Re: June 27, 1999, Wall Street indictments indicate mob connections |
By GINA EDWARDS, Staff Writer
Attorney for Naples firm says his client was a victim of the mob
Ian Richard Hosang, the ringleader of a stock fraud scheme linked to the Gambino organized crime family, once helped dangle a competitor from a ninth-floor window in New York City.
He kept a stash of marijuana in his office to reward his boiler room brokers, some recruited among New York's subway riders, federal investigators say.
Months before moving on to the firms where federal prosecutors busted him on a series of stock fraud charges in 1997, Hosang worked at the New York offices of A.S. Goldmen & Co. - the firm owned by Naples resident Anthony Marchiano.
The 40-year-old Hosang, who worked for Marchiano for four years, isn't the only mob-linked broker to pass through A.S. Goldmen's doors.
And he isn't the only A.S. Goldmen alumnus to get snared in a net of federal indictments handed down in the last two years as part of a coordinated crackdown against organized crime's infiltration of Wall Street.
Twelve former A.S. Goldmen brokers were among those named in indictments in a major federal stock fraud bust last week - cases that prosecutors say demonstrate organized crime's efforts to infiltrate Wall Street.
The brokers weren't working at A.S. Goldmen during the periods covered in the indictments. But their involvement puts A.S. Goldmen closer to a web of small brokerages under scrutiny by prosecutors and regulators trying to sweep Wall Street clean of organized crime influence.
As traditional mob rackets like garbage hauling and construction have dried up, members of Italian and Russian organized crime have moved to Wall Street to manipulate small company stocks, law enforcement authorities say.
Regulators estimate that fraud in the trading of small company stocks bilks investors out of $6 billion a year. Federal prosecutors from Brooklyn estimate that the schemes alleged in last week's indictments cost investors more than $100 million.
A state grand jury in Manhattan is investigating Marchiano's A.S. Goldmen for the same types of schemes as those to come out of the latest federal crackdown. Among the stocks Manhattan prosecutors claim A.S. Goldmen manipulated is Millennium Sports Management Inc. - the company that was Bill Rasmussen's partner in the failed Stadium Naples golf development.
Prosecutors claim hundreds of customers around the country have lost millions of dollars based on fraudulent activities at A.S. Goldmen.
The latest round of federal indictments illustrates a key problem for regulators: Rogue brokers feeding in Wall Street's gutter scatter when regulators and law enforcement turn up the heat.
Manhattan prosecutors say heat from law enforcement prompted Marchiano, a 37-year-old Port Royal resident, to move his firm from New York to Naples in 1996.
But Marchiano's attorney, Wilmer "Buddy" Parker, said this week that it wasn't regulators or law enforcement that prompted Marchiano's departure from New York.
Parker said Marchiano is a victim of mob extortion.
Deal or not?
Mobsters began short selling A.S. Goldmen's house stocks - stocks the firm had in inventory - in February 1995, Parker said. A short seller borrows stock and sells it at a high price betting he'll be able to replace it with cheap stock once the price falls. A flood of stock for sale on the market depresses the price.
Parker said it worked like this: established customers in various brokerage houses were paid money and coordinated for short selling by members of organized crime. Members of organized crime then approached A.S. Goldmen with an "economic solution" to the firm's short selling problem that threatened to devastate the firm's finances.
"You either take their deal or not. If you didn't take their deal they'd put you out of business," said Parker, an Atlanta attorney.
Parker said A.S. Goldmen told regulators at the Securities and Exchange Commission of the situation as part of testimony in an investigation of the firm in 1995. "Nothing came out of it," Parker said of the 1995 SEC investigation. The latest financial disclosure on file with the SEC reveals a pending SEC investigation.
Parker said mob influence on Wall Street was brought to the SEC's attention in 1995, but the indictments didn't come out until recently.
"You could be critical of regulators and law enforcement for being asleep at the switch," Parker said.
When told of Parker's statements about mob short selling, William Baker, the associate director of enforcement at the SEC, said the SEC doesn't comment on or acknowledge investigations. He did say: "Attacking organized crime on Wall Street has been a major priority of both the SEC and the Department of Justice."
Alabama Securities Commission Director Joe Borg, a leading regulator fighting fraud in small company stocks, said short selling controlled by organized crime has occurred.
"To what extent I don't think anybody knows," Borg said. "They (members of organized crime) usually did it with house stocks that were already manipulated. It's like one crook crying foul against another crook."
That Marchiano or other principals of A.S. Goldmen weren't indicted last week says something, Parker said.
And he said he can't make this point emphatically enough about Marchiano and the principals of A.S. Goldmen: "They're not part of organized crime."
House of Rogues
Rogue brokers aren't strangers to A.S. Goldmen, the firm that has had offices in New York, New Jersey and Naples, but is now dormant.
A Naples Daily News investigation shows that out of 300 brokers who worked at A.S. Goldmen from 1994 to 1998, 59 percent have disciplinary disclosures on file with the National Association of Securities Dealers.
That amount is almost six times the industry as a whole.
The NASD reports that just under 10 percent of the 602,000 brokers in the industry have disciplinary disclosures, which include customer complaints and claims, felony charges, industry and state sanctions, firings and bankruptcies.
Robert Dyer, an Orlando attorney who represents investors, called the figure high.
"It would certainly indicate there's the possibility of criminal intent at the top," said Dyer, a former president of the Public Investors Arbitration Bar Association, a national organization of attorneys who represent investors.
Parker dismissed the disclosure percentage as irrelevant. "What is a disclosable event's weight?" Parker said. "You can be criticized in hindsight for due diligence."
The Naples Daily News has found that at least 30 former A.S. Goldmen brokers have some type of criminal record.
Parker said brokers with criminal histories likely lied about their records on employment applications.
And Parker said the brokers indicted last week worked at A.S. Goldmen for only a short time in the early 1990s and were fired from the firm. All but two of the brokers worked for A.S. Goldmen for less than a year at various times in the early 90s.
But if they were fired, the firm didn't notify industry regulators. Records from the NASD don't show any termination filings from A.S. Goldmen on the twelve brokers.
The Naples Daily News investigation shows that 43 percent of A.S. Goldmen brokers had no prior experience in the securities industry before working at A.S. Goldmen.
Many came straight from high school or were waiters and bartenders, clerks and car salesmen. John Abbey was an Electrolux vacuum cleaner sales rep before working at A.S. Goldmen. Peter LaTourette was a Brooklyn security guard. Mark Kurziow was a New Jersey dock worker.
Pump and dump
Robert Catoggio, an A.S. Goldmen alumnus, is named in one of three Brooklyn federal indictments last week as a leader of a criminal enterprise that controlled four brokerage firms and manipulated the price of 17 small company stocks from 1991 to 1998.
The indictment says this:
Catoggio and Roy Ageloff, another one-time Goldmen broker, ran crews of brokers to hype stocks by phone to customers. Brokers would get kickbacks as incentives to put on the hard-sell to customers with false and exalted claims about house stocks the enterprise obtained cheap or stole.
To support the price of the stock by restricting supply, brokers would illegally refuse to sell customers' shares.
Catoggio and Ageloff would hold and control house stocks in "nominee" accounts with other people's names on them.
The effect: a pump of the stock's price. Later when the price was high enough, brokerage insiders and "favored customers" of the firm would dump the shares on the market creating an unstoppable price slide. In the vernacular of the business it's called a pump and dump.
The indictment says Catoggio and Ageloff laundered stock profits by wiring millions of dollars to casinos in Nevada and withdrawing the money in cash. According to the indictment, Catoggio offered an undercover agent posing as a money manager a kickback and said this:
"You make your money and you move on to the next one. You just hold it. Your clients don't lose money but...it's not like you'll be able to sell it to the street...We took eight deals out at Hanover, I never read one of the prospectuses ... I mean the reality of it is, without pulling each other's chain, you're doing this to make money. You're not doing this because it's gonna be the next IBM."
In another earlier federal indictment, prosecutors claim Catoggio set up an account for a member of the Genovese crime family to share profits in a stock manipulation scheme.
The 40-year-old Catoggio is now in jail serving an 18-month sentence in connection with earlier federal charges that he manipulated a stock with Louis Malpeso Jr., a convicted loan shark who is the son of Colombo organized crime family soldier Louis "Bobo" Malpeso Sr.
Bobo Malpeso is serving a 95-year sentence on murder-related charges that grew out of a power struggle between warring factions of the Colombo family, according to federal authorities.
Serving time with Catoggio in connection with that scheme is Joe Dibella, another A.S. Goldmen alumnus who's also named in last week's federal indictment.
Other former A.S. Goldmen brokers named include: John Asaro, William "Billy Bats" Battista, John Besarany, John Claudino, William Cosidente, and Michael Scaramellino.
None of the 12 total A.S. Goldmen alumni named in last week's three federal indictments were working at A.S. Goldmen during the periods covered in the indictments. A total of 85 defendants were named in the indictments that prosecutors called the biggest takedown of organized crime on Wall Street in history.
One of the indictments says Catoggio headed an enterprise that controlled the corrupt brokerage firms of Hanover Sterling & Co., Norfolk Securities Corp., PCM Securities and Capital Planning Associates, while manipulating the stocks of 17 small companies.
A Naples Daily News investigation shows A.S. Goldmen alumni manned the phones at those firms.
At least 14 brokers left employment at A.S. Goldmen to work for Norfolk Securities. And at least 32 former A.S. Goldmen brokers have also worked at Hanover Sterling, a review of 300 Goldmen brokers' work histories shows.
Dozens more A.S. Goldmen alumni have cycled through other firms that are under scrutiny by state and federal prosecutors.
The firms include Meyers Pollock Robbins, a firm linked to a Manhattan federal indictment in 1997 with defendants that included "capos" or captains in the Genovese and Bonanno organized crime families. Eighteen of the 20 defendants pleaded guilty this year. The Naples Daily News investigation reveals that at least 50 former A.S. Goldmen brokers have also worked at Meyers Pollock.
Almost three dozen former A.S. Goldmen brokers have worked at one time at the New York firm R.D. White & Co., a firm agents from the Manhattan District Attorney's office raided in May.
Another federal indictment released as part of last week's bust names Global Strategies Group Incas a firm with branch offices involved in a scheme linked to the Colombo crime family and the Russian organized crime group Bor. Former A.S. Goldmen broker Christopher Wolf is named in the indictment. Research by the Naples Daily News shows at least four former A.S. Goldmen brokers worked at the offices during times covered in the indictments.
Wolf and Battista are named in yet another indictment along with former A.S. Goldmen broker Chance Miglino. In 1997, Manhattan prosecutors convicted Miglino and Battista, along with 10 other A.S. Goldmen brokers, for paying impostors to take their broker licensing exams.
Catoggio and Ageloff may have met Ian Hosang at A.S. Goldmen. They worked there at the same time. Later, the three hooked up to control Norfolk after Hosang left A.S. Goldmen in 1994, federal prosecutors say.
While at A.S. Goldmen, Hosang attained the rank "Senior Vice President."
For his activities at Norfolk, Hosang was permanently barred from the securities business by the NASD. But that didn't stop the 40-year-old Hosang.
Brooklyn federal prosecutors indicted Hosang and 13 others - including Hosang's mother, son and nephew - in December 1997 for running a stock fraud scheme during the first 10 months of that year at the firms Smith, Benton & Hughes Inc. and Hampton Capital Management Corp.
As part of the case, investigators claimed this: Scores of unlicensed brokers worked in the Hosang-run boiler room on Wall Street, hyping the stock of United States Properties Inc. in exchange for cash payoffs and sometimes envelopes stuffed with marijuana.
One of Hosang's partners was Andrew Scudiero, a convicted drug trafficker netted in a federal sting of his brokerage firm in the mid 1980s. Scudiero spent 11 months in prison and subsequently obtained another brokerage license, the federal complaint says.
Frank Mancini, described in court documents by investigators as an associate of the Gambino crime family, was another partner. Investigators say Mancini lived in the Queens home of Blaise Corozzo, brother of then Gambino boss, Nicky Corrozzo.
Hosang, a Trinidad native, involved his mother, son and nephew in the operations. Hosang's 79-year-old mother, Jean Hosang Gupta, helped launder thousands of dollars in proceeds from the operation by delivering cash from the bank account of a Bahamian corporation to Hosang, investigators say.
Another time, investigators say, Mancini's wife stuffed more than $50,000 in cash in her purse to deliver to her husband from a Queens bank.
But if the operation was a family affair, it was one also tinged with an atmosphere of threats and intimidation.
Investigators say one time, Scudiero and Hosang got in a loud argument that ended with Scudiero emerging from an office waving a gun and cursing.
Another time, a competitor appeared at the firm to complain that Hosang's operation was soliciting the firm's customers. Investigators say in court documents that a confidential informant heard shouting, banging and someone getting smashed against a wall behind the closed shades of the office. Later the informant heard that Hosang, Mancini and another member of the operation had dangled the man from the window of the ninth floor office.
When regulators from the National Association of Securities dealers showed up for a routine inspection in May 1997, brokers fled the office by way of a back staircase, leaving half-eaten lunches and lit cigarettes at their desks, investigators say in court documents.
Hosang pleaded guilty in March to charges including conspiracy to commit securities fraud and money laundering. He is awaiting sentencing.
Two former A.S. Goldmen brokers from Naples - Duane Taylor and Michael Lamarti - have been indicted as part of the ongoing probe. The cases against Taylor and Lamarti, who are fighting the charges, are pending. Taylor's attorney has claimed in court documents that New York prosecutors have taken extraordinary steps to manufacture jurisdiction over alleged Florida crimes.
Manhattan prosecutors have accused A.S. Goldmen in court documents related to those cases of manipulating the stock of Millennium Sports Management Inc. - a financially troubled company that was partners in Bill Rasmussen's failed Stadium Naples golf development.
Rasmussen's first Stadium Naples collapsed amid a bribery scandal that is now the subject of an investigation by Tampa federal prosecutors. Earlier this month, Gov. Jeb Bush. asked federal prosecutors to reopen State Attorney Joe D'Alessandro's investigation of Stadium Naples.
D'Alessandro, who declined to bring charges against County Commissioner John Norris or Rasmussen, bought stock in the Stadium Naples partner Millennium from brokers at A.S. Goldmen. Manhattan prosecutors raided Marchiano's $3.3 million Naples beachfront mansion in April 1998 along with the Naples and New Jersey offices of the firm. Prosecutors say in court documents that the documents seized fill several hundred boxes.
Millennium stock is now virtually worthless.And the grand jury will decide if enough evidence suggests the stock was pumped and dumped.
Investigations of A.S. Goldmen by Manhattan prosecutors, the SEC and numerous state securities regulators continue.
No charges have been filed against Marchiano or his firm. But Marchaino's attorney Parker said they'll fight any charges if and when there are any.
Part of that defense will be that Marchiano is a victim of organized crime, Parker said. He suggested Marchiano has been unfairly targeted by law enforcement because of his Italian descent.
"The mob victimizes people regardless of their ethnicity," Parker said.
Parker wouldn't reveal specifics of the deal offered by members organized crime around 1995. "It's called extortion is what it is."