MARK PAZNIOKAS; Courant Staff Writer
A prominent labor leader, Dominick Lopreato,
arranged for $8 million in union pension funds to be invested
with Colonial Realty Co. in return for $345,000 in bribes, according
to a federal indictment unsealed Wednesday.
Lopreato then conspired with the company's
founder,, Benjamin Sisti and Jonathan Googel, to conceal the bribes
after Colonial's spectacular failure attracted federal investigators,
the indictment says.
The eight-count indictment charges Lopreato
with two counts of accepting bribes as a pension plan trustee,
three counts of filing a false tax return, two counts of perjury,
and one count of conspiracy.
FBI and IRS agents arrested Lopreato, a longtime
official of the Laborers' International Union and a trustee of
its pension plan, at 6:30 a.m. Wednesday at his Bushnell Tower
condominium in downtown Hartford.
Lopreato, 59, who faces up to 30 years in
prison and $2 million in fines, declined to comment after he was
presented before U.S. Magistrate Judge Thomas P. Smith in Hartford
and released on a $100,000 non-surety bond.
The arrest was coordinated with the disclosure
two hours later that Ronald J. Welch of West Hartford, who describes
himself as Lopreato's best friend, is prepared to testify he delivered
cash from Colonial to Lopreato on three occasions.
Welch's cooperation became public Wednesday
morning when he waived his right to be indicted and pleaded guilty
before U.S. District Judge T.F. Gilroy Daly in Waterbury to tax
fraud and aiding and abetting the payment of a bribe.
Lopreato is the first public figure to be
indicted in the Colonial scandal since authorities disclosed in
June 1993 that Sisti and Googol each had pleaded guilty to four
felony counts and were cooperating with investigators.
Accountants, lawyers, politicians, labor
leaders, stockbrokers, bankers and business executives who may
have had illegal or questionable dealings with Colonial were believed
vulnerable once Sisti and Googel became informants.
Colonial grew into a real estate colossus
in the 1 980s, buying and syndicating to investors more than a
billion dollars in real estate in Connecticut and around the nation.
But former employees said after the company's collapse that the
secrets of its success included securities fraud and bribes to
public and private officials.
After Sisti and Googel cut their deal, one
longtime Colonial employee predicted, ''They are going to rat
everyone out."
Information from Sisti and Googel, who have
yet to be sentenced, helped lead investigators to Welch, who in
turn agreed this summer to provide testimony against his old friend
Lopreato. "It was a heartbreaking and gut- wrenching decision"
by Welch to give evidence against Lopreato, said Jeremiah Donovan,
Welch's lawyer.
Jon Googel was one of his best friends and
so was Dominick," Donovan said. Ron is one of the little
people who gets caught up in this enormously lucrative scam, whose
life is wrecked by it. Now he's trying to do the right thing."
Prosecutors told Daly that Welch delivered
about $45,000 to Lopreato in June 1988 after the union invested
$2 million with Colonial, then $150,000 in September 1989 after
a $3 million investment, and another $150,000 in May 1990 after
a second $3 million investment.
The Laborers' union in Connecticut invested
$S million; an affiliate in Albany, N.Y., invested $3 million
on Lopreato's recommendation, prosecutors said.
At the time, Lopreato was the business manager
or top leader of the Connecticut Laborers' District Council, the
statewide umbrella for locals of the Laborers' International Union,
which represents construction workers. He held the same position
with Local 230.
He resigned as business manager last summer
after he admitted accepting a Rolex watch from Googel, but he
kept the title of secretary- treasurer. The admission, ironically,
came during a deposition Lopreato gave in the civil lawsuit the
union filed against Colonial after the union lost its investment.
The indictment charges that Lopreato broke
federal law by accepting the bribes and also by accepting the
Rolex, a gold presidential model with an appraised value of $1
1,700. It also says Lopreato lied under oath twice while giving
the deposition and that he failed to report the bribes as income.
Lopreato also is accused in the indictment
of hindering the investigation of Colonial. Named as unindicted
conspirators are Welch, Googel, Sisti and Sisti's son, Kevin Sisti.
Lopreato had meetings with Welch and Colonial's
principals at Hartford area restaurants, where they would coordinate
the stories they planned to tell the FBI, according to the indictment.
The last meeting was in September 1992, about eight months before
Sisti and Googel agreed to cooperate with authorities.
Lopreato met that month with Googel and Welch
across from the Hartford Civic Center, at Frank's Restaurant,
and then at a bar in the Goodwin Hotel. Once again, they agreed
to stick by their story: Lopreato had been paid nothing, the indictment
states.
But the unity fell apart under continuing
pressure from authorities -- and the prospects of long prison sentences.
Under federal guidelines, which give judges
little leeway in sentencing, cooperating with authorities is one
of the few ways a defendant can win a lesser sentence. Welch faces
a maximum sentence of six years in prison.
Assistant U.S. Attorney Thomas J. Murphy,
one of the prosecutors leading the investigation of Colonial by
the FBI, the IRS and the Department of Labor, declined to say
whether Lopreato's indictment would be followed by others.
"The investigation is continuing," he said.
Sisti and Googel are scheduled to be sentenced
Dec. 9, but the sentencing could be postponed -- as it has been
before to the dismay of angry investors who lost their life savings
in Colonial deals.
The simple answer," Murphy said of the
delay in sentencing, is we are waiting for them to complete their
cooperation."
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