Blitzstein’s partner was ready to back out

Thursday, April 29, 1999 | 11:07 a.m.

By the time Joe DeLuca wanted to back out of the scheme to rob and kill his business partner, Herbert Blitzstein, it was too late.

"Herbie was going to be burglarized and then killed," DeLuca told a U.S. District Court jury. "I didn't want this to happen -- the burglary, the killing, kicking him out. I didn't want it to happen."

But it did. On Jan. 6, 1997, using a key and security alarm code obtained from DeLuca, two men entered the home of reputed Chicago mob associate Blitzstein, then shot him in the head three times, authorities said.

On trial this week are Robert Panaro and Stephen Cino, two men with whom DeLuca said he and Blitzstein conducted business. They are among 19 people charged with various racketeering and conspiracy violations in a 50-count federal indictment handed down in February 1998.

DeLuca pleaded guilty to racketeering and other property crimes in 1997. He testified today and Wednesday as part of a plea agreement and faces 12 1/2years in prison.

DeLuca said Panaro and Cino are members of a Buffalo organized crime family -- one of two mob families whose members wanted to take over Blitzstein's lucrative loan-sharking business.

DeLuca and Blitzstein ran an auto repair shop where they did legitimate repairs but also rolled-back odometers on used cars they re-sold. They also ran an insurance fraud scheme, DeLuca said.

Today, John Fadgen, Panaro's attorney, asked DeLuca why he got into business with Blitzstein.

"You knew in the past he had been a No. 2 man for the Chicago mob. You knew that he was an enforcer for the Chicago mob in the 1970s. And you knew he had worked in all kinds of illegal activity with organized crime families. And yet you decided you and he would go into the auto repair business together?" Fadgen said. "Did Herbie even know what a carburetor was?"

DeLuca said he didn't know.

Panaro, whose auto sales business shared the same building, was in on some of the deals, DeLuca said. Cino also was involved in some of the auto deals and was a close associate of Panaro's, DeLuca said.

Blitzstein used cash from the auto repair shop to back a high-interest loan business. DeLuca said he and Blitzstein split the profits from both enterprises evenly, cutting-in Panaro and Cino when the deals warranted it, he said.

In late 1996, Peter Caruso, a man described as being affiliated with a Los Angeles crime family, told DeLuca that Blitzstein was not sharing all of his profits with DeLuca.

Caruso and a man named John Branco wanted to take over Blitzstein's loan-sharking business, DeLuca said. After that proposal was presented to Panaro, it became a plan, DeLuca said.

"Bobby (Panaro) said they were going to take over the loan business. Pete said Herbie was going to get robbed, and if something happened to him, then oh well," DeLuca said.

DeLuca said he didn't trust Branco because he recalled a Chicago newspaper article that said Branco had cooperated with the government in an organized crime investigation.

"He was a rat," DeLuca said.

Branco, who has an extensive criminal history and ties to the Los Angeles mob, was wearing a federal-issue hidden microphone at a Jan. 4, 1997, breakfast meeting with DeLuca, Caruso, Panaro and Cino.

Seated inside a Denny's Restaurant in Las Vegas, they talked about how the business takeover and burglary of Blitzstein's home would happen. Blitzstein had a penchant for buying expensive jewelry and kept large sums of money in his home, and the men planned to split that too, DeLuca said.

During breakfast, Panaro said DeLuca could drop out of the deal anytime he wanted to. But DeLuca said he stayed because of what Panaro said next.

"He said they would do it their own way. I knew that meant I would be the weak link," DeLuca told jurors. "They would take me out."

On Jan. 5 -- Panaro's birthday -- DeLuca interrupted the family's celebration to tell Panaro he wanted the whole thing stopped.

The next day, DeLuca and Blitzstein went to work as usual. They ran errands and ate lunch together. DeLuca said at the end of the day, he told Blitzstein about the plan to take over his loan business but said nothing of the murder.

"He told me to watch my back," DeLuca said.

But DeLuca didn't care enough to watch Blitzstein's back, Fadgen said.

"You knew your closest friend, your father figure, was going to be dead that night," Fadgen said. "But you only told him about half the plan."

Testimony continues today in the trial that is expected to last four weeks.