Arthur Levitt, Italian Mafia, And Wall Street

[Policing Wall Street]

In September 1993 I was told by Assistant United States Attorney Frances Fragos and FBI Special Agent Joseph Yastremski that Arthur Levitt, during his tenure as both Chairman of the American Stock Exchange and as Chairman of the Securities and Exchange Commission, used his powers in direct violation of the Securities Exchange Act of 1934 and the Racketeering Influenced Corrupt Organizations Act.

His actions thereby helped protect the Italian Mafia at the American Stock Exchange.

Fragos and Yastremski said that Levitt covered up the bribery of Steven Lister, a Senior Vice President of the American Stock Exchange by Al Avasso, who was a front man for the Italian Mafia.

In 1985 at the time of this illegal trading Avasso was a member of the American Stock Exchange. And Levitt was Chairman of the Amex.

The first cover up began when Avasso violated the Securities Exchange Act in 1985.

During the period October 1, 1985 to the morning of October 16, 1985 Avasso sold short (that is Avasso sold options that he did not own) 3,010 XMI call options. On October 16, 1985 these options had increased in price to 11/16 at the close of trading.

Avasso entered a fictitious trading ticket, which showed that Avasso had purchased 3,000 XMI call options from another Amex member trading firm- at the beginning of trading on October 16, 1985. This trade was false. The trade did not print. The counter party did not sell the contracts. The next day Bear Stearns, Avasso’s clearing firm, purchased the calls to close out the account.

Avasso was brought up on charges of falsifying trades. But Avasso was undeterred. Avasso paid off Steven Lister, Senior Vice President of Compliance, to overlook Avasso’s prior two month suspension by the Securities and Exchange Commission, Yastremski later told me.

In 1993 the Department of Justice was investigating Lister from taking payoffs from Avasso, and that's how I became involved in the matter; I was an informant.
Without the knowledge of Avasso’s prior suspension the Amex disciplinary committee voted to suspend for two months only. This two month suspension for wire fraud was approved by Arthur Levitt.

When Louis Miceli, a member of the Board of the American Stock Exchange, heard of Avasso’s minor punishment he jumped into action. Miceli notified the Board and Levitt that Avasso had previously been suspended by the SEC.

Miceli demanded that Avasso be permanently barred from the securities industry; he was later barred. Miceli also informed Levitt that Lister had received a payoff from Avasso to overlook his prior suspension by the SEC.

And what action did Levitt take? Nothing. Zero.

Seven years later Avasso once again bribed Lister but also bribed Robert VanCaneghan, owners of the Amex specialist firm, Miceli-VanCaneghan, to list the Mafia-run stock fraud, PNF.

And what action did Levitt, then Chairman of the Securities and Exchange Commission, take?

Again, zero.

Levitt covered up the bribery of Steven Lister, a felony. Levitt also used his influence to stop a Department of Justice indictment of Avasso, Lister, Miceli, and VanCaneghan for perpetrating the stock fraud, PNF.

During the time I worked with the authorities as an informant, Yastremski also informed me that Levitt, with the assistance of Robert Morgenthau, Manhattan District Attorney, impeded the investigation of the laundering of drug money from the Cayman Islands by Miceli and VanCaneghan via the broker dealer of their specialist firm, Miceli-VanCaneghan.

Yet, today Levitt is hailed as a paragon of Wall Street.