Born to Steal: When the Mafia Hit Wall Street (6 page)

He could afford it. He could afford practically anything if he set his mind to it. And Roy Ageloff was very ambitious when
it came to setting his nimble and unrestrained mind.

This was going to be Hanover Sterling’s first full year of operation. He had a sweet deal. He was pulling in 45 percent of
the trading profits. That amounted to a million or so bucks a year, and he declared every penny of it to the IRS. Roy Ageloff
could make big-time money legally, for that was the beauty of Wall Street, which had jobs for the up-and-comers and the silver-spoon
crowd alike. Roy was no silver-spoon baby. He was a guy from a lower middle-class family. And now he had arrived. Hanover
had arrived.

Every morning he drove out of the garage of his beautiful, big, wide, brick, massively windowed new house at 163 Ardsley Street,
and drove in one of his gorgeous new cars over to Clarke and the expressway and the bridge to the city. He came in to the
office whenever he wanted. He was boss. Not boss on paper, but the real boss. The paper boss, Lowell Schatzer, had a little
office near the front entrance. Roy had the corner office, with a view looking northeast over the bridges, over the Fulton
Fish Market, toward Queens and the majestic Midtown skyline.

What a house it was. It had to be big. People, in his world, judged you on what you owned, how you dressed, how you lived.
His new house was twice the size of both halves of the house on Blythe. It had huge vaultlike windows etched in a fine Beaux
Arts pattern. There was a gazebo to the side of the house. Out front, cast-iron street lamps. Big ones with hanging white
globes, five for each lamp, the kind that public buildings used to have in the days when public buildings were built to impress
the public. Roy’s house wasn’t a mansion but rather an institution in only the best sense of the word. It could have been
a small-town city hall or maybe a library or courthouse somewhere, in a town with a historic preservation movement.

What a transition for a kid from Brooklyn. He grew up there. Was proud of it. He was from Midwood, the Brooklyn of tough Jews,
and Roy was a tough Jew. His house in Midwood, a two-family house—the Ageloffs had the left side—was shabby and had TV antennas
on the top and was a short block north of Kings Highway, the main shopping street. Through the 1970s, one of the borough’s
last hangouts for tough Jews was still going strong on Kings Highway, out by the D-train station. It was the last of the old
Jewish cafeterias in Brooklyn, Dubrow’s. The Irish had bars, the Italians had social clubs, while the Jews had candy stores
and cafeterias. But the neighborhood got older, the tough Jews died or moved to Florida, just as Roy’s parents did. The cafeteria
closed. All the old Jewish cafeterias in the city closed, quietly, unnoticed and unmourned, by the mid-1980s. The last, another
Dubrow’s, shut in 1985. It was on Seventh Avenue, in the Garment District, where there were still a few aging, tough Jews.

Roy might have gone into the garment business fifty years before. But the barriers had come down. Democracy had come to Wall
Street. Working-class guys were in the front office. They were manning trading desks and working on the floor of the New York
Stock Exchange and selling people terrific little stocks, penny stocks. You didn’t need an MBA to succeed in penny stocks
or squatting at a trading desk or screaming out orders on the exchange floor. What you needed were the kind of inborn characteristics
that come from being on the street. The ability to talk, to persuade, and maybe to lead. Roy had all that. He was a powerhouse
broker. Okay, not educated. He failed the Series 7 test—that’s the one all the brokers had to take, testing you on dividend
yields and ethics and other crap—twice before he passed. But everybody on Wall Street knew that the Series 7 didn’t measure
what you really needed to become a broker—which was in your guts as much as it was in your head.

Roy got his start on Wall Street at an outfit that employed guys like him—guys who could sell. Guys who knew the gambling
mentality because investors were really gamblers at heart, so many of them. He got his training at a place called J. T Moran
& Company. When Roy knew him, in 1987 and 1988, John T Moran was a young guy, in his early thirties. He had just started the
firm a year before. He had a respectable background. He was a man of moderation—a nonsmoker.

“He had very loyal employees,” said one former Moran broker who worked at the firm in the 1980s. “But he’d always use the
analogy: ‘Whoever’s not producing, and selling so many shares of this stock or that stock or that bond, was only a footstep
away from that hot dog stand outside. Now, what would you rather do,’ he’d say. ‘Be Giussepe at that hot dog stand or here
being a stockbroker selling stocks?’ They were always ‘tomorrow’ stocks. Not making money today, but tomorrow—just you wait
and see.”

Moran’s brokers could sell that kind of hope. Blue chips were yesterday stocks. Penny stocks were stocks for the future. Dream
stocks. Not dreary, dull, boring stocks like utilities that paid penny-ante dividends. These were little companies, start-ups,
fresh companies. Sure, they hadn’t started making money. Of course not. Neither did IBM and GM when they were starting out,
neither did Thomas Edison before he got that lightbulb in the stores.

They didn’t cost in the pennies, really. “Penny stock” was like a lot of dumb Wall Street expressions, this one coming from
the old days when penny stocks literally cost in the pennies. By the 1980s, all that a “penny stock” was, in the generally
used definition of the term, was a stock that sold for under $5. And they weren’t always “stocks” at all, but very often they
were sold to the public as “units.” A unit included a share of stock and something called a “warrant,” which is basically
a piece of paper that you can convert into stock at a specific price in a specified period of time. Kind of Wall Street’s
version of those nice coupons the A&P sometimes gives you on the back of the checkout receipt—buy five more rolls of toilet
paper at 50 cents off!

What great stocks. Brokers like Roy could sell them because these stocks sold themselves. There was Phonetel, which had pay
phones in a bunch of terrific shopping centers in Ohio. There was Hygolet Brill, which made a brand-new type of toilet seat,
specially hygienic, satisfying a need of many people on the go. There was another outfit that sold respirators for people
and horses alike—a company as clean and fresh as the air itself. And then there was Moran. The company was underwriting its
own debt, selling bonds in the company to the public. Getting a piece of a mint company like Moran was maybe the biggest thing
the company had to offer at all. Every broker has to sell himself, and so was Moran. Selling himself. Literally.

Roy moved on to another firm in April 1988—you had to keep moving, keep seeking opportunities—but Moran kept on growing, kept
on getting brokers and customers and stocks to sell. By 1989 it wasn’t a small brokerage anymore. It was becoming one of the
biggest brokerage firms on Wall Street that sold stocks to the public, one of the top twenty, with three hundred brokers.

Moran never got much bad press or publicity of any kind. So it came as something of a surprise when the firm shut down at
the beginning of 1990. But the real shocker came on June 26, 1991, when John Moran was indicted by a federal grand jury in
Brooklyn. The indictment said that Moran used brokers to push stock on the public at inflated prices—including the shares
of his own holding company, the one that was issuing the bonds, J. T Moran Financial. Moran and three other top Moran officials
pleaded guilty.

Moran’s stocks were basically selling at prices that John Moran determined. It was a bit like a horse race in which the fillies
in win, place, and show are all predetermined, and where even the amounts paid out at the pari-mutuel windows are fixed in
advance. Stocks were easier to dope than any horse, because Thoroughbreds have minds of their own and can run out of control,
no matter what the jockeys want. A stock is not like that. A stock can be controlled more surely than any fifteen-hundred-pound
filly. A stock is more like a trotter. A horse at a trot can be controlled. For years the trotters had a bad rap among gamblers,
a rap that they were fixed maybe a little too often. Penny stocks had that kind of rap. Blinder Robinson & Company and First
Jersey Securities, which glommed most of the publicity, and other outfits like Hibbard Brown and Investors Center, gave penny
stocks that kind of reputation.

Moran was just as big as First Jersey and Blinder, and he never received a fraction of the attention while he was still in
business. There were a few penny stock prosecutions here and there, some people actually being sent to jail. But Blinder Robinson’s
Meyer Blinder and First Jersey’s boss Robert Brennan kept prosecutors at bay for years, and they were overshadowed by other
financial miscreants. This was the time when the insider trading/arbitrageur/junk bond scandals were dominating the financial
news, when Michael Milken and Drexel Burnham Lambert and Ivan Boesky and Dennis Levine were all mired in the public consciousness
as a kind of massive pinstriped mÉlange. Penny stock scamsters, who actually ripped off the public, were definitely not on
the front burner—when they were on the stove at all.

Stay out of the papers. It was a lesson Ageloff could have learned if he had been paying attention. He was a small fry at
J. T Moran, and his name never surfaced at the time, but if he was game he would have found the key to success, or at least
to nonfailure, in his world: Avoid publicity. Don’t attract SEC attention. Keep out of the limelight and, if possible, out
of the brokerage entirely. Don’t put your name on the books at all—at least not as a manager, not if you can avoid it. And
there were other lessons, lessons that Moran didn’t learn, but that Roy did, after he was boss.

They were not lessons that Louis had to learn—or even know about—when he was at Hanover. In fact, when he first started work
at Hanover he only faintly knew that Wall Street existed. He knew that it was a street way downtown, and that his mother used
to work there. He also knew that his mother didn’t want him to work there. Not that he cared. In fact, Louis didn’t have the
slightest idea what business Roy was in. But he knew that Hanover Sterling had to be a cool place. From the little he saw
of Roy, he saw that Roy would be a good guy to work for. He had a kind of charisma, a magnetism. Louis knew that even from
the short time he had seen Roy at the gas station.

First he had to get a suit. Louis had one his mother had gone with him to buy a couple of years before, but he had outgrown
it and the thing was stupid anyway, out of style. So Louis went to Oaktree in the Staten Island Mall and bought a nice $90
suit. Navy blue. Nice material. But Oaktree brand, cheap. It still had its factory creases the following day, when he took
the Staten Island Rapid Transit to the ferry terminal at St. George.

If Louis had looked carefully at the skyline on the way over on the ferry, he could have seen 88 Pine Street. You could just
make it out, if the sun angle was right. Pine was the first street north of Wall, and its name went back to the days when
maybe there really were trees in Lower Manhattan, as well as a wall. Pine was a narrow vestige of the old Dutch days, barely
four car-widths wide. The Hanover habitat was a block from the East River waterfront, where Pine intersects with Water Street,
which is spacious and used to have an El train before the Third Avenue El was shut down in the early 1950s.

In those days, the organized crime of the waterfront—the shakedowns, the loan-sharking, the strong-arm rackets—were about
as alien to Wall Street as the burly, tough-talking longshoremen who had their own separate world down by the Wall Street
waterfront. They existed, for all purposes and intents, on a separate planet from the men in suits in the offices high above,
on Wall and the adjoining streets. But there were intersections. Confluences of interest. For years, the Street was beset
by Mob-linked securities-theft rings, with one, never apprehended, operated by a crew calling itself the “Forty Thieves” that
worked out of a bar across South Street from the fish market.

Elsewhere in the city, Guys occasionally surfaced in stock scams. A Brooklyn gangster named Carmine Lombardozzi made the papers
in the 1960s as the “The Doctor”—the Mob’s Wall Street “financial wizard” and “money laun-derer.” “Johnny Dio” Dioguardi,
an old-school Garment District gangster best known for supposedly blinding columnist Victor Riesel, was sent to prison in
1973 for his role in a stock-manipulation scheme.

The Mob’s early stock scams were small operations, profitable but scattered. The Street’s potential was never exploited. It
wasn’t anything like the fish market, which was a franchise handed down from father to son to cousin over the decades. By
the early 1990s the Mob’s days in the Fulton Fish Market were numbered. But they were not over just yet. The last Guys in
charge of the Fulton market, Alphonse “Allie Shades” Malangone and Alan Longo and Vincent Romano, would park their cars downstairs
from 88 Pine, in the lot where the Hanover brokers parked their cars, and not pose as they got their blurry pictures taken
by the cops. Roy could look down and see them. And that made sense. I. M. Pei, the noted Japanese architect, designed 88 Pine
for the men in the suits, to look down, literally and in every other way, on the waterfront directly below. In the words of
the
AIA Guide to New York City
, this “white, crisp elegance of aluminum and glass” was “the classiest new building in Lower Manhattan.”

When Hanover moved to 88 Pine in June 1992, it was one of the very few times that Hanover made the papers back then. The
New York Law Journal
reported that this “stock brokerage firm” had relocated to Pine from 5 Hanover Square. “This was an excellent opportunity
for Hanover Sterling to acquire the space it needed to accommodate its continuing growth,” the leasing agent was quoted as
saying. The
Law Journal
went on to point out that “the company has doubled in size in the past few years.”