Mafia Took Over Publicly Traded Company
I guess this is the new answer to the question, "What's worse than Jon Corzine running your company into the ground?"
In a story that seems ripped off from a Sopranos episode, members of the Lucchese organized crime family allegedly took over FirstPlus Financial Group (OTC: FPFX), a Texas mortgage company. I wanted to make a crack about the mafioso making the bank an offer it couldn't refuse, but that's apparently exactly what they did.
According to federal prosecutors, Nicodemo S. Scarfo, Salvatore Pelullo and other associates took control of FirstPlus in June 2007 “by threatening its existing management.” I don't think it takes a genius to read between the lines on that one. Whatever the case, existing management apparently relented, allowing the mobsters to put some of their own men in charge.
This arrangement allowed the mafia to order FirstPlus to approve the purchase of companies that had little value, and in most cases were just shell companies for the mafia. This let the mobsters rake in nearly $12 million in profits from the bank. The mobsters also arranged for themselves to do phony consulting work for pay, and used the millions to live the high life. According to the indictment, this included “a luxury home for Scarfo, expensive automobiles, a yacht and jewelry.”
“The defendants gave new meaning to ‘corporate takeover',” U.S. Attorney Paul Fishman said in a statement. “Investors should be free to invest in public companies without fear that violent criminal organizations are their puppetmasters.”
In all, 13 people have been charged so far, including a noted mob defense attorney and an accountant. The crooked management at the company, who were let go in 2009, were also indicted. Former FirstPlus Chief Executive Officer John Maxwell and former Chief Financial Officer William Handley, the crooked officers who were hired at the behest of Scarfo and Pelullo, were let go right before the company filed for bankruptcy. Handley was arrested Tuesday morning, while Maxwell remains at-large.
According to mafiatoday.com , "The indictment charges the defendants with being part of a mob-connected racketeering enterprise that engaged in wire fraud, mail fraud, bank fraud, securities fraud, money-laundering, extortion and obstruction of justice."
These indictments show just how far the company has fallen since its heyday, when, according to the Wall Street Journal, it had a $60 stock price and counted Dan Marino as a pitchman, along with former Vice President Dan Quayle as a board member. Now the stock trades around 2 cents a share, and has scumbag mafioso leeching profits off the top.
Even still...I like their odds of a recovery better than anything Corzine might do.
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