It was supposed to have been a routine speech. But when Mary L. Schapiro, chief regulator at the National Association of Securities Dealers, addressed a meeting of New York securities analysts on "Market Trends and Regulatory Responses" on Mar. 17, she dropped a bombshell. Schapiro announced the formation of a task force aimed at attacking Mob infiltration of brokerages. A day later, a longtime securities industry watchdog, Representative John D. Dingell (D-Mich.), released a letter from Schapiro saying that the NASD has "significant ongoing investigations" into all but one of the brokerages--and "many" of the companies"--mentioned by BUSINESS WEEK in its cover story, "The Mob on Wall Street" (Dec. 16).
It seemed like an important, even historic, development. For the first time, the NASD, which oversees small-cap brokerages nationwide, seemed ready to take on the Mob presence in the market for microcap stocks. "The influence of organized crime in our markets is an issue that must be aggressively addressed," Schapiro told Dingell. As well as focusing on brokerages, Schapiro said, the task force will examine a crucial but even thornier topic: "the finances and operating activities" of stock issuers. BUSINESS WEEK found that the Mob had exploited the initial public offerings of small companies.
But a number of questions remain unanswered. For one thing, where is the Securities & Exchange Commission? In a letter to Dingell on Feb. 25, SEC Chairman Arthur Levitt Jr. called the reports of Mob involvement cited by BUSINESS WEEK "disturbing"--and offered to discuss the matter privately. But in testimony before Congress on Mar. 19, Levitt said that organized crime's influence was restricted to a small number of firms and said the Mob was "not as pervasive [on the Street] as may have been suggested."
That view is shared by NASD officials. In her Mar. 17 speech and another address the following day, Schapiro downplayed the Mob's significance on the Street, calling it "disturbing" but also "extremely limited." Indeed, NASD officials have said privately that there is not much of a problem for a task force to address. Two high NASD officials, interviewed by BUSINESS WEEK for the December article, said they were not aware of any Mob presence on Wall Street.
NO NEW TROOPS. Another NASD official, who asked that his name not be used, cast even more cold water on the view that the NASD is getting into the gangbusting business. No new personnel will be hired for the task force, he noted, and he said it would merely "formalize what we have already been doing." Still, one veteran Mob investigator, now in the private sector, feels that the NASD and SEC may have no choice but to act on the Mob's Street connection because it endangers public confidence in the securities markets. "The FBI is committed, and the Manhattan District Attorney's Office has an open case. The question is," he adds, "are they [the NASD] serious?"
If the NASD's commitment is questionable, this much is clear: The Mob is committed. And if the NASD and SEC officials want to see just how much it is committed, they need look no further than their own files. They can look at documents filed in connection with two IPOs that never quite got off the ground--for Mayfair Homes Corp., a Georgia-based maker of mobile homes that is still trying to go public, and American Fuel Corp., a small New York company in the coal mining business whose IPO was withdrawn. Registration statements for both IPOs were reviewed by the SEC and NASDAQ at the time they were filed--and there was something that the agencies evidently did not notice.
The filings by these companies have an intriguing element in common: a "selling shareholder" by the name of Alan J. Longo. The 46-year-old Staten Island (N.Y.) resident has been described by law enforcement officials in court documents as a "soldier" in the Genovese crime family. Both companies identify him as a major owner of stock warrants who would cash out big once the companies go public and share prices climb nicely--as they usually do, at least for a while, in Mob-influenced offerings. American Fuel's chief executive, Robert Barra, says he doesn't know Longo and has no knowledge of any Mob involvement with the IPO. Calls to Mayfair execs were not returned.
In the filing for Mayfair, appearing on the list right beneath Longo is yet another eminent family name in Wall Street Mob circles. It is Romilda Abramo, wife of Philip C. Abramo, who has been described in an FBI court affidavit as a capo in the DeCavalcante crime family. Street sources describe him as the leading Mob power on the Street, owning or controlling brokerage houses that specialize in small stocks. (Neither Longo nor Romilda Abramo could be reached for comment.) Phil Abramo is also alleged by Street sources to control Bahamian companies that were involved in the financing of another recent IPO, for SC&T International Inc. (BW--Mar. 24). SC&T officials have denied knowledge of Mob involvement in the financing of their company. Two of those Bahamian companies, Umbiquity Holdings and Maraval & Associates, are listed as selling shareholders in the American Fuel deal.
The Abramo connection does not end there. The lead underwriter of both companies is R.T.G. Richards & Co., a Garden City (N.Y.) brokerage. According to sources who are familiar with the activities on the Street of Abramo--now serving a one-year prison term for tax evasion--the alleged Mob capo controls Richards through confederates. Officials of Richards, which changed its name to Matrix Securities on Mar. 1, did not return phone calls. A man named Michael DeMayo who responded to a reporter's call to Matrix, said that he would relay a message to the president of the company, but added that he did not believe that gent would wish to discuss the two IPOs. DeMayo, also listed as a selling shareholder in the American Fuel deal, declined comment on the IPO and said he had no connection with Matrix.
Aside from Longo and Abramo, there are other familiar names in the Mayfair and American Fuel offering documents--hundreds of pages that were combed by SEC and NASDAQ officials. Co-manager of the American Fuel deal was Sovereign Equity Management Corp., which has also been described by Street sources as an Abramo-controlled firm. Sovereign officials have denied Abramo's involvement. And then there are the other investors in the American Fuel deal--six pages of them, more than 200 names. One of them is Robert Catoggio, a veteran of the penny stock business. According to attorneys for the trustee of the bankrupt Adler Coleman clearing firm, Catoggio was a partner with Roy Ageloff in controlling the now defunct Hanover, Sterling & Co. penny stock house. Street sources have maintained that Ageloff is an associate of Longo and Alphonse "Allie Shades" Malangone. Malangone has been described in court documents as a capo in the Genovese crime family. Malangone, Catoggio, and Ageloff were unreachable for comment.
Also included in the American Fuel filing is a slew of names that are little known to the public, but have achieved a distinction all their own in some circles. There is a Wall Street-Mob goon here, a cocaine dealer there, a Long Island loan shark--all on a lengthy list of names that includes, no doubt, many nice people.
If the regulators decide to peruse these documents--again--they won't have to dig too deep into their file cabinets. The American Fuel registration statement was filed last October. The Mayfair Homes filing, with Longo and Romilda Abramo appearing prominently on page 31, went to the SEC on Jan. 23--nearly two months after Longo was mentioned in BUSINESS WEEK.
EMERGENCY LOANS. So far, of course, the Mayfair and American Fuel deals have not generated any revenues for Longo. He is described as a heavy gambler who, according to a reference in one recent court decision, once had to borrow from loan sharks to pay off other loan sharks. But the Mob's Wall Street deals are no gamble. They are a sure thing--particularly when the regulators are nowhere to be seen.
A couple of weeks ago, Longo, Malangone, and other reputed Genovese mobsters were seen paying their respects at the funeral of a Genovese mobster named Peter Romano, who was believed by law enforcement to be a secret power in the Fulton Fish Market. It was a sad event. But the Mob has no reason to shed a tear. The only powers that can truly organize their funeral--on Wall Street, at least--are starting to make noise. But so far, at least, they haven't done a thing.