Mob-Busting Informant Resurfaces in SEC Probe

After he was busted for stealing more than $5 million from his clients, New York accountant Stephen P. Corso informed on so many mobsters that a Las Vegas columnist wrote he "did everything but dig up Jimmy Hoffa."

In his most celebrated case, Mr. Corso wore a wire for more than a year in Las Vegas strip clubs and casinos, generating crucial evidence needed to convict two New York police officers for acting as Mafia hit men.

When Mr. Corso in 2009 pleaded before a federal judge for a reduced sentence for his own crimes, he pledged that he had turned his life around.

While he rejected a request to enter the witness-relocation program, he told the federal judge he would "never, ever" be a licensed accountant again. His license was revoked following his conviction.

Six years later, Mr. Corso still owes restitution, and he is preparing financial statements on behalf of a number of penny-stock companies, according to public records and people familiar with the matter.

The Securities and Exchange Commission is investigating Mr. Corso's activities as part of a wider probe into penny-stock fraud that will likely lead to enforcement action, said a person familiar with the matter.

Mr. Corso, a felon, is now working under a slightly different name, according to public records and people familiar with the matter.

He is touting false academic and professional qualifications, including claims to be a licensed certified public accountant and attorney, as well as an Ivy League degree he doesn't have, according to those same sources. Mr. Corso is also professing to be younger than 60 years old, which the Bureau of Prisons says is his true age.

The Wall Street Journal isn't publishing Mr. Corso's new name or his current location. At his sentencing in 2009, his lawyer said Mr. Corso "will live the rest of his life…with a target on his back."

One of the Mafia cops bragged to him "about dunking someone's head in acid repeatedly," according to court records, while another person told Mr. Corso that if he was an informant "he would get this…[and the person] put his fingers to his head like a gun casing."

When reached by the Journal, Mr. Corso said he has "no comment.…I'm not going to have any comment on any of this."

It isn't clear how aggressively the U.S. government is pursuing Mr. Corso for the money he still owes. A spokesman for the Connecticut U.S. attorney, who led the prosecution against Mr. Corso, said, "the government is pursuing all its remedies allowed by law."

In a flurry of legal action last year, prosecutors served what is known as a writ of garnishment on him and persuaded a federal judge to schedule a hearing to look at his financial status and his means for paying the full restitution.

The hearing, scheduled for December, has been postponed, with no new date set, according to court records.

It isn't uncommon for prosecutors to have difficulty collecting debts and restitution owed as the result of an enforcement action. In most of the past 10 years, the Justice Department has collected between 20 and 30 cents on the dollar for the money it is owed, the department's figures show.

Mr. Corso's former wife is also pursuing him, for more than $118,000 in unpaid alimony, according to filings in state court.

"He owes you a ton of money. He's jerking you around," the judge in Mr. Corso's divorce case told his ex-wife earlier this year. "If you can get him to Connecticut, we'll be happy to lock him up for you."

In many ways, the penny-stock market—where thousands of companies trade with little regulatory oversight and prosecutors say fraud is rife—is the perfect hiding place for someone not eager to be found.

OTC Markets Group Inc., which operates trading platforms for penny stocks and other companies, doesn't vet the credentials of the accounting firms used by those companies, according to a spokeswoman. Cromwell Coulson, OTC Markets' president and chief executive, said his company's aim regarding what is known as its pink market for penny stocks and other risky securities is "to get as much transparency as possible."

Mr. Coulson said accountants aren't generally the bad actors in penny-stock fraud but instead, in those instances, are often just "the lazy guys" who don't do the required due diligence.

The companies Mr. Corso has worked for include at least two stocks that carry the skull-and-crossbones symbol used by OTC Markets on its website to warn investors to be careful for various reasons, including fraud investigations at the companies.

The share price of another of the companies has swung between less than two cents and $1,490 in the past two years, after allowing for a reverse stock split. Wild share-price gyrations like this are a well-known feature of the penny-stock markets.

It isn't clear how much Mr. Corso is earning from his accounting work, nor is it clear how much he has paid in restitution.

A financial statement he filed in state court in 2011, as part of his divorce from his former wife, showed his weekly income as more than $6,000.

Mr. Corso's return to auditing is the latest bizarre chapter for the son of Italian immigrants.

He worked as a licensed accountant for a decade before prosecutors in 2002 got a warrant to arrest him over the theft of more than $5 million from his clients, according to court records. In many cases, he simply banked money his clients sent him to cover their taxes, court records show.

One of his victims was sportscaster Dan Patrick, who lost more than $800,000, most of which was reimbursed by insurers. Mr. Patrick declined to comment via a spokesman.

Another victim, Charif Souki, the chief executive of a Texas energy company, said he doesn't expect any money from Mr. Corso. "He has no way to ever repay me," Mr. Souki said. The accountant stole $465,291 from Mr. Souki, of which $410,000 was later repaid by insurers.

Prosecutors said that while Mr. Corso was an accountant in New York, he lived a second life in Las Vegas, where he suffered what the government called "considerable" gambling losses.

After being confronted by federal agents over his theft, Mr. Corso agreed to cooperate in the hopes of reducing his sentence. For years, he taped mobsters at venues including the Crazy Horse Too topless club. Acting as a Mafia associate, he informed on people tied to organized crime in Russia as well as in several U.S. cities, including Boston and Youngstown, Ohio, prosecutors said. He even provided evidence for a penny-stock fraud case.

Louis Eppolito and Stephen Caracappa, the two former New York policemen dubbed the "Mafia cops" by the tabloids, are serving life in prison after being convicted of eight counts of murder. Mr. Corso was one of the star witnesses at trial.

At Mr. Corso's sentencing, U.S. District Judge Janet Hall said, "I can't find the words to describe the value, at least in my judgment, of this cooperation."

Judge Hall gave Mr. Corso a big discount on the 7½ -year prison sentence that could have been given under federal guidelines, and he ended up serving less than a year behind bars. Mr. Corso said he had paid a heavy price in terms of his career. After rising from his working-class roots to become a certified public accountant in a big firm, "I…threw it all away," he told the court. "I could never ever, I will never ever, be a CPA again."

According to company filings reviewed by the Journal, Mr. Corso had already posed as a certified public accountant under his new name at least once by that time. After his release from prison, he developed a new ré sumé that cites a CPA license among a list of impressive credentials, including an economics degree at Cornell. The Journal could find no record of him having these qualifications. A spokesman for Cornell said it had no record of someone with Mr. Corso's new name attending the university.

Write to Jean Eaglesham at [e-mail]

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