CHAPTER THIRTY
June 14, 2000
The morning of the big takedown FBI agents and New York City cops spread out across the five boroughs of New York City, ventured deep into New Jersey and fanned out across Florida. They picked up Jimmy Labate at his home in Staten Island, which was very convenient because they were able to stop right down the street and also pick up his neighbor, NYPD Detective Stephen Gardell. Sal Piazza they found in New Jersey, and Robert Lino they picked up in his native borough of Brooklyn. Frank Persico, the guy who shot up the computer, they found in Howard Beach, Queens. They were to be the stars of what Mary Jo White, the United States attorney for the Southern District of New York, would later that day call the largest securities fraud takedown in history.
The breadth and scope of law enforcement’s efforts became clear at 8 a.m. when a federal magistrate unsealed not one but sixteen indictments and seven criminal complaints making allegations of securities fraud, extortion, death threats and all around bad behavior against 120 people. All five of New York’s organized crime families—the Gambinos; the Luccheses; the Genovese, Bonanno and Colombo groups—all were named in the indictments. It took all day to bring all of them through the courts. They couldn’t fit them all on a school bus.
In the top indictment, the one with the most gangsters, Robert Lino was listed as “Little Robert,” not Robert from Avenue U. Sal Piazza was just plain Sal, and Jimmy Labate just plain Jimmy. Two names that were not on the indictment were Jeffrey Pokross and Francis Warrington Gillet III. Right away everybody knew what that meant. Immediately they all began thinking about how much time it would take for Jeffrey and Warrington to tell the FBI everything. Right away they realized that could take days.
Everything was there in one place—all the pump and dump schemes, the threats against uncooperative or simply clueless brokers who tried to put in sell orders, the bribes for the corrupt brokers and stock promoters, all the money wire-transferred to accounts on Grand Cayman. The prosecutors were talking about $15.9 million in losses caused to hundreds of victims all across America, most of whom were senior citizens so lonely they’d listen to the nice salesmen tell them about the stock that was going to make them rich tomorrow. They were only talking about a handful of the bogus schemes. There were probably thousands of victims, too many to count, between all the greed and avarice assembled in sixteen indictments and seven criminal complaints. They put out a chart with all the stocks the gangsters and their white collar cohorts had used to steal. Spaceplex alone netted $3.5 million in scam profits.
DMN Capital was called “the fraud magnet” at the center of all the scams. There was a chart for the TV people with little bundles of cash, and there was DMN right in the middle with arrows pointing off to Robert Lino of the Bonanno family and Frank Persico of the Colombo family. Robert’s name was everywhere, and he was given the rank of Mafia captain while Sal Piazza was listed as a mere associate. Jimmy Labate was listed as an associate of both the Bonanno and Gambino families, and Frank Persico only made it to the associate level, too. Some of these alleged gangsters were even listed as registered stockbrokers, including Frank, who also got his own nickname, Frankie. Detective Gardell was not listed as a member or associate of any family and he didn’t get a nickname, but his name came up quite often nonetheless.
One name that was on the indictment but was not mentioned at all during the press conference was Cary Cimino. That morning the FBI had gone to his apartment in the East Village and found no Cary. His sister had no idea where he was. None of his friends could help either. He’d just disappeared. Technically, he was a fugitive, until later in the day when his lawyer called up and said he’d arrange to have Cary come right away.
What the FBI did not know at the time was that Cary Cimino had somehow figured out the game was over and checked into a luxury suite at the Grand Hotel in Manhattan’s Soho neighborhood. He put the $500-a-night room on his credit card. It was a strange choice. It wasn’t walking handcuffed out of your apartment in the predawn darkness, but it also wasn’t Mexico. It was, instead, a place to buy time. Since Cary had run up so much debt and used up so much goodwill, there wasn’t a whole lot else that he could buy.
THE VICTIMS
They came from across America. They were extremely wealthy or moderately wealthy or not wealthy at all. Many were elderly citizens who’d saved up their money and were happy to get free advice on what to do with it. They lived in Stamwood, Washington, and Middle Village, Queens. There were investment partnerships based in London and Switzerland, and there were retired postal workers and school-teachers. They all had one thing in common: they’d thought they were investing their money in the stock market that was carefully regulated and policed for fraudulent activity. They gave up their money believing that they would make even more, and perhaps quickly. They did so willingly. They wanted to get rich quick. They got screwed instead.
Anil Deshumukh, retired electrical engineer. He bought Spaceplex and other stocks through a broker relatives recommended.
“I never saw him. I’m in Philadelphia, and he’s in New York. Over the phone he sounded all right. For every wiseguy, there’s a sucker. I’m not experienced in stock. He tells me, ‘You’re going to make thousands of dollars on these shares. It’s going to go up dramatically.’ Some stocks did . . . He forced me. He kind of pressured me to buy stocks. Those people who were involved kind of cashed out. The stock went up, and they sold off, and my stock was worthless. And he said, ‘Why don’t you take it as a tax loss?’ He was telling me that the stock is going to go up so high and you will make thousands of dollars. And then he said I don’t know why it is going down. Then I found out later this was what you call a pump and dump scheme.
“The thing is, looking back, always you can see the con. But even at present, there are cons you cannot recognize. Years from now, I’ll probably see it’s a scheme, but I don’t know it at the moment. The stocks started collapsing. He kept on saying it’s going to go up, it’s going to recover. But it went down so quickly it was hopeless. I suspect he did [unauthorized trades]. I’m not familiar with stocks. I was going not to trade any stocks and sell them and get my money back. Once when I called back, somebody else picked up the phone. They told me this is what happened [to my broker], that somebody killed him. The guy I talked to he told me what stocks I owned, and I had no idea I had these stocks. I said I never owned them. I was sick at the time. This new guy, I told him to sell, to close the account. And that was the end of it. I lost $10,000 to $15,000.
“Shame on me for being a fool. It’s not a question of me making easy money. It was taking advantage of your trust. I wasn’t looking to become a millionaire or such, but I wasn’t expecting outright fraud like that.”
Dr. Leonid Rubinov, New Jersey dentist: “The call was when the market was going up and you got a lot of calls. For some reason he talked me into something, into investing with him. One transaction was successful and then, not only did they overcharge me on commissions and everything else—they put in illegal transactions so I end up losing thousands of dollars. They told me it was just a mistake but then it wasn’t corrected for so long.”
Bill Bernard, retired lawyer from a small town in Minnesota: “I’d been in and out of the stock market for years. I was never a big investor. I was a real estate lawyer in the 1960s. I didn’t have brokerage accounts. Then in the 1990s I thought I was going to retire so I started selling everything. Of course the 1990s were kind of an upside for stocks and I didn’t know what to do with my money, so I put it in stocks. And oh boy! I took a bath . . . One broker, he would belittle you if you didn’t take his recommendation. These guys are so pompous, they say they’re executive vice president of the firm. Others brag about how much money they’re handling for well-known people and they get your confidence . . . [Another broker] promised the moon and this is where I guess personal greed comes in. But he always had a story that I guess wasn’t true. None of it was investment grade . . . I imagine that I lost $1 million and I never had $1 million. I was just a small town lawyer. I bought older buildings downtown, fixed them up and rented them out. Corporate America and the stock market are filled with thieves and the Mafia and everything else. I wish I had never got out of real estate. It didn’t appreciate but at least you can see it . . . These guys would never have contacted me except that the Bank of Minnesota sells lists of customers. I’m out here in small town America. How else are they gonna find me? I’m on somebody’s list. We’ve got a lot of people selling lists and that’s why I won’t fill out anything anymore . . . I don’t take cold calls anymore, and if I get one, I give them holy hell.” Bernard filed a complaint with the NASD in 2000. A year later a settlement was entered: $85,948 in compensatory damages, $17,905 in interest and $69,235 in attorney’s fees. “Nothing’s been paid on that award and nothing ever will.”
Manny Pragana, retired from his job working maintenance at the post office. He put the family’s savings—$45,500—into stocks. “I’m a World War II veteran, Battle of the Bulge, kid. This guy, he said that the people in East Ches ter invest with him, everything would be in good shape. We have nothing to worry about. He said he had people in Westchester investing with him. And I listened to him. I got sick from this. What are you gonna do? You live and learn. You know how it is. They tell you it’s a sure thing . . . What can I do now? They said if we had to go into court, we would have had to pay the lawyer’s fees. I said nothing doing. Before these lawyers took over, if we got anything, they got a third. We went to arbitration way down there in New York. I went there so many times, and we lost out. What are you gonna do?”
Five days after the big takedown Cary Cimino surrendered at the U.S. Attorney’s Office in Lower Manhattan with his lawyer. He was held overnight at the Metropolitan Detention Center a block away, a dark and foreboding place where Cary immediately started complaining about the mild case of glaucoma he’d suffered from in recent years. When he showed up in court to request bail the next day, he was shocked to hear a young prosecutor named Patrick Smith request that Cary be detained without bail. By now he knew quite a lot about what he was facing, but all the charges he was facing were white collar. There were no murders, no broken arms. Just money stolen. He was aware that Jeffrey Pokross had been cooperating for years and that he’d recorded hours and hours of tape inside DMN and who knows where else. He knew that the amount the feds considered to be stolen profits was in the millions and that he could be held responsible for some of that. He knew that this was not going to be a repeat of 1996, when he’d seen all the charges against him dismissed within a month. But he figured he could get bail.
Prosecutor Smith stepped forward and asked the magistrate if he could play a tape recording made by an informant. He didn’t name the informant, but Cary knew right away it would have to be Jeffrey. Prosecutor Smith explained in earnest that the tape would show how Cary Cimino was a danger to the community. He plunked in the tape, and soon Cary heard his own voice fill the room.
“Put a gun in his hand, put it in his mouth,” Cary heard himself say. “Pull the trigger and make it look like suicide.”
It was all a big misunderstanding, his lawyer argued. Had anything come of this idle threat made in conversation at Sparks Steakhouse with crowds of people all around? No. Of course not. Cary Cimino wasn’t capable of hurting a fly, never mind a stockbroker who was at one time his best friend. The only individual Cary presented a danger to was himself. Mostly Cary needed the judge to know how his eye problems were getting worse inside the prison where, his lawyer argued, conditions were simply unacceptable.
Back and forth they went, with Prosecutor Smith insisting that Cary really did mean to have Francis Warrington Gillet III murdered by a gangster, and Cary’s lawyer insisting it was just macho hyperbole by an insecure guy. The judge pushed for a compromise, and the prosecutor came up with extreme bail conditions for someone accused of nonviolent criminal activity: a $2 million bail bond backed by three people who would consider Cary to be a responsible person. Plus he’d have to remain confined all the time to his home in the Village, wearing an electronic monitoring device and staying away from securities deals, real or proposed. Cary’s lawyers agreed to the requirements and promised to make the arrangements right away. Cary wondered where he was going to find three people to help him get out of jail.