DOJ Press rease-Serpico racketeering indictment Aug 4, 1999
U.S. Department of JUSTICE
United States Attorney
Northern District of Illinois
Scott R. LassarDirksen Federal Building������������������������������������������������������������������������������
United States Attorney219 South Dearborn Street, Fifth Floor�����������������������������������������������������������
Chicago, Illinois� 60604
(312) 353-5300
FOR IMMEDIATE RELEASE�������������������� PRESS CONTACTS:
WEDNESDAY AUGUST 4, 1999��������������� AUSA David Glockner ��������� (312) 886-1324
AUSA Marsha McClellan������ (312) 353-2814
Exec. AUSA Nancy Needles�� (312) 353-5331
TWO CHICAGO UNION OFFICIALS INDICTED ON FRAUD
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AND RACKETEERING CHARGES FOR ILLEGAL LOANS AND KICKBACKS
CHICAGO � A federal grand jury today returned an 11-count indictment charging two labor union officials with racketeering, fraud and other offenses, alleging that they controlled the affairs of the Central States Joint Board (CSJB), a Chicago-based labor organization, for their personal benefit for more than a decade, announced Scott R. Lassar, United States Attorney for the Northern District of Illinois.� In return for placing CSJB funds at area banks, defendants John Serpico and his associate, Maria Busillo, allegedly received at least $5 million in personal and� business loans from banks on terms that were more favorable than those offered to customers with similar financial qualifications.� A third defendant, Gilbert Cataldo, was charged with scheming with Serpico to obtain $333,850 in kickbacks in exchange for a $6.5 million loan commitment made by a pension plan that Serpico controlled to finance a hotel in Champaign, Ill.� From May 1979 to at least 1991, the indictment alleges, Serpico and Busillo engaged in a pattern of criminal activity that included multiple acts of mail fraud, bank fraud, labor kickbacks, money laundering and the illegal structuring of currency transactions to avoid reporting requirements.
According to the indictment, Serpico and Busillo exercised substantial influence over the operations and financial affairs of the CSJB, located at 1950 W. Erie in Chicago; its member locals, whose membership varied but at times was approximately 20,000 union workers; three employee benefit plans affiliated with the CSJB; and the International Union of Allied Novelty and Production Workers (IUANPW), which at times had approximately 30,000 members and in 1995 consolidated its offices with the CSJB.� The indictment alleges that the CSJB entities did not regularly hold contested elections and Serpico and Busillo selected or controlled the selection of candidates who ran unopposed.� Separate attachments list the labor union locals that at times were members of the CSJB, as well as the positions that Serpico and Busillo have held with the CSJB, its member locals and benefit and pension plans.� In addition, Serpico is the chairman of the Illinois International Port District, an appointed post which is unrelated to the charges in the indictment, and Cataldo is a former executive director of the port district.
Serpico and Busillo were charged with one count each of racketeering, racketeering conspiracy, bank fraud and making false statements on a bank loan application.� In addition, Serpico was charged with seven counts of mail fraud, Busillo was charged with two counts of mail fraud and Cataldo was charged with three counts of mail fraud.� The indictment also contains a forfeiture allegation against Serpico and Busillo seeking $1.2 million in cash, Busillo�s condominium on Marco Island, Fla., and her residence at 1871 Wagner Rd., Glenview.
Serpico, 68, of 6539 North Longmeadow, Lincolnwood; Busillo, 53, of the Glenview address, and Cataldo, 59, of 1701 79th Ave., Elmwood Park, will be summoned to appear for arraignment in U.S. District Court.
Mr. Lassar announced the charges with Kathleen McChesney, Special Agent-in-Charge of the Chicago Field Division of the Federal Bureau of Investigation, James W. Martin, Chief of the Internal Revenue Service, Criminal Investigation Division, Illinois District, and John Peterson, District Director of the U.S. Department of Labor, Office of Labor Management Standards.�
Specifically, the indictment alleges that:
� From May 1979 to 1991, Serpico and Busillo defrauded the CSJB entities by soliciting and receiving from banks, including Gladstone-Norwood Bank of Chicago and the former Capitol Bank and Trust, at least nine personal and business loans totaling more than $5 million on terms more favorable than those that the banks offered to other borrowers with similar financial qualifications, in return for causing the CSJB entities to deposit and maintain substantial funds at those banks;
� From July 1989 to April 1991, Serpico defrauded the Midwest Pension Plan, the CSJB Staff Pension Plan and the IUANPW by soliciting and receiving a substantial kickback in exchange for influencing those entities to provide a speculative mortgage loan, initially $6.5 million, for the construction of a hotel in the Trade Centre South complex in Champaign, Illinois.� In 1990, Serpico caused approximately $100,000 in cash from this kickback to be delivered to Busillo to assist her in the purchase of her $900,000 house in Glenview;���
� From August through December of 1990, Busillo and Serpico defrauded Capitol Bank by making false statements in obtaining an $800,000 loan to Busillo to purchase the Glenview residence.� They falsely represented that the purchase price was $800,000, when, in fact, it was $900,000, and they concealed from the bank that Busillo had paid an additional $100,000 cash from an undisclosed source toward the purchase price; and
� In May 1988, Serpico and Busillo engaged in a series of unlawful financial transactions, including laundering more than $10,000 in funds derived from criminal activity and other transactions that were structured in amounts less than $10,000.
Regarding the favorable loans, the indictment alleges that the special terms and conditions that Serpico and Busillo sought and received from the banks included the following, among others: loans were made on an unsecured basis; they were not fully secured according to lending policies; they were made even though the borrowers could not demonstrate adequate cash flow to service the debt; they were made to finance 100 percent of the purchase price of real estate or of the start-up costs of a business; interim construction loans were made without permanent financing in place; principal payments were amortized over periods longer than usual, thus reducing monthly payments; they were made to cover interest payments on existing loans; business and real estate development loans were made to principals with little or no expertise in such ventures; and customary charges and fees were reduced and waived.
The indictment lists the following allegedly corrupt loans:
� A loan of approximately $210,000 from Gladstone-Norwood Bank to Serpico in May 1979, in connection with the purchase of a 59-unit apartment building at 3708 N. Sheffield, Chicago;
� A loan of approximately $240,000 from Capitol Bank to Busillo and a relative in August 1986, representing 100 percent of the purchase price of a six-unit apartment building at 3158 N. Mobile, Chicago;
� A loan of approximately $125,000 from Capitol Bank of Westmont to Busillo in January 1987, to refinance a mortgage on a condominium located on Marco Island, Fla.;
� Loans of approximately $150,000 and $1.8 million from Capitol Bank for Studio Network, Inc., a business then owned by Serpico and Individual A, in May 1987 and September 1987, to provide financing relating to a film studio located at 1058 W. Washington, Chicago;
� A loan of approximately $195,000 from Capitol Bank to Serpico and Individual B in November 1988, to provide financing for the start-up of Protective Service Systems, Inc., including 100 percent of the purchase price of a building to be used to house illegal aliens detained by the United States Immigration and Naturalization Service;
� Loans totaling approximately $1.4 million from Capitol Bank to Serpico and two partners, namely Gilbert Cataldo and Individual C, from May 1989 through December 1990, to provide 100 percent financing for the construction of a building at 1101 W. Taylor St., Chicago;
� A loan of approximately $100,000 from Capitol Bank to Busillo and Individual D in or about June 1989, for the purchase of property at 4913-21 S. Racine, Chicago, that formerly had been used as a bus fueling depot;
� Loans totaling approximately $540,000 from Capitol Bank to Serpico and Individual E from December 1989 through June 1990 for the construction of a nine-unit apartment building at 702 S. Lytle St., Chicago; and
� Loans from Capitol Bank to Busillo from April 1990 through May 1991 in connection with real estate transactions in Glenview.
In November 1996, Capitol Bank was sentenced to pay a fine of $800,000 after the bank pleaded guilty to conspiracy to commit mail fraud and bribery in connection with an employee benefit plan.� In addition, Capitol Bank�s controlling shareholders at the time were required to sell their interests in the bank�s holding company.
Regarding the hotel venture kickbacks, the indictment alleges that Serpico influenced the Midwest Pension Plan, which then had assets of approximately $39 million, to be the lead lender for the $6.5 million mortgage loan, and the CSJB Staff Pension Plan and the IUANPW to each purchase $1 million interests in the loan, when they had assets totaling $4 million and $3 million, respectively.� The indictment alleges the following additional details relating to the $333,850 in kickbacks:
� On April 27, 1990, 51 Associates Limited Partnership, a partnership involving Company A in the hotel development, issued a check for $133,850 to Taylor West and Company, a one-person consulting firm under whose name Cataldo did business.� The payment purportedly was for construction oversight services that allegedly were never provided by Cataldo or Taylor West.
� On June 11, 1990, 51 Associates issued a $100,000 check to Taylor West for architectural and engineering services that Cataldo and Taylor West allegedly never provided.� Cataldo deposited the checks into Taylor West bank accounts and� used part of the money to pay expenses for a real estate development in Cicero in which Cataldo and Serpico were partners. Between May 9 and July 24, 1990, Cataldo obtained $126,000 in cash withdrawals, all in amounts less than $10,000. Serpico caused $100,000 of this money to be delivered to Busillo, who used it in August 1990 to make a payment toward the purchase of the Glenview residence.� Serpico advised Busillo in connection with the purchase of this house, assisted her in obtaining financing for its purchase from Capitol Bank, and instructed her not to discuss the cash payment.
� On April 15, 1991, 51 Associates issued another $100,000 check to Taylor West, purportedly for architectural and consulting services, which allegedly were never provided.���
The government is being represented by Assistant U.S. Attorneys Marsha McClellan and David Glockner.
If convicted, each count of the offenses charged carries the following maximum penalties: racketeering and� racketeering conspiracy, 20 years in prison and a $250,000 fine; mail fraud, 20 years in prison and a $1,000,000 fine; bank fraud, 20 years in prison and a $1 million fine; and making false statements on a loan application 20 years in prison and a $1,000,000 fine.� The Court also may order restitution.� Note, however, that the Court will determine the appropriate sentence to be imposed under the United States Sentencing Guidelines.
The public is reminded that an indictment contains only charges and is not evidence of guilt.� The defendants are presumed innocent and are entitled to a fair trial at which the United States has the burden of proving guilt beyond a reasonable doubt.
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���������������������������������������������� CENTRAL STATES JOINT BOARD
According to the indictment, at material times, the Central States Joint Board, 1950 West Erie, Chicago, was a labor organization composed of the following union locals:�����������
Local 8, Industrial Workers Union, affiliated with the Laborers International Union of North America (�LIUNA�);
Local 10, Production Workers Union, affiliated with the International Union of Allied Novelty and Production Workers (�IUANPW�);
Local 12, Allied Production Workers Union, affiliated with the IUANPW;
Local 16, Metal Processors Union, affiliated with the IUANPW;
Local 18, Plastic Workers Union, affiliated with the IUANPW;
Local 20, Chemical and Allied Product Workers, affiliated with the IUANPW;
Local 24, Manufacturing, Production, and Service Workers Union (at times known as the “Novelty and Allied Workers Union”), affiliated with the IUANPW; and
Local 803, Amalgamated Production Workers Union, affiliated with the IUANPW (merged with Local 18, Plastic Workers Union, in or about 1991).
JOHN SERPICO
The following is a list from the indictment of the various offices that John Serpico has held with the CSJB, its member locals and affiliated entities:
Central States Joint Board
President, 1975 – April 1994
Vice-President, May 1994 – February 1996
President Emeritus, February 1996 – present
Consultant, February 1996 – present
CSJB Health & Welfare Plan
Trustee and Chairman, prior to January 1987 – April 1994
Chairman Emeritus, April 1994 – present
Midwest Pension Plan
Trustee and Chairman, prior to January 1985 – April 1994
Chairman Emeritus, April 1994 – present
CSJB Staff Pension Plan
Trustee and Chairman, prior to January 1987 – June 1994
Chairman Emeritus, April 1994 � present
International Union of Allied Novelty and Production Workers
Secretary-Treasurer, 1975 – January 1985
Consultant, 1985 – present
Local 8
President and Business Manager, 1976 – January 1996
Local 10
President, 1976 – April 1994
MARIA BUSILLO
The following is a list from the indictment of the various offices that Maria Busillo has held with the CSJB, its member locals and affiliated entities:
Central States Joint Board
President, April 1994 – present
Member, General Executive Board, 1980 – present
CSJB Health & Welfare Plan
Trustee, August 1994 – present
Midwest Pension Plan
Trustee, June 1994 – present
CSJB Staff Pension Plan
Chairman, June 1994 – present
Trustee, prior to January 1987 – present
International Union of Allied Novelty and Production Workers
Secretary-Treasurer, May 1996 – present
Vice President, February 1994 – May 1996
Member, General Executive Board, 1984 – present
Local 8
Secretary-Treasurer, January 1991 – June 1996
Recording Secretary, 1979 – December 1990
Local 10
President, June 1994 – present
Secretary-Treasurer, 1976 – June 1994