By George AnastasiaFor Bigtrial.net
He's been on the witness stand for a week and during that time he's offered the jury a behind-the-scenes look at what authorities allege was the $12 million ripoff of FirstPlus Financial.
He's admitted to falsifying records, padding expense accounts and "moving money around" to make it appear as if it came from or was going to legitimate business deals.
He sailed on the $850,000 yacht that was bought with cash from the scam, he said. He arranged some of the paperwork for the purchase of a $217,000 Bentley Continental GT that also figures in the fraud. He fabricated records to make a $40,000 trip to Europe appear like a business expense. And he set up "sideways accounts" that allowed his boss to funnel money to two mistresses.
Those were just some of the things that he saw and did while working for Salvatore Pelullo before, during and after the takeover of FirstPlus, a troubled Texas-based mortgage company, said Cory Leshner, who described himself as Pelullo's "personal assistant."
"I thought of Mr. Pelullo as a father figure," Leshner told the jury. "And he thought of me as a son." And that, he said at another point, "made me feel proud...I was willing to do whatever he asked."
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| Salvatore Pelullo with Nicodemo "Little Nicky" Scarfo |
back on the stand when the trial resumes tomorrow.
Dressed in a suit and tie, his voice clear, his comments concise, the burly 31-year-old first took the stand on Feb. 26 and quickly emerged as a key witness in the now two-month-old trial; the first "insider" to provide details about what the FBI and federal prosecutors allege was a blatant money grab orchestrated by Pelullo, 46, and Nicodemo S. Scarfo, 48, the son of jailed Philadelphia mob boss Nicodemo "Little Nicky" Scarfo.
The two are charged with secretly taking control of FirstPlus Financial in June of 2007 and siphoning $12 million out of the company to support their lavish lifestyles.
Leshner told the jury he landed a part-time job with a Pelullo company while still an undergraduate at West Chester University (where, ironically, he would earn a degree in criminal justice). He went to work fulltime for the Elkins Park wheeler dealer after graduating in 2006. One of 13 defendants originally indicted in the case, he pleaded guilty last year and agreed to cooperate. Five other defendants, including Scarfo's wife Lisa Murray-Scarfo, also have pleaded guilty but have not become witnesses for the government.
In addition to Pelullo and Scarfo, the defendants on trial include John Maxwell, the former CEO of First Plus, Maxwell's brother, William, who was special counsel to the company, and three other lawyers, David Adler, Gary McCarthy and Donald Manno.
From the witness stand, Leshner has fleshed out the allegations contained in a 107-page, 24-count indictment handed up in November 2011. The indictment capped a five-year federal investigation. The government alleges that in the summer of 2007 Pelullo and Scarfo orchestrated the takeover of FirstPlus Financial, a foundering Texas-based mortgage company, and exercised behind-the-scenes control, setting up business deals from which they reaped staggering benefits.
By October of that year, Leshner told the jury, they had gotten $7 million out of the company. Most of the money came from the purchase -- at grossly inflated and overvalued prices -- of companies that Pelullo and Scarfo had set up in the Philadelphia and South Jersey area and through "consulting fees" paid to Pelullo and Scarfo through front companies they secretly controlled.
He said that while there was paperwork and a labyrinth of companies through which the cash sometimes traveled, the marching orders were simple. "It was," he said, "how much money can we get to Mr. Pelullo and how fast."
Leshner said he was first introduced to Scarfo at a barbecue on Memorial Day 2006 in Ventnor. At the time, he said Pelullo introduced him as "Nick Promo." Leshner said he quickly learned who Scarfo really was and knew of his mob connections.
"I grew up in the Philadelphia area," he said.
He also told the jury that most of his dealings were with Pelullo who, through evidence and testimony, has been portrayed as more of a gangster than Scarfo. Brash, arrogant and quick to threaten and intimidate, Pelullo is the one whose wiretapped rants have provided the government with the foundation for many of its allegations.Leshner said he saw a different side of Pelullo at first, describing him as a hard charging and determined businessman who rightly boasted of having become a millionaire in his mid 20s without having a high school degree. Scarfo, on the other hand, fit the image of a "computer nerd" that others have also applied to him.
Leshner told the jury that the money taken out of FirstPlus was used to finance Pelullo's lavish lifestyle, a lifestyle, he said, that Pelullo was already living before the move on the Texas mortgage company.
But, he added, "it became more lavish after June 2007."
Leshner said his father went to work for Pelullo around 2005 when Pelullo owned a company that cleaned and maintained buildings. Leshner said he was hired while still in college and that he rose from being a laborer and gofer to personal assistant and, eventually, the vice president of Seven Hills Management, one of the Pelullo companies tied to the FirstPlus fraud.
One of his first jobs after graduating from West Chester in December 2006, he said, was to maintain Pelullo's condo in Miami and to serve as a gofer and assistant there. The jury saw photos of the condo which overlooked a marina. There was a pool table in one room, art work on most of the walls and rooms decorated with thick, rich furniture and brassy chandeliers. There also was a Ferrari parked in the condo garage, he said.
Pelullo, according to Leshner, moved between Philadelphia, Miami and Dallas once the FirstPlus scheme was launched. Originally, he said, Pelullo thought he could finance the takeover through the
By June 2007, Leshner said, Pelullo and Scarfo had behind-the-scenes control of the board and the money started to flow out to them. Evidence introduced earlier in the trial also indicates that both Pelullo and Scarfo communicated by telephone with jailed mob boss "Little Nicky" Scarfo and visited him in a federal prison in Atlanta where he is serving a 55-year sentence for racketeering and murder.
Scarfo, 84, and Vittorio "Vic" Amuso, 80, the boss of the Lucchese crime family, were inmates together in Atlanta. Both are named as unindicted co-conspirators in the FirstPlus fraud indictment.
The layered scheming that Leshner described involved, among other things, a $100,000-a-month consulting contract for Seven Hills that was arranged by William Maxwell, then special counsel to FirstPlus. Leshner said Pelullo frequently referred to himself as "the consultant" and frankly admitted that while he was calling the shots, he could never appear as an officer or a member of the board of directors of FirstPlus because he had two prior fraud convictions.
Seven Hills in turn arranged to funnel $33,000-a-monthy to Learned Associates, a Scarfo front, Leshner said. He said he did not know of any consulting work Scarfo did and said that Pelullo, rather than consulting, was actually running FirstPlus.
Leshner's testimony also focused on the lifestyles that the money bought.
Pelullo bought a Bentley, he said, at F.C. Kerbeck in Palmyra, and drove it to a Fourth of July party in Ventnor. He then had the car, a black, 2006 Continental GT model, shipped to Florida. On another occasion, he said, Pelullo showed up one day and told him, "I'm buying a boat."
It turned out to be an 83-foot pleasure yacht named "Priceless." While arranging a loan proved impossible, Leshner said, the purchase was eventually negotiated for cash that came from FirstPlus. The boat cost $850,000. With taxes, the total was $901,125, he added.
The listed owner was P.S. Charters and while their names never showed up on any documents, the yacht belonged to Pelullo and Scarfo, he said.
Leshner was on board for the maiden voyage that in retrospect might have been an omen of what was to come. He said he, Pelullo and William Maxwell, along with their girlfriends and two other FirstPlus employees, Cole Maxwell, the 20-something son of John Maxwell, and Todd Stark, described as head of security and entertainment for Pelullo, were on board for what was to be a six-hour cruise from Miami to the Bahamas.
But one of the yacht's two engines blew out and 21 hours later the yacht limped into port in Nassau with its electricity malfunctioning and its plumbing not working. The group, with the exception of Cole Maxwell who didn't have his passport and had to stay on the boat, spent several nights at the Atlantis Hotel -- the bill was $12,300, Leshner said -- then flew back to Miami. Maxwell stayed till the boat was repaired and sailed back with the yacht's captain.
One thing the younger Maxwell did bring along, said Leshner, was an arsenal of weapons. One of the charges in the indictment focuses on the possession of guns by Scarfo and Pelullo, both convicted felons who are prohibited from owning firearms.
Shortly before they set sail from Miami, Leshner testified, Cole Maxwell showed up with a "bag of guns." Later, Leshner said, he was with Pelullo in Pelullo's master bedroom on the yacht as he sorted out the weaponry and gave a gun to each man on board.
The indictment lists the arsenal which included two rifles, a 12-gauge shotgun, a Sig Sauer 9mm pistol, a Taurus .38 caliber revolver, a Taurus .22 caliber pistol, approximately 2,500 rounds of ammunition for the rifles and seventeen additional boxes of bullets.
While the guns were never fired, Leshner said it was all hands -- armed -- on deck as the yacht struggled through open waters with a dead engine and another boat approaching. Leshner offered no further details, but another source familiar with the incident said Pelullo and the others feared pirates and believed their show of force scared off a possible intruder that night.
Leshner also described how he doctored expense account items so that a trip to Europe taken by Pelullo could be paid for through his FirstPlus consulting arrangement. The sham, he said, was that Pelullo was researching possible investment opportunities in the cosmetics trade.
"I researched on line different places in the areas which Sal visited and said that he was there to research cosmetics at these different places," Leshner explained.
When Assistant U.S. Attorney Steven D'Aguanno, the lead prosecutor in the case, asked if Pelullo in fact that been to any of those locations, Leshner said, "No." When he was asked who told him to come up with the false information, Leshner replied, "Sal."
Pelullo was nearly cited for contempt while laughing at Leshner when he first took the stand on Feb. 26 and John Maxwell was, in fact, cited and jailed for laughing at Leshner on March 6 (see earlier FirstPlus story posted March 8).
Leshner also said that on Pelullo's orders he set up "sideways accounts" through which thousands of dollars in cash were funneled to two women, identified as Cajmoun and Nadjmer. The women, one whom worked in the FirstPlus office in Irving, Tx, were Pelullo's mistresses, Leshner said. Pelullo later divorced his wife and married Nadjmer, who was also known as Sabrina, he added.
The relationships were rocky, he told the jury.
"Mr. Pelullo would often get fed up with the two of them for any number of reasons and would break if off with them only to start it back up soon thereafter," he said.
Scarfo also had a direct line into the FirstPlus cash stream, Leshner told the jury. He said Scarfo leased an Audi S6 for $1,200-a-month as a company expense. And Pelullo and others helped arrange the down payment and mortgage for a $715,000 home Scarfo and his second wife purchased in Egg Harbor Township after the FirstPlus takeover.
Leshner attended law school at night while working for FirstPlus and continued after the FirstPlus financial bubble burst following a raid by the FBI in May 2008 that targeted dozens of locations and individuals. When the FBI came to his door, Leshner said, "I was scared to death...I was deathly afraid."
But he said that for the next five years, through the indictment and up until the eve of the trial, he espoused the same "party line" that Pelullo and his co-defendants are basing their defense on: the collapse of FirstPlus was simply a business deal gone bad and the money spent buying companies and paying for consulting fees were legitimate expenses that were part of a failed venture.
Leshner said he earned his law degree from Widener University Law School and passed the bar in Pennsylvania. His law career was short lived, however. He voluntarily agreed to be disbarred after cutting his deal with the government and pleading guilty last year. Under the terms of that plea agreement, he said, he faces five years in prison, substantially less, the defense has pointed out, than the 20 years he was facing if convicted at trial.
During cross-examination, Michael Farrell, the more boisterous of Pelullo's two court-appointed defense attorneys, hammered away at Leshner's motivation and credibility. He alleged that Leshner and his girlfriend, who subsequently became his wife, falsified information on a mortgage application for a home in Reading in 2007.
Wasn't that the same thing Leshner was accusing Pelullo and Scarfo of doing, Farrell asked?
Farrell also repeatedly asked Leshner about his reasons for joining the prosecution "team" and adopting the government's "party line," implying that Leshner was saying whatever the government wanted to hear in order to live up to a plea deal he negotiated to cut his own criminal liability.
"I didn't join anybody's team," Leshner said, adding, "I couldn't deal with the party line of Mr. Pelullo. My conscience caught up to me."
Married and with a young daughter, Leshner said he expects to be sentenced to jail.
"I pleaded guilty because I am guilty," he said in response to a question from D'Aguanno. "I couldn't keep up the explanation and the party line that I had been fed from the time I worked for Mr. Pelullo...I'm going to have to look my daughter in the eye and explain to her that when you do something wrong you stand up and face the consequences and you learn from it."
George Anastasia can be contacted at George@bigtrial.net.
