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August 09, 2016

Feds fight bail for Joey Merlino, allege tapes show he was 'leader' of mob family

It looks like a tale of the tapes in the feds’ latest battle with mob boss Joseph “Skinny Joey” Merlino.

Federal authorities, in arguing that Merlino should not be released on bail, have pointed to “explicit recordings in which Merlino discussed the crimes he was committing and exhibited his role as a leader” of the mob family.

A bail hearing for Merlino, originally scheduled for Tuesday, has been moved to Friday after Merlino’s Florida attorney David L. Roth asked for an extension.

Edwin Jacobs Jr., who is Merlino’s principal attorney and is working with Roth, said from his Atlantic City office this afternoon that they wanted more time to prepare their argument that Merlino should be granted bail.

Jacobs said it was “difficult to assess” the case against his client because the racketeering indictment unsealed last week “is not fact-specific.”

“All the allegations are broad and general in nature,” he said, adding that Merlino is charged with gambling and health care fraud but is not linked to any acts of violence.

Those arguments are expected to be part of a bail motion that Jacobs and Roth plan to file before Friday’s hearing. Merlino, 54, has been held in the Palm Beach county jail since his arrest Thursday morning.

He was one of 46 mob members and associates arrested Thursday after authorities in New York unsealed a four-count, 32-page racketeering indictment.

Merlino is charged with being one of the leaders of what authorities are calling an “East Coast LCN (La Cosa Nostra) Enterprise.” Members of the Genovese, Gambino, Luchese and Bonanno crime families were also named.

But while the indictment includes specific allegations of violence – like assaults and arson – against several of the New York mobsters, the counts against Merlino are general in nature.

In a memo seeking to have him and 10 others held without bail, prosecutors argued that “Merlino has been captured on recordings supervising a number of individuals, questioning whether certain associates were 'rats,’ collecting illegal gambling debts and engaging in fraud against health insurers.”

Authorities also allege that Merlino, from Florida, was “working in earnest to rebuild the Philadelphia crime family.”

The government memo makes reference to a cooperating witness and an undercover FBI agent, both of whom made recordings during the investigation which lasted more than three years and that stretched from New England to Florida.

The cooperating witness has not been identified, but based on government filings it appears Merlino and his co-defendants would have little trouble figuring out who it is.

The witness has been identified as the former owner of the Yonkers Club, a mob-linked illegal casino that operated under the auspice of Genovese crime family capo Pasquale “Patsy” Parrello. The government memo also contends that Parrello “approved” the witness’ move from New York to Florida where he began working with Merlino.

Merlino, Parrello and Eugene “Rooster” O’Nofiro were identified as “three powerful LCN leaders” who coordinated the activities of the East Coast LCN Enterprise.

Parrello and O’Nofrio are being held without bail.


In the memo, authorities argue that if released Merlino would be a flight risk and would also be a danger to the community. They also point out that most of the alleged crimes listed in the indictment occurred while Merlino was still on supervised release following his racketeering conviction in Philadelphia in 2001.

Merlino, sentenced to 14 years in that case, moved to Florida after he was released in 2011. But he remained on supervised release (formerly parole) for three years. Committing a crime while on supervised release is a factor often cited in motions seeking to have bail denied.

Merlino’s role in the gambling and health insurance fraud charged in the indictment has not been made clear.

The gambling charge is built around typical mob bookmaking operations, in this case based in New York and Costa Rica. Loanshaking and extortion are also part of the broad allegation.

The insurance fraud, according to sources, was a scheme involving corrupt doctors and pharmaceutical suppliers and a medication known as a compounded pain management cream – a multi-ingredient topical cream described in a recent article from the Coalition for Insurance Fraud as the “snake oil” of the 21st century. It is used to treat joint and muscle pain.

Insurance companies have been billed millions of dollars for the cream, according to government reports and investigations from various parts of the country. How and when the mob got involved remains unclear, but sources say New York mobsters brought the scam to Florida where Merlino and his associates set up a system in which “patients” would visit doctors who wrote prescriptions for the cream, which was then supplied by mob-linked “compounding pharmacies.” Those suppliers would then bill insurance companies hundreds of thousands of dollars.

“A single tube can retail for up to $10,000,” according to an article that appeared in June in the Journal for Insurance Fraud in America. “Each new prescription — often offered as a 'trial’ — authorizes 10 refills. One 'trial prescription’ for one patient thus can generate nearly $100,000.”

While details about the scheme were vague in the indictment, sources said Merlino and two co-defendants, Brad Sirkin and Wayne Kreisberg, were involved in the operation along with the unidentified cooperating witness.

The witness, according to sources, was a part of Merlino’s Florida crew and also traveled with Merlino to Philadelphia, New York and the Jersey Shore, where meetings and socializing occurred at bars, restaurants and mob hangouts.

“The case against Merlino is extremely strong, consisting in part of numerous explicit recordings in which Merlino discussed the crimes he was committing and exhibited his role as a leader,” according to the government’s motion to deny Merlino bail.