2005-2010: Release From Prison and FBI Investigation
Scarfo was released from prison on April 6, 2005. The media reported that Scarfo moved to the Jersey Shore after his release and began an effort to take over the Philadelphia crime family again. In March 2008, he purchased a $715,000 home on Hartford Drive in Egg Harbor Township, New Jersey.
Shortly afterward, federal investigators began tapping Scarfo's phones and put him under surveillance as part of an inquiry into an illegal gambling, extortion, fraud, and labor racketeering operation run by Scarfo's best friend and close mob ally, Andrew Merola. An Organized Crime Control Bureau affidavit made in 2007 alleges that Scarfo met Merola after moving to New Jersey in the early 1990s. Scarfo later became godfather to Merola's son. The affidavit claims that Scarfo helped manage Merola's illegal gambling operations in 1998 and 1999 after Merola was briefly jailed after being convicted of extortion. Although Scarfo was a "person of interest" in the case, he was never charged; Merola pleaded guilty and was convicted of several felonies in connection with the case in early 2010.
In December 2007, the Philadelphia Inquirer reported that Scarfo, Jr. had been demoted within the Lucchese crime family in part because of ongoing media coverage of his activities and in part because he intended to start a mob war to regain control of the Philadelphia outfit.
Scarfo and his wife, Michele, divorced in early 2008, whereupon she immediately remarried.
Scarfo also allegedly was involved in the financial takeover FirstPlus Financial Group and the embezzlement of millions of dollars from the company. FirstPlus Financial is a Texas-based mortgage financing company which was very active in the mortgage industry until a financial downturn left it mostly moribund in the late 1990s. The company drew federal attention in 2006 when it suddenly became very active again. On May 8, 2008, the Federal Bureau of Investigation conducted a series of raids on the company, its subsidiaries, several other companies, a number of FirstPlus' corporate officers, and several private citizens. The financial records of Nicky Scarfo, Jr.; his ex-wife, Michele Scarfo-Winkler; his infant son, Nicodemo Scarfo III; and Salvatore Pelullo (a businessman with convictions for bank and wire fraud) were also seized. Law enforcement officials also found two handguns at Scarfo's home; as a convicted felon, Scarfo could be charged with felony unlawful possession of a firearm. Based on the seized documents, federal prosecutors alleged that Scarfo and Pelullo took control of FirstPlus Financial Group in June 2007 and "transferred several million dollars between June 2007 and May 2008 to corporate entities controlled by Pelullo and Scarfo Jr." A later estimate put the amount of stolen money at $4.86 million. Federal prosecutors believe that Scarfo, Pelullo, and FirstPlus Financial officers engaged in bank fraud, mail fraud, wire fraud, interstate transportation of stolen property, and money laundering. They also accused Scarfo of using the bank to make numerous real estate deals, including the purchase of his Egg Harbor Township home. Scarfo's close friend and associate, Andrew Merola, was sentenced in late October 2010 to 10 to 12 years in prison for fraud, extortion, labor racketeering, loan-sharking, and sports betting. Law enforcement authorities revealed that some of the 39,000 wiretapped conversations in the Merola case include discussions of Scarfo's allegedly illegal activities concerning FirstPlus.
Read more about this topic: Nicky Scarfo Jr.
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