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Giving readers an unvarnished, uncensored, insider's view of the biggest courtroom dramas.

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    By George Anastasia
    For Bigtrial.net

    Ron Galati, the Don Corleone of the auto repair business, hit a trifecta this afternoon when he was indicted for a third time in an ongoing investigation by city, state and federal authorities.

    The latest charges, announced by Philadelphia District Attorney Seth Williams, allege that the 63-year-old South Philadelphia auto body shop owner orchestrated an elaborate insurance fraud scheme that netted nearly $5 million for himself and his co-conspirators.

    Those charged in the case included Galati's wife, Vicky, his son, Ron Jr. and Steven Ligambi, the 28-year-old son of mob boss Joseph "Uncle Joe" Ligambi.

    In all, 41 people have been charged and several have already agreed to cooperate, according to the District Attorney's Office which quoted one cooperator who said Galati would boast, "I live my life to cheat insurance companies. My high every day is to cheat insurance companies."

    Galati is already facing murder for hire charges brought by the District Attorney's Office and attempted murder and conspiracy charges brought by the U.S. Attorney's Office in New Jersey. He has been held without bail since his arrest last year on charges that he solicited three hitmen to kill a father and son, rival auto body shop owners, who were apparently cooperating in the investigation that had targeted him.

    Last month he was named in a federal indictment out of the U.S. Attorney's Office in Camden alleging that the same hitmen were solicited to kill the boyfriend of Galati's daughter Tiffany. The boyfriend was shot in Atlantic City, but survived.

    Two of the hitmen, along with the boyfriend and Tiffany Galati are all believed to be cooperating in that case.

    The indictment announced today was similar to a fraud case brought against Galati back in 1995 by federal authorities. He was convicted and served 37months in prison. This time, with the murder for hire and attempted murder charges, he is looking at a possible life sentence.

    The charges painted a picture of an arrogant wheeler dealer who developed a systematic routine to cash in on phony insurance claims. Corrupt insurance company agents and one Philadelphia police officer were also charged.

    Among other things, Galati's American Collision and Auto Center had a contract to repair Philadelphia Police Department vehicles.

    The DA charged that Galati had five different fraud schemes and that he generated over a million dollars for himself and his wife. The DA alleged that while he and his wife claimed in grand jury testimony that they each were earning about $250-a-week, evidence would show that "Galati cashed over $1.2 million worth of checks" at a South Philadelphia check cashing center over the past several years.

    The indictment alleges that over the past four years, insurance companies have issued $2.3 million for fraudulent claims filed as part of the Galati scheme. Authorities also allege that his shop obtained $1.8 million from the city after fraudulently obtaining a contract with the Philadelphia Office of Fleet Management.

    The "pattern of fraudulent claims," sometimes made with customers who were part of the scam, involved damages resulting fictitious deer accidents, vandalism, damage due to falling objects and staged collisions. The DA cited Galati's "knack for designing creative accident scenarios and his network of rogue professionals who conspired with him to legitimize" the phony insurance claims.

    The indictment alleged that "Galati favored deer hits, vandalism and vehicular damages from trajectory objects" because those would allow the car owner to claim "no fault" and would not result in an increase in the driver's insurance premium. Among other things, the DA alleged that witnesses said Galati "stored deer blood, hair and carcasses in the back of his shop." Those items were used "as props for what Galati deemed `Hollywood Photos'" that were submitted along with the fake insurance claims.

    Other claims filed by Galati customers included reports that their cars had been struck by or collided with "geese, dogs, cartons of fruit, flying metal and falling concrete."

    Galati, the DA said, would also stage collisions, using tow truck operators who were also charged and sometimes with the consent of the vehicle's owner. That scheme was similar to one laid out by mob associate Louis "Bent Finger" Monacello who testified this year in the racketeering trial of Ligambi and mobster George Borgesi.

    In the 1990s, Monacello said, Galati would make a copy of customer's car key, then pay Borgesi to steal the car and crash it into another vehicle, also owned by a Galati customer. The "accidents" would generate more business for Galati's shop and more opportunities to inflate and falsify insurance claims. Monacello said he was on hand to drive a backup car and assist Borgesi in getting away after he had crashed the stolen vehicle.

    Galati was convicted in 1995 for running those types of schemes. Neither Ligambi nor Borgesi were convicted in the cases at which Monacello testified.

    The indictment also alleges that Galati's falsified documents in order to qualify for the city contract even though American Collision did not meet all the city contract specifications.

    Authorities also alleged that the investigation, which was coordinated by Assistant District Attorney Dawn Holtz and conducted by Det. Robert DiFrancesco of the DA's Office and Trooper Michael Romano of the State Police Organized Crime Division, also linked Galati and co-defendant Philip Sessa to a boat stolen from a marina in Somer Point, NJ, and to the misappropriation of funds from an unidentified senior citizen's bank account.

    Galati, who loved to quote lines from The Godfather, lived well on the money from his scams, the DA charged, often throwing "elaborate parties" at shorefront properties and "hosting expensive dinners" at local restaurants.

    It was at an Italian restaurant in Northfield, NJ, authorities said, that Galati threatened his daughter's boyfriend shortly before the boyfriend was shot. The restaurant, now closed, was owned at the time by associates of Borgesi's.

    "It wasn't a big place, but Galati liked to hold court there," said a source. "He thought he was Don Corleone."

    George Anastasia can be contacted at George@bigtrial.net.

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    By Ralph Cipriano
    for Bigtrial.net

    It's a tough time at The Philadelphia Inquirer.

    First, new co-owner Lewis Katz, who just bought the paper in a court-ordered auction last week, died tragically in a plane crash Saturday night at an airport in Massachusetts.

    Then, employees came in to work this morning and discovered that Brian Tierney, the guy who crashed the newspaper in bankruptcy court five years ago, was back at large in the building.

    That's the same Brian Tierney who paid himself a $350,000 bonus while his two Philly newspapers were going under. The same Brian Tierney who as the former Inquirer CEO and publisher asked the bankruptcy court to dismiss a $50 million payment due the pension fund of the Newspaper Guild of Greater Philadelphia. [The Guild subsequently collected $170,000 on the debt of $50 million, while lawyers in the bankruptcy collected some $40 million.] The same Brian Tierney who was brought back as a sales consultant last year, collected $87,500 in salary over four months, and in exchange, brought in exactly $0 in revenues.

    Yep, with those sterling credentials it's hard to believe anybody would want to bring Tierney back to the city's paper of record, except for target practice. But the new surviving co-owner, 82-year-old H.F. "Gerry" Lenfest, announced this morning that one of his first personnel moves was to bring Tierney back as "an advisor to me focusing on advertising."

    Meanwhile, in light of Katz's death, people are beginning to wonder about the court-ordered sale of the newspaper's parent company at the overpriced sum of $88 million, and whether it will go through as scheduled on June 12.

    Lenfest told the Inquirer it would. Lenfest's lawyer, Richard A. Sprague, told the Inquirer that the three partners Katz and Lenfest bought out last week, George E. Norcross III, William P. Hankowsky, and Joseph E. Buckelew, had offered to take a 30-day extension on collecting the $41.7 million they are owed, according to terms of the sale spelled out in court documents.

    But is it true? A spokesman for the three selling owners curiously had no response to a request for comment on whether the three owners had actually agreed to the alleged 30-day extension.

    Even though the sale hasn't formally gone through yet, at the newspaper offices at 8th and Market, Lenfest sure acts like he's taken over. The former cable TV magnate installed his name on the Inquirer masthead as interim publisher. He may be on vacation in Europe, but he's been available for media interviews. And today, Lenfest announced in an email to employees that he was not only bringing back Tierney as a consultant, but also Mark Frisby as associate publisher for operations.

    Frisby, who had been seriously ill, served under Tierney and collected a $150,000 bonus while the place was going under. Lenfest also announced he was retaining George P. Loesch, a former Campbell Soup Co. official who was senior vice president of sales and marketing for Interstate General Media, the parent company that owned the Inquirer, Daily News and philly.com.

    Loesch had announced his resignation and was on his way out the door last week when he took the opportunity to blast newsroom management for their arrogance in an epic screed.

    "If our Inquirer product was a soup, it would have been taken off the store shelves," Loesch wrote his fellow employees. "As I've said, not enough chicken in the chicken noodle soup' and our readers told us that."

    But under interim publisher Lenfest, Loesch "has agreed to help as needed in the transition."

    Meanwhile, Bill Ross, executive director of the Newspaper Guild, said he was "disappointed" by Tierney's return.

    When the executive board of the Guild met with Lenfest, Ross said, they "made it clear that we were not big fans of Brian Tierney. Mr. Lenfest made it clear to us that he understood. But clearly, with his decision today, it didn’t matter."

    In addition to driving the newspaper into bankruptcy, Ross said, Tierney was an unpopular, heavy-handed boss.

     

     
    After Tierney took over, "He fired six employees all in advertising," Ross said. The Guild took the firings to arbitration and "we prevailed in every case," Ross said. "Everyone was reinstated and made whole" with back pay and benefits.

    "That was his style and we didn't appreciate it," Ross said of Tierney. "We'll be prepared for his nonsense if that's what he comes back with. Let's hope he learned a lesson."

    Tierney, along with his longtime spokesman, Jay Devine, did not respond to a request for comment.

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    By George Anastasia
    For Bigtrial.net

    Closing arguments are expected to begin tomorrow morning in the multi-million dollar fraud trial of mobster Nicodemo S. Scarfo, his business partner Salvatore Pelullo and five co-defendants.

    Assistant U.S. Attorney Steven D'Aguanno is scheduled to address the jury after Judge Robert Kugler completes a lengthy explanation of the laws that apply in the case. Kugler began his jury charge today and spoke for about three hours. He will likely spend another hour before turning the case over to the prosecution for its final arguments.

    The complicated case revolves around allegations that Scarfo, 48, and Pelullo, 46, secretly took control of FirstPlus Financial, a troubled Texas mortgage company, in 2007 and then systematically siphoned nearly $12 million from the firm throughout phony business deals and bogus consulting contracts.

    The sixteen member jury panel (four are alternates) has heard nearly five months of testimony and has seen thousands of pieces of evidence that the prosecution says lays out the fraud in exacting detail. But the defense, in an argument that is expected to be repeated again and again during closings, has said that the government has overstated and sensationalized the evidence and that the failure of FirstPlus was a result of a poor economy, not fraud and criminality.

    Scarfo's mob connections, he is the son of jailed Philadelphia mob boss Nicodemo D. "Little Nicky" Scarfo, added yet another twist to the story. The defense claims the spectre of organized crime was thrown into the case -- among the witnesses was a former FBI organized crime specialist -- in order to hype an otherwise drab business story built around tedious financial statements and laborious SEC filings.

    But the prosecution has alleged -- and has used wiretapped conversations to support its contention -- that Pelullo and Scarfo used threats and intimidation to wrest control of FirstPlus in the summer of 2007. Pelullo, who was a behind-the-scenes consultant to FirstPlus, orchestrated the takeover, according to the government, and resorted to verbal threats to advance the scheme which included seating a new board of directors in October 2007 that answered directly to Pelullo and Scarfo.

    Pelullo has been described as a mob associate and a mob wannabe. He has two prior fraud convictions.

    Scarfo, who has convictions for racketeering and gambling, was identified as a made member of the Luchese crime family and a one-time capo, or captain, in that organization. Testimony has also included details about an attempted mob hit on Halloween night in 1989 in which Scarfo was shot and nearly killed.

    His lawyer, Michael Riley, has told the jury that his client has been targeted not for anything he has done, but for who he is. His name and his father's infamous reputation nearly got him killed, Riley said while implying that those same factors were key elements in the government's decision to charge him in the current case.

    Also on trial are former FirstPlus CEO John Maxwell, Maxwell's brother William, a lawyer who worked for FirstPlus, and attorneys David Adler, Gary McCarthy and Donald Manno. Manno, who was Scarfo's criminal defense attorney for years, has represented himself during the trial.

    The case, which began in January, has included testimony for several former company insiders, including Cory Leshner whose stint on the witness stand provided some of the most damaging testimony. Leshner is one of six co-defendants indicted along with Scarfo and the others who pleaded guilty. He is the only one to testify for the government. Scarfo's wife, Lisa Murray-Scarfo and his cousin, John Parisi, also entered guilty pleas. Leshner, Parisi and Murray-Scarfo have not been sentenced.

    The evidence introduced during the trial broke the defense into three sections.

    Scarfo, Pelullo and the Maxwell brothers were portrayed as the most actively involved in the systematic looting of the company. Much of the cash funneled as consulting fees to companies controlled by Scarfo and Pelullo went through William Maxwell, who was on a $100,000 monthly retainer (plus expenses) to First Plus.

    Two of the other lawyers, Adler and McCarthy, were tied to what the government alleges were failures to properly account for business dealings with the SEC or other government regulators. Manno was tied to fraud allegations centered primarily on an escrow account that the government alleges was set up to allow Scarfo and his wife to purchase a $715,000 home outside of Atlantic City.

    The home was one of several lavish purchases allegedly financed with cash taken from FirstPlus. The government also alleged that Scarfo and Pelullo purchased an $850,000 yacht (named Priceless), a company jet and luxury automobiles. Pelullo spent $217,000 on a black, 2006 Bentley Continental GT, according to testimony. Scarfo leased an Audi S6 for $1,200-a-month on the company's dime, authorities allege.

    The FirstPlus investigation became public in May 2008 when the FBI staged a series of coordinated raids in Philadelphia, South Jersey, Miami -- where Pelullo had a condo and where the yacht was docked -- and Irving, TX, where FirstPlus was based.

    More than three years later, in November 2011, a federal grand jury in Camden handed up a 107-page, 24-count indictment outlining the charges in the case. Scarfo's 84-year-old father and another jailed mob leader, Vittorio "Vic" Amuso, 80, were named unindicted co-conspirators. Amuso was the boss of the Luchese crime family. He is serving a life sentence. The elder Scarfo is serving a 55-year term for murder and racketeering. His earliest release date, according to prison records, is 2033 when he will be 103 years old.

    Kugler has dismissed a handful of counts during the course of the trial, but none of the major charges. The closing arguments are expected to last several days (the jury does not sit on Fridays). D'Aguanno's closing could run into Thursday. Scarfo's attorney is expected to offer the first defense closing, followed by lawyers for Pelullo, the Maxwell brothers, Adler, McCarthy and then Manno.

    Under the rules of federal criminal trials, the prosecution will then get the last word, offering a rebuttal closing. Jury deliberations are expected to begin late next week at the earliest. Scarfo and Pelullo face the stiffest potential sentences, up to 30 years in prison.

    George Anastasia can be contacted at George@bigtrial.net.

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    By George Anastasia
    For Bigtrial.net

    A federal prosecutor used mobster Nicodemo S. Scarfo's own words today to describe the alleged  takeover and looting of a Texas-based mortgage company that is at the heart of what authorities charge was a $12 million scam orchestrated by Scarfo and his business partner Salvatore Pelullo.

    "Layers upon layers, like an onion," Scarfo, 48, said in a secretly recorded telephone conversation with Pelullo, 46, that was picked up on an FBI wiretap back in 2007 as authorities contend the takeover of FirstPlus Financial was unfolding.

    For nearly three hours today, Assistant U.S. Attorney Stephen D'Aguanno, the lead prosecutor, detailed the allegations in the racketeering conspiracy case against Scarfo, Pelullo and five co-defendants. D'Aguanno said underneath those layers of the onion -- false SEC filings, phony stockholder reports, bogus consulting contracts and fraudulent business purchases and expenses -- was the financial scam that poured millions into the pockets of the two lead defendants.

    "They're joined at the hip, from their criminal activities to their alleged business activities," D'Aguanno said of Scarfo and Pelullo, who frequently referred to each other as cousins even though there was no blood relationship.

    In a closing argument that signaled the beginning of the end of the five-month long trial,
    D'Aguanno called Pelullo the "de-facto" head of FirstPlus Financial. He said Pelullo "controlled" the company and that he "reported" to Scarfo. Both men had lucrative consulting contracts once they secretly took control of the company's board of directors in the summer of 2007, the prosecutor alleged.

    Co-defendant William Maxwell, a lawyer on a retainer of $100,000-a-month to FirstPlus, helped set up those consulting agreements with Seven Hills Management, Pelullo's company, and Learned Associates, Scarfo's front, according to the prosecution who spoke for nearly three hours to the 16-member (four are alternates) jury panel.

    D'Aguanno is expected to complete his arguments tomorrow. He will be followed by attorneys for the seven defendants. Jury deliberations are likely to begin late next week or early on the following week.

    The prosecutor, who spearheaded the FBI investigation that began seven years ago, said Pelullo had a contract similar to Maxwell's that paid him $100,000-a-month. Scarfo's contract called for $33,000-a-month. He later had another contract with Maxwell for $150,000-a-year, the prosecutor said.

    None of those deals were ever disclosed in SEC filings or reported to company shareholders, said D'Aguanno who then asked the jury a question that he repeated again and again - "Why?"

    The answer, he said, was because the deals were part of a massive fraud set up by Scarfo and Pelullo, both of whom had criminal records that would have had to have been disclosed had their names been listed on company filings. Pelullo has two prior fraud convictions and was cited in the past for lying to the SEC, D'Aguanno said. Scarfo has two prior convictions linked to organized crime gambling and racketeering cases.

    In their closings, defense attorneys, as they have throughout the trial, are expected to argue that the failures of FirstPlus were not caused by fraud, but by a poor economy. Defense attorneys have also argued that the government has interjected the presence of organized crime in the case to sensationalize what would otherwise be mundane financial charges that have little basis in fact. They also have contended that any chance FirstPlus had of succeeding ended when the FBI staged a series of raids in May 2008, seizing company records and assets.

    Michael Farrell, one of two court-appointed attorneys representing Pelullo, is scheduled to offer the first defense closing after D'Aguanno completes his address. Farrell, a high energy litigator with a loud and aggressive courtroom style, is expected to take three or four hours. With no court on Friday, Farrell's closing could roll into Monday. The closings from the other lawyers could take the remainder of the week. The prosecution gets a final rebuttal closing before the case goes to the jury.

    Today was a clearly one-sided prosecution summation of evidence and testimony that began back in January and finally concluded last week.

    D'Aguanno told the jury that the criminal enterprise at the heart of the FirstPlus fraud was not the mob, but the Scarfo-Pelullo organization. He said, however, that both men used the reputation of organized crime to bolster the threats and extortion that allowed them to take over the company in the summer of 2007.

    Scarfo's father, jailed Philadelphia mob boss Nicodemo D. "Little Nicky" Scarfo, and Vittorio "Vic" Amuso, the jailed leader of the Luchese crime family, were named as unindicted co-conspirators in the case. The elder Scarfo exercised "influence and control" over his son and Pelullo, D'Aguanno said, adding that both mob leaders -- even though they were in jail -- were to share in the financial benefits of the takeover.

    Scarfo Sr. and Amuso were fellow inmates at a federal prison in Atlanta in 2007. Pelullo and Scarfo Jr. visited the elder Scarfo several times and discussed the FirstPlus takeover with him, D'Aguanno charged. Scarfo Jr. has been identified as a made member of the Luchese organization.

    D'Aguanno also said a prison phone conversation between the two Scarfos in which they mentioned taking care of "Uncle Vic" was a coded reference to Amuso and his potential share in the looting.

    Scarfo Jr. was on probation at the time the fraud unfolded, D'Aguanno said. He said that Pelullo, William Maxwell and Donald Manno, a co-defendant and longtime criminal attorney for Scarfo, were part of a scheme to lie to the probation department about Scarfo's associations and job opportunities in an fraudulent attempt to have his probation restrictions lifted.

    If Scarfo had gainful, legitimate employment as a consultant for FirstPlus, why not just tell that to the probation department, D'Aguanno asked? The reason, he said, was that that disclosure might have led to government inquiries into what he was doing and disclosed his relationship with Pelullo.

    Ironically, D'Aguanno said, authorities were already investigating those connections while Scarfo and the others tried to hide them.

    Other defendants in the case include William Maxwell's brother, John, who was the CEO of FirstPlus after the alleged takeover and attorneys David Adler and Gary McCarthy who handled business and SEC filings for the company.

    D'Aguanno opened his remarks by playing a tape for the jury in which Scarfo and Pelullo laughed and joked about the untimely passing of J.D. Draper, a FirstPlus insider who authorities said helped the two plan the behind-the-scenes takeover.

    Draper, who was named compliance officer of the company, died unexpectedly of a heart attack in December 2007. On the tape, Scarfo and Pelullo mockingly talk about how they are broken up by his passing.

    D'Aguanno said Draper was one of the few insiders who knew all the details of the scam and his passing eliminated any concerns on the part of Pelullo or Scarfo that he might turn on them and go to authorities.

    "I'm crushed, tears are coming to my eyes," Pelullo said on the tape which was played twice during the trial and a third time today.

    After more mock comments about sorrow and condolences, Scarfo told Pelullo that Draper's death was "one thing I know you can't take credit for."

    But the government contends that Pelullo, in secretly recorded conversations and in emails, took credit for nearly everything else that brought him and Scarfo behind-the-scenes control of the company. And all of it, D'Aguanno said today, was based on fraud.

    George Anastasia can be contacted at George@bigtrial.net.

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    By George Anastasia
    For Bigtrial.net

    He wasn't a gangster. He was a turnaround expert.

    And if the government had just left him alone, Salvatore Pelullo would have turned FirstPlus Financial, a struggling Texas mortgage company, into a profitable business enterprise.

    Do the math!

    That was the message, accompanied by nearly 100 slides and a heavy mixture of passion and sarcasm, that Pelullo's lawyer, Michael Farrell delivered to a federal jury today in a highly charged summation that offered a decidedly different view of the testimony and evidence from the one presented by the prosecution during the five-month trial.

    The government, Farrell said repeatedly, failed to back up its charge that Pelullo and mobster Nicodemo S. Scarfo looted the company after secretly taking control of its board of directors in the summer of 2007.

    "The government never gave these people a chance and they want you to convict them of crimes," said Farrell, the first of seven defense attorneys to offer closing arguments. Farrell will be back in front of the jury when the trial resumes Monday. He is expected to take most of the day to complete his summation.

    "This is a guy with a track record of immense business success," Farrell said of his client, pointing to businesses Pelullo had started in the past, to a newspaper article identifying him as one of the top 40 businessmen under 40 and personal financial records that listed properties and assets that at times exceeded $1 million.

    Farrell described Pelullo, 46, as a high school dropout with intuitive business acumen who had developed a "business model" for taking distressed companies and turning them into successful operations. He was, Farrell added, a "risk taker" who had run afoul of the law in the past. Pelullo has two prior fraud convictions.

    But the defense attorney, contradicting a major premise in the prosecution's case, said there was never any attempt to hide Pelullo's role as a consultant to FirstPlus or to defraud the company.

    "Loot the company?" he nearly shouted at one point. "They were trying to grow the company."

    Farrell's summation came after Assistant U.S. Attorney Stephen D'Aguanno wrapped up nearly six hours of closing arguments shortly after the lunch break today. D'Aguanno described Pelullo as the "central figure" in a scam built around "a fraudulent set of legal and consulting agreements."

    He said Pelullo and Scarfo use fear, intimidation and the reputation of the mob and their links to it to advance a scheme that netted them millions while running the company into the ground. Both Pelullo and Scarfo, through companies they controlled, had consulting contracts with FirstPlus. A third defendant, lawyer William Maxwell, had a legal contract with the firm.

    Maxwell was being paid $100,000-a-month plus expenses. The government contends he set up consulting contracts for Pelullo, at $100,000-a-month, and Scarfo, at $33,000-a-month, as part of an insider move to siphon cash out of the company.

    Other defendants on trial are Maxwell's brother, John, the CEO of FirstPlus, and lawyers David Adler, Gary McCarthy and Donald Manno.

    Using slides and charts that flashed on large screens around the courtroom, Farrell challenged the goverment's contention that after Pelullo and Scarfo took control of the company board of directors, its assets dropped from about $11 million to $1,700. In fact, he contended, companies that were purchased by FirstPlus had tangible value of millions and were not the straw entities that the prosecution alleges.

    The purchases -- the government has charged that Pelullo and Scarfo controlled most of the companies that FirstPlus bought -- were part of a plan to turn the company around, part of a business model that Pelullo had developed and used successfully over the years.

    Farrell also chided D'Aguanno and FBI Agent Joe Gilson, the lead investigator in the case. The defense attorney implied that the two law enforcement officials lacked the financial background and training to accurately assess what was taking place.

    He said the FBI targeted Scarfo, the son of jailed Philadelphia mob boss Nicodemo D. "Little Nicky" Scarfo, because of his suspected mob ties. The younger Scarfo was on probation in 2007 after serving more than three years in prison for a conviction in an orgnaized crime gambling case. He has another conviction for racketeering.

    The organized crime investigation into Scarfo, dubbed "Son Block," morphed into a probe of white collar corruption, Farrell said, and went off track because the government didn't understand the financial world.

    The government "wants you to believe Scarfo was a mobster," Farrell told the jury. The evidence and testimony indicate he was "a computer nerd," the lawyer said.

    Both Pelullo and Scarfo had criminal records and were cognizant of the fact that those records could create problems with government regulators and shareholders. But neither attempted, as the government alleges, to hide their involvement as consultant to the company, he said.

    "They had strikes against them," he said of their criminal pasts. "They had obstacles. But they believed they could succeed."

    Returning to another theme that has been part of the defense throughout the trial, Farrell said a series of FBI raids in May 2008 in which FirstPlus records were seized and Pelullo and Scarfo were identified as targets thwarted any attempt for the company to succeed. It wasn't fraud, but the government's actions, he argued, that deep sixed FirstPlus Financial. 

    He urged the jury not to buy into the government's arguments.

    "They believe you'll convict solely because of the Mafia smoke," he said. But it's smoke, he said, with "no fire."

    George Anastasia can be contacted at George@bigtrial.net.

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    By Ralph Cipriano
    for Bigtrial.net

    U.S. District Judge Ronald L. Buckwalter on Friday struck down the imposition of an extremely rare "jeopardy assessment" leveled by the IRS against former state Senator Vincent J. Fumo.

    In a 63-page memorandum, the judge granted summary judgement to the plaintiff in the case of Vincent J Fumo v. United States of America. Under the jeopardy assessment, which the IRS typically uses to combat money launderers and international fugitives, the IRS had frozen three of Fumo's bank accounts totaling $2.7 million.

    The judge, however, said the imposition of the jeopardy assessment was "not reasonable" because Fumo, sitting in jail at the time, did not attempt to hide any transactions of property and money to his son and fiancee. Nor had he placed any assets "beyond the reach" of the government, the judge wrote.

    "The jeopardy assessment made against [Fumo] shall be abated and all liens and levies filed pursuant to it shall be released," the judge declared.

    "It's wonderful to be entirely vindicated by a court of law." said Mark E. Cedrone, the tax lawyer who represented Fumo. 

    For Fumo and the IRS, this is only round one. Now that the jeopardy assessment has been struck down, and Fumo's accounts unfrozen, the IRS and Fumo will slug it out again in tax court. The IRS claims that Fumo owes them more than $3 million in back taxes, fines and penalties on money stolen from the state Senate, the non-profit Citizens Alliance for Better Neighborhoods, and the Independence Seaport Museum.

    Cedrone, however, maintains that his client owes the IRS "zip."

    "Hopefully, the winds are now shifting for Senator Fumo," Cedrone said. "We still have some battles to fight in tax court."

    Maybe that's why Cedrone's client was less than exuberant yesterday over his victory.


    "It always feels good to be vindicated," Fumo said. "My joy is tempered because this is not over yet." 

    On March 6, 2009, former state Senator Fumo was convicted by a federal jury on 137 counts of conspiracy, fraud, obstruction of justice and filing a false tax return. He was fined $2.7 million and sentenced to 55 months in jail by Buckwalter.

    But the federal prosecutors who put him away didn't think it was enough. They appealed the sentence and won in appeals court. Iin 2011, Buckwalter re-sentenced Fumo to 61 months in jail, upping his prison time by 6 months; the judge also boosted Fumo's fines and restitution by more than $1.1 million, to nearly $4 million.

    "To date, Plaintiff has paid nearly $4 million to the United States in fines, restitution, and assessments in connection with his criminal convictions," Buckwalter wrote.

    Fumo also served four years in jail until he was released on Aug. 2, 2013 and sentenced to serve the rest of his sentence under home confinement. "He is presently on supervised release," Buckwalter wrote.

    After Fumo's criminal conviction, the IRS assigned Agent Kenneth J. Kelly to review the transcripts and exhibits from the criminal trial, and figure out whether the IRS could nail Fumo for any back taxes, fines and penalties related to the fraud.

    Kelly plowed through the transcripts and trial exhibits. Oct. 3, 2012, he mailed Fumo a notice saying that for tax years between 2001 and 2005, the IRS had determined that Fumo owed $2 million. 

    Five months later,  on March 21, 2013, an IRS agent visited Fumo in prison in Ashland, Kentucky, and served him with the jeopardy assessment. The IRS was notifying Fumo that they had increased his tax bill to $3 million. Under terms of the jeopardy assessment, the feds were also notifying Fumo that they had frozen three of his bank accounts totaling $2.7 million.

    The only reason why the feds did this, as far as Judge Buckwalter could determine, was because they had read an article in The Philadelphia Inquirer.

    You'll never read about this in The Inquirer. But it's all spelled out in Buckwalter's 63-page memorandum.

    "According to Agent Kelly," Buckwalter wrote, "' the IRS learned, through a newspaper article, that [Fumo] had effectively disposed of most of his real property interests,' which prompted the IRS to evaluate whether a jeopardy assessment should be made against" Fumo.

    The Inquirer story was published on Oct. 21, 2012 under the byline of Craig R. McCoy and Miriam Hill. The headline: "Fumo shifts property ownership, keeps quarreling."

    "The newspaper article," Buckwalter wrote, "describes the government's efforts to have [Fumo] pay an additional $800,000 in restitution, instead of [Fumo's] co-defendant in the criminal trial, Ruth Arnao."

    The feds had filed another appeal, seeking to extract from Fumo another $783,284 for restitution owed by Arnao, former executive director of the Citizens Alliance.

    [Of the original amount stolen in the case, $1.5 million was stolen from the Citizens Alliance. Buckwalter had originally determined that Fumo and Arnao were equally guilty in the fraud, and fined them each $783,284, splitting the cost of the restitution of the $1.5 million 50-50.

    The feds, however, said that Fumo had directed the fraud, and derived most of the benefits from it, so  he should pay Arnao's tab as well, especially since he had more money than she did. After the feds won their appeal, Buckwalter on May 20 upped Fumo's fines and restitution by $359,430. The judge had amended his order to hit Fumo with 75 percent of the $1.5 million recitation in the Citizens Alliance fraud case, and Arnao with 25 percent.

    In the Inquirer article, it appeared as though Fumo, who had just been hit with a request for an extra $783,284 in more restitution, was jugging his money and property for nefarious reasons.

    "The [Inquirer] article describes, among other topics, Plaintiff's resistance to paying the increased share of restitution, the real estate transactions detailed in the IRS declarations, and Plaintiff's claims that he transferred properties to avoid the impending increase in federal gift taxes scheduled to take effect the following January," Buckwalter wrote. "The article quotes federal prosecutors who have promised to collect any additionally-ordered restitution either from the fiancee's windfall or from the may other assets owned by Fumo," Buckwaler wrote. 

    As part of that more than $3 million jeopardy assessment, the IRS had decided that Fumo should be assessed an addional $327,895 in unpaid gift tax liabilities for 2009, plus an extra $132,798 in fines for failing to pay the gift tax on time.

    The IRS levied the unpaid gift taxes and fines on $2.8 million in transfers between Fumo and his son, Vincent E. Fumo II. The IRS claimed the movement of funds "is suspicious and appears to be designed to hide the original source of the money," the judge wrote. The feds also claimed the transfers were made for "no known purpose." Included in the transfers was $920,000 from a fund jointly held by the father and son to an account in the son's name only.

    Fumo, however, contended the money was transferred to pay Fumo's bills while he was in jail. That included more than $1 million in fines owed the federal government.

    The Inky reported that the feds were investigating Fumo's transfers of seven properties that he owned to his son and fiancee for less than fair market value. The properties included a home in Ft. Lauderdale sold for $2.3 million in 2012. Fumo's fiancee, Carolyn Zinni, received more than $1 million from that sale; the rest of the money, $1.1 million, was used to pay fines and restitution to the government.

    Other properties transferred by Fumo included:

    --  A condo in Margate, N.J. with a fair market value of $1.1 million. Fumo transferred that property to himself and Zinni for $10.

    -- A 99-acre farm in Halifax Pa. with a fair market value of $337,552 transferred to Zinni for $1. Fumo stated in a declaration that he transferred his entire interest in the farm, rather than a survivorship interest, "in recognition of many years of faithful, loving deviation" by Zinni during his time in prison. Every month he was in jail in Kentucky, Fumo wrote, Zinni drive nine hours one-way to visit him.

    -- Property at 936-40 S. 13th St. in Philadelphia with a fair market value of $130,000 to his son and himself for $1.

    -- A condo at 660 Mommouth Ave., Ventnor, N.J. with a fair market value of $525,000 transferred to a joint ownership for himself and his son for $10.

    -- Fumo's mansion on Green Street with a fair market value of more than $3 million formerly owned by Fumo was transferred to Fumo and son as joint tenants for $10.

    Fumo maintained in court that he was transferring the properties under the advice of an accountant. Fumo was preparing for "the scheduled expiration of exemptions from estate and gift taxes commonly known as the "Bush tax credits" that expired on Dec. 31, 2012, the judge wrote.

    The IRS evidence against Fumo included two hand-written letters he sent Jane Saccetti, his ex-wife, in 2010 from jail. The ex-wife testified about the two letters during a July 6, 2013 hearing in Orphans Court. [At the time, Fumo's daughter Allie was challenging her father's appointment of a trustee over a $2.5 million trust fund that Fumo had set up for Allie and his son.]

    "My goal is to become as judgement proof as possible," Fumo wrote his ex-wife. "I want to 'own nothing but control everything'" after which Fumo made a smiley face. "I never want to be this vulnerable to the government or any creditors again in my life," Fumo wrote. "These fines & restitution were a grossly unfair outrage," after which Fumo made a frowning face.

    Fumo maintained to Buckwalter that the excerpted statements were part of attempts by him to renegotiate the terms of a $1.4 million loan he had taken out on the trust for his kids to pay fines and restitution owed the government. Those comments, according to Fumo, were not about "any IRS concerns," the judge wrote.

    In reviewing the imposition of the jeopardy assessment, the judge went over the ground rules for such a drastic penalty.

    A jeopardy assessment, according to U.S. Treasury regulations, can only be applied if the taxpayers "appears to be designing quickly to depart from the United States to conceal himself," the judge wrote. The jeopardy assessment can also be imposed if the the taxpayer "appears to be designing quickly to place his property beyond the reach of the government by removing it from the United States," the judge wrote. The only other reason a jeopardy assessment can be imposed, the judge wrote, is when the taxpayer is in danger of going broke.

    The imposition of a jeopardy assessment is also usually accompanied by a "considerable lapse of time" between the jeopardy assessment and the government's efforts to collect.

    In Buckwalter's view, however, Fumo and his son were able to "rationally explain" the property and money  transfers that had attracted the attention of the Inquirer and the feds.

    Fumo was about to go to jail for four years. "It is certainly plausible that [Fumo] took a series of steps to arrange for his son to manage his affairs," the judge wrote. It doesn't necessarily "create the appearance" of hiding his money from the feds, which is necessary for a jeopardy assessment.

    "Overall, the actions taken by [Fumo and son] have the appearance of two people trying to mange [Fumo's] expenses, bills and financial obligations leading up to and during [Fumo's] incarceration," the judge wrote, "not the appearance of trying to hid money from the government." In addition, all the details of the transactions were "known to the government," the judge wrote.

    The government had contended that Fumo's expressed written desire to his ex-wife to "control everything and own nothing" was part of a plan to conceal assets from the government, the judge writes. Fumo, however, "still owns an interest in the properties at issue, and therefore has not removed them from actual or potential creditors."

    Also, the judge wrote, Fumo reported all the property transfers in a timely fashion to the government. That "undermines any notion of 'a plan to hide assets' from his creditors," including the IRS, the judge wrote.

    The government saw Fumo's 2010 letters from prison as a confession "where [Fumo] revealed his plan to avoid any exposure to creditors or the government," the judge wrote. But Fumo wasn't judgment proof, the judge wrote. A year after he wrote those letters, Fumo had to pay $1.1 million in further restitution to the government, the judge wrote. So the judge dismissed Fumo's written statements to his wife the "idle complaints" of a guy sitting in jail trying to figure out how he was going to pay his bills.

    But Fumo is in no danger of going broke, another requirement for a jeopardy assessment, the judge wrote. He still has $2.7 million in assets that had been frozen by the feds. Fumo is still a "wealthy man," the judge wrote.

    Going through past cases, the judge noted that the jeopardy assessment had been applied to a guy who a month after he found hout he was the target of a grand jury investigation, transferred $3 million to the Cayman Islands.

    In Fumo's case, all of the transferred properties, except the farm, are still owned by Fumo, his son and/or his fiancee, and are not "beyond the reach of the government, the judge wrote.

    The judge noted that when the IRS first hit Fumo with a back tax bill of $2 million in October 2012, they did not levy a jeopardy assessment. Five months later, in March 2013, when the IRS raised the bill to more than $3 million and levied the jeopardy assessment, there was "no suspicious activity" that had transpired that would have required the imposition of a jeopardy assessment, the judge wrote, other than the publication of the Inquirer story.

    "The Court is hard-pressed to find" that during October 2012 and March 2013, Fumo was "'designing quickly' to transfer real estate or money to his son and his fiancee," Buckwalter wrote.

    In essence, the judge was throwing out the jeopardy assessment because the feds had overreacted to a newspaper story.

    Ralph Cipriano is writing a book about Vince Fumo.

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    By George Anastasia

    For Bigtrial.net

    She listened to two days of testimony in the Anthony Nicodemo murder trial last month and said she wasn't buying the defense argument that Nicodemo was carjacked and became an unwitting getaway driver in the murder of Gino DiPietro.

    "The story about the carjacking was absurd," the former Common Pleas Court panelist wrote in one of several e-mail exchanges with Bigtrial.net. She also said she surmised the shooting was a mob hit even though the judge had barred any mention of organized crime. And she correctly assumed that Nicodemo was being held without bail and that he was able to afford a high priced defense attorney.

    The juror agreed to share her insights from the two days she heard testimony, but asked to remain anonymous. She was the first of three jurors dismissed during the case which ended in a mistrial on May 20. Lawyers for the defense and prosecution are to meet with Judge Jeffrey P. Minehart Thursday for a status conference during which a new trial date could be set.

    Nicodemo, 42, has been held without bail since his arrest on the day of the shooting, December 12, 2012.

    "During opening remarks, Brian McMonagle (Nicodemo's lawyer) was wearing a suit that was very, very expensive...and a watch that cost more than my 2011 car," the juror wrote. "Therefore, I deduced that he was not a public defender."

    Using the same reasoning, she said, led her to believe that "the defendant had the access to cash necessary to employ" an expensive attorney. And she wondered, "Where did this money come from? I had my suspicions."

    She said she assumed Nicodemo was being held without bail because while he appeared each day in court in a dress shirt and slacks ("business casual clothes" in the words of the juror), she noticed that he was wearing "a pair of pristine white sneakers."

    "I couldn't imagine Mr. Nicodemo would come to court in sneakers unless he was being kept in jail," she wrote. "Why wouldn't he be out on bail? I knew he had access to money, so he either was a flight risk or a very dangerous person (or both)."

    The panelist said Nicodemo had smiled at her during the jury selection process. But during the trial, which included testimony about the gangland-style slaying of DiPietro in the 2800 block of South Iseminger Street, she said she would look toward the defense table and Nicodemo "confronted me with a smug, steely gaze."

    The juror said "he appeared unmoved by the heinous details of the crime and the disturbing testimony of several witnesses."

    The juror was one of 14 chosen to hear testimony in the case. Judge Minehart opted to go with just two alternates during the trial, a move that would eventually lead to the mistrial when a third juror was dismissed on Dec. 20. She heard the bulk of the prosecution's case before being dismissed, including the testimony of two witnesses who saw the shooter.

    One witness, a letter carrier working in the neighborhood, said he heard a shot, ran toward the sound, heard a second shot and then saw a gunman in a hoody fire four more shots into DiPietro who was lying in the street beside his pickup truck. The shooting occurred shortly before 3 p.m.The gunman then fled in the opposite direction, the mailman testified.

    At that point, the shooter ran past another witness who said he saw the gunman jump into a black Honda Pilot SUV which appeared to be parked with the motor running. The vehicle sped away, but the witness got the license tag.

    The Honda Pilot was registered to Anthony Nicodemo at his home in the 3200 block of South 17th Street. Less than 30 minutes after the shooting, police were knocking on Nicodemo's door. He said he had been working inside his house. He was taken into custody. After obtaining a search warrant for the Honda Pilot, which was parked behind Nicodemo's home, police found a .357 magnum wrapped in a jacket behind the driver's seat.

    Evidence entered during the trial indicated that the gun was the murder weapon. It was, Assistant District Attorney Brian Zarallo said in his opening statement, the "smoking gun" that tied Nicodemo to the murder. Zarallo said the prosecution did not have to offer a motive for the shooting. He did not provide one. But he twice mentioned Domenic Grande, a mob associate and close friend of Nicodemo's, as the possible shooter. Grande has never been charged.

    DiPietro, 50, was a convicted drug dealer who, according to some underworld and law enforcement sources, was cooperating with authorities at the time he was killed. His murder was described by one investigator as the "dumbest" mob hit in the history of Philadelphia.

    No one, the investigator said, uses their own vehicle as the getaway car. And any experienced hitman knows that the first order of business after a shooting is to dispose of the murder weapon. The shooting occurred as mob boss Joseph "Uncle Joe" Ligambi and six co-defendants were being tried in a racketeering case in U.S. District Court in Philadelphia. A shooting during a mob trial is also considered bad underworld form.

    Those factors apparently came into play as McMonagle prepared his opening statement. In it, he told the jury that Nicodemo happened to be in the neighborhood on the day of the shooting because he had an office nearby and because his parents lived there. The defense lawyer said a masked gunman jumped into the car, forced Nicodemo to speed away and then, at some point, jumped out of the Honda Pilot, but not before stashing the gun behind the driver's seat.

    The explanation begs several questions that may or may not have been answered had the trial been completed. One was whether Nicodemo would take the stand in his own defense to expand on the "carjacking" story. At that point, he would have been faced with another difficult question. Why didn't he report the carjacking to police or mention it when they came to his door that afternoon?

    Instead, Nicodemo has sat in jail, denied bail, since his arrest on first degree murder and related charges that could land him in jail for 30 years to life.

    The juror, a Philadelphia resident who works as a media consultant, said she was not aware of all the background at the time she sat on the panel, but has since learned more about the case. At the time, she said, testimony that Nicodemo told authorities he was working on his house "made no sense with the facts presented."

    "Now that I know about the big mob trial that was going on during the DiPietro murder, it seems suspicious," she wrote. "The fact that the prosecution wasn't able to substantiate a motive in intriguing."

    The juror said she was also troubled by media reports that she had been dismissed because she had read something about the trial in the newspapers. That was not true, she said. She said she was told she was dismissed because a member of either the victim's or the defendant's family had recognized her.

    Law enforcement sources said it was a member of Nicodemo's family who belatedly claimed to have recognized the juror. The sources said they were skeptical of the claim and thought the family had targeted the woman because she appeared to be paying close attention to the prosecution's case and appeared sympathetic to DA's position. In fact, the juror said she knew no one from either family and was puzzled about why she had been let go.

    Her dismissal, after the lunch break during the second day of testimony, left the panel with one alternate. On May 19, a second juror was let go. And on May 20, amid reports of suspected jury tampering, a third juror -- a man who lived on Second Street in South Philadelphia -- was released. That reduced the panel to just 11 members and led the judge to declare a mistrial.

    Whether the defense comes up with another explanation when the new trial begins is open to speculation. With the facts in evidence fairly straightforward, Nicodemo is hard pressed to offer any story that would reasonably explain how his Honda Pilot was the getaway car and how the murder weapon was found inside of it.

    The juror, a film buff, said watching a trial is like watching a movie.

    "A film and a trial attorney's arguments are distorted depictions of `the truth,' and of course bias,'" she wrote.

    Her approach while watching a movie, she wrote, was to "think beyond the frame...Is the person telling the story withholding relevant background information so that the viewer is unable to see an event or character's behavior within its larger context. This is why it's always necessary to ask, `What aren't they telling me? Why aren't they telling me?'"

    She said she employs "the principle of Occam's razor" in looking for the truth: "(in most cases) the least elaborately constructed narrative is probably the closest to `the truth.'"

    In the Nicodemo trial, she said, her conclusions were: "There was no carjacking. Mister Nicodemo wasn't working on his house. He did a bad thing. He panicked and he got caught. It happens every day."

    While she said she weighed and assessed the information provided during the trial, she quickly surmised that Nicodemo "was a mobster" who was involved in the crime. She wrote that she considered different scenarios that were placed before the jury by the defense. These included McMonagle's arguments that it made no sense for Nicodemo to use his own car, go to a familiar neighborhood and carry out a hit. The defense also pointed out that Nicodemo had driven his two young children to school that morning and had gone shopping and purchased $150 worth of frozen shrimp for a planned Christmas Eve Seven Fishes dinner that day. These were not the kind of activities that usually come before a gangland shooting.

    The juror said she thought about those seeming incongruities, but she wrote "I ultimately decided that AN [Anthony Nicodemo] was simply a run of the mill sociopath; he could effortlessly move between that banality of his everyday life and his job as an amoral thug."

    In one final note, the juror said she was struck by the date of the murder, December 12, 2012.

    "The date 12/12/12 seems like a corny date for a planned execution," wrote the jurist. She wondered if the date was "a coincidence," adding that "the 12 card in the Italian Tarot is the Hanged Man."

    George Anastasia can be contacted at George@bigtrial.net.


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    Auction winners Gerry Lenfest and Lewis Katz
    By Ralph Cipriano
    for Bigtrial.net

    In the moments after Lewis Katz and H.F. "Gerry" Lenfest won the May 27th auction to buy The Philadelphia Inquirer for $88 million, Katz told Lenfest he wanted his son, Drew, to be a partner in the venture.

    According to a source, Lenfest's reply, in the presence of Katz's son, was no way.

    Less than 20 minutes in, the Katz-Lenfest partnership was already at loggerheads.

    Four days later, when Lewis Katz was killed in a May 31st plane crash, relations between Drew Katz and Gerry Lenfest got worse.

    Lenfest, according to a source, didn't pick up the phone to call Drew Katz to tell him he was sorry about his father's death. He didn't even call Drew Katz to discuss Lenfest's future plans for the company, plans that supposedly included Drew Katz taking over for his father.

    Instead, on the eve of Lewis Katz's funeral, Gerry Lenfest left the country. He flew to Europe, from where he granted media interviews and issued edicts on the new regime taking over the two papers. Without discussing any of it with Drew Katz.

    Drew and Lewis Katz
    Lenfest had already been named interim publisher on the day that Lewis Katz and Lenfest bought the newspapers.

    Then, when Lewis Katz died, Lenfest announced that Drew Katz would take his father's place on the board of directors of the new company. Without talking to Drew Katz.

    Even though the sale wasn't formally supposed to close until June 11th, Lenfest had already taken over. He put his name on the Inquirer masthead as interim publisher. On June 2nd, while he was in Europe, Lenfest announced in an email to all employees that he was bringing back former Inky publisher Brian Tierney as a sales consultant and former Tierney lieutenant Mark Frisby as associate publisher for operations.

    Lenfest also announced he was retaining through the transition George P. Loesch, senior vice president of sales and marketing for Interstate General Media [IGM], the parent company that owned the Inquirer, Daily News and philly.com.

    Loesch, however, said thanks but no thanks.

    Drew Katz had no say over anything.

    "Apparently, it got a little hostile," said a source knowledgable about the deal. "They started getting into some bad conversations with lawyers."

    On Monday, Drew Katz, through intermediaries, informed Gerry Lenfest that he wanted out.

    On Tuesday, they cut a deal.

    Drew Katz was going out the door for the same $16 million that his father had originally invested in IGM.

    The deal to buy Drew Katz out is scheduled to close tomorrow, the same day the sale of the two newspapers is supposed to go through.

    The May 27th auction was supposed to put an end to the feuding amongst Inky owners. It was supposed to be all peace and harmony after Katz and Lenfest bought out their three former partners -- George E. Norcross III, William P. Hankowsky and Joseph E. Buckelew -- for $41.7 million.

    Norcross, Hankowsky and Buckelew made money. Their total investment when they were bought out, according to court documents, was $35 million.

    Drew Katz, however, was only able to break even on his father's investment.

    Lewis Katz didn't expect to win the auction. He was convinced Norcross was determined to keep the papers at any cost. Instead, when the bidding hit $88 million, Norcross dropped out. And Katz and Lenfest overpaid.

    "I just said to Gerry walking in, I would have bet anything that I would have been cashing this big check," Katz told reporters and editors at the Inquirer newsroom at 8th and Market, just after he and Lenfest won the auction.

    "I really thought George wanted to own it," Katz told Bill Ross, executive director of the Newspaper Guild of Greater Philadelphia.

    The next day, when Katz and Lenfest toured the Inquirer printing plant in Conshohocken, Katz told the troops, "I can't tell you what our plans are, because my plan yesterday was to go home with a big check."
    Lewis Katz and Gerry Lenfest

    Then after the auction, Lenfest and Katz disagreed over a future role for Drew Katz.

    When Lewis Katz died, Gerry Lenfest basically staged a coup.

    Drew Katz decided to take a hike.

    Lenfest, who, just two years ago, was one of six owners who bought the company for $55 million, is now in sole possession of the Inquirer, Daily News and philly.com.

    "It's the partnership that didn't last 20 minutes," a source said.

    On Tuesday night, in an email to local journalists, Drew Katz confirmed he was getting out.

    "Because of the turmoil of the last 10 days, I have  made a decision that it would be in the best interests of the Inquirer, Daily News and philly.com for me to sell my interest in the company," Drew Katz wrote.

    Drew Katz, however, had nothing but praise for Lenfest.

    "I strongly believe that the organization would be in excellent hands under the ownership of Gerry Lenfest now and in the years to come," he wrote. He denied Big Trial's report of a rift with Lenfest.

    "I would also like to emphasize that despite public reports to the contrary, Mr. Lenfest sent me a heartfelt, beautiful note when my father passed away," Drew Katz said in his email. "My father loved Gerry Lenfest and Gerry loved my dad."

    Drew Katz maintained that his deal to sell out wasn't final yet.

    "No deal has been consummated yet," he wrote.

    The Inquirer reached Gerry Lenfest in Berlin. The 82-year-old gallivanting philanthropist would not confirm a sale.

    "It's too early," Lenfest told the newspaper he owns. "There is no agreement."

    The Inquirer also was able to confirm an earlier Big Trial report of a last minute snag in an attempt to delay by 30 days tomorrow's sale of the newspapers.

    Earlier, lawyer Richard A. Sprague, who represented Lenfest, had told the Inquirer that Norcross, Hankowsky and Buckelew had offered to wait 30 days to collect their $41.7 million.

    Then, the Inky did some backtracking.

    The newspaper on Tuesday quoted William A. Graham IV, an insurance executive, as saying that Lenfest had unsuccessfully sought a 30-day extension on the sale. "The Norcross group insisted on terms, including an additional $1 million payment, to which Lenfest would not agree, Graham said," according to the Inquirer.

    A source close to the Norcross team disputes the Graham account. The source says in the immediate aftermath of Lewis Katz's death, Norcross, Hankowsky and Bucklelew offered to make whatever accommodations Drew Katz and his family needed. That's the offer Sprague was talking about in the Inquirer.

    The offer to accommodate Drew Katz did not extend to Lenfest.

    "Mr. Graham's comments are untethered from reality," said the source close to the Norcross team.

    There's one other angle to the Inky deal. At a press conference after the $88 million auction, Lenfest had announced that he and Lewis Katz would be seeking additional new partners.

    Apparently, that's what rich guys do after they overpay for something. They pass the hat.

    Graham also told the Inquirer he was one of 10 new investors that Lewis Katz had approached before his death who were asked to pledge $1 million to the new ownership group. Graham said he intended to honor that pledge.

    So, if Graham and the Inky are to be believed on this one, our two daily newspapers are bringing aboard 10 new rich guys as owners. They'll replace the five rich guys who've recently departed the sinking ship.

    Talk about a great investment. It's like taking out a $1 million insurance policy against bad press.

    And hey, if you happen to die while you still own the Inky, they'll canonize you in newsprint, for no extra charge.

    In the Inky newsroom, however, they're going to need a tote board to keep track of who they can't piss off.

    0 0

    By Ralph Cipriano
    for Bigtrial.net

    The new owner of The Philadelphia Inquirer, H.F. "Gerry" Lenfest, wasn't back yet from his vacation in Vienna and Berlin.

    While Lenfest was away, leaders of the Newspaper Guild of Greater Philadelphia, which represents approximately 500 of the newspaper's 1,800 employees, were trying to talk Drew Katz, son of the late Lewis Katz, out of his announced intention of selling his father's $16 million stake in the company to Lenfest.

    Meanwhile, in the absence of leadership, Brian Tierney, Lenfest's newly appointed sales consultant, was holed up in former Publisher Bob Hall's office, and reportedly throwing his weight around like he was running the place.

    "I saw more people crying yesterday," said Bill Ross, executive director of the Newspaper Guild, after he toured the newspaper.

    According to Ross, three top executives at the newspaper quit yesterday because they couldn't deal with Tierney, or his lieutenant, Mark Frisby.

    At the Inky, sold last month at a court-ordered auction for $88 million, they're running Associated Press and Washington Post stories on the front page. While inside the newspaper offices at 8th and Market, it's chaos, panic and uncertainty over what will happen next.

    On Tuesday night, in response to a Big Trial story, Drew Katz announced he was selling out to Lenfest.

    "Because of the turmoil of the last 10 days, I have  made a decision that it would be in the best interests of the Inquirer, Daily News and philly.com for me to sell my interest in the company," Drew Katz wrote in an email to local reporters.

    Lewis Katz and Gerry Lenfest bought the Inky on March 27th for $88 million. Four days later, Lewis Katz was killed in a plane crash.

    After his father's death, through intermediaries, Drew Katz agreed on a deal to sell Lenfest his father's share in the company for $16 million, according to a knowledgable source. That's the same $16 million that Lewis Katz had originally invested in the newspapers.

    The sale between Drew Latz and Lenfest was supposed to go through Wednesday, but didn't. The people who know why aren't talking.

    To the Newspaper Guild, that delay presented an opportunity.

    "The deal's not consummated yet," Ross said. "Our hope is that Drew reconsiders selling his shares to Lenfest."

    "We're trying to convince Drew Katz to stay involved here because of his expertise in advertising," Ross said. "He's a very successful businessman. We hope he sees his father's passion and huge investment."

    Ross described Drew Katz  as the "best future hope to save the enterprise."

    Katz, 42, is a Stanford University law school grad who runs his own national advertising firm in Cherry Hill. He did not respond to a request for comment.

    The first person to resign yesterday was Hal Donnelly, director of circulation strategy at the Inquirer.

    Donnelly had "a run-in with Frisby earlier in the day," Ross said. "He was basically telling people he couldn't work with Frisby."

    Mark Frisby, a former Tierney lieutenant, was appointed by Lenfest as associate publisher for operations. Employees remember Frisby as the guy who, after they voted to delay taking a $25-a-week pay raise, accepted a $150,000 bonus and then drove to work in a brand new Maserati.

    Donnelly's dispute with Frisby was over the running of an extra press at the newspaper's printing plant in Conshohocken. The extra press was needed to print more copies of the paper, to solve delivery problems, particularly with late papers.

    Frisby, who, according to Ross, is all about cutbacks, canceled the extra press run and laid off the employees who worked that shift.

    Donnelly, according to Ross, responded by quitting.

    Neither Donnelly or Frisby could be reached for comment.

    The next victim was Kim Parham, vice president of national advertising at the Inquirer and Daily News. Parham had been recruited from The New York Times by Lewis Katz and former owner George E. Norcross III, Ross said.

    According to Ross, Tierney stepped into Parham's office and announced that starting immediately, she would be reporting to him. She said no she wouldn't and then she quit, Ross said.

    Parham could not be reached for comment. Neither could Tierney, or Tierney's longtime spokesman, Jay Devine.

    Donnelly and Parham gave their resignations to George P. Loesch, senior vice president of sales and marketing for Interstate General Media [IGM], the parent company that owned the Inquirer, Daily News and philly.com.

    Lenfest had asked Loesch to stay on during the transition between the old and new ownership. Loesch, however, declined to stay. Yesterday was his last day. So Loesch had three resignation letters to hand before he left the building.

    In just one day, new owner Lenfest had "lost three key positions in management," Ross said. "These are huge positions that make this company run."

    "There's no direction right now, there's no leadership," Ross complained. Except for a power grab by Brian Tierney, who, according to Ross, is already "acting like he's the publisher."

    Meanwhile, Lenfest was supposed to return from vacation yesterday afternoon and visit the Inky, but he never showed. That disappointed some Inky reporters, who were waiting to interview the new owner, presumably about his future plans for the newspaper.

    While the Inky soap opera continues, one critic has publicly rebuked the newspaper for a perceived slip in local production.

    The Echo Group, a "strategic communications firm" employed by Norcross during the Inky ownership wars, put out a couple of critical tweets this week.

    On June 12th, the Echo Group tweeted, "Why are there 3 articles about Eric Cantor on page 1 and 2 of the Inquirer -- all from the Washington Post? Are we in the Beltway suddenly?"

    The next day, on June 13th, The Echo Group tweeted, "11 AP stories, 2 from WaPo in Inky's front section not including blurbs (7 AP, 1 WaPo. Only 4 bylined by Inky. Should I just read NYT?"

    Perhaps combat fatigue has set in.

    One longtime employee said that people have been exhausted by the ongoing soap opera. It started last fall with the firing of Inquirer Editor Bill Marimow. That prompted the two feuding ownership factions to duke it out in courtrooms in two states. The legal battle climaxed with the court-ordered auction followed by the tragic death of Lewis Katz.

    Lew Katz was seen as the champion of the Inky newsroom, where his longtime girlfriend, Nancy Phillips presided as city editor. She has been on a leave of absence since the plane crash. Phillips was last seen at the public funeral services for Lewis Katz. She sat behind the family and was ignored by speaker after speaker.

    Only Marimow mentioned Phillips from the podium, as a colleague who had helped to hire him. Former Gov. Ed Rendell, however, called out Phillips' name and blew her a kiss.

    Lenfest didn't make the services; he was off in Europe. He's remembered by newsroom employees as the guy who threatened to close the joint if he didn't get the labor concessions he was seeking.

    Lenfest was also the guy who, when he met with the Guild's executive board last year, promised he wouldn't bring back Tierney, after listening to a litany of complaints.

    Then, as his first move, Lenfest, not only brought back Tierney but Frisby as well. At this point, Lenfest probably wouldn't survive a no confidence vote.

    No wondering people at the Inky are pinning their hopes on Drew Katz. They're hoping he'll consider his father's legacy and decide he wants to pick up the torch.

    Meanwhile, Brian Tierney is busy setting one fire after another.


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    By George Anastasia
    For Bigtrial.net

    After nearly six months of testimony and more than a week of detailed and grueling closing arguments, jury deliberations are set to being in the FirstPlus Financial racketeering fraud trial of mobster Nicodemo S. Scarfo and six co-defendants.

    Donald Manno, Scarfo's former criminal defense attorney and a co-defendant in the case, is expected to complete his closing arguments this morning. Manno, who is representing himself, will be the final defense attorney to address the anonymously chosen jury panel.

    A rebuttal closing argument this afternoon from the prosecution will complete the argument phase of the trial, setting the stage for the start of deliberations either late today or tomorrow.

    Manno was detailed and highly effective yesterday afternoon when he spoke to the jury for about an hour. The one-time federal prosecutor, who referred to himself in the third person, told the jury to consider the facts and not the "diversions, distortions and false circumstantial evidence" around which the prosecution has built its case.

    "Don Manno was not involved in any conspiracy," he told the jury.
    But he made it clear that he couldn't say the same thing for some of his co-defendants. In particular, he singled out Salvatore Pelullo and Scarfo, both of whom, he said, rejected his advice and lied to him. Manno argued that he was kept in the dark about many of the financial dealings involving FirstPlus, a troubled Texas-based mortgage company that authorities allege Pelullo and Scarfo secretly took control of in 2007.

    Pelullo, described as the "key figure" in the fraud by Assistant U.S. Attorney Stephen D'Aguanno, used bogus consulting contracts and phony business transactions to siphon $12 million out of the company, the government alleges. Much of the money was used to finance a luxurious lifestyle that included the purchase of a $850,000 yacht, a $207,000 Bentley and a home near Atlantic City for $715,000 for Scarfo and his new wife, Lisa.

    Manno, who is named in only five of the 25 counts in the case, was charged with fraud in connection with a mortgage for that house purchase. He opened his arguments yesterday by playing a tape in which he and Pelullo argued over what information Scarfo and Pelullo were providing on the mortgage application.

    The tape was one of hundreds secretly recorded on FBI phone wiretaps during the FirstPlus investigation. The conversation, on March 5, 2008, took place as Lisa Murray Scarfo was preparing to go to a closing on the home purchase. The mortgage had been arranged through Pelullo and Peter Fox, a FirstPlus associate who died during the investigation.

    Lisa and Nicky Scarfo were married on Feb. 14, 2008, three weeks before the deal closed. In papers filed with the mortgage company, she was listed as a single woman. Authorities alleged that Scarfo and Pelullo were deliberately keeping Scarfo's name off the mortgage papers. They also charge that W-2 forms and income tax filings that inflated Lisa Murray's income were used to get the mortgage approved.

    Lisa Murray Scarfo has pleaded guilty to bank fraud and is awaiting sentencing.

    In the conversation, Manno told Pelullo there was no reason to lie.

    "You guys are fuckin' nuts," he said. "You're nuts."

    "What are you doing here?" he asked at another point. "You're in a fuckin' fishbowl...The FBI is going to be all over this transaction...There's no reason to hide anything."

    By lying about Lisa Murray's marital status, "you raise the spectre of fraud," Manno told Pelullo.

    Manno told the jury he was unaware at that time that the financial documents filed with the mortgage application were fraudulent. Had he been part of that conspiracy, he told the jury, he wouldn't be raising a red flag about Murray's marital status. Manno didn't know about the fraud, he told the jury,  because Scarfo and Pelullo "lied to him."

    Manno urged the jury to listen to the tape, to listen to the voice inflections. Borrowing a line from other closing arguments from both the prosecution and the defense, he said the taped conversations were a "window" into the minds of those who were talking and who were unaware they were being recorded.

    He told the jury that Manno "was trying to protect people from committing crimes. And what do they do? They lie to him."

    Manno's closing, which continued this morning, capped more than a week of arguments from defense attorneys in the case, including a marathon closing from Michael Farrell, Pelullo's court appointed attorney. Farrell spent nearly three days addressing the jury, showing them nearly 1,000 slides and offering a decidedly different spin on the events that the government alleges were an orchestrated fraud.

    The overriding defense arguments in the case are that the FirstPlus financial collapse was brought on by government intervention and a faulty economy, not fraud, and that the spectre of organized crime was introduced by the prosecution in order to hype an otherwise mundane and technical financial case.

    All seven defendants in the case are charged with racketeering conspiracy. The indictment also includes allegations of bank fraud, wire fraud and obstruction of justice. There are also two weapons offenses. The other defendants include former FirstPlus CEO John Maxwell, Maxwell's brother William, a lawyer who worked for FirstPlus, and lawyers David Adler and Gary McCarthy who were hired to handle SEC filings and others financial matters for the company.

    Like Manno, several defendants, through their lawyers, sought to distance themselves from Pelullo, 46, a flamboyant Elkins Park businessman with two prior fraud convictions. .

    Mark Catanzaro, the court-appointed attorney for John Maxwell, argued in his closing that his client was not guilty of any of the charges. He said Maxwell had depended on the advice of lawyers and others with SEC expertise when he signed off on documents that the government says were part of the fraud.

    Maxwell was charged, Catanzaro argued, because he wouldn't go along with the government's theory of the case and agree to cooperate. "John Maxwell was taken along for the ride" because he wouldn't help the prosecution make its case against "those they really wanted, Nick Scarfo, Sal Pelullo and organized crime."

    Catanzaro said Pelullo was one of those people who "has to make it sound more grandiose, make themselves more important" in whatever situation they find themselves.

    "If Sal Pelullo caught a minnow he would tell you it was a shark," Catanzaro told the jury. "If it had taken 30 seconds to reel the fish in, it would have taken him the better part of the day. But only after the boat capsized three times. And the shark would have killed everybody but him."

    Working with Pelullo, Catanzaro said, was "a Saturday Night Live skit." John Maxwell realized that, he said, and learned how to deal with him. "You get used to him and you turn him off."

    Scarfo's lawyer, Michael Riley, also pointed to Pelullo, telling the jury that Scarfo's knowledge of what was going on at FirstPlus "came from Sal Pelullo." But returning to a theme that was part of Farrell's long winded argument, Riley said the government had tried to turn an organized crime investigation into a white collar fraud case. And, he argued, they had failed.

    "They wrapped it up in Mafia smoke," he said. "...calling it organized crime when there was...not a substantial attempt to effectively investigate this case."

    There was no mob involvement in FirstPlus, Riley said, despite attempts by the government to make it appear that way. He urged the jury to focus on that, adding that "Mr. Scarfo is not on trial for being a member of organized crime."

    But Scarfo and Pelullo were on trial for racketeering conspiracy and fraud, charges that had some basis in fact based on the evidence surrounding the mortgage fraud count, Manno said in his closing yesterday. 

    Returning to the taped conversation from March 5, 2008, Manno again said the only thing he was doing was acting as a "good lawyer" when he cautioned Pelullo not to lie about anything in the mortgage application.

    "I don't want to create a little crack that some fuckin' FBI agent can take and run with," Manno said as the FBI witetap recorded it all.

    "Not only did they create a crack," Manno told the jury, but by that point, the FBI was already listening in.

    George Anastasia can be contacted at George@bigtrial.net.

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  • 06/17/14--14:44: Meet The New Boss
  • By Ralph Cipriano

    Same as the old boss
    for Bigtrial.net

    On Thursday June 12th, the new owner of The Philadelphia Inquirer, H.F. "Gerry" Lenfest, was still on vacation in Europe. Meanwhile, back in Philadelphia, Brian Tierney was convening a meeting in the office of former Inquirer Publisher Bob Hall.

    For an hour, Tierney questioned four top officials from Philly.com about a dip in numbers regarding website traffic.

    The officials explained that two years ago in a re-design, Philly.com had eliminated some old gimmicks used to inflate web traffic. Gimmicks that use to fly back when Tierney was publisher. Such as counting each photo in a 20-page photo gallery as separate page views. And counting different pages of the same story as different page views.

    But Tierney wasn't interested in hearing excuses. In a demeanor described by people in the room as "bullying" and "domineering," Tierney made it clear to the folks from Philly.com that he was only interested in hearing how they were going to raise those numbers.

    "It was just frustrating," said Matt Romanoski, Philly.com's executive producer for sports. "Right off the bat, he [Tierney] almost sounded like he was preparing, like he seized on something that he could fire us for."

    Was Tierney saying to the officials at Philly.com that he wanted to bring back the old gimmicks?

    According to people in the room, maybe.

    Does Tierney have a clue about digital strategy?

    According to people in the room, that's a definite no.

    Did three Philly.com executive producers leave Tierney's office thoroughly depressed?

    You betcha.

    "We all felt the same way," said one of the Philly.com executive producers at the meeting. "Our hearts just sank. We haven't been sleeping. We haven't been eating."

    But Tierney, who couldn't be reached for comment, was just getting started.

    On Friday, Tierney sent an email to one of the four Philly.com officials that he had talked to the day before in the publisher's office. In the email, Tierney suggested that the website's lead story should be the story about possible pilot error in the plane crash that killed Lewis Katz.

    The day before, Tierney had met with three executive producers at Philly.com -- for news, sports, and entertainment -- and one official on the business development side of Philly.com whose title was director of product. Rather than email any of the executive producers from the news side, however, Tierney had chosen to lobby the business development guy.

    "Any chance we can get the Katz plane story into the top spot? Tierney emailed Ben Turk Tolub, director of product at Philly.com, from his iPhone. "Or Clinton in town?"

    Turk Tolub forwarded the email to Bob McGovern, executive producer, news, at Philly.com.

    "I just shook my head," said McGovern. It had been at least five years, he said, since somebody on the business side had tried to meddle with the editorial side.

    "I kind of thought, what are you paying me for?" McGovern said. "Maybe you don't need me."

    The Katz plane crash story had already been at the top of Philly.com for several hours on Friday June 13th. Then the story got moved down the website, though it was still near the top. It was some forty-five minutes after the Katz story had moved from the top position when Tierney emailed Turk Tolub saying he wanted the Katz story moved back to the top.

    McGovern complied with Tierney's wishes. It was one of his last acts.

    On Monday, all three executive producers from Philly.com, including McGovern, handed in their letters of resignation.

    In an interview, Romanoski referred to the meeting with Tierney as just another "straw that broke the camel's back," a sentiment shared by others in the room.

    That same day the three executive producers quit, Lenfest, just back from Berlin and Vienna, gave an interview to Jeff Blumenthal of the Philadelphia Business Journal. In the interview, Lenfest, who before he left the country, dubbed himself interim publisher, denied that in his absence, Tierney was acting as de facto publisher. Lenfest said that Tierney was not even a candidate to become publisher. He was just a sales consultant.

    "We just asked him to come and help out with advertising because he had more success with it than we've had the last three years," Lenfest told the Business Journal. "But he's not full time. He has his own company to run."

    Really Gerry?

    Chris Bonanducci, Vice President of Human Resources, was the company official who received three resignation letters Monday from the three executive producers at Philly.com.

    In his letter to Bonanducci, Romanoski said he had always "thrived in competition."

    "Unfortunately, too often at IGM, the opponents have come from within," Romanoski wrote. "That's not an atmosphere that breeds success."

    Romanoski wrote that he was proud of the work he and his colleagues had done at philly.com. "We took a stagnant collection of that day's newspapers and turned it into a living, breathing entity," he wrote.

    "If the industry is dying," he wrote, "it is via suicide. And it is being committed by a faction of old ideas trying to smother new ones without even realizing that the clock ticks closer to midnight with every one of their perceived victories."

    Leah R. Kauffman, executive entertainment and lifestyle producer, wrote Bonanducci that she did not want to "work towards unraveling the positive progress that Philly.com has made over the course of the last two years."

    "The culture of Interstate General Media, and our inability to move forward in the right direction will prevent us from innovating and competing in today's media landscape," Kauffman wrote. "Sadly, I cannot work for an organization whose future I no longer believe in."

    "For seven years, I have worked happily to help grow Philly.com into the largest news/sports/entertainment website in Philadelphia," McGovern wrote. "It's been a wonderful, rewarding experience. But recent ownership and management changes, and their effect on the direction of Philly.com, have caused me stress to the point of chronic headaches, insomnia and loss of appetite."

    "I cannot continue with so many concerns about the future of Philly.com and the company as a whole," McGovern wrote. "My health won't let me."

    In interviews, all three departing officials said they were tired of the infighting at IGM, where Philly.com was often trashed as the lowbrow digital companion to the Pulitzer Prize winning Inky and Daily News. Even though Philly.com was probably the most profitable enterprise of the three. And maybe the only one with a future.

    Romanoski said he felt that Philly.com was always a "scapegoat" for the declining fortunes of the news business.

    "We're always getting dragged through the mud," he said. He was tired about hearing about being "click bait."

    What about the stories in the paper that nobody reads that are written specifically to win journalism contests, Romanoski said, just so somebody can hang a plaque on the wall.

    "What about contest bait," Romanoski said. "Contest bait is the reason why papers are going bankrupt. It's killing the industry."

    Meanwhile, leaked emails throw more doubts on Lenfest's claim that Brian Tierney is just a sales consultant.

    At Philly.com, Ben Turk Tolub, the "director of product" was redesigning the header on the free website last week. At the top of the website, next to the Philly.com logo, the director of product added a scripted "I" to represent The Philadelphia Inquirer, and a very-plain "DN" to represent the Philadelphia Daily News.

    "Hi Brian," Turk Tolub wrote Brian Tierney at 4:21 p.m. on June 12th, after the meeting between Tierney and the four officials from Philly.com.

    "Regarding the Inquirer & Daily News inclusion on Philly.com, I just wanted to share with you the header, which is site-wide-right now."

    "As you can see, we include the Inquirer 'I' logo and the DN logo across the site," the director of product wrote. "We also have this in the footer. This provides link to not only their sites but also to the digital replica edition. Please let me know if you think we should include the paper presence in any other way. We are happy to make changes to show our willingness to work together."

    "I am going to take you up on your invitation to provide ideas for a digital strategy," Turk Tolub added. "Looking forward to working with you, Ben."

    "Ben," wrote back Brian Tierney, "Great to be with you and thanks for all your help." Tierney, however, didn't think the letters were bold enough. "Any chance we could make it a bit more explicit?"

    "And I really look forward to hearing your thoughts, the folks who are living this and breathing it every day! See you next week. Brian."

    The next day, at 6:47 a.m. on June 13th, Brian Tierney had a change of mind about those digital logos. He didn't want just an "I" for Inquirer.

    "I'd like to see what it would look like with the word Inquirer in their font, etc.," Tierney wrote Turk Tolub.

    At 7:17 a.m., late riser Turk Tolub wrote back, "Will do -- I'll get on it this morning."

    At 10:17 a.m., Turk Tolub sent Tierney a mockup using the full logos.

    "This looks great," Tierney wrote back 12 minutes later. "Thank you."

    "Just spoke to systems," Turk Tolub wrote. "They are going to roll it out with next week's Wednesday hot fix build."

    Four hours later that afternoon, Tierney wrote back, but it wasn't to say thanks. He wanted to suggest to Tolub that the story about the Katz plane crash story be moved back to the top of Philly.com.

    If he's just a sales consultant, what's he doing meddling with digital design and strategy? And placement of news stories?

    As Buddy Ryan used to say about Eagles owner Norman Braman, you'll have to ask "the guy in France." Or in this case, the guy in Germany.

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    By George Anastasia
    For Bigtrial.net

    The jury completed a fourth day of deliberations this afternoon without reaching a verdict in the FirstPlus racketeering fraud trial of Nicodemo S. Scarfo and six co-defendants.

    The anonymously chosen panel of seven women and five men is expected to return to the U.S. District Courthouse in Camden at 9 a.m. tomorrow to resume the process. The panel sent a question to Judge Robert Kugler late in the day that led to some speculation about where the panel is headed.

    The question had to do with the interrogatories or predicate acts listed to support the racketeering conspiracy charge that heads the indictment. All seven defendants are charged with conspiracy. The government has to prove at least two of the predicate acts as elements of the conspiracy charge. In response to its question, the panel was told it had to be unanimous in finding two of those acts proven.

    "I guess this means they're still on count one," said one defendant as lawyers and other courtroom observers tried to analyze what the question meant.

    The case involves 25 counts, but the principal charge is racketeering conspiracy. The consensus seemed to be that the conspiracy charge would determine how the panel would find on each of the remaining counts which were individual crimes that the prosecution argued were part of the larger conspiracy.

    The government has alleged that Scarfo and co-defendant Salvatore Pelullo orchestrated the behind-the-scenes takeover of FirstPlus, a troubled Texas-based mortgage company, in the summer of 2007. The indictment alleges that the pair then used phony contracts, bogus consulting agreements and over-priced business acquisitions to siphon $12 million out of the company.

    The money was used, the government contends, to support a lavish lifestyle for the lead defendants and to finance the purchase of a yacht, a corporate jet, a Bentley and a home outside of Atlantic City. Scarfo and Pelullo have been held without bail since their arrests back November 2011.

    Thirteen defendants were originally charged in the case. Six, including Scarfo's wife Lisa Murray Scarfo, have pleaded guilty.

    During jury deliberations, Scarfo and Pelullo are being held in a lockup at the federal courthouse. The other defendants and their lawyers are free to come and go, but are on 15-minute call notice. The jury question this afternoon brought everyone back to the fourth floor courtroom.

    Throughout the day, lawyers and defendants can be found at the defense tables in the courtroom, in the hallway outside or at a nearby coffee and sandwich shop. Many are doing work on portable computers at the defense table.

    When asked how he was spending his time during deliberations, John Maxwell, the former CEO of FirstPlus and a co-defendant in the case, pointed to his laptop and said, "Been watching a lot of movies."

    "These guys are the victims of collateral damage," said a friend and supporter of Gary McCarthy, a lawyer and co-defendant. "The government wanted those two (Scarfo and Pelullo) and didn't care what happened to anyone else. It's a disgrace."

    Scarfo and Pelullo are charged in almost every count in the case and have the most predicate acts listed in their interrogatories. Scarfo, for example, is charged with racketeering conspiracy in count one, according to the verdict sheet the jury is working on. The jury is required to find him guilty or not guilty of that charge and to support that finding by answering "yes" or 'no" to eight interrogatories that ask whether the government has proven him guilty of wire fraud, mail fraud, bank fraud, obstruction of justice, extortion, interstate travel in aid of racketeering, money-laundering and fraud in the sale of securities.

    There are interrogatories listed for all seven defendants, but Scarfo, 48, and Pelullo, 46, have the most listed under their names.

    Other defendants in the case include Maxwell, the former CEO of FirstPlus; his brother, William, who served as an attorney for the company and allegedly funnelled consulting work to Scarfo and Pelullo through FirstPlus; David Adler, a lawyer who specialized in SEC filings, McCarthy, a lawyer who worked on business and financial issues and Donald Manno, Scarfo's long-time criminal defense attorney.

    Manno is charged in only five of the 25 counts. The allegations against him center of bank fraud, money laundering and obstruction of justice involving a mortgage for a $715,000 home Scarfo and his wife purchased in 2008 and attempts by Scarfo to subvert the requirements of his probation at the time the FirstPlus fraud was allegedly unfolding.

    Scarfo, the son of jailed Philadelphia mob boss Nicodemo D. "Little Nicky" Scarfo, was on supervised release following his conviction in a mob-linked gambling case when the FirstPlus fraud was alleged to have taken place.

    His father and jailed Luchese crime family boss Vittorio "Vic" Amuso were named as unindicted co-conspirators in the case with the government alleging that the younger Scarfo and Pelullo consulted with Little Nicky and intended to kick up money to both imprisoned gangsters as part of the scheme.

    In addition to the racketeering conspiracy charge, the case includes one count of securities fraud, 17 counts of wire fraud, one count of conspiracy to commit money laundering, one count of conspiracy to commit bank fraud, one count of conspiracy to file a false bank statement and one count of obstruction of justice.

    Scarfo, Pelullo and the Maxwell brothers also face weapons offenses.

    Jury deliberations began last Wednesday following a six-month trial and more than a week of marathon closing arguments from the prosecution and defense.

    The defense has argued that the government overcharged the case, turning a failed business operation into a massive fraud. In fact, the defense argued again and again, FirstPlus failed because of a poor economy and the government investigation that undermined what Pelullo and others were trying to do to rebuild the company. The defense also argued that the prosecution introduced the spectre of organized crime to hype the charges and allegations. They argued that the investigation, which began with the code name "Operation Son Block" and with Scarfo and the mob as its target, went off track because investigators did not understand arcane and detailed financial matters that were at the heart of the operation and various SEC and related filings.

    In his rebuttal closing prior to the start of jury deliberations last week, Assistant U.S. Attorney Stephen D'Auganno, the lead prosecutor in the case, told the jury to stay focused on the allegations and the evidence.

    "What the defense has tried to sell you as a business model is really a model for fraud," he told the jury.

    George Anastasia can be reached as George@bigtrial.net.

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    By George Anastasia
    For Bigtrial.net

    It looks like the jury has voted to convict in the FirstPlus Financial racketeering fraud trial.

    But at this point we don't know which one -- or how many -- of the seven defendants have been found guilty.

    Jury deliberations resumed this morning in the six-month old trial. But questions submitted by the anonymously chosen jury panel to Judge Robert Kugler last week offer some insight into the process and have given rise to speculation that the panel has voted to convict someone.

    In a note sent Thursday afternoon, the last day of deliberations last week, the panel wrote: "We are unanimous on some counts, but we are  not unanimous yet on others (the word "yet" was underlined twice in the note). Are we under any time constraints to reach unanimity?"

    That question, coupled with an earlier inquiry about the way to respond to the racketeering conspiracy charge, has led to speculation that the jury has voted to convict at least one and possibly more of the defendants on the principal count in the 25-count indictment. All seven defendants are charged with conspiracy.

    "It doesn't look good," said one member of the defense camp last week.



    The six-month trial has focused on government allegations that mobster Nicodemo S. Scarfo and mob associate Salvatore Pelullo secretly took control of FirstPlus Financial, a troubled Texas-based mortgage company, in 2007 and siphoned more than $12 million out of the company through a series of bogus business deals and phony consulting contracts.

    Five other defendants, including the former CEO of the company and four lawyers, are also on trial. All seven defendants have been charged with racketeering conspiracy. A number of other charges, including wire fraud, bank fraud, mail fraud and money-laundering are part of the case, but not every defendant faces every charge.

    In response to Thursday's question, Kugler told the jury there were no time constraints. The deliberation process resumed this morning with an alternate being seated to replace one of the jurors who was dismissed at the end of last week's deliberations because of a pre-planned (and pre-paid) vacation.

    A male alternate took the place of the female juror who was let go. Technically, the panel is supposed to begin deliberations from scratch when an alternate is seated, but the reality is that the alternate will be quickly brought up to speed on the status of deliberations and, barring any major objection on his part about the findings thus far, the process is expected to move forward quickly.

    One source in the defense camp predicted verdicts before the end of the week. The panel has opted not to sit on Fridays and this Friday, July 4, is a holiday. One other bump in the deliberation process surfaced early today when a female juror asked to meet privately with Judge Kugler.

    The juror, according to sources, complained that she was being ignored during the deliberations and that several jurors had made up their minds and were not open to discussions or debate. The juror also complained of cliques within the panel, but, when questioned by Kugler, apparently said she could remain objective and continue on the panel.

    While it is impossible to determine what the jury has already decided, a note sent to Judge Kugler earlier last week indicated the panel had reached a unanimous decision on at least two of the predicate acts that support the conspiracy charge against one or more of the defendants.

    The law requires a jury to find at least two of those acts proven before it can find a defendant guilty of conspiracy. The number of predicate acts each defendant faces varies. Scarfo and Pelullo are each charged with eight.

    In a question submitted early last week, the jury wanted to know if the panel had reached unanimity on two of the predicate acts, was it required to find on the others. The only scenario in which the other acts could be ignored was if the panel had found two of acts proven, thereby supporting a guilty verdict and making the other predicate acts moot.

    Pessimism rose in the defense camp as defendants and their lawyers analyzed the two questions posed by the jury last week. One source speculated that the jury has reached verdicts in the cases against Scarfo and Pelullo and possibly John Maxwell, the CEO of FirstPlus, and his brother William, a lawyer who worked for FirstPlus and who is accused to funneling company funds to Scarfo and Pelullo through phony consulting contracts.

    Observers believe the jury could be wrestling with the charges against lawyers David Adler, Gary McCarthy and Donald Manno. Those three were not directly tied to the day-to-day operations of FirstPlus. Adler was involved in SEC filings for the company, filings that the prosecution alleges were based on false information. McCarthy was involved in business and financial deals that the government charges Pelullo orchestrated to advance the fraud. And Manno, Scarfo's long-time defense attorney, was charged with bank fraud and obstruction of justice.

    Manno, who defended himself, offered a "are you fuckin' crazy" defense, using the prosecution's own evidence to support his argument that Pelullo and Scarfo continually lied to him about financial issues. In his closing argument, he highlighted a secretly recorded phone conversation picked up on an FBI wiretap in which he argued with Pelullo.

    The conversation dealt with information being submitted in a mortgage application by Scarfo's wife, Lisa Murray Scarfo, for a $715,000 home outside of Atlantic City. Pelullo and Scarfo kept Scarfo's name off the application and lied about Murray Scarfo's income and financial status.

    Manno is heard on the tape telling Pelullo there was no reason to lie and that to do so would be a red flag that would attract investigators because of Scarfo's mob history. Pelullo ignored the advice with Manno at one point asking him, "Are you fuckin' crazy?"

    Lisa Murray Scarfo is one of six defendants in the case who pleaded guilty rather than face trial. She has yet to be sentenced.

    Because of prior convictions, Scarfo, 48, and Pelullo, 46, face jail terms of from 30 years to life if convicted of the racketeering conspiracy charge and related offenses.

    The penalties for the other defendants could be substantially less, but convictions for the four attorneys in the case would result in the loss of their licenses to practice law, a potentially career-ending outcome that could overshadow or at least be as devastating as any jail time.

    George Anastasia can be reached at George@bigtrial.net.


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    By Ralph Cipriano
    for Bigtrial.net

    In 2003, the U.S. Marines stormed Baghdad. The space shuttle Columbia exploded, killing seven astronauts. Outkast had the top pop song with Hey Ya!

    In Philadelphia that same year, police discovered an electronic bug in the office of Mayor John Street. Donovan McNabb was the quarterback of the Eagles. Jim Thome led the Phillies in home runs with 47.

    Also in 2003, the feds began their investigation of state Senator Vincent J. Fumo.

    On Friday, after 11 years, the long legal saga of the United States of America V. Vincent J. Fumo came to an end.

    The feds had 30 days until Friday to file an appeal on the last act in the criminal case -- Judge Ronald L. Buckwalter's May 20th decision to stick Fumo with an extra $359,430 in restitution costs.

    The feds, who have already filed two successful appeals in the Fumo case, decided not to appeal a third time. According to Fumo's defense lawyers, it was the end of the criminal case.

    "We're all happy for Vince Fumo," said Dennis Cogan, Fumo's defense lawyer. "Enough is enough. He's been through hell."

    A spokesman for the U.S. Attorney's office could not be reached for comment.

    The Fumo case began in 2003, when the FBI, IRS and a federal grand jury all began to investigate the former state senator.

    In 207, the feds indicted Fumo, who resigned from office a year later, ending a 30-year reign in the state Senate.

    In 2009, a jury convicted Fumo on 137 counts of fraud, conspiracy, obstruction of justice and filing a false tax return. That same year, Judge Buckwalter sentenced Fumo to 55 months in jail and ordered him to pay $2.7 million in fines and restitution.

    But the prosecutors didn't think it was enough. They appealed and won. In 2011, Judge Buckwalter upped Fumo's jail sentence by six months, to a total of 61 months, and increased the amount of Fumo's fines and restitution by $1.1 million, to $3.8 million.

    But the feds still weren't satisfied. They appealed the judge's restitution order, specifically Buckwalter's decision on how to repay $1.5 million stolen from Fumo's nonprofit, the Citizens Alliance for Better Neighborhoods.

    Judge Buckwalter ruled that the $1.5 million stolen from Citizens Alliance should be split evenly between Fumo and Ruth Arnao, Fumo's co-defendant and the former executive director of the Citizens Alliance. Under Buckwalter's ruling, each defendant was to pay the nonprofit $783,284 in restitution.

    But prosecutors filed a second appeal, saying Fumo should pay more since he had more money and was the mastermind of the criminal conspiracy. The Third Circuit Court of Appeals agreed. The appeals court sent the case back to Judge Buckwalter and ordered him to amend his restitution order.

    So instead of dividing the $1.5 million in restitution on a 50-50 basis, on the second go-around, Judge Buckwalter opted for a 75-25 split. Under Buckwalter's decision, 75 percent or $1,165,317 of the $1.5 million in restitution will be paid by Fumo; 25 percent or $388,439 will be paid by Arnao.

    Since Fumo had already paid $783,264 to Citizens Alliance, he still owed $359,264.

    Judge Buckwalter also presided over a sequel to the criminal case, Vincent J Fumo v. United States of America, where Vince Fumo was suing the IRS, saying they had gone too far in punishing him. On June 7th, Judge Buckwalter agreed, tossing out a jeopardy assessment imposed on Fumo by the IRS, which had frozen three of Fumo's bank accounts totaling more than $2.7 million.

    The jeopardy assessment is a rare punishment imposed by the IRS on money launderers and international fugitives.

    The judge said the imposition of the jeopardy assessment was "not reasonable" because Fumo, sitting in jail at the time, did not attempt to hide any transactions of property and money to his son and fiancee. Nor did Fumo place any assets "beyond the reach of the government," the judge wrote.

    After Judge Buckwalter lifted the jeopardy assessment, Fumo's lawyers informed the U.S. Attorney's office that Fumo had the funds and was willing to immediately pay the $359,264 in restitution owed to the Citizens Alliance. So the feds apparently decided not to look a gift horse in the mouth.

    "It's been a long road," the 71-year-old former state senator told Judge Ronald L. Buckwalter in May.

    On Friday, a 30-day limit for the feds to file the last appeal in the criminal case expired without the feds doing anything. But nobody seemed to notice.

    Even The Philadelphia Inquirer, which had written 1,769 articles about Fumo in the past 11 years, didn't write a word about the end of the case.

    But after 11 years it was finally over.

    Ralph Cipriano is writing a book about Vince Fumo.



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    By Ralph Cipriano

    for Bigtrial.net

    On Dec. 30, 2011, a Drexel University police officer was caught on camera using his 4,000-pound police SUV to ram a fleeing suspect.

    The suspect, Walter Johnson, then 43, of West Philadelphia, was crushed against a concrete wall and pinned  there for 13 seconds before the cop threw his SUV in reverse.  Johnson, who was unarmed, suffered multiple pelvis fractures and a fracture of his right lower leg "with bones protruding through the skin." His injuries were detailed in a police brutality lawsuit filed last year in Philadelphia Common Pleas Court by Philadelphia lawyer Robert J. Levant.

    It was a completely unjustified use of deadly force by Drexel University Police Officer Robert Allen, the lawsuit claims. But that was just the start of the alleged police misconduct in the case. The lawsuit alleges a coverup by the Drexel University police that went all the way to the top.

    According to a report by an expert witness for the plaintiff, former Drexel University Police Chief Edward Spangler violated police procedures by telling the Philadelphia Police Department not to investigate the use of deadly force by one of his officers. Instead, former Chief Spangler, who was hosting a party at his home that night for his top commanders, decided that the incident was just an auto accident. He made this decision without ever leaving the party, visiting the scene or reviewing any video.

    Walter Johnson was arrested and charged with attempted burglary, criminal conspiracy, attempted criminal trespass, possession of instruments of a crime and criminal mischief. But after the Philadelphia District Attorney's office got a look at the video, the D.A. decided not to prosecute. All charges against Johnson were dismissed.


    In the case of Walter Johnson V. Drexel University, et al, the plaintiff is suing Drexel University, Officer Allen, former Chief Spangler, former Drexel Police Captain Fred Carbonara, four Drexel police officers, and the vice president of Drexel University's Department of Public Safety.

    The lawsuit claims negligence, negligent infliction of emotional distress, assault, battery, false arrest, false imprisonment, intentional infliction of emotional distress, conspiracy and malicious prosecution.

    A trial is scheduled for Aug. 25th. A spokesman for Drexel University requested and then did not respond to a list of written questions.

    The story began the day before New Year's Eve, 2011. Walter Johnson, wearing a dark blue hoodie, was "attempting to open several doors and push a turn-style door" on the Drexel campus, according to a second amended complaint filed Dec. 27, 2013 by Levant. Johnson was accompanied by Troy Demby, 44, of West Philadelphia.

    As they strolled through the Drexel campus, the two men were unaware that they were being watched by Tiffany Augustine, a closed circuit TV camera operator for the Drexel University Department of Public Safety. Augustine notified Drexel Police Headquarters that she had observed two black males on camera attempting to break into the Bossone building on Ludlow Street. In response, three Drexel officers in two police cars raced to the corner of 31sat and Ludlow.

    Two officers, Louis Gregg and Lambert Rebstock, got out of their police car and confronted the suspects. Gregg, according to the lawsuit, allegedly pointed his gun at Johnson, who started to run.

    "There was no legal basis to stop or detain plaintiff or the man with him," the amended complaint by Levant stated. Troy Dembe decided not to run. He put his hands up in the air.

    As Officer Rebstock pursued Johnson east on Ludlow Street, surveillance video showed a second Drexel police vehicle driven by Officer Allen "round the corner at a high rate of speed and begin to bear down on the plaintiff."

    As the plaintiff kept running, the video "captures Allen making a wide turn, pointing his SUV at plaintiff and accelerating into him, violently smashing plaintiff against a concrete wall and buckling the vehicle's hood in the process."

    After the collision, the video shows Officer Allen opening his driver's side door and talking to Officer Rebstock while Johnson remains pinned against the wall. After 13 seconds, Officer Allen "closes the door and proceeds to reverse his SUV, leaving plaintiff to fall to the ground," the lawsuit stated.

    At first, Drexel police had told Philadelphia police that they had a crime scene that needed to be investigated.

    But then Drexel Police Sgt. Fernando Santiago arrived on the scene. According to the lawsuit, the sergeant "deliberately mischaracterized the incident while speaking with Philadelphia dispatch so as to avoid the Philadelphia Police Accident Investigation Division [AID] from being summoned to the scene."

    The upshot was, the Philadelphia cops never showed up. The crime scene was never secured.

    In a deposition, Walter Johnson testified that he was looking for a bathroom when he was checking doors at Drexel. After he was hit by the police SUV, it took smelling salts to revive him. When he woke up, Johnson testified that he saw police officers staring at him.

    "They ain't saying nothing to me," he said. "They was just looking at me. He [Officer Allen] was just sitting there looking -- And I had my hood on my head. My hood was over my head because the ground was now cold, freezing ground. And my body was tilted, I was twisted sideways."

    According to Johnson, Officer Allen came over and "snatched the hood off my head while I was laying on the ground. And then the ambulance was right there."

    When he was deposed, Officer Allen stated when he was looking at Johnson when he got out of his police car.

    "I was concerned about him," Officer Allen  said, "because I was the one that called for medical."

    "And did you get a look like at his leg, what did that look like," asked Levant.

    "It didn't look like anything," Allen responded. "He [Johnson] just looked like he was laying on the ground."

    The ambulance transported Johnson to the Hosptial of the University of Pennsylvania. Meanwhile, the Drexel cops were looking for evidence of an attempted burglary.

    An incident report prepared and signed by Officer Allen stated that Officer Gregg had observed Demby "drop a clear red-handled screwdriver." Officer Gregg signed a property receipt that said he saw Demby with a screwdriver in his hands and then the officer allegedly saw Demby drop the screwdriver.

    No such incident, however, was observed on surveillance video. Both Johnson and Demby denied they were carrying screwdrivers.

    "I never seen a screwdriver at all," Johnson stated at his deposition.

    But the cops stuck to their story.

    At a March 28, 2012 preliminary hearing before Judge Joseph J. O'Neill, Officer Gregg testified that he placed Denby under arrest after he saw him drop a screwdriver. Gregg told the judge he saw "pry marks like scratch marks" on a nearby door.

    But additional video turned over by the university during the lawsuit convinced an expert witness for the plaintiff that the burglary story was bogus. That's because the video showed Johnson and Demby walking past the door with the pry marks without touching it.

    "This footage shows that neither Mr. Johnson nor Mr. Demby engaged in any criminal conduct, did not possess any tools in their hands, and made no efforts to force their way through the doors of any Drexel University buildings," wrote D. Joseph Griffin, former Director of Public Safety and Chief of Police at Northeastern University in Boston.

    The additional video was not turned over to the Philadelphia district attorney's office in a timely fashion, according to the lawsuit.

    Lawyers for Drexel University responded to the allegations with a document that amounted to 29 pages of denials.

    "It is admitted only that Plaintiff was accidentally struck by the police cruiser driven by P.O. Allen," said the response filed April 16th by Joe H. Tucker Jr. and Carl E Jones Jr., lawyers for Drexel.

    Defense lawyers Tucker and Jones claimed that Johnson and Demby had set off a burglar alarm on campus. A Philadelphia police detective conducted an independent investigation of the accident scene and "observed what appeared to be fresh pry marks consistent and the same size as the screwdrivers recovered from Plaintiff and his accomplice," the defense lawyers stated.

    The defense lawyers denied that Officer Gregg pointed a gun at Johnson. They claimed that the Philadelphia police made "an independent determination that they would not respond to the scene." The defense lawyers also denied that deadly force had been used, and that Johnson had been falsely arrested.

    Johnson "was properly charged with crimes, which was supported by police paperwork and evidence gathered at the scene," the defense lawyers wrote. "Although prosecution was terminated in favor of Plaintiff, it is unknown whether the withdrawal was based upon a review of an altered, enhanced and/or modified version of the original Drexel CCTV video."

    According to the defense lawyers, Johnson's injuries "were the result of his own acts, negligence and/or willful or wanton misconduct." The defense lawyers claimed that the conduct of Drexel's employees "was privileged and proper under the circumstances."

    In his deposition, Chief Spangler said he had left his job at Drexel University on Oct. 31, 2013 for confidential reasons. Spangler testified that he had signed a "non-disclosure agreement with the university." He declined to say anything else about his departure.

    At his deposition, Spangler testified that on the night before New Year's Eve, he and his wife were hosting a party at their house for three senior Drexel University commanders and their wives. Spangler testified that he decided not to leave the party to check out the accident scene "because I had adequate supervision on scene."

    Initially, Drexel University officers had called Philadelphia police and told them they had a crime scene that needed to be checked out.

    But according to the expert report written by Griffin, Officer "Gregg testified that [Sgt.] Santiago then had a conversation with Chief Spangler and Gregg was ordered to call" the Philadelphia police back and "withdraw the request for a Philadelphia police investigation. [Officer] Gregg testified that he he then called" the city police back and told them that "per my chief it's not a crime scene."

    The Philadelphia police officer who took both calls from Officer Gregg was Lt. Hamilton Marshmond of Southwest detectives.

    In a deposition, Lt. Marshmond recalled telling Officer Gregg to "stay on location, and I'll be right out to you as soon as I can get myself together." Marshmond said he told Gregg he would bring two detectives with him.

    "Did Lou Gregg make it clear to you on the phone that there was a crime scene and is that why you got yourself together?" asked Levant.

    "Yes," Marshmond replied.

    A few minutes later, Gregg made a second call to the Philadelphia police.

    "He said he was calling me back to let me know that we did not have to come out, meaning myself or the detective did not have to come out," Marshmond said. "I asked him why ... And he said, 'My supervisor said that you don't have to come out. You don't have to come out.'"

    "How would you describe his demeanor in the second phone call," asked Levant.

    "In my opinion, he appeared to be uncomfortable or uneasy, and he didn't want to give much information," said Marshmond, who thought it was strange.

    "Lou is a very direct person," Marshmond said.

    After the crash, Officer Allen received "a two day suspension (for failing to control his vehicle) and returned to duty without any further training or instruction about the proper use of deadly force," Griffin wrote.

    "It is is my opinion that Officer "Allen utilized his police vehicle as an instrument of deadly force on Dec. 30, 23011 when he turned it off the road, onto the sidewalk and into Mr. Johnson's path of travel, striking him and causing him grievous injuries," Griffin wrote. It was "wholly without justification and constituted egregious conduct by a police officer."

    Officer Allen's conduct in the case "was cause for alarm and he should have been sanctioned and, if retained, retrained," Griffin wrote. "More distributing, however, is the abject failure" of the Drexel University Police Department, Griffin wrote.

    Griffin ripped the Drexel police management for "their attempt to steer the crash away from a full Philadelphia police investigation, followed by their own willful failure to conduct anything other than a pro forma investigation."

    The Drexel "commanders sought to avoid official scrutiny of a seriously unjustifiable conduct on the part of one of their patrolmen; scrutiny could bring discredit upon the officer, themselves, the department and the University," Griffin concluded.

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    By George Anastasia
    For Bigtrial.net

    Mobster Nicodemo S. Scarfo and his business associate Salvatore Pelullo were convicted today of looting more than $12 million from a Texas-based mortgage company through a series of phony business deals and bogus consulting contracts.

    Scarfo, 49, the son of jailed Philadelphia mob boss Nicodemo D. "Little Nicky" Scarfo, was described by the government as the behind-the-scenes power in the secret takeover of FirstPlus Financial in 2007.

    Pelullo, 47, an Elkins Park businessman with two prior fraud convictions, was the point man in the scheme, according to authorities. A wannabe wiseguy who quoted lines from The Godfather and brought a street corner swagger to business meetings, Pelullo was accused of using threats and intimidation to force company officials to do his bidding.

    The anonymous chosen jury, which deliberated for parts of 10 days over two-weeks, also convicted former FirstPlus CEO John Maxwell and Maxwell's brother, William, a lawyer who worked as special counsel for FirstPlus. The jury found lawyers David Adler, Gary McCarthy and Donald Manno not guilty of the charges they faced.

    The verdicts were announced shortly after 11 a.m. to a courtroom packed with friends and family members of the defendants and with government officials. The process took more than twenty minutes as Judge Robert Kugler read each of the 25 counts in the case and the jury foreman declared "guilty" or "not guilty" to each charge faced by each defendant.

    Scarfo and Pelullo have been held without bail since their indictments in November 2011. They showed little emotion as the process played out. Scarfo heard the word "guilty" tied to his name 25 times. Pelullo charged with one less count, heard it 24 times.

    Both men, because of their prior criminal convictions and because of their principal roles in the scam, face from 30 years to life when sentenced by Judge Kugler. Sentencings have been scheduled for October.

    The verdicts capped a six-month trial and a federal investigation that began more than seven years ago. The probe became public in May 2008 when the FBI conducted a series of coordinated raids in Philadelphia, South Jersey, Miami and Irving, Tx (where FirstPlus was based).

    Authorities charged that the takeover of FirstPlus began in the spring of 2007 when Scarfo and Pelullo began to maneuver for control of the troubled mortgage company. At one point, FirstPlus had been a key player in the subprime lending business but had subsequently fallen into bankruptcy.

    Scarfo and Pelullo were accused to using fear and intimidation to insert their own candidates on to the company board of directors in the summer of 2007. Authorities charged they were controlling the company by that point, even though their names never appeared on any company documents or on filings with the SEC and other government agencies.

    Full of bravado and bluster, according to witness testimony, Pelullo was involved in the day-to-day operations of the company and used his own arrogance and allusions to his organized crime connections to instill fear in those who balked at doing his bidding.

    At one point, according to a company official who testified during the trial, Pelullo threatened the official, telling him his wife would be raped and his young daughters sold as prostitutes if the official didn't go along with Pelullo's directions.

    Testimony from former employees, including Cory Leshner a top Pelullo associate who became a key prosecution witness, helped the government build its case which was also based on hundreds of secretly recorded phone conversations and thousands of pages of documents.

    Several  hours after the verdicts were announced, Scarfo's court-appointed attorney, Michael Riley, said he was disappointed but not surprised. Riley said he would "aggressively" pursue every appeal issue. As he had throughout the trial, Riley said the government mischaracterized the case in order to convince the jury.

    "This was prepared and packaged as a mob case in order to make a weak white collar case more saleable to the jury," Riley said. He said his client was also disappointed but not surprised by the outcome. The younger Scarfo, Riley said, has continuous paid a judicial price for the criminal acts and reputation of his more notorious father.

    Little Nicky Scarfo and jailed Luchese mob boss Vittorio "Vic" Amuso were named unindicted co-conspirators in the case. The government alleged that both were to benefit from the fraud.

    In a separate hearing this afternoon, the jury also granted all the government's forfeiture requests for assets the defendants had obtained through the fraud. These included a yacht and an airplane purchased by Scarfo and Pelullo, a Bentley purchased by Pelullo and bank accounts and other valuables, including jewelry Scarfo purchased for his wife.

    The readings of the verdicts came in a tense courtroom where friends and relatives had begun gathering earlier in the morning. The jury panel had sent a note to Judge Kugler late yesterday afternoon announcing that it was close to a consensus but wanted to sleep on its findings before announcing them.

    The first verdicts announced for the racketeering conspiracy count that topped the indictment set the stage for what was to follow. Scarfo, Pelullo and the Maxwell brothers were found guilty, but Adler, McCarthy and Manno were found not guilty. What followed was the recitation of the remaining counts and as the jury foreman declared "not guilty" again and again on separate fraud charges, friends and family members of Adler, McCarthy and Manno began to smile and quietly nod to one another.

    One friend of McCarthy's offered a quiet fist pump as he sat in the third row of the packed courtroom and heard "not guilty" announced to a securities fraud charge, 17 wire fraud charges and one money-laundering charge that McCarthy faced.

    The reaction was similar from friends and family members of the other defendants. Manno's wife, Rita, broke into tears of joy after the final "not guilty" was announced to one of the five charges her husband faced. One of her daughters sat next to her, gently rubbing her back.

    "A six-year ordeal is finally over," Manno, a veteran criminal defense attorney who had represented Scarfo for years, said as he exited the courtroom.

    Manno, who represented himself, said he never second-guessed his decision. He said it gave him a chance to "personalize" the defendant. Throughout the trial he spoke of himself in the third person and in a detailed closing argument he hammered home the key point in his defense: he was a lawyer trying to counsel Scarfo, not a member of the conspiracy. More important, he argued and the government's own wiretaps appeared to confirm, neither Scarfo nor Pelullo followed his advice.

    Like the two other lawyers acquitted, Manno contended that he was lied to by Scarfo and Pelullo and was never fully aware of what they were doing behind-the-scenes at FirstPlus.

    "They split the case the way we had argued for in a severance motion," Manno said of the jury's verdict, referring to a motion rejected by Judge Kugler to have Scarfo, Pelullo and the Maxwell brothers tried together and Ader, McCarthy and Manno tried in a second trial.

    Adler declined to comment as he left the courtroom, but smiled and said any questions should be handled by his defense attorney Barry Gross.

    Gross, himself a former federal prosecutor in Philadelphia, thanked the jury and the judge and said his client "looks forward" to returning to his legal practice. Adler, based in New York, specializes in SEC filings.While a federal prosecutor for the U. S. Attorney's Office for the Eastern District of Pennsylvania, Gross had won convictions of some of the top mobsters in Philadelphia, including Scarfo's father, "Little Nicky" Scarfo.

    In a prepared release later in the day Gross, who works for the Philadelphia law firm of Drinker, Biddle&Reath, said, "There was an enormous quantity of information that the government presented in this case, but the jurors clearly took their responsibilities very seriously and justice was finally achieved."

    Manno said the same thing more succinctly. "It ended the way it should have," he said, before heading off with his wife, daughter and son-in-law to celebrate the outcome.

    In a prepared statement released by his office, Paul Fishman, the U.S. Attorney for New Jersey, said those convicted had "given new meaning to the term `corporate takeover` looting a publicly traded company to benefit their criminal enterprise." He said the case proved the "rampant self-dealing, fraudulent SEC filings and intimidation" that had been used to advance the fraud.

    Assistant U.S. Attorney Steven D'Aguanno, based in Camden, and FBI Agent Joseph Gilson spearheaded the probe which also included the SEC, the Department of Labor and the Bureau of Alcohol, Tobacco, Firearms and Explosives.

    Neither Maxwell brother offered any comment. Both appeared resigned as the guilty verdicts, one after another, mounted against them. William Maxwell continued to jot notes on a legal pad. John Maxwell sat with his head resting on his hand. Following the hearing on forfeiture actions, Judge Kugler revoked the bail of both Maxwell brothers and ordered then imprisoned pending sentencing.

    William Maxwell was accused to helping to funnel cash to Pelullo and Scarfo through a series of phony consulting contracts. Maxwell was appointed as legal counsel for the firm at a fee of $100,000-a-month plus expenses. A firm set up by Pelullo was given a similar contract and in turn transferred $33,000-a-month to a Scarfo front company. Those cash transfers were the bulk of the wire fraud charges in the case.

    Deliberations over the last three days appeared to be headed toward the conclusions that were announced today, Questions from the jury panel indicated early in the week that it had voted to convict some defendants on the overarching racketeering conspiracy charge.

    Scarfo, Pelullo and the Maxwell brothers were the four defendants directly involved in the company, according to evidence and testimony and were the logical targets of that finding. Adler, McCarthy and Manno were not directly involved in any business decisions.

    The jury also voted to convict on two weapons counts. Scarfo, Pelullo and the Maxwell brothers were guilty of conspiracy to sell and possess firearms, a count tied to a cache of weapons and ammunition found on the yacht. Scarfo was convicted of a second weapons offense based on two guns found in his Egg Harbor Township home during one of the raids in May 2008.

    As convicted felons, neither Scarfo nor Pelullo are permitted to possess guns.

    Before the verdicts were announced, John Maxwell, who despite his complaints about media coverage had consistently and graciously made himself available to the media, said "It is what it is...As a kid I used to do some bull riding. This can't be any harder than that."

    John Maxwell had insisted that he was only following the advice of lawyers while running FirstPlus and that he was targeted because he had declined to cooperate in an investigation of Pelullo and Scarfo. He often joked that as a Texan he knew little about organized crime or the Luchese crime family to which Scarfo belonged.

    The only Luccheses he knew, Maxwell quipped, were the Texas boot making company that has been in business since 1883.

    The forfeiture hearing that took up this afternoon's court session focused in large part of who would be held accountable for the money that was siphoned out of FirstPlus. Throughout the trial, the government argued that the money was used primarily by Scarfo and Pelullo to support a lavish lifestyle that included the yacht, the Bentley and a $715,000 home near Atlantic City that Scarfo and his wife purchased early in 2008.

    Lawyers for Pelullo, Scarfo and the Maxwells argued that FirstPlus failed because of a poor economy and the negative impact of the federal investigation which became public after the raids in May 2008. The defense also argued that the government used the specter of organized crime to sensationalize the charges but insisted there was no mob involvement.

    Twelve defendants were originally named in a 25-count indictment handed down in November 2011. Five defendants, including Scarfo's wife, have pleaded guilty. She is awaiting sentencing on bank fraud charges linked to a mortgage for the home near Atlantic City.

    George Anastasia can be reached at George@bigtrial.net.

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    By Ralph Cipriano
    for Bigtrial.net

    A lengthy summary story about "Billy Doe," based on reporting originally done for big trial.net, has won first prize for best investigative reporting from the Catholic Press Association of the United States and Canada.

    The story, "Star witness' story in Philadelphia sex abuse trials doesn't add up," ran in the April 29, 2013 edition of the National Catholic Reporter. Labeled an "analysis" by NCR, the nearly 6,000-word story examined  a "compromised investigation," a "flawed grand jury report," and the many contradictory stories told by Billy Doe.

    Doe is the former 10-year-old altar boy and drug addict who claimed at two historic Philadelphia sex abuse trials that he was raped by two priests and a school teacher. Three men are currently in jail because of Doe's stories. A fourth defendant, Msgr. William J. Lynn, was convicted on one count of endangering the welfare of a child, but that conviction was overturned by an appeals court.

    Lynn remains on house arrest as the reversal of his conviction is scheduled to be reviewed by the state Supreme Court.

    After convictions in the two criminal cases, Doe's accusations are currently the basis of a civil case where Doe is seeking monetary damages for his alleged suffering from the Archdiocese of Philadelphia.

    The NCR article lays out the connection with big trial:

    "At the second archdiocese trial, when the jury came back with its stunning guilty verdicts, I decided to take another look at the historic prosecution," I wrote in NCR. "For the past two months on big trial.net, sponsored by The Beasley Firm, I have published the inside story of the DA's investigation as told in formerly secret grand jury transcripts and police records. The records show the investigation was compromised from day one."

    The analysis prompted an NCR editorial -- "Philadelphia was a shallow victory" -- that pointed out the troubling questions that remain about Seth Williams and his historic prosecution.

    The NCR editorial referred to Billy Doe's different accounts as "utterly different versions of reality."

    The editorial questioned why evidence wasn't introduced at trial that showed Billy Doe's mother kept meticulous calendars that directly contradicted her son's stories. The editorial said that former priest Ed Avery's recanting of a guilty plea "should raise serious questions."

    The NCR editorial also wanted to know how District Attorney Williams "found a loophole in the state's child endangerment law that allowed his office to take action against Lynn, who had never had direct contact with the children involved." While Williams' predecessor, Lynne Abraham, described by NCR as "one of the most determined prosecutors in the country in dealing with sex abuse by priests, said the law did not apply."

    That very issue was the reason why an appeals court overturned Lynn's conviction, a decision that will be reviewed by the state Supreme Court.

    Finally, the NCR editorial addressed the persistent stonewalling in the case by DA Williams, who, with the assistance of the local media, has been able to hide from answering any tough questions about Billy.

    "Perhaps answers exist for all these questions, but in months of reporting on his blog about the issues, Cipriano repeatedly sent lists of questions to the district attorney's office," the NCR editorial said. "He never received a substantive response to his queries."

    The DA also stonewalled NCR. At least he's consistent.

    The Catholic Press Association, founded in 1911, has more than 600 member organizations and  reaches more than 26 million people.

    Why the local media turned a blind eye to the Billy Doe story is the $58,000 question. That's the amount of money the Catholic League was willing to pay The Philadelphia Inquirer to publish an ad that would have called attention to the case. But the Inky said no and never explained why.

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    By Ralph Cipriano
    for Bigtrial.net

    U.S. District Court Judge Ronald L. Buckwalter has decided that former state Senator Vincent J. Fumo can travel freely throughout Pennsylvania and New Jersey without needing advance approval from his parole officer.

    Fumo's lawyer, Dennis Cogan, had filed a motion on June 17th seeking to modify Fumo's travel restrictions. Cogan filed the motion after Fumo's parole officer denied him permission to visit his condo at the Jersey Shore and a 99-acre farm his fiancee owns outside Harrisburg.

    Because it's Vince Fumo we're talking about, the government filed a motion in opposition, which was  immediately trumpeted as big news by The Philadelphia Inquirer. The prosecutors who put Fumo away for 61 months wanted to require the defendant to notify his parole officer in advance, as well as get her authorization before he went anywhere while on probation.

    But today, Judge Buckwalter issued an order granting the defendant's motion with one stipulation. Every Monday, the judge wrote, Fumo has to supply his probation officer with an itinerary for the week "setting forth where and when he intends to be."

    "The defendant is now 71 years of age and in poor health," Cogan wrote. "He has suffered other serious physical, emotional and financial setbacks over the course of the last several years."

    After serving four years in jail, Fumo was treated in March for prostate cancer.

    While on supervised release, the former state senator "wishes to spend substantial time" at his home at the Jersey shore and his fiancee's farm in Halifax, Pa., Cogan wrote.  In 2011, Fumo transferred ownership of Riverview Farm with a fair market value of $337,552 to his fiancee, Carolyn Zinni, for $1, which attracted the attention of The Philadelphia Inquirer and the IRS.

    Besides visiting the farm, Fumo "also wishes to interact with friends, and former colleagues, and other business acquaintances in various places throughout Pennsylvania and New Jersey in order to try to develop a consulting business, and to pursue other business opportunities," Cogan wrote.

    Fumo has "expended an enormous amount of money for counsel fees, victim restitution and fines," Cogan wrote. "He also lost his Senate pension as a consequence of his conviction and, for all of these reasons, he wants to attempt to engage in income producing ventures while he is still physically able to do so, and while his many friends, business and political contacts are potentially in a position to help him find business opportunities."

    But the government didn't agree.

    In a July 2nd response, Assistant U.S. Attorney Robert Zauzmer wrote, "There is no reason that defendant Fumo should be treated differently than other defendants, simply because he owns or controls more homes than the average convicted defendant."

    In the government's motion, Zauzmer claimed that Fumo "twice went to the New Jersey shore before authorization was granted, and was called to account for that."

    Cogan, however, in an interview denied the government's charge. He described the incidents Zauzmer referred to as a "misunderstanding."

    Cogan said the judge had done the right thing.

    "There's nothing unusual about the judge's order granting modification of the standard travel restrictions in a case like this, not withstanding the government's opposition," Cogan said.

    A spokesperson for the U.S. Attorney's office declined comment.

    Ralph Cipriano is writing a book about Vince Fumo.

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  • 07/11/14--11:40: Don Manno Gets His Life Back
  • By George Anastasia
    For Bigtrial.net

    Don Manno sat in Seasons 52, a posh restaurant at the Cherry Hill Mall one day this week, eating a piece of salmon and talking about the future.

    But the past, the immediate past, kept intruding into his conversation.

    It was one week exactly from the day a jury in U.S. District Court in Camden had given him his life back. Manno was calm, relaxed and philosophical about the experience. He had beaten federal prosecutors in a grueling six-month trial in which his freedom and future as an attorney were on the line.

    It shouldn't have come to that, the veteran defense attorney said.

    "I think the federal prosecutors thought they were going to teach us all a lesson about how to practice law," Manno said. "I don't need them to tell me how to be a lawyer. I did nothing wrong. If a jury had questioned what I did then I might think differently. But federal prosecutors aren't going to tell me how to be a lawyer."

    That was as close as Manno, 68, came to displaying any of the anger and bitterness that lingers from the FirstPlus Financial fraud case in which he was ensnarled. For the most part, he was sanguine, profusely thanking and praising his wife Rita and his grown daughters Kimberley and Rebecca for helping him through an ordeal that, he says, will make him a better lawyer.

    "I think I always had the ability to relate to my clients, to understand intellectually what they were going through," he said. "But now I think I have an emotional understanding. When you get a knock on your door at six in the morning and they take you away in handcuffs, you have a different understanding of the process."

    Manno, like most of the defendants in the multi-million dollar fraud case, was quickly released on bail, but that didn't make the experience of being arrested and carted out of his house in front of his wife any less disconcerting.

    "The humiliation factor alone can be overwhelming," he said.

    The indictment came down in November 2011. For the better part of three years it has been the focus of his life. For the past six months -- the trial started in January -- it dominated. Manno's decision to represent himself added another layer of pressure and tension to the situation. But he says now it was the right move.

    Earlier this week, for the first time this year, he was in court representing someone other than himself.

    "I had a client with a case in municipal court in Camden" said Manno, himself a former federal prosecutor whose criminal practice has revolved primarily around Superior and Federal Court matters. "I was happy to be there," he added with a laugh.

    Given the alternative, that was understandable.

    "I'm 68 years old," he said. "If I had been convicted and gotten, say, 15 years, that would have been a life sentence."

    Instead, he walked out of court a free man after a jury acquitted him and two other attorney co-defendants, finding them not guilty of all the charges they faced and essentially rejecting the government's contention that they were part of a massive fraud conspiracy orchestrated by mobster Nicodemo S. Scarfo and his business partner Salvatore Pelullo.

    Scarfo, 49, the son of jailed Philadelphia mob boss Nicodemo "Little Nicky" Scrfo, was convicted of all 25 counts he faced. Pelullo, 47, was convicted of the 24 counts lodged against him. Brothers John and William Maxwell were also found guilty. John Maxwell was the CEO of FirstPlus. His brother, an attorney, was hired as special counsel at $100,000-a-month.

    All were part of what the government said was the systematic looting of FirstPlus, a troubled Texas-based mortgage company, of more than $12 million. Most of the money went to support the lavish lifestyles of Scarfo and Pelullo. 

    Manno, who for years was the younger Scarfo's criminal defense attorney, said he couldn't feel sorry for his former client or for Pelullo who clearly emerged in both the prosecution's case and in the defense arguments Manno used at trial as the man pulling the strings in the fraud.

    "It was about greed," Manno said, "about wanting a lot of money fast and not working for it. It was like Cory Leshner (a former Pelullo associate who testified for the prosecution) said. It wasn't about growing the company. It was about getting cash to Sal Pelullo as fast as possible."

    Scarfo, Manno believes, "was blinded by the vast amounts of fast money for no work." He said Scarfo had rejected his warnings about the nature of the business transactions Pelullo was instituting, particularly a bank fraud built around a phony mortgage application filed by Scarfo's wife Lisa.

    Lisa Murray Scarfo pleaded guilty prior to the start of the trial. She is awaiting sentencing. So is John Parisi, Scarfo's cousin. Both were sucked into the scam, Manno believes, because of the greed and the indifference of Pelullo and Scarfo.

    "It's sad," Manno said, "the tragedy that is the Scarfo family."

    It's easy and there's some justification for pointing to the elder mob boss, Little Nicky, and fixing blame. But there was more to it than that, Manno said.

    "The tragedy that he (the younger Scarfo) brought to other people is overwhelming," said Manno. "He is his father's son. To a very real extent, he suffered because of his name (a point made again and again by the defense), but he brought a lot of this on himself. He's not a pure victim here."

    Manno clearly sees himself as one of the people Scarfo dragged into the FirstPlus quagmire. He argued during the trial that he knew very little about what was going on inside the company and that advice he offered to both Pelullo and Scarfo as an attorney was ignored. Often, he told the jury, they lied to him.

    Manno used one of the government's own tapes to effectively make that point. An FBI wiretap recorded a conversation between him and Pelullo in which Manno sounded both shocked and dismayed over a plan to lie about Lisa Murray Scarfo's income and employment on a mortgage application for a $715,000 home she and Scarfo were buying outside of Atlantic City.

    The mortgage was arranged in part through a FirstPlus subsidiary. Scarfo's name never appeared on any application.

    "Are you fuckin' crazy?" Manno is heard asking Pelullo on the tape.

    In another phone call, which Manno said the FBI had not recorded, he and Scarfo got into it over the same issue and, Manno said, he warned Scarfo that he was potentially committing bank fraud.

    "Let me worry about that," he said Scarfo told him.

    Scarfo in fact may have the next 30 years to do just that. He and Pelullo, each with two prior federal convictions, will likely face sentencing guidelines in the 30-year to life range when they appear before Judge Robert Kugler for sentencing in October.

    Manno says he hopes to have his law practice up and running full speed by that point.

    "My fees are going to be a little bit higher," he said only half joking, adding that he had worked for nearly a year without any income. His only client was himself.

    His decision to represent himself, he said, was the right one. No one else, he believes, could have presented his case to the jury. It was personal. And despite the vindication that came with the jury foreman declaring "not guilty" to each of the five counts he faced, Manno still carries the scars of the experience.

    "I was disappointed in the government," he said. "I think the case they put on was intellectually dishonest. I was really troubled by some of the mischaracterizations that were used to justify the charges."

    There was no way, Manno said, that he or lawyers David Adler or Gary McCarthy should have been indicted. And the jury verdicts exonerating them, while allowing Manno and the others to say, "See. I told you so," doesn't take the sting out of what they had to go through. 

    Adler handled many SEC filings for FirstPlus, filings that were based on false information provided by Pelullo. McCarthy was involved in setting up business transactions that again were part of Pelullo's fraud scheme, according to the government's case.

    "You know the prosecution tries to hide behind the fiction that the grand jury indicted us," Manno said. "You know that's bullshit. The prosecution gets the indictment it wants. The grand jury is just a rubber stamp. The government said they had a obligation to try the case. Bullshit. The government has an obligation to be right."

    While he didn't agree with every defense argument, Manno said he did subscribe to the overarching defense contention that the prosecution had taken a white collar fraud case and tried to make it an organized crime prosecution in order to sell it to the jury.

    "The only criminal organization was the one Pelullo and Scarfo had set up," he said. "There was no mob in this."

    He also said he thought that another reason he, Adler and McCarthy were charged was because Scarfo, Pelullo and the Maxwell brothers were offering a defense that said in part they had depended on the advice of their lawyers for everything they did within the company.

    Again, Manno said, the prosecutors and investigators had an obligation to base the charges on facts and evidence, not on prosecution strategies. Defense attorneys defend, he said, using any and every legitimate legal tactic. But the prosecution, when the system is working the way it should, has to focus on finding the truth.

    If the prosecution does that, then the system works, regardless of the verdict.

    This time, Manno believes, the system worked despite the prosecution.

    Over dessert, a small pecan pie custard and a cappuccino, Manno again returned to his family and what they had done for him.

    He estimated that he had presented his opening and closing dozens of times in his family room to his wife, daughters and sons-in-law.

    There was a large screen for his power point presentation. There were questions and questions and more questions. Each session, he believes, made him a better defense attorney for his client. Each session made the story he wanted to tell to the jury clearer, simpler and more easily understood.

    "I was just the mouthpiece," he said. "They're the ones that made it work.

    "'What are you trying to say?' they would ask me. 'What's the point? Talk to the jury like they're people, not other lawyers.'"

    It was all good advice. The results speak for themselves. He has his life back. And, he believes, he's an even better lawyer because of it. He wonders if the prosecutors in the case could say the same.

    George Anastasia can be contacted at George@Bigtrial.net

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  • 07/15/14--06:44: The Inky Vs. The Daily News
  • Barbara Laker, Wendy Ruderman and Michael Days
    By Ralph Cipriano
    for Bigtrial.net

    First it was the former owners of The Philadelphia Inquirer who couldn't get along. They wound up suing each other in court over the firing of Inquirer Editor Bill Marimow, amid charges of  newsroom meddling.

    Then it was the top editors of the Inquirer and Daily News who squared off over an Inky story about police corruption that supposedly cast the two reporters who wrote the tabloid's 2010 Pulitzer Prize-winning series, "Tainted Justice," in a negative light.

    According to several newsroom sources, two top editors of the Daily News -- Editor Michael Days and Assistant Managing Editor Gar Joseph -- lobbied heavily and even threatened to resign if new owner and interim Inquirer Publisher H.F. "Gerry" Lenfest ran an Inky story scheduled for last Sunday's paper written by Inky staff writers Mike Newall and Aubrey Whelan.

    Lenfest settled the dispute by killing the Inky story, according to several sources. Then it was Inky Editor Bill Marimow's turn to get upset about newsroom meddling. There was talk on the rumor mill about Marimow threatening to resign, but he didn't go anywhere. Now it appears the veteran Inky editor may be digging in for a longer fight.

    "It's an internal matter, and it's not open for discussion," Marimow wrote in a terse email, when asked about the killed story.

    Gerry Lenfest and Bill Marimow
    The Inky story in question was about an investigation into the activities of officers in the Narcotics Field Unit, the cops who were the targets of the Tainted Justice series.

    The Daily News series accused the officers of fabricating evidence, and stealing and looting bodegas during police raids. The newspaper also accused one cop, Thomas Tolstoy, of molesting three women during the raids.

    After years of investigation, however, the Inky reported on April 26th that the feds had decided not to charge the cops with any crimes.

    In the Inky story, Daily News editor Michael Days stood by his series, which he described as "exquisite, excellent pieces reported by amazing reporters."

    Although the feds were done with the case, the local cops weren't. On May 14th, the Inky reported that Police Commissioner Charles Ramsey had suspended Officer Jeffrey Cujdik for 30 days with intention to dismiss. In addition, Ramsey told the Inky that three of Cujdik's colleagues would be suspended.

    If Ramsey didn't think his cops were clean, why didn't the feds prosecute them? The Inky, in their May 14th follow up story, blamed a lack of evidence and witnesses with credibility problems who were afraid to testify against the cops. The Inky also said that Officer Tolstoy had told the feds he was going to cooperate, but then changed his mind.

    In the story scheduled for Sunday, the Inquirer apparently was going to take it a step further, and  blame the Daily News reporters for supposedly being part of the reason why the cops couldn't be prosecuted. Newall and Whelan had several FBI statements summarizing interviews with witnesses -- known as "302s" -- that supposedly had negative things to say about the two Daily News reporters who won the Pulitzer Prize --- Barbara Laker and Wendy Ruderman.

    It's not surprising that cops wouldn't be fans of Laker and Ruderman, who turned their series into a book, Busted; A Tale of Corruption and Betrayal in the City of Brotherly Love. But instead of airing whatever the dispute was about, Lenfest killed the story over the objections of Inquirer Editor Marimow.

    Did Lenfest trash the story because he thought it was false and libelous, as the reporters supposedly contended?

    Did the Inky story end up getting trashed because it was sour grapes from the paper that got its ass kicked by the Daily News on that Pulitzer-Prize winning cop story?

    Or was it a legitimate story?

    We have no answers because the Inky story is dead and Lenfest, an avid big trial reader, did not respond to an email seeking comment.

    None of the top editors at either paper are talking; neither are the reporters on opposite sides of the dispute.

    It's an ironic situation at the city's two daily newspapers, where people usually get paid to break the news, not bury it. The cops are angry and disappointed. Through their lawyers, relatives and defenders at the FOP, the cops say they were smeared by the two Daily News reporters they have dubbed the "Slime Sisters." They were sorry to hear that the Inky story had crashed and burned.

    In a June 10th letter to police officers, John J. McNesby, president of the Fraternal Order of Police Lodge No. 5, complained about the media continuing to "visciously attack" police officers."

    The attacks, McNesby wrote, continued, "despite the fact that NOT ONE OFFICER was convicted, charged or even arrested for any of the false allegations hurled against them by a couple of unscrupulous Pulitzer Prize hunting reporters."

    In a letter sent out today to his fellow officers, and posted at the top of the FOP website, McNesby cranked it up a couple notches. He accused the Daily News reporters of unethical behavior without offering any proof. But McNesby complained that the real story about the Daily News reporters "is being buried by our local print media deeper than Jimmy Hoffa -- by the very same people who constantly chirp about 'your right to know.'"

    The cops' view of the "Slime Sisters" is probably not the story that Sarah Jessica Parker signed on for. The Sex And The City alum has announced she's coming out of retirement to star in a TV show based on the exploits of Laker and Ruderman. But we're getting ahead of ourselves.

    Imagine you're 84-year-old Gerry Lenfest, former cable TV magnate turned philanthropist. You've just taken over as the sole owner of the parent company that owns the two newspapers and philly.com, after a court-ordered auction and the tragic death in a plane crash of your former business partner, Lewis Katz.

    You've been on the job for one and a half months. Now, one of  your first official headaches is to settle a family feud between the Inky and the Daily News that has reporters and editors on both sides supposedly at each other's throats.

    At least you don't have to worry about that public pledge not to meddle in editorial operations that was a millstone around the necks of the last set of Inky owners. One of Lenfest's first moves when he bought the papers for the inflated price of $88 million was to announce that he was getting rid of the no-meddling pledge, a gimmick that had outlived its usefulness.

    It's kind of amazing that in the recent editorial wars, Lenfest came down on the side of the Daily News.

    When he bought the papers, Lenfest the history buff could only talk about the Inquirer, the paper that he kept reminding everybody had covered the Civil War. Lenfest had to be reminded that he had also bought the Daily News.

    In siding with the Daily News, Lenfest overruled an editor on a police corruption story, Bill Marimow, who as a reporter, won two Pulitzers for exposing police corruption. It's kind of like buying out Tony Luke, and then telling him how to make a cheesesteak.

    The Inky and News have been competitors on the story about the bodega-raiding cops for years. And it hasn't aways been a friendly competition.

    "After we broke our first story, they [The Inquirer] broke out the computer-assisted reporting," Wendy Ruderman told Roy J. Harris of poytner.org in a 2010 interview. The Inky, according to Ruderman, "got very interested in this story, and wanted to take the story away from us."

    "This was Bill Marimow's career," Ruderman told Poynter about reporting on police corruption. "So he [Marimow] brought in all these reporters to compete with me and Barbara."

    Then somebody at the Daily News intercepted an email from an assistant Inquirer editor who wrote that it was up to Inky staffers to "mercilessly pound them," referring to Laker and Ruderman.

    "That really ramped up how hard Barbara and I worked," Ruderman told Poynter. "Those two words -- mercilessly pound -- were really in our minds."

    In the end, it was Laker and Ruderman who mercilessly pounded the Inquirer.

    Was Marimow trying to extract his revenge in the cop story that got killed last week? Or did the gals go overboard in their pursuit of a big story? As an old police reporter at the Inky used to say, "This we do not know."

    Before the Inky story was killed, the tensions in editorial boiled over, say several sources. Marimow had a hallway altercation with the feisty Ruderman. According to sources, Ruderman, at least a foot shorter, got in Marimow's face and yelled at him, Bill, you know we didn't do this. She also accused Marimow of trying to ruin her and Laker's reputations.

    Marimow, according to sources, replied that the story would be fair, Ruderman and Laker would have their say and that Gerry Lenfest would make the final decision.

    Marimow also reminded Ruderman that back in 2007, when she was at the Inky and in danger of being laid off in another round of company cutbacks, Marimow had engineered her hiring at the Daily News.

    Ruderman then reminded Marimow that she had made a phone call to a Philly mag reporter to say that Marimow, contrary to what Inky publisher Bob Hall was saying about him, did not discriminate against women.

    After her confrontation with Marimow, Ruderman was seen crying in the Daily News newsroom, where she was consoled by other staffers. But she may have regained her fighting spirit.

    Late yesterday afternoon, Ruderman was seen heading out of the building, supposedly to retrieve her files, amid speculation that the Daily News might be trying to get ahead of this story.

    Maybe the grudge match is on.

    Ralph Cipriano can be reached at ralph@bigtrial.net

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