The son of a Philadelphia mob boss, Nicodemo "Little Nicky" Scarfo Jr., and 12 others, are charged with racketeering and other offenses in an indictment handed down Tuesday morning. And Federal prosecutors say members of that mob have turned to a modern crime -- pillaging the assets of a mortgage company -- in a sign that organized crime is evolving to include more white-collar crime.
Thirteen people -- including lawyers and an accountant -- were charged in a federal indictment unsealed Tuesday. Most of them were arrested in raids throughout the morning in New Jersey, Florida and Texas.
Among them were Nicodemo S. Scarfo, the son of imprisoned Lucchese crime family boss Nicodemo D. "Little Nicky'' Scarfo, five lawyers and a certified public accountant. Eight of them were due in court Tuesday afternoon.
They face charges including racketeering, wire fraud, money laundering, false statements on a loan application, securities fraud. Maximum penalties range from five years in prison to decades. "The criminal activity is evolving,'' said Michael Ward, agent-in-charge of the FBI in Newark. "It's going from the back alleys to the boardrooms.''
Authorities say the plot started in April 2007, when the younger Scarfo and his associate Salvatore Pelullo, who has previously been convicted of financial crimes, decided to take over FirstPlus Financial Group, a publicly traded mortgage company based in Irving, Texas. Authorities said it was a company with a lot of cash but not much sophistication.
The indictment charges Scarfo and Pelullo used threats to help wrest control of the company. Pelullo is accused of telling a member of the FirstPlus' board that if he didn't go along with the plan, "your kids will be sold off as prostitutes.''
The indictment says he later told others who were charged in the scheme to get the company's board to agree to hand control to his and Scarfo's new directors -- and he wanted it done immediately. He allegedly told them: "I don't care if they're in a funeral parlor, I don't care if they're in a (expletive) hospital on a respirator, we'll send somebody there. I want their vote, I want their signature, and I want it done by the close of the day today.''
Authorities say the elder Scarfo, serving in a federal prison in Atlanta, was apprised of the plot, but that he was not charged because he's expected never to be released.
After getting control of FirstPlus, Scarfo and Pelullo are accused of having it buy shell companies they owned so they could take out money. After that, authorities said, they signed a series of consulting contracts to pay themselves even more.
In less than a year, authorities said, they took $12 million and spent it on multiple homes, including one for Scarfo's ex-wife; weapons and ammunition, a plane, an Audi, a Bentley, $30,000 in jewelry and an 83-foot, $850,000 yacht they named "Priceless.'' U.S. Attorney Paul Fishman wouldn't say exactly how authorities got onto the plot, but he said it ended with a series of raids in 2008.
Since then, FirstPlus has filed for bankruptcy, blaming the alleged criminals for wrecking the firm.
Fishman said the alleged conspirators were planning one more "piece de resistance:'' They wanted to pump up the stock price of FirstPlus and sell off the company. He said that was their exit strategy. "We had a different exit strategy.''
Thanks to NBC40
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