Feds: Mafia Affiliates Took Over, Looted $12 Million From Texas Mortgage Company

Federal authorities charged Tuesday that affiliates of the La Cosa Nostra and Lucchese organized crime families gave a “new meaning” to the term “corporate takeover” when they looted a publicly traded mortgage company, with one member threatening that if someone were to “rat,” their “wives will be f**ked… and your kids will be sold off as prostitutes.”

Law enforcement officials charged 13 people — including an alleged member and another associate of the Lucchese family — on racketeering and related offenses in an alleged scheme to take over and loot the Texas-based FirstPlus Financial Group Inc. (FPFG) through extortion. Ten defendants are already in custody, one is expected to surrender and two are still at large.

Federal officials allege that Nicodemo S. Scarfo Jr. — also known as “Nick Promo,” “Mr. Apple” and Mr. Macintosh” — became a “made” member of the Lucchese family after an attempt on his life in 1989. They say Lucchese family boss Vittorio Amuso, while in federal prison in Atlanta, arranged for Scarfo to become a member of the Lucchese family as a favor to former Philadelphia La Cosa Nostra boss Nicodemo D. Scarfo Sr. Both Amuso and Scarfo are named as unindicted co-conspirators in the case.While out on probation after being released from prison in 2005, Scarfo Jr. allegedly conspired with Salvatore Pelullo, Texas attorney William Maxwell and others to take over FPFG in April 2007.

One takeover method they devised was accusing other board members of financial improprieties and threatening lawsuits, eventually replacing them with “figurehead” board members loyal to them. Early on in the conspiracy, Pelullo allegedly threatened an unnamed board member by telling him “if you ever rat, your wives will be f**ked… and your kids will be sold off as prostitutes.”

Having taken over the board, members of the conspiracy allegedly worked to hire Maxwell as “special counsel” to the board under a purported “legal services” agreement for $100,000 per month. The position gave him the authority to enter into “consulting agreements,” the feds say.

At one point, Pelullo called Scarfo to tell him about the death of a former FPFG executive identified as “Individual #4” who gave Pelullo and Maxwell information they used to extort control of the board. At the time of the call, the individual was a member of the “compliance team.” In a Dec. 5, 2007 phone call intercepted by law enforcement, Scarfo and Pelullo “expressed relief” about his death, according to the feds:

After laughing about how he was “crushed” that “the rat is dead,” Pelullo acknowledged that Individual #4 was “the only connection, the only tie to anything.” As the news sunk in to Scarfo, he stated, “Oh boy. Yeah, Sal, you wanna know something though? . . . 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?”

Altogether, the feds allege that the criminal activity cost FPFG and its shareholders at least $12 million, much of which allowed Scarfo and Pelullo to “live lavish lifestyles which included the purchase of an $850,000 yacht, a luxury home for Scarfo, a Bentley automobile for Pelullo, and thousands of dollars in jewelry for Scarfo’s wife, Murray-Scarfo.”

FPFG has filed for bankruptcy. In a previous statement on their website, FPFG said they were cooperating with the U.S. Attorney’s Office in New Jersey.

“Particularly in these economic times, investors should be free to invest in public companies without fear that violent criminal organizations are their puppetmasters,” U.S. Attorney for the District of New Jersey Paul J. Fishman said in a statement. “And 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.”

Scarfo, Nicodemo Et Al. Indictment

Masthead Masthead
Editor & Publisher:
Managing Editor:
Senior News Editor:
Assistant Editor:
Editor at Large:
Investigations Desk:
Senior Political Correspondent:
Front Page Editor:
Social Media Editor:
Editor for Prime & Special Projects:
General Manager & General Counsel:
Executive Publisher:
Head of Product:
Director of Technology:
Publishing Associate:
Front-End Developer: