Scarfo Junior Gets 30 Years for FirstPlus Looting
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| The judge slammed Scarfo Jr. in court. |
EXPANDED, SEE NICKY JR.'s PLANE: Nicodemo Scarfo Junior, a member of the Luchese crime family, was sentenced to serve 360 months in prison for participating in a racketeering conspiracy and other offenses related to the looting of FirstPlus Financial Group, a Texas-based mortgage company. Scarfo and a partner used the publicly traded company to buy shell companies from which they could steal assets.
FirstPlus is now defunct. He was sentenced in July.
“Nicodemo Scarfo and his associates tried to take La Cosa Nostra corporate, using traditional, strong-arm mob tactics to take over a publicly traded company and loot it like a personal piggy bank,” said Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division. “The Justice Department will fight organized crime wherever it may surface—from back alleys to public board rooms—to ensure that crime does not pay.”
“Scarfo and his crew gave new meaning to the term ‘corporate takeover,’ pushing out the legitimate leadership of a publicly traded company and then looting it,” said and U.S. Attorney Paul J. Fishman of the District New Jersey.
“They used false SEC filings, phony consulting agreements and more traditional mob methods to steal $12 million from the company’s shareholders. That’s a risk that investors should never have to take.”
Scarfo, 50, of Galloway, New Jersey; Salvatore Pelullo, 48, of Philadelphia, an associate of the Philadelphia and Luchese families; William Maxwell, 56, of Houston, a Texas attorney; and John Maxwell, 63, of Dallas, were convicted in July 2014, after a six-month trial, of racketeering conspiracy and related offenses, including securities fraud, wire fraud, mail fraud, bank fraud, extortion, money laundering and obstruction of justice.
In addition to sentencing Scarfo to prison, U.S. District Judge Robert B. Kugler ordered Scarfo to forfeit his interest in certain properties and to pay restitution in the amount of approximately $14 million. Pelullo, William Maxwell and John Maxwell are scheduled to be sentenced later this week.
The trial evidence showed that, in April 2007, Scarfo, Pelullo and others conspired to take control of FirstPlus Financial Group Inc. (FPFG), a publicly-held company in Texas, by using threats of economic harm to intimidate and remove FPFG’s management and board of directors, and to replace them with persons beholden to Scarfo and Pelullo, including William Maxwell and his brother, John Maxwell.
“Essentially, Scarfo and Pelullo used extortion and other illegal means to gain control of the company,” said Special Agent Joe Gilson, who investigated the case from the FBI’s Atlantic City Resident Agency in New Jersey. “And then they systematically looted the company.”
“Within several weeks of gaining control,” Gilson said, “Pelullo and Scarfo had lined their pockets with $7 million. Before they were arrested in 2011, more than $12 million was illegally funneled to them—money that rightfully belonged to the company’s stockholders.
The investigation revealed that between 2007 and 2008, Scarfo received $33,000 per month from FPFG as a “consultant”—at a time when he was on home detention in New Jersey for violating his parole from a previous conviction. The money was being paid to a shell company controlled by Scarfo. Pelullo, using a different shell company, had a similar deal. With their ill-gotten gains, the mobsters purchased an airplane, a yacht, and expensive jewelry.
“Within several weeks of gaining control,” Gilson said, “Pelullo and Scarfo had lined their pockets with $7 million. Before they were arrested in 2011, more than $12 million was illegally funneled to them—money that rightfully belonged to the company’s stockholders.
The investigation revealed that between 2007 and 2008, Scarfo received $33,000 per month from FPFG as a “consultant”—at a time when he was on home detention in New Jersey for violating his parole from a previous conviction. The money was being paid to a shell company controlled by Scarfo. Pelullo, using a different shell company, had a similar deal. With their ill-gotten gains, the mobsters purchased an airplane, a yacht, and expensive jewelry.
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| Scarfo Jr. and Pellulo purchased expensive items with their ill-gotten gains, including this plane, owned by Nicky Junior. |
“Complicated financial crimes are not normally the strong suit of LCN,” Gilson noted. But Pelullo, who had two previous federal fraud convictions, “was a persuasive con man. He could maintain an air of legitimacy, but behind the scenes everything was a fraud.”
Using a variety of investigative techniques, including a court-ordered wiretap (monitored by retired FBI agents, some of whom had helped put Scarfo’s father behind bars), investigators unraveled the scam with the help of federal partners including the Department of Labor and the Bureau of Alcohol, Tobacco, Firearms, and Explosives. During the more than five-year investigation, a million pages of paper documents were analyzed and the contents of more than 100 computers were searched.
Scarfo, Pelullo, the Maxwells, and others associated with the fraud were convicted in 2014. “We feel great that our team was able to put a stop to these crimes and bring the subjects to justice,” Gilson said. “The FBI remains vigilant against all types of organized crime, including LCN.”
The indictment also named as co-conspirators Nicodemo D. Scarfo, or Scarfo Sr., the imprisoned former boss of the Philadelphia family, and Vittorio Amuso, the imprisoned boss of the Luchese family.
Five other defendants—Cory Leshner, Howard Drossner, John Parisi, Todd Stark and Scarfo’s wife, Lisa Murray-Scarfo—previously pleaded guilty to various charges.
The case was investigated by the FBI’s Newark, New Jersey, Division, with assistance from the U.S. Department of Labor-Office of Inspector General’s Office of Labor Racketeering and Fraud Investigations New York Region, the FBI’s Philadelphia Division and the ATF.
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