The trial of Angelo Caloia, 79, began on May 9 on charges of embezzlement and money laundering. Caloia is an Italian lawyer and former head of the Vatican bank. Also charged is Gabriele Liuzzo, 95, a former legal consultant to the bank. They stand charged with embezzling 57 million euros ($68 million) from the sale of real estate in Italy between 2001 and 2008.
Lelio Scaletti, a former bank director general, was investigated in connection to the above charges but died several years ago. Both Caloia and Liuzzo have repeatedly denied wrongdoing. Caloia was the president of the Vatican bank, whose official name is Institute for Works of Religion (IOR), from 1999 and 2009.
While Caloia appeared for the trial being held inside the Vatican under its own legal system, Liuzzo was absent because of his age. The Associated Press reported that prosecutors alleged on May 9 that real estate was sold at below-market rates to offshore companies, and then resold at market rates with defendants pocketing the difference. The Vatican bank is seeking damages. Vatican authorities have already frozen millions of dollars in accounts held by the three men after it announced a criminal investigation in 2014.
Caloia’s defense counsel has listed more than 50 witnesses, including three current and former Vatican secretaries of state and several other cardinals who had in the past overseen the bank. Among those expected to be deposed are Cardinals Angelo Sodano and Tarcisio Bertone, who both headed the commission overseeing the bank when they were serving as secretaries of state to erstwhile Pope Benedict XVI.
The Institute for Religious Works said late Friday that Caloia and his lawyer were charged with alleged embezzlement and self-laundering between 2001 and 2008, when the bank disposed of "a considerable part of its real estate assets." The scam allegedly involved the suspects selling Vatican-owned real estate under value to offshore companies that then resold the buildings at market value, with the suspects allegedly profiting from the difference, according to a person familiar with the investigation.
The IOR is also joining a civil case alongside the criminal trial in an attempt to recover some of its losses. The Vatican announced the criminal investigation into Caloia, who served as IOR president from 1989-2009, attorney Liuzzo, and the late bank director general Scaletti, in 2014 after bank officials discovered irregularities in IOR accounts and operations. In February, the Vatican's civil tribunal found two other former IOR heads, Paolo Cipriani and Massimo Tulli, liable for mismanagement for bad investments and ordered them to repay the institution. The two resigned from the bank in 2013. The IOR launched a massive internal overhaul and reform of its operations as part of a process launched by Pope Benedict XVI to ameliorate the IOR reputation as an off-shore tax haven.