Domestic Boiler Room Stock Scam Operations
Oct. 27, 2003 — The U.S. Attorney's Office and lawyers for Paul
R. Johnson and co-defendant John Cook II rested their
cases last week, eight weeks after the start of a trial that saw
everyone from strippers to mob stoolies take the witness stand.
While former Link Express and Pony Express CEO Johnson
scribbled notes furiously as testimony wound down last Thursday,
jurors began looking forward to a two-week hiatus before closing
arguments begin Oct. 29.
The securities fraud extravaganza could net both men 20 years in
jail. The main part of Johnson's trial ended Oct. 16 as Brian
Darrow, who said he was a Bonanno crime family associate, was
led into the courtroom in shackles. He took the stand to testify
against Johnson as part of a plea deal.
Blond, clean-cut and dressed in blue prison-issue scrubs, Darrow
spoke deliberately and confidently about his ties with the Bonanno
and Rubbo crime families as a self-admitted telemarketing fraudster.
He then testified he sold Pony Express securities for Johnson under
Darrow also testified to a deal struck with the government that
allowed him to plead guilty to one count in a massive telemarketing
fraud and organized crime indictment while dozens more counts were
dropped. Prosecutor Robin Rosenbaum was successful in getting Darrow
to admit the government was under no obligation to release him, and
could pull its deal at any time.
"In discovery, it showed I worked there," Darrow said
of his job selling securities in Pony Express, one of Johnson's package
A federal indictment unsealed in March alleged 29 people - including
Darrow, Bonanno underboss Anthony Graziano and Bonanno soldier John
Zancocchio - of telemarketing and wire fraud, money laundering
and illegal gambling. Graziano, who was arrested in March in New
York, is also accused of conspiring to murder two associates from
another crime family.
Darrow testified Johnson knew about his past, including his crime
family connections, saying he used it to get Johnson to hire him.
Darrow used two aliases working for Rubbo and two aliases working
for Johnson, he testified, adding there "absolutely" was
an element of deception in all his boiler room operations: He lied
on the phone to entice investors.
Darrow said he raised between $300,000 and $400,000 for Johnson
Testifying he was paid $5,000 a week by the Rubbos, under defense
attorney David Joffe's cross-examination, Darrow admitted he has
yet to pay taxes on those earnings.
When queried as to why, the incarcerated Darrow said, "I haven't
had the time."
Traficanti and Gambino crime family members were also named in his
indictment, Darrow acknowledged under cross-examination. Authorities
allege that suspects in Darrow's case used telemarketing firms to
get money from people with a promise it would be exchanged for foreign
currency. The money was pocketed in what authorities allege was a
foreign exchange scam.
As part of the March indictment, Darrow, 35, of Fort Lauderdale,
was accused of bilking people out of money in an mob-run, boiler
Darrow testified at Johnson's trial that he managed two of the alleged
boiler rooms named in the indictment - International Exchange and New World Exchange in Boca Raton.
While he denied he was a crime family member, Johnson conceded he
was "directed to" do things during the time Darrow and
his crew sold Pony Express securities from an office inside Gold
Key Auto on Federal Highway in Fort Lauderdale, an exotic car dealership.
Johnson would not elaborate further, noting reporters' presence
in the courtroom.
On the stand, Johnson admitted he shared a bank account with the
owner of Gold Key Auto "to cover invoices."
Darrow testified he sold Johnson's securities to new investors in
Utah, Georgia, Texas and California. A few key investors in Link
Express - the original corporate entity of Pony Express - were also
tapped, but most were shunned, he said.
Johnson told him he "should stay away from them," Darrow
testified, noting that checks were cashed in check-cashing stores
as they came in.
But sometimes the money coming in wasn't around long enough for
Darrow to pay his sales crew, he testified, suggesting Johnson was
spending the money before Darrow got his 27 percent commission. Darrow
also received a $10,000 fee "up front" from Johnson before
selling the private placements offerings, he said.
In earlier testimony, Johnson co-defendant and former broker Cook
attempted to distance himself from the Link president, claiming he
warned Johnson that his alleged cocaine use and the purchase of his
South Beach nightclub Bacchanalia were bad for business,
especially during a pre-IPO phase - even if bought with Johnson's
Cook, who said he never witnessed Johnson using cocaine, dated
and lived with Johnson's sister, Lisa, around the time Johnson bought
the nightclub. During that period, Johnson could not be reached for
long spans of time either in person or on the phone, Cook testified.
That worried Cook, who wanted answers for his shareholders, he told
Following Cook's testimony, Joffe repeatedly asked for a mistrial,
saying he and his client agreed to team up with Cook and his attorney
Bob Adler in a co-defense on the condition that no damaging testimony
would be offered by Cook.
Judge Donald M. Middlebrooks denied the motions. The climax followed
a two-week span where Johnson took the stand in his own defense.
Alternately resolute and rambling, the 32- year-old entrepreneur
sought to prove that a conspiracy by former colleagues led to the
demise of his Broward-based package delivery start-up.
"When the bully wants to take your lunch money, you take a
beating, but you fight back," Johnson testified. At the end
of the day, Middlebrooks, who implied he had heard and seen enough
of the paper trail case, rebuffed Joffe's request for rebuttal of
the prosecution's rebuttal witnesses.
"I'm having a hard time following these numbers flying around," he
said. "I suspect the jury is, too."
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