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updated: 10/26/2012 9:50 PM

Buffalo Grove man arrested after FBI thwarts plot

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  • Steven Mandell, then known as Steven Manning, in an undated Illinois Department of Corrections photo.

    Steven Mandell, then known as Steven Manning, in an undated Illinois Department of Corrections photo.
    Courtesy of Illinois Department of Corrections

  • The 1985 booking photo of Steven Mandell, then known as Steven Manning.

    The 1985 booking photo of Steven Mandell, then known as Steven Manning.
    Daily Herald File Photo


Two former police officers with criminal pasts -- one of whom once spent five years on death row -- have been charged with extortion after federal authorities say their plan to kidnap, extort and murder an area landlord was thwarted.

The men were arrested Thursday evening and were in court Friday where a judge set a bond hearing for next week.

One of the men arrested, 61-year-old Buffalo Grove resident Steven Mandell, is a former Chicago police officer who changed his name from Steven Manning after his death row sentence was overturned by the state Supreme Court in 1998.

Gary Engel, 61, of Homer Glen, was also charged. Engel is a former Willow Springs officer.

The two men were infamously connected in other crimes in the past, having previously been convicted in Missouri on kidnapping charges that were also later overturned on appeal.

According to the most recent federal complaint, the two men planned to impersonate police officers and carry out a fake arrest on the unidentified landlord, who Mandell believed makes $100,000 in cash each month from various rental properties throughout the area.

Court papers indicate both men were arrested with what FBI agents called "prop" firearms and various "fake law enforcement credentials." Engel had handcuffs and Mandell was also carrying a phony arrest warrant when they were arrested, authorities said.

Federal investigators believe the men planned to take their targeted victim to an office building on Chicago's Northwest Side that Mandell had specifically prepared to carry out the extortion plot and eventual murder. The federal complaint stated that Mandell had installed a "deep sink," a large counter "capable of supporting several hundred pounds" and a shower.

Authorities said Mandell and Engel planned to force the landlord to pay them $500,000 and also sign over ownership of 25 commercial properties under the guise that the landlord would be released upon compliance. The court papers allege the men planned to kill the landlord when their demands were met.

Investigators found a semiautomatic handgun and ammunition at the extortion site as well as "saws, a butcher knife and multiple zip-ties for use as restraints," according to the complaint. The complaint also indicates the FBI agents have had the two men under surveillance for several weeks and have recordings of them concocting the plan.

The federal complaint papers outline both men's criminal histories, including their successful appeals of previous convictions and subsequent lawsuits against the federal government.

Mandell was first convicted of insurance fraud in 1983, a conviction that led to his resignation from the Chicago Police Department. He was also convicted of burglary in 1987 and sentenced to four years in prison, according to the complaint.

Mandell was also arrested in 1990 for the murder of James Pellegrino, a former business associate of Mandell's. At trial, Pellegrino's widow testified that Pellegrino left the house the morning of his disappearance and told his wife that if he turned up dead she should call the FBI and report that Mandell was responsible.

Pellegrino's body was recovered nearly a month later floating in the river on Chicago's North Side, his hands and feet bound and a plastic bag and towel covering his head, according to news reports from the time.

In addition to the widow's testimony, the judge allowed evidence from secretly taped recordings that didn't implicate Mandell in the Pellegrino murder, but painted him prejudicially to jurors. Mandell was found guilty and sentenced to death in 1993.

The Illinois Supreme Court would later cite the widow's testimony and the tapes as the reason for overturning Mandell's conviction in 1998. The charges were later dropped altogether. Mandell would go on to sue the FBI and was awarded $6.5 million from a jury, but a federal appeals court overturned the financial judgment.

Concurrent to his troubles in Illinois during the 1990s, Mandell was also facing kidnapping charges in Missouri. He was convicted in 1992 and sentenced to life in prison.

Engel -- who was once married to James Pellegrino's sister -- was also charged in connection with the kidnapping plot in Missouri and ordered to serve 90 years in prison. Engel's criminal history dates back to the 1970s and involves weapons and burglary convictions, according to court papers.

Both men would appeal their kidnapping convictions and win their release.

Mandell was released in 2004 and Engel used evidence uncovered during Mandell's appeal to secure his release in 2010, according to previous news reports. Engel sued the FBI agents who had arrested him, as well as a former Buffalo Grove police officer who investigated him in relation to the 1986 murder of Thomas McKalip in Buffalo Grove, where no charges were ever filed.

Buffalo Grove police officials confirmed Friday that McKalip's murder remains unsolved. McKalip was no stranger to federal law enforcement. He had been convicted of three federal crimes between 1976 and 1979. And some of those prosecutions were handled by Gary Shapiro, who now serves as acting head of the Chicago U.S. attorneys office but at the time led the office's "Organized Crime Strike Force," according to previous news reports.

Engel's 2010 lawsuit contends federal and local law enforcement officials schemed to frame Mandell for Pellegrino's murder because they couldn't pin McKalip's murder on him. The lawsuit alleges Engel became ensnared in the conspiracy because he wouldn't cooperate in the investigation of Mandell. At the time, law enforcement officials believed McKalip's murder was connected to the gangland-style murder of Mandell's 72-year-old father Boris Manning.

Engel's lawsuit is still pending, according to court records.

Attempts to reach attorneys for both men were unsuccessful.

A bond hearing is set for Wednesday. Federal officials said they will ask the judge to hold the men without bail until the trial because they believe Mandell and Engel pose a "flight risk" and are a "danger to the community."

Both men now face up to 20 years in prison if convicted of the extortion-related charges.

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