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Reputed New Jersey mobster guilty in takeover of Texas company

PHILADELPHIA, July 3 (Reuters) - A federal jury in New Jersey on Thursday convicted reputed mobster Nicodemo Scarfo Jr. and three associates of an organized-crime takeover of a Texas-based mortgage company.

Scarfo, a reputed member of the Lucchese organized crime family, and Salvatore Pelullo were found guilty of a host of charges including racketeering, conspiracy, bank fraud, extortion and money laundering.

Scarfo Jr., 49, is the son of Nicodemo Scarfo, a reputed mob boss in Philadelphia who has been in prison since the mid-1990s.

Prosecutors said Scarfo, of GallowayNew Jersey, and Pelullo, of Philadelphia, used threats of violence and extortion to coerce shareholders of FirstPlus Financial Group Inc to install a board of directors beholden to the pair.

They were found guilty of using fraudulent consulting agreements to loot $12 million from the then-publicly traded company in IrvingTexas, which later filed for bankruptcy.

The indictment claimed they used the funds to buy luxury cars, a beach house, a yacht and jewelry in a scheme that began in 2007.

Bank fraud carries the possibility of 30 years in prison and a $1 million fine, while the racketeering, other fraud, conspiracy and obstruction of justice counts carry potential 20-year prison sentences.

Scarfo's sentencing was scheduled for Oct. 22.

The jury deliberated two weeks following a complex six-month trial before U.S. District Judge Robert Kugler in federal court in CamdenNew Jersey.

Also convicted were two Texas brothers, William Maxwell, a Houston-based attorney, and John Maxwell, who acted as the company's chief executive officer.

Three others were acquitted in the case.

Five other people, including Scarfo's wife, Lisa Murray-Scarfo, already pleaded guilty to charges stemming from the scheme.

Defense attorneys argued that the case did not amount to a criminal conspiracy and at best should have been litigated in a shareholder lawsuit.

Law enforcement officials have used the case to claim that organized crime has evolved from back-alley gangsters to sophisticated financial operators.