More interesting reading for GYMM rats (2).
Executive, Broker Fight Charges in Mob on Wall Street Trial
New York, March 23 (Bloomberg) -- Though originally billed by prosecutors as a case of organized crime trying to infiltrate Wall Street, mobsters were scarce at the HealthTech trial that began today in Manhattan federal court.
In his opening arguments, Assistant U.S. Attorney Jason Sabot gave the jury of five men and seven women a taste of the underworld. The five reputed mobsters originally implicated in the alleged scheme to manipulate HealthTech stock and peddle its overpriced shares to unsuspecting investors have all pleaded guilty, though, and aren't expected to testify.
Instead, what the jury will hear is a case against a business executive and a broker that sounds more like plain- vanilla stock fraud. The defendants' opening statements downplayed mob involvement.
The prosecution's case is based on ''innuendo, association and mere presence,'' said Barry Turner, the attorney representing Michael Motsykulashvili, a former stockbroker with Long Island, New York-based Meyers Pollock & Robbins. ''This case makes no sense,'' added James McGuire, who represents codefendant Gordon Hall, the chairman of HealthTech International Inc., a health club chain in Mesa, Arizona.
Hall and Motsykulashvili are charged with racketeering and fraud for their alleged roles in hyping the company's stock and duping unwary investors to buy it.
It was Hall who recruited two stock promoters -- including an alleged associate of both the Genovese and Bonanno organized crime families -- and a disbarred lawyer to tout HealthTech stock, Sabot told the jury.
Hall and his three associates bribed Meyers Pollock stockbrokers, including Motsykulashvili, to induce the brokers to drum up demand for HealthTech shares from investors, Sabot said.
Boldest Attempt
Hall and Motsykulashvili are among 20 defendants charged since November 1997 in what the government called organized crime's boldest attempt to invade the securities industry. Fourteen of those defendants, including four alleged members of the Genovese and Bonanno crime families and one alleged mob associate, have pleaded guilty to fraud and extortion charges.
The conspirators pocketed more than $1.3 million in illegal profits in 1997 by having Meyers Pollack brokers sell overvalued HealthTech shares to small investors, prosecutors said.
Defense attorneys for Hall and Motsykulashvili countered that FBI tapes of cell phone calls the government plans to use against their clients will help exonerate them. ''These tapes are Mr. Hall's best friend,'' said his attorney, McGuire.
Hall didn't know that the three people he recruited to introduce HealthTech to brokers and investors had shady backgrounds, McGuire said. Hall's life was later threatened by one of the promoters he unwittingly hired, McGuire said. ''Mr. Hall was affirmatively misled and deceived,'' McGuire told the jury.
Turner, Motsykulashvili's attorney, said his client didn't have ties to organized crime families or other defendants with questionable pasts. ''He didn't have anything to do with these individuals,'' Turner said.
Crime Connections?
The trial is expected to last three months. If convicted, the defendants could each face 20 years in prison and fines.
Hall, a 45-year-old father of eight, lives in Mesa. Motsykulashvili, 26, lives in Hicksville, Long Island, with his parents. Both men sat quietly and took notes during openings arguments.
Prosecutors have said they will rely on FBI surveillance of cell phones, including three used by stock promoter Frank Lombardo, an alleged associate of both the Genovese and Bonanno crime families. Hall recruited Lombardo, stock promoter Claudio Iodice, and Irwin Schneider, a disbarred lawyer who has served a prison sentence for another stock fraud, to run the HealthTech scheme, Sabot told the jury.
Regulators have said that organized crime's influence over the securities industry is limited, affecting a few penny stocks traded on the Nasdaq Small-Cap Market or the over-the-counter bulletin board. The stock market looked inviting as the mob's stranglehold on its traditional businesses such as trucking and garbage hauling diminished, authorities said.
Schneider and Lombardo previously pleaded guilty to fraud charges and are awaiting sentencing. Schneider will testify for the government, Sabot said today. Iodice's trial is on hold for medical reasons.
Lombardo, Rosario ''Rossi'' Gangi, an alleged high-ranking ''capo,'' or captain, in the Genovese family, Ernest ''Green Eyes'' Montevecchi, an alleged Genovese soldier, Frank ''Curly'' Lino, an alleged capo in the Bonanno crime family, and John ''Boobie'' Cerasani, an alleged Bonanno soldier, have all pleaded guilty in the HealthTech case and are awaiting sentencing.
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