Mobsters take over publicly traded companyAs Occupy Wall Street protestors chant about the criminals in the boardroom, actual thieves -- including men associated with the mafia -- have spent years quietly running FirstPlus Financial Group (FPFX), a Texas-based company and a one-time subprime lender that boasted former Vice President Dan Quayle as a board member, and used NFL Hall of Famer Dan Marino in its ads.

On Tuesday, Nicodermo S. Scarfo, a made man within the Lucchese organized crime family, was arrested at his home. He's one of 13 men charged with the illegal takeover of the publicly traded company, among other racketeering charges. "The defendants gave new meaning to 'corporate takeover,' " said U.S. Attorney Paul Fishman.

"Criminal activities have evolved from the back alleys to the board rooms," said Michael B. Ward, special agent in charge of the FBI's Newark Field Office. Still, the tactics remain the same, he says: "physical threats and intimidation to gain leverage and loot lucrative businesses."

Scarfo is not the only one of the 13 with ties to organized crime. Salvatore Pelullo, an associate of the Lucchese and Philadephia La Cosa Nostra families is also charged, as are Nicodermo D. Scarfo (Scarfo Sr.), the imprisoned former boss of the Philadelphia family of La Cosa Nostra, and Vittorio Amuso, the imprisoned boss of the Lucchese family. Others charged include an accountant and five lawyers.

According to an indictment unsealed on Tuesday, the men used both physical and finance threats to take control of FirstPlus in order to plunder the company for their own financial gain. Scarfo, Pelullo and their partners replaced the company's board of directors with their own cronies, and then named their accomplice, lawyer William Maxwell, as special counsel to FirstPlus so that Maxwell could use that position's authority to funnel millions back to the mobsters.

As a public company, FirstPlus was required to submit annual filings with the Securities and Exchange Commission, which the mobsters did, though they routinely presented fraudulent information or simply omitted certain details. As a result, the public in general, and investors particularly, were left in the dark as to the true nature of the company and its management.

A conversation between Scarfo and Pelullo, included as evidence in the indictment, demonstrates how the mobsters remained mobsters, even in the boardroom. On December 5, 2007 Pelullo called Scarfo to tell him that "Individual 4," a former FirstPlus executive who had provided information that the two gangsters used to extort control of the company, had suddenly died. According to the transcript included in the indictment, Pelullo applauded that the "rat was dead," before adding that the man was "the only connection, the only tie to anything."

As Scarfo grapsed the weight of the news, he said, "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?"

According to the indictment, Scarfo and Pelullo lived lavish lifestyles. Scarfo had a $850,000 yacht and a luxury mansion. Pelullo owned a Bentley and loads of expensive jewelry gifted to his wife. In contrast, FirstPlus and its shareholders lost at least $12 million due to the criminal activity.

"Particularly in these economic times, investors should be free to invest in public companies without fear that violent criminal organizations are their puppetmasters," said U.S. Attorney Paul Fishman. "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."

As for the company, the FirstPlus website states that "beginning with the efforts of a newly reconstituted Audit Committee, the Board of Directors is working to ensure shareholder interests are protected and preserved."

Loren Berlin is a reporter with the AOL Huffington Post Media Group. She can be reached at loren.berlin@teamaol.com, on Twitter at @LorenBerlin, and on Facebook.

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someoneole

The mafia is benefiting from the GOP's deregulation policies.

November 03 2011 at 12:15 PM Report abuse -1 rate up rate down Reply
Holly

Publicly traded companies...the mafia, and the difference is??? Oh that's right we will hear about the Mafia arrests and hold them accountable. Distraction away from Publicly traded companies. Hmmm, financed by whom?

November 02 2011 at 9:43 PM Report abuse rate up rate down Reply
maa2626

one positive with the mafia, you know exactly what you get ,and what the ground rules are. when dealing with the feds you assume (ass of u and me) you will be treated equitably and fairly, Instead of casino nation maybe mafia nation.

November 02 2011 at 9:28 PM Report abuse rate up rate down Reply
Dereck

Another Texas Company "Westfield Property Management" is a "Criminal Menace" to our Community and our Nation.
They operate a "Drug and Human Trafficking Ring" with Police and Government Involvement.
They were brought to Maryland by then U.S. President george w. bush to participate in a "Government and Corporate Espionage Ring" used to steal "Termed" Government-owned Corporations, Businesses, and Real Estate Privately Owned by the World Fortune which has recent Court Rulings as Precedent to show.
This is the reason why the U.S. Government lost all of it's Natural Resource Contracts Worldwide and it's Financing from all Countries leading to all the Job Loss and Foreclosures.

Westfield employees were the suppliers of the illegal narcotics used in the Westfield High School Drug Ring that caused several overdoses and 2 Teen Deaths.

2008 NBC News Story:TheTeens Charged After Heroin Drug Ring Busted:

http://www.nbcwashington.com/news/local/HIgh-School-Drug-Ring-Busted.htmly

Westfield is also the direct cause of the "F.B.I Probe" of the Prince Georges' County and Washington, D.C. Metropolitan Police Departments involving Illegal Gambling and 2 Felony Murders. This also caused Westfield to lose it's Contract to Property Manage Laurel Horse Racing Track.

I commented this on Wheaton, Maryland "Patch" Website where Westfield Manages a Large Mall and received this Email from Patch.

Hi Dereck,

I just wanted to let you know that I deleted two of your comments on the story "Westfield Says Nothing Has Changed." I deemed them inappropriate for the kind of civil conversation that we are trying to encourage on the Wheaton Patch, as we explain in the terms of use. Please do not continue to post those kinds of comments or I will consider suspending your account. Thank you.

--
Esther French
Editor, Wheaton Patch
wheaton-md.patch.com
301-332-8835
facebook.com/WheatonMDPatch
twitter.com/WheatonMDPatch

Those interested in the Safety of our Children and Communities may want to send her their thoughts.
esther.french@patch.com

November 02 2011 at 8:48 PM Report abuse rate up rate down Reply
brotherotis

Better hope these guys are found guilty in court. You convicted them in the article, Mr. Berlin. I thought it was a journalism basic that one attributed and didn't convict in stories.

November 02 2011 at 8:39 PM Report abuse rate up rate down Reply
knute9

Sometimes I think the Mafia has taken over our government as well.

November 02 2011 at 8:38 PM Report abuse rate up rate down Reply
1 reply to knute9's comment
docmetcalf1955

knute, i'm sure of it.

November 02 2011 at 8:59 PM Report abuse rate up rate down Reply
qaqs9000

Congress is just another branch of the mob. They use the same tactics and extort billions from everyone. Can we use the Rico act on them or do we just pray something 'natural" ends their reign of terror? Better yet something "unnatural."

November 02 2011 at 8:30 PM Report abuse +1 rate up rate down Reply
Winnie

Guess who else is run by the mafia?

November 02 2011 at 8:28 PM Report abuse rate up rate down Reply
1 reply to Winnie's comment
docmetcalf1955

the democratic party

November 02 2011 at 9:00 PM Report abuse rate up rate down Reply
consult236

Does this mean the RICO statutes will be used to take the mobsters possessions and money and use them to repay the stockholders that were defrauded?

November 02 2011 at 8:21 PM Report abuse rate up rate down Reply
Rachel Styles

The Mafia wasn't always doing illegal activities to make money. At first they were the group that people could go to when the couldn't go the police. This article gives a great explanation on how the Mafia started.

http://explainlikeakid.blogspot.com/2011/10/how-mafia-started.html

November 02 2011 at 7:29 PM Report abuse rate up rate down Reply