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

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

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

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

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

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

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

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

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

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

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

Not that some things haven't changed.

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

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

Now it all seems comparatively tame. Almost.

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

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

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

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

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

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

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Ed Vrdolyak indicted for 2nd Time in Last Decade

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Reported by Jason Meisner and Jeff Coen.

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Details on Indictment of Former U.S. Representative Aaron Schock, for Fraud, Theft of Government Funds, False Statements and Filing False Income Tax Returns

A federal grand jury returned an indictment charging former U.S. Representative Aaron Schock with allegedly defrauding the federal government and his campaign committees and covering it up with false and fraudulent statements, claims and invoices.

“I appreciate the time and attention that the grand juries have given this matter, to thoroughly review the facts and the evidence and to reach this decision,” said U.S. Attorney Jim Lewis, Central District of Illinois. “These charges allege that Mr. Schock deliberately and repeatedly violated federal law, to his personal and financial advantage. Mr. Schock held public office at the time of the alleged offenses, but public office does not exempt him or anyone else from accountability for alleged intentional misuse of public funds and campaign funds.”

According to allegations in the 24-count indictment, from as early as 2008, and continuing to at least October 2015, Schock, 35, of Peoria, engaged in a scheme to defraud the government, his campaign committees, and others for his direct personal benefit and for the benefit of others. Schock allegedly repeatedly submitted and caused false and fraudulent claims, invoices, and vouchers to be submitted to the U.S. House of Representatives (House) for payment from his Member’s Representational Allowance and from funds of his campaign committees: Schock for Congress (SFC); Schock Victory Committee (SVC); and GOP Generation Y Fund (Gen Y).

Schock allegedly generated income to himself, which resulted in a loss of more than $100,000 to the government, Schock’s campaign committees, and others. In addition, Schock is charged with filing false federal income tax returns for tax years 2010 through 2015, for failure to report additional income he received.

Several of the alleged instances of fraud from the indictment are summarized below:

• From as early as 2008 and continuing to about October 2014, Schock received total mileage payments from the House and his campaign committees of approximately $138,663, for official and campaign-related travel. Assuming all of the miles driven on Schock’s vehicles were official and campaign-related, and no personal miles were driven during this time period, Schock allegedly caused the House and his campaign committees to reimburse him for approximately 150,000 miles more than the vehicles were actually driven.
• In July 2014, Schock caused Schock for Congress to purchase a new 2015 Chevrolet Tahoe for him at a total cost of $73,896. Schock then caused the Tahoe to be titled in his name. To accomplish the purchase, Schock caused SFC to purchase his used 2010 Tahoe from him for $31,621. He then caused SFC to trade in the 2010 Tahoe with a $26,000 used car or trade-in allowance, and wrote a SFC check to the dealership for $73,896, thus causing a loss to SFC. As part of the scheme, and to conceal and cover it up, Schock allegedly caused SFC to file a false report with the Federal Election Commission (FEC) that the entire $73,896 payment was for a transportation expense of SFC rather than the purchase of a vehicle for Schock’s exclusive use. Schock allegedly made no effort to reimburse SFC for his personal use of the 2015 Tahoe.
• Schock allegedly caused the House to fraudulently reimburse him $29,021 for his September 2014 purchase of camera equipment. The equipment was for his use and the use of a congressional and campaign staff member who was also his personal photographer and videographer. In November 2014, Schock allegedly instructed the staff member to create and submit a false invoice for ‘multimedia services’ to Schock’s congressional office. After various changes to the invoice, it was submitted to the House, which authorized payment of $29,021 to the staff member. The funds were deposited in the staff member’s bank account and were later used by the staff member to make direct payments to Schock’s personal credit card account for the camera equipment purchase.
• In late 2013, Schock allegedly accused a former staffer of inappropriately accessing a friend’s social media account and falsely advised the former staffer that the FBI and Capitol Police were investigating the matter. As a result of Schock’s accusation and false representation, the former staffer retained a lawyer and incurred legal fees of more than $10,000, which were paid by the former staffer’s father. Schock later acknowledged that his allegation of a law enforcement investigation of the matter was false and after being confronted by the former staffer’s father, agreed to reimburse the former staffer’s father for $7,500 of the legal fees. In February 2014, Schock allegedly wrote a check for $7,500 payable to the former staffer’s father. In April 2014, Schock had his political director issue a check from Gen Y to him in the amount of $7,500, which was falsely reported to the FEC as payment to a Washington D.C. attorney for legal fees incurred by Gen Y. In addition, Schock allegedly caused Gen Y to pay legal expenses that he personally incurred, and to file additional false reports with the FEC that the payment was for Gen Y’s legal fees.
• In November 2014, Schock hired an Illinois decorator, who in 2010 had decorated Schock’s Peoria apartment and Cannon congressional office, to redecorate and provide furnishings for his Rayburn congressional office at a cost of approximately $40,000, including a $5,000 chandelier. Schock allegedly caused vouchers and claims to be submitted to the House totaling $25,000 to be paid to the decorator. In the submission of the vouchers and claims, Schock allegedly made false representations that the claims were, “for services to assist the member in setting up our district and DC offices” and, “includes using materials from our district and rearranging/designing/structuring the space to best suit the member and staff’s needs.” In addition, Schock caused his three campaign committees to pay a total of approximately $8,263 in additional costs for carpentry, paint, and travel and lodging expenses for the decorator/designer, who provided no product or service to these committees.
• A summons will be issued to Schock by the U.S. Clerk of the Court for a date when Schock is to appear in federal court in Springfield for initial appearance and arraignment.

Assistant U.S. Attorney Timothy A. Bass and First Assistant U.S. Attorney Patrick D. Hansen are prosecuting the case on behalf of the U.S. Attorney’s Office for the Central District of Illinois. The charges are being investigated by the FBI, Springfield Division; IRS Criminal Investigations; U.S. Postal Inspection Service, Chicago Division; FDIC Office of Inspector General; and the Illinois State Police. These agencies participate in the Central District of Illinois’ U.S. Attorney’s Office’s Public Corruption Task Force.

U.S. Attorney Lewis thanked the investigative agencies and commended their respective agents who he said, “have worked long, hard and well to present this matter fairly.”

Members of the public are reminded that an indictment is merely an accusation; the defendant is presumed innocent unless proven guilty.

If convicted, the maximum statutory penalty for each offense charged is prescribed by Congress and is provided here for informational purposes, as sentencing is determined by the court based on the advisory Sentencing Guidelines and other statutory factors.

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