The 59-year-old gangster was dreaming of getting out next month and retiring to a gorgeous eight-mile-long barrier island in the Florida Keys where he allegedly owns two luxurious homes that are listed in the name of a Madison Avenue art dealer.

The homes sit on three lots -- worth an estimated $4-to-$5 million -- on Casey Key, a magical island of 340 or so $million$ homes that was home to Seminole Indians in 1850 and was named Treasure Island in the 1920's. Last year, 25 homes were sold and the average price was $1.99 million, said realtor Tom Stone.

But Watts, who has beaten state and federal prosecutors three times since he was jailed in 1995, won't step foot in either of the two five-bedroom homes on the northern tip of Casey Key if the feds have their way.

Watts was hit early this month with a two-count indictment that could cost him 20 years in prison and the forfeiture of $3.25 million in loansharking profits he allegedly made since 1984. The indictment, filed in Brooklyn

Watts, whose six-year sentence for the slaying of Gambino soldier Thomas (Tommy Sparrow) Spinelli ends Feb. 17, is being transported to Brooklyn for arraignment. His lawyer, James LaRossa, and federal prosecutors Daniel Dorsky and Andrew Genser, declined to comment. 

According to court documents, property records, law enforcement and other investigative sources, Watts, using the name Joseph Pietruszka as an alias, laundered loansharking profits with help from Anthony DeLorenzo,   proprietor of the DeLorenzo Gallery at 958 Madison Ave. and John F. Pietruszka, owner of Anderson Kitchens, a carpenter/contractor with offices in Staten Island and Bayonne N.J.

Both men are listed in real estate transactions involving the properties over the last five years, with Pietruszka reportedly holding a $734,000 mortgage on one parcel he sold to DeLorenzo in 1995 for $1.25 million. DeLorenzo, 56, declined to comment. Pietruszka, 65, could not be reached.

DeLorenzo, who has several addresses in Florida and the New York area, has been viewed by Casey Key residents for some time as the owner of the three parcels of land. DeLorenzo is the registered agent and president of the listed owner, the 411 Realty Corporation, a name derived from the address of a parcel at 411 N. Casey Key, Osprey, Florida.

In 1996, Sarasota Magazine reported that DeLorenzo had put the "entire

The article noted that neighbors had suspicions about the place: "Casey Key insiders believe that Mafia Don John Gotti once bought this .... as a residence for his daughter. They'll point to the state-of-the-art security cameras at the Gulf-front complex and tell tales about strange guys at even stranger real estate closings and contractors getting paid hefty fees in cash."

Realtor Stone, who tried to sell the property, told Gang Land he had heard the Gotti rumors, but never confirmed them. In any event, they had nothing to do with his inability to sell the properties.

"There are not many buyers who are looking to spend that kind of money for a home," said Stone, even for one on Treasure Island.

One law enforcement source thinks there's another reason the property was never sold. "Joe wanted it for his old age."

Five mobsters who also pleaded guilty in Spinelli's death got seven year terms, but that's another story. Two, Louis (Louie Fats) Astuto and James (Jimmy Brown) Failla (left), are dead. Two, Daniel Marino (right) and Philip (Philly Dogs) Mazzera, were released last fall. Dominick (Fat Dom) Borghese cooperated, testifying against Watts in a murder case that ended in acquittal.

Before that, prosecutors Dorsky and Genser are expected to use accounts from the same informer, Fat Dom Borghese, to link Watts to mob killings for three successive family bosses, Carlo Gambino, Paul Castellano and Gotti in an effort to detain him without bail as a danger to the community when his prison term ends next month.

Fat Dom, who was inducted into the crime family in 1990 and placed in John A. (Junior) Gotti's crew, told the feds that for all intents and purposes, he worked for Watts both before and after he was "made."

Borghese said Watts told him he killed Anthony Miano, whose brother Ronnie was suspected of taking part in the kidnapping-murder of Gambino's nephew. "He killed him for the family," said Borghese.

During Castellano's reign, on Mar. 5, 1982, Watts lured con artists Nicolina and Michael Lizak to a social club and executed them as retaliation for their

In addition to killing Ciccone for Gotti on April 29, 1987, Watts whacked Gambino soldier Augustus (Big Gus) Sclafani in 1986 and was part of plot to murder Fred Weiss, a businessman who was ultimately killed by the DeCavalcante family in 1990, said Borghese, according to FBI reports obtained by Gang Land.

As for Watts' loansharking business, Borghese said he collected "$28,000 to $32,000 a week in loanshark payments for Watts .... from between 25 to 30 customers" and turned in to Watts every Tuesday night.

Borghese said he collected for Watts for about eight years, from mid-1986 until Fat Dom went to prison. Using the low figure of $28,000 and 50-week years to simply multiplication, Borghese turned in over $11 million to Watts over the years.

No figures are provided, but the latest indictment asserts that Watts also has funds in a Swiss bank account.