Chicago Sun-Times

Feds Indict Labor Leader

BY Cam Simpson Federal Court Reporter

August 5, 1999

A top Chicago union boss with political clout and mob ties got $5 million in kinky loans and shared in almost $334,000 in cash kickbacks after directing union funds to favored banks and investors, a federal indictment charged Wednesday.

John Serpico, 68, of Lincolnwood faces charges of racketeering, fraud and money laundering for allegedly running a Chicago union group and a separate international union as if they were his personal fiefdoms for at least 12 years.

Serpico is the chairman of the Illinois International Port Authority, a position he has maintained under four Illinois governors despite his connections to top Chicago mobsters. He also has doled out hundreds of thousands of dollars in union campaign contributions to former governors James R. Thompson and Jim Edgar, current Gov. Ryan, Mayor Daley and other politicians. Ryan is weighing Serpico's reappointment to the port authority, the sprawling South Side industrial harbor, a spokesman for the governor said Wednesday.

Indicted with Serpico were longtime friends and associates Gilbert Cataldo, 59, who is Chicago's former housing director, and Maria Busillo, 53, who held numerous union positions under Serpico.

Serpico has held at least 15 top positions in eight unions or labor groups since 1975. He was a top vice president for the Laborers' International Union of North America until being ousted in 1995 because of mob ties that surfaced in congressional testimony as early as 1985.

Most of Serpico's clout, however, stems from his control of the Chicago-based Central States Joint Board, an umbrella group for eight small unions with as many as 20,000 members. He was its president from 1975 to 1994, and now serves as president emeritus and "consultant." From 1975 to 1985, Serpico also was the secretary-treasurer of the International Union of Allied Novelty and Production Workers, which has had as many as 30,000 members.

The Central States Joint Board and novelty workers union are at the center of Serpico's troubles. Through his positions with them, Serpico controlled tens of millions of dollars from union pension plans, health and welfare funds and union operating cash.

The indictment alleges Serpico and Busillo directed massive deposits to Capitol Bank & Trust and Gladstone-Norwood Bank in exchange for nine personal and business loans totaling about $5 million. The loans were handed out with sweet terms that normal customers couldn't touch, the indictment charges. Many were totally unsecured. Some had easy payment plans. Others allegedly were made to cover interest payments on already existing loans.

One loan was allegedly used to finance a film studio involving Serpico, an alleged organized crime figure and former U.S. Rep. Morgan Murphy, who left Congress in 1981. Others allegedly were used to buy apartment buildings, a condo in Marco Island, Fla., and to finance a building to house illegal aliens for the government. Capitol Bank & Trust issued eight of the nine loans and pleaded guilty in 1996 for its role, paying an $800,000 fine. Its plea agreement detailed more than $20 million in union deposits and investments.

Separately, Serpico is accused of channeling a $6.5 million loan from the union to a hotel and office development in Downstate Champaign. Cataldo and Serpico shared in almost $334,000 in cash kickbacks paid out for the loan, the indictment charges. The hotel complex was developed by a Chicago company headed by one of Cataldo's relatives, who has not been charged.

Attorneys for all of the defendants either declined comment or did not return calls. Serpico also did not return calls.

Through the Central States Joint Board, Serpico has given at least $137,150 to the campaigns of Ryan, Edgar and funds controlled by House Speaker Michael Madigan (D-Chicago) since 1994. Thompson received at least $82,000 while in office and Daley has received at least $86,600, records show.

Contributing: Robert Manor, Dave McKinney