Matt O'Connor and Ray Gibson, Tribune Staff Writers.
November 18, 1996
A Northwest Side bank faces a fine of $800,000
and 5 years' probation after pleading guilty last week to a longtime
illicit relationship with two union officers.
Capitol Bank and Trust admitted bribing two
officials of the Central States Joint Board, an umbrella labor
organization, with more than $5 million in personal and business
loans at unusually favorable rates.
In return, the bank obtained about $4.5 million
in deposits of union funds and took over the lucrative assignment
of managing about $16 million in union pension and welfare plan
In conjunction with the guilty plea, the
owners of the bank's holding company, Gildo Mazzolin and his daughter,
Amalia, have agreed to give up participation in the bank's affairs
and to sell the bank in a year. Neither has been charged with
The bank, at 4801 W. Fullerton Ave., is cooperating
in the government's continuing investigation.
The illicit relationship with the two union
officials took place between August 1986 and May 1992 under previous
The federal charges didn't identify the union
officials, but sources have previously identified them as John
Serpico, a longtime powerful union official in Chicago, and a
Capitol Bank provided personal and business
loans to the two officials for eight different investments and
According to the bank's plea agreement, the
men allegedly made between $500,000 and $800,000 in profits from
the arrangement with the bank.
One of the transactions with Capitol Bank
that first attracted federal scrutiny involved Serpico's previous
dealings with corrupt banker James Wells.
Wells, the former chairman of Cosmopolitan
National Bank, entered an agreement in 1989 to buy a $1.6 million
West Side complex that was to be used as a branch bank for Cosmopolitan.
Serpico and three politically connected partners
had borrowed $1.6 million from Capitol Bank to build the complex,
but hid their ownership interest in a secret land trust at the
The deal fell through when federal regulators
ousted Wells from the bank for misusing bank funds. He was later
convicted of federal fraud charges and sentenced to prison.
Serpico's partners in that deal included
former state Sen. John D'Arco Jr., and D'Arco's brother-in-law,
attorney Pasquale DeLeo, both of whom were convicted on separate
bribery charges stemming from Operation Gambat.
Serpico heads the Central States Joint Board,
which comprises eight local unions including Local No. 8 of the
Laborers International Union, which he founded.
Labor leaders seized control of the union
last summer in a move to purge Local No. 8 of suspected mob influence.
The local represents mostly semi-skilled factory and foundry workers.
Serpico is also chairman of the Illinois
International Port District.