Saturday, March 8, 2014

Defendant Jailed For Contempt In Fraud Case

John [left] and William Maxwell
By George Anastasia
For Bigtrial.net

The judge didn't think it was funny.

But apparently some of the defendants did.

As a result, one of them has ended up in jail. John Maxwell, the former CEO of FirstPlus Financial and a defendant in an ongoing racketeering fraud trial, was cited for contempt of court, had his bail revoked and was carted off to the Federal Detention Center in Philadelphia Thursday. He's been a "guest" at the federal facility ever since, joining co-defendants Nicodemo S. Scarfo and Salvatore Pelullo who have been denied bail and have been jailed since their arrests in November 2011.

Maxwell was apparently laughing during the cross-examination of Cory Leshner, a former top business associate of Pelullo's who has emerged as a key prosecution witness in the now two-month old trial. Leshner will be back on the stand when the trial resumes Monday.

Maxwell will be back at the defense table along with Scarfo, Pelullo and four other co-defendants, including Maxwell's brother William, a lawyer who was special counsel to FirstPlus while the alleged $12 million fraud took place. The other four defendants are free on bail. 

Whether Judge Robert Kugler lifts the contempt order and reinstates bail for John Maxwell is an open question. Maxwell's court-appointed lawyer, Mark Catanzaro said he plans to ask Kugler to reconsider. Catanzaro said his client was "in shock" when Kugler lowered the boom.

Salvatore Pelullo and Nicky Scarfo Jr. [right]
The judge, however, said he was tired of warning the defendants about their comportment during the trial.

In a one-page contempt order filed Thursday, Kugler wrote that "Defendant, despite numerous
warnings, caused an audible outburst in the court in the presence of the jury. No lesser sanction than revocation of bail would be sufficient to prevent further violations of the court's order. Defendant is in contempt of court."

The latest dustup occurred Thursday afternoon shortly before the trial recessed for the week. (There have been no Friday trial sessions.). Leshner was being cross-examined by Michael Riley, Scarfo's attorney, who had asked a series of questions about Pelullo and his split personality. Pelullo has been described as full of bravado and arrogance, but also as someone who could be kind and generous.

Pelullo, 46, and Scarfo, 48, are charged with orchestrating the takeover of FirstPlus, a troubled Texas-based mortgage company, in 2007 and then siphoning $12 million out of the company through a series of fraudulent business purchases and bogus consulting contracts. Five other defendants, including four lawyers allegedly involved in the schemes, have also been charged.

Trial testimony and evidence has included several references to Pelullo making threats and Riley was asking about one in which Pelullo allegedly threatened to choke someone. Leshner said he had heard Pelullo make those kinds of comments, but had never seen him actually assault anyone. It was during that question-and-answer examination that several co-defendants apparently broke  out laughing, according to a transcript of the court session that day.

With that, Kugler ordered the jurors to leave the courtroom. When they had been removed, he looked over at the defense table and asked, "Would you like to spend the next few nights in jail gentlemen because you think it's that funny?"

Since Scarfo and Pelullo are already in jail, the question was obviously addressed to some of the other defendants. Catanzaro said his client was not the only defendant laughing, but was apparently the one that Kugler saw.

While it sounds like something out of a Junior High School home room, the consequence were more severe than after school detention.

"How many more warnings is it going to take to get your attention that I'm not going to put up with this nonsense?" Kugler asked.

On Feb. 26, shortly after Leshner took the stand for the first time, Kugler issued a similar warning to Pelullo who was apparently smirking and laughing as Leshner described how Pelullo had introduced him to Scarfo at a barbecue in Ventnor on Memorial Day in 2006.

Based on the transcript, it's impossible to tell what brought on the laughter. Leshner had told the jury that Pelullo introduced Scarfo as "Nick Promo." Later, Leshner said, he learned Scarfo's real identify. Again, Kugler abruptly ordered the jurors to leave the courtroom.

Then he lit into Pelullo, asking him, "You want to keep laughing, Mr. Pelullo? You think this is funny?"

Kugler said he had warned Pelullo during pre-trial hearings and at the start of the trial that boisterous behavior would not be tolerated. He said Pelullo's conduct, "laughing out loud" at the witness "so that everybody could hear him" was not acceptable. He noted that Pelullo is already in jail and, since his attorney is court-appointed, apparently has no money. A fine, the judge said, would not have any impact.

The only recourse, he said, was to ban him from the courtroom. Presumably Pelullo would follow the proceedings from a closed circuit TV monitor in another room were that to happen.

It didn't come to that, however. After a five-minute recess, one of Pelullo's two court-appointed attorneys, Michael Farrell, apologized for his client, telling the judge there was no "malice" in his actions.

Kugler sounded less than satisfied, but relented on punishing the defendant.

"Mr. Pelullo, if you can't control yourself we have people who will," the judge said. "I will tolerate not another sound out of you...You will be barred and that will be it."

Pelullo then told the judge, "I apologize your honor...Thank you, your honor."

Described as a brash and arrogant businessman prior to his arrest, Pelullo didn't change after he was jailed. He has had a rocky relationship with the judge from the start. Among other things, he has chided Kugler on blog postings from prison, questioning his integrity and honesty, challenging the order that he be held without bail and implying that the judge is a second prosecutor in the case.

Kugler is a no-nonsense jurist who has handled some of the toughest and more complicated cases to come through the federal courthouse in Camden. Among others, he presided over the Fort Dix Five terrorism trial, a marathon proceeding that attracted national attention. Several of the court-appointed attorneys in the FirstPlus case, including Riley, Michael Huff, who represents William Maxwell, and Troy Archie, another Pelullo lawyer, were court-appointed defense attorneys in that proceeding as well.

Leshner's lawyer, Rocco Cipparone Jr., was also in the Fort Dix case.

John Maxwell may have paid a price for the actions of several defendants that brought Kugler to the boiling point.

"I don't think Mr. Maxwell was the only one," Catanzaro said while asking Kugler to reconsider his contempt order and the revocation of bail. But the judge would not budge. And, he added, "a similar fate awaits other people who violate my orders."

George Anastasia can be contacted at George@bigtrial.net.

 

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