Daidone pleads guilty to probation violation

Mob associate Daniel Daidone, who served nearly three years in prison for his role in a Camden City corruption case, pleaded guilty yesterday to violating the terms of his supervised release by associating with convicted felons.

Daidone, who was released from prison in July 2006, could be sent back to jail for up to two years when he is sentenced on July 22.

His illegal contacts surfaced during a multistate FBI financial fraud investigation that has targeted FirstPlus Financial Group, a Texas company with alleged ties to Salvatore Pelullo, an Elkins Park businessman with two fraud convictions, and mobster Nicodemo S. Scarfo.

Scarfo, son of jailed Philadelphia mob boss Nicodemo D. "Little Nicky" Scarfo, has convictions for bookmaking and racketeering.

Daidone worked for a FirstPlus subsidiary in the Philadelphia area and, according to the complaint against him, met with Scarfo and Pelullo on numerous occasions without reporting those contacts to his probation officer.

Assistant U.S. Attorney Steven D'Aguanno declined to comment about the FirstPlus investigation but confirmed that Daidone's supervised-release violations stem in part from that probe.

Daidone, a longtime mob associate, is a former official with the Atlantic City bartenders union, which in the early days of casino gambling in Atlantic City was controlled by "Little Nicky" Scarfo.

In the late 1990s, Daidone became a top associate of mob boss Ralph Natale and the point man in Natale's plans to bribe elected officials in Camden for city contracts.

Daidone, 64, declined to comment yesterday as he left the federal courthouse in Camden with his wife and lawyer.

During a brief hearing before U.S. District Court Judge Joseph Rodriguez, he pleaded guilty to filing false monthly reports with his probation officer between February 2007 and April 2008. In each report, the complaint alleged, Daidone answered "no" when asked whether he had had any contact with a convicted felon.

In fact, the complaint alleged, he had been in repeated contact with Scarfo, Pelullo, and three other convicted felons. Two of those were Philadelphia-area FirstPlus employees Anthony Persiano, who has a conviction for murder, and Salvatore Piccolo, who has a conviction for drug dealing.

Other violations cited in the complaint allege that Daidone, a New Jersey resident, traveled without permission from his probation officer to attend a party in Pennsylvania for Pelullo in April 2008.

The complaint also alleges that while he was with Nicodemo S. Scarfo and Pelullo in Florida in February 2007, Daidone spoke on the phone with "Little Nicky" Scarfo.

That phone conversation was recorded, according to the complaint.

In July 2003, Daidone was convicted along with former Camden City Council President James Mathes on conspiracy and fraud charges tied to the Camden City corruption case. Former Mayor Milton Milan was convicted separately of charges stemming from the same investigation.

Natale, who became a government witness, testified against Milan, Daidone and Mathes.

Daidone was sentenced to 33 months in prison. Since his release, he has been working for two companies, according to his lawyer, Mark W. Catanzaro.

One of those companies, Rutgers Investment, is a subsidiary of FirstPlus Financial. Rutgers, a mortgage company, has offices in Wayne and in Irving, Texas.

FirstPlus, a onetime high-flier in the subprime mortgage-lending business, fell dormant after the economic turmoil of the late 1990s.

About 18 months ago, however, the firm began investing in companies here, in Texas and in Florida. Sources say that was about the same time Pelullo began to exert behind-the-scenes decision-making authority at the company.

Those investments, how they were financed, and who benefited from the buying and selling are at the heart of the FBI probe.

It is unclear what role Scarfo played in any of those companies, but, among other things, investigators are looking at the circumstances surrounding a mortgage Scarfo obtained on a new, $500,000 house in Egg Harbor Township earlier this year.

Details about the FirstPlus investigation surfaced on May 8 when the FBI raided nearly two dozen locations, including company offices here and in Texas, and the homes of Pelullo and Scarfo.

The search warrants listed 43 individuals and companies in which authorities were interested. Most of the companies were FirstPlus subsidiaries that had been purchased within the previous 18 months.

Daidone was on the list, as was Rutgers Investment.

To date, no one has been charged in the case.

According to the search warrants, the investigation is focused on mail fraud, wire fraud, bank fraud, the interstate transportation of stolen property, money-laundering, and racketeering.

In addition to seizing documents, records and computers, FBI agents said they found handguns in the homes of Pelullo and Scarfo, according to documents and individuals familiar with the investigation.

Because of their criminal records, both could be charged with possession of a gun by a convicted felon, a federal offense that carries a five-year prison sentence.