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

  “He had very loyal employees,” said one former Moran broker who worked at the firm in the 1980s. “But he’d always use the analogy: ‘Whoever’s not producing, and selling so many shares of this stock or that stock or that bond, was only a footstep away from that hot dog stand outside. Now, what would you rather do,’ he’d say. ‘Be Giussepe at that hot dog stand or here being a stockbroker selling stocks?’ They were always ‘tomorrow’ stocks. Not making money today, but tomorrow—just you wait and see.”

  Moran’s brokers could sell that kind of hope. Blue chips were yesterday stocks. Penny stocks were stocks for the future. Dream stocks. Not dreary, dull, boring stocks like utilities that paid penny-ante dividends. These were little companies, start-ups, fresh companies. Sure, they hadn’t started making money. Of course not. Neither did IBM and GM when they were starting out, neither did Thomas Edison before he got that lightbulb in the stores.

  They didn’t cost in the pennies, really. “Penny stock” was like a lot of dumb Wall Street expressions, this one coming from the old days when penny stocks literally cost in the pennies. By the 1980s, all that a “penny stock” was, in the generally used definition of the term, was a stock that sold for under $5. And they weren’t always “stocks” at all, but very often they were sold to the public as “units.” A unit included a share of stock and something called a “warrant,” which is basically a piece of paper that you can convert into stock at a specific price in a specified period of time. Kind of Wall Street’s version of those nice coupons the A&P sometimes gives you on the back of the checkout receipt—buy five more rolls of toilet paper at 50 cents off!

  What great stocks. Brokers like Roy could sell them because these stocks sold themselves. There was Phonetel, which had pay phones in a bunch of terrific shopping centers in Ohio. There was Hygolet Brill, which made a brand-new type of toilet seat, specially hygienic, satisfying a need of many people on the go. There was another outfit that sold respirators for people and horses alike—a company as clean and fresh as the air itself. And then there was Moran. The company was underwriting its own debt, selling bonds in the company to the public. Getting a piece of a mint company like Moran was maybe the biggest thing the company had to offer at all. Every broker has to sell himself, and so was Moran. Selling himself. Literally.

  Roy moved on to another firm in April 1988—you had to keep moving, keep seeking opportunities—but Moran kept on growing, kept on getting brokers and customers and stocks to sell. By 1989 it wasn’t a small brokerage anymore. It was becoming one of the biggest brokerage firms on Wall Street that sold stocks to the public, one of the top twenty, with three hundred brokers.

  Moran never got much bad press or publicity of any kind. So it came as something of a surprise when the firm shut down at the beginning of 1990. But the real shocker came on June 26, 1991, when John Moran was indicted by a federal grand jury in Brooklyn. The indictment said that Moran used brokers to push stock on the public at inflated prices—including the shares of his own holding company, the one that was issuing the bonds, J. T Moran Financial. Moran and three other top Moran officials pleaded guilty.

  Moran’s stocks were basically selling at prices that John Moran determined. It was a bit like a horse race in which the fillies in win, place, and show are all predetermined, and where even the amounts paid out at the pari-mutuel windows are fixed in advance. Stocks were easier to dope than any horse, because Thoroughbreds have minds of their own and can run out of control, no matter what the jockeys want. A stock is not like that. A stock can be controlled more surely than any fifteen-hundred-pound filly. A stock is more like a trotter. A horse at a trot can be controlled. For years the trotters had a bad rap among gamblers, a rap that they were fixed maybe a little too often. Penny stocks had that kind of rap. Blinder Robinson & Company and First Jersey Securities, which glommed most of the publicity, and other outfits like Hibbard Brown and Investors Center, gave penny stocks that kind of reputation.

  Moran was just as big as First Jersey and Blinder, and he never received a fraction of the attention while he was still in business. There were a few penny stock prosecutions here and there, some people actually being sent to jail. But Blinder Robinson’s Meyer Blinder and First Jersey’s boss Robert Brennan kept prosecutors at bay for years, and they were overshadowed by other financial miscreants. This was the time when the insider trading/arbitrageur/junk bond scandals were dominating the financial news, when Michael Milken and Drexel Burnham Lambert and Ivan Boesky and Dennis Levine were all mired in the public consciousness as a kind of massive pinstriped mÉlange. Penny stock scamsters, who actually ripped off the public, were definitely not on the front burner—when they were on the stove at all.

  Stay out of the papers. It was a lesson Ageloff could have learned if he had been paying attention. He was a small fry at J. T Moran, and his name never surfaced at the time, but if he was game he would have found the key to success, or at least to nonfailure, in his world: Avoid publicity. Don’t attract SEC attention. Keep out of the limelight and, if possible, out of the brokerage entirely. Don’t put your name on the books at all—at least not as a manager, not if you can avoid it. And there were other lessons, lessons that Moran didn’t learn, but that Roy did, after he was boss.

  They were not lessons that Louis had to learn—or even know about—when he was at Hanover. In fact, when he first started work at Hanover he only faintly knew that Wall Street existed. He knew that it was a street way downtown, and that his mother used to work there. He also knew that his mother didn’t want him to work there. Not that he cared. In fact, Louis didn’t have the slightest idea what business Roy was in. But he knew that Hanover Sterling had to be a cool place. From the little he saw of Roy, he saw that Roy would be a good guy to work for. He had a kind of charisma, a magnetism. Louis knew that even from the short time he had seen Roy at the gas station.

  First he had to get a suit. Louis had one his mother had gone with him to buy a couple of years before, but he had outgrown it and the thing was stupid anyway, out of style. So Louis went to Oaktree in the Staten Island Mall and bought a nice $90 suit. Navy blue. Nice material. But Oaktree brand, cheap. It still had its factory creases the following day, when he took the Staten Island Rapid Transit to the ferry terminal at St. George.

  If Louis had looked carefully at the skyline on the way over on the ferry, he could have seen 88 Pine Street. You could just make it out, if the sun angle was right. Pine was the first street north of Wall, and its name went back to the days when maybe there really were trees in Lower Manhattan, as well as a wall. Pine was a narrow vestige of the old Dutch days, barely four car-widths wide. The Hanover habitat was a block from the East River waterfront, where Pine intersects with Water Street, which is spacious and used to have an El train before the Third Avenue El was shut down in the early 1950s.

  In those days, the organized crime of the waterfront—the shakedowns, the loan-sharking, the strong-arm rackets—were about as alien to Wall Street as the burly, tough-talking longshoremen who had their own separate world down by the Wall Street waterfront. They existed, for all purposes and intents, on a separate planet from the men in suits in the offices high above, on Wall and the adjoining streets. But there were intersections. Confluences of interest. For years, the Street was beset by Mob-linked securities-theft rings, with one, never apprehended, operated by a crew calling itself the “Forty Thieves” that worked out of a bar across South Street from the fish market.

  Elsewhere in the city, Guys occasionally surfaced in stock scams. A Brooklyn gangster named Carmine Lombardozzi made the papers in the 1960s as the “The Doctor”—the Mob’s Wall Street “financial wizard” and “money laun-derer.” “Johnny Dio” Dioguardi, an old-school Garment District gangster best known for supposedly blinding columnist Victor Riesel, was sent to prison in 1973 for his role in a stock-manipulation scheme.

  The Mob’s early stock scams were small operations, profitable but scattered. The Street’s potential was never exploit
ed. It wasn’t anything like the fish market, which was a franchise handed down from father to son to cousin over the decades. By the early 1990s the Mob’s days in the Fulton Fish Market were numbered. But they were not over just yet. The last Guys in charge of the Fulton market, Alphonse “Allie Shades” Malangone and Alan Longo and Vincent Romano, would park their cars downstairs from 88 Pine, in the lot where the Hanover brokers parked their cars, and not pose as they got their blurry pictures taken by the cops. Roy could look down and see them. And that made sense. I. M. Pei, the noted Japanese architect, designed 88 Pine for the men in the suits, to look down, literally and in every other way, on the waterfront directly below. In the words of the AIA Guide to New York City, this “white, crisp elegance of aluminum and glass” was “the classiest new building in Lower Manhattan.”

  When Hanover moved to 88 Pine in June 1992, it was one of the very few times that Hanover made the papers back then. The New York Law Journal reported that this “stock brokerage firm” had relocated to Pine from 5 Hanover Square. “This was an excellent opportunity for Hanover Sterling to acquire the space it needed to accommodate its continuing growth,” the leasing agent was quoted as saying. The Law Journal went on to point out that “the company has doubled in size in the past few years.”

  Louis was entering a growth business.

  CHAPTER FOUR

  Louis had no idea where he was.

  He arrived at 88 Pine Street at about nine-thirty. It was a large building and Roy worked in an office that seemed to employ a lot of people. That was about all he could figure out.

  “I was scared,” said Louis. “I got out of the elevator and at the end of the hall there’s a big reception area. I ask the lady behind the desk, ‘What is this place?’ And she says it’s a brokerage firm. So I say, ‘I’m here to see Mr. Ageloff.’ And she says he ain’t in yet. Take a seat. So I sat there. I’m dying. And the girl says to me, ‘He’s always late like this.’ So I’m waiting. I see people walking back and forth. Nobody’s saying anything to me.”

  There wasn’t much traffic in and out. The secretary spent most of her time making personal calls, and Louis leafed through a copy of Crain’s New York Business that happened to be there. It was not a recent issue. It would not be interesting to Louis, or understandable, even if it were still warm from the presses. Louis tried reading it but then put it down and stared at the wall.

  Roy arrived shortly before noon. He passed Louis without saying anything. Five unbearable minutes went by before the receptionist told Louis to walk down the corridor until the far hallway, and then turn left.

  Roy’s office was in the corner facing the East River. It was the kind of view you had to pay to see at the World Trade Center or Empire State Building.

  “Sit down. I want to introduce you to somebody,” said Roy. He walked outside and came back with a guy he introduced as Mark Savoca.

  Mark was a young guy, just twenty-three. They shook hands. Mark asked Louis to come with him. They left Roy’s office, walked past the receptionist, and Mark pushed the button for the elevator. They waited. The elevator arrived.

  Louis had no idea what Mark was doing, and the thought passed his mind that he must have done something they didn’t like and now was getting his ass kicked out of the building.

  When the elevator reached the lobby, Mark walked toward the revolving doors. Louis followed. Mark was acting as if he didn’t care whether Louis came or not.

  It was cold, with gusts of icy wet air from the East River. Mark walked ahead, not saying anything. They went up Water Street, north toward the Seaport. In the parking lot across a side street from 88 Pine, Mark stopped and pointed. It was a Stealth. “I been doing this for a year and this is what I’ve gotten,” said Mark.

  Louis practically collapsed. A Dodge Stealth! What the fuck! Even though it was only a $30,000 car, Louis was impressed. Whoa! “A Dodge Stealth is the biggest car at that time. A Dodge Stealth is awesome,” said Louis, recalling the moment.

  “He says to me, ‘When I came in here I had nothing. I couldn’t even afford a car or an apartment. But now I live in Manhattan. I have a beautiful apartment. I have a Dodge Stealth and I go out to dinner seven days a week.’ He says it took him a year to go on his own. The first month he was on his own he made fifteen, sixteen grand.”

  That was the highlight of the day—the Stealth. Louis could get a car, an apartment, a life. He wouldn’t have to wait until he was thirty or forty. He wouldn’t have to flip burgers at the goddamn McDonald’s, as he did one lousy summer, or stack boxes at Consumers Warehouse. He hated jobs like that, with their dumb rules and their moronic supervisors, guys he hated, guys who hated him because he sneered at their dumb way of doing things. At McDonald’s they had asinine rules for fixing burgers. The way they did it the bun was cold when he put on the burger. He wanted to heat the bun first. Got into a big fight. Lost his job. It was the same in high school, at St. Josephs-by-the-Sea. He aced calculus classes without studying and he would tell the teacher that there was more than one way to solve the problem, no one right way. But she always wanted it done her way. The bitch.

  At Hanover Sterling he could get great stuff and still be young and not have to put up with stupid middle-aged assholes telling him what to do. Everybody there was young and cool.

  Back upstairs, Mark flipped through a midnight-black three-ring binder—his “client book.” He went through the procedures Louis would have to follow if he wanted a Stealth and an apartment of his own. You get yourself clients, you call up “leads”—potential customers—you tell them your name, and you pitch them stocks. And if they buy, they’re your clients.

  “But I don’t know what he’s talking about. I never heard of Wall Street in my life. I didn’t know what a ‘client’ was, never mind a ‘new issue.’ He walks me around the boardroom, shows me what everybody does. He shows me the quote machines. Meanwhile, I don’t have any concept of what he’s showing me,” said Louis.

  But Louis wasn’t dumb. For an hour and a half he just sat there listening while Mark was on the phone, pitching people. Louis paid attention. It was easy. All his life he had been a good talker. All he had to do was talk.

  After a while he was summoned back to see Roy.

  “You interested?” Roy asked him.

  Louis was interested. The only problem was that he had just started a semester at the College of Staten Island.

  Roy asked him how much it cost. Louis told him—$900.

  Roy reached into his pocket, took out a money clip, and peeled off nine $100 bills. “Come back at seven in the morning,” said Roy.

  It was pitch-black out when Louis got up the next morning. There were still bums on the ferry. It was cold, miserable, but Louis would have gone to Hanover Sterling stark naked if Roy had asked him.

  Louis was put to work in the “boardroom.” It was a weird use of the word, which most people associate with long tables surrounded by retired rear admirals and other members of corporate boards of directors. In the chop houses, the boardrooms were big rooms for all the brokers and cold-callers. Every firm had its own arrangement. At Hanover the desks were arranged in clusters, and people would work together in teams. Well, “teams” is what they called them most places on Wall Street. The chop houses called them “crews.” And the guys in the crews were all very much like Louis.

  These were kids from the boroughs and the close-in suburbs. Kids who had gone to community college or no college at all. White “ethnics,” the Manhattan snobs would call them. Guys who spoke with New York accents. In Manhattan, people didn’t talk like that anymore if they could help it. If you had any kind of standing in Manhattan, you worked hard to eradicate that way of talking. Not Roy. Not the kids in the boardrooms.

  Years ago the kids in the boardrooms couldn’t have made it into the front office. If they had worked hard and gotten MBAs maybe they could have gotten assistant-trader gigs at second-tier firms. But these kids didn’t have MBAs. Some of them could barely read. They coul
dn’t have gotten any firm to hire them as brokers, not when it was the 1980s and the market was booming and the Street was filled with ambitious preppies trying to make it in the business. Kids without fancy college degrees could have made it only to the back office, slogging along as clerks like Fran Pasciuto, or maybe working in the offices where brokerage trades are executed. But the penny stock era, the era that was coming to an end in the early 1990s, started to put the street kids in the front offices.

  Now the chop house era was beginning and the street kids were everywhere. Hanover Sterling was at the forefront of this socioeconomic-demographic revolution on Wall Street. In the boroughs and the burbs, word was spreading, fed by word of mouth and ads in the city’s tabloids. The Street was looking for ambitious kids from the street.

  Stefanie Donohue was excited about Louis’s new job.

  They had met the year before, in the record-hot summer of 1991. Louis had just graduated from Sea, Stefanie from Tottenville High School. The Donohues could afford Sea but felt its rules and its uniforms and its discipline weren’t necessary. Stefanie and her brothers were nice kids. They could be trusted. Stefanie and Louis were about as different as any two people could be and still be in the same species.

  Stefanie’s family was comfortably middle class, quiet, maybe a little repressed in an Irish Catholic way. But a little repression wouldn’t have done Louis any harm—which might have been the appeal. George Donohue was a retired policeman who ran a bar on Coney Island Avenue in Midwood, the neighborhood where Roy Ageloff had spent his formative years. By the time George wound up at the Seventieth Precinct, the Jewish population was being fast supplanted by a kind of polyglot stew of nationalities—resulting in some interesting grocery stores and a boring array of domestic strife and postmidnight mayhem. There were Russians and Pakistanis and Arabs and Haitians. George served in plainclothes most of his time at the Seven-oh.