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A powerful former labor boss with reputed ties to organized crime was convicted Monday of improperly using his influence over myriad union funds to obtain millions of dollars in personal loans from banks.

A federal jury also convicted John Serpico of pocketing a kickback in return for arranging a union loan for a hotel project in Champaign.

As a former international vice president of the Laborers Union as well as one-time head of a labor organization made up of as many as eight local unions, Serpico, 70, of Lincolnwood is the most significant Chicago labor leader to be convicted on corruption charges in years.

He also held influence with prominent politicians from mayors to governors, including former Gov. Dan Walker, who originally appointed Serpico to the Illinois International Port District, and former Gov. James Thompson, who reappointed him. Serpico was the district's longtime chairman until 1999 when he left the board after being indicted.

Two of Serpico's longtime associates, Maria Busillo, who succeeded him in several key union posts, and Gilbert Cataldo were also found guilty.

The verdict came a week after the government's case came dangerously close to unraveling. At the close of the prosecution, U.S. District Judge Blanche Manning, who presided over the two-month trial, acquitted Serpico of four of 11 counts, calling the government's evidence too weak on those counts to go to the jury.

But following deliberations over parts of three days, the seven-woman, five-man jury convicted Serpico on six of seven remaining counts, all charging mail fraud.

Cataldo was convicted of mail fraud while Busillo was convicted of mail fraud and making false statements to a bank.

With the felony convictions, Busillo, who succeeded Serpico as president of the Central States Joint Board, an amalgam of Chicago unions representing some 20,000 factory workers, and Serpico, still a $50,000-a-year consultant for the group, will be barred from union activities for life, authorities said.

The lone count on which the jury acquitted Serpico concerned a $480,000 loan Serpico allegedly helped obtain for a reputed mob figure who planned to construct an apartment building in Chicago's Little Italy neighborhood.

Prosecutors said they would seek incarceration for all three defendants, who remain free on bond. Sentencing was set for Nov. 1.

Matthias Lydon, Serpico's lead lawyer, said he was bewildered particularly at how the jury convicted Serpico on the kickback charges. Lydon contended the evidence was nonexistent.

Lydon also maintained the loans-for-deposits scheme wasn't illegal unless the prosecution proved that Serpico "either acted to the detriment of the union or got some under-the-table benefit." Neither occurred, he argued.

"It's a strange case," said Lydon, vowing he would seek to overturn the jury verdict.

Lawyers for Busillo and Cataldo couldn't be reached for comment.

The prosecution team--Assistant U.S. Attorneys David Glockner, Marsha McClellan and Joseph Ferguson--said Serpico and Busillo engaged in a 12-year scheme to trade their control over union pension, benefit and other funds to obtain more than $5 million in personal loans to finance a number of their business ventures.

Evidence at trial showed that between 1978 and 1990, Serpico and Busillo obtained 17 loans from eight different banks that received substantial union deposits, in some cases just days after the banks decided to make the loans.

But the key dealings took place with Capitol Bank and Trust, a small neighborhood bank on Chicago's Northwest Side.

In return for obtaining some $5 million in personal loans at favorable rates, Serpico and Busillo deposited about $4 million in union funds in the bank and the bank managed another $16 million in union pension and welfare fund plans.

Capitol Bank pleaded guilty in 1996 to the scheme and was fined $800,000. Its two owners were also forced to sell the bank and were banned from banking.

At Serpico's trial, Robert Hahn, former president of Capitol Bank, testified for the government that the bank was willing to take more risks on the personal loans to Serpico because of the sizable union deposits in the bank.

Among the bank's actions was a $1.8 million loan to Serpico and his partner, former U.S. Rep. Morgan Murphy, on a West Side film studio project despite cash-flow woes and no clients, authorities said. The building was later bought by Oprah Winfrey and turned into Harpo Studios.

The charges alleged that Busillo--who defense lawyers acknowledged to jurors was romantically linked to the married Serpico--obtained loans for a condominium on Marco Island, Fla., and a $900,000 house in suburban Glenview, where she still resides.

Busillo, 55, obtained the loan on the Glenview house even though the monthly mortgage payment exceeded her gross pay, prosecutors said.

Serpico and Cataldo, a former city housing commissioner and former executive director of the port district, were convicted of sharing in kickbacks of more than $330,000 after the union lined up a $6.5 million loan for a financially struggling hotel project in Champaign.

The money went to Cataldo, 61, of Elmwood Park for alleged consulting fees for architectural and engineering work.

Serpico was ousted six years ago from his position with the Laborers International Union as part of a move to purge the union of mob influence.

In testimony before the President's Commission on Organized Crime in 1985, Serpico acknowledged friendships with a virtual who's who list of Chicago mobsters, including former Outfit bosses Joseph Aiuppa, Joseph Ferriola and Ernest "Rocco" Infelice. But Serpico maintained they were all simply childhood friends.

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