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In the spring of 1988, an unassuming Montreal grandmother of Sicilian origin named Libertina Rizzuto arrived in Lugano, the financial centre of the Italian-speaking part of Switzerland.

As she opened a series of accounts with local banks, she said the money came from her farm business in Venezuela, raising chickens, crafting furniture and selling milk and cheese.

She didn't say that police in Venezuela had just arrested her husband, Nick Sr., for possession and trafficking of cocaine, for which he would spend six years in jail.

Two decades later, those bank accounts are in the news.

Mr. Rizzuto, now an 85-year-old great-grandfather clutching his trademark fedora, entered a Montreal courtroom yesterday and pleaded guilty to tax fraud. He was fined $209,200 - 135 per cent of the federal tax he evaded.

The matter was over in a matter of minutes, and as he walked away with his lawyer, Mr. Rizzuto gave no more than a courtly nod to reporters who asked for comment.

The tax was on interest earned in 1994 and 1995 from $5.2-million that the Canada Revenue Agency said Mr. Rizzuto stashed in three accounts in Lugano.

In late August, 1994, the RCMP had arrested 46 people in Operation Compote, a major investigation in which undercover police officers set up a phony currency-exchange counter in downtown Montreal where lawyers working for the mob came to launder more than $165-million in drug money.

Canadian officials then asked Swiss police to investigate bank accounts uncovered in the operation, which led investigators to the Rizzuto accounts, according to a Swiss judicial document.

The Swiss document said that Mrs. Rizzuto and a friend arrived in Lugano to close accounts just a day after the RCMP crackdown. The Swiss detained and questioned the pair for six months.

The CRA initially said Mr. Rizzuto owed a total of $1.5-million in back taxes, and yesterday's guilty plea wrapped up the only unresolved part of the overall CRA case against him.

The case made just a small dent in the fortunes of the Rizzutos, but it gave a peek into the life of Canada's leading mob family.

Court filings show that the Rizzutos, with no official income outside their stakes in a construction firm and a funeral home with modest revenues, are able to live lavishly, moving large sums through a network of relatives and confidants.

According to a CRA affidavit, Nick Sr. and Libertina receive a provincial pension and federal Old Age Security payments. They also they live from their investments. The CRA estimates Mr. Rizzuto earns 4 per cent return from $1.8-million in trust and investment incomes.

But these aren't typical pensioners.

Mr. Rizzuto's son, Vito, described by the CRA as the godfather of the Montreal mafia, is in a U.S. jail for his role in a triple murder. Italy wants both father and son extradited in connection with a money-laundering probe.

In Canada, Nick Sr. is on probation for possession of proceeds of organized crime. Police videotaped him receiving wads of cash from underlings, which he hid in his socks before going outside.

Libertina, who is 83, owns a Jaguar and a Mercedes. Swiss investigators who detained her in 1994 found in her agenda book the account numbers - written backward.

The accounts were in the names of other people - such as a niece, Giuseppina Farruggia - but the CRA said that they are proxies for Nick Sr.

Similarly, in an earlier civil case, a judge found that Vito and his mother used middlemen to hide their purchase of $1.4-million in shares in Penway Explorers Ltd., a mining company whose stock jumped because of the illegal trading.

One of those proxies paid for his Penway shares in $10 and $20 bills, claiming he was a broker for Mennonite clients who dealt only in cash.

The CRA cited the Penway case in 2000 when it accused Vito of failing to declare $1.5-million in revenues. However, he settled before the case went to trial.