Ghosts in the Villa: What we know and don’t know about the $1.2 million embezzlement scheme
Over a seven-year period, an identity theft and embezzlement scheme funnelled at least $1.2 million from the accounts of the not-for-profit retirement home Villa Italia into a secret bank account. A Spectator investigation found that account is in the name of the home's former executive director Pat Mostacci.
The home is pursuing legal action to reclaim its lost money, but Mostacci died on April 2 at the age of 53 without ever having offered an explanation. That legal battle may shed more light on the fraud scheme, but many of the related documents remain under seal by a judge's order.
Here is what we know, and what we don't, about the ghosts in the villa:
What we know
Who was Pat Mostacci?
Mostacci was a well known community leader, particularly in Hamilton's Italian community. He lead Villa Italia as its executive director from 2004 to 2022. He also gained public support through his battle against cancer.
Why was Pat Mostacci fired?
Mostacci was fired on Jan. 4, 2022, after the Sons of Italy board had raised several unresolved operational issues with him, including the home's rising vacancy rate.
He wasn't fired because of the identity theft scheme?
No. The identity theft fraud did not come to light until after he was fired.
How did the fraud work?
Three ghost accounts" were created in the villa's payroll system, using the names, addresses and SIN numbers of real people. Those accounts generated paycheques that were deposited into a bank account under Mostacci's name.
Mostacci allegedly had complete control over the home's payroll system. This included the ability to manipulate the electronic records, and sort through pay stubs before they were distributed to staff.
Did the ghosts" ever work at Villa Italia?
No. They say they have never worked for the home, nor know Mostacci.
What has happened to the real people whose identities were stolen?
Two of the women, both retired nurses, say they have been having problems with CRA, but it is not clear if that is a result of the Villa Italia fraud or some other issue. The Spectator has been unable to locate the third woman.
How do we know Mostacci was involved?
The secret bank account was in his name. Also, within 30 minutes of being fired, his login was used to remotely access Villa Italia's payroll system and the ghost accounts were altered to make it appear they had quit.
How was the fraud discovered?
After Mostacci was fired, pay stubs under the name of the ghosts were found unclaimed, prompting an internal investigation and a third-party forensic audit of the payroll.
Are the Hamilton police investigating?
No. The police say there were not informed about the issue. The Sons of Italy are pursuing a civil lawsuit to reclaim the money.
Who are the Sons of Italy?
The Sons of Italy Charitable Corporation is a non-profit arm of the century-old Hamilton service club the Order Sons and Daughters of Italy.
What's going on with the lawsuit?
A judge ordered all of Mostacci's assets frozen until the lawsuit is resolved. This included the assets owned by his wife, Gloria Mostacci, who denies any knowledge of any wrongdoing at Villa Italia.
What we don't know
How did Villa Italia get the identities of the ghosts?
This is not clear. Exactly how their personal information was acquired for use in this scheme is not known.
Why was Mostacci involved?
In March, after the Sons of Italy approached him about the scheme, he denied involvement through his lawyer. However, when the evidence of the scheme - including a forensic audit of the villa's payroll system - was presented to his lawyers, Mostacci offered no further explanations.
Was anyone else involved?
At this point, there is no evidence linking anyone else to the scheme.
Would Mostacci have had an explanation through the courts?
We don't know. He did file a notice to defend - a document that says he intends to fight the lawsuit - and other documents with the courts. However, he died a few weeks after the lawsuit was filed and no formal defence was filed.
What happened to the money?
This is unclear. Bank records obtained by the Spectator show a significant portion of the money was transferred to eight credit cards over a seven-year period. There were also several large withdrawals of cash from a TD branch, from ATMs and through e-transfers.
But those records do not show what the credit cards were used for, nor what the withdrawn money was used for.
The Sons of Italy were seeking orders from the courts to have that information turned over to them, but those records have not been released yet.
Grant LaFleche is an investigative reporter with The Spectator. Reach him via email: glafleche@torstar.ca