Sons of Italy wants to rebuild trust after $1.2 million embezzlement scheme at retirement home

The charitable agency responsible for the Villa Italia retirement home says it is taking steps to restore trust with residents and the Hamilton public after an identity-theft scheme bled at least $1.2 million from the home over the last seven years.

In a Thursday letter to Villa Italia residents, Sons of Italy Charitable Corp. chair Robert Skaljin said the organization was shocked by the embezzlement scheme and said the group has a goal of doing whatever we can to reaffirm trust and to make things right."

Calling the home a jewel in our community," Skaljin said the home is continuing to pursue the recovery of the stolen money and that safeguards have been put in place to prevent such an occurrence from ever happening again."

You can and should expect more from us," the letter says. We will learn from this and emerge as a stronger and better institution and community, continuing Villa Italia's important mission."

Every two weeks since at least 2015, thousands of dollars were funnelled out of Villa Italia's accounts into a secret TD bank account in the name of the home's former executive director, Pat Mostacci.

A Spectator investigation found that three ghost employees" were added to the home's payroll using the real names, addresses and social insurance numbers of three Ontario women.

The real women, two of them retired nurses, never worked for Villa Italia. The two nurses, who live in Brampton and Grimsby, say they do not know Mostacci and never worked at the home. The Spectator was not able to locate the third woman, listed in Villa Italia's payroll as living in Ancaster.

These ghost employees received consistent pay raises over time - starting out in 2015 earning around $73,000 annually to more than $105,000 in 2019. They also received regular overtime pay, vacation and stat pay as well as retroactive pay.

The paycheques were automatically deposited into the Hamilton TD bank account, where thousands of dollars every week were transferred to one of eight credit cards. There were also large cash withdrawals at the branch, at ATMs and through e-transfers.

The Spectator also learned that Mostacci had complete control over the home's payroll system, including the pay stubs, which he had delivered to his office in a sealed envelope. The pay stubs were only distributed to staff after he had sorted them behind closed doors.

Mostacci was fired on Jan. 4 after the Sons of Italy board raised several unresolved operational issues with him, including Villa Italia's rising vacancy rate.

Logs of Villa Italia's payroll system, obtained by The Spectator, show that about 30 minutes after Mostacci was fired, the administrator account PMOSTACCI@SOIHCC" remotely logged in and began to make dozens of changes to the ghost employee accounts.

The logs show PMOSTACCI@SOIHCC changed the ghost records to say they had quit. The date of their exit was backdated 24 hours to Jan. 3, 2022.

If the alterations to the payroll were an attempt to conceal the fake employee records, it came too late to prevent the next round of paycheques from being processed.

On Jan. 7, 2022, pay stubs arrived at Villa Italia and the newly appointed interim executive director gave them to a staffer to distribute. It was then the ghosts were discovered when their pay stubs were unclaimed.

Given his longstanding tenure at Villa Italia and wanting to provide Mr. Mostacci an opportunity to explain himself, he received notice of what had been found and a request for explanation," says Skaljin's letter. Following no substantive response to the request, a court action was initiated on March 14, 2022."

Three days later, an Ontario Superior Court judge ordered all of Mostacci's assets frozen, including his Hamilton home, pending the resolution of the lawsuit. Mostacci fell seriously ill shortly afterwards and died on April 2, 2022, at the age of 53.

Skaljin would not comment on the payroll scheme or Mostacci when contacted by The Spectator, citing the ongoing legal action. Thursday's letter is the first time he has spoken publicly about the case in any detail.

The letter confirms that at least $1.2 million was misappropriated from Villa Italia's payroll and that the Sons of Italy is exploring the feasibility of civil action against Mostacci's estate to recuperate their losses.

Although Mostacci has died, his assets remain frozen. In an email to The Spectator, the lawyer for his wife, Gloria Mostacci, confirmed her assets remain frozen as well. The lawyer also said that while Gloria Mostacci is aware of allegations levelled at her late husband, she has no knowledge of what he may have done at Villa Italia, and her husband handled all the family's finances.

Most of the files pertaining to the Sons of Italy lawsuit against Mostacci remain sealed by a judge's order. The organization requested the seal in March, saying it was necessary to prevent public access to the materials until a judge had issued orders that would prevent Mostacci or others from disposing of cash or assets obtained with the stolen money.

In his letter, Skaljin did not specify what changes the Sons of Italy have enacted to prevent future tampering with the Villa Italia payroll.

He said the board would be reaching out to residents, their families and community partners to talk about next steps.

Grant LaFleche is an investigative reporter with The Spectator. Reach him via email: glafleche@torstar.ca