Mayor's late husband labeled architect of scam
|
Betty Without Makeup
|
Cicero Town President Betty
Loren-Maltese leaves federal court following her arraignment on
corruption charges Friday. (Tribune photo by Heather Stone)
and Andrew Zajac
Tribune staff reporters
June 17, 2001
For all her self-assured defiance, Cicero Town
President Betty Loren-Maltese owes much of what she has today to her late
husband—and that may include her indictment on federal charges of
racketeering, fraud, money laundering and tax offenses.
At the core of an alleged five-year, multimillion-dollar scheme to loot the
pockets of Cicero taxpayers was an enterprise called Specialty Risk—a claims
administrator without a license to handle claims, a town contractor without a
contract, federal prosecutors say.
An architect of that scheme was Frank Maltese,
the Cicero town assessor and powerbroker married to Loren-Maltese in 1988, who
had ties to convicted mobster Ernest Rocco Infelice and
reputed mob associate Michael Spano Sr., law enforcement sources say.
As charges were filed against Loren-Maltese and nine others Friday in
connection with the scheme, one source referred to Frank Maltese, who died of
pancreatic cancer in 1993, as an "unindicted co-conspirator."
Maltese acted as a go-between for the mob and Town Hall in Cicero, sources
said. When Cicero police planned to raid operations run by Infelice's crew,
Maltese warned Infelice. And when the alleged plan was hatched to allegedly
fleece town coffers of millions of dollars by using a sham insurance claims
firm, Maltese "greased the skids for them to take over," the source
said.
Specialty Risk Consultants Inc. was a guise that would produce for its
creators money for a nine-hole golf course nestled deep in Wisconsin's North
Woods and an Indiana horse farm, Cadillac DeVilles and a new vacation house,
federal prosecutors allege.
Never meant to be a legitimate corporation, it became for its engineers a
"candy store," said Kathleen McChesney, who heads the FBI's Chicago
office.
But with the indictments of Loren-Maltese, Spano Sr. and eight others,
Specialty Risk becomes something else: another episode in a long, sad serial of
corruption that has at once plagued and defined the western suburb since the
bawdy, bootlegger days of Al Capone.
For years leading up to 1992, Cicero had used a company called Travelers Plan
Administrators of Illinois to oversee its health insurance program for municipal
employees. Like many municipalities, Cicero is self-insured and pays claims out
of pocket, but hires a company to administer the paperwork.
Specialty Risk was incorporated only in February 1992. Just two months later
it was hired to be Cicero's insurance program consultant, and by July the town
had ousted Travelers Plan.
In 1992, Spano Sr. replaced Infelice as the head of organized crime in Cicero
after Infelice's conviction on federal racketeering and murder conspiracy
charges. Frank Maltese was indicted along with Infelice and pleaded guilty to a
gambling conspiracy charge.
Guilty but still in office
Despite his plea, Maltese continued to hold his town post as assessor into
early 1993. Loren-Maltese wasn't the town's leader at the time, she was an aide
to Town President Henry Klosak.
But Klosak died in late 1992, and at a January 1993 Town Board meeting,
Maltese and his GOP allies orchestrated Loren-Maltese's ascension to town
president. The process lasted six minutes.
Maltese died later that year at age 63 before he could begin a nine-month
prison term.
Spano Sr., who controlled Specialty Risk, and Maltese teamed with
Loren-Maltese and two officials of Specialty Risk—John LaGiglio and Frank
Taylor—to have the company take over from Traveler's, prosecutors said.
Specialty Risk became the town's claim administrator without any approval from
the Town Board and without a contract, the indictments allege.
To make it appear to be legitimate months later, the indictment alleged,
then-Cicero Police Chief Emil Schullo arranged to have Klosak's signature stamp
placed on the Specialty Risk proposal given to accountants working for the town.
That allegedly took place in early 1993, weeks after Klosak had died,
authorities said.
As the scheme progressed, Loren-Maltese authorized weekly transfers of money
to Specialty Risk's accounts, transfers that had no tie to any claim
reimbursement, the indictment alleged. Ultimately, $33 million in town funds
found its way into Specialty Risk accounts, but the firm paid out only $18
million of that in health claims, prosecutors charged.
Loren-Maltese, Schullo and Town Supervisor Joseph DeChicio even used
Specialty Risk to beef up their own insurance coverage, having the company
reimburse their health insurance claims 100 percent—other Cicero employees had
to pay a portion of health costs out of pocket—and using it to gain free life
insurance coverage, according to the indictment.
As Specialty Risk culled millions of dollars from town coffers, prosecutors
allege that its operators set up a series of related firms to spend the money:
$324,505 for a new home for Spano on the Wolf River in Winneconne, Wis.; the
purchase of the Crown Point Farms horse ranch in northwest Indiana; and the
nine-hole Four Seasons golf course resort in remote Pembine, Wis.
Loren-Maltese was one of the golf course's investors, lending $300,000 from
her political fund to the project. Prosecutors say the investors hoped to open a
gambling casino at the course, which was 12 miles from a main highway and had no
lodging.
The venture ultimately failed.
Spano Sr., his son, Michael Spano Jr., LaGiglio and Taylor all got new
Cadillac DeVilles with Specialty Risk proceeds. The insurance firm also bought a
$36,584 Cadillac DeVille and leased it to Schullo.
Other areas of inquiry
Federal prosecutors made it clear Friday they are far from finished with
Cicero, and sources say at least three allegations are currently under
investigation:
Since the mid-1990s, federal investigators have looked into whether stolen
cars were being towed to the town's towing company, RAM Recovery, and later
sold. As recently as this year, a federal grand jury has checked into whether
the town violated the civil rights of Loren-Maltese's mayoral opponent, Joseph
Mario Moreno, when it arrested him on DUI charges that were later dismissed. And
federal investigators are looking into a town kickback scheme involving parking
ticket collections.
Asked on Friday if a culture of corruption existed in Cicero, U.S. Atty.
Scott Lassar drew laughs from reporters when he answered: "There does seem
to be a persistent problem."
Law enforcement authorities say that long after the influence of organized
crime waned in other Chicago area towns, gritty, working-class Cicero has
remained a mob oasis, an infamous local synonym for flamboyant pols, crooked
cops and shady business dealings.
The mob in the '20s
The first chapter of that corruption in the mid-1920s was the success of the
mob in co-opting friendly Republican politicians then running Cicero. That
enabled mobsters to fend off a wave of government reform then sweeping the city
of Chicago and bought time for Capone to consolidate the power that would make
him Public Enemy No. 1.
The town also became a breeding ground and finishing school for a string of
high octane mob leaders including Frank "The Enforcer" Nitti, Tony
"Big Tuna" Accardo and Joey "Doves" Aiuppa.
The success of Capone and other mob chieftains like Johnny Torrio in taking
over town government in Cicero also gave Chicago-area organized crime a defining
characteristic: a weedlike resilience based on its ability to take over entire
governmental offices.
"It's a top down operation," said Wayne Johnson, chief investigator
of the Chicago Crime Commission. "They moved out to Cicero in collaboration
with the government."
In 1948, a reforming town president, John Stoffel, appointed a police
superintendent, Joseph Horejs, who vowed to clean up the town.
According to the Chicago Crime Commission, Horejs told mob gambling boss
Louis Lipschultz to move his bookmaking operation out of town. Shortly
afterward, the town council fired Horejs and he was replaced by a four-time
former police chief, Martin Wojciechowski, whose tenures included the late
1920s, when Capone operated openly in the town. Stoffel resigned shortly
afterward.
Stoffel said he was quitting because of "corrupt influences which seem
to have a strangling mortgage on our political life."
If prosecutors are right, little has changed.
Tribune staff reporters Matt O'Connor, Ray Gibson, Cam Simpson and Todd
Lighty contributed to this report.