Adler, Gary McCarthy and Donald Manno, not guilty of the charges they faced.

The government has alleged that mobster Nicodemo S. Scarfo and his business associate, Salvatore Pelullo, secretly took control of FirstPlus, a troubled Texas-based mortgage company, in 2007. The two then orchestrated a series of phony business deals and bogus consulting contracts that allow them to siphon $12 million from the company, according to the case against them.

The money was used to support a lavish lifestyle. Authorities allege that Scarfo and Pelullo bought a yacht valued at nearly $900,000; that Pelullo purchased a $217,000 Bentley automobile, and that Scarfo and his wife, Lisa Murray Scarfo, bought a $715,000 home near Atlantic City.

Throughout the trial, the defense has argued that FirstPlus failed because of a poor economy and the negative impact of the federal investigation which became public after a series of raids in May 2008. The defense also argued that the government has used the specter of organized crime to sensationalize the charges but insisted there was no mob involvement.

Thirteen defendants were originally named in a 25-count indictment handed down in November 2011. Six defendants, including Scarfo's wife, have pleaded guilty. She is awaiting sentencing on bank fraud charges linked to a mortgage for the home near Atlantic City.

In addition to Scarfo and Pelullo, those on trial include former FirstPlus CEO John Maxwell, his brother, William, who worked as a lawyer for the company, and lawyers David Adler, Gary McCarthy and Donald Manno.

All seven are charged with racketeering conspiracy. Other counts in the indictment include bank fraud, wire fraud, mail fraud, money laundering and obstruction of justice. Not every defendant faces every count. Scarfo and Pelullo also face weapons offenses.


http://www.bigtrial.net/2014/07/verdict-expectedtoday-in-firstplus-trial.html#ok1aESkgJ2F0h5Sq.99


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