FirstPlus Financial Group Inc., a publicly traded mortgage company in Beaumont, Texas, was illegally taken over through extortion by thirteen individuals, two of whom are linked to the Lucchese organized crime family, according to an indictment filed by the U.S. Department of Justice.
Nicodemo Scarfo, the son of the imprisoned boss Nicodemo “Little Nicky” Scarfo of the La Cosa Nostra mob in Philadelphia, and Salvatore Pelullo, an associate of the Lucchese and LCN families, were charged with racketeering conspiracy and conduct of securities fraud, wire fraud, mail fraud, bank fraud, extortion, money laundering and obstruction of justice in the 25-count indictment filed in federal court in Camden, N.J.
Nine other defendants—including five lawyers and a certified public accountant—have also been indicted for this fraudulent scheme and Scarfo, Sr., and Vittorio Amuso, the imprisoned boss of the Lucchese family, were named as unindicted co-conspirators.
Due to the 'corporate takeover' of FPFG by these individuals, the financial services provider and its shareholders lost at least $12 million from this scam, the indictment said.
According to the indictment, the defendants devised a scheme in 2007 to take over FPFG through “economic extortion and threats of violence” in order to control the company's board of directors and loot its assets to benefit their own criminal enterprise.
Once the takeover was complete, one of the conspirators was named “special counsel” to FPFG, a position he allegedly used to bring in millions of dollars for the defendants through false legal services and consulting agreements.
The indictment said these agreements and FPFG's fraudulent acquisitions of companies that were controlled by Scarfo and Pelullo, were designed to cover up the control the defendants exerted over FPFG as well as conceal the money fraudulently conveyed to the mobsters.
The defendants allegedly submitted or omitted false information that was required for FPFG's periodic and annual filings to the Securities and Exchange Commission to hide their criminal activity. Since the SEC was unaware FPFG was being controlled by the defendants, investors also did not know their money was being stolen from them.
According to the indictment, the defendants used the money to help them live their lavish lifestyle, which included purchasing an $850,000 yacht, a luxury home for Scarfo, a Bentley automobile for Pelullo and thousands of dollars in jewelry for Scarfo's wife.
Federal officials have arrested eleven of the thirteen defendants who allegedly participated in this fraudulent scam.
“Particularly in these economic times, investors should be free to invest in public companies without fear that violent criminal organizations are their puppetmasters,” said Paul Fishman, U.S. attorney of the District of New Jersey. “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.”
