Chicago Outfit figure gets four months in federal prison in Social Security fraud scheme
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A Chicago mob figure convicted years ago in the landmark Operation Family Secrets investigation was sentenced Monday to four months in federal prison for participating in a Social Security scam by falsely claiming he’d earned wages from a series of phony or failed businesses, including Lehman Brothers and the Peanut Corporation of America.
Michael “Mickey” Marcello, 71, the half brother of imprisoned Outfit boss James Marcello, pleaded guilty earlier this year to one count of theft of government funds, admitting he stole nearly $23,000 in Social Security distributions between September 2017 and May 2019.
Marcello, of west suburban Wood Dale, has been free on bond since he was quietly indicted in December 2019. His attorney, Catharine O’Daniel, argued for probation, saying Marcello was a “low-rung” participant in the scheme and that by requesting prison time, prosecutors were attempting to engage in “a re-litigation of the Family Secrets case.”
“He doesn’t engage in that conduct anymore,” O’Daniel said during the videoconference hearing. “He doesn’t talk to those people anymore, your honor.”
But U.S. District Judge Jorge Alonso said that while the loss amount wasn’t as high as many fraud cases brought in Chicago, that’s only because Marcello got caught relatively quickly.
“The plan was to keep stealing the money for the rest of his life,” Alonso said.
The judge also said that Marcello’s previous conviction for mob-related racketeering “couldn’t be much more serious,” noting Marcello’s elevated role in the mob’s Melrose Park crew and that the Social Security fraud occurred just months after his supervised release in the Family Secrets case was terminated in 2015.
“Mr. Marcello wasn’t just involved (in organized crime), he was an operations manager,” Alonso said. “He was for a time running day-to-day operations.”
Prior to the sentence being handed down, Marcello apologized to the court, acknowledging he “made terrible choices” and asking for mercy as he nears the final phase of his life. He also asked Alonso to recognize his past for what it is. “I 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 agreement with prosecutors that as a member of the Melrose Park crew, he passed information to his incarcerated brother James, who at the time was the reputed head of the Chicago Outfit.
He also acknowledged relaying payments of $4,000 a month to mob hit man Nicholas Calabrese in a bid to buy his silence. Calabrese later became the star witness for the prosecution during the trial that ended with the convictions of some of the Outfit’s top echelon, including James Marcello.
At Mickey Marcello’s sentencing hearing in 2008, prosecutors said he’d been in organized crime for almost a decade and had evaded more than $1 million in taxes.
“He is not the worst of the bunch, but when you’re talking about the Chicago Outfit, this is a pretty grim and evil bunch,” then-Assistant U.S. Attorney Markus Funk said at the time.
U.S. District Judge James Zagel sentenced Marcello to 8 ½ 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 cooperation to a family friend with alleged mob links, knowing the sensitive information would end up in the Outfit’s hands.
Secret FBI recordings made in the waiting room of a Michigan prison in 2003 had captured the Marcello brothers anxiously discussing whether Calabrese had flipped.
Marcello testified that he learned of Calabrese’s cooperation with law enforcement from reputed mob figure John “Pudgy” Matassa Jr.
Ambrose was convicted and sentenced to four years in prison.
James Marcello, 78, is serving life in prison at a maximum-security facility in Colorado.
Court records show Michael Marcello was released from prison in September 2012 and served three years of supervised release. In early 2016, just months after having his supervised release terminated, Marcello was brought into the Social Security scheme by his longtime friend Walter Paredes, of Rosemont, who was recruiting people on behalf of imprisoned serial con man George Ruth, court records show.
According to Marcello’s plea agreement, he agreed to provide his Social Security information to Ruth, who submitted the fraudulent work history on his behalf. Marcello then lied repeatedly about his employment to his regional Social Security Administration office, according to the plea.
Among the companies Marcello claimed to have worked for was the Peanut Corporation of America, a peanut-processing business that collapsed amid one of the largest lethal foodborne contamination scandals in U.S. history.
Marcello also claimed to have worked for Lehman Brothers, the American global financial services firm whose collapse in 2008 helped trigger a global financial crisis.
In court Monday, O’Daniel said the scheme was unsophisticated and “pitifully easy for the government to unravel,” particularly because Ruth used the same contact information for each of the companies he fraudulently cited as previous employers.
“This was low-rung, late-coming conduct,” she said. “Nothing that my client did required any sophistication. He gave his Social Security number and then he lied and said he worked some places when he didn’t.”
But Assistant U.S. Attorney Niranjan Emani noted that Marcello, who’d claimed to have learned his lesson when facing sentencing in the Family Secrets case, instead just “found a new way to steal.”
“He saw the ability to make a quick, cheap, easy buck and he went with it,” Emani said.
