The Rev. Guido John Carcich, fund-raising master-mind of the Pallottine Fathers religious charity, pleaded guilty yesterday in a Baltimore court to charges that he misused more than $2 million donated for the poor.
In return for Carcich's guilty plea to a single criminal charge, state prosecutors dropped the rest of the 61 original counts in the indictment of the priest. They and Carcich also agreed to a sentence of 18 months probation, during which the 59-year-old priest is to live in a parish house in Baltimore while ministering to the needs of state penitentiary prisoners for a year.
The abrupt end to one of the most extensive criminal investigations on record in Maryland followed a month of plea bargaining, which sources said was slowed by the concern of the presiding judge that the sentence was too lenient. Sources said Judge David Ross finally accepted it after being convinced that the punishment was, in Maryland Attorney General Francis B. Burch's words, a form of "involuntary servitude" if not actual imprisonment.
When he was indicted, Carcich stated his innocence and called the government's charges "reckless and unfounded." Yesterday, under the agreement, Carcich conceded that he had held as much as $2.2 million in Pallottine funds in secret bank accounts, had given out gifts and loans of up to $50,000 to fellow priests and friends and had engaged in intricate deals with business associates -- all with money given for the poor.
But Carcich asserted, in a legal document formally pleading for probation, that he had done much of it to benefit the Pallottine charitable cause.
The direct mail tecchnique by which the order solicited over $170 million from small and often elderly contrributors over a 20-year period could soon lose its effectiveness, Carcich believed. The investments would provide a hedge against that possibility, he maintained and the secret bank accounts would prevent the imposition of judgments on Pallotine funds through future law suits according to the defense put forward yesterday.
The initial of many lawyers, learning of the plea agreement was that it was a "sweet deal for the defense." Burch called it "a fair and equitable disposition . . . not a slap on the wrist."
The agreement announced yesterday in the courtroom of Associate Supreme Bench Judge Ross was the product of negotiations that began April 7.
In fact, sources said the negotiations were drawn out in part by the skepticism of Ross, who expressed concern that Carcich might be getting a "free ride" and that his punishment -- ministering to inmates -- placed him in the somewhat honorary role of a visiting priest.
"Although his defendant has criminally mishandled a substantial sum of money, it has not been proven that he took any money for himself," Ross said yesterday as he imposed the sentence. "It's a very meaningful penalty he has to pay," Burch said at a press conference. Carcich "should be required to be there (at the prison) 16, 18, or 20 hours a day and eat with the inmates and do anything an inmate would do except that he can return home at night."
None of the underlying tension of the plea negotiations was evident in the carefully acted out scene yesterday in Judge Ross fifth floor court room in Baltimore Criminal Court.
Carcich, tanned and looking fit, arrived in the courtroom with his attorneys (from Washington's Williams and Connolly firm) at his side and a smile on his face. It soon faded as the chief prosecutor in the case, Robert Ozer, rose to make the plea bargain a mater of record.
Within minutes, the priest was standing his fingers planted rigidly on the defense table for support, and listening to Judge Ross ask "Why have you pleaded guilty?"
"Because I am guilty," he said, almost faltering, "because I am guilty of one amended count."
As Carcich continued standing, the judge told him: "Considering all of the circumstances, including the defendant's previous conduct over the span of his adult life, I am persuaded that no useful purpose would be served by imprisonment . . ."
"The total circumstances of the grand jury investigation, the indictment and the conviction, together with the services which will be performed by the defendant . . . are sufficient punishment," Ross said.
Moments later, it was over and Carcich was walking swiftly from the courtroom, refusing to make any comment.
The first hint of trouble had broken around Carcich in December 1975 when the Washington Post reported that he had made a $54,000 loan from Pallottine funds to help pay the divorce settlement from then Gov. Marvin Mandel.
Then came revelations in the Baltimore more Sun and in a Pallottine audit showing that the order was sending only a fraction - about 1.5 percent - of its charitable contributions to foreign missions while using millions for speculative real estate investments and loans to politically connected businessmen.
It was a similar pattern of activity - loans or gifts to friends and complex business deals in which money passed back and forth from, Carcich to business associates at least 28 secret bank accounts - that figured in the charges to which Carcich pleaded yesterday.
In one instance, Carcich acknowledged writing two checks from "undisclosed accounts," each of them for $100,000, and giving them to Brother John Inzetta and Father Peter Sticco. Father Carcich told his fellow clerics that "the money was in the nature of a gift to be used for investment purposes," according to a statement filed jointly by the prosecution and defense in the case. None of the clerics told any other Pallottine of the gifts, the statement said.
Carcich, known to his friends as "the Good Father" and "Father John" also acknowledged giving Mary Gerk, a long-time Pallottine employe, and her husband a $100,000 check "for investment purposes," according to the statement.
"There was a general understanding that the money would be repaid if the investments . . . became profitable. However, Father Carcich never intended to request repayment," the statement said.
In another instance, the statement told the story of a transaction in which Carcich commissioned a realtor to find tenants for a building owned by the Pallottines. Carcich found the tenants himself, however, and insisted that the realtor, W.C. Pinkard & Co., share its commission of about $16,000 with W. Dale Hess, also a licensed realtor and a close friend of suspended Gov. Marvin Mandel. Hess, who was ultimately convicted with Mandel of fraud and racketeering had performed no function in acquiring the tenants.
"Father Carcich had arranged with Hess to receive the payment for him," the statement said. And the priest ultimately deposited the nearly $8,000 in one of the secret accounts.
On another occasion, Carcich lent money to a fuel oil distribution concern at an interest rate of 18 percent. According to his lawyers, he was then "concerned that the receipt of the extremely high interest rate" would look scandalous when "it became publicly known that the Pallottine religious order charged such high rates."
In order to cover up the interest rate, Carcich had the 18 percent interest paid to a front man rather than directly to the Pallottines. He then split 6 percent of the rate between himself and his associate, Donald E. Webster. This would "further reduce the public perception of the receipt of the high interest rate," Carcich conceded in the documents presented yesterday.
In another instance, the statement related how legal fees of nearly $350,000 were paid to Baltimore lawyer George W. McManus Jr., for his work in a case involving the Pallottines. After the money was paid in several installments, McManus drew five $20,000 checks payable to Carcich in the summer of 1972, according to the statement. Four months later, Carcich withdrew $100,000 from the accounts in which the money was deposited and paid it to McManus. But that was not the end of it. In 1973, McManus made 10 monthly payments of $10,000 each to Carcich, the statement said.
Carcich, in his sentencing document, asserted that McManus had given him the $100,000 for a real estate investment, which he asked the priest to find. Ultimately, McManus decided against participating in the real estate ventures.
Carcich also acknowledged making a $20,000 loan in 1970 to John J. Giannini, a close friend and an employe at that time of the U.S. Postal Service. Giannini was said to need the money to buy a house. There is no documentation relative to repayment, according to the court statement, which added that the state "has no evidence to prove that the loan was not paid back." Giannini is now an aide to Sen. Jennings Randolph (D-W.Va.).
Carcich, as head of the Pallottines' direct-mail operation, was deeply interested in postal service policy on mail and legislative activity in that same area.
Carcich, in the statement acknowledges that about $47,000 of the $2.2 million funds in the secret accounts "were used by him during the period 1970 through 1975 for personal purposes."
Carcich was said to have personal assets of about $35,000, including money given to him by businessmen on the occasion of his 25th anniversary as a priest.
The statement notes that about $1.9 million in the total funds in the secret accounts were returned to official Pallottine bank accounts before the Pallottine investigation was begun.
Another large chuck - about $177,000 - was transfered to official accounts in February 1976, shortly after the grand jury investigation began.
Carcich's defense lawyers and his prosecutors were meeting in Ross' judicial chambers in Baltimore last Thursday with the hope of forming the final agreement.
It appeared Ross was balking at the sentencing provision until Burch assured him that the state would require the former chief fund raiser for the Pallottine Fathers to have the same life as any state inmate except he could go home at night.
"Suddenly the judge came around," recalled deputy Attorney General Jon F. Oster, who attended the meeting. "He understood that Carcich wasn't going to get any special privileges. We all sensed it was over when Ross said, 'There should be no problem (in accepting the agreement).'"
Ross' approval was the climactic turning point in nearly a month of complicated and intensive plea bargaining negotiations.
The talks began on a hostile note because of acrimonious pretrial hearings and they often bogged down on crucial points. But the discussions continued on a steady basis once the two sides indicated an interest in a settlement.
The door to negotiations were first opened a April 7 when Carcich's lawyer Brendan V. Sullivan, called Deputy Attorney General Oster and asked him to set up a meeting to discuss a possible quilty plea by the Pallottine priest.
Robert C. Ozer, the state's chief Pallottine prosecutor, was vacationing in Colorado when he heard of Sullivan's overture. Initially cool to the idea, he told Oster he thought Carcich's lawers were trying to set him up for later charges of prosecutorial misconduct.