Monday, June 30, 2014

Verdict In FirstPlus Trial, But Deliberations Continue

By George Anastasia
For Bigtrial.net

It looks like the jury has voted to convict in the FirstPlus Financial racketeering fraud trial.

But at this point we don't know which one -- or how many -- of the seven defendants have been found guilty.

Jury deliberations resumed this morning in the six-month old trial. But questions submitted by the anonymously chosen jury panel to Judge Robert Kugler last week offer some insight into the process and have given rise to speculation that the panel has voted to convict someone.

In a note sent Thursday afternoon, the last day of deliberations last week, the panel wrote: "We are unanimous on some counts, but we are  not unanimous yet on others (the word "yet" was underlined twice in the note). Are we under any time constraints to reach unanimity?"

That question, coupled with an earlier inquiry about the way to respond to the racketeering conspiracy charge, has led to speculation that the jury has voted to convict at least one and possibly more of the defendants on the principal count in the 25-count indictment. All seven defendants are charged with conspiracy.

"It doesn't look good," said one member of the defense camp last week.



The six-month trial has focused on government allegations that mobster Nicodemo S. Scarfo and mob associate Salvatore Pelullo secretly took control of FirstPlus Financial, a troubled Texas-based mortgage company, in 2007 and siphoned more than $12 million out of the company through a series of bogus business deals and phony consulting contracts.

Five other defendants, including the former CEO of the company and four lawyers, are also on trial. All seven defendants have been charged with racketeering conspiracy. A number of other charges, including wire fraud, bank fraud, mail fraud and money-laundering are part of the case, but not every defendant faces every charge.

In response to Thursday's question, Kugler told the jury there were no time constraints. The deliberation process resumed this morning with an alternate being seated to replace one of the jurors who was dismissed at the end of last week's deliberations because of a pre-planned (and pre-paid) vacation.

A male alternate took the place of the female juror who was let go. Technically, the panel is supposed to begin deliberations from scratch when an alternate is seated, but the reality is that the alternate will be quickly brought up to speed on the status of deliberations and, barring any major objection on his part about the findings thus far, the process is expected to move forward quickly.

One source in the defense camp predicted verdicts before the end of the week. The panel has opted not to sit on Fridays and this Friday, July 4, is a holiday. One other bump in the deliberation process surfaced early today when a female juror asked to meet privately with Judge Kugler.

The juror, according to sources, complained that she was being ignored during the deliberations and that several jurors had made up their minds and were not open to discussions or debate. The juror also complained of cliques within the panel, but, when questioned by Kugler, apparently said she could remain objective and continue on the panel.

While it is impossible to determine what the jury has already decided, a note sent to Judge Kugler earlier last week indicated the panel had reached a unanimous decision on at least two of the predicate acts that support the conspiracy charge against one or more of the defendants.

The law requires a jury to find at least two of those acts proven before it can find a defendant guilty of conspiracy. The number of predicate acts each defendant faces varies. Scarfo and Pelullo are each charged with eight.

In a question submitted early last week, the jury wanted to know if the panel had reached unanimity on two of the predicate acts, was it required to find on the others. The only scenario in which the other acts could be ignored was if the panel had found two of acts proven, thereby supporting a guilty verdict and making the other predicate acts moot.

Pessimism rose in the defense camp as defendants and their lawyers analyzed the two questions posed by the jury last week. One source speculated that the jury has reached verdicts in the cases against Scarfo and Pelullo and possibly John Maxwell, the CEO of FirstPlus, and his brother William, a lawyer who worked for FirstPlus and who is accused to funneling company funds to Scarfo and Pelullo through phony consulting contracts.

Observers believe the jury could be wrestling with the charges against lawyers David Adler, Gary McCarthy and Donald Manno. Those three were not directly tied to the day-to-day operations of FirstPlus. Adler was involved in SEC filings for the company, filings that the prosecution alleges were based on false information. McCarthy was involved in business and financial deals that the government charges Pelullo orchestrated to advance the fraud. And Manno, Scarfo's long-time defense attorney, was charged with bank fraud and obstruction of justice.

Manno, who defended himself, offered a "are you fuckin' crazy" defense, using the prosecution's own evidence to support his argument that Pelullo and Scarfo continually lied to him about financial issues. In his closing argument, he highlighted a secretly recorded phone conversation picked up on an FBI wiretap in which he argued with Pelullo.

The conversation dealt with information being submitted in a mortgage application by Scarfo's wife, Lisa Murray Scarfo, for a $715,000 home outside of Atlantic City. Pelullo and Scarfo kept Scarfo's name off the application and lied about Murray Scarfo's income and financial status.

Manno is heard on the tape telling Pelullo there was no reason to lie and that to do so would be a red flag that would attract investigators because of Scarfo's mob history. Pelullo ignored the advice with Manno at one point asking him, "Are you fuckin' crazy?"

Lisa Murray Scarfo is one of six defendants in the case who pleaded guilty rather than face trial. She has yet to be sentenced.

Because of prior convictions, Scarfo, 48, and Pelullo, 46, face jail terms of from 30 years to life if convicted of the racketeering conspiracy charge and related offenses.

The penalties for the other defendants could be substantially less, but convictions for the four attorneys in the case would result in the loss of their licenses to practice law, a potentially career-ending outcome that could overshadow or at least be as devastating as any jail time.

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

 

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