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Scarfo associate gets 30 years for business scam

Salvatore Pelullo insisted that he is a good father and a hardworking businessman who perhaps uses "unconventional methods." He is not the Scarfo organized crime associate who orchestrated a multimillion-dollar fraud, he told a federal Judge Wednesday.

Salvatore Pelullo used “unconventional methods.”
Salvatore Pelullo used “unconventional methods.”Read more

Salvatore Pelullo insisted that he is a good father and a hardworking businessman who perhaps uses "unconventional methods." He is not the Scarfo organized crime associate who orchestrated a multimillion-dollar fraud, he told a federal Judge Wednesday.

U.S. District Judge Robert Kugler disagreed as he sentenced Pelullo, 48, of Elkins Park, to 30 years in prison.

It was not just a fraud that Pelullo created, it was a "massive fraud" designed to fund Pelullo's retirement and channel millions to the Scarfo and Lucchese crime families, Kugler said.

Specifically, he said, business executives and their families were subjected to threats of violence, even rape, if they did not cooperate with the 2007-08 takeover of the Texas-based First Plus Financial.

"He shows no remorse for what he did," Kugler said. "He does not believe he did anything wrong."

Pelullo told the judge that he respects the jury's 2014 verdict, but that he plans to appeal his conviction on more than 20 charges that include racketeering, conspiracy, and fraud.

"I'm fighting for my life," Pelullo said.

Pelullo was a friend of reputed mobster Nicodemo Scarfo Jr., son of former Philadelphia Mafia boss Nicodemo "Little Nicky" Scarfo Jr. The two collected millions by dismantling First Plus Financial's board and appointing their own people to control the company's finances. Millions were stolen through consulting contracts.

On Tuesday, Scarfo, 50, of Galloway, N.J., was sentenced to 30 years in prison.

Assistant U.S. Attorney Steven D'Aguanno said the elder Scarfo, named as an unindicted conspirator, also participated in the scheme, even though he is serving a 50-year sentence on unrelated racketeering charges.

The Pelullo and Scarfo families have long been friends, once both living in South Philadelphia.

After the elder Scarfo was jailed, the younger Scarfo then began working in South Jersey for the Lucchese family, according to law enforcement officials.

Scarfo and Pelullo took an interest in First Plus, which purchased and flipped mortgages. The company experienced some financial problems, and Pelullo knew how to turn distressed businesses around, authorities said.

Wednesday, Pelullo's ex-wife, Svetlana, told the judge that although there were problems in their marriage, Pelullo was a good father and worked hard at building his business. There is nothing wrong, she said, with earning a lot of money and spending it.

Pelullo's daughter, Anna, said he always cared for his five children, including those he adopted.

Authorities said the amount of money siphoned from the company forced it into bankruptcy. Meanwhile, Pelullo and Scarfo purchased an $800,000 yacht. Pelullo bought a $200,000 Bentley and spent thousands on jewelry.

Pelullo's attorney, Troy Archie, asked for a 20-year sentence, saying that there had been no violence, and that Pelullo has psychiatric problems that cause him to say things he cannot control.

D'Aguanno said Pelullo's bipolar disorder and history of drug and alcohol addiction did not diminish his intelligence, or his intention to orchestrate what he thought was the perfect crime.

The government has seized assets from both men, who were ordered to make restitution of $14 million.

On Thursday, brothers John Maxwell, 63, First Plus CEO, and William Maxwell, 56, a lawyer for the company, both of Texas, are scheduled for a sentencing hearing before Kugler.