Rep. Bill Keller's top aide and business partner plead guilty

Federal agents remove boxes of evidence from KO Printed Sportswear, 2001 Moyamensing, this morning. This was one of many raids the FBI conducted in SOuth Philadelphia this morning (Ed Hille / Staff Photographer) praid19 August 18, 2010 Editors Note:

The former chief of staff to state Rep. Bill Keller and a longtime business partner for the 11-term legislator pleaded guilty in federal court Wednesday to financial crimes in separate cases. The Daily News predicted those pleas in a story Wednesday (behind a pay-wall here, read for free with promo code H66A.)

Lorraine DiSpaldo, who was forced to retire after being indicted with Traffic Court Judge Robert Mulgrew and his wife on Sept. 13, pleaded guilty to 36 counts for misusing state grant money meant for two non-profits in Keller's district and for filing false income tax returns and bankruptcy court filings.  Assistant U.S. Attorney Paul Gray said DiSpaldo improperly spent $70,000 to $120,000 in state grant money and hid $46,779 in income from 2006 to 2009.

Gray said DiSpaldo used the state money "hand out jobs" through the non-profits for friends and family of Mulgrew and Keller, who he mentioned several times by title but never by name during the hearing.  That included "make-work" jobs for the children of friends during the summer and cleaning services for Keller's office, Gray said, adding that DiSpaldo filed false state reports on how the money was spent.

DiSpaldo also paid herself $43,000 from Keller's campaign account, including lump sums and $700 monthly payments she made to a middle-man who cashed checks and gave her the money, Gray said.

Mark Olkowski, in a separate hearing, pleaded guilty to 19 counts of filing false income tax returns on $148,078 in income and defrauding the state for $16,046 in unemployment claims. Olkowski and Keller own K&O Sports, which prints T-shirts and other campaign materials for politicians and unions.  Gray said Olkowski, who was indicted on Jan. 29, routinely took cash from the business without reporting it as income.

The case went public in August 2010 when federal agents raided Keller's home, state office and business along with homes and offices of Olkowski, DiSpaldo and Mulgrew.  DiSpaldo will be sentenced on Sept. 16.  Olkowski will be sentenced on July 24.

Mulgrew and his wife, Elizabeth, who was indicted on tax charges, are due to go on trial on June 5.  Mulgrew was also indicted in January along with 8 current or former Traffic Court judges in a ticket fixing scheme.