Chapter Twelve Gambling Loansharking Theft

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Chapter Twelve Gambling Loansharking Theft Powered By Docstoc
					Gambling, Loansharking,
Theft, Fencing, Sex, and

      Chapter Twelve
•   According to Task Force on Organized
    Crime, the core of organized crime
    activity is the supplying of illegal goods
    and services—gambling, loansharking,
    narcotics, and other forms of vice—to
    countless numbers of citizen customers
           Introduction Cont.
•   The connection between OC and illegal
    business can take one of three forms
    – Parasitic
    – Reciprocal
    – Entrepreneurship
    Goods and Services or Extortion
•    Thomas Schelling states that OC has a
     relationship with the purveyors of illegal
     goods and services that is extortionate:
     The business of OC is extortion, and
     those criminals who provide goods and
     services are its victims
 Goods and Services or Extortion
• Edward Hegarty, former special agent in
  charge of the Chicago office of the FBI,
  pointed out that although persons in OC
  do not get involved in the theft of
  automobiles, they extort money from those
  who do
• The boundary between providing a good
  or a service and being parasitic is not
  clearly delineated
 Goods and Services or Extortion
• When it comes to ―goods and services,‖
  the picture is mixed
  – Many of those who provide gambling and
    other goods and services such as
    loansharking have a relationship with OC that
    is forced upon them
  – Others find the OC connection useful to their
    enterprise, and sometimes the made guy is a
    bookmaker, numbers operator, or (more
    frequently) a loan shark
    Goods and Services or Extortion
•    To understand the business of OC, we
     need to consider the degree to which a
     crime group’s business activities are
     integrated into their organizational
•   Gambling includes a wide array of games of
    chance and sporting events on which wagers
    are made
•   The estimated amount of illegal betting
    increased tenfold between 1983 and 1995,
    while arrests for illegal gambling declined
    significantly, particularly in urban centers
•   The low priority given to gambling enforcement
    adds to its attractiveness
• Bookmakers ―book‖ bets on two types of
  events—horse and sometimes dog races
  and sporting events such as football,
  basketball, baseball, and boxing
• Most bets are placed by telephone directly
  or through a roving ―handbook,‖ ―runner,‖
  or ―sheetwriter‖ who transmits the bet to
  the bookmaker
         Bookmaking Cont.
•   Bets are written down and may also be
    tape-recorded by a machine attached to
    the phone. This helps avoid any
    discrepancies about what arrangements
    were actually made over the phone
        Horse Race Wagering
•   The oldest of the major bookmaking activities:
    illegal horse-race wagering ranks behind
    sports wagering
•   The typical bettor is middle-aged or older, and
    wagers are usually modest
•   Information on the horses running at each
    track on a given day may be obtained from a
    local newspaper or a ―scratch sheet‖
•   Payoffs at the track are the basis for a
    bookmaker’s profits
          Sports Wagering
• From a gross dollar volume standpoint,
  sports wagering is the king of bookmaking,
  although the net profit for the bookmaker
  is typically less than 5 percent
• As in other forms of bookmaking, the
  sports bookmaker seeks to act as a
  broker, not a gambler
       Sports Wagering Cont.
•   To achieve equality between teams, one
    which the bookmaker hopes will attract
    like sums of money on each contestant,
    a handicapping process takes place
    through the use of a line or spread, the
    expected point difference between the
    favored team and the underdog
       Sports Wagering Cont.
•   To make any necessary line changes,
    major booking operations continuously
    track changes in the Las Vegas line by
•   When there are attempts to fix the
    outcome of sporting events, the
    approach is to have key players ―shave
        OC and Bookmaking
•   In an earlier period, bookmaking was an
    important source of income for OC. OC
    units ran the operation directly or
    ―licensed‖ syndicate bookmakers, and
    the wire service that provided instant
    race results was an important source of
    OC control over bookmaking
    OC and Bookmaking Cont.
•   Most illegal wagering today involves
    sports, rather than horse racing, and bets
    are made by telephone—or over the
•   Bookmakers (and numbers operators)
    frequently find their bets sufficiently
    unbalanced to require that they be layed
   OC and Bookmaking Cont.
• Bookmaking involves many transactions
  and generates a great deal of paperwork
• Technical changes have also made it
  harder to find bookmakers, who have
  insulated themselves by the routine use of
  mobile telephones, pagers, and call back
   OC and Bookmaking Cont.
• Competition is difficult to control because
  bookmaking can involve operations
  outside the United States
• Bookmakers frequently advertise in sports
  publications, radio programs, and the
•   The American colonies authorized
•   During the nineteenth century, lotteries
    under state license or control were found
    throughout the United States
      Lotteries/Numbers Cont.
• Policy is based on drawing numbers from 1 to 78
  by spinning a wheel
  – Twelve to fifteen numbers are drawn, and players bet
    that from one to four numbers in various sequences
    will be among those drawn
• During the 1920s, numbers were introduced as
  competition with policy
  – In numbers, a player selects one, two, or three digits
    from 0 to 9 with the odds of winning running from 10
    to 1, 100 to 1, and 1,000 to 1
     Lotteries/Numbers Cont.
• A variety of elaborate schemes are
  available for determining the winning
• The structure of the illegal lottery requires
  a great deal of coordination and is labor
  intensive, providing many jobs for
  unskilled individuals, making it an
  important source of employment in poor
      Lotteries/Numbers Cont.
•   It is essential that wagers reach trusted
    hands before the winning number or any
    part of it is known. Sometimes this is
    done by telephone; other times wager
    records (commonly known as work,
    action, or business) are physically
    forwarded to a higher echelon by a
    pickup man
     Lotteries/Numbers Cont.
• Near the top of the hierarchy is the bank
  where all transactions are handled
• Decreasing organized criminal opportunity
  was one argument for the legalization of
  certain types of gambling, in particular the
  state lottery
• There is no evidence, however, that the
  legal lotteries have diminished the
  revenues of their illegal counterparts
      Lotteries/Numbers Cont.
•   Some fear introducing of sports betting will
    serve to educate more persons on the
    intricacies of gambling
•   Because illegal operators typically provide
    better odds, do not report the winnings to tax
    officials, and accept bets on credit and over
    the telephone, legalized sports betting may
    succeed in recruiting new bettors for the
   Casino Gambling and Related
• Casino gambling requires a great deal of
  planning, space, personnel, equipment,
  and financing
• Some cities have a tradition of holding
  ―Las Vegas Nights,‖ events often run
  under the auspices of, or with the approval
  and protection of, an OC unit, using the
  legitimate front of a religious or charitable
             Casino Cont.
• OC operatives may also organize or
  sponsor card or dice games, taking a cut
  out of every pot for their services
• In certain cities, gambling activities not
  operated under OC protection, ―outlaw
  games,‖ run the risk of being raided by the
  police or being held up by independent
  criminals or robbery teams sponsored by
  an OC unit
   Las Vegas and New Jersey
• In 1931, the state of Nevada, desperate
  for tax revenue during the Great
  Depression, legalized gambling and
  established licensing procedures for those
  wanting to operate gambling
• Bugsy Siegel: the first important criminal to
  recognize the potential from legalized
  gambling in Nevada
 Las Vegas and New Jersey Cont.
• Las Vegas is no longer a mob-controlled
  playground—casinos are major corporate
  entities—and OC has been moved to the
  fringes of the Las Vegas scene
• In Atlantic City, New Jersey, the second
  state to authorize casino gambling, there
  were intensive efforts to keep OC out of
  the casinos
 Las Vegas and New Jersey Cont.
• The New Jersey State Police, which has
  extensive experience in dealing with OC,
  and the New Jersey Casino Control
  Commission, were put in charge of
  overseeing casino operations to prevent
  OC infiltration
• In Atlantic City, OC has been able to
  influence the purchase of goods and
  services through control over key unions
    Las Vegas and New Jersey Cont.
•    There is increasing evidence that the
     easy availability of legalized gambling is
     attracting young persons at an alarming
      Miscellaneous Gambling
•   Bingo is legal in 46 states
•   In a number of localities, coin-operated
    video poker machines are very popular,
    often a staple in many bars or taverns
•   Although there is no evidence of any
    attempts to restrict market entry—
    competition—the video poker appears to
    be totally an Outfit business
            Cyber Gambling
•   There is also online casino gambling
    whose connection to OC is uncertain
•   Although the 1994 Federal Wire Wager
    Act (18 U.S.C. § 1084) makes it a crime
    to operate a betting or wagering
    business using telephone lines or other
    wire communication facility, if the
    business is legal where it is licensed the
    bookmakers are beyond U.S. jurisdiction
        Cyber Gambling Cont.
•   The Internet Gambling Enforcement Act of
    2006 makes it is illegal for American financial
    institutions to process transactions originating
    from or directed towards any online gambling
    operator, prohibiting businesses, including
    banks, credit card companies, interactive
    computer service providers, and
    telecommunications services, from accepting
    or transferring money to offshore gambling
•   Between 1880 and 1915 a practice
    known as ―salary lending‖ thrived in the
    United States
•   Loansharking embodies two central
    features: The assessment of exorbitant
    interest rates in extending credit and the
    use of threats and violence in collecting
        Loansharking Cont.
• Persons in OC may insulate themselves
  from direct involvement in loansharking by
  using nonmember associates
• Many loan sharks provide loans to other
• Individual gamblers may also borrow from
  a loan shark who stays around card and
  dice games or accepts ―referrals‖ from a
         Loansharking Cont.
•   The case of Louis Bombacino, a collector
    for the Chicago Outfit’s 26th Street crew,
    who routinely carried a firearm, vividly
    reveals the intimidation involved in
          Loansharking Cont.
•   Loan sharks are not in the ―muscle‖ business;
    they are in the credit business, and thus they
    lend money to customers whom they expect
    will pay off and eventually return as customers
•   Sometimes a loan shark finds himself involved
    with a debtor’s business
•   Research into loansharking in New York
    revealed that collection rarely involves violence
    or even the threat of violence
        Loan sharking Cont.
• There are two basic types of usurious
  loan: the knockdown and the vig
• The knockdown requires a specified
  schedule of repayment, including both
  principal and interest
• The vig is a ―six-for-five‖ loan
          Theft and Fencing
•   Members of Cosa Nostra do not usually
    engage directly in theft, burglary, or
    robbery, although many have criminal
    records for such activities that typically
    precede their entry into OC
•   Members of OC are in a unique position
    to provide these services
           Stolen Securities
•   The late 1960s and early 1970s saw a
    dramatic increase in the volume of
    securities being traded, which provided a
    lucrative source of income for OC
•   Employees with gambling or loan shark
    debts or those merely seeking to
    supplement their incomes found a ready
    market for such ―paper.‖ All that was
    needed was an OC connection
       Stolen Securities Cont.
•   Although many people may have access
    to valuable securities, few can put stolen
    securities to immediate use. OC groups
    serve as the intermediate link in the
    criminal enterprise
       Stolen Securities Cont.
•   Passing through the network of OC, the
    stolen securities will eventually reach the
    hands of someone who does have the
    expertise, the capital, and the personnel
    to effect a profitable disposition
•   The fence provides a readily available
    outlet for marketing stolen (―hot‖)
•   Because of his connection with criminals
    (and otherwise) legitimate businessmen,
    the wiseguy is in a unique position to
    arrange for the disposition of stolen
            The Business of Sex
•       OC’s involvement in sex as a business
        has changed with the times
    –    In 1904, an international treaty was signed
         in Paris by all of the governments of
         Western Europe and Russia
    –    The U.S. Senate ratified the treaty in 1908
    –    In 1910, the ―White Slave Act‖ also called
         the Mann Act
    The Business of Sex Cont.
•   In the United States, there was an
    elaborate system for procuring and
    transporting women between New York,
    Milwaukee, St. Louis, and Chicago
•   Madams opened brothels, attracted
    prostitutes and customers, and secured
    protection from the police
   The Business of Sex Cont.
• OC’s interest in prostitution waned during
  Prohibition because money could be made
  more easily in bootlegging
• In many cities they ―organized‖
  independent brothels: the madams were
  forced to pay OC middlemen for protection
  from the police and from violence
• The brothel industry reached its peak in
    The Business of Sex Cont.
• The pornography business, like
  prostitution, suffers from a great deal of
  ―amateur‖ involvement
• OC involvement today may simply be
  parasitic—extorting ―protection‖ money
        Trafficking in Persons
•   Trafficking in persons includes two broad
    categories: indenture of undocumented
    workers who are brought into bonded
    servitude; and trade in persons for the
    commercial sex industry
   Trafficking in Persons Cont.
• Central to the trade is the principle of captivity,
  applied upon arrival, through seizure of travel
  documents such as passports and tickets of the
  trafficked person
• Trafficking organizations operate through a
  specialized network of persons—recruitment,
  passage, documents, workplace—and those at
  the front end may not even know those at the
  receiving end
    Trafficking in Persons Cont.
•   Human trafficking seeks a continuing exploitive
•   Debt is one of the most common means of
•   Trafficking in persons is a form of modern-day
•   Child sex tourism (CST) is a dark side of
    globalization, with some two million children
    exploited in the global commercial sex trade
   Trafficking in Persons Cont.
• The explosion of the Internet and the growing
  use of digital cameras and cell phone cameras
  have given perpetrators additional tools to
  victimize children
• While human trafficking can be accomplished by
  individual amateurs or small ―mom and pop‖
  operations, the involvement of transnational
  criminal organizations may simply be part of
  their broad business portfolio
   Trafficking in Persons Cont.
• International trafficking in women for the
  sex industry has been a characteristic of
  modern transnational OC
• Many countries grant ―artistic‖ or
  ―entertainer‖ visas that facilitate the
  movement and exploitation of trafficking
    Trafficking in Persons Cont.
•   Even in the absence of deception and
    physical coercion, trafficking must be
    seen as part of the world-wide
    feminization of poverty and of labor
•   In Southern and Eastern Europe,
    kidnapping is rare and traffickers instead
    exploit the desire to emigrate for well-
    paying employment
   Trafficking in Persons Cont.
• Human trafficking is a serious problem in
  Myanmar, where transnational criminal
  organizations and the country’s ruling
  military junta are at the center of the trade
• In West Africa, Nigerians have been at the
  center of a flourishing trade in prostitutes
  who are sent to Europe, especially Italy,
  and the Middle East
           Arms Trafficking
•   The extent and type of weaponry
    currently available to terrorists,
    insurgents, and other criminals are
•   There are two basic explanations for the
    affinity of organized crime for arms
    trafficking: they have already established
    routes for drug and human trafficking,
    and the obvious need for firearms
      Arms Trafficking Cont.
• The movement of drugs and arms is often
  connected or overlapping
• While arms smuggling often involves
  institutions and individuals who are not
  parts of criminal organizations—national
  defense ministries, national security
  agencies, banks, legitimate arms
  dealers—both terrorist and organized
  crime groups are active participants
        Arms Trafficking Cont.
•   The dissolution of the Soviet Union and the
    Warsaw Pact left vast stockpiles of arms
•   During the Cold War, governments on both
    sides of the Iron Curtain used private arms
    brokers to facilitate covert arms deals
•   Terrorist groups from other parts of the world
    have obtained significant armaments from
    traffickers based in Western Europe or using
    Western Europe as part of the delivery route
       Arms Trafficking Cont.
•   Although illegal trafficking in arms
    frequently coexists with illegal trafficking
    in narcotics, the two activities do not
    necessarily have a symbiotic
    relationship; rather, conditions that
    promote one type of trafficking very often
    promote the other
       Arms Trafficking Cont.
• In Latin America, arms dealers have been
  attracted to areas of conflict such as
  Nicaragua, El Salvador, Guatemala, and,
  of course, Colombia. Arms are stolen from
  military supplies and production facilities
  and move into the black market
• While the United States and Russia had
  dominated the small-arms market, this is
  no longer true

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