Sunday, June 24, 2007

Original Family Secrets Mob Trial Indictment

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

UNITED STATES OF AMERICA )No. 02 CR 1050

)

v. )Violations: Title 18,

)United States Code,

NICHOLAS W. CALABRESE, )Sections 2, 371, 894,

JAMES MARCELLO, )1001(a)(2), 1510, 1951, 1955,

JOSEPH LOMBARDO, )and 1962(d)

also known as "The Clown," )

"Lumpy," and "Lumbo," )

FRANK CALABRESE, SR., )

FRANK SCHWEIHS, also known as )

"The German," )First Superseding Indictment

FRANK SALADINO, also known as )

"Gumba," )

PAUL SCHIRO, also known as )

"The Indian," )

MICHAEL MARCELLO, also known as )

"Mickey," )

NICHOLAS FERRIOLA, )

ANTHONY DOYLE, also known as )

"Twan," )

MICHAEL RICCI, )

THOMAS JOHNSON, )

JOSEPH VENEZIA, and )

DENNIS JOHNSON )

COUNT ONE

The SPECIAL AUGUST 2003-2 GRAND JURY charges:

I. THE ENTERPRISE

1. At times material to this indictment there existed a

criminal organization which is referred to hereafter as "the

Chicago Outfit." The Chicago Outfit was known to its members and

associates as "the Outfit" and was also known to the public as

"organized crime," the "Chicago Syndicate" and the "Chicago Mob."

The Chicago Outfit was an "enterprise" as that term is used in

Title 18, United States Code, Section 1961(4), that is, it

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constituted a group of individuals associated in fact, which

enterprise was engaged in and the activities of which affected

interstate commerce. The enterprise constituted an ongoing

organization whose members functioned as a continuing unit for a

common purpose of achieving the objectives of the enterprise.

2. The Chicago Outfit existed to generate income for its

members and associates through illegal activities. The illegal

activities of the Chicago Outfit included, but were not limited to:

(1) collecting "street tax," that is, extortion payments required

as the cost of operating various businesses;(2) the operation of

illegal gambling businesses, which included sports bookmaking and

the use of video gambling machines; (3) making loans to individuals

at usurious rates of interest (hereafter referred to as "juice

loans"), which loans constituted "extortionate extensions of

credit," as that term is defined in Title 18, United States Code,

Section 891(6); (4) "collecting" through "extortionate means" juice

loans constituting "extensions of credit," as those terms are

defined in Title 18, United States Code, Sections 891(5), (7) and

(6), respectively; (5) collecting debts incurred in the Chicago

Outfit's illegal gambling businesses; (6) collecting debts incurred

in the Chicago Outfit's juice loan business, which debts carried

rates of interest at least twice the rate enforceable under

Illinois law; (7) using threats, violence and intimidation to

collect street tax and juice loan debts; (8) using threats,

violence, and intimidation to discipline Chicago Outfit members and

associates; (9) using murder of Chicago Outfit members, associates

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and others to advance the interests of the Chicago Outfit's illegal

activities; (10) obstructing justice and criminal investigations by

intimidating, bribing, retaliating against, and murdering witnesses

and potential witnesses who could provide information adverse to

the enterprise's interests; and (11) traveling in interstate

commerce to further the goals of the criminal enterprise.

3. In order to carry out its criminal activities, the

Chicago Outfit maintained a structure and chain of command. The

criminal activities of the Chicago Outfit were carried out in part

by sub-groups, or "crews," which were generally given territories

in different geographic locations in the Chicago area. These crews

were known by their geographic areas, and included the Elmwood Park

crew, the North Side/Rush Street crew, the South Side/26th Street

or Chinatown crew, the Grand Avenue crew, the Melrose Park crew,

and the Chicago Heights crew. Each crew was run by a crew leader,

also known as a street boss or "capo," and these crew bosses

reported to an underboss, or "sotto capo," who was second in

command of the Chicago Outfit, and therefore referred to at times

as "Number Two." The overall leader of the Chicago Outfit was

referred to as the Boss or "Number One." The Chicago Outfit also

utilized a "consigliere," who provided advice to the Boss.

4. When an individual conducting illegal activities on behalf

of the Chicago Outfit proved himself particularly trustworthy and

was to be given special status in the enterprise, he was given

"made" status. An individual could not normally be "made" unless

he was of Italian descent, and had committed at least one murder on

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behalf of the enterprise. An individual had to be sponsored by his

capo before he could be "made," which occurred at a ceremony in

which the person to be "made" swore allegiance to the enterprise.

This ceremony was attended by the individual's capo, as well as

other ranking members of the Chicago Outfit. Once "made," the

individual was accorded greater status and respect in the

enterprise. An individual who was "made" or who committed a murder

on behalf of the Outfit was obligated to the enterprise for life to

perform criminal acts on behalf of the enterprise when called upon.

5. Disputes between members of different crews were to be

resolved first by their respective capos, and, if no resolution

could be made between the capos, then the Boss would settle the

dispute.

6. During the course of the conspiracy, Anthony Accardo, also

known as "Big Tuna," and "Joe Batters," Joseph Aiuppa, also known

as "Doves," and "Joey O'Brien," Sam Carlisi, also known as "Wings,"

and John Monteleone, also known as "Johnny Apes," among others,

acted as Boss of the Chicago Outfit.

7. During the course of the conspiracy, Joseph Aiuppa, and

Jack Cerone, among others, acted as Sotto Capo, or Underboss, of

the Chicago Outfit.

8. During the course of the conspiracy, Joseph Ferriola was

a "made" member of the Chicago Outfit who reported directly to the

Boss. Harry Aleman, William Petrocelli, also known as "Butch,"

Jerry Scarpelli, and others, were criminal associates who reported

at various times to Joseph Ferriola.

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9. Defendant JAMES MARCELLO was a member of the Melrose Park

crew, was a "made" member of the Chicago Outfit, and committed

murder and other criminal activities on its behalf. Defendant

JAMES MARCELLO continued to conduct criminal activities on the

Outfit's behalf while incarcerated through his brother, defendant

MICHAEL MARCELLO, and others.

10. Defendant JOSEPH LOMBARDO, also known as "the Clown,"

"Lumpy," and "Lumbo," was a member of the Grand Avenue crew, and

committed murder and other criminal activities on its behalf.

11. Defendant FRANK CALABRESE, SR., was a member of the South

Side/26th Street crew, was a "made" member of the Chicago Outfit,

and committed murder and other criminal activities on its behalf.

Defendant FRANK CALABRESE, SR., continued to conduct criminal

activities on the Outfit's behalf while incarcerated through

defendants FERRIOLA, DOYLE, RICCI, and others.

12. Other members of the South Side/26th Street crew were

James Torello, also known as "Turk," Angelo LaPietra, also known as

"the Hook," and "the Bull," and James LaPietra, all of whom served

as capos of this crew during the course of the conspiracy.

Additional members of this crew included John Monteleone, John

Fecarotta, Ronald Jarrett, James DiForti, Frank Furio, and Frank

Santucci.

13. Defendant NICHOLAS CALABRESE is the brother of defendant

FRANK CALABRESE, SR., was also a member of the South Side/26th

Street crew, was a "made" member of the Chicago Outfit, and

committed murder and other criminal activities on its behalf.

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14. Defendant FRANK SCHWEIHS, also known as "the German," was

an enforcer for the Chicago Outfit, imposing and collecting "street

tax" for himself and Outfit members, and making additional

collections on behalf of the enterprise through the use of

extortionate means. Defendant SCHWEIHS also agreed to commit

murder on behalf of the Chicago Outfit.

15. Defendant FRANK SALADINO, also known as "Gumba," was a

member of the South Side/26th Street crew, and committed murder and

other criminal activities on behalf of the Chicago Outfit.

16. Defendant PAUL SCHIRO, also known as "the Indian," was a

criminal associate of defendant SCHWEIHS, "made" member Anthony

Spilotro, and Outfit associate Joseph Hansen, who committed murder

and other criminal activities on behalf of the Chicago Outfit.

17. Defendant MICHAEL MARCELLO, also known as "Mickey," is

the brother of defendant JAMES MARCELLO, and was a member of the

Melrose Park crew. Defendant MICHAEL MARCELLO assisted his

brother's participation in the activities of the enterprise while

defendant JAMES MARCELLO was in jail, by keeping his brother

informed of the enterprises's activities, delivering messages to

persons associated with the enterprise, and carrying out illegal

activities of the Chicago Outfit, including the operation of an

illegal video gambling business.

18. Defendant NICHOLAS FERRIOLA is the son of Joseph

Ferriola, and was a member of the South Side/26th Street crew who

assisted defendant FRANK CALABRESE, SR.'s participation in the

activities of the enterprise while defendant FRANK CALABRESE, SR.,

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was in jail, by keeping defendant FRANK CALABRESE, SR., informed of

the enterprise's activities, delivering messages to persons

associated with the enterprise, collecting monies generated by

extortionate demands of defendant FRANK CALABRESE, SR., and

carrying out other illegal activities of the Chicago Outfit,

including the operation of an illegal sports bookmaking business.

19. Defendant ANTHONY DOYLE, also known as "Twan," is a

retired Chicago Police Department ("CPD") officer, who, at the time

he was employed as a CPD officer, assisted defendant FRANK

CALABRESE, SR.'s participation in the activities of the enterprise

while defendant FRANK CALABRESE, SR., was in jail, by keeping

defendant FRANK CALABRESE, SR. informed of a law enforcement

investigation into the murder of John Fecarotta, committed by

defendants FRANK CALABRESE, SR., NICHOLAS CALABRESE, and others.

Defendant DOYLE also agreed to pass messages from defendant FRANK

CALABRESE, SR., in jail to other members of the Chicago Outfit,

including messages designed to determine whether defendant NICHOLAS

CALABRESE or James DiForti, now deceased, was cooperating with law

enforcement about the activities of the enterprise.

20. Defendant MICHAEL RICCI is a retired CPD officer, who at

the time he was subsequently employed with the Cook County

Sheriff's Department, assisted defendant FRANK CALABRESE, SR.'s

participation in the activities of the enterprise while defendant

FRANK CALABRESE, SR., was in jail, by agreeing to pass messages

from defendant FRANK CALABRESE, SR., to other members of the

Chicago Outfit, including messages designed to determine whether

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defendant NICHOLAS W. CALABRESE or James DiForti was cooperating

with law enforcement about the activities of the enterprise.

Defendant RICCI also agreed to assist defendant FRANK CALABRESE,

SR., in collecting monies generated by extortionate demands of

defendant FRANK CALABRESE, SR., and to provide materially false

information to special agents of the Federal Bureau of

Investigation.

II. THE RACKETEERING CONSPIRACY

21. From approximately the middle of the 1960s through the

date of the return of this indictment, the exact dates being

unknown to the Grand Jury, in the Northern District of Illinois,

Eastern Division, and elsewhere,

NICHOLAS W. CALABRESE,

JAMES MARCELLO,

JOSEPH LOMBARDO, also known as

"The Clown," "Lumpy," and "Lumbo,"

FRANK CALABRESE, SR.,

FRANK SCHWEIHS, also known as

"The German,"

FRANK SALADINO, also known as

"Gumba,"

PAUL SCHIRO, also known as

"The Indian,"

MICHAEL MARCELLO, also known as

"Mickey,"

NICHOLAS FERRIOLA,

ANTHONY DOYLE, also known as

"Twan," and

MICHAEL RICCI,

defendants herein, being persons employed by and associated with an

enterprise, that is, the Chicago Outfit, which enterprise engaged

in and the activities of which affected, interstate commerce, did

knowingly conspire and agree, with other persons known and unknown

to the Grand Jury, to conduct and to participate, directly and

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indirectly, in the conduct of the affairs of the Chicago Outfit

through: (1) a "pattern of racketeering activity," as that term is

defined in Title 18, United States Code, Sections 1961(1) and

1961(5), and as further specified in paragraph 49 of this count,

and (2) the "collection of unlawful debt," as that term is defined

in Title 18, United States Code, Section 1961(6), and as further

specified in paragraph 50 of this count, both in violation of Title

18, United States Code, Section 1962(c).

22. It was part of the conspiracy that each defendant agreed

that a conspirator would commit at least two acts of racketeering

in the conduct of the affairs of the enterprise.

23. It was further part of the conspiracy that the

defendants, together with other persons known and unknown to the

Grand Jury, each agreed to conduct and to participate in the

conduct of the Chicago Outfit's affairs through the collection of

unlawful debt.

24. It was further part of the conspiracy that acts of murder

would be attempted and were committed to further the criminal

objectives of the Chicago Outfit and protect the enterprise from

law enforcement. Such murders and attempted murders included:

a. the murder of Michael Albergo, also known as "Hambone," in

or about August, 1970, in Chicago, Illinois;

b. the murder of Daniel Seifert, on or about September 27,

1974, in Bensenville, Illinois;

c. the murder of Paul Haggerty, on or about June 24, 1976, in

Chicago, Illinois;

d. the murder of Henry Cosentino, on or about March 15, 1977;

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e. the murder of John Mendell, on or about January 16, 1978,

in Chicago, Illinois;

f. the murders of Donald Renno and Vincent Moretti, on or

about January 31, 1978, in Cicero, Illinois;

g. the murders of William and Charlotte Dauber, on or about

July 2, 1980, in Will County, Illinois;

h. the murder of William Petrocelli, on or about December 30,

1980, in Cicero, Illinois;

i. the murder of Michael Cagnoni, on or about June 24, 1981,

in DuPage County, Illinois;

j. the murder of Nicholas D'Andrea, on or about September 13,

1981, in Chicago Heights, Illinois;

k. the attempted murder of Individual A, on or about April 24,

1982, in Lake County, Illinois;

l. the murders of Richard D. Ortiz and Arthur Morawski, on or

about July 23, 1983, in Cicero, Illinois;

m. the murder of Emil Vaci, on or about June 7, 1986, in

Phoenix, Arizona;

n. the murders of Anthony and Michael Spilotro, on or about

June 14, 1986, in DuPage County, Illinois;

o. the murder of John Fecarotta, on or about September 14,

1986, in Chicago, Illinois.

25. It was further part of the conspiracy that at times

members of one crew would assist members of other crews in

homicides, by conducting surveillances of and luring intended

victims so that the victims would not be alerted that they were

targeted for murder.

26. It was further part of the conspiracy that cash payments

would be and were extorted from numerous individuals as "street

tax" to allow businesses run by those individuals to continue to

operate.

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27. It was further part of the conspiracy that loans made at

usurious rates, or "juice loans," would be and were made to

numerous individuals. These loans carried interest rates generally

ranging from one percent (1%) to ten percent (10%) per week, which

translate into annual rates of 52% to 520%, respectively. In

making these juice loans, the conspirators agreed to rely and did

rely upon the borrower's understanding at the time the loan was

made that delay or failure to repay the loans could result in the

use of violence or other criminal means to cause harm to the

borrower. The conspirators also understood at the time each juice

loan was made that delay or failure to repay the loans could result

in the use of violence or other criminal means to cause harm to the

particular borrower.

28. It was further part of the conspiracy that "juice loan"

payments would be and were collected from numerous juice loan

debtors, who borrowed money from conspirators at the rates

described in the previous paragraph. The conspirators each

understood at the time they collected each juice loan payment that

delay or failure to repay the loan could result in the use of

violence or other criminal means to cause harm to the particular

debtor. The conspirators used violence, intimidation and threats

to collect these debts.

29. It was further part of the conspiracy that collections

would be made of debts incurred in connection with the juice loan

business described in this Count, which business charged rates of

interest at least twice the rate enforceable under Illinois law.

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30. It was further part of the conspiracy that members and

associates of the Chicago Outfit would and did knowingly conduct,

finance, manage, supervise, direct, and own all or part of illegal

gambling businesses in violation of the laws of the State of

Illinois, including illegal sports bookmaking businesses, and

businesses which utilized video gambling machines for illegal

wagering.

31. It was further part of the conspiracy that members and

associates of the Chicago Outfit agreed to collect and did collect

debts incurred in connection with illegal gambling businesses

described in this Count.

32. It was further part of the conspiracy that members and

associates of the Chicago Outfit used violence, intimidation and

threats to: (1) instill discipline within the Chicago Outfit by

compelling adherence to the Chicago Outfit's edicts and

instructions; and (2) punish conduct by Chicago Outfit members,

associates and others, which the hierarchy of the Chicago Outfit

believed was adverse to the interests of the Chicago Outfit.

33. It was further part of the conspiracy that members and

associates of the Chicago Outfit would and did obstruct the due

administration of justice by: (1) intimidating, harming, and

killing witnesses and potential witnesses who could provide

information detrimental to the operations of the enterprise; (2)

providing false information to law enforcement officers; and (3)

paying money to individuals to keep them from cooperating with law

enforcement officials.

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34. It was further part of the conspiracy that the

conspirators would and did use nominees, "fronts," and fictitious

names to hide the proceeds of criminal activities.

35. It was further part of the conspiracy that the

conspirators would and did use coded language in their discussions

and written materials, and utilized coded names for discussing

fellow conspirators and victims of their criminal activities.

36. It was further part of the conspiracy that the

conspirators would and did collect information from corrupt law

enforcement sources to determine and disrupt legitimate law

enforcement investigation into the activities of the enterprise.

37. It was further part of the conspiracy that the

conspirators would and did steal, store, and utilize "work cars"

for use in their criminal activities, including surveillance of

murder victims and committing murders.

38. It was further part of the conspiracy that the

conspirators would and did use walkie-talkies and citizen band

radios to communicate amongst themselves while conducting criminal

activities, including murder.

39. It was further part of the conspiracy that the

conspirators would and did monitor law enforcement radio

frequencies, and acquire radio equipment, monitors, and crystals to

do so, in order to detect and avoid law enforcement inquiry into

their activities, including murder.

40. It was further part of the conspiracy that the

conspirators would and did conduct surveillance to detect the

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presence of law enforcement while they and coconspirators were

committing illegal activities, including murder.

41. It was further part of the conspiracy that the

conspirators would and did acquire explosives, explosive devices,

detonators, transmitters, and remote control devices with the

intent to murder individuals without needing to be in the immediate

vicinity of the intended victim.

42. It was further part of the conspiracy that the

conspirators would and did acquire and store firearms to be used to

commit murder.

43. It was further part of the conspiracy that the

conspirators would and did use pagers and pay phones in an effort

to reduce law enforcement's ability to intercept their

communications.

44. It was further part of the conspiracy that the

conspirators would and did maintain hidden interests in businesses,

from which they could receive income not traceable to them.

45. It was further part of the conspiracy that the

conspirators would and did maintain hidden control of labor

organizations and assets.

46. It was further part of the conspiracy that the

conspirators would and did utilize the threat of labor union

violence or disruptions to induce payments to the enterprise to

keep "union peace."

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47. It was further part of the conspiracy that the

conspirators would and did maintain written records and ledgers for

their loansharking and bookmaking activities.

48. It was further part of the conspiracy that members and

associates of the Chicago Outfit misrepresented, concealed and hid,

caused to be misrepresented, concealed and hidden, and attempted to

misrepresent, conceal and hide the operation of the Chicago Outfit

and acts done in furtherance of the enterprise.

III. PATTERN OF RACKETEERING ACTIVITY

(First Alternative Ground of Liability)

49. The pattern of racketeering activity through which the

defendants agreed to conduct and to participate in the conduct of

the Chicago Outfit's affairs, consisted of multiple violations of

the following federal and state laws:

(a) Acts and threats involving murder chargeable under

the law of the States of Illinois, Arizona, and Nevada, which are

punishable by imprisonment for more than one year; that is, first

degree murder (Illinois: Illinois Revised Statutes, Chapter 38, §9

1; Arizona: Arizona Revised Statutes §13-1105), conspiracy to

commit murder (Illinois: Illinois Revised Statutes, Chapter 38, §8

2; Arizona: Arizona Revised Statutes §13-1003; Nevada: Nevada

Revised Statutes §199.480), and attempted murder (Illinois:

Illinois Revised Statutes, Chapter 38, §8-4);

(b) Making and conspiring to make extortionate extensions

of credit, indictable under Title 18, United States Code, Section

892;

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(c) Collecting and conspiring to collect extensions of

credit by extortionate means, indictable under Title 18, United

States Code, Section 894;

(d) Interference with commerce by threats and violence,

and conspiring to commit this offense, indictable under Title 18,

United States Code, Section 1951;

(e) Acts and threats involving extortion in violation of

state law, which are punishable by imprisonment for more than one

year; that is, intimidation, in violation of Chapter 38, Illinois

Revised Statutes, §12-6 (which later became 720 ILCS 5/12-6 of the

Illinois Compiled Statutes) and conspiracy to commit intimidation,

in violation of Chapter 38, Illinois Revised Statutes, §8-2 (which

later became 720 ILCS 5/8-2 of the Illinois Compiled Statutes);

(f) Operating an illegal gambling business indictable

under Title 18, United States Code, Section 1955;

(g) Obstructing the due administration of justice,

indictable under Title 18, United States Code, Section 1503;

(h) Obstruction of criminal investigations, indictable

under Title 18, United States Code, Section 1510;

(i) Witness tampering, indictable under Title 18, United

States Code, Section 1512;

(j) Retaliating against a witness, indictable under Title

18, United States Code, Section 1513;

(k) Interstate travel in aid of racketeering enterprises,

indictable under Title 18, United States Code, Section 1952.

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IV. COLLECTION OF UNLAWFUL DEBT

(Second Alternative Ground of Liability)

50. The collection of unlawful debt through which the

defendants agreed to conduct and to participate in the affairs of

the enterprise, consisted of multiple acts of collecting and

attempting to collect debt incurred in connection with the Chicago

Outfit's operation of illegal gambling businesses and its lending

money at usurious rates, which loans were unenforceable under

Illinois laws relating to usury, such gambling and loan debts

constituting unlawful debt as defined in Title 18, United States

Code, Sections 1961(6)(A) and (B).

All of the above in violation of Title 18, United States Code,

Section 1962(d).

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COUNT TWO

The SPECIAL AUGUST 2003-2 GRAND JURY further charges:

From in or before 1996 and continuing through the date of this

indictment, in the Northern District of Illinois, Eastern Division,

and elsewhere,

JAMES MARCELLO,

MICHAEL MARCELLO, also known as

"Mickey,"

THOMAS JOHNSON,

JOSEPH VENEZIA, and

DENNIS JOHNSON,

defendants herein, together with other persons known and unknown to

the Grand Jury, knowingly conducted all or part of an illegal

gambling business, that is, a business involving the use of video

gambling machines and devices in the western Chicago suburbs and

surrounding areas, which business was in substantially continuous

operation for a period in excess of thirty (30) days, which

involved five or more persons who conducted, financed, managed,

supervised, directed, and owned all or part of the business, and

which was a violation of the following laws of the State of

Illinois: Illinois Revised Statutes, Chapter 38, Sections 8-2, 28

1(a)(1), (3), and (5) and 28-3, which later became 720 ILCS 5/8-2,

5/28-1(1), (3), and (5), and 5/28-3;

In violation of Title 18, United States Code, Sections 1955

and 2.

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COUNT THREE

The SPECIAL AUGUST 2003-2 GRAND JURY further charges:

From in or about 1998 and continuing until at least January

2003, in the Northern District of Illinois and elsewhere,

JAMES J. MARCELLO, and

MICHAEL A. MARCELLO, also known as

"Mickey,"

defendants herein, did willfully endeavor by means of bribery to

obstruct, delay, and prevent the communication of information

relating to violations of criminal statutes of the United States by

a person to a criminal investigator; that is, the defendants paid

and caused to be paid a monthly sum of money to and on behalf of

Nicholas W. Calabrese in order to maintain his allegiance to the

Chicago Outfit and to prevent and discourage his cooperation with

law enforcement authorities;

In violation of Title 18, United States Code, Sections 1510

and 2.

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COUNT FOUR

The SPECIAL AUGUST 2003-2 GRAND JURY further charges:

From sometime in the early 1980s and continuing until

approximately November 2002, in the Northern District of Illinois

and elsewhere,

FRANK CALABRESE, SR., and

NICHOLAS FERRIOLA,

defendants herein, knowingly committed extortion, as that term is

used in Title 18, United States Code, Section 1951(b)(2), which

extortion affected interstate commerce as that term is used in

Title 18, United States Code, Section 1951(b)(3), in that the

defendants would and did obtain money as "street tax" from a

restaurant operating in Chicago, with the consent of a

representative of the restaurant, induced by the wrongful use of

actual and threatened force, violence, and fear;

In violation of Title 18, United States Code, Sections 1951

and 2.

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COUNT FIVE

The SPECIAL AUGUST 2003-2 GRAND JURY further charges:

From sometime in 1992 and continuing until at least sometime

in 2001, in the Northern District of Illinois and elsewhere,

FRANK CALABRESE, SR., and

NICHOLAS FERRIOLA,

defendants herein, together with other persons known and unknown to

the Grand Jury, knowingly conducted all or part of an illegal

gambling business, that is, a sports bookmaking business, which

business was in substantially continuous operation for a period in

excess of thirty (30) days, which involved five or more persons who

conducted, financed, managed, supervised, directed, and owned all

or part of the business, and which was a violation of the following

laws of the State of Illinois: Illinois Revised Statutes, Chapter

38, Sections 8-2, 28-1(a)(1), (3), and (5) and 28-3, which later

became 720 ILCS 5/8-2, 5/28-1(1), (3), and (5), and 5/28-3;

In violation of Title 18, United States Code, Sections 1955

and 2.

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COUNT SIX

The SPECIAL AUGUST 2003-2 GRAND JURY further charges:

From sometime in the summer of 2001 and continuing until

approximately November 2001, in the Northern District of Illinois

and elsewhere,

FRANK SCHWEIHS, also known as

"the German,"

defendant herein, knowingly did attempt to commit extortion, as

that term is used in Title 18, United States Code, Section

1951(b)(2), which extortion would have affected interstate commerce

as that term is used in Title 18, United States Code, Section

1951(b)(3), in that the defendant would and did attempt to obtain

money as "street tax" from an adult entertainment club operating in

a suburb of Chicago, with the consent of a representative of the

club, induced by the wrongful use of actual and threatened force,

violence, and fear;

In violation of Title 18, United States Code, Sections 1951

and 2.

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COUNT SEVEN

The SPECIAL AUGUST 2003-2 GRAND JURY further charges:

From sometime in October of 2001 and continuing through

November 2001, in the Northern District of Illinois and elsewhere,

FRANK SCHWEIHS, also known as

"the German,"

defendant herein, knowingly participated in the use of extortionate

means within the meaning of Title 18, United States Code, Section

891(7), to collect and attempt to collect from the former owners of

an adult entertainment store operating in Indiana, an extension of

credit, within the meaning of Title 18, United States Code, Section

891(1); that is, the defendant did expressly and implicitly

threaten the use of violence to cause harm to the former owners of

the store in an attempt to obtain a sum of money from them by

November 1, 2001;

In violation of Title 18, United States Code, Sections 894 and

2.

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COUNT EIGHT

The SPECIAL AUGUST 2003-2 GRAND JURY further charges:

On or about February 21, 2003, in the Northern District of

Illinois,

MICHAEL RICCI,

defendant herein, did knowingly and willfully make materially false

and fraudulent statements in a matter within the jurisdiction of

the Federal Bureau of Investigation (FBI), an agency within the

executive branch of the Government of the United States, in that

the defendant, in response to questions posed to him by special

agents of the FBI, stated: 1) that he, Anthony Doyle, and Frank

Calabrese, Sr., never discussed the FBI's taking possession of

evidence regarding the murder of John Fecarotta; 2) that Frank

Calabrese, Sr., never mentioned to him any concern as to whether

Nicholas Calabrese was cooperating with law enforcement regarding

the murder of John Fecarotta; 3) that Frank Calabrese, Sr., never

asked him to pass any messages to anyone about the Fecarotta

homicide; 4) that Frank Calabrese, Sr., never asked him to pass

messages to anyone concerning gambling, street tax, or any other

type of criminal activity; 5) that he did not pass any messages to

or from Frank Calabrese, Sr., to or from anyone; 6) that before his

previous interview by special agents of the FBI on or about May 4,

1999, he had never heard of James DiForti; and 7) that he had never

discussed James DiForti with Frank Calabrese, Sr. In violation of

Title 18, United States Code, Section 1001(a)(2).

24

COUNT NINE

The SPECIAL AUGUST 2003-2 GRAND JURY further charges:

1. At times material herein, defendant MICHAEL MARCELLO

operated a business that involved the placement, maintenance and

use of video gambling machines and devices. This business was

known as M & M Amusement, Inc. (also known to some of its customers

as Buff Amusement, Inc.), with MICHAEL MARCELLO as the sole

shareholder and officer. MICHAEL MARCELLO employed defendants

JOSEPH VENEZIA and THOMAS JOHNSON, among others, to help him

oversee the operation and maintenance of and the collection of

proceeds from the video gambling machines and devices. JAMES

MARCELLO assisted his brother MICHAEL MARCELLO by directing him and

advising him on the operation of the business.

2. Beginning in or about January 1996 and continuing

thereafter through at least April 2004, in the Northern District of

Illinois, Eastern Division,

JAMES MARCELLO,

MICHAEL MARCELLO, also known as

"Mickey,"

JOSEPH VENEZIA and

THOMAS JOHNSON,

defendants herein, did willfully and knowingly conspire and agree

together and with others known and unknown to the grand jury, to

defraud the United States by impeding, impairing, obstructing and

defeating the lawful government functions of the Department of

Treasury, in particular, the Internal Revenue Service (hereafter

referred to as "IRS"), in the ascertainment, computation,

assessment, and collection of the revenue: to wit, income taxes.

25

MANNER AND MEANS

3. It was part of the conspiracy that defendant MICHAEL

MARCELLO caused video gambling machines and devices to be obtained

for M & M Amusement, Inc., from other companies.

4. It was further a part of the conspiracy that defendants

and others then placed and caused the placement of these video

gambling machines and devices at various locations, such as

taverns, restaurants, and fraternal clubs, primarily in Cicero and

Berwyn, Illinois, and that co-conspirator owners, managers, and

representatives of the taverns, restaurants, and fraternal clubs

accepted placement of these gambling machines and devices in return

for a portion of the profits from the machines and devices.

A. To activate these video gambling machines and

devices, players at the taverns, restaurants, and fraternal clubs

had to insert currency into the money receptacles of the video

gambling machines and devices to put credits on the machines and

devices.

B. Players earned credits based upon the success of

their resultant play. Pay-outs to winning players were based on

the total of credits accumulated. These video gambling machines

and devices could be adjusted by the defendants either to raise or

lower the amount of credits earned by players.

C. These machines and devices used electronic systems

that guaranteed that the operator retained a portion (percentage)

of the wagers as profits. From a player's standpoint, the

operation of the machine and device was essentially random. As

26

such, players had no real control over what combination of symbols

would appear, and no element of skill was involved in the game.

D. The machines and devices electronically accumulated

"credits," and players were paid based upon the number of

accumulated credits. After a winning player had been paid by a

representative of the taverns, restaurants, and fraternal clubs,

the video gambling machines and devices had a "knock off" device

(normally a button or combination of buttons) that could be pushed

to clear the accumulated credits. Also, the video gambling

machines and devices had separate electronic counters inside the

machines and devices that recorded both the total number of plays

on the machine, and the total of winning credits won on and cleared

off the machines and devices.

5. It was further a part of the conspiracy that defendants

JOSEPH VENEZIA and THOMAS JOHNSON, and others, instructed the

owners, managers, and representatives of the taverns, restaurants,

and fraternal clubs at which the video gambling machines and

devices were placed, on such topics as how to set up the machines

and devices; how properly to pay off the winners on the machines

and devices; how to "clear" or "knock off" the accumulated credits

from the machines and devices after the player had been paid off;

and other topics necessary to the conduct of the illegal gambling

business.

6. It was further a part of the conspiracy that defendants

JOSEPH VENEZIA and THOMAS JOHNSON and others entered into verbal

understandings with the owners, managers, and representatives of

27

the taverns, restaurants, and fraternal clubs, regarding the

operation of the video gambling machines and devices. These verbal

understandings included, but were not limited to, agreements

regarding reimbursement for pay-outs to the players for their

earned credits and the distribution and splitting of the proceeds

from the video gambling machines and devices.

7. It was further a part of the conspiracy that defendants

MICHAEL MARCELLO, JOSEPH VENEZIA and THOMAS JOHNSON and others

would and did conduct their business, primarily in cash, with the

persons to whom they distributed the video gambling machines and

devices, that is, the co-conspirator owners, managers, and

representatives of the taverns, restaurants, and fraternal clubs.

8. It was further a part of the conspiracy that defendants

JOSEPH VENEZIA and THOMAS JOHNSON and others would and did warn the

owners, managers, and representatives of the taverns, restaurants,

and fraternal clubs to be careful to whom they paid out money on

the video gambling machines and devices because of possible law

enforcement investigations. In particular, they warned the owners,

managers, and representatives only to pay money to winning

customers whom they knew well, and to beware of law enforcement

efforts. Those customers who were not known were to be told that

the video gambling machines were for amusement only.

9. It was further a part of the conspiracy that defendants

JOSEPH VENEZIA and THOMAS JOHNSON and others would and did visit

the taverns, restaurants and fraternal clubs, in which the video

gambling machines and devices were placed, on a fairly regular

28

basis, normally at least weekly but at times on a more frequent

basis, to collect the cash proceeds from the machines.

10. It was further a part of the conspiracy that during these

visits, defendants JOSEPH VENEZIA and THOMAS JOHNSON and others

would determine the amount of money played since the last visit on

the machines (known as the "ins"), and the amount of money paid to

winning customers on the machines (known as the "outs").

Defendants JOSEPH VENEZIA and THOMAS JOHNSON and others would open

the machines and devices and read the electronic counters inside

the machines that recorded both the total number of plays on the

machines and the total number of winning credits won, and clear off

the machines since the last collection in order to determine to

date the amount of revenue on the machines. Defendants JOSEPH

VENEZIA and THOMAS JOHNSON and others would then confer with the

representative of each location and review the accounting. If

JOSEPH VENEZIA and THOMAS JOHNSON and others visited the location

on more than one occasion per week, two written copies of the

accounting since the last visit were written on small white sheets

of paper, one of which was provided to and retained by the

representative of the location and the other of which was retained

by JOSEPH VENEZIA and THOMAS JOHNSON and others, often in a small,

locked box at the location to which only JOSEPH VENEZIA and THOMAS

JOHNSON and others employed by M & M Amusement, Inc., had access.

The owners, managers, and representatives of the taverns,

restaurants, and fraternal clubs were credited for the amount of

money paid to winning customers (the "outs"). Later, on the

29

weekly settlement date, the small white sheets of paper were then

typically destroyed by JOSEPH VENEZIA and THOMAS JOHNSON and

others employed by M & M Amusement, Inc, as well as by the

representatives of the taverns, restaurants, and fraternal clubs,

often by burning them on the premises or by other means of

destruction.

11. It was part of the conspiracy that on an agreed upon

recurring settlement day of the week, defendants JOSEPH VENEZIA and

THOMAS JOHNSON, and others, under the direction of MICHAEL

MARCELLO, issued weekly M & M Amusement, Inc. collection reports,

yellow in color, to the owners, managers, and representatives of

taverns, restaurants, and fraternal clubs when they collected M &

M Amusement, Inc.'s share of the weekly receipts of the video

gambling machines and devices placed in such taverns, restaurants

and fraternal clubs. The information recorded on the collection

reports purported to represent the following: the name of the

establishment, its address, the date of collection, the total gross

receipts from the machines for that week, which was listed on the

receipts as the "Net Amount to Divide," and the fifty percent share

of the gross receipts for the establishment, which was listed on

the collection reports as the "Merchant's Share" and the fifty

percent share of the gross receipts for M & M Amusement, Inc.,

which was listed on the collection reports as the "Balance Due

Operator."

12. It was further part of the conspiracy that the collection

reports issued weekly by defendants JOSEPH VENEZIA and THOMAS

30

JOHNSON, and others, under the direction of MICHAEL MARCELLO, were

false, in that the collection reports substantially understated the

entire gross receipts generated by the video gambling machines, and

substantially understated the amounts of money reflecting the

taverns,' restaurants' and fraternal clubs' share of the gross

receipts as well as M & M Amusement, Inc.'s share of the gross

receipts.

13. It was further a part of the conspiracy that defendants

MICHAEL MARCELLO, JOSEPH VENEZIA and THOMAS JOHNSON, and others,

kept and maintained, and caused to be kept and maintained for the

records of M & M Amusement, Inc., copies of the false collection

reports provided to the taverns, restaurants and fraternal clubs.

14. It was further a part of the conspiracy that defendants

MICHAEL MARCELLO, JOSEPH VENEZIA and THOMAS JOHNSON, and others,

created, kept and maintained, and caused to be created, kept and

maintained handwritten summary sheets of the weekly collection

reports of M & M Amusement, Inc., reflecting the amounts on the

false collection reports provided to the taverns, restaurants and

fraternal clubs, which summary sheets thus substantially

understated the amounts of money reflecting the taverns,'

restaurants' and fraternal clubs' share of the gross receipts as

well as M & M Amusement, Inc.'s share of the gross receipts.

15. It was further a part of the conspiracy that defendants

MICHAEL MARCELLO, JOSEPH VENEZIA and THOMAS JOHNSON, and others,

failed to keep permanent records of the actual gross revenues

earned as the result of the gambling operation.

31

16. It was further a part of the conspiracy that defendant

MICHAEL MARCELLO delivered to his accountant and tax preparer

handwritten summary sheets of the weekly collection reports, which

reflected the false and inaccurate income information. Defendant

MICHAEL MARCELLO knew that the amounts listed on these handwritten

summary sheets ensured that an incorrect accounting of the gross

receipts and profits collected from the video gambling machines and

amusement machines would be reported to his accountant, and that

his accountant would rely on these false summary sheets to prepare

quarterly financial reports and tax returns.

17. It was further a part of the conspiracy that defendant

MICHAEL MARCELLO verbally advised this accountant each quarter that

he was providing the accountant the entirety of the gross revenues

for that quarter when in fact the figures he was providing the

accountant did not reflect the moneys paid to bettors nor did the

figures reflect the true amount of the profits to M & M Amusement,

Inc., and to the taverns, restaurants and fraternal clubs,

collected from the video gambling machines.

18. It was further part of the conspiracy that defendants

thus caused the preparation of false S Corporation income tax

returns (IRS Forms 1120S) for M & M Amusement, Inc. for the years

1996 through 2003, by creating and providing the false documents as

described above which were used by M & M Amusement, Inc.'s

accountant in the preparation of the S Corporation income tax

returns.

32

19. It was further part of the conspiracy that defendant

MICHAEL MARCELLO then signed and caused to be filed these false S

Corporation income tax returns with the Internal Revenue Service,

knowing that these S Corporation income tax returns had been

prepared using false information and that they therefore

understated M & M Amusement, Inc.'s gross receipts and profits.

20. It was further part of the conspiracy that defendant

MICHAEL MARCELLO thus caused the preparation of false individual

income tax returns (IRS Forms 1040) for himself for the years 1996

through 2003, by creating and providing the false documents as

described above which were used by his accountant in the

preparation of the individual income tax returns as well as the S

Corporation income tax returns.

21. It was further part of the conspiracy that defendant

MICHAEL MARCELLO then signed and caused to be filed these false

individual income tax returns with the Internal Revenue Service,

knowing that these individual income tax returns had been prepared

using false information and that they therefore understated his

total income.

22. It was further part of the conspiracy that defendants

caused the preparation and delivery of numerous false IRS Forms

1099 to the owners of the taverns, restaurants and fraternal

clubs, as the figures reported on the IRS Forms 1099 did not

reflect the true amount of the profits to the taverns, restaurants

and fraternal clubs, collected from the video gambling machines.

The owners of the taverns, restaurants and fraternal clubs then

33

knowingly provided these false IRS Forms 1099 to their accountants

and thereafter caused false individual and corporate income tax

returns to be filed with the Internal Revenue Service.

23. It was further part of the conspiracy that defendants

caused to conceal from the Internal Revenue Service a substantial

portion of the income received from the operation of the gambling

operation for the tax years 1996 through 2003, inclusive.

24. It was further part of the conspiracy that defendants

JAMES MARCELLO and MICHAEL MARCELLO caused money generated from the

under-reporting of gross receipts from operation of the gambling

business to be used for their own benefit.

25. It was further part of the conspiracy that defendants

JAMES MARCELLO and MICHAEL MARCELLO would discuss at the Federal

Correctional Center at Milan, Michigan, the operation of M & M

Amusement, Inc., as it related to the relationship with the owners,

managers, and representatives of taverns, restaurants, and

fraternal clubs. This included discussions involving the then

current Internal Revenue Service's criminal investigation of the

operation of video gambling machines and devices in taverns,

restaurants, and fraternal clubs in the Cicero and Berwyn, Illinois

area.

26. It was further a part of the conspiracy that defendant

MICHAEL MARCELLO failed to deposit all the weekly business receipts

to M & M Amusement, Inc.'s bank account, knowing that its tax

accountant determined income based upon the bank deposit method.

34

27. It was further part of the conspiracy that the defendants

would and did misrepresent, conceal and hide, and cause to be

misrepresented, concealed and hidden the purposes of, and acts done

in furtherance of, the conspiracy.

OVERT ACTS

28. In furtherance of the conspiracy and to effect the

objects thereof, in the Northern District of Illinois and

elsewhere, the following overt acts, among others, were committed

by the named defendants and others:

A. On or about the following dates, defendant MICHAEL

MARCELLO signed and caused to be filed false individual and S

Corporation income tax returns, with the Internal Revenue Service,

knowing that these income tax returns had been prepared using false

information regarding the gross receipts and profits for his

business, M & M Amusement, Inc.:

(1) On or about July 23, 1997, defendant MICHAEL

MARCELLO knowingly signed and caused to be filed a false 1996 S

Corporation income tax return.

(2) On or about April 23, 1998, defendant MICHAEL

MARCELLO knowingly signed and caused to be filed a false 1997 S

Corporation income tax return.

(3) On or about July 16, 1999, defendant MICHAEL

MARCELLO knowingly signed and caused to be filed a false 1998 S

Corporation income tax return.

35

(4) On or about October 15, 1999, defendant MICHAEL

MARCELLO knowingly signed and caused to be filed a false 1998

individual income tax return.

(5) On or about September 15, 2000, defendant

MICHAEL MARCELLO knowingly signed and caused to be filed a false

1999 S Corporation income tax return.

(6) On or about, September 15, 2000, defendant

MICHAEL MARCELLO knowingly signed and caused to be filed a false

1999 individual income tax return.

(7) On or about July 11, 2001, defendant MICHAEL

MARCELLO knowingly signed and caused to be filed a false 2000 S

Corporation income tax return.

(8) On or about July 11, 2001, defendant MICHAEL

MARCELLO knowingly signed and caused to be filed a false 2000

individual income tax return.

(9) On or about July 30, 2002, defendant MICHAEL

MARCELLO knowingly signed and caused to be filed a false 2001 S

Corporation income tax return.

(10) On or about September 10, 2002, defendant

MICHAEL MARCELLO knowingly signed and caused to be filed a false

2001 individual income tax return.

(11) On or about March 27, 2003, defendant MICHAEL

MARCELLO knowingly signed and caused to be filed a false 2002 S

Corporation income tax return.

36

(12) On or about April 25, 2003, defendant MICHAEL

MARCELLO knowingly signed and caused to be filed a false 2002

individual income tax return.

(13) On or about February 27, 2004, defendant

MICHAEL MARCELLO knowingly signed and caused to be filed a false

2003 S Corporation income tax return.

(14) On or about April 14, 2004, defendant MICHAEL

MARCELLO knowingly caused to be electronically filed a false 2003

individual income tax return.

B. On or about the following dates, defendants MICHAEL

MARCELLO and JAMES MARCELLO had conversations at the Federal

Correctional Center at Milan, Michigan:

(1) December 20, 2002.

(2) January 9, 2003.

(3) January 30, 2003.

(4) April 24, 2003.

(5) May 15, 2003.

C. On a weekly basis from January 1996 through November

2003, defendants JOSEPH VENEZIA and THOMAS JOHNSON, and at times

others, delivered numerous false collection reports purporting to

represent the proceeds from the video gambling machines and devices

to representatives of numerous taverns, restaurants, and fraternal

clubs in the Berwyn and Cicero area of Illinois, each such delivery

constituting a separate overt act.

D. On a weekly basis from January 1996 through

November 2003, defendant MICHAEL MARCELLO deposited cash into M &

37

M Amusement, Inc.'s bank account, knowing that such cash was not

all of the weekly business receipts of M & M Amusement, Inc., and

that M & M Amusement, Inc.'s tax accountant determined income based

upon the bank deposit method, each such deposit constituting a

separate overt act.

All in violation of Title 18, United States Code, Section

371.

38

FORFEITURE ALLEGATION

The SPECIAL AUGUST 2003-2 GRAND JURY further charges:

1. The allegations contained in Count One of the indictment

are realleged and incorporated by reference for the purposes of

alleging forfeiture pursuant to Title 18, United States Code,

Section 1963.

2. As a result of the violation of Title 18, United States

Code, Section 1962(d), as alleged in the foregoing indictment

NICHOLAS W. CALABRESE,

JAMES MARCELLO,

JOSEPH LOMBARDO, also known as

"The Clown," "Lumpy," and "Lumbo,"

FRANK CALABRESE, SR.,

FRANK SCHWEIHS, also known as

"The German,"

FRANK SALADINO, also known as

"Gumba,"

PAUL SCHIRO, also known as

"The Indian,"

MICHAEL MARCELLO, also known as

"Mickey,"

NICHOLAS FERRIOLA,

ANTHONY DOYLE, also known as

"Twan," and

MICHAEL RICCI,

defendants herein:

(a) have acquired and maintained interests in violation of

Title 18, United States Code, Section 1962, which interests are

subject to forfeiture to the United States pursuant to Title 18,

United States Code, Section 1963(a)(1);

(b) have interests in, securities of, claims against, and

property and contractual rights affording sources of influence over

the enterprise described in Count One which defendants established,

operated, controlled, conducted, and participated in the conduct

39

of, and conspired to do so, in violation of Title 18, United States

Code, Section 1962, thereby making all such interests, securities,

claims, and property and contractual rights subject to forfeiture

to the United States of America pursuant to Title 18, United States

Code, Section 1963(a)(2);

(c) have property constituting and derived from proceeds which

obtained, directly and indirectly, from racketeering activity in

violation of Title 18, United States Code, Section 1963 (a)(3).

3. The interests of the defendants, jointly and severally

subject to forfeiture to the United States pursuant to Title 18,

United States Code, Section 1963(a)(1), (a)(2), and (a)(3) include

but are not limited to:

(a) $10,000,000;

(b) As to defendants JAMES MARCELLO and MICHAEL

MARCELLO only:

Real property at 5533 West 25th Street, Cicero,

Illinois, being more particularly described as:

Lot 78 in E. A. Cummings and Company's 25th Street

and Central Avenue Addition, being a subdivision of

the Southwest 1/4 of the Southwest 1/4 of the

Northwest 1/4 of Section 28, Township 39 North,

Range 13, East of the Third Principal Meridian, in

Cook County, Illinois.

4. To the extent that the proceeds and property described

above as being subject to forfeiture pursuant to Title 18, United

States Code, Section 1963, as a result of any acts or omission by

any defendant:

(1) cannot be located upon the exercise of due

diligence;

40

______________________________

_________________________________

(2) have been transferred or sold to, or deposited

with, a third party;

(3) have been placed beyond the jurisdiction of the

Court;

(4) have been substantially diminished in value, or;

(5) have been commingled with other property which

cannot be subdivided without difficulty;

it is the intent of the United States of America, pursuant to Title

18, United States Code, Section 1963(m) to seek forfeiture of any

other property of the defendants up to the value of the proceeds

and property described above as being subject to forfeiture;

All pursuant to Title 18, United States Code, Section 1963.

A TRUE BILL:

F O R E P E R S O N

UNITED STATES ATTORNEY

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