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It’s been nearly seven years since innocent bystander Louise Russo was shot and paralyzed in a botched underworld hit, and nearly five since the men involved directly and others, in a conspiracy after the fact, pleaded guilty.

In doing so, it was agreed that the accused who had money or access to it would pay Russo $2 million in restitution.

In cash.

No one believed Russo — who was left paralyzed from the waist down and has a disabled daughter in need of constant care — deserved anything less.

If anything, in an era when people see awards in the millions for a coffee scald, it seemed wholly inadequate.

The unusual payout was the result of a perfectly legal plea deal, negotiated in private by the Crown and defence lawyers.

It was approved by then-attorney general Michael Bryant and endorsed by a judge who used a section of the criminal code that allows for restitution in sentencing.

But there were questions, first raised by Runciman, that have never received a full public airing.

How did the deal go down?

What, if anything, did the money buy the guilty men?

Where exactly did the money come from?

Why must a crime victim turn not to the state, but to criminals, for adequate financial support?

The issues were never fully debated.

Instead, Runciman, who brought up the deal while it was still being negotiated, was chastised by the Office of the Integrity Commissioner for speaking about a case that was before the courts.

The story is the stuff of movies.

There are bikers and mobsters. There’s an unpaid debt and a plot to kill off the problem borrower, and instead an innocent mother of three is hit and left paralyzed.

An insider turns police agent — a “rat,” as he called himself — and takes them all down.

And then, an extraordinary deal that sees the accused and the attorney general agree to a restitution payment to the victim of $2 million dollars, delivered in cash — mostly $20 bills, and no doubt much of it the fruit of underworld activities.

Today, the Star revisits the deal in the launch of an investigative feature series that will examine unanswered questions in big stories of the past.

The Deal

“Restitution,” Justice David Watt said at the sentencing hearing in 2006, “is not some ‘get out of jail early’ card to be played to take a sentence out of range that would otherwise be appropriate. And it will not do so here.”

Several sources, however, have told the Star that the money was definitely a factor considered by the Crown during sentencing negotiations with the defence lawyers. They agreed on a length that was at the low range for the crimes, and submitted the deal to Watt.

In other words, the money did buy the men a shorter sentence — at the bargaining stage. As part of the sentencing principles in Canada’s Criminal Code, reparation to victims is a consideration in sentencing.

These were not amateurs. Among the accused were Paris Christoforou, a full-patch member of the Hells Angels, Peter Scarcella, a Canadian Mafia figure and Mark Peretz, a businessman involved in illegal gambling.

Russo was wounded in an attempted hit on Michele Modica, a Sicilian Mafia with an unpaid debt.

On April 21, 2004, Russo, then a 45-year old Bell Canada clerical worker, was standing at the counter of a California Sandwiches shop in North York, intending to buy lunch for her non-handicapped daughter, Krista, who was waiting in the car. A van driven by Peretz pulled into the parking lot, and two passengers, Christoforou and Antonio Borrelli, fired a semi-automatic rifle and a handgun.

A bullet fragment passed through the shop’s window and hit Russo’s spine, changing her life forever.

With that attempted hit having gone totally awry, there was talk among the perpetrators of another try.

Yet nowhere in a carefully worded, 21-page agreed statement of facts in the case was any mention of organized crime. Nor were there criminal charges laid to that effect.

So, whose idea was the deal?

James Lockyer’s. The pc28����lawyer, best known for representing the wrongfully convicted, was in this case representing Vaughan resident Peretz, a man the police investigation had convincingly nailed, along with four others.

Lockyer would not comment for this story, citing solicitor-client issues, but key players interviewed by the Star credited him as the architect.

Following the arrests, police with the RCMP-led Combined Forces Special Enforcement Unit invited defence lawyers to a meeting, at which they revealed the highlights of the case against their clients. The evidence included wiretaps and recordings made by the “rat,” mobster Raffaele Delle Donne, who was motivated to become an informer largely because he, too, was in California Sandwiches and almost got shot himself.

There was no talk at that early meeting of a plea deal, but the evidence was so solid, says one individual who was present, that he thought, “Holy f—-, we better start talking about it.”

“The evidence drove the resolution,” recalls Joe Neuberger, who represented Borrelli, who fired the bullet that ended up in Russo’s spine. “This was a very compelling case for the Crown.”

Three of the accused — Peretz, who had a record for robbery and drug trafficking, Hells Angel Christoforou, and Borrelli, who had a criminal record spanning more than a decade — were directly involved in the botched shooting and charged with attempted murder.

Peter Scarcella, a Vaughan resident with links to the Mafia and labelled by Correctional Services Canada as an organized crime boss, was charged with conspiracy to commit murder and conspiracy to commit an aggravated assault.

The accused felt genuine remorse, according to those involved in the case, and came to realize that the state was in no position to provide adequate financial support for an innocent person who been left paralyzed and who also had a disabled daughter to care for.

Meanwhile, the men had money —police seized about $700,000 in cash from two of their residences — and access to more. They were also quite guilty and quite caught, and the charges were quite serious, including attempted murder and conspiracy to commit murder.

Sentences of 15 or even 20 years were not outside the realm of possibility. But in the end, the four men received sentences of nine or 10 years (having served two prior to sentencing).

Over several meetings, the cash plea deal took shape, orchestrated by Lockyer.

The meetings were held in the boardroom at John Rosen’s Bay St. law firm. Rosen, who was representing Scarcella, had enough room for the crowd that was usually present: two police officers, two Crown attorneys and a handful of defence lawyers.

Lockyer floated a number, according to one person present at the meetings. The Crown wanted more, “and basically said, ‘What do you got?’ ”

Turned out to be $1.3 million, plus the seized money, making for $2 million in total. The final details were hammered out in the hallways of the courthouse at 1000 Finch Ave. W, where the accused had pre-trial hearings.

Then-attorney general Michael Bryant signed off on the deal which, although allowed for in the Criminal Code, was still expected to raise eyebrows.

Plea bargaining is a necessary and useful tool. Without plea agreements, in which there are always compromises, the judicial system would be seriously bogged down by costly trials. Nor is restitution unusual.

Very unusual, however, was the amount of cash that criminals — with ties to organized crime — were handing over.

“What was to be gained?” says one of those involved in the deal. “There really is no question. The sentence was reduced as a consequence in the joint submission.”

Everyone involved — including Russo — was satisfied with the outcome. And the sentence was within the range for the crimes committed.

“At the end of the day, the public was well served,” says Rosen. “Mrs. Russo was well served. And justice was done.”

Declares Harry McMurtry, who represented Russo: “The defence counsel deserve a lot of credit.”

But the deal, say critics, demonstrated how a criminal with money is in a different position from a criminal with none.

“I worry about the more usual type of offender who might genuinely wish to make some sort of restitution, but is simply not in a financial position to do so,” says one provincial court judge who asked not to be named.

“So, as in so many other things, I worry about the wealthy getting better treatment than the poor.”

Runciman, now a senator, doesn’t regret the issues he raised, particularly regarding the dubious source of the money and perception that justice can be bought.

“I took a lot of grief for those comments, from a variety of surprising sources,” he said in an interview. “I felt that the way it was accomplished was inappropriate, and I still feel that way.”

The Money

It took time for the money to top up the $700,000 confiscated by police to be gathered.

About three months after the amount had been settled upon, the last of a number of very unusual transactions took place. Two visibly relieved police officers made a delivery to the clerk’s office at the courthouse at 361 University Ave.

They’d brought the last installment, about $300,000 in cash. How it got to them remains a mystery. There were apparently deliveries made to a police station.

No one has identified the source of the money. Rosen says none of the defence counsel knew where it came from. It’s unclear who, if anyone, knows — other than the criminals themselves.

But a police source says that every Thursday, as predictably as death or taxes, a slim man who has been associated with Peretz for more than a decade makes a tour of GTA restaurants, coffee shops and businesses.

Sometimes, he takes his black Cadillac Escalade. Other times, he drives the circuit in even greater style in a Bentley, an auto worth as much as a small waterfront condo.

At stops along the way, he collects payments for an illegal online gambling operation based in Costa Rica, and for which Peretz was the brains.

A police officer who knows the collection man says no one familiar with the nature of his business would think of robbing him, even though he travels without a bodyguard.

“I think everybody knows who that money belongs to,” the officer observes. “He’s pretty much untouchable.”

The slim man is what police call a “rounder.” He’s not an official member of any crime group, but he’s trusted to work with them.

The businesspeople he visits along his route are franchisees of a sort, as the Ontario underworld stakes its claim on cyberspace.

They pay criminals for the right to run illegal sports gambling operations, much like people who ran illegal card games in the past often paid underworld protection money.

For their money, the businesspeople receive access to an Internet server based in Costa Rica. Many also receive help from the rounder’s bosses in setting up their betting websites.

Often, police wiretaps conducted after Russo’s shooting picked up Peretz calling Franco Palermo, 41, originally of Toronto, in Costa Rica, instructing him on how to run the business.

Palermo is now listed as a fugitive by Interpol. He’s wanted on charges of participating in the contract murder of Luis Diego Munoz Vargas, the 27-year-old employee of a Costa Rican sports booking agency who was accused of stealing money from the company.

Some police officers wonder if Palermo died in Mexico during the ongoing drug wars.

A cop familiar with illegal online gambling wasn’t surprised that Peretz was able to contribute to the $2-million payment for shooting victim Russo.

“That’s nothing to them,” he says. “They could make $80 million on Super Bowl weekend.”

Money made from the betting is laundered through ATMs, narcotics, loansharking and other criminal enterprises, police say.

The man in the Escalade/Bentley often used money collected from his route to stock up ATM machines owned by the group, a police officer says.

Some of the bikers involved in running the operation once had ties to the now-defunct Bandidos Motorcycle Club of Canada.

One man connected to the gambling operation was Ali Mohamed Eltabi, formerly of London, Ont. Eltabi hit the police radar a decade ago when he was charged with being part of a huge auto theft ring.

Eltabi, who ran an auto dealership on York Street in London, was sentenced in March 2010 to 22 years in prison in Costa Rica for the execution-style murder of Munoz Vargas.

Also sentenced to 22 years behind bars was Eltabi’s head of security, Juan Carlos Flores Altamirano.

A police officer laughs at the suggestion that the man in the Escalade/Bentley might someday abscond with money from his route.

“He’s seen what happen when you cross them,” the police officer says. “You wind up in a cooler in a bunch of pieces.”

The Compensation

Louise Russo never would have seen that kind of financial support if the deal had not gone down as it did.

Nor would she today.

Following the news of her restitution deal and amid criticisms that Ontario’s was too bureaucratic, Ombudsman Andre Marin launched a probe of the board. He found it to be too bureaucratic and slow. A was also conducted by former Ontario chief justice Roy McMurtry.

Despite improvements to the board, which awards crime victims financial payouts, the maximum compensation remains unchanged and far below what Russo received in restitution.

For someone injured as she was, the board might award a maximum lump sum of $25,000 or, if the victim has ongoing needs, periodic payments of $1,000 a month up to a maximum of $365,000.

University of pc28����law professor Kent Roach says the deal highlighted how inadequate the state’s victim compensation system was and still is — despite the fact many politicians tout victims rights as a justification for crime control.

“A lot of those same politicians don’t seem prepared to put their money where their mouth is and to provide a decent system of public victim compensation,” says Roach.

Many agree that there should be some state system that allows for greater financial support for crime victims such as Russo left with catastrophic and lasting injuries.

Others feel it might be too much of a financial strain, and point out that there are base systems in place, like health care and welfare.

“In a perfect world we may not need these (restitution) provisions; the state would provide adequate compensation,” says Roach.

“But given that we’re a long way away from that perfect world, this (deal) seems to me to be a second best approach that I find difficult to condemn.”

Victims’ rights advocate Priscilla de Villiers says it frustrates her that Ottawa hasn’t made good on promises to mandate a victim tax to be paid by convicted criminals.

It’s available in law but not often used, says de Villiers, whose 19-year-old daughter, Nina, was abducted and murdered in Burlington in 1991 by sexual predator Jonathan Yeo.

“There’s a huge number of victims who aren’t visible to the public but who suffer enormous losses,” adds de Villiers.

She says it frustrates her that the federal Conservatives trumpeted victims’ rights in the last throne speech without actually ensuring the surcharge will be imposed by courts.

Russo, who now works to , declined to talk about the restitution deal. “It’s still very painful to deal with,” she said.

Her lawyer, Harry McMurtry, says the deal definitely meant the men got lighter sentences, but he regards the outcome as the best possible result.

“In my opinion, that was a worthwhile trade-off for significant restitution for a victim of a horrible crime, and a victim with lifelong, permanent, serious injury,” says McMurtry, who is Roy McMurtry’s son.

“In this case, it served everybody’s interests.”

The Criminals

Mark Peretz, who was 38 on April 12, 2006, the day of sentencing, was more comfortable with his BlackBerry and computers than guns.

“Peretz was the genius of all things computer,” says a police officer who listened to hours of wiretaps.

Peretz was a member of neither the Hells Angels nor the Mafia, but he commanded considerable respect in both groups for his online business acumen.

The Vaughan resident wasn’t a particularly flashy man, driving a Chrysler Intrepid in a milieu where Escalades, Mercedes and muscle trucks are the norm.

Peretz was respected because he had generated millions of dollars for the mob and Hells Angels through his mastery of illegal online gambling, police say.

Some of his earnings were washed through a company which placed ATM machines in businesses, including some in Las Vegas.

Often, he could be heard chiding bikers and mobsters to be more hard-working, more careful and less predictable.

In the mid-2000s, police listening in on wiretaps could hear him speaking long-distance to Costa Rica, directing former York Region resident Franco Palermo on how to maintain an underworld online gambling enterprise.

“He’s a stick-to-it-guy,” a police officer says.

Some of Peretz’s far-flung criminal connections come from prison, where he was locked up for armed robbery and drug trafficking.

And while his forte was numbers and computers, he also commanded fearful respect, especially from delinquent debtors.

“If you owe him a quarter, he expects to be paid back,” says a police officer.

So when Sicilian mobster Michele Modica planned to skip the country in 2004 without paying him some $130,000 owing on a gambling debt, Peretz boiled.

His message to Modica was clear: pay up or die.

Mobster Raffaele Delle Donne, who later became a police agent, is quoted in the agreed statement of facts as saying that Peretz and Christoforou left no doubt they expected payment in full.

“Uh, after the meeting was over,” he said, “this is what . . . I didn’t see it but I heard that uh, Mark (Peretz) . . . and uh, his bodyguard (Christoforou) I guess . . . kicked (Modica) in the face and put a . . . gun in his mouth.”

Justice Watt noted in sentencing Peretz that he had quit the conspiracy to kill Modica immediately after the botched attempt paralyzed Louise Russo.

“Peretz fully acknowledged his guilt and accepted responsibility for the consequences of his behaviour,” Watt concluded. “His involvement in the conspiracy to kill Modica ended immediately after the shooting.”

He was sentenced to nine years on top of a year in custody.

Antonio (Jelly) Borrelli of Richmond Hill, who was 30 at the time of sentencing in April 2006, was a follower, cheap muscle and the man who fired the bullet that paralyzed Russo.

“If you told him to jump off a bridge, he would have done it,” says a former police officer.

A flashy man, Borrelli looked like someone from the cast of Goodfellas.

In reality, he wasn’t a member of the mob or a big-time underworld money-maker.

He received a 10-year sentence on top of a year in custody.

Paris Christoforou, who was 30 on sentencing day in April 2006, sounded liked a businessman in the agreed statement of facts in the Russo shooting.

He was described as “responsible for collections and related activities” in an illegal online betting operation.

The document did not note that, at the time of the 2004 shooting, he held the title of Sergeant at Arms of the London, Ont. Hells Angels chapter, meaning he was responsible for club enforcement and internal discipline. The agreed statement of fact said that Christoforou fired one shot during the botched hit attempt, and that bullet missed Russo.

The Mississauga man had worked in security and as a roofer when not busy with the club.

The Central Canada Hells Angels, which includes the GTA, reacted quickly and strongly to news that one of their members was linked to the Russo shooting.

The club issued a statement immediately after the shooting saying the club “extends our heartfelt sympathy” to Russo and her family.

The statement described the shooting as an “indiscriminate dreadful action” and continued that the club was “sickened by the senseless act of violence that has violated Mrs. Russo’s life.”

He was sentenced to nine years on top of a year in custody.

Peter Scarcella, who was 55 at the time of sentencing in April 2006, is an underworld survivor.

He had lunch with mob boss Paul Volpe in a Woodbridge mall hours before Volpe turned up dead in the trunk of his wife’s BMW in the parking garage at Terminal 2 of pc28����International (now Pearson) Airport in November 1983.

He was godfather to a child of Enio Mora, who was found in the trunk of his gold Cadillac in September 1996.

The remains of his New York associate Cesare (Tall Guy) Bonventre were discovered in two separate drums in a New Jersey warehouse after his 1984 murder.

Ontario associates Eddie (Hurricane) Melo, Johnny (Pops) Papalia, Carmen Barillaro and Gaetano (The Discount Casket Guy) Panepinto also met violent ends at the hands of gunmen.

For his part, Scarcella dodged a murder contract on his head in the early 1980s from a York Region mob family, and another from Sicilian Mafioso Modica in 2004, who plotted to kill him at soccer’s World Cup in 2004.

The agreed statement of fact in the Russo shooting notes that Scarcella didn’t become involved in a plot to murder Modica until after Russo was shot.

While in prison for his role in the Russo case, the father of three has fought hard — and unsuccessfully — through his lawyer, John L. Hill, to keep from being .

He blames the designation on old and fuzzy information.

He has been married to the same woman for almost 40 years, and his legitimate jobs have included parking lot attendant, construction trades union organizer, cheese and ceramic tile distributor.

His underworld activities have included gaming for decades.

Those who know him say he can be arrogant and cold, and that he values survival far more than popularity. And while he’s capable of violence, his lasting strength comes from his connections and his ability to mediate and accumulate information.

Immediately after his arrest in the Russo shooting, Scarcella was visited by a Montreal lawyer who has represented members of the crime family of imprisoned boss Vito Rizzuto.

Rizzuto’s now in an American prison for his role in three gangland slayings.

A half dozen men connected to the Rizzuto crime family have been murdered in Montreal over the past year, and some police wonder if Scarcella might be another likely target, should the violence spread to the GTA.

“He’s better off staying inside (prison),” one police officer says.

Scarcella got a nine-year sentence on top of a year in custody.

Restitution

In 2006, restitution orders were made in only three per cent of 242,988 criminal cases where there was a finding of guilt in Canada. Four out of five of those orders were made in cases involving property crime. Canada does not track the value of the orders.

In Ontario, there are about 7,000 charges a year in which a sentencing judge makes a restitution order. The average amount per charge is $5,500.

Judges can make stand-alone restitution orders, issued as an addition to a sentence, and also order payments as a condition of probation or a conditional sentence. Victims must pursue unpaid restitution through the civil courts. There is no criminal enforcement system.

Ontario Criminal Injuries Compensation Board

With a full-time staff of 64, the board receives about 4,000 applications from crime victims each year. Lump sum payments are capped at $25,000. Periodic payments of up to $1,000 a month are also available, up to a total of $365,000.

In the fiscal year 2009-2010, the board paid out $32.2 million. The average lump sum award was $9,200 and average waiting time, 23 months.

Other provinces have varying victim compensation programs.

Ontario Victim Quick Response Program

Designed to provide immediate support for crime victims with no financial means, the four-year-old program provides money for counseling (maximum $1,000) and funds to cover funerals (up to $5,000) and emergency expenses, such as crime scene clean-up (up to $1,500) and other incidentals (up to $1,000).

Last year, the program doled out $1.5 million.