It was June 1, 1999, and the Wall Street bull market was going full steam. The Colombo crime family of New York believed it was about to strike gold: unlimited access to the pension fund of Local 400 of the Industrial & Production Workers Union, worth at the time an estimated $50 million. It was all but a done deal. A potential rival, local vice-president and reputed Colombo family underboss William “Wild Bill” Cutolo (in photo, upper left-hand corner), mysteriously had disappeared less than a week earlier. Local 400 President John Gannone was at the union’s midtown Manhattan office. He was accompanied by stockbroker Frank Persico, a first cousin of acting Colombo boss Alphonse “Allie Boy” Persico. They wanted documents revealing names of all principals connected to the fund. The only thing standing in the way of the family’s big payday was Kathleen Joseph, the fund administrator. But that obstacle proved crucial. The 63-year-old Ms. Joseph, “asked” by Gannone and Persico to provide the names, refused – and apparently lived to tell about it more than seven years later.
Joseph recalled that standoff with mobbed-up union officials this past October 25 at the murder and racketeering trial of Alphonse Persico in U.S. District Court in Brooklyn, N.Y. Federal prosecutors think her testimony will help convict Persico of Cutolo’s murder. “Frank Persico wanted some documents,” testified Joseph. “He wanted the names of the trustees of the pension fund, the name of the attorney for the fund – the actuaries, the accountant.” Prosecutor Thomas Seigel asked her if she gave the documents to them, and she said “no.” Persico’s actions were pretty suspicious from the get-go; he claimed he wasn’t aware Cutolo was missing. Persico promptly installed himself as vice president in his place, without an election, and then demanded to become a trustee of the pension fund, Joseph recalled. There was no opening, so Gannone, who was a member, resigned. Persico then tried to replace the fund manager, Smith Barney, with his own cronies.
It is good fortune, and not Colombo crime family benevolence, that explains why none of the pension money of Local 400 was stolen. As it turned out, there simply wasn’t enough time to steal. Alphonse Persico, son of imprisoned legendary Colombo crime boss Carmine “the Snake” Persico, was among 120 persons arrested by federal agents (“Operation Uptick”) in June 2000 in the largest Wall Street stock scam in history. The following year he pleaded guilty to conspiring with corrupt brokers to fleece thousands of investors out of at least $50 million in pump-and-dump and other schemes, according to FBI-bugged conversations between Persico and other persons, including Bonanno family capo Robert Lino. Persico allegedly got six cents of each share of mob-controlled stock through a sham front called DMN Capital Investments, Inc.
Local 400 was never a clean union because its founder was never clean. William Cutolo created the union after being thrown out of the Teamsters in 1990 for criminal underworld ties. In 1994 he was acquitted of murder of a Colombo rival and conspiracy to kill outside rivals. It was a time of explosive inter-family warfare among New York’s Mafia families. Cutolo had the misfortune to side with Victor Oreno, who earlier had challenged Carmine Persico for Colombo leadership. Cutolo may have escaped the law, but he couldn’t escape the deadly justice of the world he inhabited. His body was never found after his “disappearance” in late May 1999, but he eventually was declared legally dead. That paved the way for the October 2004 indictments of Alphonse Persico and Colombo underboss John “Jackie” DeRoss for the murder of Cutolo.
Cutolo’s death is what enabled DeRoss to rise to underboss in the first place. Not only is DeRoss facing trial for the murder, but he, along with Michael Spataro and Carmine DeRoss III, is on trial for the attempted murder of Colombo soldier Joseph Campanella, who’d led a ruthless shakedown crew in Brooklyn but likewise managed to avoid a conviction. Campanella was shot in several places, but managed to survive. Given all this, it makes sense that Alphonse Persico, according to court testimony, had met with John DeRoss to seek permission to divert $10 million from the Local 400 pension account. Persico is still serving a prison sentence for his role in the stock swindle. His lawyer declined to comment on Joseph’s testimony. (New York Daily News, 10/29/06; other sources).