UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
UNITED STATES OF AMERICA )No. 02 CR 1050
)
v. )Violations: Title 18,
)United States Code,
NICHOLAS W. CALABRESE, )Sections 2, 371, 894,
JAMES MARCELLO, )1001(a)(2), 1510, 1951, 1955,
JOSEPH LOMBARDO, )and 1962(d)
also known as "The Clown," )
"Lumpy," and "Lumbo," )
FRANK CALABRESE, SR., )
FRANK SCHWEIHS, also known as )
"The German," )First Superseding Indictment
FRANK SALADINO, also known as )
"Gumba," )
PAUL SCHIRO, also known as )
"The Indian," )
MICHAEL MARCELLO, also known as )
"Mickey," )
NICHOLAS FERRIOLA, )
ANTHONY DOYLE, also known as )
"Twan," )
MICHAEL RICCI, )
THOMAS JOHNSON, )
JOSEPH VENEZIA, and )
DENNIS JOHNSON )
COUNT ONE
The SPECIAL AUGUST 2003-2 GRAND JURY charges:
I. THE ENTERPRISE
1. At times material to this indictment there existed a
criminal organization which is referred to hereafter as "the
Chicago Outfit." The Chicago Outfit was known to its members and
associates as "the Outfit" and was also known to the public as
"organized crime," the "Chicago Syndicate" and the "Chicago Mob."
The Chicago Outfit was an "enterprise" as that term is used in
Title 18, United States Code, Section 1961(4), that is, it
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constituted a group of individuals associated in fact, which
enterprise was engaged in and the activities of which affected
interstate commerce. The enterprise constituted an ongoing
organization whose members functioned as a continuing unit for a
common purpose of achieving the objectives of the enterprise.
2. The Chicago Outfit existed to generate income for its
members and associates through illegal activities. The illegal
activities of the Chicago Outfit included, but were not limited to:
(1) collecting "street tax," that is, extortion payments required
as the cost of operating various businesses;(2) the operation of
illegal gambling businesses, which included sports bookmaking and
the use of video gambling machines; (3) making loans to individuals
at usurious rates of interest (hereafter referred to as "juice
loans"), which loans constituted "extortionate extensions of
credit," as that term is defined in Title 18, United States Code,
Section 891(6); (4) "collecting" through "extortionate means" juice
loans constituting "extensions of credit," as those terms are
defined in Title 18, United States Code, Sections 891(5), (7) and
(6), respectively; (5) collecting debts incurred in the Chicago
Outfit's illegal gambling businesses; (6) collecting debts incurred
in the Chicago Outfit's juice loan business, which debts carried
rates of interest at least twice the rate enforceable under
Illinois law; (7) using threats, violence and intimidation to
collect street tax and juice loan debts; (8) using threats,
violence, and intimidation to discipline Chicago Outfit members and
associates; (9) using murder of Chicago Outfit members, associates
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and others to advance the interests of the Chicago Outfit's illegal
activities; (10) obstructing justice and criminal investigations by
intimidating, bribing, retaliating against, and murdering witnesses
and potential witnesses who could provide information adverse to
the enterprise's interests; and (11) traveling in interstate
commerce to further the goals of the criminal enterprise.
3. In order to carry out its criminal activities, the
Chicago Outfit maintained a structure and chain of command. The
criminal activities of the Chicago Outfit were carried out in part
by sub-groups, or "crews," which were generally given territories
in different geographic locations in the Chicago area. These crews
were known by their geographic areas, and included the Elmwood Park
crew, the North Side/Rush Street crew, the South Side/26th Street
or Chinatown crew, the Grand Avenue crew, the Melrose Park crew,
and the Chicago Heights crew. Each crew was run by a crew leader,
also known as a street boss or "capo," and these crew bosses
reported to an underboss, or "sotto capo," who was second in
command of the Chicago Outfit, and therefore referred to at times
as "Number Two." The overall leader of the Chicago Outfit was
referred to as the Boss or "Number One." The Chicago Outfit also
utilized a "consigliere," who provided advice to the Boss.
4. When an individual conducting illegal activities on behalf
of the Chicago Outfit proved himself particularly trustworthy and
was to be given special status in the enterprise, he was given
"made" status. An individual could not normally be "made" unless
he was of Italian descent, and had committed at least one murder on
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behalf of the enterprise. An individual had to be sponsored by his
capo before he could be "made," which occurred at a ceremony in
which the person to be "made" swore allegiance to the enterprise.
This ceremony was attended by the individual's capo, as well as
other ranking members of the Chicago Outfit. Once "made," the
individual was accorded greater status and respect in the
enterprise. An individual who was "made" or who committed a murder
on behalf of the Outfit was obligated to the enterprise for life to
perform criminal acts on behalf of the enterprise when called upon.
5. Disputes between members of different crews were to be
resolved first by their respective capos, and, if no resolution
could be made between the capos, then the Boss would settle the
dispute.
6. During the course of the conspiracy, Anthony Accardo, also
known as "Big Tuna," and "Joe Batters," Joseph Aiuppa, also known
as "Doves," and "Joey O'Brien," Sam Carlisi, also known as "Wings,"
and John Monteleone, also known as "Johnny Apes," among others,
acted as Boss of the Chicago Outfit.
7. During the course of the conspiracy, Joseph Aiuppa, and
Jack Cerone, among others, acted as Sotto Capo, or Underboss, of
the Chicago Outfit.
8. During the course of the conspiracy, Joseph Ferriola was
a "made" member of the Chicago Outfit who reported directly to the
Boss. Harry Aleman, William Petrocelli, also known as "Butch,"
Jerry Scarpelli, and others, were criminal associates who reported
at various times to Joseph Ferriola.
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9. Defendant JAMES MARCELLO was a member of the Melrose Park
crew, was a "made" member of the Chicago Outfit, and committed
murder and other criminal activities on its behalf. Defendant
JAMES MARCELLO continued to conduct criminal activities on the
Outfit's behalf while incarcerated through his brother, defendant
MICHAEL MARCELLO, and others.
10. Defendant JOSEPH LOMBARDO, also known as "the Clown,"
"Lumpy," and "Lumbo," was a member of the Grand Avenue crew, and
committed murder and other criminal activities on its behalf.
11. Defendant FRANK CALABRESE, SR., was a member of the South
Side/26th Street crew, was a "made" member of the Chicago Outfit,
and committed murder and other criminal activities on its behalf.
Defendant FRANK CALABRESE, SR., continued to conduct criminal
activities on the Outfit's behalf while incarcerated through
defendants FERRIOLA, DOYLE, RICCI, and others.
12. Other members of the South Side/26th Street crew were
James Torello, also known as "Turk," Angelo LaPietra, also known as
"the Hook," and "the Bull," and James LaPietra, all of whom served
as capos of this crew during the course of the conspiracy.
Additional members of this crew included John Monteleone, John
Fecarotta, Ronald Jarrett, James DiForti, Frank Furio, and Frank
Santucci.
13. Defendant NICHOLAS CALABRESE is the brother of defendant
FRANK CALABRESE, SR., was also a member of the South Side/26th
Street crew, was a "made" member of the Chicago Outfit, and
committed murder and other criminal activities on its behalf.
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14. Defendant FRANK SCHWEIHS, also known as "the German," was
an enforcer for the Chicago Outfit, imposing and collecting "street
tax" for himself and Outfit members, and making additional
collections on behalf of the enterprise through the use of
extortionate means. Defendant SCHWEIHS also agreed to commit
murder on behalf of the Chicago Outfit.
15. Defendant FRANK SALADINO, also known as "Gumba," was a
member of the South Side/26th Street crew, and committed murder and
other criminal activities on behalf of the Chicago Outfit.
16. Defendant PAUL SCHIRO, also known as "the Indian," was a
criminal associate of defendant SCHWEIHS, "made" member Anthony
Spilotro, and Outfit associate Joseph Hansen, who committed murder
and other criminal activities on behalf of the Chicago Outfit.
17. Defendant MICHAEL MARCELLO, also known as "Mickey," is
the brother of defendant JAMES MARCELLO, and was a member of the
Melrose Park crew. Defendant MICHAEL MARCELLO assisted his
brother's participation in the activities of the enterprise while
defendant JAMES MARCELLO was in jail, by keeping his brother
informed of the enterprises's activities, delivering messages to
persons associated with the enterprise, and carrying out illegal
activities of the Chicago Outfit, including the operation of an
illegal video gambling business.
18. Defendant NICHOLAS FERRIOLA is the son of Joseph
Ferriola, and was a member of the South Side/26th Street crew who
assisted defendant FRANK CALABRESE, SR.'s participation in the
activities of the enterprise while defendant FRANK CALABRESE, SR.,
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was in jail, by keeping defendant FRANK CALABRESE, SR., informed of
the enterprise's activities, delivering messages to persons
associated with the enterprise, collecting monies generated by
extortionate demands of defendant FRANK CALABRESE, SR., and
carrying out other illegal activities of the Chicago Outfit,
including the operation of an illegal sports bookmaking business.
19. Defendant ANTHONY DOYLE, also known as "Twan," is a
retired Chicago Police Department ("CPD") officer, who, at the time
he was employed as a CPD officer, assisted defendant FRANK
CALABRESE, SR.'s participation in the activities of the enterprise
while defendant FRANK CALABRESE, SR., was in jail, by keeping
defendant FRANK CALABRESE, SR. informed of a law enforcement
investigation into the murder of John Fecarotta, committed by
defendants FRANK CALABRESE, SR., NICHOLAS CALABRESE, and others.
Defendant DOYLE also agreed to pass messages from defendant FRANK
CALABRESE, SR., in jail to other members of the Chicago Outfit,
including messages designed to determine whether defendant NICHOLAS
CALABRESE or James DiForti, now deceased, was cooperating with law
enforcement about the activities of the enterprise.
20. Defendant MICHAEL RICCI is a retired CPD officer, who at
the time he was subsequently employed with the Cook County
Sheriff's Department, assisted defendant FRANK CALABRESE, SR.'s
participation in the activities of the enterprise while defendant
FRANK CALABRESE, SR., was in jail, by agreeing to pass messages
from defendant FRANK CALABRESE, SR., to other members of the
Chicago Outfit, including messages designed to determine whether
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defendant NICHOLAS W. CALABRESE or James DiForti was cooperating
with law enforcement about the activities of the enterprise.
Defendant RICCI also agreed to assist defendant FRANK CALABRESE,
SR., in collecting monies generated by extortionate demands of
defendant FRANK CALABRESE, SR., and to provide materially false
information to special agents of the Federal Bureau of
Investigation.
II. THE RACKETEERING CONSPIRACY
21. From approximately the middle of the 1960s through the
date of the return of this indictment, the exact dates being
unknown to the Grand Jury, in the Northern District of Illinois,
Eastern Division, and elsewhere,
NICHOLAS W. CALABRESE,
JAMES MARCELLO,
JOSEPH LOMBARDO, also known as
"The Clown," "Lumpy," and "Lumbo,"
FRANK CALABRESE, SR.,
FRANK SCHWEIHS, also known as
"The German,"
FRANK SALADINO, also known as
"Gumba,"
PAUL SCHIRO, also known as
"The Indian,"
MICHAEL MARCELLO, also known as
"Mickey,"
NICHOLAS FERRIOLA,
ANTHONY DOYLE, also known as
"Twan," and
MICHAEL RICCI,
defendants herein, being persons employed by and associated with an
enterprise, that is, the Chicago Outfit, which enterprise engaged
in and the activities of which affected, interstate commerce, did
knowingly conspire and agree, with other persons known and unknown
to the Grand Jury, to conduct and to participate, directly and
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indirectly, in the conduct of the affairs of the Chicago Outfit
through: (1) a "pattern of racketeering activity," as that term is
defined in Title 18, United States Code, Sections 1961(1) and
1961(5), and as further specified in paragraph 49 of this count,
and (2) the "collection of unlawful debt," as that term is defined
in Title 18, United States Code, Section 1961(6), and as further
specified in paragraph 50 of this count, both in violation of Title
18, United States Code, Section 1962(c).
22. It was part of the conspiracy that each defendant agreed
that a conspirator would commit at least two acts of racketeering
in the conduct of the affairs of the enterprise.
23. It was further part of the conspiracy that the
defendants, together with other persons known and unknown to the
Grand Jury, each agreed to conduct and to participate in the
conduct of the Chicago Outfit's affairs through the collection of
unlawful debt.
24. It was further part of the conspiracy that acts of murder
would be attempted and were committed to further the criminal
objectives of the Chicago Outfit and protect the enterprise from
law enforcement. Such murders and attempted murders included:
a. the murder of Michael Albergo, also known as "Hambone," in
or about August, 1970, in Chicago, Illinois;
b. the murder of Daniel Seifert, on or about September 27,
1974, in Bensenville, Illinois;
c. the murder of Paul Haggerty, on or about June 24, 1976, in
Chicago, Illinois;
d. the murder of Henry Cosentino, on or about March 15, 1977;
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e. the murder of John Mendell, on or about January 16, 1978,
in Chicago, Illinois;
f. the murders of Donald Renno and Vincent Moretti, on or
about January 31, 1978, in Cicero, Illinois;
g. the murders of William and Charlotte Dauber, on or about
July 2, 1980, in Will County, Illinois;
h. the murder of William Petrocelli, on or about December 30,
1980, in Cicero, Illinois;
i. the murder of Michael Cagnoni, on or about June 24, 1981,
in DuPage County, Illinois;
j. the murder of Nicholas D'Andrea, on or about September 13,
1981, in Chicago Heights, Illinois;
k. the attempted murder of Individual A, on or about April 24,
1982, in Lake County, Illinois;
l. the murders of Richard D. Ortiz and Arthur Morawski, on or
about July 23, 1983, in Cicero, Illinois;
m. the murder of Emil Vaci, on or about June 7, 1986, in
Phoenix, Arizona;
n. the murders of Anthony and Michael Spilotro, on or about
June 14, 1986, in DuPage County, Illinois;
o. the murder of John Fecarotta, on or about September 14,
1986, in Chicago, Illinois.
25. It was further part of the conspiracy that at times
members of one crew would assist members of other crews in
homicides, by conducting surveillances of and luring intended
victims so that the victims would not be alerted that they were
targeted for murder.
26. It was further part of the conspiracy that cash payments
would be and were extorted from numerous individuals as "street
tax" to allow businesses run by those individuals to continue to
operate.
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27. It was further part of the conspiracy that loans made at
usurious rates, or "juice loans," would be and were made to
numerous individuals. These loans carried interest rates generally
ranging from one percent (1%) to ten percent (10%) per week, which
translate into annual rates of 52% to 520%, respectively. In
making these juice loans, the conspirators agreed to rely and did
rely upon the borrower's understanding at the time the loan was
made that delay or failure to repay the loans could result in the
use of violence or other criminal means to cause harm to the
borrower. The conspirators also understood at the time each juice
loan was made that delay or failure to repay the loans could result
in the use of violence or other criminal means to cause harm to the
particular borrower.
28. It was further part of the conspiracy that "juice loan"
payments would be and were collected from numerous juice loan
debtors, who borrowed money from conspirators at the rates
described in the previous paragraph. The conspirators each
understood at the time they collected each juice loan payment that
delay or failure to repay the loan could result in the use of
violence or other criminal means to cause harm to the particular
debtor. The conspirators used violence, intimidation and threats
to collect these debts.
29. It was further part of the conspiracy that collections
would be made of debts incurred in connection with the juice loan
business described in this Count, which business charged rates of
interest at least twice the rate enforceable under Illinois law.
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30. It was further part of the conspiracy that members and
associates of the Chicago Outfit would and did knowingly conduct,
finance, manage, supervise, direct, and own all or part of illegal
gambling businesses in violation of the laws of the State of
Illinois, including illegal sports bookmaking businesses, and
businesses which utilized video gambling machines for illegal
wagering.
31. It was further part of the conspiracy that members and
associates of the Chicago Outfit agreed to collect and did collect
debts incurred in connection with illegal gambling businesses
described in this Count.
32. It was further part of the conspiracy that members and
associates of the Chicago Outfit used violence, intimidation and
threats to: (1) instill discipline within the Chicago Outfit by
compelling adherence to the Chicago Outfit's edicts and
instructions; and (2) punish conduct by Chicago Outfit members,
associates and others, which the hierarchy of the Chicago Outfit
believed was adverse to the interests of the Chicago Outfit.
33. It was further part of the conspiracy that members and
associates of the Chicago Outfit would and did obstruct the due
administration of justice by: (1) intimidating, harming, and
killing witnesses and potential witnesses who could provide
information detrimental to the operations of the enterprise; (2)
providing false information to law enforcement officers; and (3)
paying money to individuals to keep them from cooperating with law
enforcement officials.
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34. It was further part of the conspiracy that the
conspirators would and did use nominees, "fronts," and fictitious
names to hide the proceeds of criminal activities.
35. It was further part of the conspiracy that the
conspirators would and did use coded language in their discussions
and written materials, and utilized coded names for discussing
fellow conspirators and victims of their criminal activities.
36. It was further part of the conspiracy that the
conspirators would and did collect information from corrupt law
enforcement sources to determine and disrupt legitimate law
enforcement investigation into the activities of the enterprise.
37. It was further part of the conspiracy that the
conspirators would and did steal, store, and utilize "work cars"
for use in their criminal activities, including surveillance of
murder victims and committing murders.
38. It was further part of the conspiracy that the
conspirators would and did use walkie-talkies and citizen band
radios to communicate amongst themselves while conducting criminal
activities, including murder.
39. It was further part of the conspiracy that the
conspirators would and did monitor law enforcement radio
frequencies, and acquire radio equipment, monitors, and crystals to
do so, in order to detect and avoid law enforcement inquiry into
their activities, including murder.
40. It was further part of the conspiracy that the
conspirators would and did conduct surveillance to detect the
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presence of law enforcement while they and coconspirators were
committing illegal activities, including murder.
41. It was further part of the conspiracy that the
conspirators would and did acquire explosives, explosive devices,
detonators, transmitters, and remote control devices with the
intent to murder individuals without needing to be in the immediate
vicinity of the intended victim.
42. It was further part of the conspiracy that the
conspirators would and did acquire and store firearms to be used to
commit murder.
43. It was further part of the conspiracy that the
conspirators would and did use pagers and pay phones in an effort
to reduce law enforcement's ability to intercept their
communications.
44. It was further part of the conspiracy that the
conspirators would and did maintain hidden interests in businesses,
from which they could receive income not traceable to them.
45. It was further part of the conspiracy that the
conspirators would and did maintain hidden control of labor
organizations and assets.
46. It was further part of the conspiracy that the
conspirators would and did utilize the threat of labor union
violence or disruptions to induce payments to the enterprise to
keep "union peace."
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47. It was further part of the conspiracy that the
conspirators would and did maintain written records and ledgers for
their loansharking and bookmaking activities.
48. It was further part of the conspiracy that members and
associates of the Chicago Outfit misrepresented, concealed and hid,
caused to be misrepresented, concealed and hidden, and attempted to
misrepresent, conceal and hide the operation of the Chicago Outfit
and acts done in furtherance of the enterprise.
III. PATTERN OF RACKETEERING ACTIVITY
(First Alternative Ground of Liability)
49. The pattern of racketeering activity through which the
defendants agreed to conduct and to participate in the conduct of
the Chicago Outfit's affairs, consisted of multiple violations of
the following federal and state laws:
(a) Acts and threats involving murder chargeable under
the law of the States of Illinois, Arizona, and Nevada, which are
punishable by imprisonment for more than one year; that is, first
degree murder (Illinois: Illinois Revised Statutes, Chapter 38, §9
1; Arizona: Arizona Revised Statutes §13-1105), conspiracy to
commit murder (Illinois: Illinois Revised Statutes, Chapter 38, §8
2; Arizona: Arizona Revised Statutes §13-1003; Nevada: Nevada
Revised Statutes §199.480), and attempted murder (Illinois:
Illinois Revised Statutes, Chapter 38, §8-4);
(b) Making and conspiring to make extortionate extensions
of credit, indictable under Title 18, United States Code, Section
892;
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(c) Collecting and conspiring to collect extensions of
credit by extortionate means, indictable under Title 18, United
States Code, Section 894;
(d) Interference with commerce by threats and violence,
and conspiring to commit this offense, indictable under Title 18,
United States Code, Section 1951;
(e) Acts and threats involving extortion in violation of
state law, which are punishable by imprisonment for more than one
year; that is, intimidation, in violation of Chapter 38, Illinois
Revised Statutes, §12-6 (which later became 720 ILCS 5/12-6 of the
Illinois Compiled Statutes) and conspiracy to commit intimidation,
in violation of Chapter 38, Illinois Revised Statutes, §8-2 (which
later became 720 ILCS 5/8-2 of the Illinois Compiled Statutes);
(f) Operating an illegal gambling business indictable
under Title 18, United States Code, Section 1955;
(g) Obstructing the due administration of justice,
indictable under Title 18, United States Code, Section 1503;
(h) Obstruction of criminal investigations, indictable
under Title 18, United States Code, Section 1510;
(i) Witness tampering, indictable under Title 18, United
States Code, Section 1512;
(j) Retaliating against a witness, indictable under Title
18, United States Code, Section 1513;
(k) Interstate travel in aid of racketeering enterprises,
indictable under Title 18, United States Code, Section 1952.
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IV. COLLECTION OF UNLAWFUL DEBT
(Second Alternative Ground of Liability)
50. The collection of unlawful debt through which the
defendants agreed to conduct and to participate in the affairs of
the enterprise, consisted of multiple acts of collecting and
attempting to collect debt incurred in connection with the Chicago
Outfit's operation of illegal gambling businesses and its lending
money at usurious rates, which loans were unenforceable under
Illinois laws relating to usury, such gambling and loan debts
constituting unlawful debt as defined in Title 18, United States
Code, Sections 1961(6)(A) and (B).
All of the above in violation of Title 18, United States Code,
Section 1962(d).
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COUNT TWO
The SPECIAL AUGUST 2003-2 GRAND JURY further charges:
From in or before 1996 and continuing through the date of this
indictment, in the Northern District of Illinois, Eastern Division,
and elsewhere,
JAMES MARCELLO,
MICHAEL MARCELLO, also known as
"Mickey,"
THOMAS JOHNSON,
JOSEPH VENEZIA, and
DENNIS JOHNSON,
defendants herein, together with other persons known and unknown to
the Grand Jury, knowingly conducted all or part of an illegal
gambling business, that is, a business involving the use of video
gambling machines and devices in the western Chicago suburbs and
surrounding areas, which business was in substantially continuous
operation for a period in excess of thirty (30) days, which
involved five or more persons who conducted, financed, managed,
supervised, directed, and owned all or part of the business, and
which was a violation of the following laws of the State of
Illinois: Illinois Revised Statutes, Chapter 38, Sections 8-2, 28
1(a)(1), (3), and (5) and 28-3, which later became 720 ILCS 5/8-2,
5/28-1(1), (3), and (5), and 5/28-3;
In violation of Title 18, United States Code, Sections 1955
and 2.
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COUNT THREE
The SPECIAL AUGUST 2003-2 GRAND JURY further charges:
From in or about 1998 and continuing until at least January
2003, in the Northern District of Illinois and elsewhere,
JAMES J. MARCELLO, and
MICHAEL A. MARCELLO, also known as
"Mickey,"
defendants herein, did willfully endeavor by means of bribery to
obstruct, delay, and prevent the communication of information
relating to violations of criminal statutes of the United States by
a person to a criminal investigator; that is, the defendants paid
and caused to be paid a monthly sum of money to and on behalf of
Nicholas W. Calabrese in order to maintain his allegiance to the
Chicago Outfit and to prevent and discourage his cooperation with
law enforcement authorities;
In violation of Title 18, United States Code, Sections 1510
and 2.
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COUNT FOUR
The SPECIAL AUGUST 2003-2 GRAND JURY further charges:
From sometime in the early 1980s and continuing until
approximately November 2002, in the Northern District of Illinois
and elsewhere,
FRANK CALABRESE, SR., and
NICHOLAS FERRIOLA,
defendants herein, knowingly committed extortion, as that term is
used in Title 18, United States Code, Section 1951(b)(2), which
extortion affected interstate commerce as that term is used in
Title 18, United States Code, Section 1951(b)(3), in that the
defendants would and did obtain money as "street tax" from a
restaurant operating in Chicago, with the consent of a
representative of the restaurant, induced by the wrongful use of
actual and threatened force, violence, and fear;
In violation of Title 18, United States Code, Sections 1951
and 2.
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COUNT FIVE
The SPECIAL AUGUST 2003-2 GRAND JURY further charges:
From sometime in 1992 and continuing until at least sometime
in 2001, in the Northern District of Illinois and elsewhere,
FRANK CALABRESE, SR., and
NICHOLAS FERRIOLA,
defendants herein, together with other persons known and unknown to
the Grand Jury, knowingly conducted all or part of an illegal
gambling business, that is, a sports bookmaking business, which
business was in substantially continuous operation for a period in
excess of thirty (30) days, which involved five or more persons who
conducted, financed, managed, supervised, directed, and owned all
or part of the business, and which was a violation of the following
laws of the State of Illinois: Illinois Revised Statutes, Chapter
38, Sections 8-2, 28-1(a)(1), (3), and (5) and 28-3, which later
became 720 ILCS 5/8-2, 5/28-1(1), (3), and (5), and 5/28-3;
In violation of Title 18, United States Code, Sections 1955
and 2.
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COUNT SIX
The SPECIAL AUGUST 2003-2 GRAND JURY further charges:
From sometime in the summer of 2001 and continuing until
approximately November 2001, in the Northern District of Illinois
and elsewhere,
FRANK SCHWEIHS, also known as
"the German,"
defendant herein, knowingly did attempt to commit extortion, as
that term is used in Title 18, United States Code, Section
1951(b)(2), which extortion would have affected interstate commerce
as that term is used in Title 18, United States Code, Section
1951(b)(3), in that the defendant would and did attempt to obtain
money as "street tax" from an adult entertainment club operating in
a suburb of Chicago, with the consent of a representative of the
club, induced by the wrongful use of actual and threatened force,
violence, and fear;
In violation of Title 18, United States Code, Sections 1951
and 2.
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COUNT SEVEN
The SPECIAL AUGUST 2003-2 GRAND JURY further charges:
From sometime in October of 2001 and continuing through
November 2001, in the Northern District of Illinois and elsewhere,
FRANK SCHWEIHS, also known as
"the German,"
defendant herein, knowingly participated in the use of extortionate
means within the meaning of Title 18, United States Code, Section
891(7), to collect and attempt to collect from the former owners of
an adult entertainment store operating in Indiana, an extension of
credit, within the meaning of Title 18, United States Code, Section
891(1); that is, the defendant did expressly and implicitly
threaten the use of violence to cause harm to the former owners of
the store in an attempt to obtain a sum of money from them by
November 1, 2001;
In violation of Title 18, United States Code, Sections 894 and
2.
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COUNT EIGHT
The SPECIAL AUGUST 2003-2 GRAND JURY further charges:
On or about February 21, 2003, in the Northern District of
Illinois,
MICHAEL RICCI,
defendant herein, did knowingly and willfully make materially false
and fraudulent statements in a matter within the jurisdiction of
the Federal Bureau of Investigation (FBI), an agency within the
executive branch of the Government of the United States, in that
the defendant, in response to questions posed to him by special
agents of the FBI, stated: 1) that he, Anthony Doyle, and Frank
Calabrese, Sr., never discussed the FBI's taking possession of
evidence regarding the murder of John Fecarotta; 2) that Frank
Calabrese, Sr., never mentioned to him any concern as to whether
Nicholas Calabrese was cooperating with law enforcement regarding
the murder of John Fecarotta; 3) that Frank Calabrese, Sr., never
asked him to pass any messages to anyone about the Fecarotta
homicide; 4) that Frank Calabrese, Sr., never asked him to pass
messages to anyone concerning gambling, street tax, or any other
type of criminal activity; 5) that he did not pass any messages to
or from Frank Calabrese, Sr., to or from anyone; 6) that before his
previous interview by special agents of the FBI on or about May 4,
1999, he had never heard of James DiForti; and 7) that he had never
discussed James DiForti with Frank Calabrese, Sr. In violation of
Title 18, United States Code, Section 1001(a)(2).
24
COUNT NINE
The SPECIAL AUGUST 2003-2 GRAND JURY further charges:
1. At times material herein, defendant MICHAEL MARCELLO
operated a business that involved the placement, maintenance and
use of video gambling machines and devices. This business was
known as M & M Amusement, Inc. (also known to some of its customers
as Buff Amusement, Inc.), with MICHAEL MARCELLO as the sole
shareholder and officer. MICHAEL MARCELLO employed defendants
JOSEPH VENEZIA and THOMAS JOHNSON, among others, to help him
oversee the operation and maintenance of and the collection of
proceeds from the video gambling machines and devices. JAMES
MARCELLO assisted his brother MICHAEL MARCELLO by directing him and
advising him on the operation of the business.
2. Beginning in or about January 1996 and continuing
thereafter through at least April 2004, in the Northern District of
Illinois, Eastern Division,
JAMES MARCELLO,
MICHAEL MARCELLO, also known as
"Mickey,"
JOSEPH VENEZIA and
THOMAS JOHNSON,
defendants herein, did willfully and knowingly conspire and agree
together and with others known and unknown to the grand jury, to
defraud the United States by impeding, impairing, obstructing and
defeating the lawful government functions of the Department of
Treasury, in particular, the Internal Revenue Service (hereafter
referred to as "IRS"), in the ascertainment, computation,
assessment, and collection of the revenue: to wit, income taxes.
25
MANNER AND MEANS
3. It was part of the conspiracy that defendant MICHAEL
MARCELLO caused video gambling machines and devices to be obtained
for M & M Amusement, Inc., from other companies.
4. It was further a part of the conspiracy that defendants
and others then placed and caused the placement of these video
gambling machines and devices at various locations, such as
taverns, restaurants, and fraternal clubs, primarily in Cicero and
Berwyn, Illinois, and that co-conspirator owners, managers, and
representatives of the taverns, restaurants, and fraternal clubs
accepted placement of these gambling machines and devices in return
for a portion of the profits from the machines and devices.
A. To activate these video gambling machines and
devices, players at the taverns, restaurants, and fraternal clubs
had to insert currency into the money receptacles of the video
gambling machines and devices to put credits on the machines and
devices.
B. Players earned credits based upon the success of
their resultant play. Pay-outs to winning players were based on
the total of credits accumulated. These video gambling machines
and devices could be adjusted by the defendants either to raise or
lower the amount of credits earned by players.
C. These machines and devices used electronic systems
that guaranteed that the operator retained a portion (percentage)
of the wagers as profits. From a player's standpoint, the
operation of the machine and device was essentially random. As
26
such, players had no real control over what combination of symbols
would appear, and no element of skill was involved in the game.
D. The machines and devices electronically accumulated
"credits," and players were paid based upon the number of
accumulated credits. After a winning player had been paid by a
representative of the taverns, restaurants, and fraternal clubs,
the video gambling machines and devices had a "knock off" device
(normally a button or combination of buttons) that could be pushed
to clear the accumulated credits. Also, the video gambling
machines and devices had separate electronic counters inside the
machines and devices that recorded both the total number of plays
on the machine, and the total of winning credits won on and cleared
off the machines and devices.
5. It was further a part of the conspiracy that defendants
JOSEPH VENEZIA and THOMAS JOHNSON, and others, instructed the
owners, managers, and representatives of the taverns, restaurants,
and fraternal clubs at which the video gambling machines and
devices were placed, on such topics as how to set up the machines
and devices; how properly to pay off the winners on the machines
and devices; how to "clear" or "knock off" the accumulated credits
from the machines and devices after the player had been paid off;
and other topics necessary to the conduct of the illegal gambling
business.
6. It was further a part of the conspiracy that defendants
JOSEPH VENEZIA and THOMAS JOHNSON and others entered into verbal
understandings with the owners, managers, and representatives of
27
the taverns, restaurants, and fraternal clubs, regarding the
operation of the video gambling machines and devices. These verbal
understandings included, but were not limited to, agreements
regarding reimbursement for pay-outs to the players for their
earned credits and the distribution and splitting of the proceeds
from the video gambling machines and devices.
7. It was further a part of the conspiracy that defendants
MICHAEL MARCELLO, JOSEPH VENEZIA and THOMAS JOHNSON and others
would and did conduct their business, primarily in cash, with the
persons to whom they distributed the video gambling machines and
devices, that is, the co-conspirator owners, managers, and
representatives of the taverns, restaurants, and fraternal clubs.
8. It was further a part of the conspiracy that defendants
JOSEPH VENEZIA and THOMAS JOHNSON and others would and did warn the
owners, managers, and representatives of the taverns, restaurants,
and fraternal clubs to be careful to whom they paid out money on
the video gambling machines and devices because of possible law
enforcement investigations. In particular, they warned the owners,
managers, and representatives only to pay money to winning
customers whom they knew well, and to beware of law enforcement
efforts. Those customers who were not known were to be told that
the video gambling machines were for amusement only.
9. It was further a part of the conspiracy that defendants
JOSEPH VENEZIA and THOMAS JOHNSON and others would and did visit
the taverns, restaurants and fraternal clubs, in which the video
gambling machines and devices were placed, on a fairly regular
28
basis, normally at least weekly but at times on a more frequent
basis, to collect the cash proceeds from the machines.
10. It was further a part of the conspiracy that during these
visits, defendants JOSEPH VENEZIA and THOMAS JOHNSON and others
would determine the amount of money played since the last visit on
the machines (known as the "ins"), and the amount of money paid to
winning customers on the machines (known as the "outs").
Defendants JOSEPH VENEZIA and THOMAS JOHNSON and others would open
the machines and devices and read the electronic counters inside
the machines that recorded both the total number of plays on the
machines and the total number of winning credits won, and clear off
the machines since the last collection in order to determine to
date the amount of revenue on the machines. Defendants JOSEPH
VENEZIA and THOMAS JOHNSON and others would then confer with the
representative of each location and review the accounting. If
JOSEPH VENEZIA and THOMAS JOHNSON and others visited the location
on more than one occasion per week, two written copies of the
accounting since the last visit were written on small white sheets
of paper, one of which was provided to and retained by the
representative of the location and the other of which was retained
by JOSEPH VENEZIA and THOMAS JOHNSON and others, often in a small,
locked box at the location to which only JOSEPH VENEZIA and THOMAS
JOHNSON and others employed by M & M Amusement, Inc., had access.
The owners, managers, and representatives of the taverns,
restaurants, and fraternal clubs were credited for the amount of
money paid to winning customers (the "outs"). Later, on the
29
weekly settlement date, the small white sheets of paper were then
typically destroyed by JOSEPH VENEZIA and THOMAS JOHNSON and
others employed by M & M Amusement, Inc, as well as by the
representatives of the taverns, restaurants, and fraternal clubs,
often by burning them on the premises or by other means of
destruction.
11. It was part of the conspiracy that on an agreed upon
recurring settlement day of the week, defendants JOSEPH VENEZIA and
THOMAS JOHNSON, and others, under the direction of MICHAEL
MARCELLO, issued weekly M & M Amusement, Inc. collection reports,
yellow in color, to the owners, managers, and representatives of
taverns, restaurants, and fraternal clubs when they collected M &
M Amusement, Inc.'s share of the weekly receipts of the video
gambling machines and devices placed in such taverns, restaurants
and fraternal clubs. The information recorded on the collection
reports purported to represent the following: the name of the
establishment, its address, the date of collection, the total gross
receipts from the machines for that week, which was listed on the
receipts as the "Net Amount to Divide," and the fifty percent share
of the gross receipts for the establishment, which was listed on
the collection reports as the "Merchant's Share" and the fifty
percent share of the gross receipts for M & M Amusement, Inc.,
which was listed on the collection reports as the "Balance Due
Operator."
12. It was further part of the conspiracy that the collection
reports issued weekly by defendants JOSEPH VENEZIA and THOMAS
30
JOHNSON, and others, under the direction of MICHAEL MARCELLO, were
false, in that the collection reports substantially understated the
entire gross receipts generated by the video gambling machines, and
substantially understated the amounts of money reflecting the
taverns,' restaurants' and fraternal clubs' share of the gross
receipts as well as M & M Amusement, Inc.'s share of the gross
receipts.
13. It was further a part of the conspiracy that defendants
MICHAEL MARCELLO, JOSEPH VENEZIA and THOMAS JOHNSON, and others,
kept and maintained, and caused to be kept and maintained for the
records of M & M Amusement, Inc., copies of the false collection
reports provided to the taverns, restaurants and fraternal clubs.
14. It was further a part of the conspiracy that defendants
MICHAEL MARCELLO, JOSEPH VENEZIA and THOMAS JOHNSON, and others,
created, kept and maintained, and caused to be created, kept and
maintained handwritten summary sheets of the weekly collection
reports of M & M Amusement, Inc., reflecting the amounts on the
false collection reports provided to the taverns, restaurants and
fraternal clubs, which summary sheets thus substantially
understated the amounts of money reflecting the taverns,'
restaurants' and fraternal clubs' share of the gross receipts as
well as M & M Amusement, Inc.'s share of the gross receipts.
15. It was further a part of the conspiracy that defendants
MICHAEL MARCELLO, JOSEPH VENEZIA and THOMAS JOHNSON, and others,
failed to keep permanent records of the actual gross revenues
earned as the result of the gambling operation.
31
16. It was further a part of the conspiracy that defendant
MICHAEL MARCELLO delivered to his accountant and tax preparer
handwritten summary sheets of the weekly collection reports, which
reflected the false and inaccurate income information. Defendant
MICHAEL MARCELLO knew that the amounts listed on these handwritten
summary sheets ensured that an incorrect accounting of the gross
receipts and profits collected from the video gambling machines and
amusement machines would be reported to his accountant, and that
his accountant would rely on these false summary sheets to prepare
quarterly financial reports and tax returns.
17. It was further a part of the conspiracy that defendant
MICHAEL MARCELLO verbally advised this accountant each quarter that
he was providing the accountant the entirety of the gross revenues
for that quarter when in fact the figures he was providing the
accountant did not reflect the moneys paid to bettors nor did the
figures reflect the true amount of the profits to M & M Amusement,
Inc., and to the taverns, restaurants and fraternal clubs,
collected from the video gambling machines.
18. It was further part of the conspiracy that defendants
thus caused the preparation of false S Corporation income tax
returns (IRS Forms 1120S) for M & M Amusement, Inc. for the years
1996 through 2003, by creating and providing the false documents as
described above which were used by M & M Amusement, Inc.'s
accountant in the preparation of the S Corporation income tax
returns.
32
19. It was further part of the conspiracy that defendant
MICHAEL MARCELLO then signed and caused to be filed these false S
Corporation income tax returns with the Internal Revenue Service,
knowing that these S Corporation income tax returns had been
prepared using false information and that they therefore
understated M & M Amusement, Inc.'s gross receipts and profits.
20. It was further part of the conspiracy that defendant
MICHAEL MARCELLO thus caused the preparation of false individual
income tax returns (IRS Forms 1040) for himself for the years 1996
through 2003, by creating and providing the false documents as
described above which were used by his accountant in the
preparation of the individual income tax returns as well as the S
Corporation income tax returns.
21. It was further part of the conspiracy that defendant
MICHAEL MARCELLO then signed and caused to be filed these false
individual income tax returns with the Internal Revenue Service,
knowing that these individual income tax returns had been prepared
using false information and that they therefore understated his
total income.
22. It was further part of the conspiracy that defendants
caused the preparation and delivery of numerous false IRS Forms
1099 to the owners of the taverns, restaurants and fraternal
clubs, as the figures reported on the IRS Forms 1099 did not
reflect the true amount of the profits to the taverns, restaurants
and fraternal clubs, collected from the video gambling machines.
The owners of the taverns, restaurants and fraternal clubs then
33
knowingly provided these false IRS Forms 1099 to their accountants
and thereafter caused false individual and corporate income tax
returns to be filed with the Internal Revenue Service.
23. It was further part of the conspiracy that defendants
caused to conceal from the Internal Revenue Service a substantial
portion of the income received from the operation of the gambling
operation for the tax years 1996 through 2003, inclusive.
24. It was further part of the conspiracy that defendants
JAMES MARCELLO and MICHAEL MARCELLO caused money generated from the
under-reporting of gross receipts from operation of the gambling
business to be used for their own benefit.
25. It was further part of the conspiracy that defendants
JAMES MARCELLO and MICHAEL MARCELLO would discuss at the Federal
Correctional Center at Milan, Michigan, the operation of M & M
Amusement, Inc., as it related to the relationship with the owners,
managers, and representatives of taverns, restaurants, and
fraternal clubs. This included discussions involving the then
current Internal Revenue Service's criminal investigation of the
operation of video gambling machines and devices in taverns,
restaurants, and fraternal clubs in the Cicero and Berwyn, Illinois
area.
26. It was further a part of the conspiracy that defendant
MICHAEL MARCELLO failed to deposit all the weekly business receipts
to M & M Amusement, Inc.'s bank account, knowing that its tax
accountant determined income based upon the bank deposit method.
34
27. It was further part of the conspiracy that the defendants
would and did misrepresent, conceal and hide, and cause to be
misrepresented, concealed and hidden the purposes of, and acts done
in furtherance of, the conspiracy.
OVERT ACTS
28. In furtherance of the conspiracy and to effect the
objects thereof, in the Northern District of Illinois and
elsewhere, the following overt acts, among others, were committed
by the named defendants and others:
A. On or about the following dates, defendant MICHAEL
MARCELLO signed and caused to be filed false individual and S
Corporation income tax returns, with the Internal Revenue Service,
knowing that these income tax returns had been prepared using false
information regarding the gross receipts and profits for his
business, M & M Amusement, Inc.:
(1) On or about July 23, 1997, defendant MICHAEL
MARCELLO knowingly signed and caused to be filed a false 1996 S
Corporation income tax return.
(2) On or about April 23, 1998, defendant MICHAEL
MARCELLO knowingly signed and caused to be filed a false 1997 S
Corporation income tax return.
(3) On or about July 16, 1999, defendant MICHAEL
MARCELLO knowingly signed and caused to be filed a false 1998 S
Corporation income tax return.
35
(4) On or about October 15, 1999, defendant MICHAEL
MARCELLO knowingly signed and caused to be filed a false 1998
individual income tax return.
(5) On or about September 15, 2000, defendant
MICHAEL MARCELLO knowingly signed and caused to be filed a false
1999 S Corporation income tax return.
(6) On or about, September 15, 2000, defendant
MICHAEL MARCELLO knowingly signed and caused to be filed a false
1999 individual income tax return.
(7) On or about July 11, 2001, defendant MICHAEL
MARCELLO knowingly signed and caused to be filed a false 2000 S
Corporation income tax return.
(8) On or about July 11, 2001, defendant MICHAEL
MARCELLO knowingly signed and caused to be filed a false 2000
individual income tax return.
(9) On or about July 30, 2002, defendant MICHAEL
MARCELLO knowingly signed and caused to be filed a false 2001 S
Corporation income tax return.
(10) On or about September 10, 2002, defendant
MICHAEL MARCELLO knowingly signed and caused to be filed a false
2001 individual income tax return.
(11) On or about March 27, 2003, defendant MICHAEL
MARCELLO knowingly signed and caused to be filed a false 2002 S
Corporation income tax return.
36
(12) On or about April 25, 2003, defendant MICHAEL
MARCELLO knowingly signed and caused to be filed a false 2002
individual income tax return.
(13) On or about February 27, 2004, defendant
MICHAEL MARCELLO knowingly signed and caused to be filed a false
2003 S Corporation income tax return.
(14) On or about April 14, 2004, defendant MICHAEL
MARCELLO knowingly caused to be electronically filed a false 2003
individual income tax return.
B. On or about the following dates, defendants MICHAEL
MARCELLO and JAMES MARCELLO had conversations at the Federal
Correctional Center at Milan, Michigan:
(1) December 20, 2002.
(2) January 9, 2003.
(3) January 30, 2003.
(4) April 24, 2003.
(5) May 15, 2003.
C. On a weekly basis from January 1996 through November
2003, defendants JOSEPH VENEZIA and THOMAS JOHNSON, and at times
others, delivered numerous false collection reports purporting to
represent the proceeds from the video gambling machines and devices
to representatives of numerous taverns, restaurants, and fraternal
clubs in the Berwyn and Cicero area of Illinois, each such delivery
constituting a separate overt act.
D. On a weekly basis from January 1996 through
November 2003, defendant MICHAEL MARCELLO deposited cash into M &
37
M Amusement, Inc.'s bank account, knowing that such cash was not
all of the weekly business receipts of M & M Amusement, Inc., and
that M & M Amusement, Inc.'s tax accountant determined income based
upon the bank deposit method, each such deposit constituting a
separate overt act.
All in violation of Title 18, United States Code, Section
371.
38
FORFEITURE ALLEGATION
The SPECIAL AUGUST 2003-2 GRAND JURY further charges:
1. The allegations contained in Count One of the indictment
are realleged and incorporated by reference for the purposes of
alleging forfeiture pursuant to Title 18, United States Code,
Section 1963.
2. As a result of the violation of Title 18, United States
Code, Section 1962(d), as alleged in the foregoing indictment
NICHOLAS W. CALABRESE,
JAMES MARCELLO,
JOSEPH LOMBARDO, also known as
"The Clown," "Lumpy," and "Lumbo,"
FRANK CALABRESE, SR.,
FRANK SCHWEIHS, also known as
"The German,"
FRANK SALADINO, also known as
"Gumba,"
PAUL SCHIRO, also known as
"The Indian,"
MICHAEL MARCELLO, also known as
"Mickey,"
NICHOLAS FERRIOLA,
ANTHONY DOYLE, also known as
"Twan," and
MICHAEL RICCI,
defendants herein:
(a) have acquired and maintained interests in violation of
Title 18, United States Code, Section 1962, which interests are
subject to forfeiture to the United States pursuant to Title 18,
United States Code, Section 1963(a)(1);
(b) have interests in, securities of, claims against, and
property and contractual rights affording sources of influence over
the enterprise described in Count One which defendants established,
operated, controlled, conducted, and participated in the conduct
39
of, and conspired to do so, in violation of Title 18, United States
Code, Section 1962, thereby making all such interests, securities,
claims, and property and contractual rights subject to forfeiture
to the United States of America pursuant to Title 18, United States
Code, Section 1963(a)(2);
(c) have property constituting and derived from proceeds which
obtained, directly and indirectly, from racketeering activity in
violation of Title 18, United States Code, Section 1963 (a)(3).
3. The interests of the defendants, jointly and severally
subject to forfeiture to the United States pursuant to Title 18,
United States Code, Section 1963(a)(1), (a)(2), and (a)(3) include
but are not limited to:
(a) $10,000,000;
(b) As to defendants JAMES MARCELLO and MICHAEL
MARCELLO only:
Real property at 5533 West 25th Street, Cicero,
Illinois, being more particularly described as:
Lot 78 in E. A. Cummings and Company's 25th Street
and Central Avenue Addition, being a subdivision of
the Southwest 1/4 of the Southwest 1/4 of the
Northwest 1/4 of Section 28, Township 39 North,
Range 13, East of the Third Principal Meridian, in
Cook County, Illinois.
4. To the extent that the proceeds and property described
above as being subject to forfeiture pursuant to Title 18, United
States Code, Section 1963, as a result of any acts or omission by
any defendant:
(1) cannot be located upon the exercise of due
diligence;
40
______________________________
_________________________________
(2) have been transferred or sold to, or deposited
with, a third party;
(3) have been placed beyond the jurisdiction of the
Court;
(4) have been substantially diminished in value, or;
(5) have been commingled with other property which
cannot be subdivided without difficulty;
it is the intent of the United States of America, pursuant to Title
18, United States Code, Section 1963(m) to seek forfeiture of any
other property of the defendants up to the value of the proceeds
and property described above as being subject to forfeiture;
All pursuant to Title 18, United States Code, Section 1963.
A TRUE BILL:
F O R E P E R S O N
UNITED STATES ATTORNEY
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