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Mobsters Accused of Taking Over Subprime Mortgage Firm

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Yesterday, Illinois congressman Bobby Rush compared the NCAA to the mob, based on its control over players’ lives. Meanwhile, in New Jersey, an actual mobster, along with twelve others, was indicted earlier this week for more traditional criminal activities, albeit with a slight twist.

Nicodemo "Junior" Scarfo, son of former Philadelphia crime boss "Little Nicky" Scarfo, has been busted for participating in a scheme that siphoned millions of dollars from Texas-based mortgage company FPFG, the New York Post reports. Scarfo and his associates' plan featured mafia staples like extortion and threatening to sell board members' children into prostitution.

The scheme involved setting up mergers with sham companies and lucrative consulting contracts for Scarfo and his associates. The mobsters used the proceeds to buy fancy cars, multiple homes, and even an $850,000 yacht, named “Priceless.” When the feds seized the yacht, they found a huge cache of weapons and ammunition.

Scarfo allegedly took over FPFG in 2007. The company filed for Chapter 11 in 2009. On its website, the last update prior to the bankruptcy announcement discusses the company’s compliance in an ongoing investigation by the DOJ. The statement also mentions investigations into two FPFG board members. One of them, former CEO John Maxwell, is accused of buying a .357 Magnum for convicted felon Scarfo along with participating in the scheme.

FPFG, which specialized in subprime loans, doesn't seem like a traditional target for mafia extortion. However, the cash-rich business provided the criminals with over $12 million in assets. From all appearances, the mob wanted its piece of the booming subprime industry.

In other mafia news, game developer Zynga’s Mafia Wars 2 is currently the most popular game on Facebook. This comes as good news for a developer that plans an IPO later this month.

Mafia Wars 2’s impressive performance stands as especially important in the face of a recent SEC investigation into the company’s financials. According to Adweek, the SEC has requested details on the amount of money received from individual players, and the revenues associated with different games. Zynga’s IPO is currently expected to receive a valuation higher than Groupon’s $11.5 billion.
POSITION:  No positions in stocks mentioned.