The Law Has Its Way in Al Capone's Old Haven

Times Staff Writer

The former town president of Cicero, the infamous Chicago suburb where Al Capone once fled for protection from the law, was sentenced to more than eight years in prison Thursday for her role in a racketeering conspiracy that bilked the community of $12 million.

Betty Loren-Maltese, a flamboyant 53-year-old known for her quirky politics, heavy makeup and substantial hairdos, was also ordered to make restitution of more than $8 million and was fined $100,000. She is to report for prison April 1 and will be supervised for three years after her release.

She was one of nine people convicted in 2002 of funneling town funds through a bogus insurance company set up to handle health claims for the town government. A total of $4 million remains unaccounted for.

The rest of the money flowed from Specialty Risk Consultants to other shell firms, prosecutors said, and eventually into a thoroughbred horse farm in Indiana, a Wisconsin golf course that the group hoped to turn into a casino, a vacation home, Cadillacs and other pricey items.

"This was a wholesale betrayal of the naive faith of a whole town that trusted her," U.S. District Judge John F. Grady said in announcing Loren-Maltese's sentence. He called her actions "the outrageous and relentless pillage of the village treasury" and said he had "searched as thoroughly as I can for some trace of a mitigating circumstance, and I can't find one -- not a single one."

On the eve of her sentencing, about 150 residents of the town -- known since Capone's arrival in the 1920s as a haven for gangsters -- stood on Loren-Maltese's front lawn, lighting candles and praying. Some supporters gamely sported T-shirts depicting Loren-Maltese in caricature, with a bouffant hairdo and enormous false eyelashes.

Grady also sentenced two co-defendants Thursday, and four earlier in the week. Two more are scheduled to be sentenced before spring. Among the others convicted: Michael Spano Sr., 62, the reputed head of the Cicero mob; Cicero's former police chief, Emil Schullo, 56; and Gregory Ross, 56, a former Internal Revenue Service investigator who became a mob accountant.

Loren-Maltese was married to the town's assessor, Frank Maltese, a reputed mobster. He has since died.

The elaborate scam began in 1992, according to federal prosecutors, when Frank Maltese dropped the community's longtime insurer to make way for Specialty Risk. Authorities say the unlicensed firm was run by Spano and John LaGiglio, also a member of the "Outfit" (as the mob is known in Chicago).

In January 1993, prosecutors alleged, Maltese orchestrated the ascension of his wife to Cicero's highest post after the death of the then-town president. He did so, prosecutors said, because she would go along with a new embezzlement scheme.

Soon after Loren-Maltese took office, the town's wire transfers to Specialty Risk rose from $50,000 a week to $95,000 a week, and later to $130,000 a week, according to prosecutors.

The adoptive mother of a 5-year-old girl, Loren-Maltese, who had faced up to 14 years in prison, asked for leniency so she could raise her daughter. Grady did not address the issue of the girl's welfare, which will be handled by state child services officials. In an attempt to undercut her request, however, prosecutors called into question her mothering skills by detailing how, during 2000 and 2001, Loren-Maltese bet more than $18 million during 1,600 hours spent at area casinos.

In nine years as town president, Loren-Maltese garnered considerable support in the working-class community, sharing in the joke over her makeup and cracking down on street crime. Perhaps her most notable initiative before the Town Council came in 1999, when she proposed banishing alleged gang members, whether or not they had been convicted of any crime, from the community. The motion passed but has never been enforced.

She also oversaw a series of debacles that kept the town in the news, the stories quintessentially Cicero-ian. In 2001, a jury awarded another former police chief, David Niebur, $1.7 million in damages after he and a deputy were fired for cooperating with the FBI's corruption investigation. The jury ordered Loren-Maltese herself to pay $100,000 of the award because she had repeatedly defamed them.

After the verdict, Niebur quipped: "Fifty thousand dollars will probably come out of Betty's makeup fund."

Smiling and energetic even after that court loss, Loren-Maltese arrived at the federal courthouse Thursday just minutes before her noon hearing looking nervous, wearing little makeup and with unusually flat and disheveled hair. Typically quick with a quip, she pushed silently through a throng of reporters.

Loren-Maltese will appeal the sentence, her attorneys said.

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