Scarfo racketeering trial begins in Camden

Salvatore Pelullo
Salvatore Pelullo
Posted: January 10, 2014

CAMDEN A federal prosecutor on Wednesday outlined the case against reputed mobsters charged with a massive racketeering scheme he claims looted $12 million from a Texas-based financial company.

"This is a case about lying, cheating, and stealing," Assistant U.S. Attorney Howard Wiener said. "They lined their pockets with the millions they stole and cost shareholders millions."

Nicodemo Scarfo Jr., 45, son of jailed Philadelphia mob boss Nicodemo "Little Nicky" Scarfo, is charged along with alleged mob associate Salvatore Pelullo in a 25-count indictment. Also charged are four lawyers who worked with the men and a former CEO of the publicly traded mortgage company FirstPlus Financial.

On Wednesday, Wiener told jurors that through fraudulent transactions and layers of bank accounts and shell companies, the men made off with millions in less than a year, beginning in the spring of 2007, then used the money to purchase luxury cars, mini-mansions, and a yacht, and, in Scarfo's case, to pay organized crime debts.

Scarfo's attorney, Michael Riley, said in his opening argument that not only was the business legitimate, but that any mention of the Mafia was a strategy to mislead, to keep the case interesting and convict his client in jurors' minds before the evidence is heard. He said no money trail in the case led to the mob.

"No one's going to wake up with a horse in their bed, no one's going to go sleep with the fishes," Riley said of evidence jurors can expect to hear. "This is not an organized crime case, and to suggest it is unfair. It's a distraction and it's offered to cloud your view."

The trial before a jury of 19, selected last year, some as early as October, is expected to last for at least three months.

In addition to Pelullo and Scarfo, lawyers Gary McCarty, David Adler, and Donald Manno, and brothers John and William Maxwell, executives with FirstPlus, are also on trial. John Maxwell is CEO of the firm and his brother is an executive with the firm and a lawyer. Manno, a Cherry Hill lawyer who has long represented Scarfo, is representing himself.

Prosecutors argue that Scarfo and Pelullo controlled the scheme from the top, selling straw companies for millions and directing the defendants to knowingly cover up the fraud and launder the money. Manno is charged with having knowledge of the plan and helping Scarfo fraudulently secure a $500,000 mortgage from St. Edmond's Federal Savings Bank to purchase his Egg Harbor Township house.

The defense argues that the company was ill-fated from the start, having gone bankrupt in 2006, but that the investors and consultants, including Pelullo and Scarfo, were turning things around.

Pelullo's attorney, Troy Archie, described Pelullo, 47, as a misunderstood, successful, but brassy businessman who had partnered with Scarfo in the past, running a company that sold vacation packages and a Philadelphia-based mortgage company, GlobalNet.

Archie said his client's past as a high school dropout with two fraud felonies, coupled with his irreverent and often "maniacal" attitude, made him an easy target for FBI investigators. Archie even played a telephone recording in which Pelullo is yelling and using profanity to discuss a FirstPlus Financial board of directors' vote to introduce jurors to his personality.

"This case is the government's belief that where there was Mafia smoke, there must be Mafia fire. And now they have to masquerade that smoke as fire," Archie said.

For a case described as having mob ties, the evidence will be pretty dry: bank records, securities filings and money trails.

Jurors will also hear recorded phone conversations from more than 8,000 wiretaps recorded during the course of the investigation. They will need to determine whether those exchanges, some of which are extremely crude, prove illegal activity or just demonstrate tough-guy talk.

In one excerpt Wiener shared with the jury, Pelullo says of a dissenting board member, "If you ever rat, your wives will be [expletive] and your kids will be sold off as prostitutes."

The most critical testimony will likely come from Cory Leshner, 30, a West Reading, Pa., lawyer and one of six people indicted who pleaded guilty.

Scarfo's cousin John Parisi and Scarfo's wife, Lisa Marie, pleaded guilty in September. Howard Drossner pleaded guilty and admitted that at the direction of Pelullo, he created false tax returns to help Lisa Scarfo qualify for a mortgage.

Prosecutors have also pointed to evidence that Pelullo visited and communicated with the elder Scarfo as evidence of direct mob involvement.

An interesting legal question arose before the trial started when Pelullo's attorney asked that George Anastasia, present to cover the case for the website BigTrial.net, be barred from openings and testimony because he is on the witness list.

Anastasia, who covered the mob extensively for The Inquirer and has also written about the FirstPlus case, said he had no idea what testimony he would be asked to provide.

Anastasia said he was considering filing a complaint should the motion be granted, because prohibiting him from the courtroom would also prevent him from doing his job writing about the case.

Opening arguments will continue Thursday in Judge Robert B. Kugler's courtroom for the remaining defendants charged. Only Pelullo and Scarfo are in custody and both face 30 years to life in prison. In addition to the racketeering charge, Scarfo faces weapons charges. In 2008 the FBI found three handguns, two rifles, a shotgun, and more than 2,500 rounds of ammunition on Scarfo's yacht, the Priceless.


jterruso@phillynews.com

856-779-3876 @juliaterruso

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