CHICAGO BANK IS ACCUSED OF BRIBING UNION OFFICIALS
U.S. SAYS LOANS MADE IN RETURN FOR DEPOSITS
September 26, 1996
A Northwest Side bank was charged Wednesday with bribing two union officials with millions of dollars in favorable loans in return for obtaining many more millions in deposits.
Capitol Bank and Trust, 4801 W. Fullerton Ave., made loans totaling more than $5 million between 1986 and 1992 to two officials of the Central States Joint Board, an umbrella labor organization.
The federal charges didn't identify the union officials, but sources indicated they were John Serpico, a longtime powerful union official in Chicago, and one of his close aides.
According to U.S. Atty. Jim Burns, the bank intends to plead guilty to charges of making the illegal loans and will cooperate in the government investigation.
The plea agreement, subject to the approval of a federal judge, calls for the bank to pay a fine of $800,000 and be placed on probation for 5 years, the government said.
"The bank regrets that this occurred," said its lawyer, James Streicker. "But it's important to note these loans were made in the late 1980s and early 1990s, and since that time there has been a change in management and direction of the bank."
Burns said, "Favorable loan terms are valuable benefits, regardless of whether the loans are repaid, and, in effect, are little different from cash under the table."
Capitol Bank allegedly provided the personal and business loans to Serpico and his aide--identified only as Persons A and B in the charges--for eight different investments and purchases.
In return, the union officials allegedly used their influence to have the Central States Joint Board buy about $3 million in certificates of deposit at the bank and to maintain bank accounts there of up to $1.5 million.
The board also gave Capitol Bank's trust department responsibility for managing $16 million in pension and welfare plan assets.
Serpico heads the board, which comprises eight local unions, including Local 8 of the Laborers International Union, which Serpico founded.
Labor leaders seized control of the union this summer in a move to purge Local 8 of suspected mob influence. The local represents mostly semiskilled factory and foundry workers.
Serpico also is chairman of the Illinois International Port District. A spokesman for the district said Wednesday that Serpico couldn't be reached for comment.