Thursday, Oct. 16, 2003 | 11:04 a.m.
Two years ago, Mary Fusco, an 88-year-old widow from Albany, N.Y., was watching her life's savings of $1.5 million being quickly eaten up by medical bills and other expenses and was desperate for ways to preserve her nest egg.
A friend, who had invested several hundred thousand dollars with Delaware financial whiz kid Mark Yagalla, recommended that the 25-year-old charismatic money manager take over her finances.
"Mark sat in my mother's house, she cooked him meals and told him she was risking her life's savings with him," Claire Sellitti of nearby Slingerlands, N.Y., said. "He was a friendly, charming, bright man who reassured her that everything would be OK."
Fusco lost her life's savings and had to sell her jewelry, her vintage clothing and the home that she and her late husband, defense attorney Otto Fusco, had lived in for 40 years. She was one of 110 victims of Yagalla who, late in 2001, pleaded guilty to bilking investors out of $50 million in a Ponzi scheme disguised as a legitimate hedge fund.
Yagalla used the money he conned out of Fusco and other people to jet between the East Coast and Las Vegas. In Las Vegas he showered extravagant gifts, including a Spanish Trail mansion, on his girlfriend, Playboy cover girl and then-University of Nevada, Las Vegas student Sandy Bentley.
Today Yagalla is serving a five-year, five-month sentence in federal prison, and this month some of the last Las Vegas vestiges of his spoils will be sold.
The $1.7 million, five-bedroom, six-bath Italian villa-style mansion he bought in Spanish Trail -- and its opulent fixtures including a custom-made Traum safe and Steinway baby grand player piano -- will go on the auction block Tuesday.
"We are going to try and raise as much money as we can to help the victims recoup something," said Britney Sheehan, spokeswoman for EG&G, a federal contractor that is conducting the auction of the 5,650-square-foot home at 45 Innisbrook Ave.
"The victims will be receiving funds shortly from other assets and cash from Mr. Yagalla," she said. "The courts will have to approve the sale of the house. In other words, the buyer will get a bargain, but not a steal."
To date EG&G has auctioned seven of the luxury cars, including a Bentley, three Mercedes Benz, a Corvette, three BMWs and a Land Rover, that the convicted con man purchased for a total of $503,200.
On Nov. 6 in Los Angeles, EG&G will auction off a 2000 Cadillac Escalade SUV and a 2000 Mercedes Benz SL500.
His financial misadventures came to an end in December 2001, when Yagalla admitted in federal court, "I transferred the money (from investors) for my personal use," and pleaded guilty.
The irony of the Las Vegas mansion that is up for auction is that Yagalla, who hired a decorator to furnish the place with custom-made furniture, is believed to never have stepped foot inside the building, Sheehan said. The house was for his girlfriend.
The house offers views of the golf course, private bathrooms for each of the spacious bedrooms, a state-of-the-art media room and rooms for servants.
The house features a pool, a four-car garage, a step-up, Roman-style Jacuzzi tub -- surrounded by pillars, marble floors, a hand-carved Italian dining table, Middle Eastern carpets and many pieces of art. A small circular bathroom features a wrap-around mural of an Italian countryside.
The home, of about 5,600 square feet, has four fireplaces and a "tropical" backyard. The garage alone is 1,476 square feet, according to the auction company.
Registration to bid on the home requires a $50,000 cashier's check deposit made out to EG&G. A $5,000 cashier's check deposit made out to EG&G is required to bid just on the contents.
Sheehan said the auction will be divided into four parts: The house and land, the piano, the safe and the rest of the furniture. When the bidding is done, the bids will be totaled and a new auction will begin if someone places a starting bid 10 percent higher than the sum of all prior bids.
The reason, Sheehan said, is to give the person who submits the winning bid for the home a chance to win all of the furnishings and to raise the most funds possible for the victims, should the government eventually prevail in court against Bentley.
"I'm glad to see something is being done, although my mother hasn't received anything yet," Sellitti said. "We just thought all of the money was lost and forgotten about. But nothing that can be done will replace what my mother has lost. Her home was her life -- all of her memories. She is so terribly depressed over what this man has done to our family."
Fusco was financially helping her ailing daughter, Lorraine, when she was conned. Today Fusco and Lorraine, who suffers from the Epstein-Barr virus, which has destroyed her immune system, share an Albany townhouse.
On Valentine's Day 2002 Yagalla, owner of the now-defunct Ashbury Capital Partners Limited Partnership, was sentenced in federal court in Manhattan. He received a year longer prison term than what had been recommended to Judge Sidney H. Stein under federal sentencing guidelines.
"My former clients put their faith and trust in me, and I totally violated that trust," Yagalla told the judge, who ordered Yagalla to pay $32.1 million in restitution to investors. Yagalla admitted he spent millions of dollars in clients' money on luxury items for himself and Bentley, who was not charged.
Bentley, however, has told authorities she will sue to keep the funds raised from the sale of Yagalla's gifts to her. According to news reports, federal authorities say Bentley was given $6 million worth of gifts, including the Las Vegas mansion, six cars, three Rolex watches, a $500,000 ring and several furs.
Sheehan said future litigation over the sale proceeds will not affect the buyer of the home in which Bentley once lived and kept her doll collection and other possessions, which have been returned to her.
"The title is not clouded," Sheehan said. The home is Yagalla's because he bought it through Princess Investments Inc., which was wholly owned by Yagalla, and never was put it in Bentley's name. "The courts will decide who is entitled to the money from the sale, but the house will belong to the person who buys it at auction."
Bentley's claim surprises Sellitti. "How can anyone with a conscience go after the money or want to keep the items knowing they were bought with the money from the life's savings of widows and others?" she asked.
Attempts to reach Bentley through e-mail to her website and a phone call to her agent were unsuccessful. Bentley, who has appeared in television shows including "Sex & the City" and "The X-Show," is perhaps best known for appearing on the May 2000 cover of Playboy with her identical twin sister Mandy, now a Los Angeles model.
The two also were reportedly girlfriends of Playboy founder Hugh Hefner, who dated both women at the same time.
On the Bentley sisters' official website, Sandy Bentley is quoted as saying her "one wish" is that "life was fair to everyone regardless of who they are or what they have."
Sellitti not only questions why Bentley would want to keep tainted gifts or the proceeds from their sale but also was not impressed with the apology Yagalla made for his actions at his sentencing, which Sellitti attended.
When it came time for victims to take the witness stand, Sellitti, speaking on behalf of her family, didn't hold anything back.
"I told him he committed an evil and sinful crime that just does not affect his victims' pocketbooks -- it affects their hearts and souls," Sellitti said.
For a period Yagalla was no stranger to Las Vegas. He built a reputation as a high-rolling gambler, with his favorite casinos being the Aladdin and Mandalay Bay, Sheehan said, noting that in a single week he purportedly lost $1 million at the tables.
A Philadelphia Magazine article on the case, "The Prodigy and the Playmate," described Yagalla's gift-giving habits: "Yagalla wanted his girlfriend to live a life without limits. 'She's used to billionaires,' he explained to a friend. 'Millionaires are nothing to her.' "
Sellitti told the Sun she does not doubt such reports, noting that on several occasions Yagalla showed her, her mother and her sister gifts before he gave them to Bentley.
"He told us he was so in love with this Playboy bunny and was going to marry her," Sellitti said. "Once he showed us a watch worth $1 million that he was going to give her on his next trip to Las Vegas. My mother was concerned for him and asked, 'Are you sure she is the right girl for you?'
"(Fusco) was so worried that maybe he was wasting his money on (Bentley). It turns out, he was wasting my mother's money -- and other people's money -- on her."
Sellitti said she does not know whether Yagalla started out with good intentions of investing people's money and somehow went bad because "by the time he had met my mother, he was on his way downhill and really needed to recoup."
Yagalla later admitted in court he sent phony account statements to investors to conceal the theft of assets and legitimate trading losses. Yagalla said he had established Ashbury Capital in 1997 and pitched it to investors as "short-term trading opportunities in domestic equities."
Much of the investors' money instead went to buying Yagalla a $1.2 million home in Delaware and a $200,000 luxury box at FedEx stadium, where Yagalla watched Washington Redskins home games.
In October 2000 Yagalla, desperate to raise $1 million to satisfy suspicious creditors, made a trip to Las Vegas to unload some possessions, federal authorities say. Among the possessions he tried but failed to sell locally were cars, trucks, jewelry, a helicopter, a limousine company, oil wells, nursing homes and an interest in a horse.
In court papers prosecutors said Yagalla was caught on audiotape from Las Vegas telling a friend that he had made mistakes, that his expenses had gotten out of hand and that he was trying to "salvage" what he could.
How Yagalla had gotten himself in so deep was a combination of not getting enough investors at the start, making legitimate investments that went sour and, of course, by buying expensive toys for himself and his girlfriend.
Prosecutors said in papers filed in U.S. District Court in Manhattan that Yagalla in March 1999 tried to raise $1 billion from investors but had succeeded in getting only $896,000 to that point.
The Securities and Exchange Commission said in a civil complaint also filed in Manhattan that Yagalla eventually raised millions of dollars but could not repay investors more than a fraction of what he had collected.
The SEC said Yagalla had boasted to potential investors that he averaged 80 percent annual returns on his investments over the past nine years.
But when Yagalla tried to make money legitimately with stock market investments, he lost so much by September 2000 that the hedge fund account had a negative balance of $271,000, including money he illegally spent on personal expenses, court documents said.
Adding further to his downward spiral, Bentley broke up with Yagalla.
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