Born to Steal: When the Mafia Hit Wall Street Read online

  Copyright

  Copyright © 2003 by Gary Weiss

  All rights reserved.

  Warner Books, Inc.

  Hachette Book Group

  237 Park Avenue

  New York, NY 10017

  Visit our website at www.HachetteBookGroup.com.

  First eBook Edition: May 2003

  ISBN: 978-0-7595-2800-0

  Contents

  Copyright

  acknowledgments

  author’s note

  Prologue: Lies and Consequences

  part one: SANTA CLAUS

  CHAPTER ONE

  CHAPTER TWO

  CHAPTER THREE

  CHAPTER FOUR

  CHAPTER FIVE

  CHAPTER SIX

  part two: SANTA CLAUS FUCK-YOU MONEY

  CHAPTER SEVEN

  CHAPTER EIGHT

  CHAPTER NINE

  CHAPTER TEN

  CHAPTER ELEVEN

  CHAPTER TWELVE

  CHAPTER THIRTEEN

  CHAPTER FOURTEEN

  CHAPTER FIFTEEN

  CHAPTER SIXTEEN

  CHAPTER SEVENTEEN

  CHAPTER EIGHTEEN

  part three: LEGENDIZED

  CHAPTER NINETEEN

  CHAPTER TWENTY

  CHAPTER TWENTY-ONE

  CHAPTER TWENTY-TWO

  CHAPTER TWENTY-THREE

  CHAPTER TWENTY-FOUR

  CHAPTER TWENTY-FIVE

  part four: A GUY LIKE ME

  CHAPTER TWENTY-SIX

  CHAPTER TWENTY-SEVEN

  CHAPTER TWENTY-EIGHT

  CHAPTER TWENTY-NINE

  CHAPTER THIRTY

  CHAPTER THIRTY-ONE

  CHAPTER THIRTY-TWO

  CHAPTER THIRTY-THREE

  CHAPTER THIRTY-FOUR

  CHAPTER THIRTY-FIVE

  CHAPTER THIRTY-SIX

  CHAPTER THIRTY-SEVEN

  CHAPTER THIRTY-EIGHT

  part five: FENCE JUMPER

  CHAPTER THIRTY-NINE

  CHAPTER FORTY

  CHAPTER FORTY-ONE

  CHAPTER FORTY-TWO

  CHAPTER FORTY-THREE

  CHAPTER FORTY-FOUR

  CHAPTER FORTY-FIVE

  CHAPTER FORTY-SIX

  CHAPTER FORTY-SEVEN

  part six: ESCAPE

  CHAPTER FORTY-EIGHT

  CHAPTER FORTY-NINE

  epilogue

  For Anthony and Amanda

  acknowledgments

  Writing a book while holding a full-time job is a massive undertaking. It requires the same amount of back-breaking toil that was exhibited by Gary Cooper in Sergeant York, in the scenes in which he plowed fields at night to save up pennies for a piece of bottom land. Endless hours, lost sleep. Definitely not for me. My thanks go to Stephen B. Shepard, editor-in-chief of Business Week magazine, for sparing me that ordeal by generously providing me with the substantial leave of absence that I required to complete this book.

  Louis Pasciuto was not a source for any of the articles that I wrote for Business Week on stock fraud and the Mob’s push into Wall Street. Even so, this book is part of a continuum, if you will, that began with “The Mob on Wall Street” in December 1996, and continued in several other articles that appeared between 1996 and 2000. BW showed a special kind of courage in running those stories, particularly the first one—which other media outlets, though in possession of the essential facts, wouldn’t touch. My editors at the time, former senior editor Seymour Zucker and chief economist Bill Wolman, were gutsy advocates and supreme wordsmiths. Seymour is a journalist and mentor nonpareil, and in many respects those stories were as much his as they were mine. Kenneth M. Vittor, McGraw Hill’s general counsel, steered me from numerous possible legal pitfalls and proved many times that he is as fine an editor as he is a lawyer. Valuable assistance, for those articles and this book, came from Jamie Russell, head of Business Week’s Information Center, and her able staff.

  I owe a special debt of gratitude to Jerry Capeci, the dean of New York’s Mob journalists, for pointing Louis in my direction. Jerry’s website, Ganglandnews.com, is the premier source of organized crime information on the Internet, and it proved immensely valuable in double-checking facts and for its treasure trove of Mob lore.

  The staff of the North American Securities Administrators Association responded with forbearance to my endless requests for brokerage records. My thanks go to NASAA’s executive director, Marc Beauchamp, and his colleagues Cheryl Besl, Jerry Munk, and Ashley Baker.

  I also am indebted to Paul Schoeman, assistant U.S. Attorney for the Eastern District of New York, and his colleagues, for their courtesy and assistance.

  Many persons whom I cannot name were crucial in verifying Louis’s story. They include former chop house brokers and traders and lawyers and wiseguys, organized crime investigators and former regulators. They know who they are, and I hope they know I am grateful. I also cannot thank by name—not because of confidentiality, but because I don’t know their names—the cheerful and overworked staffs of the various record rooms of the federal and state courthouses in Manhattan, Brooklyn, Long Island, and New Jersey. I’d have been unable to write this book were it not for their assistance in fetching, often from far-off archives, the voluminous files in their custody. One of the byproducts of stock fraud and organized crime prosecutions, including the vast majority of cases that do not go to trial, is a mountain of correspondence and bail applications and sentencing minutes and hearing transcripts. Such documentation was the principal source for substantial portions of this book, including the chapters describing the early career of Charles Ricottone, and provided substantiation throughout.

  Dr. Susan Shapiro, a noted child psychologist, read drafts of the chapters concerning Louis’s early life and made valuable comments. Erin Condit also read several draft chapters and offered many useful suggestions. At Business Week, Anthony Bianco and John Byrne were generous with their advice and support.

  This book would not have seen the light of day were it not for the enthusiasm and advocacy of my agent, the estimable Morton L. Janklow. He and his colleague Luke Janklow patiently steered me through the labyrinthine process of bringing a book to life (which was a bit more complicated for this book, I suspect, than most others). They both went above and beyond the call of duty many times. My thanks also go to their colleagues Bennett Ashley and Richard Morris.

  At Warner Books I had the rare good fortune to work with executive editor Rick Horgan, who shares the credit for virtually everything in this book that may seem more than slightly worthwhile. Copyeditor Dave Cole ably rescued me from myself on several occasions, as did Elizabeth A. McNamara of Davis Wright Tremaine, who gave the manuscript a painstaking but sympathetic legal review. Rick’s assistant Katharine Rapkin provided valuable assistance as well.

  My heartfelt thanks go to members of Louis’s family, who were candid and courageous in sharing with me their recollections—no matter how painful. I am grateful to Stefanie Pasciuto, Fran Pasciuto, Nicholas Pasciuto, Louis’s sister Nicole, and Stefanie’s father and mother, referred to by the pseudonyms George and Barbara Donohue.

  I also thank, of course, Louis Pasciuto. We spent many hours together, and they were not always easy. Time alone will determine whether the man who was born to steal has truly left his old life behind him. As of this writing, he certainly has. And I hope that his young son and daughter, when they read this book, will come to understand Louis and the era that he embodied, without losing the love and respect to which their father is entitled. This book is dedicated to them.

  author’s note

  I first met Louis Pasciuto at a restaurant in New York City in Dec
ember 1999. When I laid eyes on him, I felt like turning around and walking out.

  I’d been covering his world for the greater part of a decade. I thought I knew the names of every leading practitioner of stock fraud. I thought I knew the stock promoters, the chop houses, the rogue brokers, and the mobsters. I thought I was an expert. And I’d never heard of Louis Pasciuto.

  When Louis called me and we agreed to meet, I ran his name through the usual databases. Nothing. Nobody had ever written a word about him. His regulatory record was no more or less tarnished than most of his ilk. He was, it seemed, quite plain, a total nonentity. And when I got my first glimpse of him, slumped on a seat near the cashier, my fears were realized. He wore a leather jacket and was leafing nervously through a bodybuilding magazine. I thought he was a messenger or a waiter going off duty. He was obviously much too young to know anything or anybody of consequence.

  When we shook hands, I noticed something that surprised me. He was nervous. People like him weren’t supposed to be nervous. He spoke softly, with a New York street accent so thick I sometimes had difficulty understanding him. But I had no trouble understanding the contents of the large manila envelope he’d brought.

  It was an indictment. His indictment. It was impressive.

  Louis was not just another crooked broker who’d been rounded up in the crackdown on rogue brokers and their Mob partners. He’d come of age in the Wall Street Mafia.

  After talking to him for a while I realized he was different from the scam artists and wiseguys I’d interviewed over the years. He realized what he’d done. He didn’t rationalize. He wasn’t ashamed, and he wasn’t sorry, but he was realistic. He’d been caught.

  As I spent hours talking with Louis in that and future meetings, and many more hours checking out his story, my initial misgivings were replaced by a combination of awe and horror. He was as cold and merciless with himself, in telling the story of his own degraded life, as he’d been in removing the life savings of hundreds of investors. He was a confirmed atheist, but before long I realized I was taking his confession.

  Even so, it bothered me that Louis was a professional liar—a living, breathing personification of the Liar’s Paradox. How could I believe anything this guy said to me? It was the same problem facing federal prosecutors, who were using Louis—and a host of other “cooperators”—as informants and consultants, and preparing them to confront their old pals in court. It’s not a new problem. It’s been around for as long as criminals have been caught and “turned.”

  I didn’t have to wrestle for very long with the phenomenon of a liar expounding on the art of lying and stealing. Much of what he told me became grist for future indictments and was confirmed by reams of documentation, including the court records of various civil and criminal cases involving Louis’s employers and associates. Crucial parts of his story—from the identities of obscure Mafioso to the intimate details of stock fraud—were independently verified by people well outside Louis’s orbit.

  Louis was a keen observer. He remembered in astonishing detail, down to the clothing people wore and the prices of stock he sold years before. Once I double-checked the price of a stock involved in one of Louis’s schemes. Louis had said it was $3.50. The Bloomberg database—which is pretty near infallible—said $2.50. Louis stuck to his guns. He didn’t care what Bloomberg said—it was $3.50, not $2.50. I later realized I’d asked for the wrong data. Louis was right.

  So this tale is as true as it is ugly. The names of the brokerage firms and companies haven’t been changed, and neither have the names of the brokers, their friends, and their favored customers. Only the names of victims, and of Louis’s children and his wife’s family, have been changed.

  None of the companies whose stocks were traded by Louis and his pals were ever implicated in any wrongdoing. There’s no evidence that the companies, or any of their employees, were aware that their shares were the subject of illegal stock-manipulation schemes.

  In a man musing on objects, attachment to them is conceived.

  From attachment springs desire;

  from desire springs wrath.

  From wrath is utter confoundedness;

  from utter confoundedness, whirling memory;

  from loss of memory, the loss of the understanding;

  from loss of the understanding he perishes.

  —The Bhagavad Gita

  as translated by Jogindranath Mukharj, 1900/M.

  Prologue:

  Lies and Consequences

  Louis Pasciuto was lying on his bunk, staring at the green-painted steel bottom of the bunk above him. Night after night he would lie there, forcing his unwilling mind to go blank as he listened to the snores of the Chinese guy sprawled two and a half feet above him. He would just lie there, sleeping fitfully, until the next cough or snort or moan from the Chinese guy.

  For years, Louis’s mind had been a well-trained dog. It was a mutt he could get to roll over, jump through burning hoops—and, above all, play dead. But for the past few weeks his mind had become restless, rebellious. It was the only part of Louis Pasciuto not under the direct control of the Hudson County Correctional Center. So he was helpless, despairing, as his thoughts wandered toward his Guys.

  Louis hated thinking about his Guys even more than he hated thinking about the future. The past was great. The present sucked, and the future was the present that was going to happen tomorrow. Beyond that—he didn’t know and he didn’t give a shit. He didn’t try to influence it. No point in that. What would happen would happen.

  Louis didn’t like to plan more than a week or two in advance. A month was his limit. He had no savings, no will, no insurance of any kind. He had no credit cards. He owned no stocks, even though the country was going nuts over stocks, even though he had sold millions of dollars in stocks, much of them before he was old enough to sit in a bar and order a drink.

  Louis sat in bars and ordered drinks long before he was old enough to sit in bars and order drinks. For years, Louis had not followed bullshit rules and dumb laws, such as the ones that say you have to pay taxes. He would throw away the notices from the IRS as soon as they arrived. He did not pay parking tickets or traffic tickets. He did not serve on jury duty, vote, or register for the draft.

  He did not like restrictions on his freedom of any kind.

  He hated moral codes, the racket known as the Church and the fraud known as religion. He had no patience for the misconception known as the conscience. Louis lived a free life, not influenced by such asinine fables.

  Louis Pasciuto was a stockbroker. He was twenty-five years old.

  For most of his life, and all of his seven years in the literal and spiritual vicinity of Wall Street, Louis had lived as if the rules of society did not exist. But now the rules were crashing down on him, just as surely as if the bunk above him had broken loose from the wall and the Chinese guy had come falling down on his chest.

  Louis was a wiry five feet eight inches tall. His prematurely balding head was shaved, his eyes were mahogany-brown, and his lips were curled in a sardonic sneer. He had a lot to sneer about lately. Although Louis believed deeply in breaking every law that stood in the way of a free life, he did not feel any camaraderie with his fellow alleged lawbreakers, the inhabitants of the Hudson County Correctional Center. The other inmates, also accused and/or convicted of various violations of the law, were, in his opinion, scum. Lowlifes. They were muggers, dope addicts, check-kiters, and shoplifters rounded up by law enforcement personnel in the lower-rent districts of northern New Jersey. They were virtually all members of various ethnic minority groups that did not make Louis feel especially warm and fuzzy.

  During the day, Louis kept to himself and tried to read, but conditions were not conducive. There were two open tiers of cells facing each other, with a kind of open pit in the center. A TV was always blaring. There were frequent fights about programming selections on the TV, fights of the kind that might break out between siblings with differing tastes, if the siblings
were raging maniacs. There was a great deal of noise all the time. The place smelled of disinfectant and perspiration.

  It was a familiar odor. He had been here before.

  He could do the time, even with the stink and the bad, cheap food and the uniforms and rules that were almost as bad as at St. Joseph-by-the-Sea, the parochial high school that tried unsuccessfully to mold his character. He could withstand prison if he didn’t have to think.

  When his incarceration began two weeks earlier, he tried to keep his mind on safe ground. Friends and family. That didn’t work. He soon learned that there were no safe thinking-subjects in prison. Friends? Shit friends who didn’t care if he lived or died. Family? What kind of family didn’t visit? Why wasn’t anyone taking his calls anymore? Try as he may, he couldn’t keep his mind off Stefanie and Anthony, their two-year-old.

  Stefanie took his call once. She was okay. The baby was okay. But she was struggling. Nobody was sending her money. One of his so-called friends, Armando, had promised to give her money. She waited, with the baby, at a shopping mall on Staten Island. He stood her up and she waited for an hour like a teenager on a first date at some fucking cineplex.

  Now Stefanie wasn’t taking his calls anymore.

  Charlie was pissed.

  The FBI was pissed.

  The FBI had knocked on his door just before dawn on October 20, 1999. Louis and Stefanie were asleep in their two-bedroom apartment. They lived in a townhouse attached to other townhouses, lined up with neat geometry in a former rural community called Eltingville, in the southern tier of the New York City borough of Staten Island. Unlike the older, more crowded neighborhoods to the north, crime was low on the south shore of Staten Island. Women could walk the street at night without being bothered. People knew each other. Strangers, be they burglars or FBI men, were conspicuous.

  Stefanie was the first to wake from the FBI knocks. She sat up and cursed. More strangers at the door. Over the past few months there had been other predawn knocks. There were a lot of visits by people who didn’t like Louis, or wanted something from him. Once, when she wasn’t there, the visitors had come by car and tried to smash it through the front door of the garage. She had gotten used to that kind of thing, but not used to it so much that she was willing to continue living with Louis. They were on again, off again, on the rocks.