v, ) No.

Violations: Title 18,

United Stales Code,

WILLIAM A. HANHARDT, ) Sections 371, 1962(d),

JOSEPH N. BASINSKI, ) 2314 and 2315.

PAUL ,I. SCHIRO, )

SAM DESTEFANO, )

BUY ALTOBELLO, and )

WILLIAM R. BROWN. )

COUNT ONE

The SPECIAL JANUARY 1999-1 GRAND JURY charges:

1. At all times material to this indictment:

(a) From July 13, 1953, until his retirement on pension as a captain on March 26, 1986, defendant WILLIAM A. HANHARDT was employed by the Chicago police Department (CPD"), and held several supervisory positions, including Chief of Detectives, Chief of Traffic, Commander of the Burglary Section, Deputy Superintendent for the Bureau of Inspectional Services, and District Commander. For a portion of the period of the indictment until the date of the indictment, defendant HANHARDT resided at 835 Heather Road, Deerfield, Illinois.

(b) Defendant GUY ALTOBELLO was employed by Altobello Jewelers, Inc., a retail jewelry store located at 100 East Roosevelt Road, Store 19, Villa Park, Illinois. ALTOBELLO's duties included meeting with traveling wholesale jewelry salespersons to

discuss, examine and make wholesale purchases from their jewelry lines. (c) The Hyatt Corporation was an Illinois corporation. Among other things, it operated the Hyatt Regency Columbus Hotel at 350 North High Street, Columbus, Ohio, which was near the Greater Columbus Convention Center, providing accommodations to travelers. As a service to its guests, the Hyatt provided the use of safety deposit boxes located in a room near the registration desk. (d) In August 1994, the Greater Columbus Convention Center hosted the 1994 Mid-America Jewelry Show. Many of the attending jewelers stayed at the Hyatt Regency Columbus Hotel. The following entities, which engaged in and had activities that affected interstate commerce, sent representatives to the 1994 Mid-America Jewelry Show, and had representatives who utilized safety deposit boxes at the Hyatt Regency Columbus Hotel: (i) Topaz Diamonds, Inc., a New York corporation, was located at 580 Fifth Avenue, New York, New York. (ii) World Diamond Imports, Ltd., and D&R J7jamond Importers, Inc., were Arizona corporations that were located at 6900 East Camelback Road, Scottsdale, Arizona. (iii.) Ragar Company was a partnership in New Jersey. (iv) Jewel-Que, Inc., doing business as Jeweltique, was a New York corporation located at 15 West 47^th Street, New York, New York.

(v) M.B. Saxon Co., Inc., was an Ohio corporation.

(vi) Ross & Shech7-er Diamonds Ltd., doing business as Genesis II, was a New York corporation located at 580 5°° Avenue, Suite 911, New York, New York.

(vii) Marsha's 14 Karat Gold Jewelry, was a sole

proprietorship located in Ohio.

(viii) The Gemological Institute of America was a nonprofit educational organization of the jewelry industry in the United States.

(e) The following entities were all also involved in the jewelry industry and were engaged in and had activities that affected interstate commerce:

(i) Baume & Mercier, Inc. was a corporation organized and existing under the laws of Switzerland. Its subsidiary, Baume & Mercier, was a Division of VLG North America, Inc., located at 663 Fifth Avenue, New York, New York.

(ii) Nafco Gems, Ltd. ("Nafco") was an Arizona corporation located in Scottsdale, Arizona.

(iii) Mayfield's Company was an Arizona corporation located in Scottsdale, Arizona.

(iv) Mikan, Inc., was a Delaware corporation located in Miami, Florida. Mikan, Inc. also had an office in Israel.

(v) Dennis D. Naughton Jewelers, doing business as Naughton Jewelers, was an Arizona corporation located at 37.72 Camelback Road, Phoenix, Arizona.

(vi) Gaston Jewelers Inc. was an Arizona corporation located at 3602 West Hell Road, Glendale, Arizona.

(vii) Golden Rule Jewelers, Inc., doing business as "Jewelry by Albert," was an Arizona corporation. After August 22, 1996, it was located at 8220 North Hayden Road, Suite 111. Before August 22, 1996, it was located at 8180 North Hayden Road, Suite lo2D, Scottsdale, Arizona.

(viii) Smith Fine Jewelers, Inc. was an Arizona corporation. After October 1997, it was located at 7704 East Doubletree

. Ranch Road, Scottsdale, Arizona. Before October 1997 it was

located at 8989 East Via Linda, Suite 106, Scottsdale,

Arizona.

(ix) Molina, Inc., doing business as Molina Fine Jewelers, was

an Arizona corporation located at 3134 East Camelback Road,

Phoenix, Arizona.

(x) Elan Ltd. was located at 589 5`h Avenue, Suite 1501, New

York, New York.

(xi) Kobi Katz, Inc., doing business as Baguette World, was a

California corporation located at 640 South Hill Street, Suite

851, Los Angeles, California.

(xii) Lieber & Solow Ltd. was a Delaware corporation located at 1140 Avenue of Americas, New York, New York.

(xiii) ESY, Inc. was a New York corporation located at 30 West 47 `h Street, Suite 601, New York, New York.

(xiv) Yahalom Inc., doing business as Baguettes USA, was a California corporation located at 550 South Hill Street, Suite 725, Los Angeles, California.

(xv) J. Schliff and Sons, Inc., doing business as Gem Platinum Manufacturing Company (hereafter "Gem Platinum") was a New York corporation located at 48 West 48`" Street, New York, New York.

(xvi) Solar Diamonds, Inc, was a New York corporation located at 580 5th Avenue, New York, New York.

(xvii) Advanced Ring Manufacturing Company through 1986 was a company located at 145 West 45th Street, New York, New York.

(xviii) Oscar Heyman & Brothers, Inc., was a New York corporation located at 501 Madison Avenue, 15th Floor, New York, New York.

(xix) DeBella Fine Gems and Jewelry was a New Mexico corporation located at 100 East Palace Avenue, Santa Fe, New Mexico.

(xx) .Rolex Watch USA, Inc., was a New York corporation

located at 665 5th Avenue, New York, New York.

(xxi) Horizon Imports was an Illinois corporation located

at 5 south Wabash, Chicago, Illinois.

(xxii) H, K. Ma11ak, Inc., was a New York corporation located

in Great Neck, New York.

(xxiii) Phillip Wolman & Co. was a California corporation

located at 550 South Hill Street, Los Angeles, California.

(xxiv) Gordon Brothers Corporation was a Massachusetts

corporation located at 40 Broad Street, Boston, Massachusetts.

(f) From January 31, 1996, through February 6, 1996, the

American Gem Trade Association ("AGTA") held its annual convention

at the Tucson Convention Center, in Tucson, Arizona. This

convention was open only to members of the Association, not to the

general public. From February 7, 1996 through February 11, 1996,

the Tucson Gem and Mineral Society held its trade show at the

Tucson Convention Center which the trade show was open to the

general public. Throughout the same two week period, several

hotels in Tucson, including the Holiday Inn at 181 West Broadway,

Tucson, Arizona, held smaller jewelry shows,.

(g) From May 29, 1996, through June 4, 1996, the jewelers Circular Keystone ("JCK") held its annual JCK International Jewelry Show at the Sands Expo and Convention Center in Las Vegas, Nevada. This show was open to members of the jewelry trade only, not to the general public.

(h) The Great Lakes Jewelry Show took place on August 24 and 25, 1996, at the Marriott Lincolnshire, Lincolnshire, Illinois.

7. THE ENTERPRISE

2. At all times material to this indictment, there existed a criminal organization, i.e. a group of individuals consisting of defendants WILLIAM A. HANHARDT, JOSEPH N. BASINSKI, PAUL J. SCHIRO, SAM DESTEFANO, GUY ALTOBELLO and others known and unknown, including James D'Antonio and Robert Paul, both now deceased. This group of individuals associated together for the purpose of engaging in an organized plan and scheme to gather information on individuals involved in the jewelry industry for the purpose of committing thefts of jewelry and disposing of the stolen jewelry, at times gathering such information from law enforcement and commercial databases by utilizing intrastate and interstate wire communications- This group of individuals, hereinafter known as "the enterprise," constituted an "enterprise" as that term is used in Title 18, United States Code, Section 1961(4), that is, a group of individuals associated in fact, which enterprise was engaged in and the activities of which affected interstate commerce.

3. The enterprise existed primarily to provide inC6me t6 certain of its members through illegal activities.

4. In order to carry out its activities, the enterprise utilized individuals employed by and associated with it who had

varying roles and responsibilities. The roles and responsibilities

were as follows:

DEFENDANT WILLIAM A. HANHARDT

(a) Defendant WILLIAM A. HANFLARDT (hereafter "HANHARDT^), was the leader of the enterprise. In that capacity he supervised codefendant JOSEPH N. HASINSKI and together they directed the activities of others employed by and associated with the enterprise- HANHARDT directed the other defendants and others in their gathering of information on potential jewelry theft victims and the surveillance of several such individuals. He utilized certain CPD officers to do database searches of CPD and other law enforcement computers to obtain information concerning jewelry salespersons. Similarly, he caused a private investigator to conduct credit bureau database searches and other database searches to gather information concerning individuals who were traveling jewelry salespersons. At times, HANHARDT used the telephone at his residence at 835 Heather Road, Deerfield, Illinois, to direct certain defendants and others to further the interests of the enterprise. HANHARDT personally participated in the theft of jewelry.

DEFENDANT JOSEPH N. BASINSKI

(b) Defendant JOSEPH N. BASINSKI (hereafter "BASINSKI") served the enterprise by identifying potential targets for the enterprise, including owners of or salespersons to jewelry stores

or businesses, by physical surveillances, telephone calls, database searches 'and other means. He would physically follow and surveill potential victims or locations for the purpose of stealing high quality jewelry. He assisted the enterprise by directing and

assisting in directing the activities of one or more of his codefendants in accomplishing the aims of the enterprise, including directing their activities on physical surveillances of locations and individuals and also the actual theft of jewelry. He also served the enterprise by maintaining information an potential victims of the enterprise and certain tools and instrumentalities of the enterprise, BASINSKI personally participated in the theft of jewelry.

DEFENDANT PAUL J. SCHIRO

(c) Defendant PAUL J. SCHIRO (hereafter "SCHIR0") served the enterprise by, among other things, conducting physical surveillances of jewelry stores, jewelry shows, owners of jewelry stores, and jewelry salespersons. SCHIRO personally participated in the theft of jewelry.

DEFENDANT SAM DESTEFANO

(d) Defendant SAM DESTEFANO (hereafter "DESTEFANO") served the enterprise by, among other things, conducting physical surveillances of jewelry stores, owners of jewelry stores, and jewelry salespersons. DESTEPANO personally participated in the theft of jewelry.

DEFENDANT GUY ALTOBELLO

(e) Defendant GUY ALTOBELLO (hereafter "ALTOBELLO)

served the enterprise by providing one or more of his co-defendants with information concerning jewelry salespersons that conducted business with Altobello Jewelers, Inc., so that certain of his codefendants could further identify such persons and determine the most opportune occasion to steal jewelry from such persons.

JAMES D'ANTONIO

(f) Until his death in December 1993, James D'Antonio was a coconspirator and served the enterprise by, among other things, maintaining information of traveling jewelry salespersons and maintaining various tools and instrumentalities . of the enterprise.

ROBERT PAUL

(g) Robert Paul, now deceased, was a coconspirator and served the enterprise by conducting physical surveillance of jewelry stores and jewelry salespersons in Arizona and by providing a cellular telephone used by his coconspirators.

II. THE RACKETEERING CONSPIRACY

S. Beginning in or about the early 19BOS and continuing thereafter to in or about April 1998, the exact dates being to the Grand Jury unknown, at Chicago in the Northern District of Illinois, Eastern Division, and elsewhere,

WILLIAM A. HANHARDT,

JOSEPH N. HASINSKI,

PAUL J. SCHIRO,

SAM DESTEFANO, and GUY ALTOBELLO,

defendants herein, being persons employed by and associated with an enterprise, that is, the enterprise as described in Paragraph 2 above, which enterprise engaged in, and the activities of which affected, interstate commerce, did knowingly conspire together and with other persons known and unknown to the grand jury, to conduct and participate, directly and indirectly, in the conduct of the affairs of the enterprise through a pattern of racketeering activity as those terms are defined in Title 18, United States Code, Section 1961 (1),in violation of Title 18, United States Code, Section 1962(c), as further specified in Paragraphs 6 and 7 below,

6. The racketeering activity consisted of:

(a) Transportation of stolen goods of the value of $5000 or more in interstate commerce, in violation of Title 18, United States Code, Section 2314.

(b) Receipt, possession, concealment, storage, sale and disposal of stolen goods of the value of $5,000 or more, which had

crossed a state boundary after being stolen, knowing the same to have been stolen, in violation of 'title 18, United States Code, Section 2315.

7. As part of the conspiracy, each of the defendants and others agreed that a Conspirator would commit at least two acts of racketeering in the conduct of the affairs of the enterprise.

III. MANNER AND MEANS OF THE CONSPIRACY

8. Among the manner and means of the conspiracy agreed to by the defendants and others, were the following:

(a) It was part of the conspiracy that one or more of the conspirators would and did steal jewelry and cause-some or all of said jewelry to be transported in interstate commerce, including the following:

1) The theft from the vehicle of a salesperson for

Baume & Mercier, -Inc., of approximately 180 watches

having a total value of approximately $310,000 in

Glendale, Wisconsin, on October 8, 1984.

2) The theft from the vehicle of a salesperson for

Rolex Watch USA, Inc., of watches having a value of

approximately $500,000 on or about October 13,

1986, in Monterey, California.

3) The theft from the vehicle of a salesperson for

Gordon Brothers Corporation of jewelry having a

value of approximately $125,000 in Englewood, Ohio,

on or about August 28, 1989.

4) The theft of a bag of a salesperson for J. Schliff

and Sons, Inc., doing business as Gem Platinum

Manufacturing, containing jewelry having a value of

approximately $1,000,000 on or about June 30, 1992,

at Dallas/Ft. Worth, Texas.

5) The theft from the rental vehicle of a salesperson

for J. Schliff and Sons, Inc., doing business as

Gem Platinum Manufacturing, of jewelry having a

value of in excess of $1,000,000 in Flat Rock,

Michigan, on June 23, 1993.

6) The theft from the rental vehicle of a salesperson

for H.K. Ma11ak, Inc., of jewelry having a value of

approximately $240,000 on August 3, 1993, in

Mankato, Minnesota.

7) The theft from representatives for Nafco Gems, Ltd.

and Mayfield's Company of jewelry having a value in

excess of $170,000 at the Skyharbor Airport,

Phoenix, Arizona, on May 7, 1994.

e) The theft from safety deposit boxes at the Hyatt

Regency .Hotel, Columbus, Ohio, of jewelry,

gemstones, U.S. currency, and other material of an

aggregate value in excess of $1,500,000 on August

27, 1994. The victims of such theft included the

various entities listed in Paragraph 1(e) of this

Count.

(b) It was further a part of the conspiracy that one or more of the conspirators would and did attempt to steal and remove jewelry from persons involved in the jewelry trade, including the following:

1) The theft from a hotel room at the Los Angeles

Airport Hilton of the suitcase of a salesperson for

Solar Diamonds, Inc. on or about June 17, 1994, in

Los Angeles, California.

2) The theft from the vehicle of a salesperson for

Baume & Mercier, Inc., of two jewelry cases on

October 2, 1996, one of which contained numerous

fine watches, in Chesterton, Indiana, as more fully

described in Count Two.

(c) It was further part of the conspiracy that one or more of the conspirators would and did physically surveill the residences, places of work, and/or the persons of individuals the

conspirators believed to be involved in the jewelry trade, including the following:

1) A Nafco Gems, Ltd. representative, his residence,

his car and/or place of business in Arizona on

various occasions, including in 1995 and 1996.

2) A jewelry appraiser, his car and/or residence in

Arizona on various occasions including in February

and March 1996.

3) A Mayfield's Company representative, her car,

residence and/or place of business in Arizona and

elsewhere including in 1996.

4) A Baume & Mercier salesperson, his car and/or

residence in Illinois, Wisconsin, and Indiana on

several occasions, including between April 1996 and

October 1996, as more fully described in Count Two.

S) A Kobi Katz, Inc./Lieber Solow, Ltd.

salesperson's residence in Illinois in August 1996.

(d) It was a part of the conspiracy that, to generate income, certain of the conspirators attempted to identify traveling jewelry salespersons and to obtain personal information on each such salesperson for the purpose of determining the most opportune time and occasion to steal from a car, hotel room, or other location, jewelry being transported by the salesperson.

(e) It was further part of the conspiracy that one or more of the conspirators would arid did contact hotels and determine if a traveling jewelry salesperson was staying or was scheduled to stay at the hotel, including defendant HANHARDT contacting three hotels in Illinois on August 23, 1996, to determine if a certain Elan Ltd. salesperson had an advanced reservation, and defendant

DESTEFANO contacting numerous hotels in Minnesota on August 2-3, 1993, to determine the location of a certain H.K. Mallak, Inc., salesperson.

(f) It was further part of the conspiracy that one or more of the conspirators received information from defendant ALTOBELLO concerning, among other things, the identity of certain traveling jewelry salespersons, the nature and quality of their jewelry and/or a portion of the travel schedule of the traveling jewelry salespersons, including in 1996 a Mikan, Inc. salesperson and an ESY, Inc. salesperson.

(g) It was further a part of the conspiracy that, to facilitate the activities of the enterprise, certain of the coconspirators obtained, maintained and used communications equipment such as walkie talkies, pagers, skypagers and cellular telephones.

(h) It was further a part of the conspiracy that, to perpetuate the enterprise, certain of the conspirators used and agreed to use money obtained from the pattern of racketeering activity in the operation of the enterprise.

(i) It was further a part of the conspiracy one or more of the conspirators, including defendants AANHARDT, HASINSKI, and SCHIRO, would and did physically surveill jewelry stores as part of a plan and scheme to identify persons that would carry jewelry to and from such jewelry stores, including the following:

1) Dennis D. Naughton Jewelers, doing business as

Naughton Jewelers, and Molina, Inc., doing business

as Molina Fine Jewelers, in Phoenix, Arizona, on

numerous occasions during the years 1995 and 1996.

2) Golden Rule Jewelers, Inc. doing business as

Jewelry by Albert, in Scottsdale, Arizona, on