Dadante says he hounded Regalbuto for more than a year to take one of his junkets. He finally did, chartering a Learjet from an airstrip near his home. It was the first and last junket for Regalbuto, who has a reputation as a recluse.
But by the late 1990s, Dadante said, he faced losing one of his biggest clients, a "whale" who accounted for about half his income. That's when he reached out to Cleveland stock broker Stephen J. Glantz, who sometimes gambled with him.
Dadante started investing with him. But Dadante later hatched a plan to launch his own investment fund. IPOs, or initial public offerings, were still hot, and Dadante says Glantz, who was not with Ferris at the time, was going to help him get in on the ground floor.
Things were legitimate for a time. But in search of more investors, Dadante concocted a story about having met Donald and Ivana Trump, and getting hooked up with top executives at Goldman Sachs and Merrill Lynch.
Dadante told Regalbuto and others that he'd won favor with the Wall Street tycoons by taking care of them on gambling junkets. They were going to cut him in on block trades of IPOs and other deals reserved for the elite. He guaranteed returns of up to 20 percent.
"I thought he was a box of rocks, but the connections he was supposed to have ...," said Mike Regalbuto, Frank Regalbuto's son. "It was a believable story."
Mike Regalbuto invested $850,000, a large part of it borrowed against his home. The Regalbuto family put in nearly $10 million.
Until he was caught, Dadante never failed to pay the promised dividends, making him a rock star with the investors. Most reinvested their returns, not knowing that Dadante was using money from new clients to pay old ones. The rest he used to open secret brokerage accounts, where he engaged in risky stock trades. Glantz initially handled most of his business, Dadante said.
It was a stock tip from Glantz that ultimately landed both of them in jail and spawned a lengthy investigation by the Securities and Exchange Commission that contributed to Ferris' eventual decision to sell.
At Glantz's suggestion, in the summer of 2002 Dadante began amassing shares of Innotrac Corp., a lightly traded logistics company based near Atlanta. The broker said his firm, Advest, was going to recommend the shares, Dadante said.
