Gray, too, says he received a Berger gambling loan in Atlantic City, paying back $20,000 for borrowing $15,000.
In the largest of the transactions, Pomilio says, Berger asked her to cash a batch of 33 checks and money orders for him. He told her he needed her help because he didn't have an account at a New Jersey bank. Bank records show that the money orders were deposited in Pomilio's account and that she withdrew the money in cash.
Yet another Berger associate, Marty Mazurek, a friend from the clothing business, told investigators Berger agreed to lend him $20,000 so he could complete work on a swimming pool at his house. Berger is alleged to have given him one of the peso investors' checks, but a stop-payment order had been placed on it, so the loan was never made.
The agents watching Berger never picked up on all these transactions, and there are several explanations why. For one, Berger refused to wear a concealed microphone or recording device in Atlantic City. He had told agents that if one of his mob friends were to come along and hug him, it could get dangerous.
Beyond that, only two agents had the job of watching Berger and several targets. "I'll be the first to say that investigation was a little fast and loose," says Webster, the prosecutor. "The Ponzi scheme was working fast and hard, and there weren't enough people on this case. Norm was without sufficient supervision, and the agents weren't in a position to account for every check."
"He [Norm] was running the case, flat out," alleges Blau, the Dallas defense attorney who worked for 20 years as a federal prosecutor. "We traced a couple of the missing checks, and it turned out these people who cashed them were Norm's bosom acquaintances. The government didn't know anything about them until we brought it up."
The checks formed the heart of an indictment handed up against Berger in 1994 alleging 47 counts of embezzlement and fraud -- a case that went to trial in the summer of 1995 and could have put Berger in prison for the rest of his life. "They wanted me bad," says Norm.
David Lewis, Berger's attorney, says he developed three different defenses and used them all at Berger's trial. First, he argued that Norm was under such close scrutiny that the IRS agents watching him knew what he was doing. Second, he argued that government rules permitted "churning" of investigative proceeds. Nearly all the money Norm might have received was quickly lost at the gambling tables, and as part of his undercover persona, Berger needed to pose as a high roller.
His third defense was more complicated, but seemed to be the one that worked. The government's case relied ultimately on the testimony of Norm's cronies and former girlfriend because no bank records tied Norm directly to the stolen funds. The loans and check-cashing favors put Norm one step away from the money. So Lewis went after the chief government witnesses, Galanti and Pomilio, who turned out to be easy targets to discredit.
"When she [Pomilio] took the stand, she looked like she was married to the mob," says Lewis, who attacked Pomilio's assertion that she gave the money to Norm after she cashed the investors' checks. "We had records of her spending thousands of dollars on clothes and a trip to Europe...Meanwhile, Norm is living in a tiny apartment, driving this tiny old car. Where was all the money?" Lewis says. Galanti testified "just as a mobster would," Lewis recalls. "He was going to give just enough to make the government happy, but he'd go...'Maybe it was like that.' and 'If you say so.' It was clear he didn't want to hurt Norm."
Berger had fashioned his own elaborate explanations for how Gray's checks got into the accounts of his friends, but Lewis decided not to put that material before the jury. "I pretty much got in everything I wanted through [the prosecution's] witnesses," says Lewis, who portrayed his client as a man who risked his own life to help the government bring down a huge investment scam.