A.S. Goldmen trial: Jury finds Marchianos, firm guilty of racketeering, other crimes
Tuesday, July 24, 2001
By GINA EDWARDS, gvedwards@naplesnews.com
NEW YORK — More than 6 1/2 months after his stock-fraud trial began, A.S. Goldmen & Co.'s Naples owner, Anthony Marchiano, remained stoned-faced Monday as a jury pronounced him guilty of racketeering and more than 50 other crimes.
Almost two dozen armed court officers lined the cavernous oak-paneled Manhattan courtroom Monday after the jury of nine men and three women reached its verdict after seven days of deliberations.
Monday's verdict culminated a four-year probe by Manhattan District Attorney Robert Morgenthau's office that's netted charges against more than 36 Goldmen employees and associates, 11 of them from the Naples office. Most defendants have pleaded guilty.
Jurors convicted Marchiano's twin brother, Salvatore, manager Charles Trento and the firm itself of racketeering and multiple other crimes. But jurors acquitted broker Paul Cilmi of racketeering, while convicting him of a number of less-serious forgery crimes.
The Marchiano brothers, jailed for the past two weeks, and Trento each face up to 25 years in prison for the racketeering charge at sentencing before Manhattan State
Supreme Court Judge Leslie Crocker Snyder on Sept. 27. Snyder could give the defendants more time for the remaining charges.
Marchiano used his well-oiled boiler room of brokers to pump up stock prices so Goldmen insiders could make millions in profits on rigged deals that wiped out thousands of ordinary investors, prosecutors said.
The defunct firm, which had offices in Naples, New York and New Jersey, cheated customers out of nearly $100 million in a series of 10 stock schemes, including the failed Stadium Naples golf arena, prosecutors said.
Prosecutors with Manhattan District Attorney Robert Morgenthau's office are seeking up to $99 million in restitution for Goldmen customers from Marchiano and others in a companion civil forfeiture action.
Anthony Marchiano's attorney, Jeff Hoffman, said his client will appeal the verdict, but he declined further comment outside court. During the trial, Hoffman pinned blame for rogue activities at A.S. Goldmen on others and said firm underlings kept Anthony Marchiano in the dark.
Prosecutors said A.S. Goldmen, which opened in 1988, was named to represent initials for Anthony and Salvatore Marchiano, the men who make gold.
Monday's verdict came as a relief to jilted A.S. Goldmen customers such as 49-year-old antique dealer George Coyne, of Abbington, Pa., who lost almost $10,000.
"They're such crooks," Coyne said. "They were living the high life on our money."
Coyne said he hopes the jury's verdict will deter other would-be boiler-room stock swindlers.
"They got these guys," Coyne said. "They won't be doing this to anyone else."
Anthony Marchiano's wife, Maria, who attended court daily and is awaiting her own stock-fraud trial, looked numb and stunned as the initial counts against her husband were read. As the words guilty reverberated through the quiet courtroom over and over, she bit her lip and eventually wiped tears.
Ignatius Marchiano, Anthony and Salvatore's father, at times put his head down and closed his eyes during the verdict.
The Marchiano brothers, who have changed from jail garb each day to dark business suits to conceal their incarceration from jurors, will remain locked up pending their sentencing. Snyder agreed to allow Trento and Cilmi to go free on Monday and report back at sentencing.
Jurors, who have been sequestered for a week, declined to comment after the verdict when court security officers escorted them from the 13th-floor downtown courtroom to a van waiting outside.
With their verdict jurors found:
Anthony Marchiano, 39, guilty of enterprise corruption (racketeering), 36 counts of securities fraud, six counts of criminal possession of stolen property in the first degree, five counts of falsifying business records in the first degree, three counts of grand larceny in the third degree and one count of grand larceny in the fourth degree. Jurors acquitted him of two counts of securities fraud and one of grand larceny.
Salvatore Marchiano, 39 of Freehold, N.J., guilty of enterprise corruption, seven counts of securities fraud and two counts of criminal possession of stolen property in the first degree. Jurors acquitted him of four counts of criminal possession of stolen property in the first degree.
A.S. Goldmen & Co., the defunct brokerage, guilty of enterprise corruption, nine counts of securities fraud and six counts of criminal possession of stolen property in the first degree.
Charles Trento, 33 of Staten Island, N.Y., guilty of enterprise corruption, 15 counts of securities fraud and 20 counts of falsifying business records. Jurors acquitted him of three counts of securities fraud and one count of grand larceny in the third degree.
Paul Cilmi, 33, of Brooklyn, N.Y., guilty of nine counts of falsifying business records in the first degree and one count of securities fraud. Jurors acquitted him of enterprise corruption and five counts of securities fraud.
Attorneys for Salvatore Marchiano and Trento declined comment. Cilmi's attorney, David Perlmutter, called his client's acquittal of racketeering a major victory. "It's been our position from the beginning that despite his title, he had a relatively minor role in the firm," Perlmutter said.
Jurors convicted Anthony Marchiano of a scheme to manipulate stock in Millennium Sports Management Inc., a financially failing New Jersey company that partnered on the twice-failed Stadium Naples golf arena. But jurors acquitted Marchiano of scheming to manipulate the securities of Stadium Capital Inc., the Stadium Naples start-up company with Bill Rasmussen at the helm. Only a few shares of Stadium Capital Inc. were actually sold to the public before the deal collapsed in June 1998.
Prosecutors said Marchiano — providing brokers with illegal insider information — used the Stadium Naples partnership to hype shares in Millennium, making more than $8 million in illicit profits on the stock sales in less than a year.
ESPN founder Rasmussen's first try at Stadium Naples is the subject of influence-peddling charges against two former Collier County commissioners in Collier Circuit Court.
Brokers are accused of lying to customers, trading in customer accounts without permission and refusing to let customers sell shares as part of schemes to pump up stock prices.
Monday's verdict culminated a four-year probe by Manhattan District Attorney Robert Morgenthau's office that's netted charges against more than 36 Goldmen employees and ssociates, 11 of them from the Naples office. Most defendants have pleaded guilty.
Goldmen customers such as David Christian, a Georgia computer analyst who lost almost $20,000, applauded prosecutors' efforts after hearing news of the verdict. "Too many people ignore white-collar crime," Christian said. "I'm glad the DA's office in Manhattan took the time with these guys."
Prosecutors on the case included Assistant District Attorneys Paul Mahoney, Wayne Salit, Robin McCabe, Michael Kitsis and Miriam Best.
Christian said he believes some Goldmen brokers got off easy. "But it sounds like the ones who set it all up will be facing a stiff penalty," he said.
Securities and Exchange Commission enforcement officials and state regulators have called A.S. Goldmen one of the nation's most notorious boiler rooms.
Marchiano made $26 million on the illegal deals, prosecutors have said. And he tantalized young brokers with his lifestyle. Marchiano owns a beachfront mansion on Naples' posh Gordon Drive and has a 30-strong luxury car collection that includes five Ferraris, a Lamborghini and Aston Martins.
Prosecutors intend to pursue a civil forfeiture action to recoup money for duped investors. After his indictment in July 1999, a civil judge froze Marchiano's assets, but allowed him to spend $16,000 a month on living expenses and $1.4 million on his legal defense.
A major player in the murky world of small company stocks, A.S. Goldmen at various times employed at least a dozen stockbrokers later linked to mob crime families in other federal busts.
In pretrial hearings, prosecutors said Genovese capo, or captain, Alphonse "Ally Shades" Malangone initially bankrolled Marchiano's firm. But jurors weren't permitted to hear such evidence.
Jurors did hear testimony about Marchiano's friend, Thomas Vaccaro, and a muscular enforcer for the firm named Fortunato Pizzamenta, who a witness testified beat up misbehaving brokers. But jurors didn't hear prosecutors' belief that both served as Malangone associates.
In October 1999, prosecutors expressed concern for witnesses' safety after former Goldmen broker Al Chalem and his stock-promoter friend were found executed gangland
style in a Colts Neck, N.J., mansion not far from where five Goldmen defendants lived. The killings remain unsolved.
At trial, brokers testified about life in Goldmen's raucous "boardrooms" — places where brokers, some of them wearing headsets and pacing during exuberant sales pitches, made more than 300 phone calls a day to potential customers.
Anthony Marchiano's defense attorney pinned blame for rogue activities at the firm on Stuart Winkler, Goldmen's chief financial officer. Winkler hired a hitman to kill Snyder after she threw him in jail on a bail violation. A jury convicted Winkler in December of attempting the failed
murder-for-hire plot, which didn't harm the judge, who's known for her tough sentences. He's serving up to 34 years, time that includes up to nine years for his stock fraud and racketeering guilty plea.
During closing arguments, Marchiano's attorney used a computer to flash testimony excerpts on a large movie screen that included more than 50 statements from witnesses who said they never told Marchiano about nefarious conduct at the brokerage.
Defense attorneys for Salvatore Marchiano portrayed customers as greedy investors who were willing to gamble.
At times, jurors struggled to stay awake during the six-month trial that sometimes featured highly technical and tedious evidence. Jurors heard testimony from 42 witnesses — just one of them testifying for the defense — and examined more than 400 exhibits.
But while defense lawyer Hoffman said Marchiano was in the dark, the prosecution told jurors they needed to look no further than how Marchiano alone managed Goldmen's Naples office and helped brokers cheat investors on the failed Stadium Naples golf arena deal.
Over the years, Marchiano kept one step ahead of the authorities using high-tech surveillance equipment.
Undercover investigator Miguel Rodriguez, who infiltrated Goldmen's Naples office as a trainee and phone solicitor, testified that Marchiano discovered him within nine days.
Using a $5,000 bug-detecting device that looked like a pager, Marchiano discovered Rodriguez's transmitter.
"You want to tell me who you're working for?" Marchiano said on a tape played for jurors. "I'm not from Kansas. ... The gig is up."
Marchiano discovered the investigator just days before agents raided his offices in Naples and Iselin, N.J., and his Gordon Drive home.
Prosecutors accused Goldmen of manipulating stock prices of Millennium Sports Management Inc., Stadium Capital Inc., Independence Brewing Co., Imatec Ltd., Wanderlust Interactive Inc., Winfield Capital Corp., Veritas Music and
Entertainment, Nickelodeon Theater Co., Cinema Ride Inc., and Innovative Tech Systems Inc.
Here's how prosecutors said a typical Goldmen scheme worked: Using family members and close friends, Goldmen insiders secretly gained control of large supplies of cheap stock by pre-arranging deals at initial public offerings. As part of the so-called pump-and-dump schemes, Goldmen then pumped up stock prices by using its boiler room sales force of brokers to create demand for the stocks Goldmen took public.
Brokers lied to customers they solicited on the phone to hype the stocks, and abused customers by trading in their accounts without permission. And brokers refused to let customers sell their shares to restrict supply as part of the scheme to keep stock prices rising. Later, Goldmen insiders then dumped their shares at large profits. When the pump stopped, the stock prices tanked and created massive losses for investors.
Prosecutors said Marchiano fled New York to open shop in Naples to evade customers and authorities.
In Naples, brokers hyped Stadium Naples. Months before the stadium deal became public, Marchiano himself gave brokers at the Naples office insider information and misleading sales scripts, key witness Michael Lamarti, a Naples broker testified.
Jurors heard from customers who testified about outrageous lies that Goldmen brokers told them to sell Millennium stock. For example, jurors heard from customers such as Barry Cross, a single parent from Philadelphia, who testified that his broker, Vincent Lia, told him Stadium Naples was nearly finished and practice rounds had begun. The stadium — slated for land next to Interstate 75 in North Naples — was never built.
"I think the prosecution did an excellent job with this case," Cross said when reached by phone after the verdict. "The prosecution proved they were running a
boiler-room organization and swindling people out of their money."
Goldmen brokers, using abusive sales tactics, solicited investor victims all over the country by telephone.
"No amount of distance or phone lines can protect the defendants from the consequences of their acts," McCabe, the assistant district attorney, told jurors during closing arguments.
Customer David Christian said he'll be awaiting sentencing.
"It won't be over until I hear what the punishment will be," Christian said. "I'll be watching and waiting until then.
Cortney Dentch contributed to this report.
A.S. Goldmen trial:
July 22, 2001: Jurors find humorous sides during sixth day of deliberations
July 21, 2001: Jurors end fifth day of deliberations without reaching verdict
July 20, 2001: Customer witness' testimony to be read back to jurors
July 19, 2001: Jurors ask for verdict sheet clarifications, keep deliberating
July 18, 2001: Jurors review evidence, focus on Cilmi in second day of deliberations
July 15, 2001: Six-month trial nearly over; jurors sequestered beginning Monday
July 13, 2001: Closing arguments end, jury to start deliberating on Monday
July 12, 2001: Defense attorney pins blame on financial chief in closing statement
July 11, 2001: Defense continues effort to pin case on rogue brokers
July 10, 2001: Judge jails Marchiano twins, removes juror
July 8, 2001: Investors detail high-pressure sales pitches, manipulative tactics
July 8, 2001: Investors who lost money in A.S. Goldmen & Co. stock deals
July 8, 2001: Expert: Stockbrokers have duty to deal honestly, fairly with clients
July 8, 2001: Excerpts from taped sales script | Taped broker-to-client conversation
July 6, 2001: Judge grants limited contact between current, former prosecutors
July 6, 2001: Judge refuses to dismiss charges in Goldmen case
July 4, 2001: Special prosecutor fears statute of limitations might run out
July 3, 2001: Prosecutors rest in A.S. Goldmen case
Stadium Naples: History of the original Stadium Naples deal
The Players: Key figures and how they fit into A.S. Goldmen stock fraud trial
The Charges: Defendants and charges in ASG case
More coverage of the A.S. Goldmen trial in our special report
Copyright © 2001 Naples Daily News. All rights reserved.
naplesnews.com |
