Witness tells of secret Cicero meetings

June 7, 2002

BY CURTIS LAWRENCE STAFF REPORTER

A key government witness in the Cicero corruption case held the attention of a packed courtroom Thursday with details of clandestine meetings, kickbacks and other schemes to defraud taxpayers.

At center stage was Frank Taylor, the man hired to run Specialty Risk Consultants, the alleged shell insurance firm that helped loot millions from Cicero taxpayers. He brought color into what so far has been a black and white trail of court documents.

Taylor walked jurors and the audience through the days following the death of former Cicero Town President Henry Kosak in late 1992, when a scheme was allegedly hatched by town officials and their mob friends to pocket town insurance funds to buy a summer home, a horse farm and a golf resort.

Taylor said he was assured that Kosak would be followed by someone who could be controlled by reputed mobster Mike Spano Sr.--namely, Betty Loren-Maltese.

Her husband, Frank Maltese, was an associate of Spano Sr.

Spano Sr. told Taylor that "Betty was appointed because she was Frank's wife and that Frank could control her," said Taylor, general manager of Specialty Risk, also known as SRC. The unlicensed company was created by John LaGiglio, a friend of Spano Sr., to take over Cicero's insurance business with help from Maltese.

From its inception, Taylor said he thought the company could make a killing in Cicero.

Under questioning from lead prosecutor Matthew Schneider, Taylor walked through how he and LaGiglio profited from town business as long as they made kickbacks to Spano Sr.

Prosecutors produced a note allegedly sketched out by LaGiglio that showed how he and Taylor would be paid $5,850 a week from the town. But after $2,000 in kickbacks to Spano Sr. and $1,275 for taxes, their net weekly salary would be $2,575 in the first three weeks of a given month. In the fourth week their kickback fee would only be $1,000.

"Myself and John would kick back $7,000 a month," Taylor testified. "I was told by John [LaGiglio] that money was going to Mike Spano Sr."

Taylor said the money was for Spano "and also to pay off our friends."

When Schneider asked Taylor what he meant by "our friends," LaGiglio's attorney Allan Ackermann objected because he thought Schneider was trying to make links between SRC officials and organized crime.

U.S. District Judge John Grady has told prosecutors to stick to the insurance fraud scheme and not to pursue links to the mob.

On another topic, Taylor discussed how Loren-Maltese and her husband were compensated for medical expenses totalling more than $5,600. Loren-Maltese said she had paid the bills herself and that she wanted to be reimbursed, Taylor testified.

But at the same time, insurance claims for other Cicero employees totalling more than $724,000 went unpaid, Taylor told the court.

When asked why payments weren't being made on the claims, Taylor said it was because "the money was going to personal use ... loans to purchase cars and things of that nature."

Taylor said that in late 1993, LaGiglio told him that SRC would receive a wire transfer for $750,000 from town officials to clear up the claims. He said the money was received, but not all of it was used to pay the backlogged claims.

Again, the money was put to "personal use," Taylor testified.