CAMDEN, N.J. (AP) — The son of a former Philadelphia mob boss and another reputed mob associate were convicted Thursday of federal fraud charges for taking over a Texas-based mortgage company and then plundering its assets to buy homes, luxury cars, a plane and a yacht.
Nicodemo S. Scarfo, the son of former Mafia leader Nicodemo D. Scarfo, was convicted of multiple counts including racketeering conspiracy, conspiracy to commit securities fraud, wire fraud and being a felon in possession of a gun.
A second lead defendant, Salvatore Pelullo, who prosecutors said ran the business takeover, was convicted of racketeering conspiracy, conspiracy to commit securities fraud and related counts.
Authorities had described the charges as evidence the mob has turned to more modern forms of organized crime. But Scarfo's attorney, Mike Riley, accused the government of using his client's name "to try and buttress a weak white-collar case."
"It's simply not a mob case," Riley, who vowed to appeal, said after the verdict in federal court in Camden.
The government said Scarfo and his co-defendants used threats of harm to take over the board of publicly held FirstPlus Financial Group, an Irving, Texas-based mortgage company, and then had the company buy shell companies they owned so they could take out the assets. Riley countered that the defendants took over the board through a proxy fight, not extortion.
Authorities said the conspirators plundered $12 million in less than a year, buying homes, weapons, ammunition, a plane, luxury cars, jewelry and an $850,000 yacht they named Priceless. They also alleged some of the money was used to pay organized crime debt.
The government said the men conspired in 2007 to get the money from FirstPlus two ways — first by hiring shell companies owned by Pelullo and Scarfo as consultants, then by buying other shell firms they formed. FirstPlus is now defunct.
John and William Maxwell, brothers who were executives at FirstPlus, were found guilty Thursday of wire fraud and related counts. The judge revoked their bail, saying they likely faced more than 20 years in prison.
Assistant U.S. Attorney Steven D'Aguanno argued the case had a strong organized crime element, and he dismissed complaints that the government targeted Scarfo solely for his name.