Salvatore Petti, a 76-year-old Ellicott City resident who has been at the center of a still-simmering dispute involving the bocce courts in Baltimore's Little Italy neighborhood ("Bocce Brawl," Feature, June 22, 2011), on Dec. 10 pleaded guilty in U.S. District Court to fraud and tax evasion for diverting funds from a nonprofit Social Security Administration (SSA) employees' association and failing to report his income from the scheme and from gambling at casinos.
"Guilty," said Petti, a white-haired man in a gray suit and plaid sweater vest, when asked how he wanted to plea to the charges before U.S. District Court Judge Frederick Motz. During the ensuing half-hour hearing, Motz declared Petti "entirely competent to enter the plea" and explained his maximum sentences were 20 years in prison for wire fraud and five years for tax evasion, plus fines and restitution.
Petti was charged Dec. 3 ("Bocce figure charged with fraud," The News Hole, Dec. 4) via a "criminal information," a charging document that is filed in court with the defendant's consent in lieu of a grand-jury indictment, and often is followed by a guilty plea.
The seven-page charging document states that Petti had been treasurer of the nonprofit Employees Activities Association (EAA) for more than 40 years, until 2010, a position he kept after retiring in 1995 from his SSA job as a computer-systems manager. For about five years, until December 2009, "Petti diverted EAA funds for his own personal use to support his lifestyle, which included spending approximately $430,000 at the Borgata Hotel, Casino, & Spa and $43,000 at the Tropicana Hotel and Casino" in Atlantic City between about March 2005 and August 2010, according to the information.
The amount of "unauthorized income" Petti admitted he took from EAA, over and above his $60,000 salary, amounted to $416,134 between January 2005 and December 2009, the information says. He accomplished the scheme, it continues, by "intentionally misclassifying" EAA checks to himself and drawing them from bank accounts held by EAA's for-profit arms rather than its nonprofits, in order to avoid detection by an outside accounting firm that reviewed the nonprofits' books each year.
Petti is also charged with tax evasion for failing to report a total of about a quarter-million dollars in gambling income and EAA income (both authorized and unauthorized) in 2008, depriving the government of about $36,000 in taxes.
The criminal information includes a forfeiture count to take property from Petti-including the contents of a retirement account and other bank accounts, a personal seat license for the Baltimore Ravens, and three Marriott timeshares-valued at about $87,000.
Petti, Giovanna Blatterman, and other members of a Little Italy bocce committee last year sued Thomas Macchia, a member of another bocce league, in Howard County for defamation and property destruction. After lengthy litigation, they won, and in October, a $2,750 judgment was entered against Macchia, who tells City Paper he expects the legal dispute will continue despite the recent outcome, which he believes to be unjust.
Macchia and Petti sued one another in 2011 over bocce committee finances, but the case was later dismissed. Macchia contends that money raised from team fees was apparently mishandled-he was told it was donated in cash to St. Leo Roman Catholic Church in Little Italy but was never given satisfactory proof that the donation actually occurred-and says Petti's current legal troubles signal what Macchia has believed all along about Petti: "He manipulates money," Macchia says, adding that "it's what he does. I exposed it before, and that's why they sued me. Now here he is, so sweet, stealing money from people who trusted him."
Lisa Ellis, Petti's daughter and a lawyer who represented Petti and other bocce committee members in the lawsuit against Macchia, did not return a phone message asking for comment about Petti's criminal case and the bocce dispute with Macchia.
EAA president Mike Reynolds declined to comment about Petti's charges, saying, "I went to the grand jury, so I guess I can't say anything." EAA boardmember Ron Blavatt, a lawyer, said he hadn't yet seen the charging documents and so declined to comment about Petti's charges, but he described EAA's structure and long institutional history.
The association, Blavatt explains, "was founded basically to help the employees" at SSA's Woodlawn complex back in the 1960s, when there were no stores or other commercial services nearby. To fill that gap, EAA "operated a [convenience] store in each of the buildings, and the profits went back into athletic activities," Blavatt explains. EAA soon became "a large operation" with an all-volunteer board "elected from the membership," he continues, and expanded into providing daycare, fitness programs, and insurance services. Petti "was the treasurer for many, many years" and "was the one providing all of the information" about EAA's finances to the board-though "annually, an audit was done."
Blavatt adds that Petti's improprieties with EAA's accounts prompted "inquiries and reviews of the various transactions" that Petti conducted, and EAA's boardmembers "now have safeguards in place" to prevent such problems in the future.
Asked when EAA first learned of Petti's unauthorized transactions, and whether EAA discovered them on its own or as a result of an external investigation, Blavatt said he couldn't say. According to the criminal investigation, though, Petti's fraud against EAA ended in 2010, when Petti stepped down as its treasurer.