Cont'd.
=======
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, Abramo
maintained an office on the 14th floor of 90 Broad St. in lower
Manhattan, directly adjoining the New York office of Sovereign Equity
Management. A door linked the two offices, and it was always open. ''I
knew him as a stock promoter who always had stock deals. We hired
brokers who were friends of his,'' says one Sovereign employee who
requested anonymity. Sovereign CEO Glen T. Vittor denies that
Abramo had any role in the firm.
But sources describe his role as central--as the hidden control person
behind Sovereign, a prominent name in the micro-cap stock business,
its sister firm Falcon Trading, and two other firms that are major
penny-stock brokers and market makers, Toluca Pacific Securities
Corp. and Greenway Capital Corp. He is also described by Street
sources as controlling other dealers in small-cap stocks through
brokers and traders owing allegiance to him.
On paper, Abramo is respectability personified. Over the past decade
he has been listed as president or top shareholder of four publicly held
investment companies. He is married, with a grown daughter. He has
been a ''restaurant consultant,'' auto dealer, and construction company
operator. He has had four years of college and may even have training
as an accountant.
But inquiries about Abramo bring far from routine reactions. At
Greenway Capital, President John Margiotta is asked if he knows
Abramo. Margiotta replies: ''Who?'' and hangs up the phone. A person
answering the phone at Greenway, moments later, says that Margiotta
is ''very busy'' and ''not in the office.'' Toluca Pacific President Paul
Fiorini, when asked about reports of Abramo's control of his firm, calls
them a ''total farce.'' He says he owns 100% of the firm and goes on to
say: ''Who is this person? I don't want my name associated with this. I
don't know this person. I don't know Phil Abramo.''
The reason for the reticence is understandable. According to federal
court records in recent tax-evasion proceedings against Abramo in
Newark, the Saddle River (N.J.) resident lists his occupation as
''consultant.'' But elsewhere in the court file, the FBI gives a different
version of his livelihood. In 1994, in an affidavit filed with the court in a
bail hearing, the FBI identified him as a frequent visitor to reputed New
York Mob boss John Gotti prior to his imprisonment in 1992, and
alleged that Abramo held the rank of capo in the New Jersey organized
crime family once headed by Sam ''the Plumber'' DeCavalcante. But
sources say that since then, Abramo has risen in the ranks to No.2 in
that crime family--underboss.
Abramo is easily the highest-ranking reputed mobster to be engaged
full-time in Wall Street activities. His lawyer, Harvey Weissbard,
declined comment on Abramo's alleged ties to organized crime. Asked
about Abramo's possible role on Wall Street, Weissbard said he had
''no information of which I can respond one way or the other, and I doubt
if I did know one way or the other that I would respond.''
Little is known about Abramo's early life, such as which college he
attended. Except for a conviction for possession of stolen property in
1971 and another in 1973 for conspiracy to distribute heroin--which
yielded him a seven-year prison sentence--he has stayed out of the
limelight. Even when he was indicted in 1994 in New Jersey for
allegedly swindling 300 people nationwide out of $1 million--they were
sold phony ''lines of credit''--he received no publicity and continued to
work on the Street.
Indeed, by the time he was indicted in the credit-line scheme, Abramo
already had a lengthy, ostensibly legitimate track record. In the late
1980s Abramo founded publicly-held investment companies with
names such as Cambridge Investment Service Corp. and American
Acquisition Corp. (SEC filings by these companies show they did little
but file papers with the SEC.) According to papers filed by Abramo with
the SEC for the investment companies, Abramo was a ''restaurant
consultant to Northern Roses Inc. (Miami, Fla.),'' during 1982, and ''was
also a restaurant consultant to Bagel Nosh Inc. (1983 and 1984--New
York, N.Y.).'' Abramo's Bagel Nosh connection is significant, because
the company was brought public by Thomas J. Quinn.
Quinn was one of the most prominent figures in the penny-stock world,
but his association with Abramo has never been made public, although
regulators have long suspected it. When Quinn was jailed in France in
1988 for securities fraud, investigators say, Abramo's name was
prominently displayed in a notebook that was seized from him. Calls in
1995 from Quinn's telephone to Abramo's unlisted home phone number
also appeared in phone records that were recently subpoenaed by
investigators seeking Quinn's assets. (He was successfully sued by the
SEC for securities fraud in 1989 and owes millions of dollars in civil
penalties.) Indeed, Abramo was subpoenaed to testify before the SEC
in 1989 during a probe of Quinn, but he invoked his Fifth Amendment
privilege against self-incrimination. Efforts to reach Quinn for comment
were unsuccessful.
The Quinn-Abramo connection could become significant in the months
ahead because of an ongoing federal grand jury probe in California into
possible irregularities in the trading in Solv-Ex Corp., an
Albuquerque-based company that claims to have a process for
retrieving oil from tar sands. (Solv-Ex officials denied knowledge of any
trading irregularities and claimed that a private investigator's report,
which they refused to release, indicated there was no manipulation.)
According to sources close to the grand jury probe, Abramo and Quinn
are among those who have been a subject of the investigation.
Today, Abramo faces a one-year prison term for tax evasion. It was a
plea bargain--the guilty plea to tax evasion in return for dropping of the
loan-scheme charges. He is scheduled to report to prison on Jan. 7.
While he may well handle his Street interests while incarcerated, in
some quarters there is concern that his departure will mean an
increase in violence.
The level of violence is becoming worrisome. Early in November, a
broker at a New York-area brokerage was severely beaten, his arm
broken, in the lobby of the firm. As so often happens in such situations,
he did not notify the police. His offense: He moved from a
Mob-controlled firm, taking his customers with him, and dared to sell
their stocks. Sell pressure on stocks is just what the Mob despises
(unless, of course, they are short). It can sour a deal--and the often
immense profits that can come with it.
THE DEAL
Mama Tish's International Foods is a Chicago-based company that
makes Italian ices. But when it went public last month, it was red-hot.
The IPO went for $5, but on the first day of trading, the shares moved as
high as $9.75--a sure sign of ''flipping,'' in which favored investors cash
out of the stock immediately. Alas, the Mama Tish IPO was
canceled--wiping out all the trades--when the underwriter, a Long Island
firm called Landmark International Equities, got into a heated dispute
with the firm that clears its trades. The company and underwriter were
disappointed--and so were some people who hate to be
disapppointed.
Even before the deal began, traders began receiving phone calls
warning them not to short the IPO, which might have driven down
prices. According to Wall Street sources, among the people who would
have profited heavily from the Mama Tish IPO is John Gotti Jr., reputed
acting boss of the Gambino family and son of the imprisoned Gambino
crime family chieftain. According to Wall Street sources, ''Junior'' Gotti
is the hidden owner or control person of one of the brokerages--other
than Landmark--that was active in the Mama Tish deal. Had the deal
gone through, any Gotti people involved in the deal would have profited
handsomely from the 80% difference between the offering price and the
trading price of the shares. Gotti was unreachable for comment. A
company official said he did not know of any Mob involvement in the
IPO.
If ''Junior'' Gotti represents the younger generation of reputed mobsters
on the Street, the older generation would be epitomized by John
''Sonny'' Franzese. Franzese has been described by law-enforcement
authorities for decades as an influential, feared mobster who allegedly
was the former underboss of the Colombo crime family. Sources say
Franzese joined the Mob's rush to the stock market after his release on
parole from a 50-year term for bank robbery in 1994. According to
sources, the 77-year-old reputed Mob elder described himself to
associates earlier this year as controlling, through a confederate,
Monitor Investment Group, whose brokers allegedly ripped off the West
Coast investor by promising a guaranteed runup. Monitor chairman
William F. Palla denies that Franzese or organized crime has ever
played any role in the firm.
Monitor, which ceased active operations last June, is described by
former employees as a center for widespread stock
manipulation--specifically involving boxing of International Nursing
Services, Beachport Entertainment, and Innovative Medical Services.
Officials of the three companies say they were unaware of any
irregularities in the trading of their stocks. International Nursing
Chairman John Yeros, however, concedes he felt something was amiss
at Monitor when he attended a presentation the brokerage sponsored
for International Nursing at a downtown hotel--and found that Monitor
had hired a hooker to ''service'' the brokers in attendance. Palla says
he heard of the ''hooker incident'' but denies Monitor retained that
person.
If Franzese in fact became involved in the penny-stock business, it
would be a potent sign of the lure of the penny-stock business to the
Mob. But like Abramo, Franzese may have to cool his interest in the
market for a while. He was recently found to have violated the terms of
his parole and was ordered back to prison.
THE FUTURE
There are plenty of young mobsters ready to take the place of any
old-timers who might fall victim to any future law-enforcement
crackdown. One Brooklyn-based prosecutor, a specialist in the Mob,
observes that ''there are a lot of wannabes getting jobs on the Street,
working in these places, cold-calling.'' That might explain why there
seems to be no shortage of people willing to carry guns into brokerage
houses and beat up traders in front of witnesses, or telephone threats
to traders.
One reputed up-and-comer in the Street's Mob contingent is Dominick
''Black Dom'' Dinassio, who is said by Street and law-enforcement
sources to hold sway over Euro-Atlantic Securities, a Manhattan
brokerage that is active in penny stocks. According to a source in the
Manhattan District Attorney's office, Dinassio is allegedly an associate
in the Colombo crime family.
Law-enforcement sources say that Dinassio has lately been observed
in the company of Longo, Malangone's longtime partner. Sources say a
short-seller who was active in shorting Hanover stocks, John Fiero, told
police recently that Dinassio threatened him for his trades in one stock
brought public by Euro-Atlantic, Hollywood Productions Inc. Fiero
refused comment and company officials did not return phone calls.
Contacted at Euro-Atlantic's office in lower Manhattan, Dinassio
declined to discuss his role at the firm. Asked about the allegations that
he was connected to organized crime, he replied: ''What? I think you're
crazy, buddy. I'll talk to you later,'' and hung up. Euro-Atlantic officials
did not return phone calls.
Although whistle-blowers in Mob-run firms are rare, the increasing
violence is beginning to enter the public record. At Monitor, the firm
Franzese allegedly claimed to control, an incident last January led to a
rarity in this world--a lawsuit. In a suit filed in U.S. District Court in
Manhattan, former broker Robert Grant contends that he was
''maliciously and violently struck, battered, beaten, pummelled, pushed,
punched, and attacked'' by Monitor employees at the instigation of
Palla and another manager. At one point, the suit says, Grant was
beaten with a chair. The lawsuit does not say so, but witnesses say that
another broker was also viciously assaulted. Neither Grant nor the other
broker would comment, and Palla says he was in Philadelphia at the
time of the incident, which he describes as a ''fight.'' One witness says
Monitor management suspected that the two brokers may have been
short-selling Monitor's favorite stocks.
Some of the most violent, crudest elements to come to the Street are
part of its fastest-growing contingent--the Russian Mob, based in the
Brighton Beach section of Brooklyn. ''Over the past couple of years,
they've put people in the [brokerages], kids with clean records, and
they're washing money legitimately,'' says one law-enforcement official
who is intimately familiar with Russian organized crime. The offspring of
two major Russian mob figures, he notes, have been active on Wall
Street.
The Mob's fascination with Wall Street is understandable, for they have
had little to fear from law enforcement or regulators. If the authorities,
finally, act against Mob members who are active on the Street, it will be
the first such prosecution since 1973, when three major Mob figures
were imprisoned for securities fraud. At the time, the Mobsters were
vanquished because one of their confederates became a government
witness. ''It's practically impossible to prosecute these people unless
you have a turncoat, somebody who can walk you through all those
transactions,'' notes Ira Lee Sorkin, a former SEC regional director who
was involved in the 1970s prosecutions. So long as the Street
continues to keep silent on the Mob in its midst, organized crime will
continue to be the silent partner of the financial markets. |
