THIS IS A BIG ONE: Following a series of early-morning raids, paroled Philadelphia mob boss Nicodemo S. Scarfo and his wife were among more than a dozen lawyers, accountants and associates charged by federal authorities today with racketeering and other related offenses stemming from a nearly $5 million bust-out of a Texas company.
Scarfo, 46, a member of the Philadelphia-based faction of the Lucchese organized crime family, was arrested at his Atlantic City home.
He, along with an associate member, Salvatore Pelullo, 44, are charged in connection with the “extortionate takeover” and looting of FirstPlus Financial Group, Inc., a publicly held company in Irving, Texas.
A federal bankruptcy trustee has put the overall take at $4.86 million.
However, federal authorities today said FirstPlus milked $12 million from investors by buying or investing in shell companies the two established with Philadelphia and South Jersey addresses.
Also charged in the indictment is Scarfo’s wife, Lisa Murray-Scarfo, whom the government said lie on a loan application to secure a fraudulent mortgage on a $715,000 house bought with criminal proceeds.
Scarfo and Pelullo lived the high life, buying an $850,000 yacht, a Bentley, the house and thousands of dollars of jewelry for Mrs. Scarfo, U.S. Attorney Paul S. Fishman said this afternoon.
Those charged “gave new meaning to ‘corporate takeover’ by looting a publicly traded company to benefit their criminal enterprise,” Fishman said. “Through rampant self-dealing, fraudulent SEC filings and more traditional mob methods, the defendants allegedly stole $12 million from shareholders.”
Especially in this economic climinate, “investors should be free to invest in public companies without fear that violent criminal organizations are their puppetmasters,” Fishman said, adding that the public “deserves to rely with confidence on corporate officials and professionals whose positions require them to act in the best interest of shareholders, not members of organized crime.”
MORE: The indictment comes nearly 22 years to the day when Scarfo was almost whacked. As George Anastasio of the Philadelphia Inqurier tells it:
On Halloween night 1989, Scarfo was having dinner in Dante&Luigi’s Restaurant in South Philadelphia when a man wearing a mask and carrying a trick-or-treat bag walked up to Scarfo’s table, pulled out a gun and shot the young wiseguy six times. The brazen mob hit came in the midst of one of the most turbulent periods in the history of the Philadelphia Mafia. The younger Scarfo survived the assassination attempt, but the shooting marked the end of the reign of his father, Little Nicky… READ MORE….
Scarfo, having already served two prison sentences for gambling and racketeering convictions, is also charged in a mob-connected gambling case in Morris County.
The 25-count indictment filed in Camden federal court includes charges of racketeering conspiracy, securities fraud, wire fraud, mail fraud, bank fraud, extortion, interstate travel in aid of
racketeering, money laundering and obstruction of justice.
The Indictment also names Scarfo’s father and Vittorio Amuso, another imprisoned Lucchese boss, as unindicted co-conspirators in another case.
The bankuptcy trustee alleges that at least $4.86 million and 1.6 million shares of company stock were transferred to companies believed to be controlled by Pelullo and Scarfo. The trustee identified Pelullo, former FirstPlus chief executive officer John Maxwell, 59, and Maxwell’s 52-year-old brother William, who was special counsel to the company, as “targets of [a] federal grand jury investigation.”
“Through threats of physical and economic harm,” Scarfo and Pelullo took over FPFG, established a figurehead board and installed William Maxwell as “special counsel,” the FBI said in the indictment unsealed this morning in U.S. District Court in Camden.
The crew then went about “plundering its assets,” with Maxwell funneling “millions of dollars to himself, Scarfo and Pelullo through fraudulent legal services and consulting agreements,” the indictment alleges.
The deals “were designed to mask the true identity and nature of the control exerted over FPFG and conceal the source of the money fraudulently conveyed to Scarfo and Pelullo,” it says.
Led by Scarfo and Pelullo, the crew “repeatedly submitted false information, or omitted material information, in required SEC filings,” the government alleges. “As a result, FPFG’s shareholders and the investing public had no idea that FPFG was being controlled by members and associates of organized crime.”
Most of those charged were picked up this morning during a series of coordinated raids by the FBI, the Department of Labor’s Office of Inspector General, and the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) after the indictment was unsealed.
Pelullo was arrested in Miami and William Maxwell at his Houston office.
In addition, Gary McCarthy surrendered to the FBI this morning in Philadelphia.
Scarfo’s wife was expected to surrender to authorities in Camden.
Two men are reportedly at large: John Maxwell and Todd Stark, of Ocean City, who is accused of giving Scarfo ammunition for a .9mm handgun.
Others charged include Cory Leshner, David Adler, certified public accountant Howard Drossner, William Handley of Miami, and Scarfo’s private attorney, Donald Manno, of Medford, who the government said illegally withheld information from his client’s probation officer and the court about Scarfo’s source of income and contact with convicted felons.
Also charged is John Parisi, of Atlantic City, who was with Scarfo and was shot the night of the attempted hit.
“The demise of Organized Crime has been greatly exaggerated,” said Michael B. Ward, Special Agent in Charge of the FBI’s Newark, N.J., Field Office. “Criminal activities have evolved from the back alleys to the board rooms, but the same use of physical threats and intimidation to gain leverage and loot lucrative businesses for personal gain continues to this day.”
Scarfo’s father, Nicodemo “Little Nicky” Domenico Scarfo, was a longtime Philadelphia mob boss who became a notorious crime figure by heading a particularly ruthless crew and ordering a dozen murders. He and Amuso, one-time head of the Lucchese crime family, are both serving prison terms.
The elder Scarfo was into his 55-year prison term in the mid-1990s when his second-oldest son became a member of the Luccheses, federal authorities say. Following his own release from prison in 2005 on an unrelated charge, the younger Scarfo was placed on supervised release and required to report to a probation officer.
The indictment unsealed today cites a secretly recorded phone call in which Pelullo and Scarfo express relief about “the sudden death of a former FPFG executive” because he was “the only connection, the only tie to anything.”
“The rat is dead,” Pelullo says at one point, according to the indictment.
“[Y]ou wanna know something though?” Scarfo reportedly tells his associate. “That’s one that I know you can’t take credit for . . . [laughter] . . . and that’s the natural best thing. You know what I mean? . . . That is so like Enron-ish. You know what I mean? Kenneth Lay, he bailed out and took a heart attack.”
Handling the government’s case are Assistant U.S. Attorney Steven D’Aguanno of the New Jersey U.S. Attorney’s Office Organized Crime/Gangs Unit in Camden and Trial Attorney Lisa C. Page of Organized Crime and Gang Section in the Department of Justice’s Criminal
Division in Washington.