Juries Hear Different Versions Of Mob Racketeering Conspiracy

Nicky Scarfo Jr.

By George Anastasia
For Bigtrial.net

There's racketeering conspiracy and then there's RACKETEERING CONSPIRACY!

Federal juries on opposite sides of the Delaware River began dealing with the differences today as the jury in the retrial of mob boss Joseph "Uncle Joe" Ligambi started deliberations in his eight-week old trial and the jury in the fraud case against mobster Nicodemo S. Scarfo, the son of jailed mob boss Nicodemo "Little Nicky" Scarfo, heard opening arguments in his case.

The Ligambi jury got the case in federal court in Philadelphia shortly before 11 a.m. and deliberated for the rest of the day without a verdict. The panel is due back tomorrow. The case, against Ligambi and his co-defendant and nephew George Borgesi, is built around allegations that the two mobsters ran an organized crime enterprise that generated tens of thousands of dollars through illegal gambling, loansharking and extortion.

Scarfo, Elkins Park businessman Salvatore Pelullo and five others went on trial at the same time in federal court in Camden. The government alleges that Scarfo and Pelullo orchestrated the systematic looting of a Texas-based mortgage company, FirstPlus Financial, by secretly taking  control of the board of directors in June 2007. Over the next 10 months, authorities allege, Scarfo and Pelullo lined their pockets with cash for the company. The take? A staggering $12 million.

The difference underscores what lawyers in the Ligambi case have argued continuously -- that the government has taken a penny ante gambling case and turned into into a mob conspiracy.

"Racketeering lite," Edwin Jacobs Jr., Ligambi's lawyer, said of the charges which, nevertheless, carry a maximum 20-year prison sentence for the defendants.

Scarfo and Pelullo, both convicted felons, could face even more jail time if they are found guilty at the end of their trial which is expected to last about four months.

The jury, 12 panelists and six alternates, heard about four hours of opening arguments today and will be back for more tomorrow. Testimony is not scheduled to begin until Monday.

In a sharply detailed opening, Assistant U.S. Attorney Howard Wiener, one of three prosecutors in the case, used charts, power point displays and snippets of secretly recorded conversations to paint a picture of the case that will be laid out over the coming months.

"This is a case about lying and cheating and stealing," Wiener said.

But lawyers for Scarfo and Pelullo, in their openings, said the prosecution had misinterpreted and slanted the facts. Both lawyers claimed that the alleged mob ties to the case were a smoke screen designed to sensationalize the case. Both said their clients had engaged in legitimate business deals and were innocent.

Paul Fishman, the U.S. Attorney for New Jersey, was one of dozens of spectators in the crowded courtroom for opening arguments,. At the time indictments were handed up in the case two years ago, Fishman said the FirstPlus looting gave new meaning to the phrase "corporate takeover."

Without using those words, Wiener hit on that same theme during his two-hour address to the jury.

Money was funneled out of FirstPlus, the prosecutor said, after Scarfo and Pelullo took control of the board of directors in June 2007. The money was used to fund purchases of bogus or straw companies that Pelullo and Scarfo had set up and as phony consulting fees.

Wiener said $6 million was spent to purchase the phony companies. He also told the jury that Pelullo and Scarfo used FirstPlus cash to support a lavish lifestyle. They purchased a yacht for $8000,000 and named the boat "Priceless." Pelullo also bought a $200,000 Bentley automobile. Scarfo bought a $75,000 Audi and used more than $200,000 as a downpayment on a $700,000 home in Egg Harbor Township.

The prosecutor said the pair used their alleged ties to organized crime to instill fear and to intimidate anyone who tried to block their takeover of the company. Co-defendant William Maxwell, a Texas attorney, aided the scheme after he was appointed special counsel to the company with a contract that paid him $100,000-a-month plus expenses.

Maxwell them arranged consulting contracts for Pelullo and Scarfo that were also financed by FirstPlus.

Other defendants in the case include Maxwell's brother, John, who was CEO of FirstPlus; Scarfo's longtime criminal defense attorney, Donald Manno, and lawyers Gary McCarthy of Philadelphia and David Adler of New York.

Several other defendants in the case, including Scarfo's wife Lisa, have pleaded guilty to related charges.

Wiener cited several secretly recorded conversations which he said supported the government's allegations. On one, he said, Scarfo boasted about how the takeover was set up with a series of business transactions and companies.

"Layer upon layer, like an onion," he said Scarfo told an associate on one tape.

He also said that Pelullo once threatened an associate who he and Scarfo feared might talk to authorities, telling him that his wife would be raped and his children would be sold into prostitution "if you ever rat."

Michael Riley, Scarfo's lawyer, told the jury that his client was paying a price for his father's reputation.

Nicodemo D. "Little Nicky" Scarfo, who ruled the Philadelphia-South Jersey mob for most of the 1980s, was considered one of the most violent mob bosses in America. But Riley said the younger Scarfo decided to go in a different direction after he was shot and nearly killed in a mob hit at Dante&Luigi's Restaurant in South Philadelphia on Halloween night in 1989.

That shooting, Riley argued, is the government's jumping off point for organized crime charges that have no basis for being in the case.

"No one's gonna wake up with a horsehead in their bed," Riley said, referring to a classic scene in The Godfather. But, he said, the government wants to portray the case as an extension of that world.

Would you rather watch a financial report on television or The Godfather movie, Riley asked the jury. The government, he said, is trying to glamourize and sensationalize what amounts to a dull, boring financial case by introducing the specter of the mob.

Troy Archie, Pelullo's attorney, hit on that same point, telling the jury that the government "misunderstood" the facts in the case and began an investigation with the premise that "where's there's Mafia smoke, there must be Mafia fire."

He described Pelullo as a "brash talking, foul-mouthed businessman," but said his dealings with FirstPlus were legitimate. Neither he nor Scarfo had broken the law, he said.

Pelullo's only offense, Archie said, was that "he was friends with Nicky Scarfo."

Pelullo, who has two prior convictions for fraud, "turned his life around," Archie said, becoming a "consultant and entrepreneur." But, he added, the government "got confused because he's with Nicky Scarfo and they're making money."

Closing arguments are to continue tomorrow morning in federal court in Camden while in federal court in Philadelphia an anonymously chosen jury to 11 women and one man will begin its first full day of deliberations. (A male juror was dismissed before the start of deliberations after acknowledging that he had fallen asleep during the lengthy charge of Judge Eduardo Robreno.)

Racketeering conspiracy is the overarching charge in both trials.

On a personal note, I may not be able to cover the rest of the FirstPlus trial because Salvatore Pelullo has listed me as a potential witness and witnesses are not permitted in the courtroom during testimony. Judge Robert Kugler permitted me to remain during opening arguments.

The issue may be appealed by Bigtrial.net. 

Pelullo's second attorney, J. Michael Farrell, would not say why I might be called and said he was reluctant to discuss the issue with me because I might tell the prosecution. In a brief discussion during the morning break, Farrell would offer not further explanation. I have never discussed the case with Pelullo's lawyers and am hard pressed to understand why I would be called as a witness. 

Having me on the witness list, however, would keep me from covering the trial. 

Farrell cryptically asked if I had ever written about Salvatore Pelullo before his name surfaced in this case. I told him I believed I had not. What he was getting at remains unclear to me.

I told him, 'You don't want me on the stand.' He called that a `threat' and said I would remain on the list. 

Everything I know about this case has appeared in stories that I wrote for The Philadelphia Inquirer from the time search warrants were executed in the spring of 2008 until I left the paper in October 2012. I have probably written more about the alleged scam than anyone else.

But what I could provide as a witness for the defense is baffling.

I know and have written a lot (including several books) about the Phiadelphia mob and the Scarfo family. I know about the younger Scarfo's connections to the Lucchese crime family, a key element in the prosecution's case. 

Does Pelullo want me on the stand talking about that?

I could also talk about the late Harold Garber, an Atlantic City criminal defense attorney who ended up on the board of directors of FirstPlus after the government alleges Scarfo and Pelullo took over the company behind the scenes. 

Garber died of cancer shortly after he was appointed to the board. He had represented Little Nicky Scarfo and Crazy Phil Leonetti in the 1980s. In fact, he had his law license suspended for a year after a witness in a murder case against Leonetti, whom Garber was representing, recanted his story. Garber also represented that witness.

So Garber's appointment to the board of directors of FirstPlus was a red flag for me. How, I wondered, did a criminal defense lawyer from Atlantic County end up on the board of directors of a relatively obscure mortgage company based in Irving, Tx.?

Or maybe Farrell and Pelullo would like me to talk about a story I wrote for The Inquirer in July 2008. That story was based on wiretaps from a mob case in North Jersey tied to the Gambino and Lucchese crime families.

On one tape Pelullo and Martin Taccetta, a Lucchese crime family member, talked about business and the mob; business that had very little to do with FirstPlus but a lot to do with the allegation that Pelullo was a mob associate. 

Would Farrell and Pelullo like to ask me about that?

Stayed tuned. We'll see.

George Anastasia can be contacted at George@bigtrial.net.