firstplus financial group
i have reviewed this quarterly report on form 10 - q of firstplus financial group, inc. ;
firstplus financial group, inc. agrees to settle ftc charges that ads for debt consolidation loans were false and misleading
the company has three direct subsidiaries, rutgers investment group, inc. (rutgers investment), firstplus development company (firstplus development) and firstplus enterprises, inc. (firstplus enterprises). in turn, firstplus enterprises, inc. has three of its own direct subsidiaries, firstplus restoration co. , llc (firstplus restoration), firstplus facility services co. , llc (firstplus facility) and the premier group, llc (the premier group). in turn, firstplus restoration and firstplus facility jointly own firstplus restoration & facility services company. additionally, firstplus development has one direct subsidiary firstplus acquisitions - 1, inc. the operational aspects of certain of these subsidiaries are set forth below .
except where otherwise stated, references in this document to us,  we,  fpfg or the company refer to firstplus financial group, inc. (firstplus). this form
on may 8, 2008, federal officials executed a search warrant at the firstplus financial group, inc. corporate offices in irving, texas and several of its subsidiaries offices. firstplus financial group, inc. denies any wrongdoing and if any charges are ever brought, it will vigorously defend them .
the consolidated financial statements include the accounts of firstplus financial group, inc. , and its wholly - owned subsidiaries, rutgers investment group, inc. , first plus development, inc. , and first plus enterprises, inc. all significant intercompany balances and transactions have been eliminated in consolidation .
firstplus development is a first tier wholly owned subsidiary of the firstplus financial group serving as a general contractor and construction manager, with its principal office in philadelphia, pennsylvania. additionally, firstplus development is licensed to do business in new york, new jersey, delaware, texas, florida, maryland, and louisiana .
firstplus acquisitions - 1 is chiefly a real estate holding company and property management firm. its purpose is to acquire real estate for leasing and investment purposes, as well as for use by firstplus subsidiaries. firstplus acquisitions provides the firstplus group and, more specifically, firstplus development with the ability to acquire real estate and protect it from the risks associated with major construction. the firm will serve to reduce the liability of the other subsidiaries by limiting the exposure associated with the owning of real estate .
the company closed rutgers investment groups new york division during the quarter ending june 30, 2008 and recorded an impairment charge against goodwill associated with the acquisition of rutgers investment group in july 2007 .
not - for - profit body - not - for - profit bodies may be covered by a group licence to provide financial services, debt management services and credit information services .
olé auto group, a wholly owned subsidiary of firstplus enterprises, was sold effective march 31, 2008. prior to its sale, the olé auto group was active in the buy here - pay here segment of the used automobile market, which accommodated customers with limited or damaged credit histories. in some cases, olé auto group directly financed the sales of used automobiles .
item 2. managements discussion and analysis of financial condition and results of operations .
firstplus r & f, a wholly owned subsidiary of firstplus restoration and firstplus facility, is designed to be a franchisor offering the right to own and operate locations that provide emergency restoration and commercial cleaning services, as well as janitorial and building maintenance services .
olé auto group, a wholly owned subsidiary of firstplus enterprises, was sold effective march 31, 2008. prior to its sale, the olé auto group was active in the buy here - pay here segment of the used automobile market, which accommodated customers with limited or damaged credit histories. in some cases, olé auto group directly financed the sales of used automobiles. as of the end of the quarter, the olé auto group had two used car dealerships in texas and a reconditioning center to detail, inspect, and restore automobiles purchased at auction and to support olé auto groups operations .
the company closed its firstplus restoration division during the quarter ending june 30, 2008 and recorded an impairment charge against goodwill associated with the acquisition of firstplus restoration in july 2007 .
financial services firm - firms must be authorised to provide regulated products and services, including banking, investments, insurance, mortgages and other financial products and services in the uk .
the company closed rutgers investment groups new york division during the quarter ending june 30, 2008 and recorded an impairment charge of $ 638, 333 against goodwill associated with the acquisition of rutgers investment group in july 2007 .
the company recorded total impairment charges of $ 1, 729, 011 against goodwill associated with the acquisitions of rutgers investment group and firstplus restoration & facilities services during the quarter ended june 30, 2008 .
the following discussion of results of operations and financial condition is based upon, and should be read in conjunction with, our consolidated financial statements and accompanying notes thereto included elsewhere herein .
firstplus restoration provides customer service 24 hours a day, seven days a week. firstplus restoration services customers in maryland, delaware, new jersey, pennsylvania, florida, and new york .
internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of consolidated financial reporting and the preparation of financial statements for external purposes in accordance with u. s. generally accepted accounting principles. as stated above, there has been no change in the companys internal control over financial reporting during the period ended march 31, 2008 that has materially affected, or is reasonably likely to materially affect, the companys internal control over financial reporting .
revenues for the six months ended june 30, 2008 were generated primarily from the operations of the following subsidiaries: firstplus financial group, inc. , and its wholly - owned subsidiaries, rutgers investment group, inc. , first plus development, inc. , and first plus enterprises, inc. and consisted of gross revenues from sales of approximately $ 2, 426, 000, gain on sale of olé auto group, inc. of approximately $ 1, 083, 000 and other income of approximately $ 42, 000 .
the charges stem from the alleged extortionate takeover of firstplus financial group inc. (fpfg), a publicly held company in texas, and the subsequent looting of fpfg by members of the racketeering enterprise through a series of fraudulent consulting agreements and acquisitions involving companies controlled by nicodemo s. scarfo and salvatore pelullo .
revenues for the three months ended june 30, 2008 were generated primarily from the operations of the following subsidiaries: firstplus financial group, inc. , and its wholly - owned subsidiaries, rutgers investment group, inc. , first plus development, inc. , and first plus enterprises, inc. and consisted of gross revenues from sales of approximately $ 1, 331, 000 and other income of approximately $ 42, 000 .
firstplus restorations relationships with insurance carriers and insurance adjusters are material to its business as it customarily contracts with insurance companies for payment prior to beginning restoration services. on december 31, 2007, firstplus restoration acquired the assets of american insurance restoration in order to increase its capacity. additionally, the recent acquisition of the premier group llc that provides insurance adjusting services to the general public will assist firstplus restoration in acquiring new business .
going forward firstplus plans to focus its efforts back on the core business  a successful mortgage company .
you should also be aware that if you give money to an unauthorised firm, you will not be covered by the financial ombudsman service or financial services compensation scheme (fscs) if things go wrong .
firstplus facility, a wholly owned subsidiary of firstplus enterprises, is a national janitorial / maintenance repair service provider for industrial, commercial and residential facilities that occupy both interior and exterior environments. restorative services include general cleaning (from heavy - duty to detail cleaning), floor care, construction clean - up, transitional store cleaning, commercial kitchen cleaning and light bulb replacement. firstplus facility recently commenced providing maintenance repair services. firstplus facility also uses the training facility (see below), managed by firstplus restoration and facility, for employee and contractor training, continuing
firstplus development utilizes a state of the art estimating system, approved by most national insurance carriers, that permits it to bid on additional projects for a variety of industries that otherwise may not have been available to firstplus development .
there were no changes in the companys internal control over financial reporting during the quarter ended march 31, 2008 that have materially affected, or are reasonably likely to materially affect, the companys internal control over financial reporting .
the company closed its firstplus restoration division during the quarter ending june 30, 2008 and recorded an impairment charge of $ 1, 090, 678 against goodwill associated with the acquisition of firstplus restoration & facilities services in july 2007 .
requirements are rules placed on the firm that apply to all of the financial services activities that it can operate .
firstplus facility, a wholly owned subsidiary of firstplus enterprises, is a national janitorial / maintenance repair service provider for industrial, commercial and residential facilities that occupy both interior and exterior environments. restorative services include general cleaning (from heavy - duty to detail cleaning), floor care, construction clean - up, transitional store cleaning, commercial kitchen cleaning and light bulb replacement. firstplus facility recently commenced providing maintenance repair services. firstplus facility also uses the training facility (see below), managed by firstplus restoration and facility, for employee and contractor training, continuing education and certifications .
we strongly advise you to only deal with financial firms that are authorised by us, and check the financial services register to ensure they are. it has information on firms and individuals that are, or have been, regulated by us .
the consolidated financial statements include the accounts of the company, and its wholly owned subsidiaries, rutgers investment group, inc. , first plus development, inc. , and first plus enterprises, inc. all significant intercompany balances and transactions have been eliminated in consolidation .
firstplus restoration, a wholly owned subsidiary of firstplus enterprises, provides on a nationwide basis first class restoration services to residential, commercial and industrial property owners who have sustained a hardship related to a fire, water, smoke, mold or wind damage occurrence .
in the first quarter of 2008, firstplus enterprises completed two transactions. on january 31, 2008 the premier group, llc was acquired by firstplus enterprises. the purchase price consisted of a cash payment of $ 425, 000 and 1, 000, 000 shares of the companys common stock, the closing price of which on thursday, january 31, 2008 was $ 0. 10 per share. the premier group is a licensed insurance adjuster that resolves insurance claims on behalf of its clients. also, effective march 31, 2008, firstplus enterprises sold all of the outstanding capital stock of its olé auto group, inc. subsidiary for $ 3, 200, 000 to stalwart enterprises, inc. the purchase price is payable under a secured promissory note with an initial term of seven years and bears interest at the rate of 6% per annum .
copyright © 2018 financial conduct authority (fca): 25 the north colonnade, london, e14 5hs. company no. 01920623
ivop issued - this firm has interim permission to run consumer credit business and was already authorised to provide financial products and services .
due to resource restraints, adequate staffing of personnel in the accounting and financial reporting functions has not yet been attained. the companys shortage of personnel and inadequate segregation of duties, as well as resource restraints contribute to the lack of effective controls over financial reporting .
the olé auto group was sold effective march 31, 2008, and as of march 31, 2008, the inventory of the companys remaining operations is immaterial .
the information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the company .
ivop provisionally granted - the firm has interim permission to undertake consumer credit business and was already authorised to provide financial products and services .
in january 2008, the company acquired the premier group, llc. the premier group provides insurance adjusting services and claims processing services to the general public. the premier group is licensed, bonded and fully operational in south florida, as well as in pennsylvania and plans to expand services in the near future to include central and northern florida by november 2008; the licensing application process has been also initiated in order to expand the companys services to new jersey, delaware, new york, and maryland .
the premier group, llc, a florida limited liability company, was acquired by firstplus enterprises on january 31, 2008 and provides insurance adjusting services and claims processin g services to the general public. a typical premier group client has sustained damage to their residential or commercial property and must process a claim with an insurance underwriter. the premier group is licensed, bonded and fully operational in south florida, as well as in pennsylvania and plans to expand services in the near future to include central and northern florida during 2008. application for licensing has been also initiated in order to expand the companys services to new jersey, delaware, new york, and maryland .
according to an indictment unsealed on tuesday, the men used both physical and finance threats to take control of firstplus in order to plunder the company for their own financial gain. scarfo, pelullo and their partners replaced the company' s board of directors with their own cronies, and then named their accomplice, lawyer william maxwell, as special counsel to firstplus so that maxwell could use that position' s authority to funnel millions back to the mobsters .
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting .
similar to firstplus restoration, firstplus facility offers 24 hour a day, seven day a week customer service through its toll - free telephone number and directly services customers in maryland, delaware, new jersey, pennsylvania and new york. additionally, firstplus facility has a contract management program that allows for the servicing of national contracts through the use of sub - contractors. the use of subcontractors enables firstplus facility to expand its area of service to a larger geographical region and provides a larger labor pool to draw from. the subcontractors are monitored by our operations manager, and carry their own insurance, based on our requirements .
loren berlin is a reporter with the aol huffington post media group. she can be reached at loren. berlin @ teamaol. com, on twitter at @ lorenberlin, and on facebook .
in connection with the quarterly report of firstplus financial group, inc. , (the company) on form 10 - q for the quarter ended june 30, 2008 as filed with the securities and exchange commission on the date hereof (the report), i, william l. handley, chief executive officer of the company, certify, pursuant to 18 u. s. c. section 1350, as adopted pursuant to section 906 of the sarbanes - oxley act of 2002, that, to my knowledge :
the preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of expenses during the reporting periods. actual results could differ from those estimates .
firstplus developments current operation has expanded from moderate size alterations and single family homes to large scale alterations and design / build residential, commercial and industrial projects for private developers and municipalities .
as for the company, the firstplus website states that
beginning with the efforts of a newly reconstituted audit committee, the board of directors is working to ensure shareholder interests are protected and preserved .
the largest part of firstplus facilitys income is based on recurring monthly contracts with annual renewals. additive income is derived from one - time cleaning,  i. e. , construction clean - ups .
in order to train potential franchisees, firstplus r & f has built a world - class training facility consisting of a learning center, as well as simulated job - site locations for on the job styles of training. this same facility is also utilized by firstplus restoration and firstplus facility for training purposes. the facility is currently under review to obtain an institute of inspection, cleaning and restoration and certification (iicrc) approved school status. firstplus r & f will have the ability to train franchisees on operating procedures, as well as offer them certifications in industry related courses and offer continuing education. the facility also contains a one thousand square foot home that can be saturated with 1500 - 2000 gallons of water for instruction on how to use the most up to date technology to dry the entire structure without having to remove any building material. the facility is one of seven located in north america and one of nine in the world, thus placing firstplus r & f at the forefront of what can be offered to franchisees relative to restoration training .
in its operations, firstplus restoration utilizes state of the art radio tracking equipment that provides first plus restoration the ability to monitor and track all emergency calls, as well as several non - intrusive technologies including infrared camera, thermographic and cold jet dry ice blasting technologies. the firm also uses the training facility (see below), managed by firstplus restoration and facility, for employee and contractor training, continuing education and certifications .
the companys management, with the participation of its principal executive officer and principal financial officer, has evaluated the effectiveness of its disclosure controls and procedures (as such term is defined in rules 13a - 15 (e) and 15d - 15 (e) under the securities exchange act of 1934 (the exchange act) ) as of the end of the period covered by this report. based on such evaluation, the companys principal executive officer and principal financial officer have concluded that, as of the end of such period, the companys financial reporting and disclosure controls and procedures, in addition to inadequately designed controls over financial reporting, were not effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the company in the reports that it files or submits under the exchange act .
exchange – rm - this is a multilateral system operated and / or managed by a market operator, which brings together or facilitates the bringing together of multiple third - party buying and selling interests in financial instruments .
exempt professional firm - some firms (such as solicitors, accountants and chartered surveyors) can perform limited regulated financial activities as part of their normal professional services, without being authorised or an agent of an authorised firm .
appointed representative – introducer - a firm that can introduce customers to another firm or members of the firm’s group, and / or give out certain kinds of marketing material. it must be a representative of a firm authorised by the fca or pra, or regulated in the eea .
the following discussion and financial information is presented to aid in understanding our consolidated financial position and results of operations for the quarter ended june 30, 2008. the companys activities during quarter ended june 30, 2007 were primarily focused on developing new business opportunities. the olé auto group was sold effective june 30, 2008. accordingly, the companys management has concluded that comparisons of the companys results of operations for the three months ended june 30, 2008 to the three months ended june 30, 2007 are not helpful to an evaluation and understanding of the company. accordingly, (other than for liquidity and capital resources) the discussion below focuses on the companys lines of business and the companys results of operations for the three months ended june 30, 2008 .
almost all firms and individuals carrying out financial services activities in the uk have to be authorised or registered by us. this firm is not authorised or registered by us but has been targeting people in the uk, claiming to be an authorised firm .
position and results of operations for the quarter ended june 30, 2008. the olé auto group was sold effective march 31, 2008. accordingly, the companys management has concluded that comparisons of the companys results of operations for the three months ended june 30, 2008 to the three months ended june 30, 2007 are not
according to the indictment, scarfo and pelullo lived lavish lifestyles. scarfo had a $ 850, 000 yacht and a luxury mansion. pelullo owned a bentley and loads of expensive jewelry gifted to his wife. in contrast, firstplus and its shareholders lost at least $ 12 million due to the criminal activity .
firstplus enterprises seeks to acquire established companies in a variety of industries, as well as newer developing companies or financially distressed companies in need of resources and direction to realize their business goals. our personnel and outside consultants are skilled in the areas of operations and finance, disciplines vital to the success of these acquisitions .
to date, firstplus development has completed a number of residential and commercial projects, including a design - build renovation and expansion in bethany beach, delaware, new modular homes in dover and elsmere, delaware and a renovation to a national landmark theatre in philadelphia. the firm is currently working on four assisted living facilities for a national chain, located in new jersey .
on january 31, 2008, firstplus enterprises, inc. a company subsidiary acquired certain limited liability company interests. as part of the purchase price for these interests, the company issued to the sellers of the interests, 1, 000, 000 shares of its common stock which had a closing price of $ 0. 10 per share on january 31, 2008 .
for purposes of the balance sheet and statement of cash flows, the company considers all highly liquid investments which are readily convertible into known amounts of cash and have a maturity of three months or less when acquired to be cash equivalents. at december 31, 2007, management believes that the carrying amount of cash equivalents approximates fair value because of the short maturity of these financial instruments .
our annual report on form 10 - ksb for the year ended december 31, 2007, includes a detailed discussion of our risk factors. the risks described in our form 10 - ksb are not the only risks facing the company. additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and / or operating results .
during june & july 2008 bod meetings, the board returned dr. robert oneal to the board, and added william todd hickman, paul h. ballard, and jack roubinek, all prominent and successful businessmen, to the bod. the bod then named robert oneal chairman of the board, and president. it also named william l handley as chief executive officer, and gary d. alexander as acting chief financial officer .
a conversation between scarfo and pelullo, included as evidence in the indictment, demonstrates how the mobsters remained mobsters, even in the boardroom. on december 5, 2007 pelullo called scarfo to tell him that
individual 4 ,
a former firstplus executive who had provided information that the two gangsters used to extort control of the company, had suddenly died. according to the transcript included in the indictment, pelullo applauded that the
rat was dead ,
before adding that the man was
the only connection, the only tie to anything .
as state licensing is completed, it is expected that commercial loans will include (term, bridge, real estate, line of credit loans), financing (equipment, machinery, purchase order, accounts receivable), sale - leasebacks of existing machinery, new leases, mergers and leveraged buyouts. in marketing these financial solutions, rutgers investment will focus on businesses that are less attractive to conventional banking institutions, including those in the construction industries. rutgers investment plans to accept a variety of collateral as consideration, including commercial accounts receivable, machinery and equipment, inventory, real estate, and liquid securities .
as of june 30, 2008, the company had approximately $ 1, 100, 000 in cash and cash equivalents, as compared to approximately $ 7, 300, 000 on june 30, 2007 due to acquisitions and operations growth. during the six months ended june 30, 2008, the companys cash position was decreased by approximately $ 1, 500, 000 from december 31, 2007. the company used approximately $ 852, 000 in cash in its operating activities for the six months ended june 30, 2008 as compared to cash usage of $ 4, 600, 000 for operating activities for the six months ended june 30, 2007. there was a net loss of $ (5, 473, 044) and depreciation and amortization expense of $ 107, 455 that did not involve a use of cash as compared to a net loss of $ 134, 995 and depreciation and amortization expense of $ 3, 988 for the six months ended june 30, 2007. from december 31, 2007, the companys accounts receivable decreased by approximately $ 2, 412, 000 and accounts payable increased by $ 1, 272, 000 due to costs incurred with an acquisition and sale transactions and compliance activities. in addition from december 31, 2007, accrued expenses decreased by approximately $ 321, 000, and other operating items used approximately $ 2, 510, 000 in cash as compared to cash usage of $ 4, 646, 000 for the six months ended june 30, 2007. the company provided approximately $ 1, 168, 000 in cash in its investing activities at june 30, 2008 as compared to $ 985, 000 from investing activities at june 30, 2008. specifically, the company acquired the premier group, llc for $ 425, 000 in cash and 1, 000, 000 shares of its common stock at $ 0. 10 at the closing price on january 31, 2008. also the companys subsidiary firstplus acquisitions sold all of the outstanding capital stock of the olé auto group effective march 31, 2008 for $ 3, 200, 000 payable under a promissory note for an initial term of seven years .
the companys management, including the companys principal executive officer and principal financial officer, do not expect that the companys disclosure controls and procedures or the companys internal controls, when implemented, will prevent all errors and all fraud. a control system, no matter how well conceived, operated and implemented can provide only reasonable, not absolute, assurance that the objectives of the control system are met. further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. because of the inherent limitations in all control systems, no evaluation of the controls can provide absolute assurance that all control issues and instances of fraud, if any, within the company have been detected .
management cannot provide assurance that the company will ultimately achieve profitable operations or remain cash flow positive, or raise additional debt and / or equity capital. management believes that the companys capital resources should be adequate to continue operating and maintaining its business strategy for the next nine months. however, if the company is unable to realize sufficient revenues from its operations or is unable to raise or realize additional capital in the future, management expects that the company will need to seek additional capital on less favorable terms and / or pursue other remedial measures. the financial statements included in this quarterly report on form 10 - q do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the company be unable to continue as a going concern .
the company is in the process of working towards implementing the needed changes to be in compliance for sarbanes - oxley act, section 404. the company had retained a third party consultant to map out the material processes of the company. items that have been addressed are the code of ethics, policy and procedures governing sales and purchases of company securities by insiders, the employee handbook, email policy and procedures to be followed when considering an acquisition. items that have been addressed and continue to be addressed are the financial reporting process, strategic planning process, succession planning and a continuity / disaster recovery plan. additional effort is needed to fully remedy the deficiencies and we are continuing our efforts to improve and strengthen our control processes and procedures. the companys management, audit committee, and directors will, subject to resource restraints, implement policies and procedures in order that our controls and procedures are adequate and effective .
in accordance with sfas no. 109, accounting for income taxes,  and fin 48 accounting for uncertainty in income taxes  an interpretation of fasb statement no. 109 deferred income taxes are recognized for the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts at each year - end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. the provision for income taxes represents the tax payable for the period and the change during the period in deferred tax assets and liabilities. based on the march 31, 2008 loss, fpfg will have a net operating loss carryforward available of approximately $ 45, 300, 000. a valuation allowance is provided against the deferred tax asset for future taxable income as realization is uncertain .
the indictment alleges that in april 2007, scarfo, pelullo, texas attorney william maxwell and others devised a scheme to take over fpfg, a financial services company in texas. according to court documents, through threats of physical and economic harm, the scarfo - pelullo enterprise assumed and maintained control of fpfg for the purpose of plundering its assets. the takeover was accomplished by replacing fpfg’s board of directors with new figurehead members who served at the direction of scarfo, pelullo and other members of the enterprise. once the takeover was completed, the figurehead board named william maxwell as “special counsel” to fpfg, a position that he allegedly used to funnel millions of dollars to himself, scarfo and pelullo through fraudulent legal services and consulting agreements. the agreements, as well as fpfg’s fraudulent acquisitions of companies controlled by scarfo and pelullo, were allegedly designed to mask the true identity and nature of the control exerted over fpfg and to conceal the source of the money fraudulently conveyed to scarfo and pelullo .
washington – thirteen individuals, including an alleged member and an associate of the lucchese organized crime family, are charged with racketeering and related offenses in an indictment unsealed this morning in conjunction with arrests in the case, announced assistant attorney general lanny a. breuer of the criminal division and u. s. attorney paul j. fishman of the district of new jersey .
the 25 - count indictment filed in camden, n. j. , federal court charges scarfo, a member of the lucchese organized crime family of la cosa nostra (lcn), and pelullo, an associate of the lucchese and philadelphia lcn families, with racketeering conspiracy and conduct including securities fraud, wire fraud, mail fraud, bank fraud, extortion, interstate travel in aid of racketeering, money laundering and obstruction of justice. the indictment also names nicodemo d. scarfo (scarfo sr .), the imprisoned former boss of the philadelphia family of lcn, and vittorio amuso, the imprisoned boss of the lucchese family, as unindicted co - conspirators .
nine other defendants – including attorneys william maxwell, cory leshner, david adler, gary mccarthy and donald manno, and certified public accountant howard drossner – are also variously charged with racketeering conspiracy, including securities fraud conspiracy, wire fraud, and other offenses. the indictment also charges scarfo’s wife, lisa murray - scarfo, with conspiracy to commit bank fraud and making false statements on a loan application for her role in securing a fraudulent mortgage to purchase a $ 715, 000 house with proceeds from the racketeering enterprise’s criminal activity. william maxwell’s brother john maxwell, william handley and john parisi are charged with various offenses related to the conspiracy. todd stark is charged with conspiracy to provide ammunition for a 9mm handgun to scarfo .
a number of the defendants were arrested this morning in a coordinated law enforcement effort by special agents of the fbi; department of labor, office of inspector general; and the bureau of alcohol, tobacco, firearms and explosives (atf). scarfo, handley, leshner, parisi, adler, drossner and manno were arrested at their residences; pelullo was arrested in miami; and william maxwell was arrested at his houston office. mccarthy surrendered to the fbi this morning in philadelphia. murray - scarfo is expected to surrender to authorities in camden. stark and john maxwell have yet to be apprehended. the defendants in custody in the new jersey area will appear this afternoon before u. s. magistrate judge anne marie donio in camden federal court .
“the indictment alleges that mr. scarfo and mr. pelullo used economic extortion and threats of violence to seize and maintain control of a publicly traded company, successfully removing its entire existing board of directors and management, ” said assistant attorney general breuer. “once in control, they allegedly used their criminal enterprise to extract millions of dollars from the company to fund their lavish lifestyles. this prosecution demonstrates the justice department’s resolve to root out the influence of la cosa nostra wherever it exists. ”
“according to the indictment, the defendants gave new meaning to ‘corporate takeover’ by looting a publicly traded company to benefit their criminal enterprise, ” said u. s. attorney fishman. “through rampant self dealing, fraudulent sec filings and more traditional mob methods, the defendants allegedly stole $ 12 million from shareholders. particularly in these economic times, investors should be free to invest in public companies without fear that violent criminal organizations are their puppetmasters. and the public deserves to rely with confidence on corporate officials and professionals whose positions require them to act in the best interest of shareholders, not members of organized crime. ”
“the demise of organized crime has been greatly exaggerated, ” said michael b. ward, special agent in charge of the fbi’s newark field office. “criminal activities have evolved from the back alleys to the board rooms, but the same use of physical threats and intimidation to gain leverage and loot lucrative businesses for personal gain continues to this day. in response, the charges being brought against nicky scarfo jr. , sal pelullo and others represent law enforcement’s commitment to aggressively target the illegal activity of organized crime in any commercial business or venue. ”
according to court documents, scarfo is a made member of the lucchese family and became a member after an attempt on his life in 1989 following an internal struggle for control of the philadelphia family. in the mid - 1990s while scarfo sr. and amuso were in federal prison in atlanta, amuso arranged for scarfo to become a member of the lucchese family as a favor to scarfo sr. as a member of the lucchese family, scarfo was required to earn money and participate in the affairs of the lucchese family .
according to the indictment, following his release from prison in 2005 on an unrelated charge, scarfo was placed on supervised release and required to report to a probation officer. according to court documents, by participating in the affairs of what is described in the indictment as the scarfo - pelullo enterprise, scarfo and other members of the enterprise allegedly engaged in a systematic scheme to deceive and obstruct the probation department and the district court responsible for overseeing scarfo’s supervised release .
according to the indictment, the enterprise succeeded in its criminal objectives with the knowing assistance of adler, drossner and mccarthy – who used their positions as professionals to ensure that the enterprise’s criminal activity was not revealed to law enforcement and regulatory authorities, including the u. s. securities and exchange commission (sec). as a public company, fpfg was required to submit periodic and annual filings to the sec. the indictment alleges that the enterprise, led by scarfo and pelullo, repeatedly submitted false information, or omitted material information, in required sec filings. as a result, fpfg’s shareholders and the investing public had no idea that fpfg was being controlled by members and associates of organized crime. manno, an attorney for scarfo, allegedly abused his position as an attorney to further insulate scarfo and the enterprise by deceiving scarfo’s probation officer and the district court. the indictment alleges that manno’s deception corruptly influenced scarfo’s supervised release by withholding information from the probation office and the district court regarding scarfo’s source of income and his contact with convicted felons .
the indictment details a telephone call intercepted by law enforcement on dec. 5, 2007, that illustrates the corrupt nature of scarfo and pelullo’s control of fpfg. according to the indictment, pelullo called scarfo to tell him about the sudden death of a former fpfg executive described in the indictment as “individual # 4, ” who had provided information to pelullo and william maxwell that they used to extort control of fpfg. at the time of his death, individual # 4 was employed by fpfg as a member of its “compliance team. ” during the conversation, scarfo and pelullo expressed relief regarding individual # 4’s death. after laughing about how he was “crushed” that “the rat is dead, ” pelullo acknowledged that individual # 4 was “the only connection, the only tie to anything. ” as the news sunk in to scarfo, he stated, “oh boy. yeah, sal, you wanna know something though? ... that’s one that i know you can’t take credit for... [ laughter ]... and that’s the natural best thing. you know what i mean? ... that is so like enron - ish. you know what i mean? ”
the indictment alleges that the enterprise’s criminal activity allowed scarfo and pelullo to live lavish lifestyles which included the purchase of an $ 850, 000 yacht, a luxury home for scarfo, a bentley automobile for pelullo, and thousands of dollars in jewelry for scarfo’s wife, murray - scarfo. as a direct result of the enterprise’s criminal activity, fpfg and its shareholders suffered a loss of at least $ 12 million .
the charges and allegations contained in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty .
the case is being prosecuted by trial attorney lisa c. page of the organized crime and gang section in the justice department’s criminal division and assistant u. s. attorney steven d’aguanno of the new jersey u. s. attorney’s office organized crime / gangs unit in camden. the case was investigated by the fbi’s newark field office; the department of labor, office of inspector general, office of labor racketeering and fraud investigations, new york region; and the atf, newark. the fbi philadelphia field office and the sec provided assistance .
( fpfx), a texas - based company and a one - time subprime lender that boasted former vice president dan quayle as a board member, and used nfl hall of famer dan marino in its ads .
on tuesday, nicodermo s. scarfo, a made man within the lucchese organized crime family, was arrested at his home. he' s one of
with the illegal takeover of the publicly traded company, among other racketeering charges .
the defendants gave new meaning to' corporate takeover,'
said u. s. attorney paul fishman .
criminal activities have evolved from the back alleys to the board rooms ,
said michael b. ward, special agent in charge of the fbi' s newark field office. still, the tactics remain the same, he says :
physical threats and intimidation to gain leverage and loot lucrative businesses .
scarfo is not the only one of the 13 with ties to organized crime. salvatore pelullo, an associate of the lucchese and philadephia la cosa nostra families is also charged, as are nicodermo d. scarfo (scarfo sr .), the imprisoned former boss of the philadelphia family of la cosa nostra, and vittorio amuso, the imprisoned boss of the lucchese family. others charged include an accountant and five lawyers .
. as a result, the public in general, and investors particularly, were left in the dark as to the true nature of the company and its management .
as scarfo grapsed the weight of the news, he said ,
oh boy. yeah, sal, you wanna know something though? ... that' s one that i know you can' t take credit for... [ laughter ]... and that' s the natural best thing. you know what i mean? ... that is so like enron - ish. you know what i mean ?
particularly in these economic times, investors should be free to invest in public companies without fear that violent criminal organizations are their puppetmasters ,
said u. s. attorney paul fishman .
and the public deserves to rely with confidence on corporate officials and professionals whose positions require them to act in the best interest of shareholders, not members of organized crime .
the nanny' s gut told her something was very wrong. then the dad watched the chilling cctv
homeless man is the only bystander willing to risk it all for a cop ...
family dog was missing for a month without a trace before their ...
hungry leopard chases down a baby antelope... then does the most ...
dog is chained outside for 15 years until a freak accident changes ...
immigrant mother claims 14 - month - old baby was returned to her covered in lice afte ...
homeless man is the only bystander willing to risk it all fo ...
employee tells her manager she can' t come to work since her ...
mom goes viral after she posts about her
miracle cure
for ...
the nanny' s gut told her something was very wrong. then the dad
when this rescued lioness and lion cub first met, what happe ...
first two boys rescued from flooded thai cave, according to local of ...
if you’d like to allow notifications, please go into your browser’s website or privacy settings and set the permissions for urltoken to “allow. ”
for inquiries related to this message please contact support. for sales inquiries, please visit urltoken
if you believe this to be in error, please confirm below that you are not a robot by clicking
i' m not a robot
below .
please make sure your browser supports javascript and cookies and that you are not blocking them from loading. for more information you can review the terms of service and cookie policy .
html public
- / / w3c / / dtd html 4. 0 transitional / / en
indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15 (d) of the exchange act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. yes x no o
indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non - accelerated filer, or a smaller reporting company. see the definitions of large accelerated filer,  accelerated filer and smaller reporting company in rule 12b - 2 of the exchange act
indicate by check mark whether the registrant is a shell company (as defined in rule 12b - 2 of the exchange act). yes o no x
negative of such terms. these forward - looking statements are based upon the companys
results to differ materially from those described in such forward - looking statements. the
part ii: other information item 2. unregistered sales of equity securities and use of proceeds
the company is a diversified company that provides commercial loan, consumer lending, residential and commercial restoration, facility (janitorial and maintenance) services, insurance adjusting services, construction management services and a facilities and restoration franchise business. toward this end, the company has made several complementary acquisitions of businesses that are designed to create value through synergy and enterprise - level expertise .
managements focus on rutgers investment has been to qualify rutgers investment in 48 states as a mortgage banker. this process entails applying for mortgage banking licenses in each of the 48 states and thereafter qualifying as a mortgage banker in the particular state. management anticipates that rutgers investment will be qualified as a mortgage banker in approximately 15 states during the fourth quarter of 2008. the remainder of this licensing process should be substantially completed by year - end .
additionally, as state licensing is completed, the firms target market strategy for residential loans will be on the individual borrower with a credit score on the lower end of the credit score spectrum seeking to refinance for improved terms and debt consolidation .
rutgers investment is presently conducting mortgage banking on a limited basis and has offices in pennsylvania and texas .
rutgers investment and urltoken (hla) entered into an outsourced mortgage processing and fulfillment services agreement effective december 31, 2007. the relationship proved unsuccessful and the agreement was terminated by rutgers investment on march 14, 2008 .
in support of rutgers investment, the company, on december 31, 2007, issued 10, 000, 000 shares of its common stock to rutgers for $ 1, 000, 000 that was evidenced by rutgers investments subordinated debenture delivered to the company. this debenture was secured by a pledge of the company common stock that was issued to rutgers .
the company also issued 250, 000 shares of its common stock to a financing consultant who arranged warehouse line of credit financing effective april 1, 2008 .
it is anticipated that franchises will be available for purchase during 2008. buying a franchise enables the owner to offer and provide emergency restoration and cleaning services related to fire damage, water damage and mold contamination, as well as janitorial and building maintenance services under certain proprietary trademarks .
revenue and dividends from investments are recognized at the time the investment dividends are declared payable by the underlying investment. capital gains and losses are recorded on the date of sale of the investment .
interest income is recognized on the interest method. interest income is discontinued when management determines future collection is unlikely. loans are placed on non - accrual or charged - off at an earlier date if collection of principal or interest is considered doubtful.
firstplus financial group is a texas-based mortgage company traded under the symbol fpfx . in 2011 , a number of indictments and other legal actions showed that the firm had been taken over by lucchese crime family . by the use of threats and violence . they were able to remove the firm ’s entire board of directors and managers , replacing them with their own . according to the company , in june 2007 the gangsters forced the firm to purchase several firms under very unfavorable terms . they may have looted $ 12 million from shareholders . on june 24 , 2011 , the firm filed for bankruptcy protection under chapter 11 . at one point , the company had vice-president dan quayle as a members of its ( legitimate ) board of directors . american football player dan marino once served as its tv spokesman . 
firstplus financial group is a texas-based mortgage company traded under the symbol fpfx. in 2011, a number of indictments and other legal actions showed that the firm had been taken over by lucchese crime family. by the use of threats and violence. they were able to remove the firm ’s entire board of directors and managers, replacing them with their own. according to the company, in june 2007 the gangsters forced the firm to purchase several firms under very unfavorable terms. they may have looted $ 12 million from shareholders. on june 24, 2011, the firm filed for bankruptcy protection under chapter 11. at one point, the company had vice-president dan quayle as a members of its (legitimate) board of directors. american football player dan marino once served as its tv spokesman.
firstplus financial group is a texas-based mortgage company traded under the symbol fpfx. in 2011, a number of indictments and other legal actions showed that the firm had been taken over by lucchese crime family. by the use of threats and violence. they were able to remove the firm ’s entire board of directors and managers, replacing them with their own. according to the company, in june 2007 the gangsters forced the firm to purchase several firms under very unfavorable terms. they may have looted $ 12 million from shareholders. on june 24, 2011, the firm filed for bankruptcy protection under chapter 11. at one point, the company had vice-president dan quayle as a members of its (legitimate) board of directors. american football player dan marino once served as its tv spokesman.