Gambino Associate Pleads Guilty To $20 Million Stock Swindle

Gambino Associate Pleads Guilty To $20 Million Stock Swindle

  October 08, 2010    Dapper_Don

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Taking a page out of "The Sopranos," a Staten Island mobster ran a "boiler room" stock operation that duped investors out of a cool $20 million.
Reputed Gambino crime-family associate Michael Scarpaci, who federal prosecutors say ran the stock swindle, pleaded guilty in Brooklyn federal court yesterday to investment-adviser fraud.
Known as Gryphon Financial, the operation disguised itself in blue-chip trappings, with a Web site boasting of executives educated at Harvard and Penn's Wharton School of Business.
One brochure trumpeted a glowing -- and phony -- review from billionaire George Soros: "Alone the traders of Gryphon Financial are incredible, together they are unstoppable."

They told investors they were headquartered on Wall Street, with satellite offices in London and Sydney, Australia. In reality, the firm was located in a Staten Island strip mall.
Scarpaci called himself "Michael Stern," and displayed a genuine talent for selling stock. The firm pumped out subscription investment newsletters, claimed to employ a team of financial analysts and championed its own trading desk.
Gryphon Financial also showcased its own hedge fund, flush with cash, saying its holdings exceeded $1.4 billion.
None of it was true.
The bottom line, federal prosecutors say, was that wiseguys manning the boiler room were employing illegal high-pressure tactics and selling stock to unsuspecting clients, charging them high fees in the process.
The scene echoed a plot line in the second season of "The Sopranos" where mob boss Tony's nephew, Christopher Moltisanti, operates a pump-and-dump stock office for the crime family.
Scarpaci, 34, faces life imprisonment in an unrelated Gambino racketeering case where he's charged with extortion, loan-sharking and running a gambling operation.
Yesterday, he admitted that Gryphon, which he operated from 2007 until this past spring, was a scam.
Scarpaci faces up to five years in prison and mandatory restitution of at least $855,000, as part of his plea deal in the stock-fraud case.

 http://www.nypost.com/p/news/local/staten_island/sopranos_scam_VB8mGUfOZ2swZ1NMo0ZD6K#ixzz11mcB8QTS