by Smith, Greg
The FBI knew all about this call and had no reason to think Frank Persico was involved in the murder of Al Chalem any more than about a dozen other gangsters across New York. Chalem had been into so many schemes with so many different organized crime families it was hard to tell who wouldn’t want to kill the guy. Besides Persico they quickly saw connections with Phil Abramo, the self-proclaimed father of pump and dump. But Abramo himself was sitting in a prison cell in Tampa, Florida, where he faced charges that had nothing to do with DMN. Instead the FBI began pulling together information on the exact whereabouts of some of Abramo’s mob cohorts during the evening of October 25, 1999. They’d found blood at the scene that did not belong to either Chalem or Lehmann, and while they awaited the test results they took blood and hair samples from several members of the DeCavalcante crime family, to which Abramo belonged. Nothing came of any of it.
Francis Warrington Gillet III didn’t really care who killed the two guys in New Jersey. He didn’t know them. He’d never even met them. Whoever put a bullet into them probably had his reasons, and Warrington was not in a position to know those reasons. He was simply upset that such a thing could occur to guys who were, in a way, just like him.
Two years after the FBI had come to his apartment and taken him away, Warrington’s world was continuing its downward spiral into the abyss. Nothing was going as it should. He’d split from his wife. His mother wouldn’t talk to him. His father didn’t return his calls. His half-brother made fun of him every chance he could. He’d been forced to quit Wall Street and couldn’t go near the securities industry. These days he was working around the stables at his mother’s home in Maryland, living there in a converted barn. He had just turned forty-one. He was the father of a three-year-old. He was supposed to be a responsible member of society, contributing to the tax base and participating as an able-bodied consumer of goods and services. Instead he was struggling to get control of his life, and now there was this awful thing in New Jersey.
What caught his eye was the mention of a possible theory in the deaths of the two guys in Colts Neck. One of them, Chalem, was believed to have been an informant. The word jumped off the page like a hand to the throat.
For months, Warrington had been spending long hours in anonymous government offices, sitting and talking with Special Agent D. True Brown of the FBI. He had been telling Brown everything he could remember about all of his former friends in the underworld and nearby environs. It hadn’t been easy. He’d gone back and forth, trying to decide for himself whether he was a victim or a conspirator.
Sometimes he blamed others. For a time, he launched a lawsuit against a Florida law firm that had been involved in helping him set up the Discovery Studios model search debacle. He’d alleged fraud and assorted skullduggery, claiming that the law firm he’d hired had a conflict of interest that ultimately blew up the deal. In a newspaper story in the Palm Beach Post, Warrington didn’t mention his arrest by the FBI but instead whined that he was just another working man stiffed by greedy lawyers.
“Even though I have had well-off family in Palm Beach, I’ve had to struggle and work my way up like everyone else,” he told the reporter. “I’m a regular guy just trying to make it.”
Sometimes he felt sorry for himself.
“I was an actor turned stockbroker and I didn’t know what the hell I was doing.”
The more he thought about it, though, the more he felt he had no choice but to cooperate with the government. None of these guys were his friends, not even Cary Cimino, his former best friend. What sealed the deal for Warrington was the realization one morning that Cary would turn on him in a heartbeat if he were faced with the possibility of going to prison. And if Cary turned, Warrington was sunk.
In the room with Special Agent True Brown, Warrington told all about Cary Cimino—especially about Cary. He also told about Jimmy Labate and his guns and Sal Piazza and Jeffrey Pokross (whom he referred to as “the militant angry little gangster”) and about all the stockbrokers and stock promoters involved in all the schemes. He told about the rinky-dink amusement park that was behind Spaceplex Amusement Centers International and the ridiculous roofing shingle recycling outfit in Tampa called Reclaim Inc. Then there was the ludicrous ice skating venture, Beachport Entertainment Corp. They already knew about his goofy modeling agency idea that had been Discovery Studios Inc. He’d even had to admit to his embarrassing nom de guerre, Johnny Casablanca, scribbled on all the bribe checks he’d cashed.
The idea was to stay out of jail at all costs. If they could use what he told them to make other cases and put other people in jail, Warrington might not have to join his former friends behind bars. He was inspired. He’d even tried to bolster his position by taping phone calls with Cary Cimino, the only one of his fellow co-conspirators who would talk to him after his arrest. He would call up Cary and complain about money and lawyers, and Cary would tell him to sell the Ferrari and as many horses on his family farm as he could ride out of the stable. All the tapes he made went straight to D. True Brown of the FBI, potential currency in Warrington’s bid for redemption.
For months this had gone on. Warrington would take the train up to New York City, submit to one of these all-day sessions with the FBI and various assistant United States attorneys, unburdening himself of all that he had done. That was important. They made it clear he had to tell them everything. He even mentioned the tickets he’d gotten for running a red light and talking on his cell phone while driving. Nothing was hidden. In the white light of truth, Warrington was—perhaps for the first time—as vulnerable as a child.
He had still not signed an actual plea agreement. He had yet to testify in open court. He and his lawyers were trying to work out the details. The prosecutors told him little and made few promises, except to say they’d ask the judge not to make Warrington do time. The prosecutors needed him to take some form of punishment, and they’d more or less agreed that would be monetary. He would have to join his fellow conspirators in coming up with some form of restitution for all the old ladies in Wisconsin they’d ripped off. The figure being kicked around was $1 million, plus a $75,000 fine payable to the United States government for all their hard work. The prosecutors were certainly not Warrington’s friends.
Clause by clause they were working it out. They’d hoped to sign a final plea agreement within a few months, if all went as planned.
Now there was this business in New Jersey. Warrington was vaguely aware that what he was doing was dangerous. Although he’d made a point to never ask too many questions of Jimmy Labate and Sal Piazza and Jeffrey Pokross, their inclinations were certainly obvious to him.
“Finally when they got around to paying you, you’d look at the people who were paying your commission and you knew. They’re all proud that they’re from Brooklyn. They get their nails done, they walk the walk and talk the talk. They’re all John Gotti wannabes. That’s what they aspire to. Do you know why Monitor was called Monitor? If you get beaten, you get put on a life support system. You’re on a monitor. That’s why it was called Monitor.”
Somehow after he was arrested and the FBI offered to keep him out of jail if only he would help out a little, he’d felt the risk was worth it. As far as he knew, nobody was absolutely sure that he was cooperating. Now there were two guys dead in Colts Neck, New Jersey. If they were willing to do that, why wouldn’t they come after him? When he’d been arrested, he’d thought that was pretty bad. When he was told he might have to cough up a million dollars in restitution, that was pretty bad. When he lost his ability to earn a living on Wall Street, that was as lousy as it could get. Or so he thought. Now Warrington found himself with two options, both lousy. He could pull out of his deal with the government and face the possibility of going to federal prison. Or he could continue in his role as a secret FBI informant knowing that soon enough, that role would be anything but secret. Soon enough Sal would know, Jimmy would know, Jeffrey would know, and Cary would know.
Once again, Warrin
gton found himself unable to choose between bad and worse.
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. No
ne 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?”