The Outfit-connected crew had planned the raid on the cartel stash house carefully, using a street gang member who tipped them to a 40-kilogram shipment of cocaine from Mexico that would be warehoused on Chicago's Southeast Side before being cut up for distribution on the street, authorities say.
But what crew leaders didn't know was that the nondescript gray frame house on the 13400 block of South Brandon Avenue was a setup. The cocaine had been planted by law enforcement officials, who wired the home with video and audio surveillance equipment before giving their informant the go-ahead to set the sting in motion.
As an FBI spy plane monitored the Hegewisch neighborhood from the air late July 16, a team of Chicago police and federal agents on the ground watched as reputed Outfit soldiers Robert Panozzo and Paul Koroluk, posing as law enforcement, kicked in the door and grabbed the stacks of narcotics. When agents swooped in and made the arrest, Koroluk still had a police star dangling from his neck, authorities said.
The dramatic sting was the culmination of a monthslong investigation and led to sweeping racketeering and drug charges unveiled in Cook County criminal court last week against Panozzo, Koroluk and three other alleged crew members. The charges alleged an array of crimes going back to at least 2007, from home invasions and armed robberies to burglaries, arson, insurance fraud and prostitution.
Authorities said the crew -- which, according to previous court testimony, has ties to reputed Grand Avenue mob boss Albert "Little Guy" Vena -- robbed cartel stash houses of drugs and cash with a remarkable mix of sophistication and brazen violence, tracking drug dealers with GPS devices and wearing stolen police badges and body armor during the raids.
They had Chicago gang members providing tips and acting as lookouts and used a battery service business in their Near West Side neighborhood as a meeting place to divide up the loot, according to the charges. When an associate was nabbed for a home invasion, the crew plotted to kill the key witness before he could testify and even put the Cook County judge overseeing the case under surveillance, according to authorities.
Authorities say Panozzo, 54, and Koroluk, 55, have also been prolific burglars, using country club membership lists, tips from insurance brokers and other intelligence to identify the high-end homes before they hit them, then fencing stolen merchandise through Wabash Avenue jewelers and other professionals on the take.
A search warrant affidavit filed in the case stated that the crew has "surreptitious and unauthorized links (with) certain employees of state and local government, as well as insurance agents, jewelers, currency exchanges, banks, and business owners."
Joseph Ways Sr., the former second-in-command at the Chicago division of the FBI who now is executive director of the Chicago Crime Commission, said the case shows the mob is still "alive and well" despite recent high-profile prosecutions that decimated much of the Outfit's key leadership.
Ways said that while the Panozzo-Koroluk crew allegedly used many traditional mob schemes, it is also accused of a particularly bold and risky tactic: stealing drugs that originate from powerful drug cartels.
"That's a new twist," Ways said. "To go in and rip off a stash house, depending on where it's at in the supply line ... if you get too close and the wrong people find out, it could be very hazardous to your health."
Authorities said the investigation into the crew began in October, when the would-be hit man informed police of the plot to kill a state witness who was about to testify against Panozzo's associate.
While the charges identify the associate only as "Individual H," numerous sources have confirmed to the Tribune that he is Jeff Hollinghead, 48, a former union truck driver who spent several years running an auto glass store in Las Vegas. After returning to Chicago about six years ago, he teamed up with Panozzo, whose base of operation was in Hollinghead's old neighborhood.
In October 2009, Hollinghead and three others were charged with kidnapping a wheelchair-bound gang member from his South Side home and holding him for ransom. The man's family called police, who set up a sting with the ransom money, court records show. Hollinghead was arrested by Chicago police and FBI agents as he opened a garbage can in a Bridgeport alley that had been marked with an "X" and removed what he thought was the ransom payment.
When he was arrested, Hollinghead first told authorities he was just looking for a place to relieve himself. Later he told an elaborate story of how he was approached by a man on the street who ordered him at gunpoint to retrieve the bag for him or Hollinghead's wife would be killed, court records show.
According to the search warrant affidavit, police investigating the Panozzo-Koroluk crew got a huge break when Hollinghead began cooperating last November, shortly before he pleaded guilty to the kidnapping charges and was sentenced to 15 years in prison.
Hollinghead laid out the details of the crew's operation, including how Panozzo used connections with the Spanish Cobras and Latin Dragons street gangs for tips on drug suppliers and the location of stash houses, according to the charges. Police said Hollinghead told them that the crew's technical operations wizard, Maher "Max" Abuhabsah -- who was also charged with racketeering -- ordered GPS tracking devices from a Skokie surveillance store and put them on the cars of their targets so he could track their movements through his smartphone.
Hollinghead told police that while he was free on bond and awaiting trial, he and Panozzo had discussed arranging the murder of the victim in his case, but the victim had gone into hiding and no one could find him, according to the affidavit. Meanwhile, another informant said Abuhabsah had found the victim's brother's address through Internet research, the affidavit alleged.
Then, last July, Hollinghead's lawyer called him to a meeting at a Caribou Coffee on Maxwell and Halsted streets, according to the affidavit. At the meeting, the attorney slid a computerized printout of the victim's name and address across the table.
"Give this to Bob, he knows what to do with it," the attorney allegedly told Hollinghead, according to the court documents. "This is your only problem."
The charges refer to the attorney only as "Individual K," but court records show Hollinghead was represented at the time by longtime criminal defense attorney Joseph Lopez.
Lopez told the Tribune he did meet Hollinghead at the coffee shop but gave him only a copy of his investigator's report, which included a routine public records search that had only outdated addresses for the victim. Lopez said the meeting was part of the normal course of preparing for trial.
"We were trying to locate and interview the victim as part of trial preparations, just like we always do," Lopez said.
A review of court records in Hollinghead's case suggests that eliminating the victim would not have helped him beat the charges. The victim never identified Hollinghead in a lineup, and the main witnesses against him were FBI agents and Chicago police officers who were monitoring the ransom drop site and watched as Hollinghead reached into the garbage can and took the bag, records show.
Raised in the old Italian-American enclave known as "the Patch" on the Near West Side, Panozzo and Koroluk have criminal histories that stretch back decades, court records show.
In 2006 they were both sentenced to seven years in prison for a string of burglaries targeting tony north suburban homes that netted millions in jewelry and other luxury items. Police at the time described the burglars as some of the most sophisticated they'd run across, from the disabling of state-of-the-art alarm systems to the cutting of phone lines before entering the properties. It wasn't until Koroluk slipped up and left footprints in the snow leading to his car that police were able to crack the case.
According to court records, Panozzo got his start as a juice loan collector under former Grand Avenue boss Joseph "The Clown" Lombardo, who was convicted in the landmark Family Secrets trial. Recently, Panozzo was operating a house of prostitution masquerading as a massage parlor in the 800 block of West Superior Street, according to the racketeering charges.
No one answered the door when a Tribune reporter visited the alleged brothel last week. Employees of the hair salon next door said they had been suspicious of the place for months, sometimes spotting beautiful young women dressed in skimpy lingerie escorting men into the building in broad daylight.
The racketeering charges also allege that Panozzo has a history of violence. According to the affidavit in the case, Panozzo has often bragged to associates that he threw an elderly woman down three flights of stairs to her death in 1987 after tricking her into signing over ownership rights to her three-flat in the 2300 block of West Ohio Street.
Public records show that the woman, Lydia Minneci, 77, signed a quitclaim deed to her home in October 1987 to a man named Steven Brantner, who at the time lived with Panozzo a few blocks away on West Erie Street. Minneci was killed shortly after she signed the papers, though no one was ever arrested, records show.
Four years later, Brantner was also killed, records show. According to the affidavit, Panozzo drove Brantner to the hospital, where he died of bullet wounds. No one was ever charged with his slaying.
As authorities were ramping up their investigation into Panozzo's crew earlier this year, his name surfaced in the sensational trial of former Chicago cop Steve Mandell, who was convicted in February of plotting to kidnap, murder and dismember a local businessman flush with cash.
According to trial testimony, Panozzo had introduced Mandell to real estate mogul George Michael during a July 2012 lunch at La Scarola restaurant on West Grand Avenue. At the table was Vena -- the reputed Outfit boss who replaced Lombardo after he went to prison -- and several other alleged mobsters, according to testimony. Michael, who unbeknownst to his dining companions was an FBI informant, recorded the meeting on a hidden wire, but the recording was never played at Mandell's trial.
Ways, of the Chicago Crime Commission, said it's difficult to tell whether the charges against the Panozzo-Koroluk crew signify a wider investigation of mob activity. With all the recent attention on Chicago's rampant gun violence, organized crime has faded from headlines. But that doesn't mean it's gone away, he said.
"That's the joy of law enforcement," Ways said. "Even if they decide to lay low for a while, you know they'll be back."