Born to Steal: When the Mafia Hit Wall Street Page 28

  The New York office of TYM Securities was at 2 Rector Street, way downtown. Familiar streets, familiar bars, familiar restaurants. Familiar people. Dave Lavender, one of his cold-callers from the old days (a year before), had told him about TYM and about the Guy who made it all possible, whose name was Ralph Torrelli.

  As soon as he met Ralph, Louis knew that he was going to like him.

  Ralph Daniel Torrelli was thirty-seven when Louis met him. Big and heavy. Very heavy. Tremendi. He was over six feet tall and weighed in excess of three hundred pounds. But he was soft-spoken. Reasonable. He was the kind of guy Joe Bonanno might have had in mind when he talked about “men of honor.” Ralph kept his word. He didn’t scream like the other Guys. He kept his voice low because his credentials preceded him and hollered on his behalf.

  Ralph Torrelli was a sweet-dispositioned ex-drug dealer.

  In 1989, Ralph was convicted of federal narcotics charges in the bucolic but drug-infested Gulf Coast of Florida. Ralph’s arrest, trial, and conviction received little attention even in Florida. Some drug dealers from the north had come into town and gotten arrested. Not big news. This was the era of the War on Drugs, and Ralph was a POW.

  “Five people were sentenced in Orlando federal court Monday for their involvement in a drug ring that manufactured speed and chemicals used to make cocaine,” said the article on the second page of the second section of the Orlando Sentinel, March 21, 1989. “U.S. District Judge G. Kendall Sharp sentenced Ralph Torrelli, 29, to 10 years in prison and Glenn Crouse, 32, to six years. Last December, a jury had convicted the two men, both of Levittown, Pa., on drug-conspiracy and distribution charges.” Ralph emerged from the federal prison system in April 1995 after serving nearly six years of his sentence.

  In bygone eras, a Guy like Torrelli would have been able to find employment after prison on the docks, or in construction, or as a strikebreaker, or in the Fulton Fish Market. But in the 1990s an ex-con with the right connections had his best chances for getting his act together on Wall Street. Torrelli, sobered by his lengthy incarceration, moved from manufacture and distribution of controlled substances to manufacture and distribution of equity in companies.

  Chop stocks were the crack cocaine of the New Economy, far less risky and almost as profitable, and there was no War on Stock Fraud when Torrelli set up shop at a brokerage firm called Amerivet. He organized a consulting firm called Effson, whose offices were in the same Rector Street building as Amerivet. He was now a full-fledged stock promoter, one of the investment bankers of the chop house world. Like Real Wall Street investment bankers, chop house stock promoters are middlemen between companies and brokerages. Stock promoters raise money for small companies by introducing them to brokerages, and get product for chop houses (and legit brokerages too) by introducing them to companies.

  By the time Louis arrived, the Amerivet Rector Street branch office had a new sign on the door. It was now the TYM Securities Rector Street branch office.

  Louis didn’t know how Torrelli got into the chop stock business. But it made perfect sense. It was a thing that was being done at the time by Guys from all of the six families in the New York metro area and, now, Philadelphia. Louis was lucky to be hooked up with a Guy who was comparatively quiet, nonviolent, and reasonable, a degree of emotional intelligence not common in that walk of life.

  “At TYM things started to get back to normal. Ralph got the OSJ [branch office] for TYM. He had a little office there. Computer, printer. Nice office. Ralph was in Pennsylvania his whole life, except for the time he was in jail. It seemed to me that what he was doing here was trying to get his life together. He had a family. Four kids. Ralph was low-key. He never gets in trouble. He’s fucking hidden.”

  Ralph put the stock deals together, and was responsible for paying the brokers. He got the cash from a slick, well-dressed Russian named Alex, known as “Alex Versace” because of his taste in designer wear and good selection of wristwatches, which Louis estimated to be in the $70,000 range.

  “After a while Alex started to talk about the money so I found out the money from the clients was wired to Israel, and then this Hassidic guy would come and then bring us the cash. One time I wanted to find out, so I followed Alex downstairs one payday. I left the office right after him, and I watched him get into this green van with a Hassidic Jew. I was curious where the kid got the money, because he’d come up with two, three hundred thousand in cash. It’s not that easy. Even for a bank it’s hard. You’d have to give a bank three, four days’ notice. We would pay six percent off our money to get it in cash. That’s the way it was. Well worth it.”

  Alex was what is popularly referred to as a “money launderer.” A few years later, when terrorists destroyed the World Trade Center, a lot of attention would be focused on the kind of money laundering that sneaks cash into the U.S. from abroad. But for years, more complicated forms of money laundering were essential to the chop houses. The mechanics were complex but the aim was simple—to turn the proceeds from stock scams into untraceable cash. Ironically, considering the later association of money laundering with Islamic militants, the money laundering networks that benefited the chop house kids and their Guys were mainly operated by Russian Jewish immigrants and Israelis. Ralph had somehow developed good connections in that world.

  Times were good with Ralph. Louis couldn’t believe it. Unless he was missing something, which was possible, he had finally run into one of those characters he had only seen in the movies—a sympathetic, nice, not completely out-for-himself Guy. Ralph directly paid Charlie the money due from Louis, and even lied about the money Louis was getting, to cut into Charlie’s share. “He was on my side,” said Louis. And that was getting to be a rare thing, with Benny gone and Stefanie not around that much anymore.

  Louis finally caught up with the Internet stock mania at TYM. By now, dot.coms, IPOs in particular, were generating crazy returns despite thin or nonexistent profits—kind of a chop stock pitch come true. TYM was pushing stock in a company called Internet Holdings. Great name. Great symbol—HTTP—the acronym for the hypertext protocol used on the World Wide Web. All it needed was a story Louis could sell. Not a business. A story.

  HTTP had to get its story out to the public, and that was Ralph’s job too. Like any promoter or investor relations professional involved in bringing stocks to the attention of investors, Ralph developed and distributed promotional materials that often were sent out to brokerage firms and to the financial press. After all, a favorable mention in the financial press can really light a fire under a stock.

  In the summer of 1997, a white cardboard folder—somewhat cheaply labeled “Due Diligence Package”—came to Business Week from Internet Holdings Incorporated. Dozens if not hundreds of similar stock promotional materials come to Business Week each year. Inside the cardboard folder were promotional materials about the company. The material was undated but was apparently being circulated to the press in August 1997, at about the time Louis, Mergen, and the Argent brokers joined Ralph Torrelli at TYM. Included in the packet was a letter from a securities lawyer to Elton Johnson, president of Amerivet Securities Incorporated, listing the states where HTTP could be sold. There was also a handwritten note to Johnson. It was apparently included in this particular packet by accident. This is what it said:

  Effson Consulting Inc.

  2 Rector Street

  10th Floor

  New York, N.Y. 10006

  Dear Elton,

  Just wanted to send you this package for your review. Please look it over. Call me.

  Best regards,

  Ralph

  Unfortunately for HTTP, the packets weren’t working too well. The company wasn’t getting any publicity, which probably was because of the contents of that cardboard folder. An SEC filing in the company’s due dilly package said it “presently has no operations” and “does not currently maintain offices.” The filing did have one bit of good news: “The company believes its employee relations are good.” There w
as one employee.

  No offices, no operations. Not much of a company, but a great stock! A terrific story! Louis sold $1 million of it to one of his Whales.

  “Name was Henry O’Keefe. I was practically guaranteeing the stock to him. I told him it was an Internet company that had a patent. Something that the phones needed, and that every phone company in the United States would have to buy over the next six months, or otherwise they wouldn’t be able to use their phones. Some shit like that. They had a monopoly on this device and because they’re changing all the lines from analog to digital in the United States, ‘if they don’t buy this device, they won’t be able to become digital. You won’t be able to use your phone. They got a monopoly!’ Actually they had something to do with digital but they didn’t have a ‘monopoly.’ They didn’t even have the ‘poly’ in monopoly.”

  Somehow or other, Henry O’Keefe found out that HTTP wasn’t all it was cracked up to be. Customers were getting smart—maybe it was all the press. They knew what to do when they got ripped off by a broker.

  “One day I go out to my car and this guy shows up. Name is Steve. He says, ‘I’m here for Henry O’Keefe.’ I went, ‘Who is that?’ He says, ‘You know damn well who that is, kid. You ripped him off for close to a million dollars.’ He says he’s Henry’s ‘friend,’ and he’s there to get the money. But this guy’s a real broken-down valise. He’s in his mid-forties, with an unbuttoned shirt, really cheap silky unbuttoned shirt with bad-material dress pants and these ugly beige Capezios. So I put him in touch with Charlie.”

  For Charlie, a complaining customer with “Guy connections” meant only one thing: payday. “Charlie goes, ‘I got to get back to them. They want to meet.’ He says, ‘What do you think? Sooner or later somebody wasn’t going to come over to you? You think you’re going to get away with robbing people your whole life?’ I say, ‘Charlie, this is what I do for a living. I rob clients.’” Apparently the thought had never occurred to Charlie.

  It sounded fishy to Louis. He suspected that this Steve was sent by somebody other than Henry O’Keefe, though he never bothered contacting O’Keefe to find out if that was true.

  Steve eventually went away. But unbeknownst to Louis, there were other burned HTTP customers. And they were complaining. A client of one of Mergen’s brokers complained to the regulators. Instead of being ignored, which was the routine in the past, she got a visit from two FBI agents. One was True Brown, head of the FBI’s stock-scam hunters. The other was an agent named John Brosnan.

  CHAPTER FORTY-TWO

  Early in the morning of December 27, 1997—the lucky two-sevens were at work again—Stefanie Donohue Pasciuto gave birth to Anthony Pasciuto. He had Stefanie’s cherubic face and Louis’s strong will. Louis had mixed feelings about being a father. The timing wasn’t too great. But he got into the whole expectant-father thing, which made the in-laws and parents happy. He participated in Lamaze classes. He was supportive, the way expectant fathers are supposed to be nowadays. After Anthony was born, Stefanie saw Louis actually cry one time. It is an emotional thing having a kid. More than just having another mouth, or Guy, to feed.

  Now that he was a father, Louis tried harder than ever to hold a steady job. TYM could be a steady job. Stefanie had moved back in with Louis late in her pregnancy. Louis promised that things had changed. He had changed. He would change his ways. Stop gambling. Pay off his debts.

  But it was hard, so hard. His favorite song was “Free Bird” by Lynyrd Skynrd: “For I’m as free as a bird now, and this bird you cannot change.”

  Louis was going to try to change. But he had to admit to himself that he couldn’t. He gambled compulsively. He couldn’t stop. He couldn’t change, and he faced three years in prison for the check scam. He was keeping his mouth shut about Charlie, he had stopped trying to jump ship, and still Charlie was acting as if he were a pariah, a traitor, a rat. Charlie didn’t help when John Mergen started to torture him again. Louis saw Mergen every day at TYM. Even though Louis had paid off the debt he owed Richie months before, Mergen was still trying to squeeze him for money.

  The Mergen situation was straining his relationship with Charlie. It was a violation of the implied contract between Louis and Charlie: Louis paid; Charlie helped. Louis was still paying when he could, or more precisely when he couldn’t get away with not paying. And Charlie was balking.

  A typical early 1998 conversation on the subject:

  “I want to go to Brooklyn to talk to you. I need help with Mergen,” he told Charlie.

  “No!”

  “Every time you wanted me to come to Brooklyn for you to talk to me, I come. I want to come to Brooklyn to talk to you.”

  “I don’t want to talk to you. What’s it about?”

  “I just said—John Mergen.”

  “Fuck that fucking Turkish pigheaded fuck. Tell him I’ll smack him.”

  “If I tell him you’re going to smack him he’s going to kill me right on the spot. You just got to come here and smack him.”

  “Fuck him. I ain’t fucking going nowhere. Tell him if he lays a hand on you he’ll have to deal with me.”

  “That ain’t good enough.”

  Charlie just didn’t understand. Or he understood and he didn’t give a shit.

  Charlie might have forgiven Louis for the fence-jumping if he was generating cash. But he wasn’t. By the spring of 1998 they were barely on speaking terms because the TYM branch office shut down. So much for stability. Louis moved to firm number thirteen, Barron Chase. The offices were getting crummier and crummier. He was on Maiden Lane now, a cruddy building on a grimy little side street a few blocks north of Wall Street. A kid named Lance Marino, who was related to a Guy in the Colombo family named Craig Marino, was running the place, along with Alex Versace and a few other Russians. It sucked. Louis didn’t get along with one of the Russians, and Mergen and his crew followed him there too and made his life miserable. It seemed as if Mergen was going to follow him everywhere, forever. And not as his pal. As his boss.

  “Now I go to Barron Chase and this kid Mergen thinks I’m going to work for him,” said Louis. “I’m like, ‘Get the fuck out of here.’” But Mergen persisted. Since Louis didn’t tell Charlie he was making money, he couldn’t go to him for help. “I couldn’t say to him I made fifty grand and Mergen wants a piece of it,” said Louis. “I was in a bad situation.”

  Louis had a plan to open his own branch office. If Lance Marino could do it, why not him? So he called Shannon Johnson, who happened to know of a firm that had a branch office available. “Shannon knew so many people, he could get me a branch office right away,” said Louis. He flew Shannon up to New York and discussed it with him. But it didn’t pan out. *

  Nothing was panning out. Everything was turning to shit.

  The Cunningham IPO was Louis’s downfall. Not directly. One thing led to another, as it always did, and the other thing the first thing led to was always worse.

  Cunningham was a printing company where Nick Pasciuto worked—Cunningham Graphics International. It went public toward the end of April 1998. A legit IPO for a legit company, and Nick Pasciuto wanted to invest in it. Louis didn’t have any money to loan, so he put his father in touch with a broker and pal named Armando. Nick Pasciuto borrowed $40,000 from Armando and bought some shares in the IPO. A good investment. He wound up making about $20,000. But then something went wrong. Naturally.

  Mergen found out that Nick owed Armando $40,000. So he wanted Louis to get that money from Nick—and give it to Mergen. Louis would just have to gain access to Nick’s checking account. It would be simple. Louis knew what to do with checks. He had done that before. He had stolen from his father before too. It would be as easy as stealing rolls of quarters from the bedroom closet. Easier, maybe. “‘We’ll split it and beat Armando,’ Mergen said. I said, ‘No.’ Then he starts threatening me, trying to force me to beat my friend.”

  Charlie decided to help this time. He called Mergen.

  “Now John Merg
en says, ‘I don’t give a fuck if Charlie calls me.’ I call Charlie. He says, ‘Tell him I don’t give a fuck either,’” said Louis.

  That was true enough. Charlie didn’t give a shit. Louis was on his own. Mergen summoned him for a meeting in Staten Island. They went for a walk on the beach. “He grabs me and whispers in my ear, ‘Go rob Armando by tomorrow morning, or I’ll come to your house. You’ll be dead.’ I say, ‘Okay, I’ll rob him.’ He says, ‘Tomorrow morning, I want the money.’ All right.”

  Louis knew what he had to do.

  The next morning he drove to the Hudson County courthouse in Jersey City and asked a startled Judge Camille Kenny to revoke his bail on the check-stealing charge. He went to jail.

  It was May 27, 1998. The lucky two-sevens were at work again.

  CHAPTER FORTY-THREE

  Louis’s new home, the Hudson County Correctional Center, was a concrete-block structure about halfway between New York and Newark. Years later, after the September 11 attacks, it would gain some limited notoriety as a holding pen for illegal immigrants from the Middle East. But when Louis resided there it was steeped in obscurity. Even the gas station attendant down the street had trouble locating it for a visitor. From the outside it vaguely resembled a shopping mall, with a vaulted entranceway and exposed steel. But inside, from the inmate point of view, it had few if any virtues, except for a kind of heavy-handed, chemically induced germicidal miasma. Chlorine made it smell like a cross between a high school swimming pool and a public beach restroom.

  When he arrived at the end of May 1998, Louis surveyed his surroundings with a kind of bleak indifference.