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Laguna Niguel’s Sicilian Gatsby

Laguna Niguel’s Sicilian Gatsby

By garwom1

“Laguna Niguel’s Sicilian Gatsby”

Luigi DiFonzo has been called “Laguna Niguel’s Sicilian Gatsby”, and with good reason. Like the Gatsby character in F. Scott Fitzgerald’s book he was at one time extremely wealthy and very mysterious. He had a rags to riches story including a significantly checkered past. Working as an FBI informant somehow brought him to California where he would perpetuate his biggest con.

The remarkable mansion DiFonzo built at 3 Inspiration Point, Laguna Niguel was testament to his vast fortune. The home he built is a 14,700 square-foot castle on a hill with panoramic views, Italian marble floors, spiral staircase, 11 bedrooms, and 12 bathrooms. Although, don’t waste a trip to Laguna Niguel to see it because the community as well as the estate are both gated. And based on personal experience I can tell you the guard at the community entrance is less than friendly to “Looky Lou’s.” To put DiFonzo’s wealth into perspective take the virtual tour online of his mansion and property on YouTube just use the address shown above.

Who was this larger than life man running his financial empire from a suite of offices in one of the tallest and most pristine buildings in Irvine, CA? Luigi Miguel DiFonzo was a tall, barrel chested Italian looking man who usually sported a beard. He had for a short time been a professional boxer, and he had spent years weight training including during his stints in prison.

In 1971 DiFonzo was hired for a professional writing role as a script editor for the movie “The Godfather” directed by Francis Ford Coppola. An extremely good job for a guy who never attended college but did have a love for writing as well as the mafia lifestyle. How did this guy from humble beginnings later become a mafia style don with those in his charge kissing the diamond ring on his finger?

In 1998, the year his house was completed, DiFonzo’s wealth was estimated at tens of millions of dollars. His investment firm was called DFJ Italia Ltd. Several professional athletes invested their money with DFJ including former LA Ram Eric Dickerson as well as celebrities such as the fashion supermodel Kim Alexis. DFJ's sales promotion to potential customers included investments in foreign currencies and precious metals all with at least a 20% return on investment.

Luigi DiFonzo had experienced a rough childhood in Massachusetts where his father was a gas station attendant with 4 kids. Luigi was the oldest child and always drew the wrath of his father when his parents fought, which was constantly. In one of his first attempts at writing he drafted a poem when he was 10 years old that read, “Tiny, tiny lips, they bleed, and bleed and bleed/You say it can’t be you it’s because of me/Broken arms, broken knees, tell me why this must be/Am I too little for you to see?” DiFonzo titled his poem, “Too Little to See” and revised it slightly a few years later.

As DiFonzo grew into a man he had a tremendous internal rage and was accused of frequently using physical violence to vent that rage. He did though always have a soft spot in his heart for abused children. Even those that did not like DiFonzo say that he could have been successful at almost anything he put his mind to. But Luigi wanted to distance himself from the boy in the poem who hid from the rath of his father. He thought tough guys and con men were the coolest and wanted to be just like them.

So, the fundamental question is, how did this man who was an accused conspirator in the infamous Chicago Purolator vault heist and later a twice-jailed felon sit atop this financial entity? An equally important question is, who in their right mind would trust him with large sums of money to invest for them? The answer to these questions is both complex and simplistic at the same time.

We’ll start with the Chicago Purolator robbery which would become the largest cash heist in the history of the world as of 1974, some $4.3 million in unmarked bills had disappeared. The money stolen that night would have weighed more than 700 pounds. A few days after the heist authorities arrested the night watchman, Ralph Marerra, as the inside man for the job. Some of the money was recovered at his grandmother’s house under freshly poured cement. A short time after taking Marerra into custody police also arrested Peter Gushi, 27, Pasquale (Patsy) Marzano, 42 who was the alarm man, William A. (Tony) Marzano 32, and James Maniatis, 59 who provided and drove the getaway van. These men were eventually all convicted and sent to federal prison with long sentences.

Authorities also arrested Luigi DiFonzo on Grand Cayman Island. He was there trying to deposit almost two hundred pounds of cash in suitcases, more than $1 million. After his arrest DiFonzo claimed he didn't know the money was stolen. He hired a famous Boston based attorney, Joe Oteri, who soon discovered that his client was a world-class con man. Oteri said of DiFonzo, “he was always true to his friends, but he had a thieving mentality when it came to everybody else.” Oteri was widely known for handling high-profile mob, drug and murder cases. In 1990 Joe Oteri was approached to defend General Manuel Noriega, but he turned down the offer stating that he was just too busy.

During the trial several people testified against the accused burglars in the Purolator case, including at least one witness who linked DiFonzo directly to the robbery. Thanks to Oteri’s defense Luigi DiFonzo was acquitted of all charges the only one of the six Purolator defendants set free. "Unbelievable," the infuriated judge said of the verdict of innocent. Later, much to the court’s chagrin, DiFonzo came away with a six-figure reward for assisting Purolator’s insurer to recover all but $1.3 million of the loot. That amount was never discovered or accounted for during or after the investigation and trials, it remains missing today.

Historically, there has been much speculation over the missing $1.3 million. Some say a portion went to a co-conspirator who died of natural causes before he testified at a grand jury hearing. Some also say that Luigi DiFonzo came away not just with the insurance award, but also a good portion of the missing $1.3M. Not long after his trial was over, and he was acquitted Luigi gave Joe Oteri a new Rolls Royce as a thank you gift.

The guard, Marerra, had early on been considered by both federal and local authorities to be at risk because of the mob connections. Before his trial began Marerra was poisoned and almost died while incarcerated. He lived but suffered from significant, life-long physical problems from the poisoning. Years later DiFonzo penned a story about a mob connected Vatican financier named Michele Sindona, who was also poisoned while in jail; but unlike Ralph Marerra’s outcome Michele Sindona died from the poisoning. It is apparent that the mafia believes stringently in the maxim, “dead men tell no tales” (e.g. Jimmy Hoffa).

To say the least 1974 was not Luigi’s favorite year due to his indictment for the Purolator heist. In Chicago DiFonzo had persuaded investors he was a financial genius extremely well educated who held master's degrees and was hugely successful at a very young age. By the time he was 27 years old DiFonzo had been told by the mob to leave Chicago after defrauding thousands of investors in a commodity trading scam. Supposedly Chicago’s boss of bosses Tony “Big Tuna” Accardo decided that DiFonzo was to leave “The Windy City” for good because of the public uproar.

Accardo and DiFonzo shared a Sicilian heritage, although both men were born in the U.S. Accardo originally worked for Al Capone in Chicago and bragged he was one of the hit men in the St. Valentine’s Day Massacre, although some dispute the assertion. He was though responsible for the murder of 3 burglars and 4 persons close to the burglars who broke into his River Forest, IL home in 1978 while he vacationed at a new house he had recently purchased in Palm Springs, CA. Autopsy results showed that each of the seven men had been strangled and then their throats slit. Years later in 2002 mob turncoat Nicholas Calabrese gave testimony which provided the reason for the murders and helped authorities convict the killers. Accardo had passed away 10 years earlier of natural causes at the age of 86.

After his narrow escape of significant prison time, DiFonzo resolved to go straight. Well straightish anyway and to make a successful career of writing. He tried to sell his first professional writing project as a combination of “The Godfather” and “The Sting.” In truth it was a thinly veiled account of the Purolator heist, because he thought using his own criminal credentials would be beneficial. That idea had worked for him when he went to work as an editor on “The Godfather.” According to the FBI, Luigi Miguel DiFonzo was a well-connected, young Mafioso with ties to the Gambino crime family.

Although his book project was interrupted in 1978, when DiFonzo was imprisoned for filing false documents with securities regulators. During his short prison time he taught creative writing to other inmates. After his release he completed his first book with the assistance of Jesse Kornbluth, a New York magazine writer.

"He had a tremendous lust for success, a hunger that seemed to distort everything," said Jesse Kornbluth. "Luigi was a fantasist from the word go, truly a Sicilian Gatsby." Kornbluth said the time he spent with DiFonzo was surreal and felt like they were characters taken directly from the book “Wiseguys” by Nicholas Pileggi, which was later used as the premise for the movie “Goodfellas” directed by Martin Scorsese. Their book was published by Avon in 1981 under the title "Bucks" sales of the book were poor, but DiFonzo was not disillusioned.

Next, DiFonzo tried his hand at nonfiction and sold New York magazine a story about disgraced Vatican financier Michele Sindona. His knowledge of Sindona’s activities supposedly were enhanced by his affiliation with New York’s Gambino crime family. Sindona, the pope's investment banker, defrauded banks in New York and Italy out of approximately $3 billion. Reportedly Sindona also laundered heroin drug money in Italy and the U.S. for the Gambino family.

In 1983 DiFonzo used both the information his investigation turned up for the magazine story as well as inside knowledge to complete a biography of Michele Sindona. It was titled "St. Peter's Banker," and traced the links between Sindona, banks, the Mafia and the Catholic Church. It was called "an enthralling work of investigative reporting" in a New York Times review of the book. It sold more than 20,000 copies and it received several positive reviews by other critics listing it as exciting and well written.

Because of the success of “St. Peter’s Banker” DiFonzo wrote several more books. One was titled "Dreamers and Betrayers," it was the tale of a Mafia money-launderer. His next work was titled "Mouth of the Lion," which was a story about a family caught up in the drug wars plaguing Columbia. Even though he did not have a college degree, he was hired as an instructor at Harvard. School records at Harvard show that Luigi taught courses on beginning fiction writing and advanced film writing in summer school.

None of his other books met the level of success he had with "St. Peter's Banker." The 1980’s decade ended for DiFonzo the way he began it, with him in prison. During the earlier part of this decade DiFonzo had become interested in a 1983 crime story in which a Minnesota man and his teenage son murdered two bankers. They lured the two bankers, who had foreclosed on their family dairy farm, to a remote location. The man and his son then committed premeditated murder by killing both men. Authorities quickly determined who was responsible, but prior to being arrested the father committed suicide. DiFonzo traveled to St. Paul, MN to observe the court action as the son’s trial was set to begin. While in Minnesota Luigi worked with the young man’s attorney to purchase the rights to the story for just under $20,000.

DiFonzo never actually completed his book about these murders, but he did become friends with the teenager's defense attorney, Allan Sven Anderson. Not long after the trial was over Anderson died unexpectedly. Later, DiFonzo was charged with stealing $120,000 of the inheritance Anderson’s widow was to receive. After pleading guilty in April of 1989 for defrauding Anderson’s widow he received a three-year prison sentence.

He was sent to prison for the second time and DiFonzo’s new cell mate was Angelo Ales, who was serving a 4-year sentence for a check-kiting fraud. Ales shared DiFonzo's taste for the finer things in life. He had a thick Long Island accent, and when not in prison Ales dressed like a Sicilian mobster with silk suits and half-buttoned shirts. He loved wearing ostentatious gold jewelry and being the center of attention.

In 1995, not long after the pair got out of prison, they developed their plan for DFJ Italia Ltd. Shortly thereafter they hired, Guy Scarpelli, who helped build DFJ's client base using information gained from him having access to records supposedly from John Hancock Financial Services. Scarpelli was handsome and charismatic he contacted his parents' friends in New Jersey, marketing DFJ Italia to all potential investors. Scarpelli early on had to know something was “fishy” because he also at times delivered large sums of cash which was used as payment of interest to earlier customers.

Potential DFJ customers were often told that the firm's owner was a Sicilian Count. They recruited former pro football player Duval Love as a salesman, and he unwittingly reeled in other athletes including Dickerson. Love had introduced Luigi DiFonzo to Eric Dickerson at a Hall of Fame Dinner in Canton, OH. Love was unaware of the true nature and intent of DFJ Italia because he also convinced his own family to invest heavily with them.

Bill Liotta, a tenured professor at Tulane University, invested $72,000 in DFJ. Liotta said he was a huge LA Rams fan and during one of his visits to the DFJ office he met Duval Love. People want to believe in these type of schemes even intelligent, well-educated folks.

DiFonzo and Ales went to great lengths to distance themselves from DFJ Italia primarily because of their felonious backgrounds. Officially, neither of them owned any part of DFJ Italia Ltd. John Loy, DFJ Chief Financial Officer, said in his court-ordered testimony that he was instructed by DiFonzo to put his own name on all legal documents for DFJ Italia.

DiFonzo was rarely seen at DFJ's offices, which were sometimes even locked during business hours. Several employees stated that the linebacker sized DiFonzo ruled the firm through physical intimidation. DFJ operated using a mob-style hierarchy with DiFonzo as the don, Ales and Loy as caporegimes, and the salespeople were soldiers. Most, if not all, of this was merely bravado by DiFonzo, Ales, Loy, and others at DFJ. They certainly were not committing or sanctioning “mob hits,” but rather they stuck with what they knew namely cons, Ponzi schemes, and fraud.

Bank and court records show that much of the money taken in went to DFJ's executives. Ales used part of his share to buy expensive jewelry he gave his girlfriend. DiFonzo spent $1M on a vacation to Hawaii for a bunch of his friends. They also used the money for parties in Las Vegas all of which were held at famous Las Vegas casinos.

U.S. Bankruptcy Court documents indicate that money from DFJ went to DiFonzo's film-production company as well as several other shell corporations owned by executives. One of those shell corporations was a Mexican sex-toy business which was owned by Ales. Complaints were also filed against the Luigi DiFonzo irrevocable trust, Guy Scarpelli and Scarpelli Furniture. Additionally, complaints were filed against KED Investments and John Loy who testified that he gave $7 million to DiFonzo in cash payments of $40,000 each week. During testimony Ales said he and other DFJ employees often cashed in chips at Las Vegas casinos spacing their actions at specific time intervals so as not to leave a paper trail.

When it appeared that the fraud was about to become public knowledge both DiFonzo and Ales became very concerned. The two men claimed to have been advised in May 1999 that vast sums of company funds were missing. According to his attorney Ales went to Orange County authorities to report the possibility of fraud at DFJ.

As exposure of the fraud became more and more likely, DiFonzo disappeared for several weeks. He later alleged that Ales and an associate kidnapped him from his home in Laguna Niguel. Supposedly he reported the abduction to both the FBI and the Orange County district attorney's office. No charges were ever filed over his reports. However, records show that the FBI did begin an investigation into DFJ Italia that summer.

The FBI's relationship with DiFonzo began long before DFJ Italia Ltd. was fully functioning in early 1996. DiFonzo acted as an informant for the FBI, according to them, only for a short time. The disclosure by the FBI was made public because of rumors that the agency turned a blind eye to DFJ's criminal activities. Special Agent, Matthew McLaughlin, insisted that the agency had ended its relationship with DiFonzo before the DFJ Italia startup. DiFonzo's wife Brenda disputes that statement saying her husband spoke to the FBI several times after 1996. And that he kept direct contact numbers handy for two specific FBI agents until his death.

Angelo Ales repeatedly told friends that he was a paid FBI informant the entire time DFJ Italia was operating. Ales said the FBI’s probe into DFJ began in early 1999 and that he had assisted with their investigation. The FBI would not make any comment on its relationship with Ales.

As DFJ’s scheme began to fall apart DiFonzo became depressed and his overall health deteriorated. He was a man living with significant depression because he was losing the magnificent life he had lived for a long time. He left DFJ in late 1999 but kept his mansion in Laguna Niguel, although he had to borrow from friends to pay expenses.

The DFJ crew, led by Guy Scarpelli, worked to keep the firm from going bankrupt. But like all Ponzi schemes when the incoming cash could not cover the interest payments, the jig was up. Investors, led by Duval Love whose parents and friends lost a fortune in the scam, forced DFJ into involuntary bankruptcy. In April of 2000 prosecutors seized DFJ Italia and the once resplendent offices in Irvine became nothing more than a reminder of all that had been.

Even during this period in the U.S. DiFonzo and Ales had put DFJ on a different plateau with their cunning and craftiness. However, DFJ was small potatoes compared to the Ponzi scheme perpetrated by Bernie Madoff. Madoff at one time was chairman of the NASDAQ stock exchange and began his $20B scheme in the late 1980’s. Madoff’s fraud was, and still is, the largest Ponzi scheme in world history. He is serving a life sentence in a federal prison in Butner, N.C. Ironically, Reuters News Agency reported that Bernie’s closest friend in prison is Carmine “The Snake” Persico, who is head of the Colombo crime family.

Thomas Casey, the U.S. Bankruptcy Trustee for DFJ Italia said, “Luigi DiFonzo, the man depicted in dozens of interviews, court records and personal letters seemed to have lived five or six lives, a lawless Zelig who adopted a more fantastic persona in each reincarnation. Atop DFJ, he occupied the most out-sized fantasy of all, one he had been constructing all his life. He was truly the embodiment of a mafia style don in his role.”

Following DFJ's collapse investors wanted to determine how this could have happened. One woman whose family lost $75,000 stated that she knew her family was in serious trouble after reading DiFonzo’s biography of Vatican financier Michele Sindona. Whatever part the FBI played in these shenanigans will never be fully known, but historically their overzealous efforts to investigate and prosecute organized crime have not been without significant error (e.g. James “Whitey” Bulger, Salvatore “Sammy the Bull” Gravano). Lisa Valle stated, "I don't expect to get my money back, but I need to know the truth. Was the FBI protecting him instead of the people he was ripping off?”

Another of the victims, Eileen Goodrich of Bridgewater, NJ said, "The authorities knew Ales and DiFonzo were felons and con men. Why weren't they watched more closely? How could these two convicted felons operate an investment firm?” Her families’ losses in DFJ’s Ponzi scheme were more than $140,000.

In July of 2000 U.S. Marshalls came to DiFonzo’s mansion in Laguna Niguel with a court order compelling him to appear. Because he had been consistently unavailable, Thomas Casey, the bankruptcy trustee assigned to DFJ obtained the court order. Brenda stood by helplessly as the marshals put DiFonzo in handcuffs and took him into custody.

“It's going to be a long time before you get to the truth," he told the creditors' attorney. “You're going to feel like the biggest ass in the world.” He told Brenda that he was being framed by the FBI and Ales but vowed he would be vindicated. However, during his July 25, 2000 court ordered testimony concerning DFJ Italia DiFonzo consistently invoked his fifth amendment rights.

Luigi DiFonzo was found dead at his home in Laguna Niguel on Monday August 14th, 2000. A coroner's report concluded that DiFonzo, at the age of 52, committed suicide. But his wife and others who knew him say nothing could be further from the truth.

Sheriff's deputies collected two suicide notes addressed to his fourth wife, Brenda. The first one showed the extent of the despair he was experiencing. "My whole life has been ripped away from me. Everything is gone. My house. My money. My assets. My wedding ring. Even my dignity. I am nothing more than an annoying, inconvenient, middle-aged failure. A great tree turned to kindling. A whisper on the lips of a dead man."

The second note was a final love letter to Brenda and their children. It began with “Cara mia”, and professed his undying love for her and their children. "Tell the children I was ill. Let them know the depths of my love for them and the depths of my failures as a man." Even though both notes read like a final farewell Brenda DiFonzo refused to accept the coroner's conclusion of suicide, insisting her husband died of natural causes or perhaps an accidental overdose.

DiFonzo’s civil attorney, Michael Binning, stated that he was stunned by DiFonzo's death. "I have no reason to believe it’s a suicide and would be very surprised to learn that it was," he said. "Mr. DiFonzo was a strong person who cared very much about his wife and children,” said Binning. John Barnett, DiFonzo's criminal attorney, said he had spoken to DiFonzo the week before his death and that his client's mood was "up."

In early 2000 it had been discovered that DiFonzo's health was failing. His physician had prescribed medication to combat heart problems as well as depression and anxiety. He took morphine frequently because of persistent back pain. The blood analysis during his autopsy revealed that all the drugs he was prescribed were present in his system when he died. Brenda stated that the autopsy also discovered that Luigi had kidney cancer which she said was not previously known.

The morning of August 16th Casey won a court order evicting DiFonzo’s family from their home in Laguna Niguel. It was only two days after Brenda found Luigi dead. She had found him lying in a spare bedroom with the patio doors open to let in the summer breeze. Next to his bed was a nightstand with all his prescription medication bottles on it. As soon as she entered the room Brenda said she knew something was wrong because of his chalky white color. She immediately phoned 911 for help but the paramedics were unsuccessful at reviving him.

A month or so after DiFonzo died Casey held an auction to sell all his remaining belongings. Weeks earlier Casey had seized seven sports cars and various bank accounts. In the backyard of DiFonzo’s mansion sat a tiled hut where he once kept a pet wolf and his elegant swimming pool sat empty. Orange County’s self-invented mafia style don was dead; the “Sicilian Gatsby of Laguna Niguel” like the character in Fitzgerald’s book was gone forever, beyond justice.

In August of 2001 Ales was released from his latest prison sentence on an unrelated charge. He then almost immediately resumed his extravagant lifestyle. It was reported in bankruptcy court that Ales frequently dines at upscale restaurants in Orange County and often arrives in a chauffeur driven limousine.

Casey told DFJ investors they could expect only a fraction of their money back, but some of the approximately 700 investors continued to seek answers. This same group of DFJ investors openly discussed suing the FBI, but no civil, legal action was ever taken. To these investors amazement no criminal charges have ever been filed despite sworn admissions by Ales, Scarpelli, and Loy in the bankruptcy case.

Luigi DiFonzo’s family had his ashes scattered in the hills just outside of Palermo, Sicily.

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4 Mar, 2019
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