by Smith, Greg
The other scenario was that someone did this to him. The FBI was very interested in this possibility and asked a lot of questions. This wasn’t your usual Wall Street fraud case, after all.
Only Claudio knew for sure, and he was no longer able to speak.
Jimmy Labate, Sal Piazza and Jeffrey Pokross were sitting in the conference room at DMN talking about deals. As was always the case, the smallest guy in the room—Jeffrey Pokross—was the guy doing the most talking. He was a catalog of schemes. Every day he thought up new ways to steal. His newest brainstorm involved bribing the guys who ran some of the union locals to dump their members’ pension funds into stock DMN was pushing. He wanted to start with the pension fund of Production Local 100, a union he believed would soon be available as a kind of piggy bank. It was controlled by a guy they knew, Frank Persico. Pokross had noticed a change regarding Frank Persico. When Persico’s name first came up, it was no big deal. Lately—or more precisely, after the Meyers Pollock arrests—Pokross noticed that Robert Lino and Jimmy Labate would get worked up when Frank Persico’s name popped up.
Jimmy stood up and said, “Just a second.” He walked over and turned up CNBC on the TV in the corner.
“Okay,” he said. “That’s better.”
After Robert Lino’s cousin, Frank, and all the rest were arrested in the Meyers Pollock mess, for some reason DMN Capital had managed to stay off the radar. That was somewhat surprising, considering that Jeffrey Pokross and Robert Lino had spent a considerable amount of time dealing with Meyers Pollock in the months preceding the arrests. Yet DMN Capital did not appear to interest the FBI. It seemed that Robert Lino, Jeffrey Pokross, Sal Piazza, Jimmy Labate—all of them had dodged the bullet. That was good news, because the market was taking off.
Tech stocks were the mantra. The profits were mind-boggling. The Internet was spawning dozens of new company concepts each week. Everybody was dropping run-of-the-mill jobs with real paychecks to sign up for a start-up with not much in the way of wages but plenty in the way of stock options. You could sell anything by just plopping a dot-com on to the end of your idea. You wanted to use the Internet to sell pet supplies? Kitchen cabinets? Truck parts? No problem. In fact, you could now sell anything you wanted through the Internet. Sure it was really just another way to advertise and attract buyers. Who cared? Just create a company and you’re off.
In so many ways, the stars had aligned for the forces of DMN Capital. The day they busted everybody at Meyers Pollock, the feds eliminated DMN’s competition. Now DMN could sell everything. Spaceplex was a lousy amusement park on Long Island. Beachport was a bunch of ice shows. Country World was a ratty old casino in Colorado. Monolite supposedly made parts for semis—supposedly. Take ’em public, make a mint. Watch the profits soar. Sure you could lose money, but mostly you didn’t. Nobody had seen anything quite like it. Certainly not the gangsters of Wall Street, who knew they had a good thing going as the market took off for the heavens.
That didn’t mean it couldn’t all go to hell.
This was the thought that ate away at Jimmy Labate when he turned up the TV in the conference room. Since the Meyers Pollock busts, he had become increasingly paranoid. Every time Pokross would begin discussing investing the detective’s union pension funds or Frank Persico over at Production Local 100, Jimmy would jump up and turn up the TV. Jimmy would tell anybody who asked that there were bugs everywhere, FBI agents on every corner and, more likely than not, an informant in their midst. He couldn’t prove it. He just sensed it.
He was particularly sensitive about Frank Persico. Down at DMN Capital on Liberty Street, Robert Lino and Jeffrey Pokross understood one mission above all when it came to keeping the money flowing—keep the contraption off the regulatory radar. Now that Meyers Pollock had collapsed and DMN was free and clear, they needed to keep things low-key. Keep the wiseguys behind oak veneer walls. Keep the investors believing that they were dealing with graduates of the Wharton School, not graduates of the Brooklyn waterfront. Robert Lino and Jeffrey Pokross both knew that Frank Persico was going to make that mission a challenge.
Frank Persico was the cousin of Alfonse Persico, the more-or-less boss of the Colombo crime group. Alfonse was the son of Carmine Persico, the real boss of the family, but Carmine was behind bars for the rest of his life and he’d designated as acting boss his son, a college graduate who’d once had his minions shoot a guy in the testicles for messing around with his wife. Cousin Frank Persico was Allie Boy’s official designate on Wall Street, and he’d really gotten into the role in a serious way. For instance, though Frank looked like a Teamsters foreman with his no-neck fireplug physique and nylon jogging suit wardrobe, Frank himself was an actual registered stockbroker legally approved to buy and sell stocks to the trusting public.
How Frank Persico had obtained his license was not clear. In the early 1990s, regulators had discovered a number of individuals like Frank who’d paid others to take the exam under their name. Some—but not all—were caught. Frank—whose only experience eligible for listing on a résumé was “trucking assistant”—had some made it through the Series 7 exam and was now listed as a registered broker for one esteemed brokerage house after another: Joseph Stephens, William Scott, White Rock, State Street. All sounded quite legitimate. All were as rancid as fish left lying too long in the sun. It was a mystery worth investigation that would remain unsolved why anyone would buy stock from Frank Persico, but many an investor did.
Frank Persico’s real job was to represent the interests of the Colombo crime family and his cousin, Alfonse, and when Jeffrey Pokross was looking for brokers to push one of his bogus stocks, he’d heard only good things about Frank and his registered brokers’ license. Jeffrey had asked Frank to come aboard to help hype Beachport stock, and at first, the marriage of the Bonanno and Colombo families had gone swimmingly.
Then the marriage careened toward divorce. Persico had a problem with his emotions, plus he was not too swift with numbers. He blew up his relationship at William Scott, so Lino, Labate, Piazza and Pokross discussed putting him at another brokerage they controlled, First Liberty. They put him in there, and he helped them push a deal called 1-800--TRAVEL. Usually these things work out well for all concerned. This time it was different. After Persico booked the stock into client accounts, the deal went up for about a day or two and then went straight down to $1.
Persico was furious, and because the deal came from a Bonanno wiseguy, he blamed DMN. He became convinced that DMN had set him up, that they were shorting the 1-- 800-TRAVEL stock just to screw him. All of his brokers suffered, their clients suffered, and now he was having a tough time calling customers and raising money for other house stocks.
More disputes between DMN and Persico erupted. Persico got it into his mind that a $40,000 copy machine at DMN was really his. Many citizens might have pursued the matter through litigation in small claims court or taken their dispute to a TV judge and hashed it out in front of a national audience. Frank Persico had a different approach. He came into the DMN office and demanded stock as compensation for the copy machine. Jimmy Labate gave him forty thousand personal shares of whatever they were about to pump up, but did so with the promise that Persico would give Jimmy back the money at cost after he sold the shares at profit. Persico apparently forgot about the back end of the deal, and Jimmy got not a dime. Jimmy estimated Persico owed him $80,000; ill will between the two followed.
Then Persico brought in a hustler named Albert Alain Chalem, a day trader from New Jersey who always wore baseball caps and did not seem to have a job. He claimed he’d made millions after selling a printing business in Queens and was now playing the stock market for fun and profit. He was also a friend of Alfonse Persico, the son of the boss of the Colombo family. Chalem and the Persicos hung out in Fort Lauderdale on Chalem’s fifty-five-foot Hatteras, the Miss Boombastic. Nothing this guy owned was in his name. Frank Persico promised that Chalem would turn lead into gold, so he was allowed to work at DMN on certain d
eals. Soon it became obvious that Chalem was hustling everybody. He had worked with Meyers Pollock, with Philly Abramo, and now with DMN, and appeared to be playing one off the other. The rumor was he was shorting DMN house stocks in a big way. Frank Persico’s latest contribution to DMN was asked to leave. That was the last time Robert Lino and Jeffrey Pokross saw Albert Alain Chalem and his baseball cap.
Now they sat in the conference room discussing the problems of Frank Persico with the TV set turned up loud. They had come to realize that Frank was short in both the temperament and intellect departments, and the deficit was causing certain frictions. He was the cousin of the boss’s son, and he had come to believe his last name allowed him to tell other people what to do.
Suddenly they heard a loud Pop! at the front of the office. They bolted out of the conference room.
They found the front door open and the receptionist cowering under her desk. There was smoke coming out of a computer monitor. The receptionist was weeping.
She said Frank had come into the office and started ranting and raving about a copy machine. She didn’t know what he was talking about. He’d pulled out a gun. She didn’t see much else because she dove under the desk, but when she came back up she had figured it all out. Frank had gone and shot the computer and stormed out.
It was difficult to imagine such a scene at Bear Stearns.
CHAPTER TWENTY-SEVEN
December 1, 1999
After midnight the phone crew wearing AT&T jackets stepped out of the elevator on the eighteenth floor of an office building a few blocks from Wall Street. To the left they approached an office upon which was the title “DMN CAPITAL” in brushed, embossed steel letters. They had a key. Inside they quickly entered the office of Jeffrey Pokross and removed the plate covering a phone jack about knee-high next to his desk. They quickly installed a tiny device about the size of a pencil eraser and replaced the cover. One of the technicians used another device to test the bug installed in the wall. Then they moved to a conference room, where they repeated their task with another phone jack right next to the fax machine. The technicians looked around to make sure they hadn’t left a mess, and then out the door they went.
The New York City detective and his girlfriend stood in the elevator, waiting for the number 18 to light up. He was in his fifties, silver-haired, Irish-American, the proud owner of a storied career in the New York Police Department. She was a few years younger, a divorcee with a teenaged son. She was going to marry the detective soon. He was, after all, a hero. He’d been written about in the papers, truly one of New York’s finest. Fifteen years ago, he’d run an investigation of a disturbed man who’d mailed a booby-trapped book to his own mother. The mother had opened the book, and flying shrapnel, sent by her own flesh and blood, had ripped into her. The papers worried about a new mad bomber; no motive was apparent. Detective Stephen Gardell tracked down the lunatic offspring.
Detective Gardell had worked his way up through the ranks, spent too much time humping up and down urine-soaked stairwells in housing projects. He was tired of the job. That was why he and his bride-to-be were down here in the anonymous office world of Wall Street, a man and woman clearly out of their element.
The couple stepped into the lobby on the eighteenth floor of 5 Hanover Square and observed all the accoutrements of the typical small brokerage on Wall Street: the oak-paneled walls, a Federalist end table with white porcelain vase and pale blue plastic hydrangeas, an oil painting of a wild ocean at dawn. Furnishings implying old money. They noted that the fixtures were polished brass, the name-plate on the door:
“DMN CAPITAL” in a tasteful brushed steel.
The detective and his fiancée entered the office and were greeted by Lucille the receptionist, the gatekeeper who knew that anybody she didn’t recognize who tried to come into the office was not making it past the door.
“Stephen Gardell,” the detective said, not bothering to mention his rank in the New York City Police Department. He nodded toward his fiancée and said, “This is Sharon Kilcoin.”
He did not have a warrant. He was not there to ask questions. This was no cop on the job. He was there to do business at DMN. He was expected.
Lucille the receptionist smiled and got Jeffrey Pokross on the phone in his office. She told the detective to go right into the conference room.
Detective Gardell and Sharon Kilcoin walked past the cubicles with brokers working phones, TVs with CNBC on all day long, a coffeepot eternally filled with burned coffee, a water cooler, file cabinets. There were doors leading to offices but no names on them. This was a place where business occurred with anonymity.
Jeffrey Pokross welcomed the couple into the room. Detective Gardell shook his hand and introduced his beloved. There were smiles all around. Jimmy Labate strolled in and embraced Gardell like a lost brother.
“If this fund works out right and you can open up doors for more funds, you won’t have to work as long as you live,” Jimmy said.
“I know,” said Gardell.
“This is a hell of a parachute,” Pokross said.
“I know that,” Gardell said. “What they hell you think I’m going out there for? I’m not a traveler. Jimmy thinks I’m going out there for a vacation. I’m not. I don’t like to travel. She does. I don’t.”
Pokross was a pragmatist. Some of the gangsters at DMN hated the idea of involving a cop in all of this, but Pokross had an intuitive sense that this particular cop wasn’t really a cop. He was a crook with a badge, which had certain advantages. Such as the fact that Stephen Gardell was at the top of the union pension fund for New York City’s detectives. One of his jobs was to invest all that money. Jeffrey Pokross and the gangsters at DMN were going to help him with this.
Gardell said he was supposed to fly out to San Francisco to meet with a new money manager who was going to handle some deal he was trying to set up. As Jeffrey Pokross saw it, the deal was going to be the future of DMN and the Bonanno crime family’s piece of Wall Street.
The idea was to tap into the huge pool of money in union pension funds. Gardell was treasurer of the Detectives Endowment Association, one of the union officers responsible for deciding how to invest the DEA’s $175 million pension fund. Frankie Persico was bringing in another union the Colombo family was controlling, Production Workers Local 400. They had maybe $120 million sitting in various funds and accounts. The Mafia had used unions for their own benefit at construction sites and on the waterfront, why not use them in pump and dump schemes as well? Union pension funds were the wave of the future. They were going to make them all rich—the cop, the fiancée and all the gangsters in the conference room at DMN.
It was strange to have a cop hanging around the office with all those members of the Bonanno crime family coming and going, but Gardell had adopted an odd interpretation of the thin blue line. Gardell didn’t really see the need for a thin blue line. He believed that it was every man for himself. You took care of your own and you worried about the rest later. Anybody who was a victim was really just a sucker. He had a sticker attached to his phone to remind him: “RATS TALK ON PHONES.” That way he could remember to say nothing important over the phone, because with phones you never knew for sure who you were talking to.
Jimmy Labate had brought Gardell to DMN. He’d met the detective through his neighbor in Staten Island, Tom Scotto, the head of the detectives union. Gardell viewed the DEA’s pension fund as his ticket to the good life. He’d worked hard his entire life. Sure he’d been dubbed a hero by the papers, but what did that contribute to the bottom line? He’d risked his life for the civilian world and what did he have to show for it? The union had been his road to opportunity. He’d locked up a good job with the DEA that let him kick back as he wound up his twenty years. He was going to get the pension, then settle into semiretirement and the good life in Boca. He had it all planned out.
Jimmy Labate was going to make it happen. He’d known Jimmy for years. He was in construction on Staten Island just like h
is father. He was possibly connected. Possibly. Jimmy never said and Detective Gardell didn’t ask. It was better not to know. When Jimmy introduced him to Jeffrey and Jeffrey started talking about all the opportunities that were available to him because of his influence in the union, Detective Gardell had promised he could steer the union pension fund’s board toward hiring a brokerage controlled by DMN to manage the fund’s bounteous assets.
Detective Gardell was a regular guy, for a detective.
In order for this to work, DMN needed to stay out of the picture. They needed a legitimate-looking money manager up front to set up a plan of investment for the DEA fund. It would be mostly prudent, conservative investments, but it would also involve setting aside a little to buy DMN house stocks. That was where Gardell would benefit. Jeffrey had arranged to get Gardell some private shares. Detective Gardell, after all, wasn’t doing this for his health.