By Jared Chausow
By Katie Toth
By Elizabeth Flock
By Albert Samaha
By Anna Merlan
By Jon Campbell
By Jon Campbell
By Albert Samaha
The government claims that a pair of wiseguys aligned with the late John Gotti's Gambino crime family, working with veteran advertising hucksters and sophisticated publishing executives, took in more than $400 million over a five-year period in the late 1990s in twin scams involving the Internet and telephone services.
The schemes allegedly mousetrapped Web surfers who logged onto pornography sites by presenting "free tours" in exchange for credit card information. The sites, as described in government search warrants, contained a cyber-age version of a mob-style offer that can't be refused: The browser's "back" button was temporarily disabled and no exit offered from the screens. Instead, charges mounted as viewers paged through the website.
The telephone scheme, detailed in a new indictment filed this month which superseded charges originally brought last March, had a similar catch. Advertisements placed in magazines, newspapers, and on TV offered free samples of sex, psychics, or horoscopes to those who punched in "800 numbers" on their telephones. But there was no free punch. Instead, the calls triggered hefty and recurring monthly phone charges that were then attached to subscribers' local telephone bills, a method known in the industry as "cramming."
Profits from the schemes were laundered through shell corporations back to mob bigs as "tribute," prosecutors allege. The scams, wrote Assistant U.S. Attorney Linda Lacewell in a letter to the court, were "worthy of the most sophisticated white collar criminals."
Except that the alleged perpetrators are anything but.
Alleged Gambino soldier Richard Martino, who ran day-to-day operations of the businesses, and his reputed crime family captain, Salvatore "Tore" LoCascio, whose companies provided "content" and raked in the profits, are both 44 years old. Neither has the résumé of a Wall Street shark. LoCascio's father, Frank, served as Gotti's consigliere, or counselor, and the 1992 conviction of the men for murder and racketeering helped start the mob's downward spiral. Salvatore LoCascio graduated from Eastchester High School in 1977 and attended Westchester Community College for a period. There, he flunked algebra, banking, and psychology, records submitted in court files show. But he managed a B in business management and a B+ in small business organization. He later dropped out after coming down with a traditional college-age ailment, mononucleosis.
At the same time, he was engaged in other studies.
On February 12, 1979, LoCascio was picked up by cops and charged with gambling and possession of a weapon; two days later he was again arrested for gambling. He paid fines in both instances and stayed out of trouble until 1998, when he was rounded up with other high-level Gambino crime family figures and accused of shaking down Scores, the posh East Side strip club. He later pled guilty to lesser charges of failing to report $260,000 in earnings from a Gambino gambling operation. He paid a $1.5 million fine and served five months of house arrest.
But gambling was the least of his income streams.
LoCascio told federal probation officials at the time that his work experience until the early 1980s consisted of making sandwiches in a delicatessen and stocking shelves at a supermarket. But in 1983 he launched a computer programs business, he said. He employed his mother, sister, and five others and utilized equipment he valued at $20,000. The business did exceedingly well. It grossed an estimated $15 million a year, he told authorities. In 1995, he and his wife personally declared adjusted gross income of $2.8 million. The following year the figure jumped to $6.8 million. He did almost as well in 1997, earning an even $6 million.
The generator of that mammoth income was a converted carriage house on East 39th Street in Manhattan's Murray Hill, where more than a dozen telecommunications companies, run by Martino, were housed. The building had a street-level two-car garage, and most mornings in the mid 1990s Martino could be seen pulling in behind the wheel of a white Rolls Royce or a black Mercedes. Back when he was known as "Richie from the Bronx," Martino had his own scrapes with the law. In 1979, he was the getaway driver in a Westchester County stickup gone bad. Cops found gambling policy slips in his pocket when they arrested him. He later pled guilty to attempted robbery. A couple of years later, Martino celebrated his birthday at a bar in New Rochelle by coldcocking two other patrons with a bottle. Martino beat an assault rap but served 22 months for possession of a weaponthe bottle.
By the late 1980s, however, Martino entered the end of the telephone business known as "audio text"supplying customers with pay-to-listen "900 numbers" to call for sports, weather, and spicy chats, as well as deceptive "800 numbers" that appeared to be free for those who missed the subtle warning signals. The sex calls were routed by way of carriers to a station in Kansas, then to the Dominican Republic where companies tied to Martino employed scores of women to talk dirty in several languages. In another demonstration of business acumen, the X-rated call center was located in a tax-exempt free trade zone.
Business boomed. Records obtained by the Daily News for a series of stories about Martino's operation in September 1995 showed that just five of his phone numbers drew half a million calls per month. Payroll records showed Martino was pulling in about $3 million a year in declared salary. At the same time, federal and state regulators were swamped with complaints about the bills, many from angry parents who said their kids had run up thousands of dollars and others from adult consumers who said they had been deceived. Civil actions filed by officials in Massachusetts, New York, and California against firms in partnership with Martino were settled by the payment of millions of dollars in fines.
Lawyers for Martino and LoCascio don't deny those problems, or their clients' success. But they say their financial dealings were all open and aboveboard and that there is no evidence of any rough stuff by Gambino gangsters or anyone else in the charges. As for the extra costs allegedly larded onto telephone and credit card bills, any "reasonably prudent consumer" should have figured out how to avoid them, defense attorneys insist.
"The only cramming going on in this case is that the government has taken two civil investigations in disparate industries and they are cramming this case into the structure of an organized crime indictment," said Maurice Sercarz, an attorney representing LoCascio.
LoCascio's lawyers have also filed motions to dismiss the charges, claiming that the feds knew all about their client's business affairs when they accepted his guilty plea in 1999 and agreed not to prosecute him for related crimes.
The feds have countered by offering evidence of organized crime ties. They have provided the defense with copies of FBI video surveillance of Gotti's old Ravenite club on Mulberry Street conducted from 1987 to 1991while the computer and phone businesses were growing. LoCascio, they allege, appears on more than 90 of them.
Employees of Martino's who were put before the grand jury, court records show, whispered and joked about their boss's rumored mob connections. But sometimes it wasn't so funny. "I do not recall hearing a person that angry," said one employee describing Martino dressing down a co-worker. "There was a very hard and cold quality to his voice. . . . Something . . . very creepy."