Two Ex-Cops -- One A Former Death Row Inmate -- Charged In Extortion, Murder Plot

CHICAGO (CBS) -- Federal authorities said they stopped a gruesome kidnapping and murder plot allegedly cooked up by two former police officers – including one who was sentenced to death row and later released – who allegedly plotted to abduct and dismember a man who they believed had lots of cash and real estate holdings.

Steven Mandell, of Buffalo Grove, and Gary Engel, of Homer Glen – both of them 61 – were arrested on federal charges of attempted extortion, and conspiracy to commit extortion, according to the U.S. Attorney's office.

Mandell, an ex-Chicago police officer formerly known as Steven Manning, had served 13 years on death row for kidnapping and murder, for allegedly killing trucking company owner Jimmy Pellegrino in 1990. Mendell was released from prison after his case was overturned in 1998.

Federal prosecutors said Mandell and Engel, a former Willow Springs police officer, were arrested Thursday night, after they went to the Northwest Side to kidnap their victim -- who they called "Soupy Sales" -- by posing as law enforcement officers, and take him to a nearby office equipped with a large sink, a long counter, and a shower.

LISTEN: WBBM Newsradio's Nancy Harty Reports

The two were carrying fake guns and false law enforcement credentials at the time of their arrest, prosecutors said.

After Mandell and Engel were arrested, federal agents searched the building where they planned to take their victim, and found a loaded .22 caliber pistol, a number of saws, a butcher knife, and zip-ties that could be used as restraints.

Prosecutors said Mendell believed the victim took in $100,000 a month in cash from rental properties he owned. He and Engel allegedly discussed demanding $500,000 in cash from the victim by telling him they'd let him go, although they planned to kill and dismember him.

During the investigation, which included audio and video recordings, Mandell allegedly told a person identified only as "Individual A" that he knew someone who knows how to torture someone for information.

Mandell allegedly told the individual, "My guy knows what he's doing, he knows how to waterboard, do interrogation, psy-ops," according to the affidavit.

In 1993, Mandell – then known as Steven Manning – was convicted of kidnapping and murder in the death of Jimmy Pellegrino. He was sentenced to death, but his conviction was later overturned after the Illinois Supreme Court ruled the trial judge improperly allowed testimony from Pellegrino's wife. Prosecutors dropped the case in 2000.

In 2005, a federal jury awarded Manning $6.5 million after he sued two FBI agents for framing him. But a judge later threw out the jury's verdict, after losing a second claim against the federal government. An appeals court later upheld the judge's ruling to deny Manning the jury's award.

In 1983, Manning resigned from his job as a Chicago cop, after he was implicated in an insurance fraud scheme. He was later convicted in that case.