1. Cook onion and garlic in hot oil till tender but not brown. Stir in the next 8 ingredients. Simmer uncovered 30 minutes; remove bay leaf. Add Italian Meat Balls (see below) and continue cooking about 30 minutes longer.
2. Soak bread in water for 2-3 minutes, then squeeze out moisture. Combine soaked bread with remaining ingredients, mixing well. Form in small balls (about 20). Brown slowly in 2 T hot olive oil. Add to sauce, cook 30 minutes as directed above.