Frank Taylor, 50, had already said that he would be a government witness in the scheduled May 23 trial of Loren-Maltese on charges of siphoning off millions of dollars through bogus insurance payments.

Loren-Maltese has pleaded innocent to the charges that she and eight co-defendants stole as much as $10 million and invested it in an Indiana horse farm, a Wisconsin golf course and a summer home.

Co-defendants include former Cicero Police Chief Emil Schullo and reputed mob boss Michael Spano Sr., who were convicted March 28 of bilking the corruption-plagued suburb out of $75,000 in another scam.

Prosecutors said Spano heads the mob in the suburb just across Chicago's city limits, known as a haven for organized crime since Prohibition when Al Capone made it the hub of his bootlegging empire.

Taylor said in a signed plea agreement with federal prosecutors that he was hired by Spano and co-defendant John LaGiglio as general manager of the insurance firm of Specialty Risk Consultants Inc.

Taylor said he kicked back $119,000 in income to Spano and LaGiglio in 1993 and 1994. The money had been laundered through another company, Plaza Partners, to conceal it, he said.

He said he joined in a scheme "to overcharge the town of Cicero millions of dollars for health claims administration and other insurance services." He said that he, Schullo and Loren-Maltese were joined by the town president's husband, Frank "Baldy" Maltese, who died of cancer in 1993 while awaiting sentencing on a mob-related gambling conviction.

Taylor said that in 1993 Cicero transferred $9,957,815 to Specialty Risk while the firm spent just $5,575,000 on insurance for the town. The next year, Cicero paid $8,820,000 to the company, which spent about $5,168,000 on behalf of the town.

Taylor left the firm in June 1995. But for the months that he was there, the town transferred $3,769,000 to Specialty Risk while the firm spent $2,636,000 on insurance for the town. He said that he and others dipped into the funds for their own use.

He admitted that in 1993 he used $121,000 taken from the firm to improve a residence he maintained in Lake County. He said he used money earmarked for health claims and insurance premiums to lease cars for his wife and other family members.

He admitted creating bogus invoices to cover the theft.

Specialty Risk charged a fee of 50 percent of savings from health claims management services to justify overpayments and charged a fee of 20 percent of all health claims filed, the document said. It said: "Such a fee is unheard of in the health claims administration industry,"

Cicero also paid $750,000 for a sham "safety program," it said.

In January 1994, Taylor acknowledged, he and other defendants used $1 million in insurance money to buy a bond through an offshoot of Specialty Risk, then sold it three months later. Specialty Risk failed to return either the interest or the principal to the town, he said.

The plea agreement said that in 2000 Taylor was sentenced to six months in prison for tax evasion. Prosecutors said that he could be sentenced to from 46 to 57 months on the latest charges but that they would ask the judge for 23 months as a reward for his cooperation.

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