Documents: Scarfo played role in Texas fraud case

Jailed mob boss Nicodemo "Little Nicky" Scarfo played an active role in setting up a scheme to defraud a Texas financial firm of millions of dollars while sitting in a federal penitentiary in Atlanta, new documents in a Dallas bankruptcy case contend.

But whether the 82-year-old mob boss will be indicted is one of several issues that prosecutors in the U.S. Attorney's Office in Camden are wrestling with as the FirstPlus Financial Group investigation draws to a close.

Scarfo's son, Nicodemo S. Scarfo, 46, and Elkins Park businessman Salvatore Pelullo, 45, have been identified as the primary targets of the investigation, which included a series of raids more than three years ago at businesses and homes in Texas, Pennsylvania, and New Jersey.

In 2007, according to an 83-page civil complaint filed by attorneys for the FirstPlus court-appointed bankruptcy trustee, Pelullo orchestrated a scheme in which FirstPlus paid "millions of dollars for essentially worthless companies" that he and the younger Scarfo controlled.

The companies were set up in Philadelphia and Atlantic City to engage in construction and restoration projects. One did insurance adjustments, and another was set up as a training school for restoration work.

Officials with the U.S. Attorney's Office in Camden have declined to comment.

But a law enforcement source familiar with the criminal investigation said last week that the bankruptcy document was "a very good summary of what went on."

The source also said an indictment would be returned soon but said no decision had been made on whether the elder Scarfo, serving a 55-year sentence for racketeering and murder, would be charged or simply listed as an unindicted coconspirator.

He is not eligible for parole until 2033, so his sentence is, in effect, a life term.

The bankruptcy complaint filing on behalf of Matthew D. Orwig, the trustee, repeats several allegations contained in earlier documents in a FirstPlus Chapter 11 proceeding under way in Dallas.

But it also contains new allegations, including the assertion that accountants and lawyers working for FirstPlus were, in fact, looking out for the interests of the so-called Pelullo group.

In contends that Pelullo, who has two fraud convictions, handpicked individuals to sit on the company's board of directors. Those members, the trustee alleges, approved purchases and expenditures without due diligence.