Ex-Chicago Teamster Boss Coli Pleads Guilty to Shakedowns, Tax Fraud

John T. Coli Sr. has a saying: “Pigs get fat. Hogs get slaughtered.” He’s kind of feeling like a hog now. On July 30, Coli (in photo, on right), for years the most powerful Teamster in the Chicago area, pleaded guilty in U.S. District Court for the Northern District of Illinois to one count each of receiving a prohibited payment and filing a false income tax return. The first charge refers to acts of extortion totaling $325,000 from an area employer in order to ensure “labor peace.” He had been slapped with a 13-count superseding indictment in September 2017 after being indicted on six counts that July. Coli resigned as head of Teamsters Local 727 on the day of the initial indictment, clearing the way for his son, John T. Coli Jr., to take over. The actions follow a probe by the FBI, the IRS, and the Labor Department’s Office of Labor-Management Standards and Office of Inspector General.

Union Corruption Update has been following the ongoing four-year downfall of John T. Coli (here, here and here). Prior to that, Coli, now 59, occupied a lofty perch in the overlapping worlds of Chicago labor, business, politics and crime. He headed Teamsters Local 727 and Joint Council 25, the latter of which represents over two dozen locals with a combined more than 100,000 members. He also served as a trustee of Local 700. In a real sense, he born for these roles. His father, Eco Coli, ran Local 727, and not very well. During the Seventies he was identified in a White House report on organized crime as a member of the Chicago Mafia, known informally as “the Outfit.”; reportedly, he was a hit man. After the elder Coli’s death in 1982, his son James took over the local. He ran it for a decade until his removal by the feds for ignoring mobster infiltration. That’s when James’ brother, John Coli Sr., assumed control. It was a job he would keep for a quarter century.

By this time, the International Brotherhood of Teamsters had become a ward of the U.S. Justice Department, the result of a 1989 settlement of a massive racketeering suit. Coli, a trained lawyer, knew he could ill afford to give the appearance of corruption, especially given the high level of scrutiny from the three-member, court-ordered monitoring agency, the Independent Review Board. He played his cards right. He forged alliances with International General President James P. Hoffa, who took office in 1999. He also endorsed state and local political candidates in Illinois, positioning his union for tax incentives and project labor agreements. And he put the squeeze on certain Chicago-area businessmen, one of whom would prove to be his undoing.

The “problem” centered on Cinespace Chicago Film Studios, a production facility that supported TV series such as Chicago Fire, Chicago P.D. and Empire. During the tenure of former Democratic Governor Pat Quinn (2009-15), Cinespace had received five state grants worth a combined $27.3 million, including one for $10 million in December 2014 for the purchase of seven industrial properties near its North Lawndale campus which the company eventually returned at the behest of Quinn’s successor, Bruce Rauner. The company also received generous tax breaks. Coli had pushed heavily for these incentives to induce Cinespace to hire Teamster labor. And he added some unorthodox persuasion.

Starting in 2014, Coli allegedly demanded cash payments from Cinespace President Alex Pissios, typically in $25,000 increments. The payments, which constituted extortion by any reasonable definition, would continue until sometime around the fall of 2016 when company accountants informed Pissios that the balance sheets didn’t add up. A perturbed Coli demanded that the payoffs resume. “We’ll shut it (the studio) down tomorrow,” he told Pissios on October 13. “We’ll shut it down within an hour…I will fucking have a picket line up here and everything will stop.” For emphasis, Coli added: “There’s gonna be time-to-time, unique things that are gonna come up that you’re gonna have to deal with…You can’t have a fucking rat in a woodpile. You can’t have a whistleblower here.”

Even before that outburst, Coli was throwing his weight around. Specifically, he tried to persuade Pissios to fire Mark Degnen, Cinespace’s chief financial officer. Degnen had been a top official of Ryerson Steel and had helped the company sell a former mill to Alex Pissios and his family in order to build Cinespace on that site. Degnen’s wife, Bridget Degnen, moreover, had won a seat on the Cook County Board of Commissioners, defeating ex-Commissioner John Fritchey, whose ex-wife Karen Banks works for the studio. Banks’ brother, zoning attorney James Banks, also served as chairman of Belmont Bank & Trust, which helped finance Cinespace. This web of connections had the potential to blow up in Coli’s face.

And the groundwork for the blowup would happen. When Alex Pissios failed to disclose a loan he had received from a late uncle to open Cinespace, federal prosecutors charged him with bankruptcy fraud. Seeing an opening for something bigger, the feds offered Pissios leniency if he wore a wire to gather information from Coli. Eventually, prosecutors convened a grand jury. On July 12, 2017, a Chicago federal judge unsealed a six-count indictment accusing Coli of extorting cash payments from Cinespace during July 2016-April 2017 totaling $100,000. Reading the tea leaves, Coli announced his resignation from the Teamsters that day. Two months later, on September 21, he was slapped with a 13-count superseding indictment for obstruction of commerce, concealment of financial information, and tax fraud. His alleged Cinespace-derived shakedown income was raised to $325,000. Coli allegedly used “fear of economic loss from threatened work stoppages and other labor unrest unless such cash payments were made.” The new indictment also accused Coli of evading $117,500 in combined federal and state income taxes.

A deal with prosecutors took a while to negotiate, but it happened about two weeks ago on July 30. As part of the 26-page agreement, Coli pleaded guilty to one count each of receiving a prohibited payment and filing a false income tax return. He also declared that he would cooperate with prosecutors “fully and truthfully.” He faces up to eight years in prison. However, that sentence might be reduced to as little as 20 months if he provides the kind of help that the feds are looking for.

That prospect may have some top state and local political figures worried. Coli had close ties with Illinois House Speaker Michael Madigan, former Illinois Governor Pat Quinn, and former Chicago Mayors Richard M. Daley and Rahm Emanuel, among other officials. The probe continues. Last August, the grand jury that indicted Coli issued subpoenas to Quinn campaign manager Lou Bertuca, press secretary Brooke Anderson and another Quinn-era official, John D’Alessandro. The grand jury this February also issued a subpoena for the personnel file and other records of State Senator Thomas Cullerton, a cousin of current Illinois Senate President John Cullerton. As for John Coli, retirement might not be so bad: He stands to collect at least two union pensions.