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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Preying on a Mobster's Paranoia

Chicago Outfit assassin Frank Calabrese Sr. was stewing in prison in 1999, trying to figure who was ratting him out for crimes worse than the loan-sharking that had landed him there.

First on his list of prime suspects was fellow mobster James DiForti. Calabrese Sr. couldn't stop gabbing about how DiForti could hurt him.

Calabrese Sr. covered every angle with his son, Frank Jr., who was locked up with him in federal prison in Milan, Mich. He quizzed two crooked cop friends for intelligence on DiForti, who was out on the street.

Calabrese Sr. -- so paranoid other mobsters made fun of him for always talking in code -- had not one but three nicknames for DiForti: "Poker," because DiForti liked to play poker; "Tires," because DiForti once had a tire store; and "rota," Italian for tires.

There was only one error in Calabrese Sr.'s thinking.

DiForti wasn't the snitch. FBI agents, preying on his paranoia, had played a mind game on him. And while Calabrese Sr. focused on DiForti, he missed the informant right under his nose -- his son, Frank Jr., who was secretly recording his father.

The mind game served two purposes. Calabrese Sr.'s focus on DiForti kept him talking about misdeeds -- much of it being recorded. And it kept the real informant safe from his father's suspicion. Agents had little doubt Calabrese Sr. would have had his son killed.

The FBI mind game is the untold story of the Family Secrets investigation, pieced together through court records and an exclusive interview with one of the key agents involved at the start of the case, Kevin Blair.

In an interview last week, Blair, now an FBI supervisor in Southern California, downplayed his own role and praised the work of fellow agents. But as one of the early agents on the case, Blair came up with the name for the investigation, Family Secrets.

Without the turmoil within the Calabrese family, the case would never have been made. Frank Calabrese Jr. also testified against his father at trial. Frank Calabrese Sr.'s brother, Nick, cooperated and told jurors how he and his brother killed for the mob.

Family Secrets began when Frank Calabrese Jr. wrote a letter in 1998 to the FBI, telling them he wanted to cooperate. "I feel I have to help you keep this sick man locked up forever," he wrote.

Frank Calabrese Sr. wanted to restart the Calabrese mob crew when he got out and wanted his son, who was going to released sooner, to pave the way. "It scared Frank Jr., and he realized he didn't want his father to ever get out again," Blair said.

After the FBI got the letter from Calabrese Jr., Blair was sent out to talk to him. The two men had a history. He had arrested Calabrese Jr. in 1995 on the very case that landed him in prison with his father. The arrest had gone smoothly, and Blair believes that set the tone for the FBI's further relationship with Frank Calabrese Jr., who was part of his father's crew but wasn't involved in the violence.

"When we arrested Frank Jr., it was one of those very polite, very professional things," Blair said. "We treated him like a gentleman. He treated us like gentlemen."

The tone of the arrest was designed to put Calabrese Jr. in the frame of mind to cooperate. "He knew we were treating him differently than his father was," Blair said.

Frank Calabrese Jr. got his father to talk about the murder of John Fecarotta and other slayings while he secretly recorded him. It was beyond the FBI's best hopes. "I just have to rate this guy as the best informant I've ever come across," Blair said.

Calabrese Jr. "did it with extreme risk, inside the walls of a prison. He did it with the ultimate sincerity, to make sure a bad man stayed in prison," Blair said.

The FBI also had two informants who fed false information into the Cicero crew to have them believe the FBI had an informant within the mob.

One informant, who court records show is the late private investigator Sam Rovetuso, went to Cicero mob chief Michael Spano Sr. and said an FBI agent had approached him, wanting to talk. Rovetuso said he referred the agent to his attorney, who sent Rovetuso a letter with a list of topics the FBI wanted to discuss. Rovetuso, who was wired up, showed Spano Sr. the letter.

The whole story was a lie, right down to fake attorney stationery the FBI created. The idea was to get Spano Sr. talking and worried there was a snitch within his crew, given the FBI's interest in certain topics.

A second informant also told mobsters the FBI had an Outfit snitch. This informant had credibility within the Cicero crew, because the informant had been passing along true intelligence on law enforcement activity for years.

The Outfit came to believe the FBI's informant was reputed mobster James DiForti. DiForti was charged in 1997 with murder but had not gone to trial for two years -- a delay that stoked the suspicions of many mobsters.

The suspicions made their way to Frank Calabrese Sr. who clearly became obsessed with DiForti. Calabrese Sr. became so obsessed that agents eventually went to warn DiForti his life could be in danger and asked if he would cooperate. DiForti declined, shutting the door in the agents' faces.

He would die of natural causes in 2000.

Thanks to Steve Warmbir

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Co-op Exec Said to Have Paid Mob to Avoid Union Trouble

Friends of ours: Tony Accardo, Frank Calabrese Sr., Nick Calabrese, Michael Spano, Rocky Infelice
Friends of mine: Michael Cagnoni

The head of a cooperative association specializing in shipping fruits and vegetables was also delivering a briefcase stuffed with cash to mob figures before his murder, a witness testified Thursday.

"Yes, I believe that was one of the gentlemen," security expert Fred Pavlich told the trial of five alleged mob members after studying an FBI surveillance photo of the late Chicago mob boss Tony Accardo.

Pavlich said he resigned as head of security for the shipping cooperative that Michael Cagnoni headed only weeks before a powerful bomb erupted under the driver's seat of Cagnoni's Mercedes on June 24, 1981. Pavlich said the night before he resigned, he got a threatening phone call that didn't mention Cagnoni by name but still persuaded him that it would be prudent to give up his post as the association's security director.

Federal prosecutors say convicted loan shark Frank Calabrese Sr. was responsible for the Cagnoni murder. Calabrese's brother, Nicholas, the government's star witness, described how a bomb was planted and detonated by an automatic radio-controlled device. An eyewitness, who was at one time a U.S. Marines explosives expert, testified Wednesday that the blast sent huge hunks of metal flying through the air, produced a giant cloud of smoke and tore Cagnoni's body in half.

Calabrese, 69, is among five men charged with taking part in a racketeering conspiracy that included extortion of "street tax" from businesses as well as illegal gambling, loan sharking and 18 murders.

Pavlich testified Cagnoni was a brilliant shipping executive who figured out a way of setting up a cooperative association consisting of Chicago and New York grocers and California produce growers. He said thousands of trucks were going back and forth between Chicago and the West Coast every week aboard railroad cars with the association's shipments.

On arriving in the Chicago area, some trucks went to local grocers while others went on to New York to supply produce to supermarkets there. But every week Cagnoni also carried a briefcase stuffed with thousands of dollars in cash to Flash Trucking, a suburban Cicero company that made most of his Chicago-area deliveries, Pavlich testified.

Flash was owned by brothers, Michael and Paul Spano. Michael Spano is serving a 12-year prison sentence for his 2002 conviction for helping former Cicero town president Betty Loren-Maltese swindle the suburb -- long plagued by mob influence -- out of millions of dollars in insurance money.

Prosecutors say that when longtime Cicero mob boss Rocky Infelice was sent to prison in the early 1990s he dubbed Michael Spano his successor.

Pavlich said sometimes money was delivered to a meeting in a Rosemont hotel that Cagnoni and a number of other men attended.

"I of course kept my distance and went downstairs as I was told to do," Pavlich said. But he identified an FBI surveillance photograph of Accardo, who for decades was one of the most powerful mob bosses in the country, as that of one of the men on hand for at least one meeting. "I believe Rocky was there every time I was there," the former security director said, speaking of Infelice.

Calabrese attorney Joseph Lopez asked Pavlich whether he made the payments to avoid union problems. Pavlich said that as he understood it, that was one of the reasons.

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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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Family Secrets Crackdown Just the Latest Hit on the Mob

Among the 14 alleged mob bosses and associates indicted last week by a federal grand jury were three "made" members who enjoy lofty status in the organized crime underworld.

Prosecutors said the indictments were historic for Chicago because never before had so many high-ranking bosses of La Cosa Nostra been taken down in a single criminal case. The mob, U.S. Atty. Patrick Fitzgerald said, had taken a hit. But the truth is the Outfit has been wounded for some time.

A series of successful federal prosecutions over the years have put many bosses behind bars and have forced mobsters and their associates into much lower profiles. "Over the last 20 years, it's been one blow after another," said Lee Flosi, a former FBI agent who supervised the organized crime task force in the early 1990s.

The mob has downsized from six street crews to four. The number of organized crime associates--individuals the crews need for muscle, loan sharking, debt collecting and sports betting--also has dwindled.

"Made" members, who are typically of Italian descent and have committed one murder on behalf of the mob, have become an endangered species.

The Como Inn

The last known induction into the mob took place in 1984 at the Como Inn, an Italian restaurant in Chicago, although there may have been other induction ceremonies since, according to former organized crime investigators.

The FBI estimates that Chicago now only has 25 "made" members and another 75 organized crime associates. Federal authorities said that 15 years ago the mob had 50 "made" members and as many as 400 associates.

Mob violence has dropped off, as well.

The last known successful mob hit occurred in Nov. 20, 2001. That's when Anthony "Tony the Hatch" Chiaramonti, a top figure in the Outfit's South Side rackets, was gunned down in the vestibule of a west suburban chicken restaurant. The 67-year-old Chiaramonti's murder remains unsolved.

The hit, or rub-out, was used to command loyalty, to take out rivals or to silence witnesses. According to the Chicago Crime Commission, 1,111 gangland slayings have been committed since 1919.

The latest arrests of alleged mobsters generated widespread media interest and calls from overseas talk show hosts who recall the St. Valentine's Day massacre of 1929, which led to the end of Prohibition, made Al Capone a household name and solidified Chicago as the gangster capital of the world. But the Chicago Police Department's definition of organized crime has shifted during recent decades from the Outfit to street gangs like the Latin Kings and the Black Gangster Disciples that control drug sales in the city.

"When you look at who's a bigger threat to the public, it's clear," said Cmdr. Steve Caluris, who runs the Deployment Operations Center, which coordinates all of the department's intelligence gathering. "These aren't just punks hanging out on street corners. It's organized crime." Chicago police statistics show that 1,276 murders were tied to street gangs from 2000 through 2004.

The 41-page racketeering indictment provided fresh insights into the mob's enterprise of illegal gambling, loan sharking and murder. Prosecutors charged that La Cosa Nostra bosses and "made" members were responsible for 18 gangland slayings from 1970 through 1986.

While the Outfit is still active in embezzling from union pension and benefit funds, illegal sports bookmaking, video poker machines and occasional violence, its heyday of influence passed long before Monday's indictments of James Marcello, the reputed boss of the mob; fugitive Joseph "the Clown" Lombardo; and 12 others.

Marcello, Frank Calabrese Sr. and Nicholas Calabrese were the three "made" mob members indicted, according to court records.

"Once `made,' the individual was accorded greater status and respect in the enterprise," the indictment said. "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."

Prosecutors had begun weakening the Chicago Outfit with a series of successes, though few of the convictions have involved mob murders.

Among the more recent major cases have been that of William Hanhardt, a former Chicago police deputy superintendent, for running a mob-connected jewelry theft ring and reputed Cicero mob boss Michael Spano Sr. for looting $12 million from town coffers.

In the 1990s, convictions included mob leaders Gus Alex, chief political fixer for decades; Lenny Patrick, a gangster for 50 years who became the highest-ranking mobster to turn government informant; Sam Carlisi, former head of the mob's day-to-day operations; Ernest "Rocco" Infelice, convicted of murdering a bookmaker who refused demands to pay "street tax"; and Marco D'Amico, a top gambling boss.

With each aging mobster who dies or goes to prison, the Outfit has not been fully successful in recruiting leadership. Still, law enforcement officials and mob watchers caution that Monday's arrests do not mean the Chicago La Cosa Nostra is near death. La Cosa Nostra--"this thing of ours" or "our thing"--is used to refer to the American mafia.

The mob controls most of the illegal sports betting in the Chicago area, remains stubbornly entrenched in the Teamsters Union and remains disturbingly effective at collecting "street taxes" as a cost to operate businesses such as strip clubs.

While federal authorities, took down alleged members and associates from the Grand Avenue, the 26th Street and Melrose Park crews, the Elmwood Park street crew was untouched. That crew, perhaps the most powerful of the four mob crews in the Chicago area, reputedly is led by John "No Nose" DiFronzo. And even though they are imprisoned, mob bosses have remained adept at running their enterprise from their cells. "They still continue illegal activities through conversations with relatives and associates. It's not going to put them out of business," said James Wagner, a 30-year FBI veteran who retired in 2000.

Court records show that Frank Calabrese Sr., a leader with the mob's 26th Street crew, did just that. Two retired Chicago police officers allegedly delivered messages between Calabrese and mobsters on the outside, including messages to determine whether Calabrese's younger brother, Nicholas, had become an mob turncoat and was cooperating with government. Frank Calabrese Sr. was right to worry; his brother had become an informant, federal authorities said.

The indictment provided sketchy data about a sports bookmaking operation that allegedly was run between 1992 and 2001 by Frank Calabrese Sr. and Nicholas Ferriola. The indictments stated that it operated in northern Illinois and involved five or more people.

Thomas Kirkpatrick, president of the Chicago Crime Commission, said illegal gambling is the mother's milk of the mob.

Kirkpatrick said he had seen one estimate from several years ago that about $100 million was bet with the Chicago mob on the NFL's Super Bowl. "That's where the money is for the mob," Kirkpatrick said. "No one else has the ability to move the money, to cover the bets, to keep the records and to collect debts. That takes an organization."

And, the chairman of the Illinois Gaming Board last week raised concerns that the current board's low staffing of investigators could let organized crime sneak into the state's nine operating riverboat casinos. Gaming officials fear that mob figures would work the casinos in search of desperate gamblers and offer them "juice loans," lending money at rates that can reach 520 percent a year.

The Chicago mob allegedly has its tentacles deep into at least six Teamsters Union locals, according to a report prepared last year by the union's anti-corruption investigators. They turned up allegations of mob influence, kickback schemes and the secret shifting of union jobs to low-wage, non-union companies.

A copy of the report had been provided to the Justice Department after the investigators alleged that union leaders acting at the direction of the Chicago mob had blocked their probe into alleged wrongdoing. "The Chicago area, more than anywhere else where Teamster entities are concentrated, continues to furnish the conditions that historically have made the union vulnerable to organized crime infiltration and systemic corruption: an organized crime family that still has considerable strength, a corrupt business and political environment and resistance to anti-racketeering reform efforts by key Teamster leaders," the report said.

In fact, the FBI's organized crime unit already is investigating some of the allegations in the report.

Agents are looking into whether hundreds of thousands of dollars were siphoned from a Teamsters benefit plan that provides dental care to Chicago-area undertakers and valets, according to sources. "The mob is the same as it always has been," said FBI spokesman Ross Rice, "just on a smaller scale."

Thanks to Todd Lighty and Matt O'Connor.

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How Mobsters Live the High Life without Getting Caught

On The Sopranos, TV mobster Tony Soprano runs the Bada Bing strip club and a garbage hauling firm.

Real-life mobster Tony Centracchio, who died last year while facing charges he oversaw a video gambling empire, was slightly more diversified. Over the years, Centracchio, who lived in Oak Brook, owned a jewelry shop, a carpet store and an abortion clinic, sources say.

Why the different businesses? To hide the ill-gotten cash.

Successful mobsters such as Centracchio need legitimate ways to explain the good life they're living. The kind of life that includes nice houses, fancy cars, big vacations, private schools for the kids. Centracchio oversaw an illegal video gambling operation that pulled in more than $22 million over two decades, the feds say, and he could hardly just throw all that money into a savings account. The Internal Revenue Service, if not the folks next door, might ask questions.

Legitimate businesses provide a quiet way for mobsters to hide money, make more money (a good restaurant will turn a profit for a devil as readily as for an angel) and, when opportunity calls, blend the legit with the illegit. Centracchio's jewelry store sold legally purchased jewelry as well as the stolen stuff, authorities said.

In all, the Chicago Outfit rakes in an estimated $100 million in pure profit each year, law enforcement sources say, and while that's nowhere near what Al Capone took in--more than $1 billion a year in today's dollars--it's a hefty amount that has to be put somewhere.

John "No Nose" DiFronzo, for instance, put some of his money into a car dealership, authorities said.

As for Capone, he spread his wealth around. The bill for his suites at the Metropole Hotel in the 1920s ran him $1,500 a day, according to one biography. He burnished his public image by feeding thousands of people through soup kitchens. When it came to spending his loot, he was flashy. Which may have been his downfall. When Capone was finally sent to prison, it was not for bootlegging, but income tax evasion.

Chicago's street gangs, as described last April in the first installment of the Chicago Sun-Times Crime Inc. series, follow in Capone's spirit. Flooded with cash from illegal drug sales, street gang leaders have invested in ostentatious suburban homes, private jets and vanity motion pictures about their lives. But the Chicago mob, often called the Outfit, will have little of that. It prefers a lower profile, the better to stay out of jail.

Chicago mobsters buy car dealerships and limousine companies. They start up construction companies, private investigation firms and car washes. They buy strip clubs, dirty bookstores and restaurants. They start trucking companies--a natural for them, given their long ties to the Teamsters union. And, in one of the mob's more extravagant moments, it even bought a golf course in Wisconsin, with dreams of opening a casino. That particular mob dream was behind an insurance scam that on Friday brought down Cicero Town President Betty Loren-Maltese and six others. A jury brought in a verdict of guilty against the seven.

While the mob simply buys its way into many businesses, it strong-arms its way into others. About 10 years ago, for example, the owner of a west suburban pest control company racked up a $6,000 gambling debt. The businessman, hooked on video poker, couldn't pay it back, so he took out a juice loan from a man who worked for Centracchio, former Stone Park chief of detectives Thomas Tucker, court documents show. Tucker, ironically, also was responsible for overseeing the very video poker machines the man blew his money on.

For the juice loan, the businessman had to pay $300 in interest. Not per year or per month. Per week. At one point, the business owner told Tucker he couldn't pay back the money, so Tucker gave him a five-month reprieve--with a price. Tucker and two other men demanded to buy into the man's business for a low price, then eventually bought him out altogether for a pittance. The onetime business owner wound up working for them.

Once a wise mobster owns a business, however, he tries to pretend he doesn't own it, usually by putting it in the name of someone he trusts. That way, if the feds haul him in and convict him of a crime, the business is safe from being seized by the government, or at least safer than if it were in his name.

The late mob boss Sam Carlisi and top mobster James Marcello, who is now in prison, bought real estate through a former Chicago cop, William Galioto, who is Marcello's brother-in-law, to hide their ownership, the feds believe.

Galioto's name came to light most prominently in 1995 when Mayor Daley scotched a low-interest city loan to him and his partners to build a West Side movie studio. Galioto has denied any wrongdoing. But for a really vivid picture of how the mob launders money, one needs to look no further than Loren-Maltese, alleged Cicero mob chief Michael Spano Sr. and a handful of their pals, who were found guilty Friday of running an insurance scam that siphoned more than $12 million out of the town.

Two of the key players were Spano and his business partner, John LaGiglio. They ran a trucking firm and knew zip about insurance. But that didn't stop them from starting up Specialty Risk Consultants, an insurance company that had one big customer, the Town of Cicero.

LaGiglio had dreams of going after the insurance business of other trucking firms, strip clubs and bars owned by his buddies, but the Town of Cicero was the only client necessary, authorities said. The town kept paying and paying, no questions asked.

LaGiglio didn't actually own Specialty Risk Consultants, not officially. The IRS was on his tail for back taxes, and if it became known that he owned a profitable insurance business--bam, here comes the IRS with its hand out. So LaGiglio's parents owned the business, at least on paper, the feds say.

To run the business, LaGiglio hired a guy named Frank Taylor, who knew insurance and, more importantly, was a crook himself. Over the years, Taylor has had a hand in everything from pornography to financial fraud. But Taylor had his own tax problems, making it difficult for him or LaGiglio to be seen getting salaries.

So they played the name game again, the feds say, this time setting up a company called Plaza Partners. The "partners" in Plaza Partners were the wives of LaGiglio and Taylor.

Every week, giving some reason, Specialty Risk Consultants would shift cash to Plaza Partners, prosecutors say. Then the wives would collect their weekly paychecks from Plaza Partners and hand the money right back to their husbands, the feds say.

Plaza Partners wasn't the only shell company set up to hide the money being stolen from Cicero. There was also Specialty Leasing Inc. It was a car leasing company.

Customers--some of the defendants and their families and friends--set their own payments, with Cadillacs being the favorite vehicle. And there was Specialty Financing, a loan company.

Here's how it worked, according to the feds:

No collateral?

No problem!

You don't want to pay all the loan back? No problem!

Spano's son-in-law got a $40,000 loan.

Didn't pay all of it back.

The brother of top mobster Marcello, Michael, got a $16,000 loan for a boat.

Didn't pay all of it back.

In all, nearly $2 million of Cicero's money went to Specialty Finance, IRS investigators estimate. And millions of dollars more were funneled through various other shell companies, making it possible for Spano to buy a Wisconsin vacation home, for the LaGiglios to buy an Indiana horse farm, and for that purchase of the Wisconsin golf course, the feds allege.

Attorneys for the alleged key players have disputed the prosecutors' version.

Loren-Maltese didn't know about any theft from the town, her attorney says. And where was the bribe to her to allow such thievery?

Other defense lawyers have emphasized that key government witnesses have cut deals for reduced sentences or lied under oath before.

One of the oddest cases of mob money laundering involved a friend of Spano's, loan shark James Inendino. Inendino goes by the nickname "Jimmy I," which stands for his last name, and for ice pick, which he reportedly once used on a man's eye.

In the early 1990s, according to court documents, Inendino helped launder millions of dollars in cash belonging to the late Outfit boss Anthony Accardo.

Why so much cash? Accardo, who was once Al Capone's bodyguard, had stashed it in his River Forest house, apparently for decades. Some of the money was so old--dating back to the Capone era--that the mobsters apparently feared it might no longer be accepted as legal currency.

Thanks to Steve Warmbir

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