Have They Finally Cornered Jack Catain?...

Jack Catain is a 56-year-old San Fernando Valley businessman whose name has a peculiar effect on some people.

They whisper when they say it.

“Jack is organized, “ whispered H. Daniel Whitman, a West Hollywood restaurateur. “Jack is very heavy.”

Whitman’s description, secretly recorded by federal law enforcement officers three years ago, jibes with the views of many of the officers themselves.

They have long speculated in and out of court that Jack M. Catain Jr. is a major organized crime figure, with links to the highest levels of Mafia “families” in Chicago and Philadelphia.

Wide Suspicions

They say they suspect that he has been involved in a variety of criminal enterprises--money laundering, extortion, trading in stolen securities and counterfeiting.

But they have been unable to parlay their suspicions that he is an important mob businessman into any convictions.

Catain’s first trial ever, for counterfeiting, is scheduled next week.

Over the last 10 years, he has been the focus of much police effort. “There could be literally dozens of police agencies interested in Mr. Catain,” said Edwin Gale, a Justice Department lawyer who heads the Organized Crime Strike Force in Los Angeles. Gale made the comment in court last month in fending off a request by Catain’s lawyer for all government surveillance photos.

But Catain said he has “never done anything illegal.” He explained the extraordinary law enforcement interest in somewhat circular fashion. “They know I’ve never done anything wrong because they constantly surveil me,” he said. “Since they cannot prove I have done anything wrong, they want me out of the way to save face.”

Frontiere Case

Catain’s reputation as a powerful mobster emerged as a factor recently in the court case against Dominic Frontiere, songwriter-husband of Los Angeles Rams owner Georgia Frontiere.

Dominic Frontiere is awaiting sentencing Dec. 8 in federal court in Los Angeles for filing a false income tax return and lying to Internal Revenue Service agents to cover up his role in scalping Rams tickets to the 1980 Super Bowl game.

He claims that he lied about his profits from the ticket sales in part because a friend of Catain--who was either acting at the behest of Catain or purporting to--extorted most of the profits from him.

Frontiere told this story to the Justice Department in 1985 before he was charged. He admitted through his attorney in a document later filed in court that he scalped the tickets through Raymond Cohen, an old friend of Catain.

Frontiere’s Account

Frontiere said he met Cohen through his friend Whitman, the restaurateur, and gave this account:

After Cohen sold the tickets and gave Frontiere his share of the proceeds, $100,000 in a paper bag, Cohen called him and told him Catain wanted to see him. Frontiere balked. Then Whitman called and told Frontiere he had no choice: Catain was the head of the Mafia in Los Angeles.

They met at Cohen’s business in Woodland Hills. Catain said he had done Frontiere a favor and wanted to be paid. The favor was a visit to a dissident Rams executive and a warning to him to be more docile. Frontiere was scared. He had not asked Catain to visit the executive, who had been causing “problems” for Frontiere’s then-fiancee, Georgia Rosenbloom. But he was afraid of challenging Catain. He told Catain he paid his debts. Catain told him that Cohen would let him know how much he owed. Cohen did.

Government prosecutors did not believe Frontiere and immunized Catain to force him to testify before the grand jury that indicted the composer.

Denies Any Role

Catain, in an interview, denied any role in the scalping. He said he may have met Frontiere once but was not even sure of that. It was at a restaurant where Cohen introduced him to a man Cohen said was Frontiere, he recalled. Catain said he had nothing to do with any tickets. “I didn’t even go to any games.” He also said he had nothing to do with any extortion.

He added: “I am not a member of organized crime or the Mafia . . . and I do not believe that any of my friends and associates are members of organized crime.”

As for Whitman reportedly telling Frontiere that Catain was the head of the Mafia in Los Angeles, Catain had a possible explanation:

“When the papers constantly pound away and keep referring to me as a ‘major organized crime figure,’ people have a tendency to believe what they read--especially junk like that,” he said. “Therefore, it’s my opinion Dan Whitman, whom I met and have been in his company maybe three or four times, started believing that.”

Convicted of Plot

Whitman was later convicted of plotting unsuccessfully to murder Cohen, after Cohen became a government informant.

Catain does not appear threatening. Short and heavyset, he has artificial hips and a bad heart. He dresses casually and walks with a cane.

He speaks gruffly, and it sometimes seems doubtful he will complete a sentence without cursing. But he was very friendly recently when a reporter suggested that his never having been to trial could be explained by Justice Department incompetence, or by his not being the major crime figure he is reputed to be.

Catain flashed a broad smile, pumped the reporter’s hand, and, after some negotiation, agreed to an interview consisting of an exchange of written questions and answers, with his lawyer acting as intermediary. The lawyer, James A. Twitty, later said Catain’s answers were “mostly” in Catain’s words.

Ran Conglomerate

Catain’s business career is a blend of street and corporate suite. For years, he was a prominent executive, president of Westwood-based Rusco Industries Inc., a conglomerate with sales of $100 million a year whose stock was traded on the American Stock Exchange.

He has also been involved in other businesses, including a cosmetics firm, restaurants, a motion picture production company, oil exploration partnerships, a real estate firm, a construction company, a furniture store, and an exotic car dealership, according to his financial statements and an associate.

But during a 1983 civil proceeding, when he was asked straightforwardly, “What sources of income do you have?” his lawyers reacted as if the question might lead to incrimination.

“I’ll object to the question as being vague, broad and ambiguous,” said one.

“I’ll . . . instruct the witness not to answer,” said another.

Catain followed the advice.

Grew Up in Chicago

One of two sons of a produce market worker, Catain grew up in Chicago where, by his account, he was a remarkable achiever, working 60 hours a week while still in grammar school, setting a record for most letters earned in sports in high school and acquiring ownership of two short-order restaurants by the time he graduated from high school.

He came to Los Angeles as a salesman in the 1950s, and founded an aluminum company that merged with Rusco.

As head of Rusco, Catain was active in raising money for local charities. He said he was once named man of the year by the Eddie Cantor Charitable Foundation for his contributions to the mentally retarded. And he said he was honored by the City of Hope for helping raise money to fight cancer and leukemia, a disease that claimed one of his three children at the age of 13.

But there was a stark flip side, illustrated in court recently by a tape recording of his conversation with an Orange County man who became a government witness in a case involving a conspiracy to defraud the Internal Revenue Service by showing fictitious “wins” and “losses” on the London Commodities and Metal Exchange.

‘You . . . Idiot’

“When we blow up your (expletive) house,” said Catain, who was not named as a defendant in the case, “you’re going to get worried, you (expletive) idiot.”

Then he laughed.

His attorney said he was just kidding.

Catain took a major tumble from respectability early in the decade when a court-authorized investigation found that Catain ran the publicly held Rusco like a private company, and that he misused his position to enrich himself and some of his friends.

An audit committee determined that he owed Rusco $2.7 million for insider transactions.

One of the many charges was that Catain used $75,000 worth of company goods to give a hefty contribution to another of his favorite charities, Villa Scalabrini, a retirement home for Italian-Americans in the northern San Fernando Valley, without the approval of the company’s board of directors.

Quit Company

Catain resigned from Rusco in 1980 in a consent settlement of federal civil fraud charges with the Securities and Exchange Commission, but has continued to deny any wrongdoing.

“The SEC working with other government agencies forced me out,” he said, “they literally cheated me out of my company.”

Catain said Rusco, which is now insolvent, owes him about a million dollars.

In his written interview, Catain said he is retired.

But Gale, the government prosecutor, claimed in court that Catain earned half a million dollars last year as a “consultant” to various businesses, and said a grand jury is investigating an allegation that Catain attempted to make still more money by extorting it from a San Fernando Valley businessman.

Set to Stand Trial

Catain’s troubles with the federal government may culminate next week when he is scheduled to stand trial for the first time.

He is charged with counterfeiting, and has pleaded not guilty.

His troubles began in 1971 when the Securities and Exchange Commission forced Catain, then head of Rusco, to pay an $800,000 judgment because of questionable loan transactions.

They intensified in 1975 when law enforcement officials said they suspected--but never proved--that Catain and an associate tried to set up a gambling operation in London for Angelo Bruno, then head of the Mafia “family” in Philadelphia.

In 1976, a court-authorized wiretap intercepted conversations Catain had with Frank Sindone--identified by law enforcement authorities as No. 3 man in the Bruno “family,” The New York Times reported. The paper said the conversations dealt with laundering millions of dollars.

String of Denials

Catain, in the interview, denied having such discussions, denied ever laundering money or knowing how to, and denied knowing Bruno. But he acknowledged knowing Sindone.

“I met him through mutual friends,” Catain said. “Mr. Sindone loved California and wanted to buy a ranch and retire here some day. He asked me to help him if I could in accomplishing this dream. He was a very nice man and called me once in a while to talk about California. I was sorry to hear of his death.”

Sindone was slain in the 1980 Philadelphia mob war that also saw the violent death of Bruno. The Wall Street Journal paid tribute to Sindone in a front-page article. He was his city’s leading loan shark, the paper said.

Organized crime investigators compiled allegations that Catain also associated with Mafiosi from Detroit and New York, and that Rusco, under his leadership, had considered purchasing a Detroit race track and a Las Vegas casino, officials said.

Alarming Report

It was also reported, with some alarm, that a Rusco subsidiary provided security control devices for federal buildings in cities around the country, including Los Angeles, officials said.

One of Catain’s Rusco salesmen, Joseph Landino, was identified by law enforcement officials as a member of the New York-based Gambino crime family.

Landino, according to the Rusco auditors’ report, was illiterate, but smart in other ways.

The New York Times, in its 1978 article, quoted associates of a wealthy European financier and casino owner, Judah E. Binstock, as saying that Landino threatened the casino owner with bodily harm, and that Binstock paid Landino at least $1.3 million under duress. The article reported that $650,000 of that money was passed to Catain.

When the Rusco audit committee attempted to trace the money, it found that the South Coast National Bank of Costa Mesa, in which Catain owned stock, had collected $650,000 for him from Switzerland. But the source of those funds remained obscured.

Greek Named Nick

Landino, who has since died, claimed he lent the money to Catain. But Catain denied it. Catain claimed the loan was from a Greek named Nick whose last name he could not recall, auditors reported.

After he left Rusco, Catain became closely associated with the Commercial Bank of California in West Hollywood, which had been founded in 1978 as a financial institution for the entertainment industry.

Catain became one of the bank’s most valued customers. In 1981, he deposited hundreds of thousands of dollars in insurance proceeds from an arson fire that destroyed his 6,000-square-foot Encino home. No one has been charged with the blaze, and Catain said the only thing he knows about it is that a furnace blew up. He now lives in a Tarzana condominium.

Bank Throws a Party

On his birthday, the bank threw a party for him. Catain invited show business and sports celebrities, lawyers and businessmen to the bash, which resulted in the bank securing $759,000 in deposits and making $833,000 in loans, according to bank records.

One of the bank’s directors later accused Catain of using the bank to run a loan-shark operation. But nothing came of the charge, which was made in the course of a civil suit over the bank’s financial troubles. The bank was taken over by federal regulators in 1983.

Catain seemed to have an almost magical way of attracting money and losing it.

He submitted a financial statement to one bank in March, 1983, stating a net worth of $3.5 million. But two months later, when a federal court issued its order requiring him to pay the $2.7 million the SEC said he owed Rusco, he declared bankruptcy.

Arrived in a Rolls

Witnesses said he showed up for his first bankruptcy hearing in a Rolls-Royce convertible.

The special counsel to Rusco, John C. Bell Jr., found Catain “utterly amazing.”

Late last year, when Catain sought to have his unpaid debt to Rusco discharged, Bell argued strongly against it.

“We’ve got a man,” Bell told a bankruptcy court judge, “who has been chairman of the board of a company on the American Stock Exchange with sales of a hundred million a year, who has various people who, according to his (statements), owe him $2 million, and yet no documents are produced to aid the trustee in the collection of those dollars . . . .

“We’ve got a man . . . who is making payments . . . of $3,500 a month on one loan and $750 a month on other loans, and, according to his testimony, paying the house note for his daughter with two trust deeds on it, paying the note of a cousin . . . who apparently was on hard times, and otherwise living a right substantial life style.

Nothing to Show

“And yet for all the efforts of the (trustee and trustee’s lawyer) they have not been able until September, 1985, to collect a single dime.”

Catain lost his bid to get the debt discharged.

Other things were going sour for him, too.

His health had deteriorated. And he was spending time fending off his first indictment.

Catain was charged in early 1982 with conspiring to distribute $1.5 million in counterfeit notes--roughly $1 million in 100s and $500,000 in 50s. He was also charged with accepting $50,000 from an undercover Secret Service officer as payment for a future delivery of counterfeit money.

Catain had been introduced to the undercover agent by his childhood friend, Raymond Cohen, who knowingly betrayed him, court records disclosed.

Owed Money

Cohen--the same man who had scalped tickets for Frontiere two years before--owed Catain money. He said Catain had offered him a deal distributing the counterfeit bills as a way of paying the money back.

But Cohen, a convicted thief, was arrested distributing the bills in Las Vegas. He agreed to work for the government in setting up Catain.

According to a transcript of their conversation, secretly recorded by Cohen and filed in court, Catain bragged to the undercover agent, who claimed to be from Philadelphia, that he had known Angelo Bruno and Frank Sindone, identified on the transcript as “Sadoni.” “De Angelo was my best friend,” the transcript quoted Catain as saying. “ . . . Frank used to live in my house.”

Deal Alleged

Then he negotiated a deal for the exchange of $100,000 in genuine currency for $200,000 in counterfeit notes, the transcript showed.

There was also talk of a future deal, in which the transcript quoted Catain as saying he could come up with $5 million in counterfeit notes in about six weeks.

Out of the presence of the undercover officer, he told Cohen, according to the transcript, that the counterfeit distribution was taking place at the behest of someone from Chicago to whom he had to pay $100,000.

“I gotta give that man from Chicago 100,” the transcript quotes Catain as having said. “That’s why I told you you’re responsible. . . . This 100 ain’t for us. The rest is for us . . . .”

“Do I know this guy?” Cohen asked a few minutes later. “Yeah, Jack Cerone,” Catain answered.

“Jackie Cerone got this stuff?”

‘You Don’t Listen’

“I’m waiting to go to Chicago. I gotta bring him the 100. . . . I try to tell you these things. Evidently you don’t listen.”

“You’re telling me Jackie Cerone is in this?” Cohen persisted a few minutes later.

“Well, he’s gotta get the money, OK? No one knows he’s involved. . . . You know, when someone comes to me and tells me, ‘Here, this is a gift from so and so, and do this,’ well, you know that kind of story.”

The reference to Jack Cerone was apparently to Jackie (The Lackey) Cerone, reputed underboss of the Chicago Mafia, whose son, Jack Jr. is a labor lawyer who had done work for Rusco. The elder Cerone was recently convicted of helping to skim $2 million from Las Vegas casinos.

Question Unanswered

When Catain was asked about the reference to Cerone in the written interview, he did not answer the question.

He said, however, “I know nothing about any counterfeit operation.”

A Chicago appeals court found to the contrary. In an opinion upholding the conviction of the printer of the counterfeit bills, the justices found as a fact that Catain, named as an unindicted co-conspirator, was very much involved.

The justices noted that Catain initially told Cohen that he did not want to be present when Cohen handed over the counterfeit money, but that Catain had a change of heart. He was present at the transfer at a Los Angeles restaurant on Dec. 15, 1981, the justices said.

Catain was immediately arrested. But he managed to avoid trial for four years with a list of physical ailments only slightly less depressing than a coroner’s report.

Case Dismissed

He had two major surgeries, suffered two major heart attacks and was treated for severe, terminal organic heart disease, recurrent angina and diffuse arteriosclerosis, according to statements his lawyers and doctors have made in court.

After granting numerous trial postponements, waiting for Catain to get better, U.S. District Court Judge William Gray finally dismissed the case against him last April, saying he did not want to take the chance of Catain dying from the stress of a trial.

But two weeks later, the government indicted Catain again for distributing more counterfeit money while free on bail on the first counterfeiting charge.

“I believe the government is simply trying to kill me,” Catain said.

Prosecutor’s View

Gale, the prosecutor, said he could prove that Catain was feigning some of his ailments.

He said he could prove that Catain, who listed his occupation on a bail form as “none,” worked eight to 12 hours a day, six days a week last year doing consulting work.

One of those for whom he consulted, according to court documents, was an entrepreneur, Barry Minkow, who said he started a carpet, furniture and drapery-cleaning business five years ago when he was 15 and now has 330 employees.

Minkow testified before a federal grand jury “about the entire relationship, which I characterize as extortion,” Gale said in court. He would not be more specific, and Minkow and his attorney declined to be interviewed.

Carpet Business

But documents from a civil suit Catain filed against Minkow show that Catain got involved with Minkow in an expansion plan to get multimillion-dollar carpet-restoration jobs from insurance companies.

Catain claimed in the lawsuit that he used his influence to get a financially hurting Minkow half a million dollars in loans in return for an approximate one-half interest in the business, but that Minkow refused to pay him his share of the profits.

Minkow said there were no profits and that the loans were usurious, with interest rates ranging from 2% to 5% a week.

Catain denied the loan-sharking allegation.

Minkow testified that during their relationship, an enterprise that Catain appeared to be running, Beauty Sales Inc., shared his office space. Beauty Sales was marketing a cosmetics line called Le Mid. State corporation commission records show that its president is Phyllis Sherwood, Catain’s wife.

Doctor Indicted

During a three-day hearing aimed at persuading Judge Gray that Catain was well enough to stand trial, prosecutor Gale also disclosed that he believed Catain was “at least partially responsible” for some criminal activity involving his principal physician, Peter Koenig, who was indicted in September on charges that he inflated his income on an application to refinance his Hidden Hills home. Koenig has pleaded not guilty to the indictment, which charges that he solicited Catain’s assistance in filing a false loan application.

Catain and his attorney claimed that government prosecutors were out of control, going after Koenig out of vindictiveness and in an effort to pressure him to change his testimony that Catain was too ill to stand trial.

During the hearing, Koenig testified that Catain’s condition had stabilized somewhat.

Gale also presented testimony from Stewart Gorenstein, a figure in the London Commodities and Metal Exchange case, who claimed he received threats from Catain last year.

Telephone Message

Gorenstein said that at one point he changed the greeting message on his telephone answering machine to say, “Jack, if you’re going to continue making threats on my life, I’m going to go to the U.S. attorney.”

Catain called again, he said, and “I was told I was a dead man.”

After hearing the threats that Gorenstein had tape-recorded, Gray said Catain no longer sounded like such a sick man. He set a trial date for next week.