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Undercover colleague helped nab suspect in bizarre case

Published: Monday, Dec. 3, 2012 9:45 a.m. CST
Caption
(Photo by Terrence Antonio James/Chicago Tribune/MCT)
At the Dirksen federal Building, former police officer Steve Manning leaves December 8, 2004, after giving testimony in his lawsuit against the FBI and others over his imprisonment for murders, cases in which he was later exonerated.

(MCT) — CHICAGO — Steven Manning trusted “Individual A” with virtually every gruesome detail of an alleged plot to kidnap a Chicago-area businessman, extort him of cash and real estate, then kill him, according to federal charges.

Undercover recordings captured Manning, an ex-police officer and former death row inmate, allegedly chatting amiably with Individual A about everything from torture techniques to the equipment they would need to dismember the victim.

By secretly cooperating with federal investigators, this trusted Manning associate — identified by authorities only as Individual A — helped take down Manning, long considered by law enforcement to be a dangerous killer and elusive target.

The kidnapping plot was foiled in dramatic fashion in October, authorities said, when FBI agents swooped in to arrest Manning and an accomplice as they arrived at a small Northwest Side realty office to allegedly carry out the abduction.

The office belongs to George Michael, a beefy, affable banker who made headlines a few years ago when he claimed that his suburban lakefront mansion was an Armenian church in order to qualify for a nearly $80,000 break on his annual property tax bill.

At a recent court hearing, Manning, who now goes by the name Steven Mandell, told his lawyer he wanted to expose the identity of Individual A.

“I want them to know that it’s George Michael,” Manning whispered loud enough to be heard by a reporter in the spectators gallery after learning that prosecutors and his attorney had agreed to a protective order on sensitive evidence in the case, including the identity of Individual A.

When Michael answered the door at his Lake Bluff mansion on a recent evening, he asked how the Chicago Tribune had “figured out” his involvement in Manning’s case but stopped short of confirming he was Individual A. He expressed concern for his safety, saying Manning was “a bad guy.” Michael’s attorney, Lawrence Karlin, later said Michael “has no comment on this or any criminal investigation.”

Federal authorities also declined to comment.

Manning, who waived a detention hearing and is being held in the Metropolitan Correctional Center, did not respond to a Tribune request for an interview. He has pleaded not guilty to the attempted extortion and conspiracy charges.

Real estate records and witness interviews show that Michael was the real estate agent who helped Manning find a vacant office building to rent on the Northwest Side. The criminal complaint against Manning alleges he intended to use the location, dubbed “Club Med” in undercover recordings, to carry out the extortion and slaying.

The nondescript property in the 5300 block of West Devon Avenue is sandwiched between an Irish pub and an Italian restaurant in a neighborhood heavily populated by police officers, firefighters and other city workers.

The building offered 2,500 square feet of first-floor office space that had been gutted down to the cinder block walls before being abandoned by its last tenant. The real estate listing described it as a “great opportunity to get that thing that you wanted to try started.”

The Coldwell Banker real estate agent who listed the building, who wished to remain anonymous, said he took Michael to check out the property in mid-August. Later that month, Michael came into the office with a tall, well-dressed man who introduced himself as Steven Mandell. He said he was an accountant looking to rent extra office space.

Mandell carried himself well and had impeccable credit, the agent said in a recent interview. But his interest in the building seemed odd. For one, he requested an office that had a garage accessible from an alley, an unusual need for an accountant, the agent said. He also thought it was strange they were interested in a building that would require such extensive renovation.

“There were others just down the street already built out, ready to move in,” the agent said.

On Sept. 27, Mandell signed a four-year, $1,500-a-month lease and paid a month’s rent in cash as a security deposit. He told the agent he planned to spend the winter in Florida and likely wouldn’t begin construction on the office until spring.

Three days after signing the papers, Manning was secretly videotaped by federal authorities talking with Individual A at Individual A’s office, according to the complaint. Manning could be seen pointing to a diagram he had drawn on a piece of paper as he allegedly discussed the plan for Individual A to lure the victim to Individual A’s office. Then Manning and his alleged accomplice, Gary Engel, posing as police officers, would allegedly come in with a bogus federal warrant and “arrest” the victim.

Engel would then try to extort the victim at Club Med while Manning drove the victim’s car to the victim’s home, leaving the cellphone on so it would ping off towers and throw off law enforcement later looking into the victim’s disappearance, authorities said.

“How do you know he’s telling you where the money is?” the complaint quoted Individual A as asking about the victim, whom authorities did not identify by name.

Manning allegedly expressed confidence that Engel would make the victim “spill the beans.” According to the complaint, Manning covered his eyes with his hands to indicate the victim would be blindfolded. He then allegedly let out several “simulated cries of pain.”

On Oct. 4, Manning and Individual A were recorded on a visit to Club Med. Individual A asked for “direction” on the renovations, authorities said, and Manning said he wanted it outfitted with a big sink like in “an old-fashioned laundry room.” He also asked that a sturdy enough counter be installed “so you could put a couple hundred pounds on there,” according to the charges.

Manning allegedly expressed concerns that the renovations might attract undue attention since the building was between two businesses. “I don’t want this to become a neighborhood talked about ... what’s going on here?” the complaint quoted him as saying.

Peter McCarthy, executive chef of Moher Public House, a restaurant next to Club Med, said he quickly noticed something strange about the renovation work. He watched as contractors came and went at all hours without any permits being posted, he said. Many of the windows were painted over or covered with paper, but when he peeked through the front door, McCarthy saw that workers had erected a makeshift interior wall that blocked the view of the back of the office.

One day, McCarthy looked on as workers unloaded an industrial-size, triple-compartment sink — the kind used in restaurants — from a beat-up pickup truck, he said.

“I knew something was up,” McCarthy said. “ ... What were they doing putting a sink like that in an office?”

Things got even more bizarre in mid-October. Two 12-foot-long church pews were installed in the front of the office, and several religious pictures, including the Last Supper, had been propped up on them, McCarthy said. Stenciled on the front door in ornate lettering were the words “Christian Consulting. By appointment only.” But there was no phone number, McCarthy said.

“How are you supposed to call and make an appointment?” he said.

A few days before the arrest, McCarthy was in the alley behind the restaurant when a tall man in business attire walked toward him with his hand outstretched and introduced himself as Steven Mandell from Michael Realty.

Over the next few days, Mandell twice came into the restaurant and ordered food for the work crew next door, saying he wanted them to “eat on the job,” McCarthy said.

Then just before the dinner rush on Oct. 25, McCarthy was out back having a smoke when FBI agents suddenly swarmed the alley, running full speed at him with guns drawn. They ordered him to move inside and stay there. They told employees at the Italian restaurant two doors down that if they “heard any explosions, it was just a concussion grenade,” McCarthy said.

“Those guys meant business,” he said of the FBI.

About the same time and less than two miles away, residents and business owners near Michael Realty on Milwaukee Avenue watched a similar scene unfold. Dark-colored, unmarked vans screeched into the narrow parking lot behind the agency and FBI agents piled out, neighbors said. The whole area was cordoned off for hours.

“The agents came in and told us to lock the doors as a precaution until they came back and gave us the all-clear,” said one employee of the nearby Pasta D’Arte restaurant who did not want her name used. She said they were allowed to let customers in and out as needed.

A little more than a week after the arrests, Engel, a former Willow Springs police officer and convicted jewel thief, was found hanged with a bedsheet at McHenry County Jail, where he was being held on the federal charges. His death was ruled a suicide, authorities said.

The undercover recordings suggest Individual A dealt exclusively with Manning and didn’t even know of Engel’s involvement. The trust Manning placed in Individual A in assisting in the alleged kidnapping plot was remarkable, especially considering that the ex-Chicago officer’s conviction in the murder of a trucking boss years ago had hinged on the testimony of notorious jailhouse informant Tommy Dye, who wired up on Manning while the two were in Cook County Jail.

Manning was sentenced to death, but the conviction was later overturned in part because of Dye’s unreliable testimony. Manning won his release in 2004 and sued the FBI for framing him. In a surprising verdict, a federal jury awarded Manning a record $6.5 million in damages, but he never saw any money because a judge reversed the judgment.

Over the years, Michael has been building a small empire of mostly commercial real estate holdings through a bank and realty companies he owned with his brother, Robert. By 2009, the brothers ran dozens of buildings across the Northwest Side and suburbs, owned two popular bars in Chicago and had a combined net worth near $15 million, according to court documents.

But there were problems. Lenders accused the brothers of playing fast and loose with financial regulations, making deals without telling the board of directors of Citizens Bank and Trust and hiding personal interests they had in many of the properties. In 2010, a federal administrative law judge recommended that the brothers be kicked out of banking indefinitely, ruling that the Michaels had “a tendency to violate regulation, engage in unsafe or unsound practices, and breach their fiduciary duties.” Banking regulators later ousted the brothers.

George Michael also built a reputation for dealing with some of the city’s more unsavory characters. One of the bank deals that got the Michael brothers in hot water with regulators involved a Harvey strip club proposal by John Galioto, a former Laborers Union boss ousted from his leadership job when he was accused of being a Chicago Outfit bookie.

Michael also had financial interests in PoleKatz, a Bridgeview strip club, that has included a who’s who of underworld figures among its “investors” and “consultants.” Records show Michael is involved in a pending lawsuit over the club’s finances.

But it was Michael’s establishment of The Armenian Church of Lake Bluff that garnered him the most attention.

In 2008, Michael was granted an $80,000-a-year tax break on his 17-room mansion overlooking Lake Michigan by saying he held orthodox services on the home’s racquetball court because his wife was too ill to travel to their regular church in Chicago.

An appeals judge later ruled that the church was a sham. Michael had been ordained as a priest through a free online site called The Church of Spiritual Humanism.

Michael lost the tax break, and in 2010 Lake County billed him almost a quarter of a million dollars. But Michael filed for bankruptcy about the same time, so he has not paid a dime of the property tax. The bill stands at $451,865, county records show.

Michael is still living in the home, though it is on the market for $3.9 million. The residence features five fireplaces, an exercise room, indoor pool, barbershop, home theater and outdoor patios with built-in grills overlooking a private beach, according to the listing.

The bankruptcy protects the home from being taken over by the county, according to Don Schneider, the county’s chief deputy treasurer. But the taxes “will not go away regardless” of how the bankruptcy case is settled, he said.

Meanwhile, the building that was to serve as Club Med is vacant. The stenciling advertising the Christian consulting business was removed after the arrests, and the pews and photographs are gone. A card taped to a window announced the lease was in default.

Residents in the Sauganash neighborhood are still talking about the alleged plot, said McCarthy, the chef. “This is such a safe area,” he said. “Who would expect anything like that was going on?”

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