The Sopranos in penny stock land…

November 4, 2011

One of the things footnoted readers tell us fairly regularly is that they want better follow-up on some of the companies that find their way onto this site. Yesterday, we obliged by providing an update on Chesapeake Energy (CHK) whose CEO managed to get the company to pay for his map collection back in 2009.

Today, we’re updating another weird story from 2009 involving a much smaller company, the penny stock firm FirstPlus Financial (FPFX). While FirstPlus stock has actually climbed by 33% since we last looked at them in March 2009, it’s definitely a reminder of why penny stocks are only for the bravest of the brave (or perhaps we should type the stupidest of the stupid).

That’s because earlier this week, we learned that federal prosecutors charged that the company was actually taken over by the Mob. We’re not talking about a group of penny stock freaks — the kinds of folks you might find on some remote Yahoo message board. We’re talking about the actual Mob, in this case, the Lucchese Family. Here’s a snip from the Bloomberg story that broke earlier this week:

Scarfo and Pelullo forced the new management to approve the acquisition of companies they owned that had little, if any, value, according to the indictment. Scarfo and Pelullo looted FirstPlus of hundreds of thousands of dollars through phony consulting agreements and used the stolen money to finance lavish lifestyles that included —a luxury home for Scarfo, expensive automobiles, a yacht and jewelry, the indictment said.

—The defendants gave new meaning to —corporate takeover—, U.S. Attorney Paul Fishman said in a statement. —Investors should be free to invest in public companies without fear that violent criminal organizations are their puppetmasters.

The whole idea that a publicly traded company can be taken over by the Mob seems like something that Christopher Molisanti might have cooked up during some drug-infused episode of the Sopranos.

We have to admit that when we first saw the 8-K that FirstPlus filed back in 2009, it definitely raised some eyebrows. But even we never imagined that it could be related to organized crime, as the prosecutors allege.

Given that, we can only imagine what’s behind the whole Johnny Earl Satterwhite situation that we footnoted back in June. Satterwhite, you might recall, made 61 separate filings to the SEC, claiming to own large chunks of major companies, including Microsoft (MSFT) and Exxon Mobil (XOM). As best as we’re able to tell, there’s been no charges filed against him — either by the SEC or by federal or state prosecutors.

Perhaps this will turn into a late-night TV drama fit for HBO too.

Image source: HBO

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