Facing new fields of fraud
By JEFF TESTERMAN
Published May 20, 2007
In the 1990s, Peter J. Porcelli made millions with laser printing and junk mail and poured part of his fortune into the Tampa Bay Smokers, a fast-pitch softball team that featured a cigar-chomping mascot and the best players money could buy.
Porcelli became the king of the sport as his Smokers won two world championships in three years.
But Porcelli was also gaining attention for another kind of fast pitch, a deceptive direct-mail and telemarketing come-on that cheated consumers.
Two months ago he was indicted on conspiracy and fraud charges involving a credit card scam that targeted 165, 000 victims. He pleaded guilty Friday to all 19 counts.
Now, state and federal investigators are scrutinizing a nonprofit he set up and a mortgage company he ran. The two Clearwater businesses - the Safe Harbour Foundation and Silverstone Lending - worked hand-in-glove to target desperate homeowners facing foreclosure and enticed them into short-term, high-risk loans that may violate Florida laws.
The state Office of Financial Regulation says it is looking into whether Silverstone violated Florida's Fair Lending Act, and U.S. postal inspectors say they have opened a criminal investigation into the activities of Safe Harbour and Silverstone.
The two agencies aren't revealing much about their inquiries. But the St. Petersburg Times examined mortgage records and interviewed several Silverstone clients and found a series of problems.
- In 2004, a federal judge issued a permanent injunction against Porcelli and associate Bonnie Harris, banning them from offering "credit-related products, " including loans or financing of any kind. Within 14 months of the injunction, they incorporated Safe Harbour and Silverstone and began a mortgage business.
- The Safe Harbour Foundation bills itself as a nonprofit. But the foundation is not listed among exempt charities on the IRS Web site or registered with the state of Florida. Nor did the foundation's registered agent, Thomas C. Little, respond to a written request to provide documentation about the nonprofit status, as the law requires.
- In its literature, Safe Harbour warns of "companies who look to profit from your misfortune." Yet the foundation collected fees of thousands of dollars for its automatic referrals to Silverstone, a company with whom it shared a Clearwater office suite. Safe Harbour also lacks the state license required to collect fees for mortgage referrals.
- Silverstone loans were typically written at 18 percent, the maximum Florida allows for home loans. Many loans included fees that pushed the rate to as much as triple the state's legal limit.
Porcelli, 55, of Oldsmar, declined to be interviewed. "There are a lot of things I'd like to tell you, " he said. "I've tried to help a lot of people. But I don't want this to be a character assassination."
He referred a reporter to two of his attorneys, Lee Atkinson and Ronald K. Cacciatore. Atkinson declined to comment. Cacciatore said Porcelli "has written no new mortgages since December, and he will not be writing any new mortgages."
"That you can speculate about, " Cacciatore said. "That's the only statement I'm prepared to make."
For Calvin Lewendowski, 55, the halt in Silverstone loans comes too late. A roofer for 25 years, he scrimped for the down payment to buy his first home, in North Port in Sarasota County. He faced foreclosure after the housing slump led to a downturn in his handyman business.
Along came the Safe Harbour flier and the referral to Silverstone.
"We needed about $20, 000, but the loan they made us was $35, 000, " he said. "And it had the option for them to take our house. I was completely naive. I didn't know what I was doing when I signed that loan."
When Lewendowski couldn't pay Silverstone after six months, Porcelli called him on a Friday and said he had to vacate his house right away. Lewendowski begged for more time. He had found a small rental unit but hadn't moved his furniture. Porcelli said he'd give him two more nights - if he overnighted a check for $1, 000.
Lewendowski sent the check but could not get all his furniture out before the 48-hour deadline. Left behind and lost: tools, glassware, an entertainment center, an imported china cabinet.
"You hear about this kind of thing on the news, " said Lewendowski. "But you never expect it to happen to you. It is so cold-blooded."
* * *
Porcelli's early work history includes a personal bankruptcy and a stint selling Exquisite Eel wallets from a University Square Mall kiosk. He struck it rich with Marketing Response Group and Laser Co., a printing and direct mail outfit that brought in $42-million a year and was a semi-finalist for Tampa Chamber of Commerce small business of 1995.
About the same time, Porcelli founded the Tampa Bay Smokers, stocking the fast-pitch team with nine players from the legendary Clearwater Bombers and putting them to work at Marketing Response Group.
The team, financed by an unheard-of $500, 000-a-year budget from Porcelli and sporting 1920s throwback uniforms of virgin wool, won the International Softball Congress world championship in 1996.
The 1996 documentary film Fastpitch features Porcelli as the win-at-all-costs Smokers owner triumphing over ragtag teams whose players dig into their pockets to meet travel expenses.
Dapper in a cream-colored, double-breasted suit and posing by a yacht and Mercedes sports car, Porcelli says, "I firmly believe I was endowed by a sense of destiny, and with more talent than a human being really deserves.
"I like being the antihero, " he adds. "It gets the job done."
That year, the Federal Trade Commission sued Porcelli and Marketing Response Group, saying "Pack Your Bags!" sales pitches for free trips and guaranteed awards were deceptive; a promised free vacation cost as much as $894. He settled with the FTC.
His company filed for bankruptcy. The Smokers won another championship in 1998, then disbanded, with Porcelli blaming lack of local support.
Next, Porcelli moved from direct mail to credit card telemarketing with several new companies, including Largo-based Bay Area Business Council. But according to court records, Porcelli's new business consisted of boiler rooms where cold-callers collected fees for a MasterCard that never materialized.
FTC investigators said callers coaxed bank information from victims to collect a $200 membership fee but sent out only a dummy credit card with a MasterCard logo and a phony magnetic strip on the back.
The FTC said Porcelli's practices "amounted to little more than thievery" and shut down his call center companies.
In April 2004, a federal judge ordered Porcelli's companies to repay $12.5-million to consumers.
But by then, Porcelli and several of his companies had filed for bankruptcy. At the time, he owned a $6.27-million Belleair home called Millennium Sunset but said he had just $100 in his checking account and was collecting $1, 100 a month in unemployment.
Porcelli started over. He became field manager for a new fast-pitch team, the Calgary Diamonds, and prepared to launch a career in mortgage lending.
* * *
After consumer complaints about Silverstone Lending, state regulators opened an investigation and interviewed Porcelli in January.
He said he had a letter from a Pinellas lawyer, Michael W. Gaines, "stating there was no problem with what he was doing" with his business. Gaines' law license would be suspended in April for his use of heroin, morphine and methadone, and his misrepresentation to the Florida Bar about his drug use.
Porcelli told the regulators that he had no mortgage experience but was tutored by former associates in Las Vegas.
Investors in Silverstone included a Las Vegas company called MT25, and Southeast Advertising, a Clearwater company Porcelli said has "hundreds of millions" to invest.
The president of Southeast is Las Vegas native Tony Amico, whose grandfather and uncle were crime family bosses in Rochester, N.Y., involved in extortion and illegal gambling. Amico was charged with running an illegal gambling operation in 1986 and pleaded to a reduced charge that carried no jail time.
Amico did not return calls from the Times. Five years ago, he told the newspaper that loans were "his easiest investment, " because, "if they don't perform, you end up with the property."
A number of Silverstone's loans made around Florida were later sold to Amico's Southeast Advertising.
In his interview with regulators, Porcelli said he deals "strictly" in the foreclosure business, and "works mainly" with Safe Harbour Foundation to find homes whose owners have plenty of equity. Porcelli neglected to say that he incorporated Safe Harbor and that the foundation and Silverstone shared an office at 12890 Automobile Blvd. in Clearwater.
It took Barry Whitaker months to make that connection. A 62-year-old Vietnam veteran with a home in Oldsmar, Whitaker fell behind on his mortgage payments after diabetes forced a job change. In the mail came a flier from Safe Harbour.
The man who answered the toll-free number asked about his equity. The home was worth $260, 000, Whitaker told him, and he owed a little more than $100, 000.
Safe Harbour ordered an appraisal and called back to tell Whitaker, "We'll be going with Silverstone lending."
"I'd never heard of them, " said Whitaker. "But at the time our credit rating had slipped and we were backed into a corner."
Whitaker needed about $10, 600 to bring his first mortgage current. But the amount of the six-month loan was $30, 000. Included in the costs: $7, 500 to Safe Harbour; $1, 500 to MT25, the Las Vegas investor; $400 to attorney Gaines; $200 to Attila Toth, the "mobile notary" sent to collect signatures late one night.
Whitaker said that Toth, Hungarian-born, spoke broken English and sounded "like Dracula."
He was polite but could answer few questions about the closing papers, including the option agreement that came with a $100 check signed by Gaines, the attorney.
Determined to do whatever he could to save his home, Whitaker scurried across the street to find a neighbor to witness his and his wife's signatures.
Only later did the Whitakers learn that if they failed to pay off the entire $30, 000 loan after six months, the option allowed Silverstone to buy their $260, 000 home for $142, 000.
Whitaker filed complaints with state regulators and postal inspectors. "We've told everyone we can think of, " he said. "And for now, anyway, we still have our home."
This month, a postal inspector visited the Clearwater office suite off Ulmerton Road used by the Safe Harbour Foundation and Silverstone. No one was there.
Visible through windows were papers strewn about the floor. On the wall was a map with a dozen or so counties shaded - the same places where Silverstone has done business.
In a Dumpster adjacent to the office, a computer was discarded, along with most of its parts. Missing was the computer's hard drive.
Also discarded: several envelopes holding Safe Harbour fliers mailed to foreclosure victims, then returned, undeliverable.
Times researcher John Martin contributed to this report. Jeff Testerman can be reached at (813) 226-3422 or firstname.lastname@example.org
12 years of trouble
1996: The Federal Trade Commission sues Peter J. Porcelli, his Marketing Response Group and three other companies, saying their direct mail campaigns offering guaranteed awards and free trips are deceptive and fraudulent. Porcelli institutes business reforms and settles with the FTC.
2002: The FTC shuts down Porcelli's Bay Area Business Council in Largo and sues Porcelli and seven companies, saying a telemarketing scheme offering interest-free MasterCards is illegal and has defrauded 90, 000 consumers.
2003: Porcelli, who owns a $6.27-million home in Belleair and two Mercedes, files for personal bankruptcy. He says he has $100 in his checking account and gets $1, 100 a month in unemployment benefits.
2004: A federal judge orders Porcelli's Bay Area Business Council to repay consumers $12.5-million. The judge issues a permanent injunction banning Porcelli from offering credit, loans or financing of any kind.
2007: A federal grand jury in Illinois issues a 19-count indictment against Porcelli alleging conspiracy, wire fraud and mail fraud. The indictments say he operated call centers in the United States, Canada, India and the Caribbean that tried to defraud 165, 141 consumers out of $12-million with phony offers of interest-free MasterCards. Porcelli is accused of setting up shell companies and deleting portions of recorded sales pitches to disguise the fraud.
He pleads guilty to all charges and is free pending sentencing Aug. 24.
The U.S. government also has filed papers to seize his $549, 000 home in Oldsmar.
Ongoing: U.S. postal inspectors and the Florida Office of Financial Regulation are investigating the Safe Harbour Foundation and Silverstone Lending, two companies Porcelli established to offer high-interest, short-term loans to homeowners in foreclosure. The loan operation apparently violates the injunction issued against Porcelli in 2004. Also, fees added to the Silverstone loans may push the annual percentage rate to double or triple the 18 percent ceiling set by Florida law.