Most mornings for more than a decade, Giuseppe Viola sat with his back against the wall in the corner of Caffe Roma in North Beach. He always wore a suit and tie, and his rosary beads were regularly on display. In small, tidy handwriting, he would track the financial markets and chart his findings on graph paper.
Caffe Roma is a convivial hub in the social life of the North Beach old guard. One regular customer, a retired longshoreman, could not resist asking Viola what he was up to with all those charts. Viola responded with a tutorial on anticipating the movements of the financial markets. There was talk of the Fibonacci system, Bollinger Bands and the Elliott wave theory.
Impressed, the longshoreman eventually gave Viola $28,000, tantalized by the prospect of annual returns of 20 percent to 25 percent. In time, friends and relatives — and scores of others — would follow.
“I was one of the first” North Beach residents to invest with Viola, the longshoreman said. “I was naïve.”
He may have been naïve, but he certainly was not alone. Viola, 59, is now accused by clients and an independent lawyer hired by the bankruptcy court in San Francisco of carrying on a Ponzi scheme that cost investors millions of dollars.
All told, Viola took in about $17 million using a trust account he set up at Citibank with a now-vanished early investor, according to the bankruptcy court attorney. San Francisco police, overwhelmed by the number of complaints, handed the case to the Federal Bureau of Investigation, which is now investigating.
“This is really a viper in the middle of North Beach who just stole zillions from those poor people,” said William McGrane, a San Francisco lawyer representing some of the investors. “It just shows you how gullible people are. It just bends your mind.”
Viola was arrested in March for skipping bail in a separate 1990 Arizona fraud case, and he is currently being held in the Maricopa County Jail in Phoenix. He had previously served five years in prison in Arizona in the 1980s, also for fraud. His name was Joseph Viola until he arrived in North Beach at some point in the mid-1990s and started calling himself Giuseppe.
Writing with a golf pencil from the jail, Viola argued that since the bankruptcy papers identify him by his original name, Joseph Viola, no “legally recognizable connection has been demonstrated.”
As details of the alleged fraud continue to surface, North Beach is abuzz with tales of the neighborhood wheeler-dealer who left pain and betrayal in his wake.
Viola was not just North Beach’s investment guru, and perhaps now its Bernie Madoff. He also had business dealings with numerous North Beach pastry shops, coffee bars and even a company that sold $100,000 kit cars made from Alfa Romeo bodies over Corvette engines. He sold five of the vehicles to a Kuwaiti diplomat who planned to present two of them to the kings of Jordan and Morocco. The kings never received their gifts, according to court documents, and the Kuwaiti government, $500,000 poorer, is among the allegedly defrauded.
The Kuwaiti Embassy in Washington did not return a call for comment.
Viola lacked the trappings of a traditional investment adviser. His office was a windowless room in the basement of a North Beach pastry shop. He shared little personal information, even with investors who thought of him as a friend.
Even now, no one knows where Viola lived.
In a sense, he lived for years in Caffe Roma, where his clients would know they could find him. On the first day of every month, they crowded into the cafe as Viola distributed a thick stack of cashier’s checks.
In January, Viola showed up at Caffe Roma as usual, but with no checks. He was changing banks, he said. Morton D. Kirsch — who had invested about $8 million with Viola in 2008 and had been trying to withdraw the last $4 million of his principal — hired a lawyer to force the liquidation of the investment fund in bankruptcy court.
Although Viola is in jail, the whereabouts of another man believed to be central to the investigation remains a mystery. That man, Ralph Napolitano, an elderly dockworker, has not been seen since shortly after he and Viola opened a joint trust account at Citibank in 1999, using Napolitano’s life savings as the initial deposit. Napolitano is not suspected of participating in the alleged fraud, said John MacConaghy, the attorney hired by the bankruptcy court to sift through the Viola case.