Alleged Mobster Joins The Accused In Staten Island Fraud Case

Jun 22 2010 | 12:05pm ET

As if intentionally playing into the borough’s reputation, Staten Island’s very own hedge fund fraud allegedly included a member of the Mafia.

Federal prosecutors have charged nine more people in the Gryphon Holdings case, bringing the total number of people charged in the case to 14. Among the new indictments is that of Michael Scarpaci, who already faces racketeering charges in a separate federal case. Scarpaci is allegedly an associate of the Gambino crime family, which was once led by arch-mobster John Gotti.

According to prosecutors, Gryphon defrauded investors of $17.5 million. Among the many lies that Gryphon allegedly told its victims was that it managed a $1.4 billion hedge fund and had received the imprimatur of hedge fund billionaire George Soros.

According to prosecutors and the Securities and Exchange Commission, which filed a parallel civil suit, Gryphon garnered clients—many of them elderly—through unsolicited e-mails and telephone calls. Once they had contact information, the firm’s employees allegedly used high-pressure sales tactics and a variety a fraudulent tactics to get between $99 and $250,000 for its investment advice.

In addition to its fictitious hedge fund, authorities say Gryphon had fictitious offices in Manhattan, London and Sydney, Australia—it was actually run from a Staten Island strip mall—and fictitious traders, Michael Warren and Kenneth Maseka, who the SEC say were “figments of” Gryphon president Kenneth Marsh’s imagination.

In addition to Scarpaci, the others newly charged are Richard Borrello, John Degliuomini, Christopher Perrotta, Gregory Rossomando, Robert Seidor, Dominic Spinelli, Paul Stokes and William Vecchione.

All 14 of those indicted have pleaded not guilty; each faces up to 20 years in prison if convicted.


In Depth

'Smart Beta' Funds In Regulators' Sights, Hedgies May Be Next

Mar 26 2015 | 11:11am ET

Funds that mimic strategies used by active managers for a fraction of the cost could...

Lifestyle

Study: Both Marriage and Divorce Lead to Negative Hedge Fund Performance

Mar 25 2015 | 6:51pm ET

Trouble at home leads to trouble in the market for fund managers, according to researchers...

Guest Contributor

Concerned About Your HFT Exposure? Hedge It!

Mar 26 2015 | 1:06pm ET

High-frequency trading has been a persistent storyline for several years. The trading...

 

Sponsored Content

    Mar 9 2015 | 6:35am ET

    Kelly RodriquesKelly RodriquesAs more investors look to diversify, many are beginning to use retirement funds to invest in alternative assets such as private equity and real estate. Kelly Rodriques, CEO & President of PENSCO Trust Company, explains how companies can connect with those looking to use their retirement accounts in a different way. Read more…

Editor's Note