Chicago Suburb Living Up to Its Legacy

The flamboyant town president of the famously corrupt Chicago suburb of Cicero was indicted along with nine others on federal corruption charges Friday, accused of siphoning off millions of dollars in city funds to purchase, among other things, a Wisconsin golf course and an Indiana horse farm.

Republican Betty Loren-Maltese, legendary here for her pancake makeup, ties to mobsters and bare-knuckle politics, and the others were charged with racketeering, fraud, money laundering and 14 additional counts for allegedly stealing $10 million from the town’s insurance fund.

According to the indictment, the money was laundered between 1992 and 1997 with the help of a former police chief--already under indictment for embezzlement--Cicero’s former treasurer, and a onetime Internal Revenue Service agent-turned-unlicensed insurance consultant, among the others.

“They used their mob connections to turn Cicero into their personal piggy bank,” U.S. Atty. Scott Lassar said.

It is the latest in a seemingly endless string of organized-crime-related miseries for the tough blue-collar town of 70,000, where Depression-era mobster Al Capone based his empire of bootlegging and mayhem after federal agents began cracking down on his Chicago operation.

The most recent debacle came less than a month ago, when a federal jury ordered the city to pay $1.7 million in damages for firing another former police chief, David Niebur, and one of his deputies for cooperating with an FBI inquiry into corruption at City Hall.

The jury ordered that Loren-Maltese herself pay $100,000 of the award because she had helped sully the officers’ reputations by making baseless public accusations against them.

“Fifty-thousand dollars will probably come out of Betty’s makeup fund,” Niebur quipped after the verdict.

As laid out in the indictment, the latest alleged scheme, although elaborate and gaudy in its details, was simple. Loren-Maltese and other city officials allegedly wired more than $28 million to the unlicensed insurance firm, but spent just $18 million on insurance for the city. That left $10 million for a variety of colorful purchases.

About $3 million went to the Four Seasons Golf Course on Miscauno Island, Wis., which the accused hoped to turn into a casino, prosecutors say. Thousands more went to Crown Point Farms in northern Indiana, where two of the defendants keep thoroughbred racehorses.

Reputed members of the Chicago “Outfit,” or mob, Michael Spano Sr. and his son Michael Spano Jr., allegedly built a $324,505 home on the scenic Wolf River in northern Wisconsin with some of the money. Along with fellow Cicero trucking executive John LaGiglio, the Spanos spent $133,000 on Cadillacs, the indictment says.

The purported fraud helped explain why Cicero city employees were forced to accept pay cuts in 1994 to help their town dig itself out of debt for having missed health-care payments, prosecutors said. The reason it was behind in the payments, according to the indictment: Loren-Maltese and the others were wiring tens of thousands of dollars a week to the unlicensed insurance company, Specialty Risk Consultants.

Operated by Gregory Ross, a onetime local supervisor with the IRS’ Criminal Investigation Division, and several of the others named in the indictment, Specialty Risk Consultants allegedly cut the checks for the various purchases.

“Town employees had to have payroll reductions to fund the scheme,” Lassar said.

Loren-Maltese, who is under no obligation to resign unless and until she is convicted, was freed on a $100,000 bond Friday afternoon and was uncharacteristically silent as she departed the federal courthouse.

Her attorney, Terry Gillespie, said Loren-Maltese was in fact trying herself to unravel the embezzlement scheme when she was indicted.

“To suggest she is somehow involved in a conspiracy she’s worked so hard over the last few years to uncover is sad,” Gillespie said.

The scandal is but the latest pulp fiction-style legal adventure for Loren-Maltese, whose massive false eyelashes, bouffant hairdo and zany politicking have made her better known than her late husband, Frank “Baldy” Maltese, a mob bookie who died in 1992 after allegedly helping to launch the scheme that led to Friday’s charges.

In April, Loren-Maltese was reelected by a landslide to a third term, despite the fact that nine other city officials from her administration had already been indicted on various corruption charges. The town president is equivalent to mayor.