He's been on the witness stand for a week and during that time he's
offered the jury a behind-the-scenes look at what authorities allege was
the $12 million ripoff of FirstPlus Financial.
He's admitted to
falsifying records, padding expense accounts and "moving money around"
to make it appear as if it came from or was going to legitimate business
deals.
He sailed on the $850,000 yacht that was bought with
cash from the scam, he said. He arranged some of the paperwork for the
purchase of a $217,000 Bentley Continental GT that also figures in the
fraud. He fabricated records to make a $40,000 trip to Europe appear
like a business expense. And he set up "sideways accounts" that allowed
his boss to funnel money to two mistresses.
Those were just some
of the things that he saw and did while working for Salvatore Pelullo
before, during and after the takeover of FirstPlus, a troubled
Texas-based mortgage company, said Cory Leshner, who described himself
as Pelullo's "personal assistant."
"I thought of Mr. Pelullo as
a father figure," Leshner told the jury. "And he thought of me as a
son." And that, he said at another point, "made me feel proud...I was
willing to do whatever he asked."
Leshner, who has pleaded guilty to a conspiracy charge and faces up to five years in prison, is due
back on the stand when the trial resumes tomorrow.
Dressed
in a suit and tie, his voice clear, his comments concise, the burly
31-year-old first took the stand on Feb. 26 and quickly emerged as a key
witness in the now two-month-old trial; the first "insider" to provide
details about what the FBI and federal prosecutors allege was a blatant
money grab orchestrated by Pelullo, 46, and Nicodemo S. Scarfo, 48, the
son of jailed Philadelphia mob boss Nicodemo "Little Nicky" Scarfo.
The
two are charged with secretly taking control of FirstPlus Financial in
June of 2007 and siphoning $12 million out of the company to support
their lavish lifestyles.
Leshner told the jury he landed a
part-time job with a Pelullo company while still an undergraduate at
West Chester University (where, ironically, he would earn a degree in
criminal justice). He went to work fulltime for the Elkins Park wheeler
dealer after graduating in 2006. One of 13 defendants originally
indicted in the case, he pleaded guilty last year and agreed to
cooperate. Five other defendants, including Scarfo's wife Lisa
Murray-Scarfo, also have pleaded guilty but have not become witnesses
for the government.
In addition to Pelullo and Scarfo, the
defendants on trial include John Maxwell, the former CEO of First Plus,
Maxwell's brother, William, who was special counsel to the company, and
three other lawyers, David Adler, Gary McCarthy and Donald Manno.
From
the witness stand, Leshner has fleshed out the allegations contained in
a 107-page, 24-count indictment handed up in November 2011. The
indictment capped a five-year federal investigation. The government
alleges that in the summer of 2007 Pelullo and Scarfo orchestrated the
takeover of FirstPlus Financial, a foundering Texas-based mortgage
company, and exercised behind-the-scenes control, setting up business
deals from which they reaped staggering benefits.
By October of
that year, Leshner told the jury, they had gotten $7 million out of the
company. Most of the money came from the purchase -- at grossly inflated
and overvalued prices -- of companies that Pelullo and Scarfo had set
up in the Philadelphia and South Jersey area and through "consulting
fees" paid to Pelullo and Scarfo through front companies they secretly
controlled.
He said that while there was paperwork and a
labyrinth of companies through which the cash sometimes traveled, the
marching orders were simple. "It was," he said, "how much money can we
get to Mr. Pelullo and how fast."
Leshner said he was first
introduced to Scarfo at a barbecue on Memorial Day 2006 in Ventnor. At
the time, he said Pelullo introduced him as "Nick Promo." Leshner said
he quickly learned who Scarfo really was and knew of his mob
connections.
"I grew up in the Philadelphia area," he said.
He
also told the jury that most of his dealings were with Pelullo who,
through evidence and testimony, has been portrayed as more of a gangster
than Scarfo. Brash, arrogant and quick to threaten and intimidate,
Pelullo is the one whose wiretapped rants have provided the government
with the foundation for many of its allegations.
Leshner said he
saw a different side of Pelullo at first, describing him as a hard
charging and determined businessman who rightly boasted of having become
a millionaire in his mid 20s without having a high school degree.
Scarfo, on the other hand, fit the image of a "computer nerd" that
others have also applied to him.
Leshner told the jury that the
money taken out of FirstPlus was used to finance Pelullo's lavish
lifestyle, a lifestyle, he said, that Pelullo was already living before
the move on the Texas mortgage company.
But, he added, "it became more lavish after June 2007."
Leshner
said his father went to work for Pelullo around 2005 when Pelullo owned
a company that cleaned and maintained buildings. Leshner said he was
hired while still in college and that he rose from being a laborer and
gofer to personal assistant and, eventually, the vice president of Seven
Hills Management, one of the Pelullo companies tied to the FirstPlus
fraud.
One of his first jobs after graduating from West Chester
in December 2006, he said, was to maintain Pelullo's condo in Miami and
to serve as a gofer and assistant there. The jury saw photos of the
condo which overlooked a marina. There was a pool table in one room, art
work on most of the walls and rooms decorated with thick, rich
furniture and brassy chandeliers. There also was a Ferrari parked in the
condo garage, he said.
Pelullo, according to Leshner, moved
between Philadelphia, Miami and Dallas once the FirstPlus scheme was
launched. Originally, he said, Pelullo thought he could finance the
takeover through the
purchase of company stock, but when that
proved impossible -- there was a "poison pill" provision in the company
by-laws that would thwart any hostile takeover, Leshner said Pelullo
told him -- the plan changed to getting control of the board of
directors.
By June 2007, Leshner said, Pelullo and Scarfo had
behind-the-scenes control of the board and the money started to flow out
to them. Evidence introduced earlier in the trial also indicates that
both Pelullo and Scarfo communicated by telephone with jailed mob boss
"Little Nicky" Scarfo and visited him in a federal prison in Atlanta
where he is serving a 55-year sentence for racketeering and murder.
Scarfo,
84, and Vittorio "Vic" Amuso, 80, the boss of the Lucchese crime
family, were inmates together in Atlanta. Both are named as unindicted
co-conspirators in the FirstPlus fraud indictment.
The layered
scheming that Leshner described involved, among other things, a
$100,000-a-month consulting contract for Seven Hills that was arranged
by William Maxwell, then special counsel to FirstPlus. Leshner said
Pelullo frequently referred to himself as "the consultant" and frankly
admitted that while he was calling the shots, he could never appear as
an officer or a member of the board of directors of FirstPlus because he
had two prior fraud convictions.
Seven Hills in turn arranged to
funnel $33,000-a-monthy to Learned Associates, a Scarfo front, Leshner
said. He said he did not know of any consulting work Scarfo did and said
that Pelullo, rather than consulting, was actually running FirstPlus.
Leshner's testimony also focused on the lifestyles that the money bought.
"Trips
to Europe, dinners, casinos, just kind of whatever he wanted to do, he
did" on the FirstPlus dime, Leshner said of Pelullo.
Pelullo
bought a Bentley, he said, at F.C. Kerbeck in Palmyra, and drove it to a
Fourth of July party in Ventnor. He then had the car, a black, 2006
Continental GT model, shipped to Florida. On another occasion, he said,
Pelullo showed up one day and told him, "I'm buying a boat."
It
turned out to be an 83-foot pleasure yacht named "Priceless." While
arranging a loan proved impossible, Leshner said, the purchase was
eventually negotiated for cash that came from FirstPlus. The boat cost
$850,000. With taxes, the total was $901,125, he added.
The
listed owner was P.S. Charters and while their names never showed up on
any documents, the yacht belonged to Pelullo and Scarfo, he said.
Leshner
was on board for the maiden voyage that in retrospect might have been
an omen of what was to come. He said he, Pelullo and William Maxwell,
along with their girlfriends and two other FirstPlus employees, Cole
Maxwell, the 20-something son of John Maxwell, and Todd Stark, described
as head of security and entertainment for Pelullo, were on board for
what was to be a six-hour cruise from Miami to the Bahamas.
But
one of the yacht's two engines blew out and 21 hours later the yacht
limped into port in Nassau with its electricity malfunctioning and its
plumbing not working. The group, with the exception of Cole Maxwell who
didn't have his passport and had to stay on the boat, spent several
nights at the Atlantis Hotel -- the bill was $12,300, Leshner said --
then flew back to Miami. Maxwell stayed till the boat was repaired and
sailed back with the yacht's captain.
One thing the younger
Maxwell did bring along, said Leshner, was an arsenal of weapons. One of
the charges in the indictment focuses on the possession of guns by
Scarfo and Pelullo, both convicted felons who are prohibited from owning
firearms.
Shortly before they set sail from Miami, Leshner
testified, Cole Maxwell showed up with a "bag of guns." Later, Leshner
said, he was with Pelullo in Pelullo's master bedroom on the yacht as he
sorted out the weaponry and gave a gun to each man on board.
The
indictment lists the arsenal which included two rifles, a 12-gauge
shotgun, a Sig Sauer 9mm pistol, a Taurus .38 caliber revolver, a Taurus
.22 caliber pistol, approximately 2,500 rounds of ammunition for the
rifles and seventeen additional boxes of bullets.
While the guns
were never fired, Leshner said it was all hands -- armed -- on deck as
the yacht struggled through open waters with a dead engine and another
boat approaching. Leshner offered no further details, but another source
familiar with the incident said Pelullo and the others feared pirates
and believed their show of force scared off a possible intruder that night.
Leshner
also described how he doctored expense account items so that a trip to
Europe taken by Pelullo could be paid for through his FirstPlus
consulting arrangement. The sham, he said, was that Pelullo was
researching possible investment opportunities in the cosmetics trade.
"I
researched on line different places in the areas which Sal visited and
said that he was there to research cosmetics at these different places,"
Leshner explained.
When Assistant U.S. Attorney Steven
D'Aguanno, the lead prosecutor in the case, asked if Pelullo in fact
that been to any of those locations, Leshner said, "No." When he was
asked who told him to come up with the false information, Leshner
replied, "Sal."
Pelullo was nearly cited for contempt while
laughing at Leshner when he first took the stand on Feb. 26 and John
Maxwell was, in fact, cited and jailed for laughing at Leshner on March 6.
Leshner also said
that on Pelullo's orders he set up "sideways accounts" through which
thousands of dollars in cash were funneled to two women, identified as
Cajmoun and Nadjmer. The women, one whom worked in the FirstPlus office
in Irving, Tx, were Pelullo's mistresses, Leshner said. Pelullo later
divorced his wife and married Nadjmer, who was also known as Sabrina, he
added.
The relationships were rocky, he told the jury.
"Mr.
Pelullo would often get fed up with the two of them for any number of
reasons and would break if off with them only to start it back up soon
thereafter," he said.
Scarfo also had a direct line into the
FirstPlus cash stream, Leshner told the jury. He said Scarfo leased an
Audi S6 for $1,200-a-month as a company expense. And Pelullo and others
helped arrange the down payment and mortgage for a $715,000 home Scarfo
and his second wife purchased in Egg Harbor Township after the FirstPlus
takeover.
Leshner attended law school at night while working for
FirstPlus and continued after the FirstPlus financial bubble burst
following a raid by the FBI in May 2008 that targeted dozens of
locations and individuals. When the FBI came to his door, Leshner said,
"I was scared to death...I was deathly afraid."
But he said that
for the next five years, through the indictment and up until the eve of
the trial, he espoused the same "party line" that Pelullo and his
co-defendants are basing their defense on: the collapse of FirstPlus was
simply a business deal gone bad and the money spent buying companies
and paying for consulting fees were legitimate expenses that were part
of a failed venture.
Leshner said he earned his law degree from
Widener University Law School and passed the bar in Pennsylvania. His
law career was short lived, however. He voluntarily agreed to be
disbarred after cutting his deal with the government and pleading guilty
last year. Under the terms of that plea agreement, he said, he faces
five years in prison, substantially less, the defense has pointed out,
than the 20 years he was facing if convicted at trial.
During
cross-examination, Michael Farrell, the more boisterous of Pelullo's two
court-appointed defense attorneys, hammered away at Leshner's
motivation and credibility. He alleged that Leshner and his girlfriend,
who subsequently became his wife, falsified information on a mortgage
application for a home in Reading in 2007.
Wasn't that the same thing Leshner was accusing Pelullo and Scarfo of doing, Farrell asked?
Farrell
also repeatedly asked Leshner about his reasons for joining the
prosecution "team" and adopting the government's "party line," implying
that Leshner was saying whatever the government wanted to hear in order
to live up to a plea deal he negotiated to cut his own criminal
liability.
"I didn't join anybody's team," Leshner said, adding,
"I couldn't deal with the party line of Mr. Pelullo. My conscience
caught up to me."
Married and with a young daughter, Leshner said he expects to be sentenced to jail.
"I
pleaded guilty because I am guilty," he said in response to a question
from D'Aguanno. "I couldn't keep up the explanation and the party line
that I had been fed from the time I worked for Mr. Pelullo...I'm going
to have to look my daughter in the eye and explain to her that when you
do something wrong you stand up and face the consequences and you learn
from it."
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