A Chicago Mafia figure convicted years ago in the landmark Operation Family Secrets investigation was sentenced to four months in federal prison on Monday for his involvement in the Social Security fraud by falsely claiming to have made money from a series of bogus or failed companies including Lehman Brothers and Peanut Corporation of America.

Michael “Mickey” Marcello, 71, the half-brother of imprisoned Outfit boss James Marcello, pleaded guilty to stealing government funds earlier this year, admitting he stole nearly $23,000 from Social Security distributions between September 2017 and May 2019 .

Marcello, who lives in the western suburb of Wood Dale, has been free on bail since he was quietly indicted in December 2019. His attorney, Catharine O’Daniel, advocated for probation, saying Marcello was a participant in “low level” on the show and that by requesting a prison term, prosecutors were trying to engage in a “Family Secrets retrial”.

“He no longer engages in that behavior,” O’Daniel said during a videoconference hearing. “He doesn’t talk to these people anymore, Your Honor.

But U.S. District Judge Jorge Alonso said that while the amount of losses was not as high as many of the fraud cases filed in Chicago, it was only because Marcello was caught relatively quickly.

“The plan was to steal money for the rest of your life,” Alonso said.

The judge also said Marcello’s previous mob-related racketeering conviction “couldn’t have been much more serious,” noting Marcello’s high profile with the mob crew at Melrose Park and that the Social Security fraud occurred just months after his supervised release in The Family Secrets case ended in 2015.

“Mr. Marcello was not only involved (in organized crime), he was the operations manager,” Alonso said. “He ran the day-to-day operations for a while.”

Before sentencing, Marcello apologized to the court, acknowledging that he had “made terrible choices” and asking for mercy if he was approaching the last phase of his life. He also asked Alonso to recognize his past for what it is. “I have paid my debt to society,” he said.

Marcello was one of the first defendants to plead guilty in the Family Secrets investigation, admitting in a plea deal with prosecutors that as a member of the Melrose Park crew he passed information to his imprisoned brother James, who at the time was the purported boss of the Chicago Outfit.

He also admitted to making payments of $4,000 a month to mob hitman Nicholas Calabrese to buy his silence. Calabrese later became the prosecution’s key witness during the trial that resulted in the convictions of some of the Outfit’s top echelons, including James Marcello.

At Mickey Marcello’s 2008 sentencing hearing, prosecutors said he had been involved in organized crime for nearly a decade and had evaded more than $1 million in taxes.

“He’s not the worst of the bunch, but when you talk about the Chicago Outfit, it’s a pretty grim and evil bunch,” said US Assistant Attorney Markus Funk at the time.

U.S. District Judge James Zagel sentenced Marcello to eight and a half years in prison.

In 2009, Marcello testified in the federal trial of John Ambrose, a deputy U.S. marshal accused of leaking information about Calabrese’s collaboration with a family friend with alleged mob ties, knowing that confidential information would end up in the hands of the Outfit.

Secret FBI footage taken in the waiting room of a Michigan prison in 2003 captured the Marcello brothers anxiously discussing whether Calabrese had fallen.

Marcello testified that he learned of Calabrese’s cooperation with law enforcement from Mafia notorious John “Pudgy” Matassa Jr.

Ambrose was found guilty and sentenced to four years in prison.

James Marcello, 78, is serving a life sentence in a maximum security facility in Colorado.

Court records show that Michael Marcello was released from prison in September 2012, having served three years of supervised release. In early 2016, just months after completing his supervised release, Marcello was inducted into the Social Security system by his longtime friend, Walter Paredes of Rosemont, who recruited people on behalf of imprisoned serial fraudster George Ruth, according to court records.

Under the settlement, Marcello agreed to give his Social Security information to Ruth, who submitted a fraudulent work history on his behalf. Marcello then repeatedly lied about his employment with his regional Social Security Administration office, according to the allegation.

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Among the companies Marcello claimed to have worked for was the Peanut Corporation of America, a peanut processing company that collapsed in one of the deadliest food contamination scandals in US history.

Marcello also claimed to have worked for Lehman Brothers, the US-based global financial services firm whose collapse in 2008 helped trigger the global financial crisis.

In court on Monday, O’Daniel said the plan was uncomplicated and “woefully easy for the government to unravel”, particularly because Ruth used the same contact details for each of the companies he fraudulently cited as previous employers.

“It was low-level behavior, overdue,” she said. “Nothing my client did required any sophistication. He gave out his Social Security number, then lied and said he worked some places when he didn’t.

But US Assistant Attorney Niranjan Emani noted that Marcello, who claimed to have learned his lesson from his Family Secrets conviction, instead simply “found a new way to steal.”

“He saw an opportunity to make money quickly, cheaply and easily, and he went with it,” Emani said.

jmeisner@chicagotribune.com

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