FEDERAL BUREAU OF INVESTIGATION CRIMINAL FILES CONTENTS CHAPTER 1 FBI ITALIAN ORGANIZED CRIME CHAPTER 2 FBI WHITE COLLAR CRIMES CHAPTER 1 ITALIAN ORGANIZED CRIME LET THE STRATEGY BEGIN Using Intel to Stop the Mob, Part 1 06/22/07 Seventy-five years ago this December, one Special Agent B.E. Sackett penned a short article for Bureau employees on what he called "organized crime conditions in Chicago." By 1932, organized crime in the U.S.—though a shadow of what it is today—had started to get its legs. Al Capone, who with the help of the Bureau had just landed in federal prison, had built an empire of crime in the Windy City that would continue to morph and grow. An extensive underground of hoodlums, racketeers, and Chicago gangster Al gangsters had emerged in response to Prohibition Capone and was thriving. Hundreds of rackets that used threats of violence to force businesses to ante up a percentage of their profits for "protection" existed throughout Chicago and other cities. In New York, "Lucky" Luciano had risen to power in the Mafia and was beginning to shape it into the structured, secret society of criminals that we know today. A "valuable weapon" against these criminal rings, Agent Sackett thoughtfully stated in his article, was "accurate information"—details on the key players, their interlocking connections, their tactics and capabilities. He talked about how Chicago agents had begun building this base of knowledge, through informants and other contacts and through an extensive index of pictures and background on more than "three hundred of the notorious criminals and members of their gangs." He didn't call it "intelligence," a concept that was still in its infancy, but that's essentially what it was. The approach was strategic, thinking about a criminal network in larger terms, gathering information and insights to take out entire criminal organizations and their support and not just select individuals, and thus preventing a litany of future crimes. This picture of the underworld would grow in the coming years and yield significant results for the young Bureau and its partners. We would begin puncturing these networks—exposing their activities for all of law enforcement, undercutting their support structures, and tracking their most dangerous actors and elements much in the same way that we now do with terrorist cells plotting attacks on U.S. soil. A few examples: In August 1933, we prepared a detailed analysis of organized criminals and the various ways law enforcement had succeeded in stopping them. We outlined more than a hundred "rackets" in Chicago that extorted money from electric sign companies, "candy jobbers," dental labs, and others. This analysis helped paint a picture of the threat for all of law enforcement. When John Dillinger was on the run for a violent string of bank robberies, we put pressure on the many connections he and his gang had to all levels of the underworld—precisely because we had mapped out these connections. With the extensive cooperation of many police forces, this allowed us to track his movements and ultimately generated the leads that led to his death in a shootout outside a Chicago theater in July 1934. We learned everything we could about the enablers of organized crime: money launderers and fences, both organized and freelance, who helped criminals hide their loot from the law; shady doctors who performed backroom plastic surgeries to help disguise mobsters and shyster lawyers who helped shield them from justice; and the corruption-backed "spas" and criminal safe havens in places like Hot Springs, Arkansas, and St. Paul, Minnesota, that mobsters used to rest, recruit comrades, and plan their next moves in relative safety. Working with our law enforcement partners, we started building the criminal justice support system that has enabled a coordinated, layered attack against both criminal and terrorist networks, which includes national criminal records and crime stats…cutting edge forensic science services…and extensive training for law enforcement professionals. In Chicago and elsewhere, the fight against organized crime had just begun. And so has our story. In the next few months, we'll run a series of articles tracing how we've used intelligence to take on mobsters and even decimate entire crime families in different times and different places over the past seven decades. http://www.fbi.gov/page2/june07/mob_intel062207.htm How do we cripple national and international organized crime syndicates that strangle free enterprise and raise the level of violence, fraud, and corruption in our cities? By using every capability and tool we’ve got: undercover operations; surveillance; confidential sources; intelligence analysis and sharing; forensic accounting; multi-agency investigations; and the power of racketeering statutes that help us take down entire enterprises. We also work closely with our international partners—in some cases, swapping personnel—to build cases and disrupt syndicates with global ties. Italian Organized Crime—Overview Since their appearance in the 1800s, the Italian criminal societies known as the Mafia have infiltrated the social and economic fabric of Italy and now impact the world. They are some of the most notorious and widespread of all criminal societies. There are several groups currently active in the U.S.: the Sicilian Mafia; the Camorra or Neapolitan Mafia; the ’Ndrangheta or Calabrian Mafia; and the Sacra Corona Unita or United Sacred Crown. We estimate the four groups have approximately 25,000 members total, with 250,000 affiliates worldwide. There are more than 3,000 members and affiliates in the U.S., scattered mostly throughout the major cities in the Northeast, the Midwest, California, and the South. Their largest presence centers around New York, southern New Jersey, and Philadelphia. Their criminal activities are international with members and affiliates in Canada, South America, Australia, and parts of Europe. They are also known to collaborate with other international organized crime groups from all over the world, especially in drug trafficking. The major threats to American society posed by these groups are drug trafficking and money laundering. They have been involved in heroin trafficking for decades. Two major investigations that targeted Italian organized crime drug trafficking in the 1980s are known as the “French Connection” and the “Pizza Connection.” These groups don’t limit themselves to drug running, though. They’re also involved in illegal gambling, political corruption, extortion, kidnapping, fraud, counterfeiting, infiltration of legitimate businesses, murders, bombings, and weapons trafficking. Industry experts in Italy estimate that their worldwide criminal activity is worth more than $100 billion annually. A Long History These enterprises evolved over the course of 3,000 years during numerous periods of invasion and exploitation by numerous conquering armies in Italy. Over the millennia, Sicilians became more clannish and began to rely on familial ties for safety, protection, justice, and survival. An underground secret society formed initially as resistance fighters against the invaders and to exact frontier vigilante justice against oppression. A member was known as a “Man Of Honor,” respected and admired because he protected his family and friends and kept silent even unto death. Sicilians weren’t concerned if the group profited from its actions because it came at the expense of the oppressive authorities. These secret societies eventually grew into the Mafia. Since the 1900s, thousands of Italian organized crime figures—mostly Sicilian Mafiosi—have come illegally to this country. Many who fled here in the early 1920s helped establish what is known today as La Cosa Nostra or the American Mafia. Charles “Lucky” Luciano, a Mafioso from Sicily, came to the U.S. during this era and is credited for making the American La Cosa Nostra what it is today. Luciano structured the La Cosa Nostra after the Sicilian Mafia. When Luciano was deported back to Italy in 1946 for operating a prostitution ring, he became a liaison between the Sicilian Mafia and La Cosa Nostra. Sicilian Mafia (based in Sicily) The Sicilian Mafia formed in the mid-1800s to unify the Sicilian peasants against their enemies. In Sicily, the word Mafia tends to mean “manly.” The Sicilian Mafia changed from a group of honorable Sicilian men to an organized criminal group in the 1920s. In the 1950s, Sicily enjoyed a massive building boom. Taking advantage of the opportunity, the Sicilian Mafia gained control of the building contracts and made millions of dollars. Today, the Sicilian Mafia has evolved into an international organized crime group. Some experts estimate it is the second largest organization in Italy. The Sicilian Mafia specializes in heroin trafficking, political corruption, and military arms trafficking—and is also known to engage in arson, frauds, counterfeiting, and other racketeering crimes. With an estimated 2,500 Sicilian Mafia affiliates it is the most powerful and most active Italian organized crime group in the U.S. The Sicilian Mafia is infamous for its aggressive assaults on Italian law enforcement officials. In Sicily the term “Excellent Cadaver” is used to distinguish the assassination of prominent government officials from the common criminals and ordinary citizens killed by the Mafia. High-ranking victims include police commissioners, mayors, judges, police colonels and generals, and Parliament members. On May 23, 1992, the Sicilian Mafia struck Italian law enforcement with a vengeance. At approximately 6 p.m., Italian Magistrate Giovanni Falcone, his wife, and three police body guards were killed by a massive bomb. Falcone was the director of Criminal Affairs in Rome. The bomb made a crater 30 feet in diameter in the road. The murders became known as the Capaci Massacre. Less than two months later, on July 19, the Mafia struck Falcone’s newly named replacement, Judge Paolo Borsellino in Palermo, Sicily. Borsellino and five bodyguards were killed outside the apartment of Borsellino’s mother when a car packed with explosives was detonated by remote control. Under Judge Falcone’s tenure the FBI and Italian law enforcement established a close working relationship aimed at dismantling Italian organized crime groups operating in both countries. That relationship has intensified since then. Camorra or Neapolitan Mafia (based in Naples) The word “Camorra” means gang. The Camorra first appeared in the mid-1800s in Naples, Italy, as a prison gang. Once released, members formed clans in the cities and continued to grow in power. The Camorra has more than 100 clans and approximately 7,000 members, making it the largest of the Italian organized crime groups. In the 1970s, the Sicilian Mafia convinced the Camorra to convert their cigarette smuggling routes into drug smuggling routes with the Sicilian Mafia's assistance. Not all Camorra leaders agreed, leading to the Camorra Wars that cost 400 lives. Opponents of drug trafficking lost the war. The Camorra made a fortune in reconstruction after an earthquake ravaged the Campania region in 1980. Now it specializes in cigarette smuggling and receives payoffs from other criminal groups for any cigarette traffic through Italy. The Camorra is also involved in money laundering, extortion, alien smuggling, robbery, blackmail, kidnapping, political corruption, and counterfeiting. It is believed that nearly 200 Camorra affiliates reside in this country, many of whom arrived during the Camorra Wars. ’Ndrangheta or Calabrian Mafia (based in Calabria) The word “’Ndrangheta” comes from the Greek meaning courage or loyalty. The ’Ndrangheta formed in the 1860s when a group of Sicilians was banished from the island by the Italian government. They settled in Calabria and formed small criminal groups. There are about 160 ’Ndrangheta cells with roughly 6,000 members. They specialize in kidnapping and political corruption, but also engage in drug trafficking, murder, bombings, counterfeiting, gambling, frauds, thefts, labor racketeering, loansharking, and alien smuggling. Cells are loosely connected family groups based on blood relationships and marriages. In the U.S., there are an estimated 100-200 members and associates, primarily in New York and Florida. Sacra Corona Unita or United Sacred Crown (based in the Puglia region) Law enforcement became aware of the Sacra Corona Unita in the late 1980s. Like other groups, it started as a prison gang. As its members were released, they settled in the Puglia region in Italy and continued to grow and form links with other Mafia groups. The Sacra Corona Unita is headquartered in Brindisi, located in the southeastern region of Puglia. The Sacra Corona Unita consists of about 50 clans with approximately 2,000 members and specializes in smuggling cigarettes, drugs, arms, and people. It is also involved in money laundering, extortion, and political corruption. The organization collects payoffs from other criminal groups for landing rights on the southeast coast of Italy, a natural gateway for smuggling to and from post- Communist countries like Croatia, Yugoslavia, and Albania. Very few Sacra Corona Unita members have been identified in the U.S., although some individuals in Illinois, Florida, and New York have links to the organization. Organized Crime home La Cosa Nostra La Cosa Nostra is the foremost organized criminal threat to American society. Literally translated into English it means “this thing of ours.” It is a nationwide alliance of criminals—linked by blood ties or through conspiracy—dedicated to pursuing crime and protecting its members. La Cosa Nostra, or the LCN as it is known by the FBI, consists of different “families” or groups that are generally arranged geographically and engaged in significant and organized racketeering activity. It is also known as the Mafia, a term used to describe other organized crime groups. The LCN is most active in the New York metropolitan area, parts of New Jersey, Philadelphia, Detroit, Chicago, and New England. It has members in other major cities and is involved in international crimes. History of La Cosa Nostra Although La Cosa Nostra has its roots in Italian organized crime, it has been a separate organization for many years. Today, La Cosa Nostra cooperates in various criminal activities with different criminal groups that are headquartered in Italy. Giuseppe Esposito was the first known Sicilian Mafia member to emigrate to the U.S. He and six other Sicilians fled to New York after murdering the chancellor and a vice chancellor of a Sicilian province and 11 wealthy landowners. He was arrested in New Orleans in 1881 and extradited to Italy. New Orleans was also the site of the first major Mafia incident in this country. On October 15, 1890, New Orleans Police Superintendent David Hennessey was murdered execution-style. Hundreds of Sicilians were arrested, and 19 were eventually indicted for the murder. An acquittal generated rumors of widespread bribery and intimidated witnesses. Outraged citizens of New Orleans organized a lynch mob and killed 11 of the 19 defendants. Two were hanged, nine were shot, and the remaining eight escaped. The American Mafia has evolved over the years as various gangs assumed— and lost—dominance over the years: the Black Hand gangs around 1900; the Five Points Gang in the 1910s and ‘20s in New York City; Al Capone’s Syndicate in Chicago in the 1920s. By the end of the ‘20s, two primary factions had emerged, leading to a war for control of organized crime in New York City. The murder of faction leader Joseph Masseria brought an end to the gang warfare, and the two groups united to form the organization now dubbed La Cosa Nostra. It was not a peaceful beginning: Salvatore Maranzano, the first leader of La Cosa Nostra, was murdered within six months. Charles “Lucky” Luciano became the new leader. Maranzano had established the La Cosa Nostra code of conduct, set up the “family” divisions and structure, and established procedures for resolving disputes. Luciano set up the “Commission” to rule all La Cosa Nostra activities. The Commission included bosses from six or seven families. Luciano was deported back to Italy in 1946 based on his conviction for operating a prostitution ring. There, he became a liaison between the Sicilian Mafia and La Cosa Nostra. Other Historical Highlights: 1951: A U.S. Senate committee led by Democrat Estes Kefauver of Tennessee determined that a “sinister criminal organization” known as the Mafia operated in this nation. 1957: The New York State Police uncovered a meeting of major LCN figures from around the country in the small upstate New York town of Apalachin. Many of the attendees were arrested. The event was the catalyst that changed the way law enforcement battles organized crime. 1963: Joseph Valachi became the first La Cosa Nostra member to provide a detailed looked inside the organization. Recruited by FBI agents, Valachi revealed to a U.S. Senate committee numerous secrets of the organization, including its name, structure, power bases, codes, swearing-in ceremony, and members of the organization. Today, La Cosa Nostra is involved in a broad spectrum of illegal activities: murder, extortion, drug trafficking, corruption of public officials, gambling, infiltration of legitimate businesses, labor racketeering, loan sharking, prostitution, pornography, tax-fraud schemes, and stock manipulation schemes. The Genovese Crime Family Named after legendary boss Vito Genovese, the Genovese crime family was once considered the most powerful organized crime family in the nation. Members and their numerous associates engaged in drug trafficking, murder, assault, gambling, extortion, loansharking, labor racketeering, money laundering, arson, gasoline bootlegging, and infiltration of legitimate businesses. Genovese family members are also involved in stock market manipulation and other illegal frauds and schemes as evidenced by the recent FBI investigation code named “Mobstocks.” The Genovese crime family has its roots in the Italian criminal groups in New York controlled by Joseph Masseria in the 1920s. The family history is rife with murder, violence, and greed. Early History—Masseria and Maranzano Masseria sparked the so-called “Castellammarese War” in 1928 when he tried to gain control of organized crime across the country. The war ended in 1931 when Salvatore Maranzano conspired with Masseria’s top soldier, Charles “Lucky” Luciano, to have Masseria killed. Maranzano emerged as the most powerful Mafia boss in the nation, setting up five separate criminal groups in New York and calling himself “Boss of Bosses.” Two of the most powerful La Cosa Nostra families—known today as the Genovese and Gambino families—emerged from Maranzano’s restructuring efforts. Maranzano named Luciano the first boss of what would later be known as the Genovese family. Luciano showed his appreciation less than five months later by sending five men dressed as police officers to Maranzano’s office to murder him. Luciano, Costello, and Genovese With Maranzano out of the way, Luciano become the most powerful Mafia boss in America and used his position to run La Cosa Nostra like a major corporation. He set up the LCN Commission, or ruling body, composed of seven bosses, and divided the different rackets among the families. In 1936, Luciano was sentenced to 30 to 50 years in prison. Ten years later, he was released from prison and deported to Italy, never to return. When he was convicted, Frank Costello became acting boss because Genovese—then just an underboss—had fled to Italy to avoid a murder charge. His return to the states was cleared when a key witness against him was poisoned and the charges were dropped. Costello led the family for approximately 20 years until May of 1957 when Genovese took control by sending soldier Vincent “the Chin” Gigante to murder him. Costello survived the attack but relinquished control of the family to Genovese. Attempted murder charges against Gigante were dismissed when Costello refused to identify him as the shooter. In 1959, it was Genovese’s turn to go to prison following a conviction of conspiracy to violate narcotics laws. He received a 15-year sentence but continued to run the family through his underlings from his prison cell in Atlanta, Georgia. Valachi Sings—and Lombardo Leads About this time, Joseph Valachi, a “made man,” was sent to the same prison as Genovese on a narcotics conviction. Labeled an informer, Valachi survived three attempts on his life behind bars. Still in prison in 1962, he killed a man he thought Genovese had sent to kill him. He was sentenced to life for the murder. The sentencing was a turning point for Valachi, who decided to cooperate with the U.S. government. On September 27, 1963, he appeared before the U.S. Senate Permanent Subcommittee on Investigations and testified that he was a member of a secret criminal society in the U.S. known as La Cosa Nostra. In 1969, several years after Valachi began cooperating with the FBI, Vito Genovese died in his prison cell. By then the Genovese family was under the control of Philip “Benny Squint” Lombardo. Unlike the bosses before him, Lombardo preferred to rule behind his underboss. His first, Thomas Eboli, was murdered in 1972. Lombardo promoted Frank “Funzi” Tieri, and later Anthony “Fat Tony” Salerno as his front men. Throughout the 1980s, the Genovese family hierarchy went through several changes. Tieri, recognized on the street as the Genovese family boss in the late 1970s, was convicted for operating a criminal organization through a pattern of racketeering that included murder and extortion. Salerno then fronted as boss until he had stroke in 1981. In 1985, Salerno and the bosses of the other four New York families were convicted for operating a criminal enterprise—the LCN Commission. Lombardo, his two captains in prison and his health failing, turned full control of the Genovese family over to Gigante— the man who tried to kill Costello 30 years earlier. Fish on the Hook In 1986, a second member turned against the Genovese family when Vincent “Fish” Cafaro, a soldier and right-hand-man to Anthony Salerno, decided to cooperate with the FBI and testify. According to Cafaro’s sworn statement, Gigante ran the family from behind the scenes while pretending to be mentally ill. Cafaro said this behavior helped further insulate Gigante from authorities while he ran the Genovese family’s criminal activities. Gigante’s odd behavior and mumbling while he walked around New York’s East Village in a bathrobe earned him the nickname “the Odd Father.” After an FBI investigation, Gigante was convicted of racketeering and murder conspiracy in December 1997 and sentenced to 12 years. Another FBI investigation led to his indictment on January 17, 2002, accusing him of continuing to run the Genovese family from prison. He pled guilty to obstruction of justice in 2003. Gigante died in prison in December 2005 in the same federal hospital where Gambino family leader John Gotti had died in 2002. The Pantheon Project and the Italian American Working Group Over the years, FBI investigations have revealed how organized criminal groups have proliferated and impacted much of the world. Partnerships with foreign law enforcement agencies are essential to combat global organized crime groups. The Pantheon Project was developed to improve cooperation between Italy and the U.S. in fighting Italian organized crime. Through the project, two FBI investigators are detailed to the headquarters of the Italian National Police, while the FBI hosts two Italian officers. The investigators work side-by-side with host agents and other law enforcement officials to help investigate the Sicilian mafia and La Cosa Nostra. They also work on Albanian organized crime. Italian American Working Group The FBI takes part in the Italian American Working Group, which meets every year. The group addresses organized crime, cyber crime, money laundering, international terrorism, illegal immigration, cooperating witnesses, drug smuggling, art theft, extradition matters, and cigarette smuggling. The U.S. and Italy take turns hosting the meetings. Labor Racketeering Labor racketeering is the domination, manipulation, and control of a labor movement in order to affect related businesses and industries. It can lead to the denial of workers’ rights and inflicts an economic loss on the workers, business, industry, insurer, or consumer. The historical involvement of La Cosa Nostra in labor racketeering has been thoroughly documented: More than one-third of the 58 members arrested in 1957 at the Apalachin conference in New York listed their employment as “labor” or “labor-management relations.” Three major U.S. Senate investigations have documented La Cosa Nostra’s involvement in labor racketeering. One of these, the McClellan Committee, in the late-1950s, found systemic racketeering in both the International Brotherhood of Teamsters and the Hotel Employees and Restaurant Employees International Union. In 1986, the President’s Council on Organized Crime reported that five major unions—including the Teamsters and the Laborers International Union of North America—were dominated by organized crime. In the early 1980s, former Gambino Family Boss Paul Castellano was overheard saying, “Our job is to run the unions.” Labor racketeering has become one of La Cosa Nostra’s fundamental sources of profit, national power, and influence. FBI investigations over the years have clearly demonstrated that labor racketeering costs the American public millions of dollars each year through increased labor costs that are eventually passed on to consumers. Labor unions provide a rich source for organized criminal groups to exploit: their pension, welfare, and health funds. There are approximately 75,000 union locals in the U.S., and many of them maintain their own benefit funds. In the mid-1980s, the Teamsters controlled more than 1,000 funds with total assets of more than $9 billion. Labor racketeers attempt to control health, welfare, and pension plans by offering “sweetheart” contracts, peaceful labor relations, and relaxed work rules to companies, or by rigging union elections. Labor law violations occur primarily in large cities with both a strong industrial base and strong labor unions, like New York, Buffalo, Chicago, Cleveland, Detroit, and Philadelphia. These cities also have a large presence of organized crime figures. We have several investigative techniques to root out labor law violations: electronic surveillance, undercover operations, confidential sources, and victim interviews. We also have numerous criminal and civil statutes to use at our disposal, primarily through the Racketeer Influenced and Corrupt Organization (RICO) Statute. The civil provisions of the RICO statute have proven to be very powerful weapons, especially the consent decrees. They are often more productive because they attack the entire corrupt entity instead of imprisoning individuals, who can easily be replaced with other organized crime members or associates. Consent decrees are most effective when there is long-term, systemic corruption at virtually every level of a labor union by criminal organizations. A civil RICO complaint and subsequent consent decree can restore democracy to a corrupt union by imposing civil remedies designed to eliminate such corruption and deter its re-emergence. The Teamsters are the best example of how efficiently the civil RICO process can be used. For decades, the Teamsters has been substantially controlled by La Cosa Nostra. In recent years, four of eight Teamster presidents were indicted, yet the union continued to be controlled by organized crime elements. The government has been fairly successful at removing the extensive criminal influence from this 1.4 million-member union by using the civil process. We work closely with the Office of Labor Racketeering in the Department of Labor and with the U.S. Attorneys' offices in investigating violations of labor law. http://www.fbi.gov/hq/cid/orgcrime/lcnindex.htm PARTNERSHIP IS BORN 'Pizza Connection' Only the Beginning 05/17/06 In a serene courtyard on the grounds of the FBI’s National Academy in Virginia stands a monument to one of the Mafia’s most ardent foes, a former judge and prosecutor in Italy who put hundreds of mafiosi behind bars. For that, Giovanni Falcone paid with his life. But why, you might ask, is an Italian hero’s bronze bust resting in the secured inner sanctum of the FBI’s training academy? The story goes back two decades, when the Mafia held considerable sway on both sides of the Atlantic. Louis Freeh, a federal prosecutor in New Chris Swecker, left, chief of York City who would later become director of the the FBI's Law Enforcement FBI, was cracking down on the Mafia. In a case that Services, is joined by would become known as the “Pizza Connection,” Vincenzo DiFresco, nephew the FBI, the NYPD, and federal prosecutors teamed of Judge Giovanni Falcone, with Falcone and Italian authorities to bust an whose memorial rests at international heroin-smuggling ring that laundered the FBI Academy in drug money through pizza parlors. The 1985 trial, Virginia. which lasted more than a year, cemented Freeh and Falcone’s relationship. In Italy, meanwhile, Falcone was prosecuting his own Mafia trial. The “Maxi- Trial,” as it was called because of its massive scale, put 338 mafiosi behind bars, 19 of them for life. Thereafter, he fought the appeals of convicted mafiosi. Then in 1992, a Mafia henchman’s roadside bomb killed Falcone, along with his wife and three bodyguards, as they drove outside Palermo. Two years later, FBI Director Freeh dedicated the bronze memorial to Falcone at Quantico. “Here was a judge…who made a deeply personal decision to enforce the law with all of its vigor, with all of his strength—knowing full well that this commitment would place his very life in danger, knowing it could—as it did—lead to his murder,” Freeh said. Now flash forward 12 years to the same memorial garden, where a crop of new agents and a contingent of Italian high school students gathered to hear the FBI’s chief of Law Enforcement Services praise Falcone’s bravery on the 14 th anniversary of his May 23, 1992 assassination. “Judge Falcone knew very well he was a marked man,” said Chris Swecker, who was accompanied by the slain judge’s nephew, Vincenzo DiFresco. Swecker, who recently ran the FBI division that includes organized crime, called on the new agents to reflect on the memorial’s significance. “This serves as a reminder of what we all stand for…that you will have to put yourself in harm’s way…that we’re all going to be faced with the same choice.” The Italian students were guests of the Palermo-based Falcone Foundation, which sponsored a scholarship for schools that could best describe the ill-effects the Mafia has had on Italian society. The joint crackdown on the Mafia in the early ‘80s hatched the Italian-American Working Group in 1984. The bi-annual assembly of FBI and Italian officials looks at emerging threats, including regional organized crime and terrorism. Last summer, Swecker joined Italian police in Rome to sign an agreement that took the partnership a step further: posting two FBI agents with the Italian police in Rome and two Italian officers at FBI headquarters in Washington, D.C. CHAPTER 2 FBI WHITE COLLAR CRIMES Fraud—the art of deliberate deception for unlawful gain—is as old as history; the term "white-collar crime" was reportedly coined in 1939 by Professor Edwin Sutherland and has since become synonymous with the full range of frauds committed by business and government professionals. Today's con artists are more savvy and sophisticated than ever, engineering everything from slick online scams to complex stock and health care frauds. Here you can learn about the many white-collar crimes we investigate, how to protect yourself from common scams, and what to do if you think you've been victimized. FOR IMMEDIATE RELEASE June 7, 2007 LAS VEGAS MAN SENTENCED FOR DEFRAUDING REXBURG COUPLE OF $4 MILLION Raymond Eugene Chasten will serve 46 months in federal prison for defrauding a Rexburg couple out of $4 million by making false representations about an investment program, U.S. Attorney Tom Moss announced today. At his sentencing Tuesday in U.S. District Court in Pocatello, Chasten was also ordered to pay a fine of $38,000 and restitution of $819,097.15. He was taken into custody to begin serving his sentence immediately. Chasten, 62, was convicted in September after a two-week trial. He was found guilty of one count of wire fraud and one count of interstate theft. According to court documents and testimony at trial, Chasten contacted the victims, purporting to have millions of dollars in an overseas account that needed to be brought into the country. Chasten told the couple that their investment of $4 million, along with his own $6 million investment, would allow him to bring his funds from overseas into the United States. After being assured that their money would be placed in a non-depleting bank account with no risk, that it could not be transferred or spent without their written approval, that they could withdraw their funds at any time, and that they stood to make a generous return, the victims invested $4 million in the "project." Shortly thereafter, the victims' money was transferred from a Pasadena, California, bank, to one in Idaho Falls and used by Chasten to purchase a home and a helicopter from the victims and to pay other expenses. When one of the victims contacted the Pasadena bank, he found that the account contained only $2,000. The representations Chasten made to the victims were later shown to be false. Once the victims got their home back and collected from Chasten through their private attorney, their loss was reduced to about $800,000, which reflects the restitution ordered by the court at sentencing. Chasten used business trusts to hide his involvement with the investment scheme and to allow him to blame the trustees, whom he hired and controlled, for the loss of the invested funds. The case was investigated by the FBI, assisted at trial by the IRS. JUNE 7, 2007 MAN POSING AS REAL ESTATE INVESTMENT PRINCIPAL CHARGED IN MULTIMILLION DOLLAR PONZI SCHEME MICHAEL J. GARCIA, the United States Attorney for the Southern District of New York, RON WALKER, the Inspector-in- Charge of the United States Postal Inspection Service ("USPIS"), and MARK J. MERSHON, the Assistant Director- in-Charge of the New York Office of the Federal Bureau of Investigation ("FBI"), announced the arrest today of WILSON JAMES BASTON, JR., a/k/a “Wil James,” a/k/a “Will James,” the President and Founder of Will James Equity Partners, Inc., on charges that BASTON defrauded investors of over $16 million. According to the twocount Complaint filed in Manhattan federal court: In 2002, BASTON created Will James Equity Partners, Inc., which purported to be a real estate investment program which purchased distressed properties in the New York City area, as investment vehicles for long and short-term investors. A marketing/promotional brochure for Will James Equity Partners, Inc., described the enterprise as a “for-profit corporation whose purpose is to identify real estate properties which are undervalued or distressed, for investment and resale.” BASTON claimed to purchase “pre-foreclosures” and distressed properties, in Brooklyn, Queens, Long Island, and Manhattan, which he would renovate as necessary, and resell at market value. According to the brochure, these purchases were funded from “a variety of equity partners,” with terms determined on an individualized, venture by venture basis. According to the promotional brochure, investments in Will James Equity Partners, Inc., started at $25,000 and could be held for “as little as 14 days or as long as 18 months.” The brochure promised rates of return ranging from 10% to 30%, based on the equity in the property being acquired. BASTON operated Will James Equity Partners, Inc., as a “classic Ponzi scheme.” BASTON recruited investors by making false promises of guaranteed short-term, high rates of return on investments in distressed properties, with additional guarantees on the principal investment. After receiving preliminary investments from victims, BASTON, at least initially, repaid both interest and principal as promised. Believing Will James Equity Partners, Inc., to be legitimate and potentially profitable, and that BASTON was trustworthy, victims thereafter agreed to rollover their invested funds into new investments, or, often, invest additional, larger sums of money in the scheme. BASTON then ceased paying the victims the promised interest and did not return the principal. Eventually, when the victims began to complain to BASTON about getting their money as promised, BASTON employed a variety of lulling tactics and avoided responding to their calls and inquiries. When BASTON was unable to avoid these victims, BASTON made false excuses and explanations as to why they had not been paid. In some instances, BASTON paid these complaining victims with the funds he received from newer investors, rather than from the proceeds of any alleged investments. BASTON obtained more than $16 million from investors pursuant to his scheme. The mail fraud and wire fraud charges in the Complaint each carry a maximum penalty of five years in prison, and a fine of the greatest of $250,000, or twice the gross gain or gross loss from the offense. BASTON will be presented in United States Magistrate Court later today. Mr. GARCIA praised the efforts of the USPIS and the FBI in the investigation of this case. Assistant United States Attorney GLEN G. McGORTY is in charge of the prosecution. The charges contained in the Complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty. http://newyork.fbi.gov/dojpressrel/pressrel07/ponzischeme060707.htm http://www.fbi.gov/whitecollarcrime.htm $5.4 MILLION EMBEZZLEMENT SENDS CEDAR RAPIDS WOMAN TO FEDERAL PRISON June 6, 2007 Contact: Sean Berry United States Attorney Matt M. Dummermuth announced today that a woman who defrauded her employer out of millions of dollars was sentenced today to more than six years in federal prison. CAROL GRIFFITH, 59, from Cedar Rapids, received the prison term after a November 27, 2006, guilty plea to one count each of mail fraud, possession of a forged security, and money laundering. At the guilty plea, GRIFFITH admitted she was employed as a bookkeeper and administrator by a related group of companies, trusts, and individuals doing business in Cedar Rapids. GRIFFITH admitted she defrauded her employers out of approximately $5.4 million over several years by fraudulently using her employers’ checks. GRIFFITH obtained her employers’ signatures on checks made payable to entities with which her employers did business and changed the payee on these checks. GRIFFITH also filled in blank checks that had been pre- signed by her employers and used checks on which she forged her employers’ signatures. GRIFFITH admitted she also fraudulently issued extra payroll checks to herself. GRIFFITH admitted she used the proceeds from the checks to make payments to her credit card company or to pay for goods and services for her benefit and for the benefit of her family. GRIFFITH was sentenced in Cedar Rapids by United States District Court Chief Judge Linda R. Reade. GRIFFITH was sentenced to 78 months’ imprisonment. A special assessment of $300 was imposed, and she was ordered to make over $5,390,413.91 in restitution. She must also serve a 3-year term of supervised release after the prison term. There is no parole in the federal system. GRIFFITH was ordered immediately into the United States Marshal’s custody at the end of the hearing where she will remain until she can be transported to a federal prison. The case was prosecuted by Assistant United States Attorney Sean R. Berry and investigated by the Federal Bureau of Investigation and the Cedar Rapids Police Department. http://omaha.fbi.gov/dojpressrel/2007/om060607.htm June 5, 2007 http://sacramento.fbi.gov/dojpressrel/pressrel07/sc060507.htm SACRAMENTO MAN SENTENCED TO 70 MONTHS PRISON AND ORDERED TO PAY OVER $6 MILLION IN RESTITUTION FOR LEADING INVESTMENT FRAUD SCHEME SACRAMENTO-- United States Attorney McGregor W. Scott announced that MICHAEL F. EGAN, 62, of Sacramento, was sentenced to 70 months imprisonment today by United States District Judge David F. Levi for his role in an investment fraud scheme that took in over $8 million from victim investors. EGAN, who earlier had pled guilty to one count of mail fraud and one count of filing a false income tax return in connection with scheme, was immediately remanded into custody. He was also ordered to pay over $6.8 million in restitution to victims. The case was the result of a joint investigation by the Federal Bureau of Investigation and the Internal Revenue Service Criminal Investigation. According to Assistant United States Attorneys Benjamin B. Wagner and Philip A. Ferrari, who prosecuted the case, EGAN admitted in his plea agreement that he had perpetrated the fraud scheme through an entity named Philanthropic Charities, Inc., and other entities in California and the Bahamas with similar names. EGAN told potential investors that they could earn high rates of return through investing in private annuity contracts with Philanthropic Charities, or in "donor-advised accounts," which he represented were risk-free. Many of the investors were elderly and were convinced to invest their retirement savings. In fact, most of the money was not invested at all, but instead routed back to EGAN himself through bank accounts in the Bahamas, or routed to others who helped EGAN promote the fraud scheme. EGAN admitted that he caused account statements to be sent to investors which falsely reported that the investments were earning high returns. He also used some of the investors' own funds to make interest or annuity payments back to the investors. Beginning in about 1999, when he was unable to make payments to investors, EGAN made numerous various false statements to investors about the reasons for the delays. In 2002, after a federal search warrant was executed at his home in Shingle Springs, California, EGAN fled to South Carolina, where he was arrested in December, 2003. With respect to the charge of filing a false income tax return, EGAN admitted that in October 1999, he filed a United States Individual Income Tax Return on Form 1040 for the year 1998 that falsely reported taxable income of only $4,293. In fact, EGAN's taxable income was substantially higher, and he had receipts of at least $279,000 from the Philanthropic Charities investment program. EGAN’s sentencing date was previously scheduled for May 22, 2007, but he failed to appear and became a fugitive. A warrant issued for his arrest, and the government began forfeiture proceedings against the property which a relative had posted to secure his release. EGAN appeared at a hearing set this morning to discuss the status of the forfeiture proceeding. Judge Levi ordered him into custody and proceeded immediately to sentencing. Two other persons who served as brokers for the Philanthropic Charities investment program have already pleaded guilty to felonies. LARRY T. BALENTINE, 67, of Salinas, California, pleaded guilty to charges of aiding and abetting mail fraud, and money laundering in connection with his conduct as a broker for Philanthropic Charities, and RANDALL ALAN HUFFMAN, 44, of Morgan Hill, California, pleaded guilty to a charge of misprision of a felony. Both are awaiting sentencing. OFFICE OF THE UNITED STATES ATTORNEY SOUTHERN DISTRICT OF CALIFORNIA San Diego, California United States Attorney Karen P. Hewitt For Further Information, Contact: Assistant U.S. Attorneys Jason A. Forge (619) 557-7463 or Eric J. Beste (619) 557-5104 NEWS RELEASE SUMMARY - June 4, 2007 United States Attorney Karen P. Hewitt announced that Will O. Washburn, charged as William O. Washburn, was sentenced today in federal court in San Diego following his guilty pleas to wire fraud and tax evasion. United States District Judge Thomas J. Whelan sentenced Washburn to serve 87 months in custody, to pay restitution to the victims of his wire fraud scheme (the total amount will be determined within sixty days, but is expected to be more than $2 million), and to serve a three-year term of supervised release following his release from prison. According to court documents, Washburn’s scheme to defraud senior citizens involved his creation of the Pacific Income Fund II (“PIF”), which Washburn falsely represented to investors was formed primarily to serve as a secured lender to commercial real estate developers and to corporate owners of real estate. In his guilty plea, Washburn admitted that most of the funds he received were not actually invested, but used to support his personal lifestyle and to make payments to investors in other funds that he had created. United States Attorney Hewitt said, “This case is a stark reminder that so-called ‘white collar’ criminals pose a serious threat to our community. Today’s sentence of over seven years in federal custody is an important step in our effort to protect everyone, particularly our senior citizens, from these predators.” United States Attorney Hewitt praised the efforts of the Federal Bureau of Investigation, the Internal Revenue Service-Criminal Investigation Division, and the United States Postal Inspection Service which jointly investigated the case. “The prosecution of individuals who hide their income and evade taxes is a vital element in keeping the public’s confidence in our tax system. Honest taxpayers should not have to foot the bill for those who intentionally conceal income from the government and disregard our tax laws,” said Ronald Krajewski, Acting Special Agent in Charge, San Diego Field Office. DEFENDANT Case Number: 04cr2011-W Will O. Washburn Age: 46 Los Angeles, California SUMMARY OF CHARGES Wire Fraud, in violation of Title 18, United States Code, Section 1343 Tax Evasion, in violation of Title 26, United States Code, Section 7201 AGENCIES Federal Bureau of Investigation Internal Revenue Service, Criminal Investigation Division United States Postal Inspection Service http://sandiego.fbi.gov/dojpressrel/press rel07/sd060407.htm CALIFORNIA MAN SENTENCED FOR PARTICIPATION IN HIGH-YIELD INVESTMENT SCAM Tampa, FL - U.S. District Judge Susan C. Bucklew today sentenced 57year-old John Sherwood Everding of Livermore, California to 15 months’ imprisonment and a $3,000 fine for committing wire fraud in furtherance of a high yield investment scam. According to court documents, in the Summer and Fall of 2002, Everding and another California man made numerous fraudulent representations to the victim to convince her to invest in a high-yield investment scheme promising a 150% monthly return on a trading pool of $150 million. The trading was allegedly to occur in Europe and commence over the course of 40 weeks. To induce the victim to invest in the scheme, Everding sent her a copy of a $50,000 check drawn on his personal account which he claimed represented his own investment in the program. That check, however, was never negotiated and in fact, bank records showed that the funds in his account were woefully insufficient to cover a check in that amount. Everding represented himself as a high-rolling wheeler- dealer who had important relationships with individuals in the high-end trading and investing community in Europe. Everding and his partner eventually persuaded the victim to wire-transfer them $130,000 from her account at Bank of America in Tampa, which the two men then converted for their personal use and benefit. The case was investigated by the Federal Bureau of Investigation. The case was prosecuted by Assistant United States Attorney Cherie L. Krigsman. http://tampa.fbi.gov/dojpressrel/2007/investmentscam053107.htm FORMER EXECUTIVE OF AHOLD SUBSIDIARY SENTENCED TO SEVEN YEARS FOR $800 MILLION DOLLAR SECURITIES FRAUD SCHEME http://newyork.fbi.gov/dojpressrel/pressrel07/securitiesfraud051707.htm MICHAEL J. GARCIA, the United States Attorney for the Southern District of New York, announced that MARK P. KAISER, a former executive of U.S. Foodservice, Inc. (“USF”) -- until recently a subsidiary of the Dutch food conglomerate Royal Ahold, N.V. (“Ahold”) -- was sentenced today in Manhattan federal court by the Honorable THOMAS P. GRIESA to 84 months in prison for his participation in a scheme to inflate USF’s and Ahold’s reported results of operations by approximately $800 million over a period of three years. On November 8, 2006, KAISER was found guilty, following a jury trial, of all six counts with which he was charged, including one count of conspiracy, one count of securities fraud and four counts of making false filings with the SEC. According to documents filed in Manhattan federal court and the evidence at trial: KAISER participated in the fraudulent scheme between 2000 and February 2003. USF was one of the United States’ leading distributors of food and related products. USF purchased those products from a variety of suppliers at full price and resold them to customers such as restaurants and cafeterias. However, the suppliers often refunded to USF a portion of the purchase prices in the form of negotiated rebates, known as “promotional allowances.” Promotional allowances reduced USF’s costs, thereby increasing earnings. KAISER and others inflated USF’s earnings by causing USF to record hundreds of millions of dollars in fictitious promotional allowances. As part of the scheme, KAISER and others induced numerous representatives of USF’s suppliers to provide to USF’s outside auditors fraudulent audit confirmations that those promotional allowances were, in fact, due and owing. In February 2003 Ahold announced its discovery that promotional allowances had been overstated by approximately $500 million, necessitating the issuance of restated consolidated financial statements. Following that announcement, the price of Ahold’s securities -- including American Depository Receipts, which were traded on the New York Stock Exchange -- plummeted by more than 60 percent, representing a decline in Ahold’s market capitalization of approximately $6 billion. In May 2003, following further review, Ahold announced that promotional allowance income at USF had been overstated by more than $800 million. In addition to 84 months imprisonment, KAISER, 50, of Ellicott City, Maryland, was sentenced to 2 years of supervised release and ordered to pay a $50,000 fine and a special assessment of $600. Mr. GARCIA praised the investigative efforts of the Federal Bureau of Investigation and the SEC. Assistant United States Attorney LAWRENCE GERSCHWER is in charge of the prosecution.
Pages to are hidden for
"FBI CRIMINAL FILES"Please download to view full document