Nothing But Money (21 page)

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Authors: Greg B. Smith

BOOK: Nothing But Money
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Jeffrey knew all about the rodeos. There were some boiler rooms downtown that had more in common with the World Wrestling Federation than the New York Stock Exchange. There was one where there were fewer phones and desks than there were “brokers,” so whoever got there first in the morning got the phones. If you got there late, you could always try to beat the hell out of some guy who was already at a phone. It was dog-eat-dog, with guys parading around in full Staten Island regalia—nylon sweat suits, gold chains, the works. There were holes in the plasterboard at this place. A biker guy built like a mountain range stood by the trading window. If a broker showed up with a sell order, he’d grab the guy by the neck and shout, “Somebody show this guy how to run his business!” Not at DMN Capital.
Except, of course, for the stockbroker sprawled on the carpet in the conference room.
It was the guy’s own fault, of course. The number one rule at DMN was simple and easy to understand—no sales, period. This guy, this broker they were bribing to the tune of $25,000 a hit, had gone and violated that rule. They hadn’t noticed it at first, but when they found out, Jeffrey knew they had to do something about it. So he called up Jimmy Labate and had him come into the DMN office and wait in the conference room. Then he’d summoned the broker by telling him there was a staff meeting.
The idea was just to scare the guy. The guy walked in, and Jimmy got up from his chair, walked over and hit the guy as hard as he could square in the forehead. The guy had gone down like a piece of frozen meat falling off the back of a truck. And now, unfortunately for all concerned, he wasn’t moving.
“Get a rug,” Jimmy said. He said it the way you say, “Pass the salt” or “What time is it?” Jeffrey didn’t know what he was talking about. All he knew was that he had a dead guy lying in the conference room of a company that had his name on its letterhead. The aroma of legitimacy was seeping out the windows like air from a punctured balloon.
“To wrap him up,” Jimmy explained.
“Oh. Right.”
They started scrambling around, considered ripping up the rug from one of the rooms, but figured there’d be all these little carpet tack things flying everywhere and that would just add to the mess.
Suddenly the guy sat up.
Labate was furious at the guy for so many reasons. First he was furious for the sell orders. Then he was furious for having to hit him in the forehead. Then he was furious for him not being dead, but instead getting everybody all worked up. He grabbed the guy and ripped his shirt and started hollering. It appeared he believed that the guy was wearing a wire. The guy looked like he’d awoken in the middle of some bad science fiction movie, the ending of which was surely not pleasant. He put the pieces of his shirt back on and scurried out of the office. He promised he’d never sell another stock as long as he lived.
 
 
Before he began working for DMN, Cary Cimino hadn’t spent much time hanging around gangsters. In fact, he hadn’t met any. He watched movies, of course. Like any other American he knew the
Godfather
lines: “Make him an offer,” “sleeps with the fishes,” “take the cannolis,” etc. Having grown up in New York, he knew what “connected” meant, but that was about as far as it went. He wasn’t really into that world, didn’t really understand it. He certainly had not sought out business with these guys. Perhaps if he’d thought about it more, he might have walked away from that first meeting with Jeffrey before it was too late. If only he had known certain facts related to this relationship. Legitimate guys who do business with the mob always end up on the losing end. It is a fact. No matter how charming they may appear, gangsters ultimately are looking out only for themselves. And legitimate guys are considered weak links, like extra baggage on a too-small life raft. They’re the first to go overboard.
When Cary first heard about the incident at the office of his new employer, he had one of those sea change moments. Here were certain facts presented and certain decisions required. A broker had been beaten senseless inside a respectable office on Wall Street. He realized he was no longer working at Bear Stearns or Oppenheimer. This was unfamiliar territory.
There were different ways to view the incident. One was to see that this was not a good thing and it was time to go. The other was to figure that maybe it wasn’t going to be such a problem. He’d known Sal Piazza for several years and he’d never seen him act unreasonably. Sure he considered Jimmy Labate a thug, but Jeffrey and Sal seemed to have the guy under control. At this time Cary made a choice. He would pick ambition over sagacity. Or was it just greed? How could you tell the difference between ambition and greed? No matter what you called it, the money was fantastic. Cary experienced a thought adjustment, explaining it in his own unique manner:
“Jimmy was an absolute thug, but the financial remuneration that I was receiving? And Jimmy wasn’t threatening me. At this point in time, he wasn’t. I mean later in the future he does. And I was dealing directly with Jeffrey. Jeffrey was paying me. They were paying and I had had a long-term established relationship with Sal, who to me, never appeared as a thug, who I never knew had crime family ties as Jeffrey alleges. I really want to delineate the difference of how I perceived Sal and how I perceived Jimmy. I perceived Sal as a nice guy that my sister had a long-term relationship with, that I socialized with, that I went out to dinner with and double-dated with I never saw Sal act violent or raise his voice in any manner. Unlike Jimmy, who was inarticulate, prone to rages, and who Jeffrey manipulated.”
Cary’s thought adjustment had to do with math. For the first time in quite a long time, Cary was wallowing in money. Cash payments flowed to the point where he could now take a supermodel to a top-end restaurant in Soho and not worry about picking up the tab. DMN was taking care of his car payments, so that was no longer a sword hanging over his head. And besides, Cary felt he was being paid well because he deserved it. He had brought in maybe 90 percent of the corrupt brokers needed to make Spaceplex take off. His new friend, Warrington, was using his overseas contacts to make six-figure buys. Sal and Jeffrey were ecstatic. Cary could do no wrong. Cary had brought in a dozen brokers and was getting 35 percent commission on all sales. The math was this: organized crime was not getting in the way of Cary’s net profit. Cary could live with organized crime.
 
 
For Jeffrey Pokross, the gangster presence at DMN Capital was both a blessing and a curse. Mostly the curse involved Jimmy Labate, who had evolved into somewhat of a problem. On the one hand, Jeffrey needed the guy around. Now that the Spaceplex campaign was up and running, enforcement of the no-sell rule was always an issue, and Jimmy was quite good at scaring the hell out of the brokers and stock promoters in the office. He kept a .38 in his waistband and loved to talk loudly about how useful a golf club had been while beating some guy bloody in Staten Island. That same kind of talk, however, added a certain edge to the proceedings and made keeping the place looking legit more complex. Jimmy was a gangster on display. He looked like a gangster, he walked like a gangster, he talked like a gangster. He didn’t hide it from anyone.
With difficulty, Jeffrey came to realize that for the scheme to work, he would have to live with his decision about Jimmy. He really needed Jimmy around. Jimmy’s ties to Robert Lino were crucial. Without this, morons from other families would ultimately come knocking on the door demanding their percentage. On the other hand, Jeffrey was increasingly aware that Jimmy needed him as well. Jimmy’s construction business was failing, so he needed the income provided by DMN. Jeffrey knew well how to turn someone else’s lousy situation to his advantage. He’d made Labate an actual partner in DMN and thus Labate was, in a way, indebted to him. And everybody was clear about his role. Labate wasn’t there to draft analysis on the futures market or make buy and sell recommendations to investors. His role, Jeffrey made clear, was simple:
“He would continue to find mobbed up brokers that could put out our stocks. We bribe and hold on to it. In addition Mr. Labate would enforce the no-sale policy through threats of violence.”
The effort to keep DMN looking legitimate was a never-ending high-wire performance. The idea was to keep the threats of violence (and the actual violence) to a minimum. The beating of the stockbroker had been a fairly drastic example. Usually all Jimmy had to do was walk up, open his knee-length leather coat, show off his gun and check the computer for sell orders. It was a delicate job, choreographing this friction between Wall Street and the streets of South Brooklyn. Now that Spaceplex was starting up, Jeffrey would have to see if his marriage to the mob was going to make him rich or dead.
 
 
In March 1995, the Spaceplex pump and dump was a going concern. Mostly it was a Jeffrey Pokross production. Maybe he hadn’t gone to the Wharton School and maybe Illinois State College wasn’t quite the London School of Economics, but Jeffrey Pokross was quite creative when it came to making money work for him—especially when it came to finding ways to conceal what he was doing from the NASD and Securities and Exchange Commission.
First they had to get control of the majority of shares in the company, which was already trading for pennies in the over-the-counter market. They did a reverse split, which shrunk the number of shares, then the company issued a number of free or absurdly discounted shares to Pokross and Piazza. “That would control the amount of shares that were allowed to trade in the market that weren’t friendly or that we would have no control over.” That meant they couldn’t control the rest of the shares, the so-called public pool, but the pool was much smaller now.
Next the corrupt brokers pocketing bribes would contact market makers, that is, other brokers representing institutional investors, and get them to buy big gobs of shares in Spaceplex. That would drive up the price. The institutional investors had no real incentive to do this and weren’t getting bribes. Instead, they were told by DMN’s troops that they would be guaranteed against a loss. This was completely illegal, but it got the job done.
Pokross described it this way: “I would call him on the phone and say, let’s say the stock was bid at one, offered at one and a quarter. I would say, Hey Johnny, why don’t you move the stock up, why don’t you take out the one and a quarter and move it up to one and three quarters?” I would make a call a half hour later, Hey Johnny, why don’t you move the stock up to two and offer it out at three. I would guarantee them against a loss and give them a small profit.”
Now with the price on the rise, the retail brokers could go to work. Cold-calling victims all over America, they pointed out Spaceplex’s remarkable stock performance in recent days. They’d then launch into a dog and pony show, claiming Spaceplex was going to be the next Six Flags when, in fact, it was just a creaky little amusement park in suburban Long Island with a handful of crappy rides and games no one could win. It was a joke, but it worked.
This was supposed to happen on two fronts—in America and in Germany. Here is where DMN had to switch tactics.
“I had done my job,” Pokross recalled. “I had found the stock, the price of the stock went up and we were waiting for the Germans to start buying it. The Germans didn’t buy it. So we found U.S. brokers and promoters to go buy it and bribe the stockbrokers here in the U.S.”
It was a delicate little dance. As usual, the biggest pressure was to keep the customer from trying to sell before it was time. This was the trickiest aspect of pump and dump. You didn’t want a furious investor whining to the NASD that his broker wouldn’t sell stock when he was told to. So if a customer insisted, DMN had a solution that put the pressure back on the broker. Sell the stock, but find a buyer.
Pokross called this “crossing the stock”: “In other words, if a broker has got client A that wants to sell the stock and that’s demanding to sell the stock, that broker couldn’t go and give it to the trader and say sell it. That broker had to find customer B. So effectively he had to sell it from Customer A to Customer B directly.”
The effect of this was to make it appear as if Spaceplex was a hot commodity, a must-buy. And it worked. They started lining up with buy orders. There were amateurs and pros, big money and small. Even some institutional investors jumped on Spaceplex. They came from all over. There was Carmen Campisi of Howard Beach, Queens, and Astaire & Partners Ltd. of Queen Street, London. A firm in Germany invested $300,000; another in Switzerland committed $500,000. An Italian invested $482,000; a wealthy guy from Pueblo, Colorado, dumped in $221,000. Warrington got the Bank of Monaco to put in another $285,000. All told in 1995, more than two hundred investors sunk $3.5 million into Spaceplex. It’s probably a safe bet that none of these investors had seen the Spaceplex Family Amusement Center in Garden City, Long Island. If they had they might have thought twice.
While this was going on, Cary Cimino and his band of corrupt stockbrokers did no good but did quite well. Jeffrey was writing Cary checks for 35 percent commission and expecting him to chop up 20 percent for the brokers. These payments were straight-ahead bribes; none were disclosed to investors. Sometimes they were by check, sometimes by wire transfer to an overseas account, sometimes by cash. The checks were always made out for less than $10,000, the amount that requires banks to report transactions to oversight authorities looking for money laundering.
Most importantly for Cary Cimino, the checks cleared. Investors actually believed the nonsense the brokers were saying about Spaceplex. And this was why Cary didn’t feel so bad about it. Warrington at first expressed some reservations and dabbled in guilt, but soon he, too, embraced Cary’s credo that investors were just as greedy as the rest of us. They bought the craziness about “the next Six Flags” or “the next McDonald’s” or “the next Starbucks” because they
wanted
to buy it. Their choice to buy was not bovine inspiration. It was a choice. They listened, they chose to stay on the phone and not slam it down in disgust. They authorized a stranger to spend their money. So if they got burned, that was their problem, not yours.

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