Alleged mobsters guilty in vast Net, phone fraud

Surprise guilty pleas
The surprise guilty pleas on Monday, following negotiations that lasted through the weekend, pre-empted what would have been one of the most closely watched mob trials in years.

Using the power of plea bargains, prosecutors already had peeled off a number of alleged co-conspirators who were expected to testify against Martino and Locascio, including:

• Norman Chanes, a 58-year-old millionaire advertising executive and movie producer (co-producer of the 2000 film “Blue Moon,” starring Ben Gazzara, Rita Moreno and “Sopranos” cast member Vincent Pastore), who allegedly advertised the 1-800 phone numbers used in the telephone fraud in magazines and newspapers around the country.
• Bruce Chew, 57, who was CEO of Crescent Publishing Co. Chew was a defendant in a Federal Trade Commission lawsuit against Crescent Publishing that led to a $30 million settlement in November 2001.
• Kenneth Matzdorff, a 48-year-old Missouri businessman who allegedly acted as a front man to purchase the Cass County Telephone Co. in Peculiar, Mo., and the Garden City Bank in Garden City, Mo., on behalf of Richard Martino and others. Matzdorff pleaded guilty in January to conspiracy to commit mail and wire fraud charges under a plea agreement.

Another figure in the case who might have been called to testify is Carl Ruderman, a 60-something-year-old publisher and philanthropist who reportedly was the secret owner of Crescent Publishing.

‘The invisible man’ of porn
Ruderman, dubbed “the invisible man” of porn by fellow skin magazine publisher Al Goldstein in 1989 for his low profile, was never charged with any crime, reportedly because he told authorities that he delegated responsibility for day-to-day operations of Crescent Publishing to Chew and had no knowledge of the billing scam.

One former Crescent employee said that Ruderman certainly lived up to the “invisible man” sobriquet at the company’s Manhattan offices.

“We used to call him the Wizard of Oz, because you never saw the guy,” said the employee, who spoke with MSNBC.com on condition of anonymity. “I saw him twice the whole time I worked for him.”

Former Gambino crime boss John Gotti Sr., forever known as the "Dapper Don," also had been expected to testify from the grave.

Longtime New York newspaper crime reporter Jerry Capeci, who now publishes his work on the Ganglandnews.com Web site, said prosecutors had planned to play a tape of a wiretapped conversation from January 1990 in which Gotti sings the praises of newly minted mobsters Martino and Locascio, who had just been inducted into the Gambino family.

‘I like the Richies’

Mark Lennihan / AP file The late John Gotti listens to proceedings during a trial in New York on assault and conspiracy charges in New York in this Jan. 31, 1990 file photo.

“I want guys that done more than killing,” Capeci quotes Gotti as saying on the tape, obtained from a listening device planted in an apartment above the Ravenite Social Club in Manhattan’s Little Italy. “I like the Richies. … They’re young – twenty-something, thirty-something -- … They’re beautiful guys. … Ten years from now, these young guys we straightened out, they’re going to be really proud of them.”

Gotti died in prison at the age of 61 on June 10, 2002, from complications of head and neck cancer while serving a sentence of life without parole for murder and racketeering.

The criminal case was filed more than three years after the FTC announced that it had filed suit, along with the New York attorney general’s office, to stop Crescent Publishing from “illegally billing thousands of consumers for services that were advertised as ‘free,’ and for billing other consumers who never visited the Web sites at all.” The suit did not address the phone billing portion of the scam.

In announcing the suit in August 2000, the FTC estimated that the "free tour Web sites" had generated income of $188 million between 1997 and October 1999, including $141 million in the first 10 months of 1999 alone.

According to Luke Ford, a pioneer blogger and keen observer of the Internet porn scene, the scheme was able to roll up such huge numbers because of deals Crescent made with two Internet traffic brokers — Serge Birbrair and Yishai Habari — that resulted in millions of porn-seeking surfers a day being directed to the sites.

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