Robert Catallozzi's neighbors here sometimes wondered how he could afford to add a third floor to his home, buy a summer house and drive a Mercedes-Benz, a Jeep and a Winnebago on his salary as a postal employee.

"He had all sorts of big cars," recalled Sam Tregar, 17, who lived across the street. "He couldn't have made all that money at the post office."Actually, he did. Catallozzi, the supervisor of accounting services for the post office in Providence, embezzled the money by writing himself a series of Treasury checks and postal money orders that federal prosecutors believe totaled nearly $3.5 million.

The authorities call Catallozzi's thefts, which began in 1987 or earlier but went undiscovered until March, the largest white-collar crime in the history of the Postal Service. On Monday he pleaded guilty in federal court to one count each of embezzlement and money laundering.

Catallozzi, now 46, joined the Providence post office as a mail carrier 19 years ago and rose to head its accounting department. He earned $54,894 a year and lived in a brick and frame house, which he expanded from two stories to three as a result of his illegally gained affluence.

But Catallozzi wanted more: more cars, more vacations and more houses.

Among his purchases was a summer home on the Rhode Island shore. But the biggest share of the money he embezzled went toward the construction of a stately Tudor-style house in East Greenwich.

That house stands out even among the gracious homes that line the area's curving, landscaped drives: it is set apart by its ornate entrance, a two-story stone turret with a crenelated roof and Gothic windows.

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Still, Catallozzi was never able to enjoy all his gains. To begin with, the contractor who worked on his East Greenwich house went bankrupt. "He paid $1 million for a $650,000 house," said Kenneth Madden, the assistant U.S. attorney prosecuting Catallozzi.

And by the time the house was completed, by a second contractor, Catallozzi and his wife had divorced. She got the house and sold it.

Had it not been for the divorce, Catallozzi might never have been caught. Besides the house, his wife got $210,000 in the settlement. So in April 1992 he wrote himself another Treasury check. "That's the one that tripped him up," said Jay Abernethy, a postal inspector.

Catallozzi, now free on bail, will be sentenced on March 10. He has pleaded guilty of embezzling only $1.9 million of the $3.5 million; the five-year statute of limitations has expired on the rest.

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