Replies to post #2145 on Ayn Rand and Russian Investments

[d indian]

There are some real bright ones over there. Don 't think the 20 posters that think they are the smartest and brightest over there, pumping AURC. Could light up one Christmas tree bulb with there '' BRIGHTNESS ''. Lemmings always feel safe running in a herd, or pack. See MARK IS GETTING HIS SHARE OF ABUSE, from the new ''LEADERS ''. I am one fellow don't need a ''BUDDY ''. Already know enough A####LES. $42,000,000.00 IN REVENUES, are people really this stupid??? This is getting more comical by the day. Biggest thing going now BUYOUTS, and MERGERS. Most never happen. The ones that do follow through, CEOS and insiders end up with roughly 90 to 95 percent of all the money, actually probablely more. Sorry BENZ must say, hahaha, certain people you can't be honest with. Good way to lose a lot of so called fair weather friends. Sure seems to be a lot of 3, 4 month investors, that are experts about AURC. Will have to start asking their advice on otther stocks they bought in the last 2 weeks.

Hope the slow guy with all the patents don't come over here asking stupid questuions again. Don't think he has ever posted an original thought of his own. Too busy '' inventersing, ring '', or something like that. Indian

[youhavenoidea]

19 Charged in Stock Scheme Tied to Mob
Print Save Share
Del.icio.usDiggFacebookNewsvinePermalinkBy ALAN FEUER
Published: March 3, 2000
The scheme was straight out of a Hollywood pitch meeting, the authorities said: ''Goodfellas'' meets ''Boiler Room.'' For nearly three years, they explained, a cadre of stockbrokers cheated unsuspecting investors out of $40 million -- with the support and muscle of the New York mob.

The story, which was revealed in a federal indictment unsealed yesterday in Brooklyn, even had the requisite action-movie ending. In predawn raids, nearly 100 federal agents arrested 11 of the 19 people charged in the stock fraud scheme, including the brother-in-law of Salvatore Gravano, the Mafia hitman turned informer better known as Sammy the Bull.

While federal law enforcement officials acknowledged yesterday that Wall Street and La Cosa Nostra had a tangled history of illicit dealings, they said the current scheme, run from the offices of two financial district brokerage firms, involved the most senior members of the Mafia to date.

Mr. Gravano's brother-in-law, Edward Garafola, 61, of Staten Island, was indicted along with five other people the authorities called organized crime figures, including Frank Coppa, 58, of Manalapan, N.J., who was described as a captain in the Bonanno crime family. At least two members of the Russian Mafia were also charged, the authorities said.

Lewis D. Schiliro, the assistant director of the Federal Bureau of Investigation in charge of the New York office, refused to explain what role the Russian mob had in the case, but he said, in general, that the Russians ''have the ability to bring in an international money-laundering angle, particularly with overseas accounts.'' Indeed, the indictment accuses some of the 19 defendants of funneling their ill-gotten gains through Caribbean accounts.

According to the indictment, the scheme, which lasted from 1993 to 1996, was led by John Doukas, 52, of Cross River, N.Y., and Walter Durchalter, 34, of Middle Village, N.Y., who together controlled the brokerage firms of White Rock Partners & Company and State Street Capital Markets Corporation in downtown Manhattan.

In a ploy described as a ''pump and dump,'' Mr. Doukas, Mr. Durchalter and their partners secretly bought huge blocks of stock in four companies, then artificially inflated the stocks' value by flooding the marketplace with false and misleading information, the authorities said.

When a stock reached what the brokers assumed was its height, they sold it swiftly and suddenly, the authorities added, ignoring frantic phone calls from helpless investors who also wanted to sell.

Thousands of investors across the city were duped, said Loretta E. Lynch, the United States attorney in Brooklyn. In some cases, she said, the stocks these investors held plunged from being worth tens of thousands of dollars to being worthless within seconds.

Because the partners could hardly ask the authorities for help if there were problems, they turned to the gangsters for protection, said Jonathan S. Sack, an assistant United States attorney.

Mr. Schiliro said the brokers ''availed themselves of the muscle offered by La Cosa Nostra'' as the gangsters settled disputes among feuding brokers and thwarted attempts by outsiders to extort money from the firms.

Of the eight defendants not arrested yesterday, four were expected to turn themselves in today, two were already in custody on unrelated charges and two were believed to be overseas.


http://query.nytimes.com/gst/fullpage.html?res=9F06E0D91F39F930A35750C0A9669C8B63&n=Top%2FRefere...

[youhavenoidea]

RACKETEERING; SECURITIES FRAUD; WIRE FRAUD; MAIL FRAUD; MONEY LAUNDERING


SEMION MOGILEVICH




Photographs taken in 2001


Aliases: Seva Moguilevich, Semon Yudkovich Palagnyuk, Semen Yukovich Telesh, Simeon Mogilevitch, Semjon Mogilevcs, Shimon Makelwitsh, Shimon Makhelwitsch, "Seva"

DESCRIPTION

Date of Birth Used: June 30, 1946 Hair: Gray (Balding)
Place of Birth: Kiev, Ukraine Eyes: Green
Height: 5'6" to 5'7" Sex: Male
Weight: 290 pounds Race: White
NCIC: W874119382 Nationality: Ukrainian
Occupation: Businessman
Scars and Marks: Mogilevich has pockmarks on his face.
Remarks: Mogilevich may wear facial hair to include a moustache. He is known to be a heavy smoker. Mogilevich has his primary residence in Moscow, Russia, but also has ties to the United States and England. He utilizes a Russian passport.

CAUTION

Semion Mogilevich, Igor L'Vovich Fisherman, and Anatoli Tsoura are all wanted for their alleged participation in a multi-million dollar scheme to defraud investors in the stock of YBM Magnex International, Inc. (YBM), a public company incorporated in Canada, but headquartered in Newtown, Bucks County, Pennsylvania. Investors lost more than 150 million dollars through the alleged scheme that included inflating stock values, preparing bogus financial books and records, lying to Securities and Exchange Commission officials, and offering bribes to accountants. The scheme to defraud collapsed on May 13, 1998, when federal search warrants were executed in Pennsylvania and trading of the YBM stock was suspended by the Ontario Securities Exchange. A federal indictment, issued for the men on April 24, 2003, in the Eastern District of Pennsylvania, Philadelphia, Pennsylvania, charges them all with 45 counts of racketeering, securities fraud, wire fraud, mail fraud, and money laundering.

The indictment alleges that between 1993 and September of 1998, Semion Mogilevich headed and controlled the Mogilevich Enterprise, an association which consisted of the aforementioned individuals and a network of companies in over twenty different countries which orchestrated a sophisticated scheme to defraud investors in YBM stock. The scheme was allegedly funded and authorized by Mogilevich. This complex network of corporations was set up to create the illusion that YBM was engaged in a profitable international business, primarily the industrial magnet market. Igor Fisherman served as the Chief Operating Officer of YBM on behalf of Mogilevich, who was YBM's major shareholder. Anatoli Tsoura was the Vice President of Finance for YBM's main subsidiary.

ADDITIONAL PHOTOGRAPH



Photograph taken in 2000


SHOULD BE CONSIDERED ARMED AND DANGEROUS AND AN ESCAPE RISK




The Russian Mafia

Organized Crime in the Former Soviet Union

An estimated 80 percent of the private enterprises and commercial banks in Russia's major cities are forced to pay a tribute of 10 to 20 percent of their profits to organized crime.

On April 21, 1994, during a Senate hearing, CIA Director R. James Woolsey said, "Organized crime is so rampant in Russia that it threatens Boris Yeltsin's presidency and raises concern that syndicates will obtain and smuggle Russian nuclear weapons to terrorists or foreign agents."

Wooisey revealed that organized crime syndicates from Russia, Asia, and Africa are forming alliances with traditional Italian and Latin American organizations, creating a formidable threat to international peace and stability.

Our investigation of the Russian mafia has been limited to its activities in Thailand. We feel it we are a much greater threat than the Japanese mafia not only because they are more violent but they are much less predictable. So our investigations have been limited surveillance and information gathering, and we have avoided confronting the Russian mob in Thailand.

In fact by paying off the special police that is supposed to investigate the transnational mafias they are one of the major players in the local area. One of the few bank robberies that the resort has ever had and the most violent one turned out not to be done by local Thai criminals but by the Russian mafia who had no qualms about shooting down local policemen during the commission of the robbery. Whereas Thai robbers would go to great lengths to avoid armed confrontations with the Thai national police force.

Our Agency's information on the Russian mob is still classified, so it will not be discussed here but below is an outline of the Russian mob and how it works.

"Mafiya" Threat

Since the "collapse" of the Soviet Union in 1991, oceans of ink have been poured into press coverage of the Russian Mafiya, and the subject has become a staple of Hollywood action fare.

However, there is nothing novel about the activities or ambitions of the Russian mob. In an April 1994 interview published in the International Herald Tribune, Georgian mafia leader Otari Kvantrishvili boasted: "They write that I am the mafia's godfather. It was Vladimir Lenin who was the real organizer of the mafia and who set up the criminal state." In 1995, former Lithuanian Vice President Algirdas Katkus stated that although "Westerners believe that the mafia is the product of post-Communism … in reality it is organized, staffed, and controlled by the KGB."

These observations are confirmed by Yuri Maltsev, a former senior adviser to Mikhail Gorbachev, who told THE NEW AMERICAN that "Russia has become the criminal capital of the world. In Russia today, the organized mafia and the government are one and the same thing. They're two hands of the same ruling elite." This state of affairs began with the founding of the Soviet state. "The Soviet state security apparatus was essentially staffed by criminals collected from Russian prisons," Maltsev recalls. "In short, you had a criminal state using criminals to enforce what it called the law."

One irony noted by Maltsev is that the Soviet state, like any totalitarian enterprise, "essentially prohibited any form of social or economic activity that didn't advance the interest of the state. In short, they criminalized everything." The "collapse" of the Soviet Union in 1991 brought "little, if any, change in the organization of the criminal justice system in Russia," Maltsev wrote in the December 1995 issue of The Freeman. "Russia's prisons, probably the worst in the world, are still filled with over 100,000 entrepreneurs, most of whom were convicted for commercial and business practices absolutely legal in civilized countries. Private production and exchange - the most natural of human activities - are still criminalized through a confiscatory tax system and monstrous regulatory mechanism."

With 111 different federal and local taxes, a tax code even more inscrutable than our own, and top rates which run as high as 140 percent of income, it should come as no surprise that there are more than 600,000 tax convictions each year in Russia. Furthermore, Maltsev points out that "ex-communists" still occupy more than 60 percent of local government and bureaucratic positions and 90 percent of all positions in the central government.

Accordingly, Russians still suffer beneath the basic conditions of totalitarianism: Complete insecurity of person and property, fear of summary arrest for ill-defined or undefined offenses, and an omnipresent sense of incipient violence. Lenin defined the governing philosophy of his state as "power without limit, resting directly upon force, restrained by no laws, absolutely unrestrained by rules." This remains the governing philosophy of "post-Soviet" Russia.

Whom Are We Helping?

Soviet analyst J. Michael Waller of the American Foreign Policy Council informed THE NEW AMERICAN that "U.S. aid and trade policies with Russia have had the net effect of entrenching the nomenklatura and the KGB oligarchy at the expense of Russians sympathetic to the West." Joint U.S.-Russian law enforcement initiatives are used by the "ex"-communist elite to preserve this hegemony: "We're collaborating with the very people who created the problem of organized crime in the former Soviet Union. In part, this is because American policymakers tend to 'mirror-image' everything in our relationship with Russia. They look at Russian organized crime through the lens of our own experiences, and the Russians are only too happy to play along."

Frank Cilluffo, an adviser to a Senate task force on global organized crime, told THE NEW AMERICAN, "Most of the FBI's cooperative initiatives are conducted with the MVD, which is more or less their analogue in Russia." Although Cilluffo maintains that the MVD does not have significant connections to the Russian mafia, he acknowledges that "we can't exonerate any of the [Russian] services" because of Russia's "endemic corruption." As a result, "It's almost impossible to know when we're helping the criminals."

Writing in the December 1995 issue of the Journal of Contemporary Criminal Justice, Michael Waller and fellow Soviet analyst Victor J. Yasmann observed: "When analyzing the Russian government's approach to fighting organized crime … it becomes apparent that the country's political, economic, security, and law enforcement elites fundamentally are part of the problem." This is not merely a result of runaway corruption, but rather a product of long-term strategic planning:

[W]hat is often seen as a "spontaneous" development of Russian organized crime … in many instances is a process unleashed by the communist/state security oligarchy, and in many important aspects is guided by them.... KGB guidance virtually transformed the Russian Mafiya, which only a decade ago looked underdeveloped and provincial at best. KGB officers provided the criminal chiefs with the institutional and organizational experience, professional intelligence, and tradecraft, and later shared their contacts, first domestically and later internationally.

Looting and Pillaging

In addition to its efforts to strengthen the mob, the KGB also laid the groundwork for almost all post-Soviet joint economic ventures with the West. According to Waller and Yasmann, a KGB training and operations manual published in 1989 stated that in the era of perestroika, "'active reserve' or 'operational reserve' officers no longer needed to mask their identities when approaching foreigners; indeed, it was becoming an asset to announce one's 'former' career in the KGB because foreign businesses thought it attractive - chekists [secret policemen] could provide security and get things done like no one else." By 1992, an estimated 80 percent of all joint ventures in the Russian Federation had been infiltrated, or were controlled outright, by the KGB.

Similar measures were undertaken by the Communist Party of the Soviet Union (CPSU) to provide for its continued ascendancy even after it formally surrendered its legally mandated political monopoly in Russia. On August 23, 1990, CPSU Administrative Director Nikolai Kruchin issued a document entitled "Emergency Measures to Organize Commercial and Foreign Economic Activity for the Party," which outlined the fashion in which the Soviet nomenklatura would supervise "privatization" efforts. According to Kruchin, "confidentiality will be required and in some cases anonymous firms will have to be used disguising the direct ties to the CPSU. Obviously the final goal will be to systematically create structures of an 'invisible' party economy...."

Within the "invisible party economy," party members are subject to discipline and conspiratorial control as complete as any which prevailed during the Soviet era. Dissident Russian author Lev Timofeyev writes that every "ex"-communist in charge of a "private" venture is "bound hand and foot to his social class - the apparat, the military-industrial complex, and the KGB. He is dependent on that trinity in everything he does, because he obtains his property rights from them for a price: a silent oath of loyalty. If he breaks that oath, he will not remain a property owner for long."

Nor are genuine entrepreneurs spared the rigors of party loyalty. Russian businessman Konstantin Borovoi has described the shakedown tactics jointly employed by the KGB and the Russian mob: "First [comes] the racket, strong pressure, then a KGB proposal to 'help.'" The "help" comes in the form of "penetration of KGB officers into the top leadership of the company, or the leadership of the company [must establish] close contact with the KGB, and the company [must cease] to exist as an independent commercial organization."

Thieves' World

Were the impact of the KGB-organized Russian mob confined to U.S.-Russian joint economic ventures, the case for disengagement would be compelling enough. However, given that the KGB's Russian mob continues to pursue traditional Soviet strategic objectives through its increasingly powerful connections in the global underworld, disengagement becomes an imperative.

Russian authors Georgy Podlesskikh and Andrei Tereshonok have documented that the KGB took the leading role in "advancing and consolidating the 'horrible mutant,' the modern professional underworld," on a global basis. This has provided a new strategic avenue for Marxist ambitions: "n contrast to the 'world proletariat,' about whom the Kremlin's adventurists dreamed, the criminal clans of all countries are indeed moving to the quickest unification."

Frank Cilluffo points out that "because the Russian mob has been controlled by elements of the Communist Party and the KGB, there's no question that they [the mob] have the tradecraft, techniques, contacts, and resources to pursue both personal enrichment and political designs in the post-Soviet era. The KGB's still got their active networks all over the world, including their sleeper networks. Nobody knows the extent to which those networks are involved in mob activity, or are carrying out strategic designs on behalf of the Russian state - and these objectives overlap, of course."

The case of Filipp Bobkov, the former First Deputy Chairman of the KGB, exemplifies the role of the mobbed-up KGB networks. Bobkov was "cashiered" from the KGB for his role in the bloody KGB-Spetnaz crackdown on the Lithuanian capital of Vilnius in 1991. As a "private" citizen, Bobkov pursued the KGB-ordained strategy of marketing his services to Western investors, and quickly assumed control of a banking group in Moscow. Bobkov swiftly assembled a collection of KGB veterans who had been stationed in Burma, Cambodia, Laos, and Korea. This was the nucleus of what has become known as the "Moscow Narco-Group," which coordinates drug-running operations in Romania, Colombia, Peru, and Cuba. Its main base of operations is the Russian naval base at Cam Ranh Bay in Vietnam - a communist regime which is next in the queue for "joint ventures" and American foreign aid.

The "Moscow Narco-Group" is just one identifiable example of the role carried out by the KGB mob's global network. In her book Thieves' World: The Threat of the New Global Network of Organized Crime, the late Claire Sterling observed: "As the old geopolitical frontiers fell away, the big crime syndicates drew together, put an end to wars over turf, and declared a pax mafiosa. The world has never seen a planetwide consortium like the one that came into being with the end of the communist era." By 1993, wrote Sterling, "The big syndicates of East and West were pooling services and personnel, rapidly colonizing Western Europe and the United States, running the drug traffic up to half a trillion dollars a year, laundering and reinvesting an estimated quarter of a trillion dollars a year in legitimate enterprise."

Perhaps the most shocking aspect of the KGB-created mob network's activities is the impunity with which it conducts its affairs. A remarkable account published in the January 22nd issue of New York magazine describes how over the past two years the Russian mob has received at least $40 billion - all of it in uncirculated $100 bills still in their Federal Reserve wrappers - via Delta Flight 30, which flies from New York City to Moscow five times a week.

The Russian mob, reports New York, "has been using an unimpeded supply of freshly minted Federal Reserve notes to finance a vast and growing international crime syndicate.... The Russian mob's monstrous growth has been aided considerably by its ability to quickly and easily launder its dirty criminal proceeds into clean - and now supposedly counterfeit-proof - U.S. hundreds. Russian banks have been eager to assist, which is not surprising given that a good number are owned outright by Russian mobsters." An official at the federal Comptroller of the Currency office told New York that the laundered currency "is used to support organized crime; it's used to support black market operations.... Yet it appears that at least part of the federal government sees nothing wrong with it."



Stephen Handleman observes that the Vorovskoi Mir (Thieves' World), a thriving Russian underground which has existed since the 1600s, has always exhibited "a complex paramilitary structure whose exclusive rituals and codes of honor were often copied by the early Bolshevik conspirators.... The nomenklatura's principal attributes - a paramilitary hierarchy, hostility toward outsiders, and a propensity for illegal behavior - established its similarity with the criminal societies of the old Russian underworld. The similarity was no coincidence. The organizational model that the Bolsheviks found so attractive in the Russian criminal bands … was internalized in the modern Communist Party structure."

It was a common theme in Soviet propaganda that organized crime was an affliction to which socialist societies are immune. This illusion was disposed of in the era of perestroika in part to provide the KGB security organs with a new rationale: They were to defend "reforms" against the new "criminal element," a role that was defined in an order issued in October 1991 by then-KGB chief Vladimir Kryuchkov.

Many Russians, understandably terrified by the KGB-abetted rise of organized crime, support authoritarian measures to preserve some semblance of order and domestic tranquility. One Russian who understands the larger picture is author Yevgenia Albats. In her book The State Within a State: The KGB and Its Hold on Russia - Past, Present, and Future, Albats recalls:

At the height of Perestroika, in the winter of 1990-91, the KGB announced that it was going after the Mafia's economic stranglehold, whereupon Gorbachev issued a decree granting agents the right … to "unimpeded entrance to the premises of businesses, offices, organizations" … and production spaces used by citizens for enterprises of individual labor.

"The true aim of this campaign has been achieved," Albats records. "Our citizens have been reminded that whatever they do, whatever work they take up, the Chekists will be watching them." This is a particularly bitter realization for Albats. On the evening of August 21, 1991, Albats recalls, she and a few close friends held a quiet celebration as a crane removed the statue of KGB founder Felix Dzerzhinsky from its former place of prominence outside the organization's Lubyanka Square headquarters. "And yet," Albats ruefully records, "as God is my witness, on that night, we left worse Chekists in place."

Global Implications

The KGB-controlled Russian mob is thus used by the security organs to preserve the communist oligarchy's control. Further, the threat of the global mob network is being used as a rationale for the consolidation of police authority in the United Nations. As British Sovietologist Christopher Story observes:

[T]he "problem" of transnational crime and global terrorism is being "addressed" ever more intensively, as Governments respond to the perceived "need" for international cooperation in this area and even as the "former" Soviet Bloc states with which the West is seeking to cooperate ever more anxiously, intensify their global criminal operations. In all probability, many high-profile "international" terrorist incidents, culminating in a "nuclear accident," are planned. Urged on by agents of influence in the West and the United Nations, Western Governments are being "softened up" for "global solutions" to this "international crime" epidemic.

The Clinton Administration eagerly advanced the most corrupt and dangerous of those "global solutions" - intimate cooperation between the FBI and the worst surviving elements of the Soviet security state coupled with relentless subsidy of KGB-controlled joint ventures. In this fashion the "strategic partnership" between the U.S. and Russia is used to construct a global "robbers' state."



http://www.irs-agency.us/russian_mafia.htm

[youhavenoidea]

THE MOB ON WALL STREET--PART 1
A three-month investigation reveals that organized crime has made shocking inroads into the small-cap stock market
In the world of multimedia components, Phoenix-based SC&T International Inc. has carved out a small but significant niche. SC&T's products have won raves in the trade press, but working capital has not always been easy to come by. So in December, 1995, the company brought in Sovereign Equity Management Corp., a Boca Raton (Fla.) brokerage, to manage an initial public offering. ''We thought they were a solid second- or third-tier investment bank,'' says SC&T Chief Executive James L. Copeland.

But there was much about Sovereign that was known to only a very few. There were, for example, the early investors, introduced by Sovereign, who had provided inventory financing for SC&T. Most shared the same post office box in the Bahamas. ''I had absolutely no idea of who those people were,'' says Copeland. He asked Sovereign. ''I was told, 'Who gives a s---. It's clean money.''' The early investors cashed out, at the offering price of $5, some 1.575 million shares that they acquired at about $1.33 a share--a gain of some $5.8 million.

By mid-June, SC&T was trading at $8 or better. But for SC&T shareholders who did not sell by then, the stock was an unmitigated disaster. Sovereign, which had handled over 60% of SC&T's trades early in the year, sharply reduced its support of the stock. Without the backing of Sovereign and its 75-odd brokers, SC&T's shares plummeted--to $2 in July, $1 in September, and lately, pennies. The company's capital-raising ability is in tatters. Laments Copeland: ''We're in the crapper.''

A routine case of a hot stock that went frigid. Or was it? Copeland didn't know it, but there was a man who kept a very close eye on SC&T and is alleged by Wall Street sources to have profited handsomely in the IPO--allegedly by being one of the lucky few who sold shares through a Bahamian shell company. His name is Philip Abramo, and he has been identified in court documents as a ranking member, or capo, in the New Jersey-based DeCavalcante organized crime family.

James Copeland didn't know it. Nobody at SC&T could have dreamed it. But the almost unimaginable had come true: Copeland had put his company in the hands of the Mob.

Today, the stock market is confronting a vexing problem that, so far, the industry and regulators have seemed reluctant to face--or even acknowledge. Call it what you will: organized crime, the Mafia, wiseguys. They are the stuff of tabloids and gangster movies. To most investors, they would seem to have as much to do with Wall Street as the other side of the moon.

But in the canyons of lower Manhattan, one can find members of organized crime, their friends and associates. How large a presence? No one--least of all regulators and law enforcement--seems to know. The Street's ranking reputed underworld chieftain, Abramo, is described by sources familiar with his activities as controlling at least four brokerages through front men and exerting influence upon still more firms. Until recently, Abramo had an office in the heart of the financial district, around the corner from the regional office of an organization that might just as well be on Venus as far as the Mob is concerned--the National Association of Securities

Dealers, the self-regulatory organization that oversees the small-stock business.

A three-month investigation by BUSINESS WEEK reveals that substantial elements of the small-cap market have been turned into a veritable Mob franchise, under the very noses of regulators and law enforcement. And that is a daunting prospect for every investor who buys small-cap stocks and every small company whose stock trades on the NASDAQ market and over the counter. For the Mob makes money in various ways, ranging from exploiting IPOs to extortion to getting a ''piece of the action'' from traders and brokerage firms. But its chief means of livelihood is ripping off investors by the time-tested method of driving share prices upward--and dumping them on the public through aggressive cold-calling.

In its inquiry, BUSINESS WEEK reviewed a mountain of documentation and interviewed traders, brokerage executives, investors, regulators, law-enforcement officials, and prosecutors. It also interviewed present and former associates of the Wall Street Mob contingent. Virtually all spoke on condition of anonymity, with several Street sources fearing severe physical harm--even death--if their identities became known. One, a former broker at a Mob-run brokerage, says he discussed entering the federal Witness Protection Program after hearing that his life might be in danger. A short-seller in the Southwest, alarmed by threats, carries a gun.

Among BUSINESS WEEK's findings:
-- The Mob has established a network of stock promoters, securities dealers, and the all-important ''boiler rooms''--a crucial part of Mob manipulation schemes--that sell stocks nationwide through hard-sell cold-calling. The brokerages are located mainly in the New York area and in Florida, with the heart of their operations in the vicinity of lower Broad Street in downtown Manhattan.

-- Four organized crime families as well as elements of the Russian Mob directly own or control, through front men, perhaps two dozen brokerage firms that make markets in hundreds of stocks. Other securities dealers and traders are believed to pay extortion money or ''tribute'' to the Mob as just another cost of doing business on the Street.

-- Traders and brokers have been subjected in recent months to increasing levels of violent ''persuasion'' and punishment--threats and beatings. Among the firms that have been subject to Mob intimidation, sources say, is the premier market maker in NASDAQ stocks--Herzog, Heine, Geduld Inc.

-- Using offshore accounts in the Bahamas and elsewhere, the Mob has engineered lucrative schemes involving low-priced stock under Regulation S of the securities laws. Organized crime members profit from the runup in such stocks and also from short-selling the stocks on the way down. They also take advantage of the very wide spreads between the bid and ask prices of the stock issues controlled by their confederates.

-- The Mob's activities seem confined almost exclusively to stocks traded in the over-the-counter ''bulletin board'' and NASDAQ small-cap markets. By contrast, New York Stock Exchange and American Stock Exchange issues and firms apparently have been free of Mob exploitation.

-- Wall Street has become so lucrative for the Mob that it is allegedly a major source of income for high-level members of organized crime--few of whom have ever been publicly identified as having ties to the Street. Abramo, who may well be the most active reputed mobster on the Street, has remained completely out of the public eye--even staying active on the Street after his recent conviction for tax evasion.

-- Mob-related activities on the Street are the subject of inquiries by the FBI and the office of Manhattan District Attorney Robert M. Morgenthau, which is described by one source as having received numerous complaints concerning mobsters on the Street. (Officials at both agencies and the New York Police Dept. did not respond to repeated requests for comment.)

-- Overall, the response of regulators and law enforcement to Mob penetration of Wall Street has been mixed at best. Market sources say complaints of Mob coercion have often been ignored by law enforcement. Although an NASD spokesman says the agency would vigorously pursue reports of Mob infiltration, two top NASD officials told BUSINESS WEEK that they have no knowledge of Mob penetration of member firms. Asked to discuss such allegations, another high NASD official declined, saying: ''I'd rather you not tell me about it.''

-- The Hanover, Sterling & Co. penny-stock firm, which left 12,000 investors in the lurch when it went out of business in early 1995, is alleged by people close to the firm to have been under the control of members of the Genovese organized crime family. Sources say other Mob factions engaged in aggressive short-selling of stocks brought public by Hanover.

-- Federal investigators are said to be probing extortion attempts by Mob-linked short-sellers who had been associated with the now-defunct Stratton Oakmont penny-stock firm.

Mob manipulation has affected the markets in a wide range of stocks. Among those identified by BUSINESS WEEK are Affinity Entertainment, Celebrity Entertainment, Beachport Entertainment, Crystal Broadcasting, First Colonial Ventures, Global Spill Management, Hollywood Productions, Innovative Medical Services, International Nursing Services, Novatek International, Osicom Technologies, ReClaim, SC&T, Solv-Ex, and TJT. Officials of the companies deny any knowledge of Mob involvement in the trading of their stocks, and there is no evidence that company managements have been in league with stock manipulators. These stocks were allegedly run up by Mob-linked brokers, who sometimes used force or threats to curtail short-selling in the stocks. When support by allegedly Mob-linked brokerages ended, the stocks often suffered precipitous declines--sometimes abetted, traders say, by Mob-linked short-sellers. The stocks have generally fared poorly (table, page 99).

Not all of the stocks were recent IPOs, and they were often taken public by perfectly legitimate underwriters. International Nursing, for example, went public at $23 in 1994 and was trading at $8 in early 1996 before falling back to pennies. Short-sellers who attempted to sell the shares earlier this year were warned off--in one instance by a Mob member--market sources assert. International Nursing Chairman John Yeros denies knowledge of manipulation of the stock.

What this all adds up to is a shocking tale of criminal infiltration abetted by widespread fear and silence--and official inaction. While firms and brokerage executives who strive to keep far afield of the Mob often complain of NASD inaction, rarely do such people feel strongly enough to share their views with regulators or law enforcement. Instead, they engage in self-defense. One major brokerage, which often executes trades for small-cap market makers, keeps mammoth intelligence files--to steer clear of Mob-run brokers. A major accounting firm keeps an organized-crime expert on the payroll. His duties include preventing his firm from doing business with brokerages linked to organized crime and the Russian Mob.

In the pages that follow are the results of BUSINESS WEEK's investigation.


THE BOX
At about 3 o'clock in the afternoon of Sept. 25, 1996, three men appeared on the 28th floor of 120 Broadway, Manhattan. They walked into the offices of Sharpe Capital Inc., a dealer in over-the-counter stocks. They were burly. ''Like lumberjacks,'' said an eyewitness soon after. A gun was in the belt of one of the men.

The confidential police report of the incident (Complaint No. 10530, First Precinct) reads as follows:

''At that point they asked the victim what he was trading in. Then they slapped him in the head and stated again, 'What the f-- are you trading in.' Then he slapped the victim in the head again.''

A witness recalls one of the men saying: ''Don't f-- with our stock.'' The stock: Crystal Broadcasting Inc. After the men left, Sharpe stopped trading in Crystal Broadcasting.

To the New York Police Dept., the incident at Sharpe was about as serious as a scuffle over a parking space. A police source says that the assault, categorized as a low-grade misdemeanor at best, is considered closed and is not being investigated because the victim was not seriously hurt, no gun was displayed--even though one was observed--and the perpetrators were unknown. (However, one witness ruefully notes, police did nothing to ascertain their identity--such as examine a security-camera surveillance tape.) Sharpe's CEO, Lawrence Hoes, declined to discuss the matter.

But BUSINESS WEEK learned that the assault at Sharpe was not an isolated incident. Rather, it was part of a systematic pattern of intimidation. By eliminating competing market makers and allowing only cooperating brokers to bid on stocks, the result is a kind of rigged auction--with the prices where desired, and the spreads between bid and ask prices kept as wide as possible. In Street parlance, this process of rigging the market in a stock is known as ''boxing'' a stock. It is part of the lexicon of the Mob's dominion on Wall Street (page 99).

The box is the heart of most stock-manipulation schemes. In the case of Crystal, the trader at Sharpe was suspected of ''cracking the spread.'' According to market sources who were familiar with the trading in Crystal that day, Sharpe was blamed, in effect, for doing what a market maker is supposed to do--get the best possible price for its customers and keeping the spreads as narrow as possible. During the day, Crystal traded as low as 4, well below the 5 1/8 closing price of the day before, and the spreads narrowed as well, to a relatively reasonable 4 3/8 bid and 4 7/8 ask. Sharpe was blamed for that benign--to most people--market action.

In the weeks following the Sharpe incident, Crystal shares were trading at the kind of spreads that can only happen when the market is tightly controlled. If you buy it from a dealer, you pay the ask price, $3.50. But when you sell it, you get the bid--56.2 cents. (Crystal's president, Joseph Newman, said he had no knowledge of coercion of market makers in his stock.)

Sometimes the maneuvering involved in creating and exploiting the box can be as subtle as a bison in a china shop. One West Coast investor, who requested anonymity, says that brokers at a small New York firm, Monitor Investment Group, convinced him that two small-cap stocks--International Nursing Services and Beachport Entertainment--were about to be pushed upward. Says the investor: ''They said they had a handle on all this stock. They said they'd run it up and get me out of it in a week.''

So sometime around last New Year's Day, he bought warrants and a big block of the stock--100,000 shares of International Nursing and 85,000 of Beachport. When he tried to sell, he says, his brokers flatly refused. The shares, which had started heading southward almost from the moment he bought them, plummeted. They're now worth one-fifth of what he paid. Monitor Chairman William F. Palla denies the firm was involved in stock manipulation but concedes a broker may have promised a runup but not really meant it.

Sometimes, of course, thinly traded stocks can be run down by aggressive short sellers, and the Mob is alleged by Street sources to have profited from that as well. One target of investigators, sources say, is a coterie of brokers formerly associated with the defunct penny-stock brokerage of Stratton Oakmont. Sources familiar with the investigation say that authorities are exploring charges that some of these brokers, after Stratton's demise, may have extorted money from their former colleagues in the business--allegedly threatening to short-sell stocks underwritten by those firms. According to sources, the Stratton brokers allegedly shared their profits with a member of a New York crime family.

Among the trading being investigated, sources say, are stocks underwritten by a penny-stock firm called State Street Capital Markets. Stocks brought public by the New York-based firm--Fun Tyme Concepts, U.S. Bridge of N.Y., and Cable & Co. Worldwide--were pummeled in the market last August, and trading in the stocks is allegedly being probed. At the time, State Street maintained that its shares were victimized by concerted short-selling. State Street officials did not return phone calls, and Stratton officials could not be reached for comment.


''YOU'VE MADE A FRIEND''
First Colonial Ventures Ltd. is a minor venture-capital firm whose stock trades on the OTC bulletin board--so small that it is not required to file more than token disclosures with the Securities & Exchange Commission. But for market makers in small-cap stocks, First Colonial looms huge. It is an object lesson: When the Mob speaks, market makers obey.

The incidents took place early in October, one week after the assault at Sharpe. First came a beating. A trader at Naib Trading Corp. in Fort Lauderdale was summoned to the office of a man by the name of Roy Ageloff. The trader has told associates that Ageloff had beaten him once before with a nail-pierced baseball bat. This time, he said, Ageloff left the room. Then a 400-pound hoodlum knocked him down and kicked him while he was on the floor. The message: Stay away from First Colonial.

The trader at Naib was not the only one to suffer ''persuasion'' over First Colonial. Sources say that four other firms were approached with warnings to cease trading in the stock. To be sure, it was not a total success. There was one rebuff: A market maker in the little town of Hurst, Tex., Anthony Elgindy of Key West Securities Inc., says he ignored warnings that traders who did not comply would soon be ''facing the ceiling''--and has received numerous threatening phone calls since then. But at two other market makers, the intimidation worked. They ceased making a market in First Colonial.

The market makers dropping the stock were William V. Frankel & Co. in Jersey City, N.J., and the biggest name in NASDAQ stocks: Herzog, Heine, Geduld. Sources say traders at both firms quit trading the stock after receiving menacing visits at their offices. ''We decided we shouldn't get involved in a stock like that,'' says Herzog's head trader, Irwin Geduld. Was anyone at his firm threatened? ''We weren't,'' said Geduld. ''Someone else was.'' (A Frankel trader, who declined to give his name, says: ''We have no comment whatsoever about First Colonial Ventures.'') Even a brokerage that was not a market maker, D.L. Cromwell Investments Inc. in Boca Raton, received a visit from a thug, a source says. The visitor left after demanding, and being shown, proof that the firm was not a short-seller in the stock. Cromwell officials declined comment.

Sources say that traders who caved in to coercion later received expensive bottles of liquor with a note that read: ''You've made a friend.'' But the market makers who dropped First Colonial were making no new pals among investors. Since the incident, the ask price paid by the public for buying First Colonial stock has climbed--from a low of $1.13 on Oct. 2 to as high as $4.13 in recent trading. But the bid price that the public gets when selling the stock back to the Street has been far less buoyant. The bid promptly rose from a low of 87 cents on Oct. 2 to $1.50 and has stayed at about that level, even as the ask price has skyrocketed to almost three times that figure. (On Oct. 4, according to a letter sent to market makers obtained by BUSINESS WEEK, the NASD launched an inquiry into the dropping of First Colonial stock by market makers. The NASD declined comment on the investigation.)

Who was behind the wave of intimidation over First Colonial? NASDAQ trading figures point toward a New York-based firm called PCM Securities Ltd. PCM was the largest market maker in First Colonial in September, with 48% of the trades. By October, however, this rose to 75%. PCM completely dominated the market in First Colonial.

Although he is not listed in NASD records as a control person or even as an employee of PCM--or of any other brokerage--Street sources say that the power behind PCM is the 37-year-old Ageloff. He did not respond to numerous messages left at PCM's office in Boca Raton. An employee there said Ageloff nowadays spends most of his time there, punctuated by frequent visits to New York. Asked about Ageloff, Steven Edelson, PCM's principal, denied that Ageloff has any role in the firm and says he has met him only once. Edelson had no comment on its trading in First Colonial, and First Colonial President Murray Goldenberg said he was ''shocked'' to hear reports of intimidation of market makers.

(Continued on next screen)


http://www.businessweek.com/1996/51/b35061.htm

[youhavenoidea]

THE MOB ON WALL STREET--PART 2
A TALE OF TWO MARKETS
Even though NASD records show Ageloff has not been officially associated with any brokerage firm over the past two years, he is a widely known figure in small-cap stock circles. Why would market makers drop a stock just because Ageloff tells them--even when he is not accompanied by 'persuasion'? Street sources say the fear he inspires is justified: The force that drives Ageloff, they maintain, is a 59-year-old man who, on official record at least, has never set foot on Wall Street. He is Alphonse Malangone, otherwise known as 'Allie Shades,' and his few appearances in the public record pertain almost exclusively to another market--the Fulton Fish Market.

'Allie Shades' Malangone is the Zelig of the Mob's Wall Street coterie. For years, he has been observed by investigators in lower Manhattan, ensconced in the twin worlds of the Fulton Fish Market and the stock market. To law enforcement he is an alleged loan shark and gambler, a longtime power behind Mob control of the Fulton market, and he is described in court proceedings by federal and state law enforcement officials as a capo in the Genovese crime family.

But to the very few Wall Streeters who know him, he is a sophisticated market player who is an expert at 'working the spreads'--getting in at the bid price and exiting at the ask price, with the help of cooperative traders. 'He's very smart, very articulate,' says one investigator. 'When you hear him on the wire, he would couch what he would say in gambling phrases' to mislead investigators.

Investigators are not fooled, but despite close surveillance and wiretaps dating back to the 1980s and perhaps before, they have been unable to make a case against Malangone and other reputed Fulton market mobsters for their suspected activities on Wall Street. One longtime Malangone-watcher recalls that the Fulton market was believed by law-enforcement authorities in the early '80s to be a clearinghouse for stolen bonds. But nothing was ever proven.

Investigators thought they were on to something, finally, in 1985. They had in their sights two big fish, so to speak--Malangone and Vincent Romano, also identified in court papers as an alleged Genovese family member who was suspected of involvement in the Fulton market. Malangone and Romano were probed by federal and local authorities for their alleged manipulation of a pharmaceutical company stock, Nu-Med Inc., a company that later declared bankruptcy. Investigators believed that the two men had a position in Nu-Med shares. The investigation was never made public, for authorities couldn't build a case against Malangone and Romano. Efforts to reach the two men were unsuccessful.

Sources on Wall Street say that Malangone was a behind- the-scenes player in the biggest penny-stock fiasco of recent years: Hanover Sterling. According to sources, Malangone controlled Hanover through his right-hand man, Alan Longo, who has been identified by federal authorities in court filings as a member of the Genovese family. Longo, who is described by acquaintances as a heavy gambler, is said by sources to have worked directly with Ageloff in Hanover and other market ventures.

Ageloff--in concert with his alleged Mob contacts--is believed by market sources to have been the hidden control person at Hanover. It went out of business in early 1995 and resulted in the demise of the firm that it cleared through, Adler, Coleman & Co. An attorney for the trustee in the Adler Coleman bankruptcy, Mitchell A. Lowenthal, says that his firm, Cleary, Gottlieb, Steen & Hamilton, has discovered evidence that 65% of Hanover's profits were shared by Ageloff and another Hanover official. Efforts to reach Hanover execs were unsuccessful.

Street sources say that the Mob was involved in both sides of the Hanover-Adler imbroglio. The Malangone-Longo-Ageloff faction, they say, profited from the runup in Hanover stocks, while other mobsters allegedly sold short the Hanover stocks and pushed their prices downward--to the chagrin of the Malangone faction. This internecine dispute, sources close to Hanover say, was eventually resolved without bloodshed, but only after some tense meetings between Mob factions. Lowenthal says that his firm's investigation has shown that 'Ageloff and some of the shorts were all connected [to the Mob] in one way or the other,' but nothing was proven.

According to people close to the Hanover Sterling machinations, the Mob was represented on the short side through Falcon Trading Group and Sovereign Equity Management Corp. And those brokerages, sources say, are controlled by the alleged SC&T profiteer--a silver-haired, 51-year-old resident of northern New Jersey named Philip C. Abramo.

Abramo's name has never surfaced in any of the thousands of pages of deposition testimony taken by the adversaries in the Hanover-Adler Coleman legal warfare. Nor have his recent legal troubles--a federal fraud indictment-- resulted in exposure of his Street ties or alleged Mob membership. Abramo's stunning success at avoiding publicity has helped make him the most active reputed Mob honcho on Wall Street. 'He is educated. He sounds sincere,' says one source. 'He's gotten all these wiseguys to work together.'


THE 'CONSULTANT'
In court records and corporate filings, Philip Abramo gives his business address as 176 Saddle River Road, South Hackensack, N.J. The address applies to not one but several buildings, forming a kind of cul de sac on a dreary street in an industrial town in northern New Jersey. It is a quiet area. A cemetery is next door. Faded lettering shows that one of the buildings was once used many years ago to process meat. Today they house an auto-body shop, a construction company, and other little offices with ambiguous names.

Listed in no official records is another address for Phil Abramo--one that is far more apropos for a man who is a hidden power in the brokerage industry. Until a couple of months ago, sources say, Abramo maintained an office on the 14th floor of 90 Broad St. in lower Manhattan, directly adjoining the New York office of Sovereign Equity Management. A door linked the two offices, and it was always open. 'I knew him as a stock promoter who always had stock deals. We hired brokers who were friends of his,' says one Sovereign employee who requested anonymity. Sovereign CEO Glen T. Vittor denies that Abramo had any role in the firm.

But sources describe his role as central--as the hidden control person behind Sovereign, a prominent name in the micro-cap stock business, its sister firm Falcon Trading, and two other firms that are major penny-stock brokers and market makers, Toluca Pacific Securities Corp. and Greenway Capital Corp. He is also described by Street sources as controlling other dealers in small-cap stocks through brokers and traders owing allegiance to him.

On paper, Abramo is respectability personified. Over the past decade he has been listed as president or top shareholder of four publicly held investment companies. He is married, with a grown daughter. He has been a 'restaurant consultant,' auto dealer, and construction company operator. He has had four years of college and may even have training as an accountant.

But inquiries about Abramo bring far from routine reactions. At Greenway Capital, President John Margiotta is asked if he knows Abramo. Margiotta replies: 'Who?' and hangs up the phone. A person answering the phone at Greenway, moments later, says that Margiotta is 'very busy' and 'not in the office.' Toluca Pacific President Paul Fiorini, when asked about reports of Abramo's control of his firm, calls them a 'total farce.' He says he owns 100% of the firm and goes on to say: 'Who is this person? I don't want my name associated with this. I don't know this person. I don't know Phil Abramo.'

The reason for the reticence is understandable. According to federal court records in recent tax-evasion proceedings against Abramo in Newark, the Saddle River (N.J.) resident lists his occupation as 'consultant.' But elsewhere in the court file, the FBI gives a different version of his livelihood. In 1994, in an affidavit filed with the court in a bail hearing, the FBI identified him as a frequent visitor to reputed New York Mob boss John Gotti prior to his imprisonment in 1992, and alleged that Abramo held the rank of capo in the New Jersey organized crime family once headed by Sam 'the Plumber' DeCavalcante. But sources say that since then, Abramo has risen in the ranks to No.2 in that crime family--underboss.

Abramo is easily the highest-ranking reputed mobster to be engaged full-time in Wall Street activities. His lawyer, Harvey Weissbard, declined comment on Abramo's alleged ties to organized crime. Asked about Abramo's possible role on Wall Street, Weissbard said he had 'no information of which I can respond one way or the other, and I doubt if I did know one way or the other that I would respond.'

Little is known about Abramo's early life, such as which college he attended. Except for a conviction for possession of stolen property in 1971 and another in 1973 for conspiracy to distribute heroin--which yielded him a seven-year prison sentence--he has stayed out of the limelight. Even when he was indicted in 1994 in New Jersey for allegedly swindling 300 people nationwide out of $1 million--they were sold phony 'lines of credit'--he received no publicity and continued to work on the Street.

Indeed, by the time he was indicted in the credit-line scheme, Abramo already had a lengthy, ostensibly legitimate track record. In the late 1980s Abramo founded publicly-held investment companies with names such as Cambridge Investment Service Corp. and American Acquisition Corp. (SEC filings by these companies show they did little but file papers with the SEC.) According to papers filed by Abramo with the SEC for the investment companies, Abramo was a 'restaurant consultant to Northern Roses Inc. (Miami, Fla.),' during 1982, and 'was also a restaurant consultant to Bagel Nosh Inc. (1983 and 1984--New York, N.Y.).' Abramo's Bagel Nosh connection is significant, because the company was brought public by Thomas J. Quinn.

Quinn was one of the most prominent figures in the penny-stock world, but his association with Abramo has never been made public, although regulators have long suspected it. When Quinn was jailed in France in 1988 for securities fraud, investigators say, Abramo's name was prominently displayed in a notebook that was seized from him. Calls in 1995 from Quinn's telephone to Abramo's unlisted home phone number also appeared in phone records that were recently subpoenaed by investigators seeking Quinn's assets. (He was successfully sued by the SEC for securities fraud in 1989 and owes millions of dollars in civil penalties.) Indeed, Abramo was subpoenaed to testify before the SEC in 1989 during a probe of Quinn, but he invoked his Fifth Amendment privilege against self-incrimination. Efforts to reach Quinn for comment were unsuccessful.

The Quinn-Abramo connection could become significant in the months ahead because of an ongoing federal grand jury probe in California into possible irregularities in the trading in Solv-Ex Corp., an Albuquerque-based company that claims to have a process for retrieving oil from tar sands. (Solv-Ex officials denied knowledge of any trading irregularities and claimed that a private investigator's report, which they refused to release, indicated there was no manipulation.) According to sources close to the grand jury probe, Abramo and Quinn are among those who have been a subject of the investigation.

Today, Abramo faces a one-year prison term for tax evasion. It was a plea bargain--the guilty plea to tax evasion in return for dropping of the loan-scheme charges. He is scheduled to report to prison on Jan. 7. While he may well handle his Street interests while incarcerated, in some quarters there is concern that his departure will mean an increase in violence.

The level of violence is becoming worrisome. Early in November, a broker at a New York-area brokerage was severely beaten, his arm broken, in the lobby of the firm. As so often happens in such situations, he did not notify the police. His offense: He moved from a Mob-controlled firm, taking his customers with him, and dared to sell their stocks. Sell pressure on stocks is just what the Mob despises (unless, of course, they are short). It can sour a deal--and the often immense profits that can come with it.


THE DEAL
Mama Tish's International Foods is a Chicago-based company that makes Italian ices. But when it went public last month, it was red-hot. The IPO went for $5, but on the first day of trading, the shares moved as high as $9.75--a sure sign of 'flipping,' in which favored investors cash out of the stock immediately. Alas, the Mama Tish IPO was canceled--wiping out all the trades--when the underwriter, a Long Island firm called Landmark International Equities, got into a heated dispute with the firm that clears its trades. The company and underwriter were disappointed--and so were some people who hate to be disapppointed.

Even before the deal began, traders began receiving phone calls warning them not to short the IPO, which might have driven down prices. According to Wall Street sources, among the people who would have profited heavily from the Mama Tish IPO is John Gotti Jr., reputed acting boss of the Gambino family and son of the imprisoned Gambino crime family chieftain. According to Wall Street sources, 'Junior' Gotti is the hidden owner or control person of one of the brokerages--other than Landmark--that was active in the Mama Tish deal. Had the deal gone through, any Gotti people involved in the deal would have profited handsomely from the 80% difference between the offering price and the trading price of the shares. Gotti was unreachable for comment. A company official said he did not know of any Mob involvement in the IPO.

If 'Junior' Gotti represents the younger generation of reputed mobsters on the Street, the older generation would be epitomized by John 'Sonny' Franzese. Franzese has been described by law-enforcement authorities for decades as an influential, feared mobster who allegedly was the former underboss of the Colombo crime family. Sources say Franzese joined the Mob's rush to the stock market after his release on parole from a 50-year term for bank robbery in 1994. According to sources, the 77-year-old reputed Mob elder described himself to associates earlier this year as controlling, through a confederate, Monitor Investment Group, whose brokers allegedly ripped off the West Coast investor by promising a guaranteed runup. Monitor chairman William F. Palla denies that Franzese or organized crime has ever played any role in the firm.

Monitor, which ceased active operations last June, is described by former employees as a center for widespread stock manipulation--specifically involving boxing of International Nursing Services, Beachport Entertainment, and Innovative Medical Services. Officials of the three companies say they were unaware of any irregularities in the trading of their stocks. International Nursing Chairman John Yeros, however, concedes he felt something was amiss at Monitor when he attended a presentation the brokerage sponsored for International Nursing at a downtown hotel--and found that Monitor had hired a hooker to 'service' the brokers in attendance. Palla says he heard of the 'hooker incident' but denies Monitor retained that person.

If Franzese in fact became involved in the penny-stock business, it would be a potent sign of the lure of the penny-stock business to the Mob. But like Abramo, Franzese may have to cool his interest in the market for a while. He was recently found to have violated the terms of his parole and was ordered back to prison.


THE FUTURE
There are plenty of young mobsters ready to take the place of any old-timers who might fall victim to any future law-enforcement crackdown. One Brooklyn-based prosecutor, a specialist in the Mob, observes that 'there are a lot of wannabes getting jobs on the Street, working in these places, cold-calling.' That might explain why there seems to be no shortage of people willing to carry guns into brokerage houses and beat up traders in front of witnesses, or telephone threats to traders.

One reputed up-and-comer in the Street's Mob contingent is Dominick 'Black Dom' Dinassio, who is said by Street and law-enforcement sources to hold sway over Euro-Atlantic Securities, a Manhattan brokerage that is active in penny stocks. According to a source in the Manhattan District Attorney's office, Dinassio is allegedly an associate in the Colombo crime family.

Law-enforcement sources say that Dinassio has lately been observed in the company of Longo, Malangone's longtime partner. Sources say a short-seller who was active in shorting Hanover stocks, John Fiero, told police recently that Dinassio threatened him for his trades in one stock brought public by Euro-Atlantic, Hollywood Productions Inc. Fiero refused comment and company officials did not return phone calls. Contacted at Euro-Atlantic's office in lower Manhattan, Dinassio declined to discuss his role at the firm. Asked about the allegations that he was connected to organized crime, he replied: 'What? I think you're crazy, buddy. I'll talk to you later,' and hung up. Euro-Atlantic officials did not return phone calls.

Although whistle-blowers in Mob-run firms are rare, the increasing violence is beginning to enter the public record. At Monitor, the firm Franzese allegedly claimed to control, an incident last January led to a rarity in this world--a lawsuit. In a suit filed in U.S. District Court in Manhattan, former broker Robert Grant contends that he was 'maliciously and violently struck, battered, beaten, pummelled, pushed, punched, and attacked' by Monitor employees at the instigation of Palla and another manager. At one point, the suit says, Grant was beaten with a chair. The lawsuit does not say so, but witnesses say that another broker was also viciously assaulted. Neither Grant nor the other broker would comment, and Palla says he was in Philadelphia at the time of the incident, which he describes as a 'fight.' One witness says Monitor management suspected that the two brokers may have been short-selling Monitor's favorite stocks.

Some of the most violent, crudest elements to come to the Street are part of its fastest-growing contingent--the Russian Mob, based in the Brighton Beach section of Brooklyn. 'Over the past couple of years, they've put people in the [brokerages], kids with clean records, and they're washing money legitimately,' says one law-enforcement official who is intimately familiar with Russian organized crime. The offspring of two major Russian mob figures, he notes, have been active on Wall Street.

The Mob's fascination with Wall Street is understandable, for they have had little to fear from law enforcement or regulators. If the authorities, finally, act against Mob members who are active on the Street, it will be the first such prosecution since 1973, when three major Mob figures were imprisoned for securities fraud. At the time, the Mobsters were vanquished because one of their confederates became a government witness. 'It's practically impossible to prosecute these people unless you have a turncoat, somebody who can walk you through all those transactions,' notes Ira Lee Sorkin, a former SEC regional director who was involved in the 1970s prosecutions. So long as the Street continues to keep silent on the Mob in its midst, organized crime will continue to be the silent partner of the financial markets.








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RELATED ITEMS
COVER IMAGE: The Mob On Wall Street

TABLE: How the Mob Makes Money on Wall Street

TABLE: In the Shadows of the Small-Cap Market

TABLE: Mobspeak: A Glossary

TABLE: Mob-Exploited Stocks: Most Have Suffered

DID THE NASD LOOK THE OTHER WAY?


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http://www.businessweek.com/1996/51/b35062.htm

[youhavenoidea]

How the Mob Makes Money on Wall Street
TRADING SCAMS

http://www.businessweek.com/1996/51/b35064.htm

THE BOX: Mob-affiliated traders control the market for a stock and its price by trading it among themselves--enforcing their control through bribery, violence, and intimidation. They then unload the stock on the public at an inflated price and, sometimes, sell it short to profit when the shares go bust.

REGULATION S: Through offshore accounts, Mob members illegally buy cheap stock issued under Regulation S of the securities laws--supposedly reserved only for foreign investors. The cheap stock is sold on the open market at vast, riskless markups.

FLIPPING: Mobsters, through front men, quickly unload, at inflated prices, stocks that are the subject of hot IPOs issued by firms they control.


BROKERAGE SCAMS

HIDDEN OWNERSHIP: Through front men who have no criminal records, the Mob controls, or has hidden ownership stakes in, at least two dozen NASDAQ brokerage firms.

TRIBUTE: Mob members get kickbacks from brokerages for protecting them from shakedown attempts by other mobsters.

EXTORTION: Mobsters, working with short-selling confederates, demand payments in return for not shorting the stocks issued by penny-stock and microcap brokerages.

DATA: BUSINESS WEEK