• Federal Prosecutors: Mafia Gives New Meaning to ‘Hostile Takeover’
  • April 11, 2012 | Author: David C. Scileppi
  • Law Firm: Gunster - Fort Lauderdale Office
  • Although this was a news story that hit about six months ago, we saw very little coverage on, what we think, is a very novel alleged hostile takeover bid by organized crime.

    On October 26, 2011, a federal grand jury indicted Nicodemo S. Scarfo, an alleged member of the Lucchese crime family, Salvatore Pelullo, an alleged associate of the Lucchese and Philadelphia LCN families, and 11 other people, including five practicing lawyers and an accountant for allegedly taking over FirstPlus Financial Group, Inc. (OTC Markets: FPFX), a publicly traded mortgage company in Texas.

    According to the indictment, the men used both explicit and implicit threats of economic and physical harm to seize control of FirstPlus by replacing its existing board of directors and management with members who would further their interests.

    Based on the facts from the indictment, in 2007, the defendants falsely accused a director of financial improprieties, and threatened a lawsuit against the director unless the director agreed to persuade the existing directors and management to turn over control to the defendants. Over the course of 2007 and 2008, according to the indictment, the men looted the company through various acquisitions of entities controlled by the defendants at inflated prices. The defendants were indicted for securities fraud, wire fraud, money laundering, extortion, and obstruction of justice.

    No mention of whether the defendants ever filed a Schedule 13D.