A New Insight on the Wall Street Mob Hit

Jerry Capeci has an interesting column today (subscription only) on the unsolved 1999 slaying of two Mob-linked stock promoters, Alan Chalem and Maier Lehmann.

In a BusinessWeek article at the time, I pointed out that Chalem had business dealings with DeCavalcante crime family capo Phil Abramo, now imprisoned, who controlled Toluca Pacific Securities and another penny stock house called A.S. Goldmen.

Capeci reports:

The so-called real Sopranos’ main man on Wall Street, capo Philip Abramo, (left) had controlled Toluca Pacific, and soldier Anthony Capo was quickly fingered as one of the gunmen.

Capo, however, squelched that theory after he was indicted on racketeering and murder charges, and began cooperating that December with federal prosecutors in Manhattan. Capo admitted several mob killings, but insisted he had nothing to do with the Colts Neck murders.

At that point, he said, investigators began probing the Russian mob:

For several years, federal prosecutors in Newark, working with state police, the FBI and SEC, used a federal grand jury investigation in an effort to get to the bottom of the double homicide. Despite several leads that pointed in that direction, including a cooperating witness who told the feds he had seen several gun-toting Russian gangsters in Chalem’s house, that also turned out to be a dead end.

Now, here's where it gets interesting. Capeci says that the slayings are now believed to be linked to Alphonse "Allie" Persico of the Columbo crime family, who's now serving life in prison. Persico had business dealings with Chalem, and there is still a link with Toluca Pacific:

[Persico family member] Sean Persico. . . and Chalem were also “silent partners” in a classic “pump and dump stock scheme” that the men allegedly operated out of Toluca Pacific Securities, one of two shady brokerages that Chalem worked for during the late 1990s.

Neither man was ever charged, but authorities and other sources say that Sean Persico used a crew of corrupt brokers he controlled to “pump up” the prices of stocks that Chalem gave him. The crooked brokers touted the stocks to unsuspecting investors who would buy them and end up with worthless paper when Chalem would “dump” his own holdings at artificially high prices.

A person who knows these kinds of things tells me that Abramo would have had to approve the killing even if it was carried out by the Columbo family. After all, Chalem was his money-maker. One doesn't kill one's milch cows if one can avoid doing so.

I've never really understood why these guys were killed. The mob people involved in Wall Street at the time, even the Russian mob guys (who were fifty times as violent as their Mafia brethren) did not leave a trail of bodies behind them. It doesn't seem likely they'd have been killed unless there was either a massive ripoff or it was believed that one or both of them was about become an informant.

Complicating the investigation is that Lehmann may be a red herring. Capeci says that state and federal authorities believe that Chalem was the target, and that Lehmann might just have been in the wrong place at the wrong time.

This is shaping up to be just another of the thousands of mob killings over the years that have never been solved, and never will be.

© 2009 Gary Weiss. All rights reserved.

Victoria Gotti's Fish Story

John Favara goes down in history as one of the most pathetic victims of the mob. He was the next door neighbor of John Gotti, the bestial boss of the Gambino crime family. Favara accidentally ran down the Gotti's young son Frankie in March 1980. Favara was abducted and brutally murdered.

Details of Favara's murder--apparently he was dismembered while still alive--have emerged in mob prosecutions over recent years, as described here.

So that's that, right? Just another disgusting murder of hundreds of murders carried out by the Gotti crew and other mob thugs over the years. But now, it seems, Favara's memory is being foully stained.

The New York Post yesterday published an excerpt of a new book by Gotti's daughter Victoria, and her account portrays Favara as a smirking, callous, drunk idiot:

My brother had borrowed another kid's minibike and was riding in a construction site near the side of the road. But that dreadful day, a drunken driver was speeding down the avenue and struck my brother.

The driver dragged him some 200 feet before angry neighbors stopped the car, pounced on his hood, and stopped him from crossing the avenue.

"Don't you even realize you have a kid under the wheels of your f- - -in' car?" one neighbor, Ted Friedman, recalled yelling out.

According to the neighbor, the driver, John Favara, then stopped the car. Another neighbor reached in and grabbed his keys, shutting the ignition off and pointed to my brother's near-lifeless body under the front wheels.

My brother's blood seemed to leave a trail down the entire block, leading up to the now-parked car.

Favara jumped from the car and started yelling, "What the f- - - was he doing in the street?"

To complete the picture, Favara is described as catching sight of Victoria's distraught mother and "he shot her a smug smile. Then he grinned."

Gee, I'd want to dismember a guy like that, wouldn't you? Except that this story seems like an absolute phony from top to bottom.

Compare the account of the accident provided by Ms. Gotti above to other accounts, such as Mob Star by authoritative mob writers Gene Mustain and Jerry Capeci. There's no mention of Favara being drunk, or of having dragged the child for 200 feet. Favara was never prosecuted. In fact, as best as I can tell, only Victoria Gotti provides these gruesome "details," which are calculated to make Favara as muder-able as possible.

The "smug smile" bit is totally lacking in credibility. Favara knew that he had accidentally killed the son of a vicious killer and gang boss. Every single other account, such as this one in New York magazine, make it very plain that Favara was mortified and repentent, and had consulted the neighborhood priest, who warned him to stay away from the Gottis.

The New York magazine account adds that Favara was blinded by the sun when he struck the child, and that Favara's son Scott was close friends with Frankie Gotti.

Scott Favara has had to grow up without a father because his family had the misfortune of living in the same galaxy as a blood-stained murderer like John Gotti. He hasn't even a grave to visit, as noted in this 2004 article. Now he has to see the memory of his father besmirched so irresponsibly.

Where is his book contract? Where is his newspaper excerpt?

© 2009 Gary Weiss. All rights reserved.

Madoff and the Mob (again)

One of the more interesting aspects of Harry Markopolos's testimony before the House Financial Services committee yesterday was his assertion that the Russian mob, or Latin American drug cartels, were probably involved in the Bernie Madoff fraud. This issue has reared its head before.

Markopolos also said (and the two are being jumbled together in news reports) that he was in fear for his life, albeit for different reasons. His written testimony said: “Our analysis lead us to conclude that Mr. Madoff’s fund and the secret walls around it posed great danger to those questioning and investigating them. He was one of the most powerful men on Wall Street and in a position to easily end our careers or worse.”

That makes sense. Personally I think an even greater danger came from civil litigation, and that was certainly a credible threat, even though Madoff was guilty as hell and knew it.

Markopolos had no evidence of mob money was involved; it's basically a hypothesis, based on the amount of dirty money flowing into offshore accounts. Frankly I think it's a bit of a red herring that tends to divert attention from the real issue, which is the failure of regulators to uncover the fraud.

The House committee, particularly Rep. Gary Ackerman, pounded their fists convincingly for the cameras, which is nice I guess, and the SEC officials present were suitably evasive and squirmy. But what happens before the cameras doesn't matter. Let's see Ackerman put some legislation where his mouth is.

As for the mob: It's entirely possible that shady money was invested with Madoff, through feeder funds and such, but the shtunk would have been insane to solicit money directly from people he knew were involved in organized crime. Since he was a ripoff artist, he'd have been putting his life in danger. Indeed, skimming the list of victims released today, it's obvious that Madoff went out of his way to rip off people who weren't going to pose much of a danger to him -- such as the dead (the "Estate of Howard M. Squadron," a noted New York attorney, for instance).

Now it's always possible that the mob was involved in some other way, such as through money laundering. In Born to Steal I describe how money laundering was used by crooked brokers in the 1990s. Perhaps Madoff used such mechanisms to get his money out of the country. But, again, no evidence on that has energed so far.

© 2009 Gary Weiss. All rights reserved.

Bernie Madoff and the Russian Mob?

The latest word from the Bernie Madoff front, in the absence of real news (pending word on whether he'll be thrown in the slammer) is not news at all but rather speculation: was Bernie Madoff involved with the Russian mob? See this exchange of guesswork on CNBC.

Is it possible? Sure. I said from the beginning that I thought it possible that Bernie was being shaken down. I wouldn't be at all surprised if that happened. But I don't have the slightest idea and neither does anyone else, outside of the participants.

Let's be clear about our nomenclature. There's talk about the mob "investing" with Madoff. The mob doesn't "invest" with anybody if they can help it. They take. There's a lot of talk about money laundering and such, but my hunch is that if the mob is involved (and there's not a shred of evidence on that so far), it would be old-fashioned extortion. The Russian mob "stars" in a lot of the half-baked conspiracy theories you see floating around the Internet, but in this case it is entirely credible.

But honestly, I don't see how it matters all that much. What he did was so awful that it is kind of in the very cellar of horribleness, and cannot sink any deeper. Word emerged today that Bernie allegedly took a quarter of a billion dollars from a 95-year-old "friend" just ten days before the roof fell in. The mind boggles.

I've been writing about bad people for almost two decades, and if even half of the accusations against "I'm Close to the Regulators" Madoff are true, he would definitely rank as the very worst white collar thief I've ever encountered.

UPDATE: John Carney weighs in at Clusterstock. Incidentally, I wouldn't call Madoff a "victim," even if he was run over by a truck.

Personally I think that this is all a red herring, but you never know. Only the investigators, and of course the Madoff clan itself, would know for sure.

They call him "Bernie Made-Off" but my own name for him is The Shtunk. That's a Yiddish expression that refers to a human being who stinks (morally or physically). After reading about Madoff's scheme to rip off that 95-year-old "friend," I had to conclude that Madoff is the one, and only Shtunk.

At least there is a bright side to the Madoff scandal, as Susan Antilla points out: it's highlighted the ineptitude of the SEC.

© 2009 Gary Weiss. All rights reserved.

Junior Gotti Busted -- Again

Junior Gotti in happier days

Junior Gotti, the now-middle-aged child star of the Gambino family, has been arrested yet again, this time in Tampa, on murder-conspiracy charges. Junior has been arrested and tried several other times, as noted in the New York Times article linked, but nothing has really stuck so far.

Here's the indictment. What's interesting to me is how the list of charges against Junior are scummy, low-level, violent and crude -- a far cry from the sophisticated scams, and the high-level union and Las Vegas skimming, that used to dominate Mafia law enforcement until a few years ago. What we have here are street-level offenses like shaking down drug dealers, home-invasion robberies and the usual murders.

Not a whiff of securities fraud either. Junior was charged with that only once, and he beat the rap. The Gambino family was very heavily into pump-and-dump schemes back in the 1990s, and were behind several of the small "chop houses" in lower Manhattan. No more. Now they're back to stickups and you don't even see the kind of sophisticated tax scams the Russian mob is noted for. (Speaking of which, it's been quite a while since we've heard of any prosecutions in t hat area, and they're certainly not going anywhere.)

The mob is certainly not gone and will be around forever, but they sure are getting grungy, almost pathetic.

© 2008 Gary Weiss. All rights reserved.

He Spat on the Sidewalk Too

I seem to be getting a lot of mob press releases in my inbox recently. The latest is an illustration of the state of the modern day mob. It concerns the sentencing of the acting boss of the Genovese crime family, Danny Leo "a/k/a the Lion," 67 years old, and his nephew Joey, 46. Both are from New Jersey, and here is what they did:

DANNY and JOSEPH LEO conspired from 2002 to 2006 to commit extortion by threatening a loansharking victim with physical violence and other harm if he did not make prompt repayment of various loans and debts. DANNY LEO also conspired with other members and associates of the Genovese Family from approximately 2003 to 2006 to extort money from the owners and operators of an illegal gambling business by threatening economic harm and violence.

OK, this is no good and I'm glad they're being put away for "60 and 45 months respectively," according to this press release from federal prosecutors in Manhattan.

But here's what this gets me wondering: is this all these guys have to do to make money? Shaking down some bookies and a guy they loaned money to? Is that what they've been reduced to--low-grade extortion?

Just wondering. Back in the day, the Genovese crime family controlled labor unions, much of the garment industy, real estate, food businesses, and of course also committed quite a bit of stock fraud. Extortion is nasty stuff, but somehow I expect more from a Genovese family boss. Are they that much down on their luck?

The answer, I suspect, is yes. The mob was always a tawdry, disgusting business without any glamor at all. If the Sopranos had reflected real life, I've always felt, it would have been too grimy and small-time to watch.

© 2008 Gary Weiss. All rights reserved.

The Policemen Are Getting Younger -- But Not the Mob Guys

One of the telltale signs of age is how the policemen all seem to be getting younger. I have found that to be true, but not when it comes to mob guys. They still seem to be getting older.

Today I received a press release from the U.S. Attorney's office in Manhattan announcing the sentencing of a Genovese family capo named Ciro Perrone, who had been convicted of RICO violations, loansharking and such. He is 87 years old. The sentence was five years.

Here's more on Perrone, in case you care. Seems he had asked for clemency for his "civic deeds." Such as, perhaps, showing us all how a guy can still remain active well into his golden years?

© 2007 Gary Weiss. All rights reserved.

Wall Street Angle in Gambino Bust

Newsday today has an interesting wrapup on the recent Gambino family megabust. Here's a Los Angeles Times pickup of the article.

Newsday says that securities fraud charges, mentioned peripherally in the indictment, "stem from a giant Wall Street boiler-room operation prosecuted in 2001."

The latest Gambino indictment accuses reputed Gambino captain Charles Carneglia and reputed captain Leonard DiMaria with securities fraud conspiracy stemming from the 2001 stock fraud prosecution, according to court records.

DiMaria and Carneglia are accused of plotting to commit securities fraud in the sale of three stocks from November 1995 to March 1996, according to the indictment.

Interesting. I wonder if that aspect of the case dates back to an informant who was the buyer in an unrelated art forgery case some years ago.

Note this New York Times story from back in 2000. Seems that there was an "unnamed man who had pleaded guilty to securities fraud and was already cooperating with federal agents." [emphasis added] The two people involved were "associates" of Carneglia, and quite obviously they were cooperating against him.

Could just be a coincidence. Or it could be that the unnamed man who had pleaded guilty -- probably under seal -- was instrumental in the 2001 prosecution and the ongoing investigation of Carneglia. There were quite a few mob stock prosecutions in 2000 and 2001, so it's hard to say offhand which one is involved.

That's how mob prosecutions are made. One case leads to another which leads to another, with defendants flipping like waffles. Took a while to get this one going, that I will say. Eight years?

© 2007 Gary Weiss. All rights reserved.

Interesting Connections in a Boiler Room Case

In my book I discussed at length the dismaying manipulation surrounding a stock called Eagletech Communications. Eagletech was a straightforward "chop stock" scheme, with brokers paid in cash to push the stock, in which organized crime figures played a decisive role.

I say "surrounding" because the "manipulatees" included the media. NBC News's Dateline program ran a disgraceful segment portraying this dogpile stock -- its registration was revoked for not filing required SEC reports -- as, you guessed it, a "victim of naked short selling." That despite the total absence of any mention of naked shorting in the voluminous legal proceedings surrounding the company.

So it's easy to dismiss out of hand a recent lawsuit filed by the company, being circulated by loony "stock counterfeiting" conspiracy sites, as just more grandstanding by Eagletech's CEO Rodney Young. Which is precisely what it is. The suit claims that a mammoth conspiracy of Wall Street firms destroyed his company, thereby shifting the blame from Young and the company.

Though this suit stinks to high heaven, there's some testimony cited in it that is intriguing, and which bring to mind the late 1990s case of A.R. Baron, a boiler room whose customer ripoffs were known to its clearing broker, Bear Stearns & Co.

In this case, what's at issue is Salomon Smith Barney, one of whose employees, an executive vice president named John Dorocki, was involved in a round of financing fir the company through a firm called Trinity Technology Management. TTM, the suit claims, was "composed of SSB managing directors." There's no evidence presented in the suit that SSB management knew about any of this -- in contrast to Bear Stearns-AR Baron -- but it is still raises eyebrows.

In a deposition quoted in the suit, a stock promoter who masterminded the scheme, John Serubo, testified as follows:

Q. In your conversations with Mr. Dorocki, was Mr. Dorocki made aware of the mob affiliation in connections to [the boiler room that pushed the stockk,] Bryn Mawr?
A. Yes
Q. Was Mr. Dorocki aware of mob connections or mob affiliations in the Wall Street and money business?
A. Yes.

In the next few questions, Serubo claims Dorocki dropped some mob names in a conversation they had. Then comes this exchange:

Q. Did Mr. Dorocki state that he did business with them through SSB [Salomon Smith Barney]?
A. He didn't say that.
Q. At least as much as you know of?
A. As much as I know of, yeah. I mean it's common practice that we were, you know, a pump and dump shop,
Q. And surely Dorocki knew that?
A. Yes, he did.
Q. Well, thell me if you knew how he knew that.
A. Well, Harry Leopold told me that he gold Dorocki about our felony - my felony conviction. I always make it aware. Also, Harry Leopold told me that Robert Dobbs had told Dorocki he wanted to do the deal with Salomon Smith Barney to get away from the Bryn Mawr firm because Bryn Mawr was a tainted firm.
And Dorocki and I had conversation about, you know, my New York guys pumping the stock. You know, he thought it was absolutely wonderful how, you know, we could get a stock to trade for almost a 12-month period, you know, at a market cap of 180 million dollars when the company had a million dollars net worth.
Q. So Dorocki as an executive vice president of Salomon Brothers had no problem whatsoever dealing with mob people in his business?
A. No. He had no problem dealing with - I can only tellyou from my perspective he had no problem dealing with our firm or our deal.

The suit also makes some interesting allegations against Schroder & Co., which was the clearing firm for the Bryn Mawr.

A lot of junk lawsuits have been filed by small companies seeking to shift blame for their own failings and negligence. This suit is clearly one such suit. But despite the suit's absurd overreaching and conspiracy-mongering, its allegations of involvement by people from large firms should not be tossed casually aside.

They deserve further investigation and media attention -- but not the kind that Young and the conspiracy theorists are craving.

Reading through the suit (available from a wackadoo website here) makes me wonder about Rodney Young. He seems to have escaped this whole mess without so much as a rap on the knuckles, and it does not seem right. That anomaly deserves at least as much attention as anything else.

© 2007 Gary Weiss. All rights reserved.

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Wall Street Versus America was published by Penguin USA on April 6.
Click here for its Amazon.com listing and here for more information on the book, from my web site, gary-weiss.com.

My (Almost) Mob Jury Experience

I just read in Newsday about the mixed jury verdict last week in the trial of Christopher Colombo and other reputed mobsters.

I have a personal interest in that case, as I was in the federal court jury pool when the Colombo jury was empaneled.

Didn't even get to be questioned. I mentioned "Born to Steal" in the jury questionnaire (even though there was no question "Have you ever written a book about the Mob?") and I was excused.

Drat. Would have been an interesting, if time-consuming, experience.

© 2007 Gary Weiss. All rights reserved.

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Wall Street Versus America was published by Penguin USA on April 6.
Click here for its Amazon.com listing and here for more information on the book, from my web site.

The Mob Never Left the Street

At the end of my book Born to Steal I pointed out that the protagonist of my tale, Louis Pasciuto, was still being asked to join boiler rooms as late as 2000, after he started cooperating with the government.

An federal indictment handed up yesterday in Brooklyn provies further evidence that the mob is still chugging along on the Street.

As you can see from the press release announcing the charges against two reputed Gambino members, the two were allegedly engaged in a stock fraud scheme in 2003.

While the extent of mob activity is probably not as high as it was in the late 1990s, this is a sign of how microcap stocks continue to attract lowlifes and hustlers.

© 2006 Gary Weiss. All rights reserved.

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Wall Street Versus America was published by Penguin USA on April 6.
Click here for its Amazon.com listing and here for more information on the book, from my web site.

A Blast From the Past

Yesterday the U.S. Attorney's office in Brooklyn rounded up a gaggle of alleged Mafia-linked wiseguys who ran boiler rooms a few years ago. Here's a New York Post story.

What's I found interesting about yesterday's arrests is that these are some of the same people I wrote about in Business Week slightly over eight years ago. Here's a link to my BW story.

This shows you how long it can take for the feds -- and Eastern District prosecutors are a top-notch bunch, by the way -- to make a case against alleged securities crooks. It also shows the resilience of the individuals involved. These guys allegedly continued to rip off investors even after their chief reputed Mob connection -- John Baudanza -- appeared in my story. Some of the scams described in the indictment were chugging along in 2000, nearly three years afterwards.

Two of the firms mentioned in the indictment, TYM and Amerivet, also made appearances in my 2003 book Born to Steal. But the reputed Pennsylvania wiseguy who I connected to those firms in the book, Ralph Torrelli, was not named in yesterday's indictments.

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Wall Street Versus America will be published by Penguin USA on April 6.
Click here for its Amazon.com listing and here for more information on the book, from my web site.

Give the New York Ports Back to the Mob?

So says Deanne Stillman in the Huffington Post, in jest I suppose. But who says the mob ever left?

Actually the New York crime families, after effectively destroying the waterfront during the 1950s and 1960s, never really left the few slivers of waterfront industry still remaining in the New York area. Or at least that's what prosecutors say, in all kinds of indictments and lawsuits in recent years.

Note, for example, this civil racketeering suit filed by the U.S. Attorney in Brooklyn last July. Apart from the usual recitation of nastiness, it includes a rundown of the recent history of mob involvement in the waterfront. Yup. Still there.

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Wall Street Versus America: The Rampant Greed and Dishonesty That Imperil Your Investments will be published by Penguin USA on April 6.

Click here for its Amazon.com listing and here for my web site.