As her fraud trial opened Tuesday, Cicero Town President Betty Loren-Maltese was
caught in the crossfire of accusations, with one co-defendant joining the
prosecution in accusing her of wrongdoing.
Prosecutors alleged that Loren-Maltese, former public safety director Emil
Schullo and former Town Treasurer Joseph DeChicio swung the doors to the town
treasury "wide open," let the "wolves into town" and didn't
question millions of dollars in fraudulent payments to the town's insurance
And a lawyer for Schullo accused Loren-Maltese in his opening statement of
shredding evidence, a charge prosecutors didn't even level. The attorney, Frank
Lipuma, then alleged there was only one real power in the town--Loren-Maltese,
saying she "ruled her Cicero empire to her financial benefit and to her
But Loren-Maltese's attorney contended that the scheme was well under way when
she was appointed town president in 1993 and that she was politically
inexperienced and didn't catch onto the fraud for several years.
With jurors outside the courtroom, Loren-Maltese's lawyers sought a mistrial,
saying Schullo's allegations against Loren-Maltese wouldn't have been brought up
had she been tried separately. They also asked that Loren-Maltese's trial be
severed from those of the other defendants.
But U.S. District Senior Judge John Grady refused the request. "Mr. Schullo
has a right to present a defense that is antagonistic," the judge said.
Assistant U.S. Atty. Mitchell Mars told jurors that in 1992, Loren-Maltese's
husband, Frank Maltese, then a powerful political figure in Cicero, helped boot
out the town's insurance administrator, installing in its place Specialty Risk
Consultants, which at the time had been in existence for only four months. Frank
Maltese died in 1993.
In court papers, prosecutors have alleged Loren-Maltese, Schullo and DeChicio
allowed Specialty Risk--secretly controlled by defendants Michael Spano Sr., a
reputed Cicero mob boss, and his business partner John LaGiglio--to steal $10
million by charging inflated fees and imposing bogus charges.
Mars alleged that about $5 million in stolen funds went to buy and renovate a
golf course and clubhouse on a Wisconsin island, dubbed "Fantasy
Island" by the prosecutor.
Loren-Maltese's lawyer, Terence Gillespie, said thievery took place on
Loren-Maltese's watch but noted the fraud was going on for several months before
she was elevated to town president in early 1993.
Gillespie contended Loren-Maltese was duped by the insurance scam.
"Betty doesn't like to hear this," he said, "but she was over her
Gillespie maintained that the powers in Cicero appointed her town president
because of her political inexperience and "that she could be fooled."
"And she was," he said.
In Loren-Maltese's defense, Gillespie said even the town's auditors didn't catch
onto the fraud scheme.
When Loren-Maltese learned of the fraud in 1996, Gillespie said she notified the
state's attorney, hired a "blue-ribbon" ex-prosecutor and outside
accountants to investigate and sued Specialty Risk.
"If you're under investigation, you hide," Gillespie said. "You
don't start investigations, and that's what she did."
But Lipuma, Schullo's lawyer, quickly blamed Loren-Maltese, saying,
"Nothing could be done in Cicero without Betty Loren-Maltese's knowledge
Lipuma also alleged that following Schullo's firing, Loren-Maltese had
undisclosed documents removed from his office and shredded the papers "to
conceal the truth."
Lipuma said Schullo, a career police official, wasn't educated on insurance
matters and relied on the judgment of town lawyers and accountants. Prosecutors
say Loren-Maltese, Schullo and DeChicio sat on a town panel that oversaw the
Thomas Anthony Durkin, DeChicio's lawyer, accused prosecutors of trying to lump
the three accused town officials together. Durkin maintained DeChicio didn't
know the treasurer's duties were among his responsibilities when he was
appointed to the town board.
"Who really was part of the inner circle in Cicero?" he asked.
"The one thing I'm sure of is it wasn't Joe DeChicio."
Mars said the fraud scheme bled the insurance fund dry, leading to backlogs of
as much as $800,000 on claims and forcing the town to borrow money and hit up
town workers for payroll deductions. A doctor for one employee threatened to cut
off treatment for cancer because the town wasn't paying its bills, Mars said.
Mars alleged one town financial employee repeatedly warned Loren-Maltese of the
excessive insurance payments but she fired him "to get him out of the
Mars charged that Loren-Maltese's claims of going after Specialty Risk after
learning of the fraud were nothing more than a continuation of the scheme's
cover-up attempts. Also on trial are Spano's son, Michael Jr.; LaGiglio's wife,
Bonnie; and attorney Charles Schneider.