A person wearing a hard hat walks away from 16 Lyndhurst Court in Toronto on May 10, 2012. The mansion large home being built in the Bathurst and Davenport area is being built for Luigi Lusi, an Italian Senator and his wife, Giovanna Petricone, a Canadian citizen who is under arrest in Italy so she won't flee the country. Senator Luigi Lusi is accused of embezzling 22 million Euros from a political party for which he served as treasurer.
Less than a block from Toronto's storied Casa Loma castle, a palatial villa is at the centre of a political scandal that has ensnared an Italian senator and put his Canadian-born wife under house arrest.
Senator Luigi Lusi took $29-million from a political party for which he once served as treasurer, Rome prosecutors allege, and his wife, Giovanna Petricone, is restricted to their Italian home because she is considered a flight risk.
Their would-be Toronto "casa" – an ultra-modern three-storey house at 16 Lyndhurst Court – was built with cash that was sent by the senator and his wife to an Ontario company administered by her brother. Her twin sister is a principal in the architecture firm that designed the home.
The case made headlines in Italy this week as the senator's bid for immunity – which is sometimes afforded to politicians in his position – went before the Italian courts. His wife appealed her house arrest, but lost. She is also facing embezzlement charges.
As OMNI TV first reported, her brother, Francesco "Frank" Petricone, administers the Ontario company that purchased the Lyndhurst property, razed the existing bungalow and paid for the design and construction of a 5,500-square-foot home. Mr. Petricone, a Canadian citizen and resident of King City, also administers another Ontario company linked to the embezzlement allegations in court documents.
The construction of the house at 16 Lyndhurst has been handled by the Giannone Petricone Associates Inc. Architects firm of Toronto. Principal Pina Petricone is Giovanna Petricone's twin, according to birth dates in court documents and Pina's online resumé. In it, the architect and University of Toronto professor describes the building as "a provocative urban/domestic design for a single-family residence overlooking the Davenport escarpment in Toronto." Still under construction, it features four bedrooms, four living spaces, six bathrooms, a nanny suite, den, two exterior decks and a roof terrace, according to a floor plan obtained by OMNI TV.
Three months ago, Mr. Lusi told interrogators that he withdrew more than $4-million from the accounts of the left-wing La Margherita party, court documents say. The hefty sum, he explained, was progressively wired through his wife's account to two Ontario-based companies run by his brother-in-law, Francesco "Frank" Petricone. Provincial records confirm that both companies, LUIGIA Ltd and FILOR 627 Ltd, are administered by Mr. Petricone.
Mr. Lusi told investigators that he and his wife co-own the two companies, and that he sent $2.3-million of La Margherita money specifically to FILOR 627 Ltd to finance a real estate investment in his wife's hometown, Toronto. He told Italian police he was investing the money on behalf of the political party. Others in the party knew of the investments, he said, but he refused to name anyone because they would not be able to confirm that claim.
Giovanna Petricone said in her testimony she knew party funds were paying for the Toronto house. She said she was the only one with this knowledge.
Provincial records reveal that FILOR 627 Ltd purchased 16 Lyndhurst Court for $995,000 on July 2, 2008. Municipal documents obtained through Freedom of Information requests show that the property is currently owned by FILOR 627 Ltd. Under the previous owner, the property featured a single-family bungalow. With over $2-million in its coffers, FILOR 627 Ltd applied for three building permits between 2009 and 2011 to demolish the old house and build a new one.
Italian banking records, provincial documents, and testimony by Mr. Lusi and Ms. Petricone allege this cash flow sequence: between 2006 and 2008 Mr. Lusi transferred $4.6-million from the party's account to his wife's account. Ms. Petricone testified that she wired $2-million from her account to FILOR 627 Ltd.
Rome prosecutors are investigating Mr. Petricone's role in the scandal. He is cited three times in Italian Justice Simonetta d'Alessandro's arrest warrant for Mr. Lusi. LUIGIA Ltd, the other Ontario-based company he runs, is mentioned more than six times and is described in court documents as a "dummy corporation" that "had a bankroll of 13,579,200.00 euro" (nearly $17-million) of allegedly embezzled cash. Francesco Petricone is under investigation for allegations of money laundering, fencing and fraudulent registering of assets in Italy, but no charges have been laid, and none of these allegations have been proven in court.
The Globe and Mail has repeatedly sought interviews with Francesco Petricone. His wife said he was not available. Pina Petricone has not responded to interview requests.
In Justice d'Alessandro's arrest warrant, which is a public document in Italy, Mr. Lusi is alleged to have "abused his privileges as treasurer (…) and systematically pilfered party funds for private gain." The bank transfers have been documented by the Financial Intelligence Unit of the Bank of Italy, which sounded the alarm over "unusual financial transactions" involving La Margherita accounts and those connected directly or indirectly to Mr. Lusi.
Prosecutors say that every transfer Mr. Lusi authorized out of party accounts was under 150,000 euros, the limit under which he did not require a party co-signer to approve expenses.
Several of Mr. Lusi's Italian assets have already been seized by local authorities. Among these is the Genzano di Roma villa, where his wife is under arrest, and which underwent $4 million-worth of renovations overseen by Pina Petricone's firm.
In February, Mr. Lusi offered to return some of the money he took from party coffers, and to serve a light sentence – what would amount to a year of house arrest. It remains to be seen whether FILOR 627 Ltd will sell 16 Lyndhurst Court – worth an estimated $3.5-million – and return the money, including the capital gains.
Special to The Globe and Mail. Andrew Monti is a reporter for OMNI TV.
Clarification: In this article, The Globe and Mail did not, and did not intend to, state or imply that Francesco (Frank) Petricone, Pina Petricone or Giannone Petricone Associates Inc. are accused of wrongdoing or are implicated in the allegations being made against Italian Senator Luigi Lusi.