Flashback: Prison Release of Betty Loren-Maltese Awakens Organized Crime Mystique of Cicero

Prohibition was the law of the land when Al Capone took over Cicero in 1924, muscling his way in with gun-toting hoodlums on Election Day. And many residents were happy to hear his beer wagons rumbling through the streets en route to speakeasies.

More than 80 years later, this sleepy-looking suburb of blue-collar bungalows and strip malls a few miles west of Chicago still hasn't shaken its reputation for mob influence, political scandal and corruption, even as leaders insist they've put it behind them.

"The organized crime mystique _ that's the reason for our image," says town spokesman Ray Hanania, insisting President Larry Dominick has "taken politics out of town government" since taking office in 2005. The story of Cicero and the mob, he said, is "a great story and it's easy to write but it's unfair."

Critics, though, say corruption still hangs thick in the air.

About a week ago, former town President Betty Loren-Maltese returned to Chicago after 6 1/2 years in prison for fleecing taxpayers of more than $12 million in a mob-related insurance scam. The money paid for an island golf course in Wisconsin, a horse farm and a summer home for reputed mob boss Mike Spano, who went to prison along with Loren-Maltese.

Loren-Maltese was boosted into politics by her late husband, former Cicero town assessor Frank "Baldy" Maltese, who was indicted on corruption charges in the early 1990s along with Rocco Infelice, reputed one-time boss of the Cicero mob. Maltese pleaded guilty to conspiracy in 1993 but died of cancer before going to prison. Infelice died behind bars.

No sooner had the once-jovial Loren-Maltese _ sporting her trademark flamboyant hairdo but grim and silent behind large dark glasses _ arrived Monday to start a four-month term in a halfway house, than news surfaced that she and her elderly mother were receiving health insurance benefits from the very town fund that Loren-Maltese was convicted of looting.

Hanania said Loren-Maltese received the benefits under a law she "rammed through" while still in office that provides coverage to all Cicero elected officials for life, and her mother got insurance for serving on the police and fire commission for 10 years.

By Tuesday, officials in the town of about 85,000 decided her mother wasn't entitled to the coverage because she never held elective office, and terminated it. But that wasn't the only problem, critics say. Dominick, a hefty ex-cop who served on the Cicero force for years, also has found jobs for a number of his relatives on the town payroll, including a son who works as the human resources director.

"I think they haven't really changed since the Al Capone era in their approach to government and politics and civic decency," says Andy Shaw, head of Chicago's Better Government Association. "This is the town that time forgot."

Not that some things haven't changed.

Scantily clad prostitutes no longer saunter in the neon haze outside the mob-connected strip joints that flourished along Cicero Avenue in the 1950s and 1960s. Gone are the no-name prize fighters who once slugged it out in a little arena in a cloud of colored smoke and flickering strobe lights.

"The place was crawling with vice and gambling," said John Binder, author of "The Chicago Outfit," a history of the city's organized crime family. "It was the same story in some other little suburbs where the mob could get its hooks in, but Cicero was sort of the crown jewel, maybe because of its location close to Chicago and because Capone pushed his way in there."

Now it all seems comparatively tame. Almost.

In February 2003, a massive pipe bomb erupted on a quiet street in Berwyn, a neighboring suburb. The explosion blew away the front of a company that distributed the video poker machines that federal prosecutors say were used for illegal gambling throughout Chicago and its suburbs.

Prosecutors said it was organized crime's way of delivering the message that horning in on its monopoly on video poker machines was dangerous _ and at the time, the biggest distributor of the machines in the western suburbs was based in Cicero.

It was owned by Michael Marcello, whose brother, James Marcello, went to prison for life following the 2007 Operation Family Secrets trial, the biggest mob case in Chicago in decades. Michael Marcello also went to prison after pleading guilty to racketeering and other offenses for running a gambling business and paying the government's star witness in the Family Secrets case, Nicholas Calabrese, to keep mum.

Then in 2008, Cicero jewelry store owner Mark Polchan and Samuel Volpendesto, a tiny, white-bearded, 86-year-old former manager of a Cicero strip joint, were indicted on charges of blowing up the Berwyn video poker company.

Last year, the charges against the two men became part of a larger, racketeering indictment that added five other defendants, including a Cicero police officer. All have pleaded not guilty and are awaiting trial in September.

Originally reported by Mike Robinson on 2/21/10.

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Ed Vrdolyak indicted for 2nd Time in Last Decade

Former Chicago Ald. Edward Vrdolyak earned the nickname "Fast Eddie" for his bare-knuckled ability to work the angles. But for the second time in the past decade, Vrdolyak has been indicted on charges of using his influence to shoehorn his way into a big-money deal and turn a handsome profit for himself and his connected friends in spite of doing little or no work.

In charges made public Tuesday, federal prosecutors alleged Vrdolyak muscled in on one of the biggest bonanzas of them all — the record $9.2 billion settlement with the tobacco companies from the late 1990s.

Prosecutors charged that Vrdolyak worked out a secret deal with other attorneys to collect as much as $65 million even though he'd done no work on the tobacco case. The indictment did not make clear just how much the former alderman actually pocketed. The case was unsealed last week without fanfare by low-key U.S. Attorney Zachary Fardon's office. His spokesman, Joseph Fitzpatrick, declined comment Tuesday.

Vrdolyak, who turns 79 next month, could face up to five years in prison if convicted of both counts of impeding the IRS and income tax evasion. His lawyer, Michael Monico, said he was dismayed by the government's decision to charge Vrdolyak. He said the former longtime alderman will plead not guilty to the two-count indictment Tuesday in federal court.

Vrdolyak was added to an indictment against attorney Daniel Soso, a former Chicago police officer who once ran for alderman with Vrdolyak's backing. Soso was originally indicted alone in May 2015 on charges of failing to pay about $780,000 in taxes related to the settlement money.

Despite Vrdolyak's reputation for skirting criminal probes, the case marks the second time in less than a decade that the onetime political powerhouse faced criminal charges. In 2010, Vrdolyak was sentenced to 10 months in prison for his role in a $1.5 million real estate kickback scheme that had links to the federal probe that felled then-Gov. Rod Blagojevich.

Like many Chicago politicians, Vrdolyak got his start by working precincts at election time and within a few years he had grown a formidable ward organization. In 1970, he survived scandal when his brother, Peter, was indicted on charges of gambling and using prostitutes as door prizes during Vrdolyak ward events, according to Tribune stories from the time. Peter Vrdolyak was convicted; his brother was not charged.

First elected alderman of the Far Southeast Side's 10th Ward in 1971, Vrdolyak, the son of Croatian-born tavern keepers, quickly earned a reputation as a consummate Chicago politician, brash at times but with a keen sense of how to do business the old-fashioned way. A Tribune editorial from his freshman term called Vrdolyak an "influence-peddler and backroom wheeler and dealer almost without peer in a city noted for them."

In an interview that year, Vrdolyak said he lived by the axiom that "if you're good to people, they reciprocate."

"They send business your way, so you get jobs for people," he said. "That's the way it's done. Me — it's the only place these people can go. I'm the committeeman, alderman, father confessor, cop, lawyer, employment agency. Me. I'm the man."

In the 1980s, Vrdolyak became Cook County Democratic chairman, led the "Vrdolyak 29" block of white aldermen who frustrated Mayor Harold Washington and twice ran unsuccessfully for mayor. After Washington's death, Vrdolyak ran as a Republican for mayor but made his worst showing ever — and the bitterness of that race still showed years later as Mayor Richard M. Daley tightened his grip on City Hall.

"You've got to understand something about the Irish, the Daley Irish," he told the Tribune in 1996. "It's the Irish first, and everybody else is a Polack."

Through the years, Vrdolyak has had to defend himself against allegations he was cozy with the Chicago mob. In 1983, Vrdolyak wrote a letter to the Tribune detailing his close relationship with Joe Salas, a reputed hit man who was convicted in the 1979 abduction and murder of a Florida agriculture inspector. Vrdolyak, who had sponsored Salas for a city job, wrote that he'd been friends with Salas' family for years and "attempted to counsel (them) against any anti-social behavior."

Later, after his power at City Hall waned, Vrdolyak found political refuge in the alleged mob stronghold of Cicero, where he was paid millions of dollars in taxpayer-funded fees under then-town President Betty Loren-Maltese, who was later convicted of corruption.

The indictment made public Tuesday alleges Vrdolyak was in the middle of a scheme that stemmed from a series of lawsuits brought by some 46 states seeking to recover Medicaid funds the state had spent treating smoking-related diseases from tobacco giants such as Phillip Morris. The tobacco companies eventually negotiated a series of settlements totaling $206 billion.

The $9.2 billion settlement in Illinois' suit sparked controversy after it was revealed that then-Attorney General Jim Ryan had negotiated a contingency arrangement promising 10 percent of the payout to four law firms that handled the litigation. That figure was dramatically reduced after years of court arbitration, but in the end, Ryan agreed to pay a total of $188.5 million to several law firms.

One of those firms was the Seattle-based Hagens Berman, which was headed by attorney Steve Berman. According to the indictment, Berman entered into a secret agreement in 1996 to pay Vrdolyak and Soso fees from the settlement and hide the payments from the attorney general and tobacco companies. Under the final deal struck in 1999, Vrdolyak expected to receive about $65 million from Berman. The firm has denied any attempt to conceal payments.

In 2005, while investigating Soso for failure to pay income taxes, the Internal Revenue Service learned that he had been receiving large payments from Vrdolyak and failed to report the income, the charges alleged. The IRS then served Vrdolyak with a levy notice requiring him to pay the IRS instead of Soso because of all the back taxes owed.

That November, Vrdolyak sent a fax to an IRS investigator claiming that he was no longer paying Soso and therefore he owed them no money. The fax stated that if there were any payments made in the future he "intended to honor the 2005 levy served on him" and remit the funds to the IRS, according to the charges. But according to the indictment, money again began changing hands two years later, with Soso hiding funds paid to him by Berman and Vrdolyak in accounts used by his relatives and girlfriend.

In 2011, Vrdolyak sent payments totaling $170,000 to Soso, including checks that a Vrdolyak relative wrote, the indictment alleged.

The indictment comes five years after Vrdolyak was released from prison on his 2007 case. He pleaded guilty to fraud for his role in a kickback scheme in which a Gold Coast real estate deal was rigged so he could secretly split a $1.5 million finder's fee with corrupt insider Stuart Levine, a close friend who later secretly wore a wire on Vrdolyak.

In 2009, U.S. District Judge Milton Shadur spurned prosecution calls for prison and sentenced Vrdolyak to probation for a fraud conviction, but prosecutors appealed.

The 7th Circuit U.S. Court of Appeals later ordered that a different judge resentence Vrdolyak, calling Shadur's punishment a "slap on the wrist" that ignored Vrdolyak's status as one of Chicago's most influential insiders. The appeals court also held that Shadur gave too much weight to dozens of letters — including one from then-Bears linebacker Brian Urlacher — attesting to his acts of generosity.

In October 2010, U.S. District Judge Matthew Kennelly sentenced Vrdolyak to 10 months in prison as well as five months in a work-release center and an additional five months in home confinement.

Reported by Jason Meisner and Jeff Coen.

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Betty Loren-Maltese is Ready to Spill the Beans

After being released from prison and living in Las Vegas, former Illinois politician Betty Loren-Maltese is ready to spill the beans.

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Blagojevich's Brother Tied to Betty Loren-Maltese

His last name is Blagojevich but his first name is Robert. He's the older brother of the embattled Illinois governor.

Who is Robert Blagojevich and why was the FBI listening to his cell phone calls?

Robert Blagojevich has been his 'brother's keeper' since last August or at least the keeper of his brother's multi-million dollar campaign fund, a political fund that Robert Blagojevich's lawyer says is likely to be indicted before it's all over.

The I-Team found that one of the most puzzling questions about the governor's brother concerns someone else's campaign fund.

On election night 2002, when Rod Blagojevich watched the returns roll in and won his first term as Illinois governor, brother Robert was there with him. But at the same time, according to state election records, Robert's financial services firm had an interest in another Illinois elected official, Betty Loren Maltese.

Maltese is the controversial and now imprisoned mayor of Cicero.

For more than two years, Maltese' bulging campaign fund had invested millions of dollars through a company headquartered in Tampa, Florida, the firm Invest Financial Corporation. Its CEO at the time was Robert Blagojevich, the governor's older brother.

State records show that between July of 2000 and September of 2002, Robert Blagojevich's company paid Maltese' campaign fund nearly $3.3 million. The dozens of entries are listed as investment dividends, interest and proceeds from the sale of U.S. Treasury bills.

Some of the investment payments from Robert Blagojevich's company occurred even after Mayor Maltese was convicted of swindling $12 million from the town through an insurance firm.

Lawyer Michael Ettinger, who represents the governor's brother in the current federal investigation, was unaware of the link to Betty Loren Maltese.

On Wednesday at the I-Team's request, Ettinger had Robert Blagojevich review the state records and Blagojevich reported that "he knows nothing about it" and that the investments must have been made by some other affiliated bank even though his was listed 41 times.

Since taking over as chairman of his brother's campaign fund, Robert Blagojevich has been paid $12,500 a month.

The FBI listened to as many as 50 phone calls between Robert, his brother the governor and others. Many of the calls were from Nashville, Tennessee where Robert Blagojevich lives in a stately colonial. The former U.S. Army commander is a real estate developer there, and a key fundraiser and board member for the YMCA.

"Selfless person, doesn't want recognition. Actually would rather not have it," said Michael Check, Nashville YMCA. But when federal authorities charged the governor last month, his brother was "fundraiser a" in the criminal complaint. In one conversation the governor allegedly told his brother that he wanted to collect cash upfront for the appointment to Barack Obama's Senate seat.

It was just a few months earlier, in May, that Robert Blagojevich gave the commencement speech at his alma mater, University of Tampa.

Oddly, even though his brother the governor also attended University of Tampa, Robert did not once utter his brother's name during the speech.

As for the Betty Loren Maltese financial affair, there are Blagojevich family ties to the crooked mayor of Cicero.

Governor Blagojevich and ex-mayor Maltese have one friend in common: Eddie Vrdolyak, the former Chicago alderman and longtime village attorney in Cicero. Gov. Blagojevich's first job was as a clerk in Vrdolyak's law firm and it was a relationship that rekindled when Blagojevich was elected governor. Vyrdolyak himself is now headed to federal prison for a kickback scheme involving one of the governor's top appointees.

Thanks to Chuck Goudie

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Family Secrets Mob Prosecutor Succumbs to Cancer

It may seem an odd compliment, but there is perhaps no better praise for the work Assistant U.S. Attorney Mitchell Mars did than how mobsters referred to him.

"That (expletive) Mitch Mars," is what crooked Chicago cop Anthony Doyle called him on tape recordings he didn't know were being made.

"That is a real testament to the guy," said Markus Funk, one of Mars' co-prosecutors in the Family Secrets trial, which put Doyle and other mobsters away in September.

Over and over, said Funk, on wiretaps and prison eavesdropping recordings, the bad guys had one concern: what did Mitch Mars know and how close was he getting?

More often than not, Mars knew a lot about the Chicago Outfit and was very close.

In September, he got closer than many mobsters ever dreamed he would: convicting mob leaders James Marcello, Joseph "The Clown" Lombardo, Frank Calabrese and others on racketeering charges stemming from murders that were, in some cases, decades old.

It was a fitting exclamation point on the career of Mars, the chief of the organized crime section of the U.S. attorney's office.

Mars died of lung cancer Tuesday night. He was 55.

He had battled crime since 1978, when he joined the U.S. Justice Department. He arrived in Chicago in 1980 and joined the U.S. attorney's office in 1990 when it merged with the Justice Department's organized crime strike force.

Family Secrets was but the last hurrah in a long line of prosecutions. He also helped put away Cicero mayor Betty Loren-Maltese, Chicago Heights mob boss Albert Tocco and several others along the way.

"But we would do a disservice to remember Mitch only by what he accomplished as a prosecutor in the courtroom," said Patrick Fitzgerald, U.S. attorney for the Northern District of Illinois, in a prepared statement.

"He is a complete gentleman," said Susan Shatz, one of the lawyers who represented Lombardo in the trial. "I hold him in the highest regard.

While Mars was all business in the courtroom, those who knew him outside of it said he was easygoing and a prankster.

After months of trial and working late nights and weekends, Shatz and Mars were forever calling one another, Shatz said.

On the last day of trial, Shatz arranged with Mars' wife, Jennifer, to have Jennifer wait until Mars wound down that evening and then ask him if he had remembered to call Shatz.

Mars apparently enjoyed the joke enough to return the favor, calling Shatz that night on her office phone, demanding trial papers in a mock-annoyed voice.

"I have not taken his message off my voicemail since then," said Shatz, who said she kept it when she learned Mars was sick.

Mars discovered his cancer shortly after the trial and took a leave of absence to spend time with his family.

He is survived by his wife, his mother, Constance, his sister, Deborah Berkos, his brother, Jeffrey, an uncle Raymond Oster and several other aunts, uncles, nieces and nephews.

Visitation is Friday from 3-9 p.m. at Damar Kaminski Funeral Home, 7861 S. 88th Avenue in Justice. A funeral Mass will be held Saturday at 10 a.m. at St. Cletus, 600 W. 55th St. in LaGrange.

Thanks to Rob Olmstead

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Loren-Maltese Attorneys Hand Over $225,000 to Feds

Friends of mine: Betty Loren-Maltese

Defense attorneys have agreed to hand over to the federal government $225,000 they received from the imprisoned former town president of suburban Cicero for the appeal of her racketeering sentence.

The attorneys will keep $400,000 that Betty Loren-Maltese paid them four years ago as she sought to overturn her conviction on charges of engineering a fraud scheme that swindled Cicero out of $12 million. The agreement between the federal government and the attorneys was outlined in court papers made public Monday.

U.S. District Judge John F. Grady in January 2003 sentenced Loren-Maltese to eight years in prison for her part in the insurance scam. Loren-Maltese was one of seven defendants convicted in the scheme to siphon money out of the town treasury in the small, blue-collar suburb west of Chicago that has been troubled by mob influence for decades. Grady also fined Loren-Maltese $100,000 and ordered those convicted at trial to forfeit $3,250,000 and pay $84 million in restitution.

In her effort to overturn the conviction, Loren-Maltese hired nationally prominent defense attorney Alan Dershowitz for the appeal. She paid Dershowitz $625,000, according to court papers. They said that Dershowitz then transferred $270,000 to his brother's New York law firm of Dershowitz, Eiger and Adelson, which also worked on the appeal.

Under the settlement, the attorneys will pay $225,000 to the federal government to help satisfy the forfeiture amount. These funds were described in a court document as "unearned fees."

A spokesman for the U.S. attorney's office, Randall Samborn, declined to comment on the settlement, referring a reporter to the court papers. But Dershowitz's brother, Nathan Z. Dershowitz, said in a brief telephone interview that some of the $625,000 that Loren-Maltese paid was for expenses and some a retainer against future fees. Nathan Dershowitz declined to say how much of the $225,000 his firm would pay and how much would be paid by his brother.

Loren-Maltese remains in federal prison and is still asking the 7th U.S. Circuit Court of Appeals to overturn her conviction.

Thanks to Mike Robinson

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Corruption Figures' Sentences Cut

Friends of ours: Michael Spano Sr.
Friends of mine: Betty Loren-Maltese, Michael Spano Jr., Charles Schneider

The son of a reputed mob boss and a former lawyer, both convicted four years ago of helping to bilk Cicero out of millions of dollars, have won lighter prison sentences.

U.S. District Judge John Grady reduced Michael Spano Jr.'s sentence by 14 months, to five years and four months. Former attorney Charles Schneider's sentence was cut by two years, to five years and three months.

The two men were convicted of racketeering in 2002 along with former Cicero town president Betty Loren-Maltese; Spano's father, alleged Cicero mob boss Michael Spano, Sr.; and two other co-defendants for using a bogus insurance company to bilk taxpayers out of more than $10 million from 1992 to 1996.

A federal appeals court in September ruled that the defendants should be resentenced because Grady, who presided over the three-month trial, made an error in imposing the original sentences.

Prosecutors argued Tuesday for a longer sentence for Spano and no change for Schneider, but Grady reduced both terms, saying the original sentences placed too much blame on the men for their roles in the scam.

Grady resentenced Loren-Maltese on Monday to eight years in prison - the same as her original sentence.

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Apology Doesn't Sway Judge

Friends of ours: Al Capone, Michael Spano Sr.,
Friends of mine: Betty Loren-Maltese, Emil Schullo

Betty Loren-Maltese apologized in court Monday for allowing corruption to occur while on her watch as the former town president of the Chicago suburb of Cicero. But a federal judge determined her apology did not go far enough and resentenced her on a racketeering conviction to eight years in prison, the same jail term he doled out three years ago.

Loren-Maltese, 56, and five co-defendants were convicted of racketeering in 2002 for using a bogus insurance company to bilk taxpayers out of more than $10 million from 1992 to 1996.

A federal appeals court in September ruled that Loren-Maltese and her co-defendants should be resentenced because U.S. District Judge John F. Grady, who presided over the three-month trial, made an error in imposing the original sentences.

The appeals court opinion said that after Grady determined the amount of money Loren-Maltese and the others swindled from Cicero taxpayers to be $10.6 million, the judge wrongly rounded down the number to less than $10 million.

Prosecutors have spent years investigating the small, blue-collar suburb just outside the Chicago city limits that has been known as a haven for corruption since the 1920s, when Al Capone made it the hub of his bootlegging empire.

Among the others convicted with Loren-Maltese were alleged Cicero mob boss Michael Spano Sr. and Emil Schullo, one-time head of the Cicero police department. Schullo was scheduled to be resentenced today.

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Loren-Maltese Conviction Will Not be Thrown Out by Court

Friends of ours: Al Capone, Michael Spano Sr.,
Friends of mine: Betty Loren-Maltese, Emil Schullo

The U.S. Supreme Court on Monday rejected an appeal of the racketeering conviction of former Cicero Town President Betty Loren-Maltese, who is already scheduled to be resentenced later this month. Loren-Maltese is serving an eight-year prison term after she and her co-defendants were convicted of using a bogus insurance company to bilk Cicero taxpayers out of more than $10 million from 1992 to 1996. The high court, without comment, refused to consider Loren-Maltese's appeal of her 2002 conviction.

Amy Adelson, an attorney for Loren-Maltese, said she thought the Supreme Court would have taken the case to resolve differences in how lower courts have interpreted the "honest services" statute under which Loren-Maltese was convicted. "Obviously the Supreme Court takes very few of the cases presented to it," Adelson said. "We're not surprised, but we are disappointed."

Loren-Maltese is scheduled to be resentenced Jan. 23. A federal appeals court ruled in September that a federal judge made an error during the sentencing phase.

Randy Samborn, a spokesman for the U.S. Attorney's office in Chicago, said the office would have no comment on the Supreme Court's decision. Prosecutors have spent years investigating the small, blue-collar suburb just outside the Chicago city limits that has been known as a haven for corruption since the 1920s, when Al Capone made it the hub of his bootlegging empire.

Among the others convicted with Loren-Maltese were alleged Cicero mob boss Michael Spano Sr. and Emil Schullo, one-time head of the Cicero police department. Last September, an appeals court ruled that Loren-Maltese and five others convicted in 2002 of corruption should be resentenced.

A three-judge panel of the 7th U.S. Circuit Court of Appeals found that U.S. District Judge John F. Grady, who presided over the three-month trial, made an error in imposing the sentences. The opinion said that after Grady calculated the amount of the loss at $10.6 million he wrongly rounded the number down to below $10 million.

Under federal sentencing guidelines, the greater the loss, the harsher the sentence. Grady's decision cut 10 months or more off the sentences. Grady said he rounded the number down by $600,001 because it was merely an estimate and could be unreliable. But the appeals court said unless Grady thought the estimate biased, he had no basis for rounding down or rounding up.

At the Jan. 23 resentencing, Adelson said defense attorneys will be asking for a reduction in Loren-Maltese's sentence. In court papers, they have argued Loren-Maltese should be reunited with her young daughter - currently being cared for by Loren-Maltese's elderly mother - and say that after nearly three years in prison, she's a changed woman.

Adelson said defense attorneys will also argue that the sentence involved an upward departure from guidelines, resulting in a "quite severe" sentence. Federal prosecutors, however, want to extend Loren-Maltese's sentence by three years to more than 11 years. In court papers, they noted Grady said at the original sentencing he considered putting Loren-Maltese away for longer.

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Reduced time for Loren-Maltese?

Friends of ours: Michael Spano Sr., Al Capone
Friends of mine: Betty Loren-Maltese

Defense attorneys are asking a judge to reduce the eight-year prison term he imposed on the former town president of suburban Cicero so she can be reunited with her young daughter. The request comes two months after an appeals court ruled that Betty Loren-Maltese and five others convicted in 2002 should be resentenced. Prosecutors want her sentence extended to more than 11 years. Keep in mind that Loren-Maltese only adopted her daughter at the urging of "Fast Eddie" Vrydolyak after she come under heavy scrutiny by the Feds. She specifically did this so that she could play this card and appear more sympathetic.

Loren-Maltese and her co-defendants were convicted of racketeering for using an insurance scam to bilk $10 million from the town. Prosecutors had spent years investigating the small, blue-collar suburb just outside the Chicago city limits that has been known as a haven for corruption since the 1920s, when Al Capone made it the hub of his bootlegging empire.

A three-judge panel of the 7th U.S. Circuit Court of Appeals found that the trial judge, U.S. District Judge John F. Grady, made an error in imposing the sentences. The appeals court ruled that after Grady calculated the amount of the loss at $10.6 million he wrongly rounded the number down to below $10 million. Under federal sentencing guidelines, the greater the loss the harsher the sentence. Grady's decision cut 10 months or more off the sentences. Grady said he rounded the number down because it was merely an estimate and an estimate could be unreliable.

Court papers filed last week by Loren-Maltese's lawyers included a letter from her mother, Kitty Loren, who cares for her daughter, Ashleigh, 8, in Las Vegas. Kitty Loren, who turns 85 on Tuesday, wrote: "I do the best I can; however, no one can replace a mother's nurturing." The defense lawyers want Loren-Maltese's sentence reduced to four or five years, which could get her out of prison as early as 2006. They said that after nearly three years in prison, she's a changed woman.

Prosecutors, however, want to extend her sentence by three years. In court papers filed last week, they noted that Grady said at the original sentencing he considered putting Loren-Maltese away for longer. During that sentencing, prosecutors questioned Loren-Maltese's desire to be a parent by noting how often she gambled in Las Vegas and in the Chicago area. Apparently, this figure approached $18,000,000 over the years 2000 and 2001. Prosecutors said they also will seek to extend the sentences for her co-defendants.

Grady could set a resentencing date as early as this week. Among the others convicted with Loren-Maltese were alleged Cicero mob boss Michael Spano Sr. and Emil Schullo, one-time head of the Cicero police department.

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New sentencing ordered in Cicero fraud case

Betty Loren-Maltese to be resentenced in fraud case.

Suburban Chicago Cicero's former town president and five others must be resentenced in the $10.6 million fraud case that sent them to prison, an appeals court ruled Thursday. Former town President Betty Loren-Maltese could get the same eight-year sentence she's now serving for swindling the suburban community, a stiffer one or a lesser one under the ruling.

A three-judge panel of the 7th U.S. Circuit Court of Appeals found that U.S. District Judge John F. Grady, who presided over the three-month trial, made an error in imposing the sentences. The 15-page opinion written by Judge Richard A. Posner said that after Grady calculated the amount of the loss at $10.6 million he wrongly rounded the number down to below $10 million.

Under federal sentencing guidelines, the greater the loss the harsher the sentence. Grady's decision cut 10 months or more off the sentences.

Grady said he rounded the number down by $600,001 because it was merely an estimate and an estimate could be unreliable. "But unless he thought the estimate biased, he had no basis for rounding down any more than he would have for rounding up," the appeals court said.

Loren-Maltese, 55, was sentenced in January 2003 for presiding over a scheme in which millions of dollars were paid to an insurance consultant and siphoned off by the defendants. They used the money to buy a horse farm and a golf course among other things.

Federal guidelines that require longer time in prison for bigger monetary losses were mandatory when Grady imposed the sentences on Loren-Maltese and her co-defendants. But a U.S. Supreme Court decision has since made them advisory only and freed judges to impose sentences outside the guidelines as long as they are "reasonable." That means, the appeals court said, that Grady could impose the same sentences over again and they would most likely be upheld.

The appeals decision was a victory for federal prosecutors who have spent years investigating the small, blue-collar suburb just outside the Chicago city limits that has been known as a haven for corruption since the 1920s when Al Capone made it the hub of his bootlegging empire.

The appeals court affirmed all of the convictions and brushed aside defense arguments that they should be set aside. The court said attorneys for Loren-Maltese were wrong in claiming that she was unfairly convicted because she got little out of the scheme personally beyond increased health insurance coverage.

After the verdict, one juror was quoted in a published report as saying that co-defendant Michael Spano Sr.'s alleged mob ties had been discussed in the jury room. But the appeals court dismissed a defense claim that Grady should have held a hearing to determine if the jury's deliberations had been tainted by mention of Spano's alleged ties. Federal prosecutors have said Spano, now in prison, is the head of the Cicero mob.

Thanks to Mike Robinson.

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Did Feds Kill Off the Mob?

A mere decade ago, the Chicago Outfit's political wing still had an address: Room 2306 of the Bismarck Hotel, at Randolph and LaSalle, the 1st Ward offices of Committeeman John D'Arco Sr. and Ald. Fred Roti, a made member of the mob. Downstairs at Counsellors Row Restaurant, D'Arco and Roti held court with mob-friendly aldermen, judges and state legislators like John D'Arco Jr. The feds installed a hidden camera at Counsellors Row and wired lawyer Bob Cooley (When Corruption Was King: How I Helped the Mob Rule Chicago, Then Brought the Outfit Down). They caught D'Arco and Roti discussing mob business such as rigging elections, bribing judges to fix cases and greasing zoning and license deals.

"Yes sir," the judges and aldermen--some still in office--told ward Secretary Pat Marcy, and rushed off to get him a liquor license or whatever he asked for.

Roti and D'Arco Sr. went to jail and have since died. Counsellors Row was torn down and the old 1st Ward mapped out of existence. Even the Bismarck has a new name: Hotel Allegro. At the same time, the feds took over some of the most mobbed-up unions to try to clean them.

So did the feds kill the mob? Are local pols right to call mob influence in Chicago "ancient history?" Have the mobsters gone straight and quit trying to cultivate friends in government? Mob-watchers and cops say, "No."

The mob has always wanted friendly judges on the bench for help on cases and cops on the force to keep some crimes unsolved. Controlling unions provides jobs for flunkies and money for pols. Friendships with legislators prevent bills cracking down on video poker, which some say nets $100 million a year for the mob.

Most of all, the mob wants friends in government for jobs and contracts. The mob doesn't offer health insurance--mob lackeys need day jobs for that. "It used to be you'd give him $200 a week to get the [illegal betting] books--now you get him a city job," a city worker said at a Northwest Side coffee shop as he looked around cautiously and sipped coffee on his 11 a.m. break. "There's a lot of power with jobs," said Terrance Norton, the Better Government Association executive director.

A slew of convictions this year shows the downsized mob has just diversified and moved west. And the video poker games stay in the bars.

Stone Park Mayor Robert Natale went to prison this year for taking mob bribes to allow illegal video poker gambling at mob-linked bars.

Cicero Town President Betty Loren-Maltese, widow of convicted mobster Frank Maltese, will be sentenced next month for an insurance scam that skimmed $4 million from employee policies. The firm behind the scam gave $21,000 to Gov. Ryan, state Rep. Angelo "Skip" Saviano (R-Elmwood Park) and others.

Union boss John Serpico--appointed and reappointed by Gov. Jim Thompson and Gov. Jim Edgar to head the state port authority even though Serpico testified in 1985 he regularly met with mob boss Joe Ferriola--was sentenced this year on a loan scheme. Serpico showered union money on pols.

Still, elected officials whose campaigns benefit most from the generosity of businesses the state Gaming Board or the Chicago Crime Commission call mob-tied say the mob is dead: "I don't think there's a mob around anyway to run anything," said state Rep. Ralph Capparelli (D-Chicago). "They're still talking about 1924 and 1930. I think you use the word 'mob' because some guy has an Italian name." Saviano and state Sen. James DeLeo (D-Chicago) have made similar statements.

If a mob-linked legitimate business does good work and offers the low bid, why shouldn't it get the contract, one west suburban mayor asked.

With no official address or go-to guy in local government, it's hard to know the mob's legislative agenda. Mob-watchers say a new casino in Rosemont, or better yet, downtown Chicago, tops the list, along with more video poker.

The state Gaming Board refused to allow a casino in Rosemont, finding mob-linked firms already working on the site. Former Crime Commission chief investigator Wayne Johnson blasted twice-indicted, never-convicted Rosemont Mayor Don Stephens for ties to men the commission says are associated with organized crime, such as Sam Giancana and Bill Daddano.

Stephens sued Johnson for libel but admitted the ties to Giancana and Daddano in court filings. Stephens' suit silenced Johnson, the most vocal mob-watcher in town. Johnson left the commission and has been advised by attorneys not to discuss Stephens' alleged mob ties.

Mayor Daley has not cut all ties to the mob-linked Duff family, which donated $8,875 to his campaigns and reaped $100 million in local government contracts. Patriarch John F. Duff Jr. was a character witness for mob boss Tony Accardo. "I just know them. That's all," Daley said. "I'm not personal friends with them. I know them. So what?" A federal grand jury subpoenaed records of Duff contracts with local governments.

Daley's main ally in pushing a downtown casino in the early '90s was Ed Hanley, who had to give up control of the Hotel and Restaurant Workers union amid a federal probe of mob ties.

William Hanhardt was convicted this year of running a jewelry theft ring that stole more than $5 million while Hanhardt climbed the ranks of the Chicago Police Department to deputy superintendent. Cooley warned officials more than a decade ago that Hanhardt was the mob's main plant on the force, getting mob lackeys hired and promoted.

Police Supt. Matt Rodriguez quit five years ago after admitting a close friendship with a mob-linked felon questioned in an oil executive's murder.

Chicago police have watched as powerful ward committeemen still in office today huddled with mob higher-ups such as Vincent "Jimmy" Cozzo.

"What does the mob want from government? No. 1, money, and No. 2, power," Cooley said. "Nobody could ever get a city job or a promotion without the approval of the 1st Ward. They had all the jobs in McCormick Place, all the city jobs, police, sheriff's, state's attorney."

Mobbed-up unions provide an entree for mob types to get jobs in departments like Transportation and Streets and Sanitation that hire union members. A raid at Streets and Sanitation found 37 employees AWOL, including Chucky Miller, who was robbing a Wisconsin jewelry store of $250,000 on city time.

Transportation Department 'worker' James Vondruska, whom the commission calls a mob associate, pleaded guilty this year to playing the horses on city time. WBBM-TV reporter Pam Zekman taped him and other mob-linked workers playing hooky.

Mob-watchers say the mob wants to unionize workers at any new casino that opens in Rosemont or Chicago to work their way into the operation there. "John Serpico was out there with John Matassa 'cause they were going to unionize all the workers at the casino," one mob-watcher said.

The feds have taken over one union after another, from the Teamsters to the Laborers and Hotel and Restaurant Workers' locals, to try to purge them. Serpico was kicked out of the Laborers Union, then committed his loan fraud at Central States.

"The attraction of a union to a mob organization is the union's pension fund investments and medical plans, which are supposed to go to benefit union rank and file, most of whom could never enter the same restaurants ... as Hanley and his syndicate friends," said Combined Counties Police Association President John Flood. "And the main attraction of a union like that controlled by Hanley to the politicians also is the ability to dish out cash contributions."

Thanks to ABDON M. PALLASCH

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Is Cicero Still a Mob Town?

In the 1920s, Al Capone and his gangsters, looking for a safe and protected place, moved their headquarters from Chicago to Cicero, Ill., a small town just west of the city. Some people, including a recent police chief there, say the mob never left. Carol Marin reports for 60 Minutes II. Cicero is a blue-collar town: Very few people in this suburb of about 70,000 ever get rich. But one group there has made money, for the better part of 80 years: a group known simply as "The Outfit."

Since Capone, other big-name bosses controlled the Cicero rackets: Frank Nitti, Capone's enforcer and handpicked successor; Sam "Momo" Giancana, who befriended John Kennedy and Marilyn Monroe, among others; and Tony "Big Tuna" Accardo, the most feared and respected of all mob bosses.

Nearly 40 years ago, Cicero was described by Cook County State's Attorney Dan Ward as "a walled city of the syndicate."

In 1989, that wall began to crack. The break began with Cicero native Bill Jahoda, who for 10 years was one of the mob's top bookies. He probably made about $10 million for the mob, he says. "I was in the gambling department," he says. "I [was] in the mob's hospitality wing, or the entertainment division. But let me tell you, gambling is a very dangerous and competitive line of work. There were three murders on my shift that I was aware of that related to gambling. In two of those cases I was what would be considered the setup guy. I steered the men to the place where they were ultimately killed."

Not long after that, Jahoda became a government informant, and his testimony helped convict 20 members of a gambling crew headquartered in Cicero. When his work was done, Jahoda left town a marked man. "The mob controlled town hall," Jahoda says. "It wasn't necessarily who was in there; it was who the mob put in there." The police department knew that it shouldn't interfere with the mob's businesses, Jahoda says.

"Any time there's a dollar there, the mob wants a piece of it," he says. "Whether it's coming out of protection, whether it's coming out of graft, whether it's coming out on contracts, whether it's coming out of unions, any time there's a dollar, the mob wants to get about 90 cents on it."

In the 1980s and 1990s the mob's man at town hall was Trustee Fank Maltese, according to Jahoda. Maltese and Betty Loren were married in 1988, with some of the mob's top men in attendance. Three years later a federal grand jury indicted Frank Maltese on gambling and racketeering charges. Maltese pled guilty to the federal charges.

Maltese died before he could be sent to prison, but not before pulling off what some consider his best political fix. In a closed-door meeting with other town trustees, Maltese had his wife, who had never been elected to any office, named Cicero town president. Betty Loren-Maltese, a tough politician with a penchant for big hair and false eyelashes, is still town president. When she took office, she would change Cicero's image, she said.

Cicero doesn't deserve its reputation, she says. "Every community has a problem but apparently we get the notoriety because everybody knows the name Cicero," she says. "Some people in Southern states say, 'Oh my God, Cicero.' They assume that there's hit men with machine guns on the street."

Since 1993 Loren-Maltese has closed down strip joints and taken on street gangs. Three years ago she set out to reform Cicero's police department, which by her own account was corrupt. After a nationwide search, she found David Neibur, at the time the police chief in Joplin, Missouri.

At first Neibur didn't want the job. But then Loren-Maltese promised him that he could root out corruption wherever he found it.

Neibur took the position and began trying to clean up the town. He took a look at Ram Towing, which had the exclusive, lucrative contract to tow cars in Cicero. Ram Towing got that contract after being in business just one week. Over the next two years Ram Towing, along with its sister company, gave more than $30,000 to the political campaign of Loren-Maltese.

Neibur says he had other questions, especially about how some companies were servicing police department vehicles. His department was paying to have cars tuned up that had just been tuned up weeks before, and paid for tires that never arrived, he says.

Neibur told Loren-Maltese about these allegations, he says. He also cited poker machines he says were making illegal payoffs in bars and restaurants. He asked his boss to outlaw the machines, which have been used by the mob as a way to make money. She refused, he says.

The FBI was also interested in the town's operations. It had bugged town hall as part of a corruption investigation with Loren-Maltese as one of the targets. The FBI wanted Neibur's help in its investigation, which is still going on, Neibur says.

Through an attorney, Ram Towing said it has done nothing wrong. When Neibur made his allegations of corruption, Cicero's special legal sounsel at the time, Merrick Rayle, investigated and said he found no wrongdoing. "I didn't hear about any, and I certainly didn't see it," Rayle says. "And it's not my sense, having worked with these folks, that they were corrupt in any fashion.

Rayle served as Cicero's special legal counsel for a year and a half. Besides investigating Neibur's claims, his other principal job was to catch and fire police officers who violated Cicero's residency requirements. His bill was $1.5 million. He did a lot of work for the money, Rayle says. He also contributed around $34,000 to Loren-Maltese's political fund during that time. There is no correlation between the donations and his hiring by the town, Rayle says. Rayle says Loren-Maltese fired him because his bills were too high. His replacement, a personal friend of the president, charged even more.

Even though he was fired by Loren-Maltese, Rayle says that he still likes her. "I think she has done a tremendous job as president of the town of Cicero," he says. "Lesser people would walk away from that job because of the constant turmoil, the constant bad press."

Four and a half months after Loren-Maltese hired Neibur to reform the Cicero police department, she fired him. Neibur is now suing. He was dismissed after turning over documents to the FBI alleging a pattern of fraud, he says. "[One] night, five members of the police department showed up at my house, seized my car, uniforms, ammunition and served me with a letter from Betty saying that I could no longer represent myself as a employee of the town of Cicero in any capacity," he says.

Loren-Maltese refused to comment on any of these matters. In a written statement the town's attorney said: "The exclusively negative nature of the topics submitted for discussion could only serve to harm the improving image of the town of Cicero." But in 1998, she did speak to a local TV station: "Does the town have a problem? Are there investigations going on? Yes. Will there always be? Yes, because we are Cicero."

Loren-Maltese dedicated the town's public safety building to the memory of her husband, the late mob felon.

Jahoda's testimony, which helped convict Maltese, was a blow to the outfit, but it was hardly fatal, he says. The man who now runs the day-to-day operation of the Chicago mob, is a former Cicero resident, Johnny "Apes" Monteleon, according to authorities. "I learned the hard way that Al Capone really never left Cicero," Neibur says. "I believe the organization still exists in Cicero.

Thanks to Carol Marin

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