Part 9 (1/2)

The morning Accessible Software went public, it opened at $1, about twice what the wives of DMN's partners had paid. This did not make the front page of the Wall Street Journal Wall Street Journal . Accessible Software of New Jersey was not exactly a household name, but the word on the over-the-counter bulletin boards was that it was hot. The company as presented seemed like a brilliant idea. It claimed to have designed and developed large computer application systems that acted as management software for companies. Run your business by computer program. DMN had arranged a private placement deal that allowed certain qualifying insiders-close relatives-to acquire 1 million shares of Accessible without a holding period. Most of the stock was purchased by the wives of DMN's partners. Now Jeffrey Pokross just needed somebody to make a market for Accessible and sell the stuff. . Accessible Software of New Jersey was not exactly a household name, but the word on the over-the-counter bulletin boards was that it was hot. The company as presented seemed like a brilliant idea. It claimed to have designed and developed large computer application systems that acted as management software for companies. Run your business by computer program. DMN had arranged a private placement deal that allowed certain qualifying insiders-close relatives-to acquire 1 million shares of Accessible without a holding period. Most of the stock was purchased by the wives of DMN's partners. Now Jeffrey Pokross just needed somebody to make a market for Accessible and sell the stuff.

Until now Pokross had traipsed from corrupt brokerage to corrupt brokerage, searching for enthusiastic stockbrokers and stock promoters willing to hype whatever nonsensical company was put in front of them for exorbitant hidden fees, otherwise known as bribes. This was becoming tedious and dangerous. Every time you did this you ran into a new crime family. It was getting like the garbage business out there. Jeffrey decided it was time for a new approach. It was no time to take over a brokerage house and make it DMN Capital's own, and Jeffrey even had the perfect candidate in mind-a small boutique outfit in Philadelphia called Monitor Investments.

Always the opportunist, Jeffrey had run into the owner of Monitor, William Palla, who'd told him he was very interested in opening an office in New York City. Nothing was that simple. Palla informed Jeffrey that he'd heard that to make a good living in the world of pump and dump, you required certain friends. Jeffrey agreed that this was true and said he might be able to help out. Pokross then met with Robert Lino, and it was agreed that grabbing on to Monitor and squeezing it like a grapefruit was the best possible option. It was decided that the newly acquired Monitor would get its feet wet hyping Accessible Software's initial public offering.

Within minutes of opening, Accessible began to take off. By the close of business, it was selling at $9 a share. The wives quickly sold 120,000 shares to retail customers and made a fortune. The brokers at Monitor who did the heavy lifting pocketed huge undisclosed commissions. In one twenty-four-hour period, the three DMN partners-Jeffrey Pokross, James Labate, and Salvatore Piazza-cleared $500,000 in profit. They still had a lot of stock left over when regulators halted trading of Accessible.

When it resumed trading, they stopped the manipulation and went legit. The gamble paid off. The regulators walked away and the stock held around $7. DMN and Monitor were a marriage made in Wall Street heaven. Robert Lino and the Bonanno crime family got their share and everyone was happy, but there was a little problem. When Jeffrey and Robert had decided to take over Monitor, they did not know that-once again-one of the princ.i.p.als already had a relations.h.i.+p with another crime family, a guy named Ron.

Ron was somehow related to a guy who knew a guy in the Gambino family. At least that was how it was explained to Robert Lino when his presence was requested at a sit-down with a Gambino soldier named Johnny R. This guy Ron claimed Robert had stolen $75,000 from Monitor and a solution had to be reached. When the time came for the meeting, Robert Lino showed, along with Jeffrey Pokross and Jimmy Labate and Jimmy's friend in the Gambino family, Johnny R, showed as well, but Ron did not. He'd changed his mind and relocated to Florida.

This did not please the Gambino family. This absence of complainant made them look bad, which in turn made them feel bad. They left the meeting in a huff, then later reached out to Jimmy Labate and demanded he come to yet another meeting, a proposition that made Jimmy quite nervous. The Gambino family was insistent, and also insisted that Robert Lino be present as well to put the dispute on record with the Bonanno group. This time they met in Manhattan. Lino sat down with a soft-spoken captain in the Gambino family named Mikey Scars DiLeonardo, who was said to be quite close to the Gotti family and was believed to be a fan of compromise. Although Gotti had been convicted and was slowly dying in prison, he still ran the family and had to be recognized.

During the meeting with Mikey Scars, Robert Lino admitted right away that he had, in fact, taken over Monitor and that he wasn't about to walk away. DiLeonardo insisted that Lino owed $75,000 to the Gambino family. Lino admitted taking all the money and sending it on to the Bonanno crime family. But he didn't see it as ”stealing,” at least not from the Gambino family. He offered, as a token of ”respect,” to pay the Gambino family $17,000 and have them walk away.

”That is an insult,” said Mikey Scars.

He was flexible. He offered more reasons why the Bonanno family needed to pay the Gambino family money, as soon as possible. Jimmy Labate, who was supposedly a.s.sociated with a Gambino soldier, had neglected to forward anything to his boss when the guy went away to prison. This was considered an extreme breach of etiquette, and DiLeonardo, a man of reason, suggested that Labate could be the conduit for a $20,000 payment to the Gambino family come Christmas. All of this talk was businesslike, like a company merger, or two money managers discussing bonds versus derivatives. Robert Lino and Mikey Scars were nothing like Jimmy Labate. They both believed that reason and accommodation worked well, as long as everybody looked good and n.o.body walked away with an empty wallet. On this day, their approach prevailed. Monitor became an a.s.set for both Robert Lino and Mikey Scars.

CHAPTER TWENTY-TWO.

May 1996

Bill Palla sat in Jeffrey Pokross's wood-paneled office at DMN Capital with the Illinois State University diploma on the wall. Palla was the CEO of Monitor Investment Group, but he was anything but in charge. He was the front man, the guy installed by the guy, the name on the paperwork. He was sitting before his real bosses, Jeffrey Pokross, Salvatore Piazza, and Jimmy Labate, and he was holding several certified letters, all of which were sent personally to him but none of which had he bothered to answer.

He was explaining to Jeffrey and Jimmy and Sal that the letters were from the National a.s.sociation of Securities Dealers (NASD) enforcement unit.

”They want me to come in for an interview,” Palla said.

”Maybe you should find out what they want instead of ignoring five certified letters,” said Jeffrey, clearly not amused.

The morning Palla showed up at DMN, Monitor Investment Group was the company the investing public dealt with without realizing it was really dealing with DMN. To the investing public, DMN did not exist. Investors saw Monitor letterhead, Monitor monthly statements, Monitor telephone help lines. As far as they could see, Monitor appeared as a multimillion-dollar Wall Street success story. In reality, Monitor was one big fraud concealing another.

For Jeffrey, Sal, Jimmy and the bosses of the Bonanno crime family, Monitor was perfect. Jeffrey had long sought an unrestricted brokerage outside the New York area that he could call his own. He wanted something off the regulatory radar screen where he could hire his own brokers and promoters, where he could run the show from behind a legitimate front.

So far, it had worked well. During the months DMN secretly controlled Monitor, Pokross, Piazza and Labate had made millions of dollars off of a handful of bogus stocks-Accessible Software, s.p.a.ceplex, Reclaim, Beachport and any number of a.s.sorted and sundry capers Jeffrey could dream up. DMN had made $1.2 million on Reclaim alone. At its peak, Monitor had one hundred brokers (some licensed, some not) and three offices in New York City. It was a symphony of schemes, with brokers pumping up stock in unison. Pokross was even able to get his sister, Jody, a job at Monitor as an executive a.s.sistant. In less than a year, Monitor had helped make DMN a growing business.

Much of the reason for Monitor's success could be laid at the feet of Cary Cimino. For a year he'd worked his tail off for Jeffrey and Sal and Jimmy, hustling up legitimate brokers who were willing to take bribes to hype house stock. For a year he'd made Jeffrey and Sal and Jimmy a lot of money. He gave himself much of the credit for this. He estimated that he himself was the top earner at DMN, and he believed that without him, Monitor and DMN would never have existed in the first place.

As Cary saw it, he was the man behind the millions. It was he who'd introduced Jeffrey Pokross to Todd Nejaime, who in turn introduced Jeffrey to the guy who owned Monitor down in Pennsylvania. It was he who'd produced Warrington Gillet, the rich WASP stockbroker he'd found in St. Bart's on New Year's Eve. In the year Warrington did business with Cary, he'd brought in major investors who routinely bought huge chunks of stock. He had his Maryland horse country pals and their blue-blooded cash, but he also had contacts with overseas bankers who were always willing to help out-for a fee.

Cary figured that between Todd and Warrington, the partners at DMN Capital would make millions this year.

He figured they owed him big-time.

”It was a stock promoter's dream-an unrestricted broker /dealer based outside of the scrutiny of New York City,” Cary remembered. ”Albeit the company had no sales force, but since it was unrestricted, it could grow as fast as Jeffrey could fill it up with his friends. They could make an enormous amount of money with a sales force who came from firms known to make markets in high-commission, low-quality stocks called chop stocks. Brokers from these firms could be expected to be more interested in chop stocks than a broker from an NYSE firm. Once fully operational, with a sales force, Pokross could supply his friends with large amounts of shares, many of which he owned directly or indirectly, with high commissions.”

But of course, it couldn't last.

A few weeks after the certified letters from NASD showed up, the phone call came from the NASD. Somehow despite Jeffrey Pokross's best efforts to keep it off the radar screen, the NASD had noticed Reclaim and Accessible and s.p.a.ceplex and all the rest, and connected the up-and-down pattern to Monitor. The phone call was notification of a formal NASD challenge.

Monitor had a choice. They could fight the challenge, and subject themselves to scrutiny with doc.u.ment production and depositions and all the rest. Or they could fold their cards and go away. The choice was obvious. By the end of the business day, Monitor had notified the NASD that it would voluntarily cease trading and market-making operations immediately.

The plug was pulled on Monitor.

”On the surface Monitor showed all the signs of legitimacy,” Cary recalled, ”but in the background, it was a scam.”

Still, DMN stayed out of the sun, and Jeffrey Pokross-as always-had a new plan. Days after Monitor shut down on June 12, 1996, Jeffrey flew to Florida to meet with the head of another brokerage he was all excited about-Meyers Pollack. They were up and running with a whole stable of corrupt brokers ready to push the next stock, Innovative Medical Services. It was easy money-a San Diego company that purported to sell water filtration devices for pharmacies. They intended to raise $4 million. Monitor was just starting to work that one when the NASD spoiled the party. No matter. Meyers Pollock could handle it.

When Innovative Medical Services began trading in August 1996 under the symbol PURE, it opened at $4. By day's end, the brokers of Meyers Pollock had done what the brokers of Monitor could no longer do-they had driven the price up to $7 per share.

Monitor's demise was but a speed b.u.mp on the auto bahn to instant affluence.

October 10, 1996

Jeffrey Pokross emerged from the PATH train into the station deep inside the World Trade Center concourse. He was just one of the millions of salary-earners streaming out of New Jersey into the New York City morning to earn their daily bread. The place was, as usual, like a cattle yard, a sea of hardworking humanity fueled by caffeine and driven by the desire to make money. The commodities exchange was here. Numerous brokerage houses were up in the twin towers. Wall Street was just a few blocks away. Jeffrey Pokross, like the rest of the crowd, trudged along, the latest stock DMN was pus.h.i.+ng weighing heavily on his mind.

The stock was called Crystal Broadcasting. He'd gotten the deal from a soldier in the Bonanno crime family who'd been referred over by Robert Lino. The guy wanted a 50/50 split, and that wasn't a problem. The stock wasn't really a problem either. Anything even resembling communications was selling these days. Pokross's biggest pressure was a.s.sembling an army of corrupt brokers to push Crystal on the unsuspecting investing public.

After a few false starts, everything seemed to be going as planned. True, Monitor had imploded and Meyers Pollock hadn't worked out. There was some dispute with the Genovese crime family over who got to run the place and Jeffrey had been forced out the door. But he and Sal and Jimmy were now working on taking over another brokerage, also in the Philadelphia area, this one called First Liberty. Forget about the WASPy names. This one even had a taste of the Founding Fathers thrown in.

Also they still had some of the old high-producers from Monitor like Cary Cimino and Todd Nejaime and Warrington Gillet. But the best news was a new prospect that seemed quite promising named Jeff Morrison, working out of One World Trade Center. His firm was called Thorcon Capital, which was where Jeffrey was headed now.

Morrison had come to DMN a few months back, recommended by Cary Cimino. He'd made it clear what he was willing to do.

”He said he was looking for some stocks that he can put out to some wealthy clients that he has and he can hold on to those stocks for an extended period of time,” Pokross recalled. ”And for doing that, he was looking to get a bribe. I thought it was great. We ended up constructing a deal on this Crystal Broadcasting where he would put out the stock to his wealthy clients, he wouldn't disclose that he was getting a bribe, and we sent him some stock in Crystal Broadcasting in advance-antic.i.p.ating that he would do a lot more business. We sent him some stock that he can just hold on to that he can just pay the bribe, pay himself the bribe as he continued to book more stock to his customers.”

So far DMN had sent Morrison nine thousand shares of Crystal, trading around $5 through something called a depository trust company. Morrison had sold off about two thousand of those shares. Jeffrey looked at the business he was doing with Thorcon as an investment of sorts. He believed that Jeff Morrison would be ready to do more deals when Crystal Broadcasting was over, which was one of the subjects he hoped to broach when he arrived at Thorcon's offices.