On a sandy cove in the Caribbean island of Curacao, ties of friendship and money bound Chicago criminals to their law enforcement chums.
Together they took stakes in the Curacao Caribbean Hotel & Casino, a venture overseen by Chicago mob figure Vincent “Jimmy” Cozzo. A former Teamsters official who had served time in federal prison, Cozzo would be banned from union activities in 1990 because of his organized crime activities.
During the mid-1990s, the U.S. Drug Enforcement Administration and U.S. Embassy officials investigated whether Cozzo’s Curacao casino was used to launder drug profits for the mob. But that probe stalled, in part, because federal authorities could not obtain financial records from the Curacao government, federal memos show.
The Tribune obtained Curacao court permission to examine boxes of receipts and check ledgers decaying in a shipping container and a storage room on the island.
The records reveal a web of deals that brought potential murder suspects and swindlers together with law enforcement officials from the agencies investigating them. Built from offshore trusts and secret holding companies, the deal collapsed in a contested bankruptcy a decade later.
Cozzo formed an investment company that in 1987 bought the 190-bed hotel and attached casino for $5 million. He took a mortgage from a Curacao government-owned holding company and gathered $3 million from roughly 15 shareholders and partners.
Among the investors was Frank Milito, a convicted felon who came under scrutiny in the 1987 slaying of Amoco Oil Co. executive Charles Merriam. In October 1988, casino records show, Cozzo gave Milito a letter with a palm tree logo, offering him an option to buy $45,000 worth of stock in the venture.
Milito put his shares in the names of his sons and made additional loans and investments in the venture that would total $240,000, according to letters made available by his attorney. He gathered some of his investment money from relatives, the letters indicate.
Another investor was Renato DiSilvestro, a Chicago police officer who came under investigation in the 1986 killing of Giuseppe Cocozza, which detectives linked to the Merriam slaying.
Cook County sheriff’s Assistant Chief William B. Shlifka also took a stake. He was fired from that post for undisclosed reasons in 1991 and later pleaded guilty to being a ghost payroller on the City Council Traffic Committee. The sheriff’s office investigated the Merriam case.
The casino donated at least $300 to the political campaign of Shlifka’s boss, Sheriff James O’Grady, and at least $1,230 to the New Republican Organization of Chicago–a Republican group run by Cozzo and Shlifka to support the political campaigns of O’Grady and Undersheriff James Dvorak.
Dvorak was in charge of day-to-day personnel and law enforcement decisions during the time of the Merriam slaying. He recently completed a 7-year prison sentence for taking bribes and orchestrating a massive ghost-payrolling scheme during the time he oversaw the Merriam case. Dvorak could not be reached for comment through an attorney or federal officials.
Cozzo’s New Republican Organization gave at least $7,350 to the election funds of O’Grady and Dvorak, campaign records show. Dvorak was a Chicago ward committeeman, so he did not have to divulge his election receipts and spending, thus only partial records are available.
At a Near West Side sports bar and pool hall he frequents, Cozzo exhaled the silky effluence of Marlboro Lights as he staved off questions about the Caribbean venture. He said every dollar of its financing was properly accounted for, but declined to provide details.
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A key casino investor was convicted swindler James F. Graves, who had been sentenced to 5 years in prison in 1964 for misusing the funds of a savings and loan, casino and law enforcement records show. By the 1980s, Graves and a group of investors had acquired interests in several downtown Chicago office buildings, two hospitals and a North Michigan Avenue surgical center, Cook County land and court records show.
At the same time, Graves and Cozzo were leapfrogging the Caribbean to establish casinos, U.S. Embassy cables indicate. They raised start-up funds by exploiting Cozzo’s control of Teamsters Local 786’s financial affairs, FBI and U.S. Labor Department reports indicate.
Former Cosmopolitan National Bank Chairman James E. Wells–a corrupt banker who would be sentenced to a 15-year prison term for bribery, arson and bank fraud–told the FBI that his bank had arranged one $100,000 loan because Cozzo was affiliated with the Teamsters union, which held substantial certificates of deposit at Cosmopolitan.
Cozzo said he never approached Wells for a loan, but he declined to discuss the subject further.
Casino revenues wound through a labyrinth of linked companies, one of which was paid $15,000 a week “up until the week that Mr. Cozzo had to leave,” an accountant’s memo shows.
Owing close to $10 million to the government of Curacao for unpaid taxes, land lease payments and other fees, the hotel and casino declared bankruptcy and were sold for $4.5 million in 1997. Sale proceeds were turned over to the Curacao government, and the hotel and casino have since been refurbished and joined an international chain.
Milito declined to answer questions about the venture. His attorney, Paul Julian, said Milito was brought into the investment by then-parks Supt. Edmund Kelly, who was an investor. Julian said Milito didn’t know Cozzo before then.
Julian said Milito soon learned about Cozzo’s background and immediately tried to withdraw his money from the casino and distance himself from Cozzo.
Julian acknowledged that Milito lent Cozzo’s Curacao venture an additional $50,000 after that, and that Milito continued to relax with Cozzo in Curacao, according to vacation photographs obtained by the Tribune. But Julian said Milito was making a show of trust because he was frightened of Cozzo and was trying to recoup his investment without making Cozzo angry.
Cozzo used an obscenity to dismiss Milito’s account. Cozzo said he has known Milito for at least 25 years, and said Milito came into the investment on his own, not through Kelly.
While some investors said they lost everything they put into the venture, Milito was paid more than $100,000 from casino accounts, records and interviews show. But in the end, Milito said in a 1997 letter provided by Julian, Cozzo still owed him $130,000 as well as $30,000 in interest.