Jury acquits two of Blitzstein murder

Friday, May 21, 1999 | 4:01 a.m.

A federal jury today acquitted two Mafia members of all charges related to a plot to murder Chicago underworld Herbie Blitzstein.

But the seven woman, five man jury convicted Robert Panaro and Stephen Cino of conspiring to extort Blitzstein in a scheme to take over his street rackets.

Cino, 57, a suspected "made member" of the Los Angeles mob, was convicted of 12 other federal charges, including counterfeiting, mail fraud and money laundering stemming from an undercover FBI investigation into Las Vegas street rackets.

Attorneys for Panaro, 62, a reputed soldier in the Buffalo mob, tried to obtain his release from federal custody after the verdict was read. But U.S. District Judge Philip Pro set a hearing on Tuesday to discuss the request.

Panaro's wife, Kathy, sobbed uncontrollably while the not guilty verdicts related to Blitzstein's murder were read in court.

Afterwards, both sides said they were pleased with the outcome of the month-long trial.

Assistant U.S. Attorney Eric Johnson, of the Organized Crime Strike Force, acknowledged the murder case against the two reputed Mafia members was difficult to prove. But he said he had "no regrets" pursuing it.

Several other underworld associates, including one of the shooters, Antone Davi, previously have pleaded guilty.

The verdicts hinged on the credibility of two key witnesses who bolted from the mob and joined the prosecution efforts.

Before the case was sent to the jury Thursday, Johnson defended the use of John Branco, who steered the FBI to those involved in the murder plot, and Joe DeLuca, who pleaded guilty to his role in helping plan the killing.

"You cannot infiltrate a criminal organization with priests, Boy Scouts and the common person off the street," Johnson said, as he wrapped up the government's closing argument. "When you open a sewer and you look inside, you do not see swans swimming."

Johnson acknowledged that DeLuca's testimony, in particular, was crucial in helping the 12-member jury evaluate the evidence the government presented during the trial.

DeLuca was called upon to fill in the blanks on secret FBI recordings that captured Panaro and Cino, discussing plans to muscle in on Blitzstein's loan-sharking and insurance fraud operations in Las Vegas on behalf of the Los Angeles and Buffalo crime families.

Panaro, a reputed soldier in the Buffalo mob, wanted Blitzstein out of the way after noticing that his loan-sharking business had become very lucrative, Johnson told the jury.

Blitzstein, once a top lieutenant of slain Chicago Mafia kingpin Anthony Spilotro, had as much as $200,000 in loans on the street before his Jan. 6, 1997 murder, the prosecutor said.

Johnson, meanwhile, also made it clear the government needed Branco, a career criminal who wore a recording device throughout much of the FBI's two-year undercover investigation, to provide insight into the role of the two defendants in the murder plot.

The government contended that Branco -- though he participated under the watchful eye of the FBI in the plan to force Blitzstein out of business -- was kept in the dark about the murder.

Two days before Blitzstein's slaying, John said, Branco was assured by Panaro at a recorded meeting that Blitzstein would not be killed. But unknown to Branco at the meeting, Panaro already had approved the murder.

Prosecutors have alleged that Panaro, with the backing of his bosses in Buffalo, authorized the hit on Blitzstein and "pulled the strings" behind the scenes. Cino, the government lawyers charged, used his ties to the Los Angeles mob to help "grease the wheels."

Attorneys for the two defendants, however, argued that the evidence during the trial, including the tapes, showed both did not want Blitzstein killed.

"It's all on tape," said Cino's lawyers, Louis Palazzo, "Thank God it's all on tape."

Both Palazzo and John Fadgen, who represents Panaro, tried to discredit Branco and DeLuca in their closing arguments, saying the two government witnesses had the most to gain with Blitzstein out of the way.

Branco, who received $150,000 for his government informant work, they argued, would be able to earn even more money by dragging additional defendants into the investigation, and DeLuca no longer would have to answer to Blitzstein when pulling off insurance scams.

Palazzo made an impassioned plea to the jury Thursday, alleging Branco and the FBI "created the crimes" and manufactured the entire case against Panaro and Cino.

"Over-reaching? Abuses? Misconduct by the government? I'd say so," Palazzo charged.

He urged to jury to serve as a "buffer" between the government's actions and the defendants.

Johnson, however, told the jury how difficult it is to pursue criminal cases against organized crime figures who are adept at insulating themselves from the crimes.

He praised the undercover work of Branco, whom he said was used by the FBI in the racketeering probe because members of the Los Angeles mob had trusted him.

"Without John Branco, this crime (the Blitzstein murder) would never have been solved," Johnson said.