International Financial Law Prof Blog

Editor: William Byrnes
Texas A&M University
School of Law

Sunday, September 21, 2014

Mafia Takes Over FirstPlus Financial, Drains it Into Bankruptcy

A Pennsylvania accountant was sentenced today to serve 40 months in prison for conspiring to defraud FirstPlus Financial Group Inc. (FirstPlus), a Texas-based financial services company, which had been targeted for extortionate takeover and looting by a group led by Lucchese organized crime family member Nicodemo S. Scarfo.

Justice logoAccording to court documents and evidence introduced at the trial of his coconspirators, Scarfo is a made member of the Lucchese organized crime family.  In April 2007, Scarfo, Salvatore Pelullo and others devised a scheme to take over FirstPlus.  Scarfo and Pelullo used threats of economic harm to intimidate and remove the prior management and board of directors and replaced those officers with individuals beholden to Scarfo and Pelullo.   

Howard Drossner, a certified public accountant (CPA), joined the conspiracy in February 2008 when he helped Scarfo and Scarfo’s then-fiancée secure a $500,000 mortgage to purchase a house for $715,000 in Egg Harbor Township, New Jersey.  At the direction of Pelullo, Drossner created false tax returns to help Scarfo’s fiancée qualify for a mortgage.  Scarfo used money looted from FirstPlus for the $215,000 down payment on the house.  The false tax returns, which exaggerated Scarfo’s fiancée’s income so she could qualify for the mortgage without naming Scarfo, were used to secure the mortgage. 

After the First Plus scheme was shut down by federal law enforcement in May 2008, Scarfo was unable to pay the mortgage and the house ultimately went into foreclosure.  It was sold by the bank in 2010.   

In addition to the prison term, Judge Kugler sentenced Drossner to three years of supervised release and fined him $125,000.  Under the terms of his plea agreement, Drossner was required to notify the Pennsylvania State Board of Accountancy of his guilty plea and consent to the voluntary suspension of his CPA license.

Four other members of the conspiracy – Scarfo, a member of the Lucchese La Cosa Nostra (LCN) family; Pelullo, an associate of the Lucchese and Philadelphia LCN families; William Maxwell, a Texas lawyer; and John Maxwell, who acted as the nominal CEO of FirstPlus after the takeover – were convicted of several offenses, including racketeering conspiracy, in July 2014 after a six-month trial.  They are all awaiting sentencing.  The indictment also named Nicodemo S. Scarfo’s father, Nicodemo D. Scarfo – the former boss of the Philadelphia LCN family – and Vittorio Amuso – the boss of the Lucchese family – as unindicted co-conspirators.  Both are serving lengthy prison sentences.

Three other defendants charged in the indictment – John Parisi, manager of Scarfo’s shell company; Lisa Murray-Scarfo, Scarfo’s then-fiancée and a participant in the mortgage fraud conspiracy; and Cory Leshner, a participant in the looting of FirstPlus – have pleaded guilty and are awaiting sentencing.  Todd Stark, also charged in the indictment, previously pleaded guilty and was sentenced for providing ammunition to Scarfo and Pelullo despite knowing that they were convicted felons.

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