Alleged mobsters guilty in vast Net, phone fraud

Writing a sudden ending to what authorities say is one of the biggest consumer fraud cases ever prosecuted, alleged members of one of New York’s most notorious Mafia families pleaded guilty Monday to conspiracy and fraud charges stemming from an Internet and phone billing caper that bilked consumers out of more than $650 million.

Prosecutors alleged in court papers that the principals of the scheme, which ran from 1996 to 2003, are members of the Gambino crime family, an outfit better known for such muscle-and-blood criminal enterprises as gambling, loan sharking, protection rackets and creative bookkeeping for construction projects and garbage collection.

But in this case, prosecutors said, the hoods targeted phone customers and Internet users, tricking them into responding to too-good-to-be-true offers of free porn, psychic readings, dating services and sports picks, and then putting the hurt on their pocketbooks with a series of unauthorized credit card and telephone charges.

The mobsters also ripped off two federally supervised funds that subsidize rural phone companies through another billing scam, they said.

Alleged mastermind, Gambino ‘capo’ enter pleas
Among those who entered guilty pleas Monday in U.S. District Court in Brooklyn — on the day jury selection was to have begun — were the alleged mastermind of the scheme, Richard Martino, 45, known in the New York tabloids as the “X-rated mobster,” and 45-year-old Salvatore Locascio, described by authorities as a Gambino “capo,” or captain.

Under a plea bargain worked out over the weekend, prosecutors dropped the racketeering allegation, which had been a central part of its case. That allowed the defendants to plead guilty to the crime without acknowledging that the scheme was an organized crime operation.

Under the deal, Martino pleaded guilty to one count of conspiracy to commit mail and wire fraud and one count of extortion for forcefully trying to extract a $1 million payment from a porn industry rival. Martino faces up to 10 years in prison and agreed to forfeit $15 million under the deal.

Locascio entered a guilty plea to a single count of  money laundering and also faces up to 10 years in prison and forfeiture of $4.7 million.

Three other alleged mob associates — Dennis Martino, brother of Richard Martino, Thomas Pugliese and Andrew Campos — pleaded guilty to a count of conspiracy to commit mail and wire fraud. A fourth man, Zev Mustafa, pleaded guilty to money laundering in connection with the scheme.

Daniel Martino, Pugliese and Campos each face up to five years in prison and agreed to forfeit a total of $2.1 million, while Mustafa faces up to 10 years in prison and will forfeit $1.7 million.

Prosecutors allege that Richard Martino, a Gambino “soldier,” directed the scheme and paid $8 million of the proceeds directly to Locascio, the leader of his “crew,” and funneled at least $40 million more into Gambino family coffers.

Bank, phone company purchased
The elaborate scheme brought in so much money that the defendants and various co-conspirators were able to purchase a telephone company and bank in Missouri, according to court documents. They also created at least 64 shell companies and opened a host of foreign bank accounts through which to pass their ill-gotten gains, the documents said.

In an indictment returned in March 2003, prosecutors alleged a two-headed scheme:

People who called 1-800 phone numbers advertising free samples of phone sex, psychic hot lines and dating services unwittingly triggered recurring monthly charges that appeared on their phone bills as “voice-mail services" and other innocuous services.

At the same time, the scheme trapped Web surfers seeking adult content on the Internet by enticing them to enter their credit card information for “free” tours, only to begin billing them between $20 and $90 a month.

The defendants routinely changed corporate billing names and merchant banks to stay one step ahead of authorities and foil Visa USA’s fraud-detection system, according to court documents. In 1999, they began processing credit transactions in Guatemala to further muddy the waters, the documents said.

Prosecutors charged that the Web sites used in the Internet scam were part of a joint venture formed in 1996 between Crescent Publishing Group Inc., a Manhattan company that published such high-profile adult magazines as Playgirl and High Society, and Lexitrans Inc. of Overland Park, Kan., a Web hosting company that they said was secretly controlled by Richard Martino.

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