Nothing But Money (26 page)
Authors: Greg B. Smith
It was all Warrington’s idea. Warrington was still doing well with Cary and Jeffrey on new stock deals, but he felt it was time to personally branch out. It was time to be an entrepreneur.
This would surely be Warrington’s way out of the office grind. By now he was officially a father, and he wanted to actually act like one. Francis Warrington Gillet IV was all of two months old. He’d been born May 21, 1996. Warrington was thirty-seven years old. It was time to get serious. No more fooling around. He wasn’t going to be like his own father and hit the road for Palm Beach once the responsibilities of parenthood kicked in. He was going to do it right. That was his promise to little Warry the Fourth and to Warry’s mother.
Discovery Studios was the key. He’d already scared up some big-money investors through Gillet family connections. He’d persuaded Cornacchia the Trivial Pursuit guy to dump some money into Discovery, and he’d convinced socialite Mary Lou Whitney, the doyenne of the Saratoga Springs set and former actress, to join his “beauty advisory committee.” He also claimed to have two actual princesses—Bea Auersberg of Austria and Loretta Witt genstein of Germany—signed up to help market Discovery Studios’ beauty products overseas. Already it glittered with legitimacy.
He was also borrowing a page from the Jeffrey Pokross playbook; he was going to reverse merge the thing into another shell company, then pay off his former Monitor broker buddies to push it in the retail market. Cary Cimino had been very helpful with that, even recommending a new guy from a company called Thorcon Capital inside the World Trade Center.
The guy’s name was Nick Vito, and he was very helpful. He had overseas customers and he was happy to promote Discovery, knowing full well it had no real assets and was not much more than a dream inside Warrington’s imagination. All Nick wanted in return was some discount shares, preferably wired to certain bank accounts overseas. Warrington also offered to gift Nick free shares of restricted stock in Discovery equal to the number of shares Nick could convince his clients to buy. This provided Nick with an enormous incentive to convince his clients to buy stock in Discovery. If the clients bought a hundred thousand shares, Nick Vito would get a hundred thousand free shares in Discovery. Of course, Nick would not be mentioning anything about free shares to clients.
On a sweltering afternoon in July 1996, Warrington made his way downtown to Thorcon’s office the World Trade Center. When he arrived, Warrington made it clear to Nick that it was time to move on the Discovery stock. He said several other broker dealers were getting ready to make a market for the stock, and that it was now or never for Nick Vito to jump on board.
“What’s in it for me?” Nick asked.
“This is a gray area,” Warrington replied. “I know I’m not supposed to be giving you cash or stocks. Do you have an overseas account?”
The plan was simple. Warrington arranged for a Swiss banker he knew to wire money into Nick Vito’s brokerage account in the Bahamas after Nick got his clients to buy Discovery stock. Back and forth they went about precisely how to do this, and after all the dancing around, Warrington suddenly started speaking in plain, declarative sentences whose intentions were clear. The payment would be worth 30 percent of the value of however much Discovery stock Nick convinced his clients to buy.
Warrington preferred that it be in cash. Thirty percent was the best he could do because he owed a percentage to Cary.
Nick was very helpful. He suggested that the Swiss bank could set up a consulting agreement with him to justify the payment. Warrington said no way. Instead he promised that the Swiss bank would transfer the money from a bank in the Bahamas to Nick’s account in the Bahamas one day after the Discovery stock purchases were settled. And he brought up the free restricted stock idea, making sure to remind Nick not to mention this little side arrangement to the National Association of Securities Dealers. They had already been giving Warrington headaches about the Discovery Studios stock offerings, and headaches he didn’t need. He made sure to add that it would probably be best if they didn’t mention the free stock to their mutual acquaintance, the guy who’d introduced them.
Nick agreed. Warrington’s foray into the world of the entrepreneur was under way. In no time at all, girls across America would be signing up at their local malls to become the next big discovery. It was Warrington’s way of spreading around the wealth and fame. It was his little gift to America.
Spring 1996
The morning Accessible Software went public, it opened at $1, about twice what the wives of DMN’s partners had paid. This did not make the front page of the
Wall Street Journal
. Accessible Software of New Jersey was not exactly a household name, but the word on the over-the-counter bulletin boards was that it was hot. The company as presented seemed like a brilliant idea. It claimed to have designed and developed large computer application systems that acted as management software for companies. Run your business by computer program. DMN had arranged a private placement deal that allowed certain qualifying insiders—close relatives—to acquire 1 million shares of Accessible without a holding period. Most of the stock was purchased by the wives of DMN’s partners. Now Jeffrey Pokross just needed somebody to make a market for Accessible and sell the stuff.
Wall Street Journal
. Accessible Software of New Jersey was not exactly a household name, but the word on the over-the-counter bulletin boards was that it was hot. The company as presented seemed like a brilliant idea. It claimed to have designed and developed large computer application systems that acted as management software for companies. Run your business by computer program. DMN had arranged a private placement deal that allowed certain qualifying insiders—close relatives—to acquire 1 million shares of Accessible without a holding period. Most of the stock was purchased by the wives of DMN’s partners. Now Jeffrey Pokross just needed somebody to make a market for Accessible and sell the stuff.
Until now Pokross had traipsed from corrupt brokerage to corrupt brokerage, searching for enthusiastic stockbrokers and stock promoters willing to hype whatever nonsensical company was put in front of them for exorbitant hidden fees, otherwise known as bribes. This was becoming tedious and dangerous. Every time you did this you ran into a new crime family. It was getting like the garbage business out there. Jeffrey decided it was time for a new approach. It was no time to take over a brokerage house and make it DMN Capital’s own, and Jeffrey even had the perfect candidate in mind—a small boutique outfit in Philadelphia called Monitor Investments.
Always the opportunist, Jeffrey had run into the owner of Monitor, William Palla, who’d told him he was very interested in opening an office in New York City. Nothing was that simple. Palla informed Jeffrey that he’d heard that to make a good living in the world of pump and dump, you required certain friends. Jeffrey agreed that this was true and said he might be able to help out. Pokross then met with Robert Lino, and it was agreed that grabbing on to Monitor and squeezing it like a grapefruit was the best possible option. It was decided that the newly acquired Monitor would get its feet wet hyping Accessible Software’s initial public offering.
Within minutes of opening, Accessible began to take off. By the close of business, it was selling at $9 a share. The wives quickly sold 120,000 shares to retail customers and made a fortune. The brokers at Monitor who did the heavy lifting pocketed huge undisclosed commissions. In one twenty-four-hour period, the three DMN partners—Jeffrey Pokross, James Labate, and Salvatore Piazza—cleared $500,000 in profit. They still had a lot of stock left over when regulators halted trading of Accessible.
When it resumed trading, they stopped the manipulation and went legit. The gamble paid off. The regulators walked away and the stock held around $7. DMN and Monitor were a marriage made in Wall Street heaven. Robert Lino and the Bonanno crime family got their share and everyone was happy, but there was a little problem. When Jeffrey and Robert had decided to take over Monitor, they did not know that—once again—one of the principals already had a relationship with another crime family, a guy named Ron.
Ron was somehow related to a guy who knew a guy in the Gambino family. At least that was how it was explained to Robert Lino when his presence was requested at a sit-down with a Gambino soldier named Johnny R. This guy Ron claimed Robert had stolen $75,000 from Monitor and a solution had to be reached. When the time came for the meeting, Robert Lino showed, along with Jeffrey Pokross and Jimmy Labate and Jimmy’s friend in the Gambino family, Johnny R, showed as well, but Ron did not. He’d changed his mind and relocated to Florida.
This did not please the Gambino family. This absence of complainant made them look bad, which in turn made them feel bad. They left the meeting in a huff, then later reached out to Jimmy Labate and demanded he come to yet another meeting, a proposition that made Jimmy quite nervous. The Gambino family was insistent, and also insisted that Robert Lino be present as well to put the dispute on record with the Bonanno group. This time they met in Manhattan. Lino sat down with a soft-spoken captain in the Gambino family named Mikey Scars DiLeonardo, who was said to be quite close to the Gotti family and was believed to be a fan of compromise. Although Gotti had been convicted and was slowly dying in prison, he still ran the family and had to be recognized.
During the meeting with Mikey Scars, Robert Lino admitted right away that he had, in fact, taken over Monitor and that he wasn’t about to walk away. DiLeonardo insisted that Lino owed $75,000 to the Gambino family. Lino admitted taking all the money and sending it on to the Bonanno crime family. But he didn’t see it as “stealing,” at least not from the Gambino family. He offered, as a token of “respect,” to pay the Gambino family $17,000 and have them walk away.
“That is an insult,” said Mikey Scars.
He was flexible. He offered more reasons why the Bonanno family needed to pay the Gambino family money, as soon as possible. Jimmy Labate, who was supposedly associated with a Gambino soldier, had neglected to forward anything to his boss when the guy went away to prison. This was considered an extreme breach of etiquette, and DiLeonardo, a man of reason, suggested that Labate could be the conduit for a $20,000 payment to the Gambino family come Christmas. All of this talk was businesslike, like a company merger, or two money managers discussing bonds versus derivatives. Robert Lino and Mikey Scars were nothing like Jimmy Labate. They both believed that reason and accommodation worked well, as long as everybody looked good and nobody walked away with an empty wallet. On this day, their approach prevailed. Monitor became an asset for both Robert Lino and Mikey Scars.
CHAPTER TWENTY-TWO
May 1996
Bill Palla sat in Jeffrey Pokross’s wood-paneled office at DMN Capital with the Illinois State University diploma on the wall. Palla was the CEO of Monitor Investment Group, but he was anything but in charge. He was the front man, the guy installed by the guy, the name on the paperwork. He was sitting before his real bosses, Jeffrey Pokross, Salvatore Piazza, and Jimmy Labate, and he was holding several certified letters, all of which were sent personally to him but none of which had he bothered to answer.
He was explaining to Jeffrey and Jimmy and Sal that the letters were from the National Association of Securities Dealers (NASD) enforcement unit.
“They want me to come in for an interview,” Palla said.
“Maybe you should find out what they want instead of ignoring five certified letters,” said Jeffrey, clearly not amused.
The morning Palla showed up at DMN, Monitor Investment Group was the company the investing public dealt with without realizing it was really dealing with DMN. To the investing public, DMN did not exist. Investors saw Monitor letterhead, Monitor monthly statements, Monitor telephone help lines. As far as they could see, Monitor appeared as a multimillion-dollar Wall Street success story. In reality, Monitor was one big fraud concealing another.
For Jeffrey, Sal, Jimmy and the bosses of the Bonanno crime family, Monitor was perfect. Jeffrey had long sought an unrestricted brokerage outside the New York area that he could call his own. He wanted something off the regulatory radar screen where he could hire his own brokers and promoters, where he could run the show from behind a legitimate front.
So far, it had worked well. During the months DMN secretly controlled Monitor, Pokross, Piazza and Labate had made millions of dollars off of a handful of bogus stocks—Accessible Software, Spaceplex, Reclaim, Beachport and any number of assorted and sundry capers Jeffrey could dream up. DMN had made $1.2 million on Reclaim alone. At its peak, Monitor had one hundred brokers (some licensed, some not) and three offices in New York City. It was a symphony of schemes, with brokers pumping up stock in unison. Pokross was even able to get his sister, Jody, a job at Monitor as an executive assistant. In less than a year, Monitor had helped make DMN a growing business.
Much of the reason for Monitor’s success could be laid at the feet of Cary Cimino. For a year he’d worked his tail off for Jeffrey and Sal and Jimmy, hustling up legitimate brokers who were willing to take bribes to hype house stock. For a year he’d made Jeffrey and Sal and Jimmy a lot of money. He gave himself much of the credit for this. He estimated that he himself was the top earner at DMN, and he believed that without him, Monitor and DMN would never have existed in the first place.
As Cary saw it, he was the man behind the millions. It was he who’d introduced Jeffrey Pokross to Todd Nejaime, who in turn introduced Jeffrey to the guy who owned Monitor down in Pennsylvania. It was he who’d produced Warrington Gillet, the rich WASP stockbroker he’d found in St. Bart’s on New Year’s Eve. In the year Warrington did business with Cary, he’d brought in major investors who routinely bought huge chunks of stock. He had his Maryland horse country pals and their blue-blooded cash, but he also had contacts with overseas bankers who were always willing to help out—for a fee.
Cary figured that between Todd and Warrington, the partners at DMN Capital would make millions this year.
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