By Rudolph Bush
Tribune staff reporter
Published June 7, 2002

Shortly after the death of Cicero's town president in 1992, operators of the allegedly mob-controlled company that handled the town's insurance claims worried whether the change in leadership would cause problems, according to court testimony Thursday.

Frank Taylor, then-manager of insurer Security Risk Consultants, said he was assured Betty Loren-Maltese, who was put in charge of the western suburb, would be compliant.

On the stand before U.S. District Senior Judge John Grady in the trial of Loren-Maltese and seven others, Taylor said that within weeks after taking office, Loren-Maltese expanded town business handled by the insurance company.

Specialty Risk Consultants was put in charge not only of managing the town's health insurance program, but it also was given the contract for worker's compensation and automobile insurance.

Taylor is a key witness in the trial of the eight charged with running an insurance scam that bilked Cicero taxpayers out of $10 million.

Also charged in the scheme are Emil Schullo, former town public safety director; Joseph DeChicio, former town treasurer; reputed Cicero mob boss Michael Spano Sr. and his son, Michael Jr.; Spano's business partner, John LaGiglio and his wife, Bonnie; and attorney Charles Schneider.

Taylor was also charged in the scheme but pleaded guilty this year and agreed to testify against the others.

The insurance scheme was hatched in early 1992, when Taylor was approached by LaGiglio to establish the insurance company with LaGiglio's parents listed as the firm's officers, Taylor testified.

"John LaGiglio told me that because of relationships he and his friends had with folks in the Town of Cicero we could get their business," Taylor said.

The most influential contact was Loren-Maltese's husband, town trustee and political powerhouse Frank Maltese, Taylor said. Cicero's town president, Henry Klosak, was initially hostile to the idea, Taylor testified.

But Maltese seemed to persuade Klosak to turn over the insurance business from a more established firm to Specialty Risk, a start-up company with few clients, Taylor said.

The company charged the town almost double the previous firm's price to handle each town employee's insurance claims. It also tacked on a 20 percent charge to every claim it processed for the town, which paid them from its treasury.

"The money was going for loans [to family and friends of Spano Sr., LaGiglio and Taylor] and for personal use," Taylor said.

One loan, he said, went to the family of Spano Sr.'s son-in-law for a restaurant, and some of the money was used to buy new Cadillacs for Spano Sr., LaGiglio, Taylor and Spano Jr.

After Klosak's death in 1992, Taylor worried that the next president might not cooperate with the scheme, he said.

When he approached Spano and LaGiglio about his concern, "LaGiglio told me someone was going to be appointed [president] that he and [Spano Sr.] could control," Taylor said.

Later Spano Sr. told him Loren-Maltese would be appointed president "because she was Frank's wife and that Frank could control her."

Attorneys for Loren-Maltese have argued she was an unwitting pawn in the scheme.

But Taylor described her as a hands-on leader, who, with Schullo, demoted or froze out people who questioned Cicero's dealings with Specialty Risk.

When Town Comptroller Robert Balsitis raised concerns about the amount of payments going to the company, Schullo said he was going to have Balsitis demoted, Taylor said.

Soon after, Balsitis was assigned to lesser duties.

Taylor also testified that by the end of 1993, the town had a backlog of more than $700,000 in unpaid claims made by town employees. Prosecutors have alleged the backlog was directly due to money being skimmed by Specialty Risk.

Taylor said despite the backlog, Loren-Maltese requested--and was paid--some $6,000 to reimburse her for dental bills and for home health care for her husband.

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