Cont'd.
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''YOU'VE MADE A FRIEND''
First Colonial Ventures Ltd. is a minor venture-capital firm whose stock
trades on the OTC bulletin board--so small that it is not required to file
more than token disclosures with the Securities & Exchange
Commission. But for market makers in small-cap stocks, First Colonial
looms huge. It is an object lesson: When the Mob speaks, market
makers obey.
The incidents took place early in October, one week after the assault at
Sharpe. First came a beating. A trader at Naib Trading Corp. in Fort
Lauderdale was summoned to the office of a man by the name of Roy
Ageloff. The trader has told associates that Ageloff had beaten him
once before with a nail-pierced baseball bat. This time, he said, Ageloff
left the room. Then a 400-pound hoodlum knocked him down and
kicked him while he was on the floor. The message: Stay away from
First Colonial.
The trader at Naib was not the only one to suffer ''persuasion'' over First
Colonial. Sources say that four other firms were approached with
warnings to cease trading in the stock. To be sure, it was not a total
success. There was one rebuff: A market maker in the little town of
Hurst, Tex., Anthony Elgindy of Key West Securities Inc., says he
ignored warnings that traders who did not comply would soon be
''facing the ceiling''--and has received numerous threatening phone
calls since then. But at two other market makers, the intimidation
worked. They ceased making a market in First Colonial.
The market makers dropping the stock were William V. Frankel & Co.
in Jersey City, N.J., and the biggest name in NASDAQ stocks: Herzog,
Heine, Geduld. Sources say traders at both firms quit trading the stock
after receiving menacing visits at their offices. ''We decided we
shouldn't get involved in a stock like that,'' says Herzog's head trader,
Irwin Geduld. Was anyone at his firm threatened? ''We weren't,'' said
Geduld. ''Someone else was.'' (A Frankel trader, who declined to give
his name, says: ''We have no comment whatsoever about First Colonial
Ventures.'') Even a brokerage that was not a market maker, D.L.
Cromwell Investments Inc. in Boca Raton, received a visit from a thug, a
source says. The visitor left after demanding, and being shown, proof
that the firm was not a short-seller in the stock. Cromwell officials
declined comment.
Sources say that traders who caved in to coercion later received
expensive bottles of liquor with a note that read: ''You've made a
friend.'' But the market makers who dropped First Colonial were
making no new pals among investors. Since the incident, the ask price
paid by the public for buying First Colonial stock has climbed--from a
low of $1.13 on Oct. 2 to as high as $4.13 in recent trading. But the bid
price that the public gets when selling the stock back to the Street has
been far less buoyant. The bid promptly rose from a low of 87 cents on
Oct. 2 to $1.50 and has stayed at about that level, even as the ask price
has skyrocketed to almost three times that figure. (On Oct. 4, according
to a letter sent to market makers obtained by BUSINESS WEEK, the
NASD launched an inquiry into the dropping of First Colonial stock by
market makers. The NASD declined comment on the investigation.)
Who was behind the wave of intimidation over First Colonial?
NASDAQ trading figures point toward a New York-based firm called
PCM Securities Ltd. PCM was the largest market maker in First
Colonial in September, with 48% of the trades. By October, however,
this rose to 75%. PCM completely dominated the market in First
Colonial.
Although he is not listed in NASD records as a control person or even
as an employee of PCM--or of any other brokerage--Street sources say
that the power behind PCM is the 37-year-old Ageloff. He did not
respond to numerous messages left at PCM's office in Boca Raton. An
employee there said Ageloff nowadays spends most of his time there,
punctuated by frequent visits to New York. Asked about Ageloff, Steven
Edelson, PCM's principal, denied that Ageloff has any role in the firm
and says he has met him only once. Edelson had no comment on its
trading in First Colonial, and First Colonial President Murray
Goldenberg said he was ''shocked'' to hear reports of intimidation of
market makers.
A TALE OF TWO MARKETS
Even though NASD records show Ageloff has not been officially
associated with any brokerage firm over the past two years, he is a
widely known figure in small-cap stock circles. Why would market
makers drop a stock just because Ageloff tells them--even when he is
not accompanied by ''persuasion''? Street sources say the fear he
inspires is justified: The force that drives Ageloff, they maintain, is a
59-year-old man who, on official record at least, has never set foot on
Wall Street. He is Alphonse Malangone, otherwise known as ''Allie
Shades,'' and his few appearances in the public record pertain almost
exclusively to another market--the Fulton Fish Market.
''Allie Shades'' Malangone is the Zelig of the Mob's Wall Street coterie.
For years, he has been observed by investigators in lower Manhattan,
ensconced in the twin worlds of the Fulton Fish Market and the stock
market. To law enforcement he is an alleged loan shark and gambler, a
longtime power behind Mob control of the Fulton market, and he is
described in court proceedings by federal and state law enforcement
officials as a capo in the Genovese crime family.
But to the very few Wall Streeters who know him, he is a sophisticated
market player who is an expert at ''working the spreads''--getting in at
the bid price and exiting at the ask price, with the help of cooperative
traders. ''He's very smart, very articulate,'' says one investigator. ''When
you hear him on the wire, he would couch what he would say in
gambling phrases'' to mislead investigators.
Investigators are not fooled, but despite close surveillance and wiretaps
dating back to the 1980s and perhaps before, they have been unable to
make a case against Malangone and other reputed Fulton market
mobsters for their suspected activities on Wall Street. One longtime
Malangone-watcher recalls that the Fulton market was believed by
law-enforcement authorities in the early '80s to be a clearinghouse for
stolen bonds. But nothing was ever proven.
Investigators thought they were on to something, finally, in 1985. They
had in their sights two big fish, so to speak--Malangone and Vincent
Romano, also identified in court papers as an alleged Genovese family
member who was suspected of involvement in the Fulton market.
Malangone and Romano were probed by federal and local authorities
for their alleged manipulation of a pharmaceutical company stock,
Nu-Med Inc., a company that later declared bankruptcy. Investigators
believed that the two men had a position in Nu-Med shares. The
investigation was never made public, for authorities couldn't build a
case against Malangone and Romano. Efforts to reach the two men
were unsuccessful.
Sources on Wall Street say that Malangone was a behind- the-scenes
player in the biggest penny-stock fiasco of recent years: Hanover
Sterling. According to sources, Malangone controlled Hanover through
his right-hand man, Alan Longo, who has been identified by federal
authorities in court filings as a member of the Genovese family. Longo,
who is described by acquaintances as a heavy gambler, is said by
sources to have worked directly with Ageloff in Hanover and other
market ventures.
Ageloff--in concert with his alleged Mob contacts--is believed by market
sources to have been the hidden control person at Hanover. It went out
of business in early 1995 and resulted in the demise of the firm that it
cleared through, Adler, Coleman & Co. An attorney for the trustee in the
Adler Coleman bankruptcy, Mitchell A. Lowenthal, says that his firm,
Cleary, Gottlieb, Steen & Hamilton, has discovered evidence that 65%
of Hanover's profits were shared by Ageloff and another Hanover
official. Efforts to reach Hanover execs were unsuccessful.
Street sources say that the Mob was involved in both sides of the
Hanover-Adler imbroglio. The Malangone-Longo-Ageloff faction, they
say, profited from the runup in Hanover stocks, while other mobsters
allegedly sold short the Hanover stocks and pushed their prices
downward--to the chagrin of the Malangone faction. This internecine
dispute, sources close to Hanover say, was eventually resolved without
bloodshed, but only after some tense meetings between Mob factions.
Lowenthal says that his firm's investigation has shown that ''Ageloff and
some of the shorts were all connected [to the Mob] in one way or the
other,'' but nothing was proven.
According to people close to the Hanover Sterling machinations, the
Mob was represented on the short side through Falcon Trading Group
and Sovereign Equity Management Corp. And those brokerages,
sources say, are controlled by the alleged SC&T profiteer--a
silver-haired, 51-year-old resident of northern New Jersey named Philip
C. Abramo.
Abramo's name has never surfaced in any of the thousands of pages of
deposition testimony taken by the adversaries in the Hanover-Adler
Coleman legal warfare. Nor have his recent legal troubles--a federal
fraud indictment-- resulted in exposure of his Street ties or alleged Mob
membership. Abramo's stunning success at avoiding publicity has
helped make him the most active reputed Mob honcho on Wall Street.
''He is educated. He sounds sincere,'' says one source. ''He's gotten all
these wiseguys to work together.''
THE ''CONSULTANT''
In court records and corporate filings, Philip Abramo gives his business
address as 176 Saddle River Road, South Hackensack, N.J. The
address applies to not one but several buildings, forming a kind of cul
de sac on a dreary street in an industrial town in northern New Jersey. It
is a quiet area. A cemetery is next door. Faded lettering shows that one
of the buildings was once used many years ago to process meat.
Today they house an auto-body shop, a construction company, and
other little offices with ambiguous names.
Listed in no official records is another address for Phil Abramo--one
that is far more apropos for a man who is a hidden power in the
brokerage industry. Until a couple of months ago, sources say, |
