Chicago Jury Convicts Boss Serpico and Girlfriend

After three days of deliberations, a federal jury in Chicago convicted ex-union boss John Serpico July 16 on six of seven mail fraud counts. Two of Serpico’s longtime associates, Maria Busillo and Gilbert Cataldo were also found guilty. Busillo, the longtime girlfriend of the married Serpico was convicted of mail fraud and making false statements to a bank. Cataldo was convicted of mail fraud. As an ex-int’l vice president of the Laborers’ Int’l Union of N. Am. and ex-head of the Central States Jt. Bd., Serpico is the most significant Chicago union boss to be convicted on corruption charges in years. CSJB is a labor organization which handles funds for eight locals including locals of LIUNA and the Int’l Union of Allied Novelty & Production Workers. Serpico was CSJB president from 1975-94 and is now its $50,000-a-year consultant. Busillo is the current CSJB president and IUANPW secretary-treasurer. Serpico also held influence with prominent politicians including several Ill. governors, who appointed him to the Ill. Int’l Port Dist. He was IIPD’s longtime chairman until 1999 when he was indicted. He was purged from LIUNA in 1995.

Asst. U.S. Atty. David Glockner said Serpico and Busillo engaged in a 12-year scheme trading their control over union pension, benefit, and other funds to obtain some $5 million in loans for personal business ventures. From 1978-90, the two obtained seventeen loans from eight banks that received substantial union deposits, in some cases just days after the banks made the loans. The key dealings were with Capitol Bank & Trust. In return for some $5 million in personal loans at favorable rates, the two deposited about $4 million in union funds in Capitol. The bank also managed $16 million in union pension and welfare plans. Capitol pled guilty in 1996 to the scam and was fined $800,000. Its two owners were forced to sell it and were banned from banking. At Serpico’s trial, ex-Capitol president Robert Hahn testified for the government. Among Capitol’s actions was a $1.8 million loan to Serpico and his partner, ex-U.S. Rep. Morgan F. Murphy (D-Ill.), on a film studio project despite cash-flow woes and no clients. The building was later bought by Oprah Winfrey and turned into Harpo Studios.

Busillo allegedly obtained loans for a condominium on Marco Island, Fla., and her $900,000 house in Glenview, Ill. She reportedly obtained the loan on the house even though the monthly mortgage payment exceeded her gross income. Serpico and Cataldo, an ex-Chicago housing comm’r and ex-IIPD executive director, were convicted of sharing in kickbacks of more than $330,000 after CSJB secured a $6.5 million loan for a failing hotel project in Champaign, Ill. The money went to Cataldo for consulting fees for architectural and engineering work. The one count on which the jury acquitted Serpico was a $480,000 loan he allegedly helped obtain for a reputed mobster.

“[Serpico] was a corrupt union official as was Ms. Busillo, and they misused union assets for their personal benefit,” Glockner said. Glockner wants prison for all three, who are free on bond. U.S. Dist. Judge Blanche M. Manning (N.D. Ill., Clinton) set sentencing for Nov. 1. Glockner added that Serpico and Busillo would be “out of the labor union business for life as they should be.”

Matthias Lydon, Serpico’s lead attorney, said he was bewildered at how the jury convicted Serpico on the kickback charges. Lydon, of Winston & Strawn, contended the evidence was nonexistent. He also maintained the loans-for-deposits scheme wasn’t illegal unless the prosecution proved that Serpico “either acted to the detriment of the union or got some under-the-table benefit.” Neither occurred, he argued. He vowed he would seek to overturn the jury’s decision. [Chi. Trib., Chi. Sun-Times 7/17/01, BNA 7/18/01]