Editor’s note: This article was originally published in the Nov. 8, 1986 issue of Fortune.
Crime pays. Annual gross income from the rackets will probably exceed $50 billion this year. That makes the mob’s business greater than all U.S. iron, steel, copper, and aluminum manufacturing combined, or about 1.1% of GNP. These figures, compiled for the President’s Commission on Organized Crime, include only revenues from traditional mob businesses, such as narcotics, loan-sharking, illegal gambling, and prostitution. They do not include billions more brought in from the mob’s diversification into such legitimate enterprises as entertainment, construction, trucking, and food and liquor wholesaling.
The industry that runs this huge part of the economy comprises crime families, not companies. Wharton Econometric Forecasting Associates, in a study prepared for the President’s Crime Commission, found that the mob’s hold on the economy stifles competition and siphons off capital, resulting in a loss of some 400,000 jobs, an increase in consumer prices of 0.3%, a reduction in total output of $18 billion, and a decrease in per capita disposable income of $77 a year. Since organized-crime members cheat on taxes, the rest of the population will pay an estimated $6.5 billion more to the Internal Revenue Service this year.
The organization chart of a crime family or syndicate mirrors the management structure of a corporation. At the top of the pyramid is a boss, or chief executive. Below him are an underboss (chief operating officer) and a consigliere (general counsel). Then follow ranks of capos (vice presidents) and soldiers (lower-level employees who carry out the bosses’ orders). Like corporations, crime groups often rely on outside consultants.
For this story FORTUNE interviewed FBI agents, leaders of federal organized-crime strike forces, and local law enforcement officials across the U.S. On their assessment of the wealth, power, and influence of the crime bosses, FORTUNE has ranked them from 1 to 50 on the facing page.
In spite of its clout, organized crime is an industry in crisis. The leadership is old, and the next generation of managers seems to lack spirit, dedication, and discipline. “Today you got guys in here who never broke an egg,” a New Jersey Mafia leader complained in a conversation bugged by the FBI. Another reported that a disrespectful underling had addressed him by his nickname. The FBI says that the Mafia membership is shrinking. To bolster the lower ranks, the bosses have been recruiting tough young trainees from Sicily, called “Greenies.”
How they rank in wealth, power, and influence
- Anthony “Fat Tony” Salerno
Age: 75
Headquarters: New York City
Status: In Jail, On Trial
Family: Genovese
Sources of income: Construction, unions, gambling, loan-sharking - Anthony “Joe Batters” Accardo
Age: 80
Headquarters: Palm Springs
Status: Free
Family: Chicago
Sources of income: Gambling, unions, loan-sharking - Anthony “Tony Ducks” Corallo
Age: 73
Headquarters: Long Island
Status: On Trial
Family: Lucchese
Sources of income: Garbage, extortion - Gerardo “Jerry” Catena
Age: 84
Headquarters: Boca Raton
Status: Free
Family: Genovese
Sources of income: Construction, gambling, casinos - Gennaro “Jerry Lang” Langella
Age: 47
Headquarters: Brooklyn
Status: In Jail, On Trial
Family: Colombo
Sources of income: Construction, loan-sharking, gambling - Carmine “Junior” Persico
Age: 48
Headquarters: Brooklyn
Status: In Jail, On Trial
Family: Colombo
Sources of income: Construction, loan-sharking, gambling - Christopher “Christie Tick” Furnari
Age: 62
Headquarters: New York City
Status: On Trial
Family: Lucchese
Sources of income: Construction, unions, gambling, loan-sharking - Salvatore “Tom Mix” Santoro
Age: 70
Headquarters: New York City
Status: On Trial
Family: Lucchese
Sources of income: Construction, unions, loan-sharking - Philip “Rusty” Rastelli
Age: 68
Headquarters: New York City
Status: On Trial
Family: Bonanno
Sources of income: Concrete, unions, loan-sharking, narcotics - Vincent “Vinnie” DiNapoli
Age: 49
Headquarters: New York City
Status: Indicted
Family: Genovese
Sources of income: Construction, unions - Ralph Scopo
Age: 57
Headquarters: Brooklyn
Status: On Trial
Family: Colombo
Sources of income: Construction, unions - Russell Bufalino
Age: 83
Headquarters: Scranton, PA
Status: In Jail
Family: Bufalino
Sources of income: Sweetheart contracts - John Gotti
Age: 46
Headquarters: New York City
Status: In Jail, On Trial
Family: Gambino
Sources of income: Loan-sharking, robbery, phonograph records - Joseph “Joe Bananas” Bonanno
Age: 82
Headquarters: Tucson
Status: In Jail
Family: Bonanno
Sources of income: Narcotics - Santo “Louis Santos” Trafficante
Age: 71
Headquarters: Tampa
Status: Free
Family: Tampa
Sources of income: Gambling, loan-sharking, narcotics - Carlos “Little Man” Marcello
Age: 76
Headquarters: New Orleans
Status: In Jail
Family: New Orleans
Sources of income: Gambling, real estate, nightclubs - Frank “Frankie Bal” Balistrieri
Age: 68
Headquarters: Milwaukee
Status: In Jail
Family: Milwaukee
Sources of income: Gambling, liquor, Teamsters pension fund - Michael Franzese
Age: 35
Headquarters: Long Island
Status: In Jail
Family: Colombo
Sources of income: Movies, auto dealerships, bootleg gasoline - Vincent “Chin” Gigante
Age: 57
Headquarters: New Jersey
Status: Free
Family: Genovese
Sources of income: Unions, gambling, loan-sharking - Joseph “Joe Nagall” Ferriola
Age: 59
Headquarters: Chicago
Status: Free
Family: Chicago
Sources of income: Gambling, extortion - Joseph “Joey O’Brien” Aiuppa
Age: 78
Headquarters: Chicago
Status: In Jail
Family: Chicago
Sources of income: Gambling, casinos, unions - Gus “Slim” Alex
Age: 70
Headquarters: Chicago
Status: Free
Family: Chicago
Sources of income: Gambling, political fixing - Vincent “Jimmy Blue Eyes” Alo
Age: 82
Headquarters: Miami
Status: Free
Family: Genovese
Sources of income: Gambling, casinos, money laundering - Anthony “Bruno” Indelicato
Age: 39
Headquarters: New York City
Status: On Trial
Family: Bonanno
Sources of income: Narcotics - Michael “Mike” Genovese
Age: 65
Headquarters: Pittsburgh
Status: Free
Family: Pittsburgh
Sources of income: Gambling - Joseph N. Gallo
Age: 74
Headquarters: New York City
Status: Free
Family: Gambino
Sources of income: Pornography, real estate - Philip “Benny Squint” Lombardo
Age: 78
Headquarters: Miami
Status: Free
Family: Genovese
Sources of income: Construction, gambling, loan-sharking - Raymond “Long John” Martorano
Age: 59
Headquarters: Philadelphia
Status: In Jail
Family: Philadelphia
Sources of income: Narcotics, unions, vending machines - Anthony “Tony Pro” Provenzano
Age: 69
Headquarters: New Jersey
Status: In Jail
Family: Genovese
Sources of income: Unions - John “Jackie” Cerone
Age: 72
Headquarters: Chicago
Status: In Jail
Family: Chicago
Sources of income: Casinos - James “Jimmy Napp” Napoli
Age: 75
Headquarters: New York City
Status: Free
Family: Genovese
Sources of income: Gambling, loan-sharking - Paul Vario Sr.
Age: 72
Headquarters: New York City
Status: In Jail*
Family: Lucchese
Sources of income: Gambling, robbery - Carl “Toughy” DeLuna
Age: 59
Headquarters: Kansas City, Mo.
Status: In Jail
Family: Kansas City
Sources of income: Gambling, casinos - Gennaro “Jerry” Angiulo
Age: 67
Headquarters: Boston
Status: In Jail
Family: Boston
Sources of income: Numbers, loan-sharking, money laundering - Matthew “Matty the Horse” Ianniello
Age: 66
Headquarters: New York City
Status: Indicted
Family: Genovese
Sources of income: Unions, topless bars, loan-sharking - James “Jimmy Brown” Failla
Age: 67
Headquarters: New York City
Status: Free
Family: Gambino
Sources of income: Unions - John Riggi Sr.
Age: 61
Headquarters: New Jersey
Status: Free
Family: DeCavalcante
Sources of income: Construction, waterfront unions - Louis “Bobby” Manna
Age: 57
Headquarters: New Jersey
Status: Free
Family: Genovese
Sources of income: Construction, gambling, loan-sharking - John “Johnnie Dee” Digilio
Age: 53
Headquarters: New Jersey
Status: Free
Family: Genovese
Sources of income: Waterfront unions, gambling, loan-sharking - William “Willie” Cammisano
Age: 71
Headquarters: Kansas City, Mo.
Status: Free
Family: Kansas City
Sources of income: Gambling, loan-sharking, fencing - Vincent “Little Vince” Meli
Age: 62
Headquarters: Detroit
Status: Free
Family: Detroit
Sources of income: Steel hauling - Vincent “Vince” Solano
Age: 67
Headquarters: Chicago
Status: Free
Family: Chicago
Sources of income: Gambling, unions - Nicodemo “Nicky” Scarfo
Age: 57
Headquarters: Atlantic City
Status: Free
Family: Philadelphia
Sources of income: Gambling, numbers, unions - Tino “George Grecco” Fiumara
Age: 46
Headquarters: New Jersey
Status: In Jail
Family: Genovese
Sources of income: Waterfront unions - Donald “Don Angel” Angelini
Age: 60
Headquarters: Chicago
Status: Free
Family: Chicago
Sources of income: Gambling - Peter Milano
Age: 60
Headquarters: Los Angeles
Status: Free
Family: Los Angeles
Sources of income: Gambling - Paul “Paulie” Schiro
Age: 45
Headquarters: Phoenix
Status: Free
Family: Chicago
Sources of income: Gambling - Chris Petti
Age: 47
Headquarters: San Diego
Status: Free
Family: Chicago
Sources of income: Gambling - Angelo “Little Angie” Tuminaro
Age: 81
Headquarters: Unknown
Status: Fugitive
Family: Lucchese
Sources of income: Narcotics - Frank “The Horse” Buccieri
Age: 62
Headquarters: Palm Springs
Status: Free
Family: Chicago
Sources of income: Loan-sharking
Based on information from FBI agents, federal prosecutors, and local law enforcement officials, FORTUNE compiled this list of top Mafia leaders, their territories, and their lines of business. Although 17 of the mobsters are in jail, they retain their power, issuing orders by phone and through visitors.
The Mafia, the largest and best-established crime organization, is up against forceful new competition from Asian and Latin American underworld groups that specialize in heroin, cocaine, and marijuana. These drug smugglers and dealers not only have destroyed the monopoly that the mob once had but also have put some Mafia veterans in the uncomfortably subservient role of acting as their distributors.
The most serious challenge comes from federal law enforcement officials, who are now effectively using the 16-year-old Racketeer Influenced and Corrupt Organizations (RICO) statute to prosecute mobsters. G. Robert Blakey, the Notre Dame law professor who drafted the 1970 law, says that it usually takes prosecutors some time to recognize the force of new legislation.
Recent indictments under the RICO statutes have brought about half the 50 most important crime members to trial, including No. 1, Tony Salerno, godfather of the Genoveses, the strongest Mafia family. Salerno is a defendant in the so-called Commission trial in New York. The government is trying to convict him and six other members of the Mafia’s national ruling council, the Commission, of being part of a racketeering enterprise. Most of the accused sit stone-faced and silent in the courtroom. But Carmine Persico (No. 6), the basset-eyed boss of the Colombo family, is acting as his own lawyer.
Pressure from law enforcement agencies is forcing the mob to change some of its management techniques. Members of the Commission used to gather in large ceremonial “sitdowns” to settle their business problems. The FBI’s extensive use of wiretaps and electronic bugs have made sitdowns prime surveillance targets, and these meetings have become less frequent affairs. The Mafia leaders are even reducing business lunches and dinners in their old public hangouts. Wherever possible, bosses use couriers to pass along their orders.
Mafia chieftains are also trying to snuff out disputes, which can flare in public and attract further FBI attention. But their voracious appetite for money usually defeats such nonadversarial policies.
The Mafia has always been able to surmount its other problems, overpower its adversaries, and outrun the feds. Even if the Commission members are jailed, their operations will continue. Bosses behind bars are not powerless. Their “access to telephones is virtually unlimited,” assistant FBI director Oliver Revell told a Senate committee in 1983. The late Nick Civella, he pointed out, “was running the Kansas City mob from federal prison.” If the Commission members’ prison terms are long or if they die in jail, new leaders will rise in each family to take their place. Their replacements, whose names appear below them on the top 50 list, may turn out tougher still.
The culture of organized crime—based on greed, tenacity, and discipline—remains strong. Mob members call each other “wise guys,” and so-called wise-guy rules define a strict code of conduct. For one thing, a member who vouches for someone who ultimately betrays the organization takes the hit—usually before reprisals against the stool pigeon. For another, if a fixer takes a mob payoff, he must produce precisely what he promises. No excuses or refunds are accepted.
The crime industry is organized geographically. Though the mob’s grasp reaches most major cities—Seattle is an exception—two-thirds of the Mafia’s membership is concentrated in New York and Chicago. The Commission adjudicates territorial disputes, settles business conflicts, and even passes on execution sentences.
Five sometimes-warring Mafia families control New York City—the Genoveses, Gambinos, Luccheses, Bonannos, and Colombos. Induction into these families involves a swearing-in ritual that calls for the taking of a secret oath and the giving of a drop of blood. In Chicago a single Mafia organization called the Outfit runs matters with less friction. There the initiation rite is consummated like a business deal, with a handshake. The Outfit also influences mob activities in Milwaukee, Kansas City, Phoenix, Las Vegas, and Los Angeles.
According to the FBI there are only about 1,700 sworn, or “made,” Mafia members. For each member, the government figures there are ten “associates.” Wharton Econometric Forecasting Associates estimates that the average annual income for an individual organized-crime member was about $222,000 between 1979 and 1981. Of course, the haul for the top 50 crime bosses would be much higher. The forecasters used data from the FBI as well as income statistics from the IRS—gross income from tax returns and average unreported income from criminal and civil cases. Wharton also estimated that associates made an annual average of $61,000 over that period. Associates advance to full membership in the organization by loyally carrying out orders and by being willing to kill. According to the Wharton study, some 265,000 people are employed in businesses run, at least in part, by organized crime.
Underworld leaders often reinvest their swag, kickback money, or bribes in legitimate enterprises. Such diversification is less risky than expanding an illegal operation. Furthermore, benign business can camouflage much criminal activity and reduce the danger of prosecution for income tax evasion.
In doing business with law-abiding companies, mob leaders have learned to cash in on their notorious reputation without automatically resorting to violence. Fraud and intimidation are their favorite tactics. Says Steven J. Twist, chief assistant attorney general of Arizona: “The dangerous thing about organized crime today is it has become semi-legitimate.”
A common racketeer strategy is to control a union so that it willingly signs cut-rate “sweetheart” contracts with mob-run companies and threatens to strike competitors. Underworld leaders have used unions to influence and infiltrate many legitimate businesses, from warehouses to nightclubs. Wharton forecasters figure that the involvement of organized crime tends to push prices up between 0.5% and 2% in these and related industries, such as food and liquor distribution.
A corrupt union is a profit center. It offers almost unlimited opportunities for extortion through the use of “ghosts” (fictitious workers) and “no-shows” (employees who do not come to work) and the threat of slowdowns. Mob-controlled unions and labor-leasing companies supply security guards for nuclear power plants, garbage collectors for most New York City office buildings, and truck drivers for Shell Oil, Coca-Cola, and International Paper, among many others. “A union can be used instead of a gun or a baseball bat,” says Edward McDonald, chief of the Organized Crime Strike Force in Brooklyn.
Anthony Salerno, 75, whose name appears first among the top 50, heads an underworld conglomerate with enterprises on both sides of what for him, at least, is an indistinct line separating illegal from legitimate business. Known as “Fat Tony” (“Too fat to flee,” chide his underworld cronies), he presently resides at the Metropolitan Correctional Center in Manhattan, next door to the U.S. Southern District Court, where he and other alleged Commission members are on trial.
Salerno’s power does not stem solely from his position as head of the 300-member-strong Genovese family. Even before he became boss in 1980, Salerno made more money than most Mafia chieftains, mainly by skimming from casinos in Nevada and the Caribbean. Skimming is taking cash off the top of gambling proceeds before they are reported as taxable revenues. Law-abiding casinos take pains to prevent skimming; in mob-controlled casinos the practice is encouraged and widespread. The easiest way to skim is to simply walk into the counting room and take the money, a casino operator was overheard by the FBI to say. A recent indictment charges Salerno and his cohorts with operating a number of illegal gambling joints for betting on numbers and sports. In addition, they make “extortionate extensions and collections of credit”—that’s how the Justice Department defines loan-sharking. Salerno is accused of using “threats and beatings to force victims to pay illegal interest and to repay loans.”
Crime boss No. 1 also has thriving business interests in New York City’s construction industry. According to Justice Department disclosures in the Commission case and in another racketeering indictment, between 1981 and 1985, Salerno and his colleagues imposed a 2% Mafia tax on New York City contractors pouring concrete for all superstructures costing more than $2 million. They ran a cartel that rigged bids for supplying the concrete. The cartel decided in advance which company would submit the winning bid. Other companies were forced to put in bids that were unacceptably high. The 2% tax alone produced $3.5 million in profits for the Mafia on the 72 construction jobs the government investigated. That’s only a fraction of the buildings that have gone up in New York’s recent real estate boom, for which the mob supplied concrete. One witness told the President’s Crime Commission that the mob has inflated Manhattan construction costs by as much as 20%.
Salerno, according to the indictment, “is a hidden partner” in a covey of companies that bid on the concrete construction work. Together they have won contracts worth more than $71 million from ten big construction jobs, including Trump Plaza, a luxury apartment building on Manhattan’s East Side.
The government charges that bidding on these projects was further rigged in favor of Salerno’s companies through collusion with two ready-mix firms: Certified Concrete Co. and Transit-Mix Concrete Corp. Both are owned by Edward J. “Biff” Halloran, who is better known for the midtown hotel Halloran House, which he once owned. He denies any collusion.
Any contractor who dared bid against the mob cartel faced a cutoff of ready-mix or problems with its delivery. The federal indictment charges that Salerno also holds sway over Teamsters Local 282, whose members drive concrete delivery trucks. A punishment for recalcitrant contractors: delays and other, more serious labor problems.
Salerno’s hand in union affairs reaches right to the top. The Justice Department charges that it was he who “selected” Roy Williams to lead the International Brotherhood of Teamsters in 1981 and then ordered union officials to elect him president. Williams was imprisoned for conspiring in 1979 to bribe Howard Cannon, then a U.S. Senator from Nevada. Even so, federal prosecutors say that Salerno continues to hold “effective control” of the union under the current president, Jackie Presser.
Tony and his wife, Margaret, often relaxed at their estate in Rhinebeck, New York. For the five years that ended last December, they were a two-income family. The government charges that Marathon Enterprises, a New Jersey food-processing company, paid Margaret “brokerage fees” on sales of hot dogs and other delicatessen foods to supermarkets, sports arenas, and street vendors. She received these payments even on sales to such reputable companies as Chock Full O’ Nuts (restaurants), Pathmark (supermarkets), and Canteen Corp. (vending machines). The Justice Department claims that Genovese soldiers arranged the kickbacks by threatening Marathon with “force, violence, and fear of economic loss.”
For all his wealth and power, Salerno operated modestly before being arrested. His office was not in one of the gleaming midtown Manhattan towers whose construction costs he had driven up, but in the Palma Boy Social Club, in a storefront in teeming East Harlem. For a long time Salerno attended to business at the Palma or puttered around his Rhinebeck estate without encountering much trouble from the feds. His principal worry was his weight, and he spent weeks at fat farms trying to slim down. The plump times ended after the FBI planted a bug in the Palma Boy Club, which produced much of the evidence for the racketeering charges Salerno now faces. Even if he is convicted and sent to prison, Salerno will probably continue his unchallenged control of the Genovese family.
Chicago’s boss, Anthony Accardo, 80, boasts that he has never spent a night in jail. Like many a chief executive lately, he was called back from retirement (at the Indian Wells club near Palm Springs, California) when the organization he had long headed faced a sudden management crisis: The leadership of the Chicago Outfit was packed off to jail early this year. Accardo’s renewed position raises him to No. 2 on the list.
Accardo is reputed to have been a machine-gunner for Al Capone, and he is called “Joe Batters” by his Mafia cronies because of the baseball bat he formerly used for persuasion. He has always been a master of strategic planning. His formidable Outfit is a racketeering combine that runs everything from diaper services to funeral parlors; its efficiency is envied throughout the Mafia. Accardo was the architect of the intricate power plays that made the Outfit the dominant force in the rackets from the Great Lakes to the Pacific over the past decade. Now, with a cadre of couriers winging back and forth from Chicago to California, he functions as the chairman of the board. His operations chief in Chicago is Joseph Ferriola, 59, a disciplined underboss who survived heart bypass surgery last year and is No. 20 on the list. Ferriola’s organizational skills are well known. In the Seventies he muscled back into the fold the bookies in Chicago who had tried to be independent.
Discipline is the Outfit’s guiding management principle. The Chicago mob imposes a “street tax” on all illegal activities and on some legitimate ones as well. Bookies, hookers, narcotics peddlers, even owners of bars, restaurants, and parking lots pay from 10% to 50% of their gross revenues, depending on the profitability of their operations and the amount of protection required to keep them running. Another city with a street tax is Philadelphia. But organized-crime leaders there have not been very effective in collecting it—not even after the so-called Docile Don, Angelo Bruno, was murdered in 1980 and replaced by the violence-prone Nicodemo Scarfo (No. 43) in a prolonged 18-death gang war in the City of Brotherly Love.
The Outfit maintains especially tight discipline over its internal security. Chicago insurance executive Allen Dorfman, a sophisticated money manager, pioneered the use of union welfare and pension funds to finance an underworld bank in the 1960s. First he funneled loans from the Teamsters’ Central States pension fund to several casino-hotels in Las Vegas. Then he showed Accardo and associates how to establish health care organizations in which participating doctors and dentists gave the Outfit kickbacks after overcharging union patients. Dorfman, who personally received kickbacks for processing the Teamster loans and insurance claims, knew too much about the Outfit’s finances. He was gunned down in a suburban Chicago parking lot in 1983.
Beginning in 1970 strongman Anthony Spilotro was stationed in Las Vegas to monitor casino skimming and to see that the money flowed smoothly back to his bosses in Chicago. Known as “Tony the Ant” because of his squat, close-to-the-ground appearance, he did not keep an appropriately low business profile, operating out of a Las Vegas hamburger joint called the Food Factory. From there he dabbled in real estate and set up sidelines to control burglary, fencing, and prostitution on the Strip.
But Spilotro failed to keep the skimming operation well disciplined. Some of the men he supposedly controlled turned up as government witnesses, resulting in the January conviction of Chicago’s former ruling duo, Joseph Aiuppa (No. 21) and John Philip “Jackie” Cerone (No. 30). Imprisoned with them were seven other gang leaders, including Carl DeLuna (No. 33), the Kansas City mob’s comptroller, whose meticulously kept financial records were uncovered by the FBI (see facing page).
Last June, Tony Spilotro and his brother Mike were found buried in an Indiana cornfield. Investigations suggested they had been garroted and may have been buried alive. In any case, they were victims of wise-guy rules: They had not prevented the guys from spilling the beans, so they suffered the consequences. “There’s no way Spilotro could have been killed without Accardo’s approval,” says Patrick Healy, executive director of the Chicago Crime Commission.
Spilotro’s execution may lead to the disintegration of an important peace-keeping pact, hatched by Accardo in 1977, that ceded authority in Las Vegas to the Outfit in Chicago and gave Atlantic City to New York Mafia families. Former FBI agent William Roemer, who spent 23 years tailing Accardo and his cohorts and now is a consultant to the Chicago Crime Commission, says the deal had a grandfather clause. “According to the 1977 agreement, the Eastern mob could keep what it had in Las Vegas, but it couldn’t start anything new. Spilotro was there to enforce the edict.”
In the confused aftermath of Spilotro’s death, competition from New York is challenging the Outfit’s hegemony in Las Vegas. Federal and state authorities as well as the Las Vegas police have detected a resurgence of Eastern mob activity, particularly by the Genoveses. “The Outfit’s beat up real bad,” says an undercover cop. “Not just in Chicago, but here in Las Vegas. The New York guys are taking advantage of it.” Police say that Vincent “Chin” Gigante (No. 19), a Genovese capo, is seizing much of the power previously held by the Outfit and dispensed through Spilotro. Gigante is gigantic, a hulking former boxer who fits the Genovese rough-and-tumble style. He serves on what amounts to the Genoveses’ three-man executive committee, with Tony Salerno and Louis Manna (No. 38).
The aftershock of Spilotro’s assassination and the vacuum it has left in Las Vegas have hurt the Outfit’s reputation on the West Coast. Other mobsters have taken to calling its California operatives the “Mickey Mouse Mafia.” This doesn’t bode well for West Coast boss Peter Milano (No. 46), who is supported by Accardo in Los Angeles. When a franchise operated by the Outfit turns sour, it can prove terminal for any field representative connected with it. What is happening on the West Coast may be a mild precursor of things to come in Chicago. The aged Accardo has heart disease, and when he dies the Outfit may find itself in turmoil.
Among the Mafia’s aging executives a true yuppie has emerged. Michael Franzese (No. 18), the son of convicted bank robber and Colombo chieftain John “Sonny” Franzese, is a fast-talking 35-year-old businessman and handsome father of five. He put together a cartel that produced feature movies (including the horror film Mausoleum and a youth-gang musical called Knights of the City), ran a discotheque, sold and repaired automobiles, operated construction firms, and achieved a near monopoly of independent gasoline sales on Long Island. Mike seemed to strive to shed the reputation of his father, telling the press last year: “Absolutely, I know people that my father associated with. That doesn’t mean I have to do business with them, or have to be part of any type life they’re alleged to be in. It’s all nonsense.”
A 28-count, 99-page federal indictment tells another story. The government accuses young Franzese of ripping off more than $5 million in tax fraud, insurance fraud, fraudulent loans, and the fraudulent operation of two auto dealerships. The victims of his car sales scam included General Motors, Mazda Motors of America, and Beneficial Commercial Corp. Investigations also reveal that he cheated New York, New Jersey, and Florida out of hundreds of millions in gasoline taxes.
The gas tax scam was accomplished through what federal prosecutor Jerry D. Bernstein calls a “daisy chain of phony companies.” Some 20 Franzese oil and gas distributors would make paper sales of gasoline from one company to another until the whole tax bill was owed by one firm known as the “burnout company.” It consisted only of a mailing address, a telephone, and a corporate principal who was an illegal alien. The burnout company, in turn, sold the gas to retailers with an invoice marked “all taxes paid.” Then the burnout company would declare bankruptcy, and Franzese would create another daisy chain.
In spite of his clean-cut image, Mike Franzese inherited his father’s business tactics and violent ways. According to Bernstein, one of his goons broke the head of a competitor with a ball peen hammer. And an auditor who questioned Franzese’s books was threatened by a Franzese associate: “You don’t know who you’re bleeping with. We’ll cut your heart out.” Franzese told a friend who could implicate him in the gasoline tax scam that the man’s son would be murdered if he didn’t vanish beyond the reach of U.S. courts. The man fled to Panama. Four months later he returned in federal custody to testify against Franzese.
In March, Franzese agreed to plead guilty to racketeering and conspiracy charges, accept a prison term of ten years, forfeit assets worth $4.8 million, and pay an additional $10 million to the states defrauded in the gasoline tax scam. He was able to persuade the Justice Department that he couldn’t possibly come up with the $14.8 million if he was stuck behind bars—not even after selling his various houses and signing over his movie rights. An extraordinary deal was struck. Before going to prison, Franzese was permitted limited freedom under the guard of deputy U.S. marshals. The surveillance costs were to be paid by Franzese, who was soon seen (and to the embarrassment of the government, filmed by an NBC-TV news crew) scurrying around Hollywood with his posse in tow. The farce ended when Franzese, reverting to form, gave a bad check to the U.S. Marshals Service to pay for his guards. A federal judge sent him off to prison.
The investigation of Franzese’s affairs revealed yet another crooked business—the 700-member Allied International Union, a large labor union of private security guards. Its members worked in sensitive spots as diverse as nuclear power plants and gambling casinos. Allied International had been a joint venture of the Genoveses, Gambinos, and Colombos. But when the Genovese and Gambino partners died, it became exclusively a Colombo operation.
Before Allied International came under Franzese’s wing, Daniel Cunningham, a builder in Smithtown, Long Island, thought he had bought control of the union from one of the Genoveses for $90,000. Cunningham saw a way to get rich. He took $134,000 a year in salary and expenses and put his wife, ex-wife, and girlfriend on the union payroll. Cunningham admitted trying to call a guard strike against five nuclear power plants along the Eastern Seaboard, including Three Mile Island, and threatening to strike the Atlantic City casinos. He was indicted for embezzlement, racketeering, and bribery in 1981.
Testifying last year before the President’s Commission on Organized Crime, Cunningham explained that when he attempted to sell control of the union to Mike Franzese after going to jail, the latter responded: “Why should I buy something I already own?” Cunningham reported that he was replaced by one of Franzese’s sidekicks, who promptly shifted the union’s pension fund to a Virgin Islands insurance company that granted Franzese a home mortgage free not only of interest but of principal payments as well.
Garbage collection, which depends on union control, has been a favorite Mafia target. Mob leaders tried unsuccessfully to infiltrate this business in Chicago, Des Moines, and other cities, but succeeded in the New York area, where municipal governments provide garbage pickup just for houses and apartments. Restaurants, hotels, nightclubs, even the United Nations do not get the city’s Sanitation Department services; private companies, called carters, do the job. The carters allocate customers among themselves, buying and selling client businesses for from $2,000 to $2 million each. What the carters are buying is the right to overcharge.
Peter Reuter, senior economist with Rand Corp., figures that the allocation scheme inflates private garbage collection prices from 35% to 65% in New York. The harder prosecutors pursue the racketeers, the more notorious the garbage business becomes and the less attractive the business is to legitimate competitors. Says Reuter: “That is the value of a bad reputation.”
The only competition is among Mafia families vying for the business. On Long Island the Luccheses and the Gambinos struck a deal to split garbage collection payoffs from various carters. Anthony Corallo (No. 3), the Lucchese boss who is standing trial with Tony Salerno, controlled the employers’ group, Private Sanitation Industries Associates Inc. James Failla (No. 36), a Gambino capo, held sway over the garbage truck drivers as overseer of Teamsters Local 813. Every three months Corallo had to pay Failla $50,000 for his cooperation.
Corallo, called “Tony Ducks” because of his previous success in ducking subpoenas, and Salvatore Avellino, his chauffeur-enforcer, thought the best way to eliminate payments to Failla was to start a rival Teamsters local. Through a bug planted behind the dashboard of Avellino’s Jaguar, the New York State Organized Crime Task Force overheard him telling a friend how such a rival union could be organized and used: “Let’s take a son-in-law, somebody, put them into the [union] office; they got a job. Let’s take somebody’s daughter, whatever, she’s the secretary. Let’s staff it with our people.” Then, so his listener fully understood how the new union’s leaders would dispense with a dissident, Avellino added: “and when we say go break this guy’s balls … they’re there, seven o’clock in the morning to break the guy’s balls.”
Avellino went on to detail how profitable a union could be in overcharging for phantom garbage: “This is what he [Corallo] tells me. A strong union makes money for everybody, including the wise guys … because the envelopes [of money] … are bigger and better … 2,000, 5,000, 10,000, 20,000, 30,000, 50,000 … I can’t even carry them.”
Corallo did not start a Teamster local to rival the Gambino one. But he controls others, notably Teamster locals 295 and 851, whose members play a key role in the $4.2-billion-a-year air freight business at New York’s Kennedy Airport. His union clout helped block the proposed $63-million merger in 1983 of Air Express International and CF Air Freight, a subsidiary of Consolidated Freightways. According to Air Express’s labor contract, the company had to continue the existing Teamster pact, even if it merged. That was unacceptable to Consolidated. Corallo’s men offered to abrogate the contract for $500,000 in cash. Both companies balked at the shakedown and abandoned the merger plan.
Corallo’s extortion attempts were usually more successful. Six air freight companies operating at Kennedy—Air Express, Union Air Transport, Kamino Air Transport, Schenkers International Forwarders, Three Way Corp., and Hi’s Airport Service—funneled more than $1.1 million to the Corallo mob between 1978 and 1985. FBI wiretaps on the home phone of Corallo’s airport overseer revealed the payoffs. Paul Vario (No. 32) and three other Corallo lieutenants pleaded guilty.
In many cities mobsters use Teamster connections to shake down legitimate companies. In Detroit, Vincent Meli (No. 41) captured the entire steel-hauling business with the connivance of crooked Teamster officials in Local 124. His trucking company, Trans-Steel, obtained such favorable contracts that it did not even pay drivers fringe benefits. Meli drove all his competitors out of business. “I know of no other industry in the area where organized crime has achieved such control,” says Craig Woodhouse, an investigator for the Department of Labor.
Mafia entrepreneurship took a different tack in Scranton, Pennsylvania. There Eugene Boffa, an associate of the local Mafia boss Russell Bufalino (No. 12), organized what he called a “labor leasing” business. The President’s Commission on Organized Crime reported that to get the new venture off the ground, Boffa gave “bribes and kickbacks” to “corrupt Teamsters,” including President Jackie Presser. Boffa established 30 labor-leasing companies to provide truck drivers to such giants as Shell Oil Co., Continental Corp., Coca-Cola, American Cyanamid, Crown Zellerbach, and International Paper.
The labor-leasing scheme worked like this: The client corporations would fire all of their drivers and Boffa would rehire them at a reduced wage,” the President’s Commission reported. In return, Boffa received fees ranging from 7% to 10% of the drivers’ gross wages. Then he handed over 50% of his share to boss Bufalino.
The surest way to get ahead in the Mafia is to kill. That explains the sudden rise to prominence of John Gotti (No. 13). As a petty crook, Gotti had the humiliating habit of getting caught, usually as a result of sloppy bravado. Though he is only 46, he has served prison terms of one year for attempted burglary and four years for stealing truckloads of clothing at Kennedy Airport, and he is on trial for hijacking armored trucks. Law enforcement authorities say he arranged the execution last December of Gambino boss “Big Paul” Castellano and his bodyguard outside Sparks Steak House in Manhattan.
The press portrays Gotti as the new boss of the Gambino clan and the reincarnation of Al Capone. His custom-tailoring, his black Mercedes 450 SL, his wisecracks in court, even his carefully coiffed pompadour made him a sudden sensation. But his superstar status is more image than substance. He claims to be a distributor of phonograph records. His experience is really as a loan shark, hijacker, and hit man. He does not seem qualified to run the Gambino family’s complex businesses, which range from meat and poultry sales to a garment industry trade association. Besides, if he is sentenced to the maximum 45-year prison term, his newly acquired and self-proclaimed control over the Gambino family would evaporate.
The President’s Commission on Organized Crime reported that the Gambino meat and grocery operations are so vast that legitimate food producers feel compelled to deal with them. Paul Castellano, Gotti’s victim, ran Dial Poultry Co., a large distribution company in Brooklyn, now managed by his sons Paul Jr. and Joseph. Big Paul’s cousin Peter Castellana Sr. is listed as sales manager of Quarex Industries, another wholesale company with sales of more than $100 million. Frank Perdue, who heads the famous $840-million-a-year chicken processing company, used Dial Poultry to distribute his chickens. Perdue’s relationship with the Castellanos, as the President’s Commission put it, shows that some legitimate businessmen turn to “organized crime-connected companies” to gain a competitive edge.
Initially, Perdue told the President’s Commission, he was reluctant to have anything to do with Dial because of Paul Castellano’s notoriety as a Mafioso. But when Perdue saw Dial as a way of expanding his sales, he recalled, “I started saying to myself, ‘Why shouldn’t I have some of that business?'” As his sales to Dial increased, Perdue sought Big Paul’s help in fighting a union-organizing campaign at his processing plant in Accomac, Virginia. Perdue explained: “I just thought, you know, they have long tentacles, shall we say, and I figured he may be able to help.” By long tentacles, Perdue said that he meant “Mafia” and “mob” connections. Castellano, who said, “Accomac is a long way from Brooklyn,” did not do anything to help Perdue.
The Mafia’s net income, the gross revenues less such overhead costs as salaries, transportation, entertainment, and payoffs, is conservatively estimated at $30 billion a year by the President’s Commission. But the profits present a bit of a problem. Much of the money comes in $10 and $20 bills; making a big purchase with, say, hundreds of pounds of greenbacks could be incriminating. Before this dirty money can be safely spent or pumped into legitimate businesses, it must be laundered.
One solution is to employ clandestine couriers to transport the cash to banks in the Bahamas, Switzerland, or Hong Kong. But an easier way was the system used by Gennaro Angiulo (No. 34), the silver-haired underboss in Boston. Workers in Angiulo’s North End headquarters merely stuffed the money into brown grocery bags and walked three blocks to a branch of the First National Bank of Boston. They returned with cashier’s checks.
Even though Angiulo acquired an oceanfront estate in suburban Nahant and a $320,000 yacht to go with it, his bucket brigade of deposits drew no special attention. The myriad transactions occurred despite a federal regulation passed in 1970 that required all banks to report cash receipts of $10,000 or more. In 1981 the U.S. government deployed agents to eavesdrop on Angiulo’s operation. The inquiry resulted in racketeering charges against Angiulo and deep trouble for the Boston bank.
Angiulo’s associates purchased cashier’s checks totaling $8.3 million between 1979 and 1982, according to the federal investigation. The bank failed to report 105 checks bought for $1.8 million in cash, as well as some $1.2 billion in foreign cash transfers, unrelated to Angiulo. The bank pleaded guilty and was fined $500,000. Angiulo was fined $120,000 and sent to prison for 45 years. At his trial it was disclosed that the FBI, using wiretaps, had overheard the following admissions:
“We buried 20 Irishmen to take this town over,” bragged Angiulo. “We are bookmakers. We’re selling marijuana. We are illegal here, illegal there. Arsonists. We are everything.”
“Pimps,” added a sidekick.
“So what!” snapped Angiulo, unwilling, it seemed, to omit one division from his com- plete catalogue of businesses.
The bookkeeper who did his job do well
As underboss and comptroller of the Kansas City mob, Carl DeLuna felt immense concern for his fiduciary responsibilities. “Toughy,” as he is known, called his meticulous record keeping “doin’ the right thing.” It proved much too right. In January his handwritten documentation of how cash was skimmed from the Tropicana and Stardust casinos in Las Vegas sent nine gangsters to jail, including DeLuna.
The ledgers revealed that between 1976 and 1979, the mob extracted $2.3 million from the two casinos’ counting rooms before taxable revenues had been declared. In an October 1977 entry, DeLuna recorded the sitdown in Chicago at which top mob executives determined how the skimming operation would work. The notes proved DeLuna as reliable a recording secretary as he was a bookkeeper. Until the documents were uncovered, federal authorities never suspected that a mobster would keep a record of so important a conclave.
The crime bosses who convened in Chicago agreed that couriers—one DeLuna code-named “Deerhunter” and another, a Chicago policeman he called “Stompy”—would deliver the loot each month to the families in Kansas City, Milwaukee, Chicago, and Cleveland. Distribution of the cash was done the same way corporations declare dividends. The mob bosses and underbosses in the four cities held shares, or “points,” in the Stardust and Tropicana; they received a certain amount for each share.
Sometimes the shareholders received extra dividends: DeLuna’s ledger shows that skimming produced a $130,000 bonus in January 1979 that he called a “surprise number.” The next regular dividend, however, failed to materialize. DeLuna recorded the reason: A key skimmer got sick.
FBI agent William N. Ouseley, who found the books hidden in the basement, attic, and ventilating ducts of DeLuna’s house, had no trouble cracking the code that camouflaged the various entries. No. 22, for example, stood for Chicago boss Joe Aiuppa. No. 21 was Aiuppa’s enforcer, Jackie Cerone. The nicknames “Fancypants” or “Beerman” applied to Frank Balistrieri, the Milwaukee boss. “ON” (for onorevole, meaning honorable in Italian) was Nick Civella, the Kansas City Mafia chief and DeLuna’s boss.
DeLuna was a cautious accountant. If he did not actually see the money change hands, he said so to distance himself from and defalcations.
He embarked on an important mission in 1978. His assignment: to force Allen R. Glick (“Genius”), the licensed owner of the Stardust and another casino-hotel, the Fremont, to sell out or risk the murder of his two children. The mob, which had begun to distrust Glick, thought it could skim more under another owner. In Las Vegas, DeLuna met first with three members of the Mafia’s skimming team: Carl Thomas (“CT” in the ledger page below), a gambling boss at the Tropicana; Joe Agosto (“Ceaser”), casino manager at the Tropicana; and Frank “Lefty” Rosenthal (“Craze”), the mob’s man at the Stardust. Next he met Glick, who two days later announced his casinos were for sale.
Four days after DeLuna left for Las Vegas, his wife, Sandy (“San”), followed for the weekend. True to form, DeLuna’s accounts show that he paid “personally for San’s fare out and in and also for any personal purchases.” As one of DeLuna’s cronies confided to the FBI, ” He kept track of who got what, just so if anybody asked, he could show everything was right, that he hadn’t grabbed a dime of that money for himself.”
The carefully kept records were only partially responsible for the jailing of Chicago’s then Mafia leaders, Aiuppa and Cerone. The testimony provided by Glick, who told about the threats the mob used to force him to unload his casinos, also helped. So did the mob’s avarice. The Chicagoans might never have turned up in DeLuna’s ledgers if they had not tried to make the most of their role as conciliators. They tried to mediate between the bosses in Kansas City, Milwaukee, and Cleveland who got to squabbling over the casino spoils in 1975. For their efforts the Chicago mob demanded a 25% fee.
DeLuna’s books depict Mafia benevolence toward both the greedy and the needy. In 1979, $1,500 went to then Kansas City Teamster chief Roy WilIiams, code-named “Rancher,” who used his influence to help arrange Teamster loans to the mob-controlled casino hotels. The skimming money also supported a welfare program. DeLuna once noted that after he, Civella, and the others divided some $30,000, smaller amounts ranging from $1,000 to $3,000 were handed out to elderly Mafiosi and to the families of imprisoned mobsters.
The mob’s outside consultants
Consultants are almost as popular with organized crime families as they are with corporations. These special counsellors—lawyers, labor experts, and political advisers—shuttle between members of the mob and moviemakers, hotel and casino operators, owners of professional sports franchises, corporate chief executives, and public officeholders. They claim to be aboveboard with nothing to hide. But when forced to testify under oath about their underworld connections, they usually become vague.
Chicago lawyer Sidney R. Korshak has represented Hilton Hotels Corp., the Los Angeles Dodgers, and numerous other corporations. Nevertheless, former FBI agent William Roemer describes Korshak as “the most important link between organized crime and legitimate business.” He has a marvelous ability to help his clients settle labor difficulties.
Korshak has always been careful to conceal his organized-crime connections. Investigators learned, however, that in 1958 he helped Tony Accardo draw up a contract that paid the Chicago mob boss $65,000 a year as an employee of a wholesaler called Premium Beer Sales. An FBI bug planted in a mob hangout revealed that Korshak used the code name “Mr. Lincoln? in his underworld dealings. Jimmy fratianno, a gangster-turned-informer, said in his biography The Last Mafioso, that the now-imprisoned former Chicago boss Joe Aiuppa told him: “Sid is our man,” adding that he has “been our man his whole life/” In 1983 Joseph Hauser, a convicted insurance swindler, testified before a senate labor investigation that Accardo had told him “on several occasions [that] he had sent Korshak to Los Angeles to represent the mob there.”
Two years ago Korshak shed a little light on his fixer’s role with Hilton. During the hotel’s unsuccessful attempt to get a casino license in New Jersey, Chairman Barran Hilton announced that he was dropping Korshak’s services because of the Division of Gaming Enforcement’s concern about Korshak’s underworld connections. The hotel had previously paid him $700,000 in fees.
Korshak fired of an angry response to the chairman that was later turned over to the state’s gaming investigators: “I read with interest your disparaging remarks about me,” he wrote. “When did you discover that I was associated with characters that shocked your most decent sensibilities?” Korshak added: “You will remember calling me in Las Vegas at six one morning while you were with [movie executives] Kirk Kerkorian and Frank Rothman to ask the unions involved not to strike you. As you well know, there was no fee involved.”
Labor consultant Jack McCarthy is still in business even after taking on Rico Construction Co. of Long Island as a client in 1979. Facetiously named after the anti-racketeering statute, Rico was an FBI front. In a series of secretly taped conversations, McCarthy agreed to get Rico non-union carpenters for a $5,000 bribe and a promise of future payments.
McCarthhy had already served time for accepting kickbacks on Teamster pension fund loan and should have suspected that he was being set up. But he did not. Soon he lured Teddy Maritas, boss of the District Council of Carpenters, into the taped conversations. The FBI promptly arrested Maritas and tried him for working with gangsters to rig bids and shake down contractors. The jury was unable to reach a verdict, and Maritas disappeared before he could be retried. Authorities believe he was murdered. McCarthy pleaded guilty to extortion and went to prison again. He was freed in 1982, but is still under close watch. “We intend to limit history from repeating itself,” says Ray Maria, deputy inspector general of the Labor Department.
In Chicago politics and organized crime have always been linked. The FBI has had Pat Marcy, a 1st Ward Democratic leader, under surveillance since the late 1960s. Former FBI agent Roemer told Senate investigators in 1983, “Marcy has been calling the shots of the mob as far as politics is concerned for many, many, many years. He was the conduit through which orders of the Outfit passed to those politicians and public officials who were under their control.” And he still is.
An equal opportunity employer
Organized crime in the U.S. is not a Mafia monopoly. Members of the Chinese Triad secret societies and Japanese Yakuza have acquired growing influence in Hawaii and on the West Coast, where their legal and illegal enterprises range from prostitution and heroin to commercial real estate. Vietnamese underworld gangs operate in California and Texas, and the so-called Israeli Mafia is based in Los Angeles. Even a Russian emigre gang works extortion and narcotics rings in New York City. And in September a jury convicted 11 members of a Taiwanese crime syndicate, United Bamboo, of racketeering and drug dealing in the same Manhattan courthouse where eight of the top 50 Mafia bosses are now on trial.
At least three other groups have become strong enough to strike deals with the Italian-American mob. Most powerful are Colombian cocaine and marijuana traffickers, who are shattering the widely held assumption of Mafia omnipotence. For one thing, the Colombians’ sources of supply, their cocaine-processing labs, and their armed strongholds in Latin America are beyond the Mafia’s reach. For another, Colombian gunmen in the U.S. are known not only for shooting their targets, but for picking off the victims’ relatives as well. Even Genovese and Bonanno hitters are afraid to challenge these wild men, preferring a policy of appeasement, and a cut of the profits for serving as their distributors.
Perhaps the biggest cocaine trafficker is Colombian Carlos Enrique Lehder Rivas, 38, a fugitive from the Drug Enforcement Administration who is also known as Joe Lehder. Arrested in Detroit in 1973 for smuggling stolen cars, Lehder was imprisoned for two years and then deported to Bogota. Back home he got into the drug business, acquiring jungle plantations and processing labs. He also assembled a private army and a fleet of fast ships and planes, and built a well-guarded base for his smuggling activities on Norman’s Cay in the Bahamas.
With the assistance of fugitive American financier Robert Vesco, Lehder’s men struck a deal with Fidel Castro’s officials to let drug-laden planes fly through Cuban air space unimpeded for two hours a day. Federal agents estimate that Lehder’s cocaine sales in the U.S. range from 500 to 1,000 kilos a week. At a rock-bottom price of $6,000 per kilo, his annual revenues would come to between $160 million and $320 million.
U.S. agents investigating Lehder believe he is hooked on his own wares. He fancies himself a Marxist revolutionary called “Comandante Rambo” but runs his far-flung operations from the cockpit of a Learjet. He also owns a newspaper that publishes anti-U.S. diatribes. He pronounced death threats against U.S. diplomats in Colombia and the agents trying to close down his business on American soil.
Other crime groups, such as the Pagan Motorcycle Club and the Cuban “Corporation,” have also reached accommodation with various Mafia families. The Pagan “bikers,” who are Americans, work with the Philadelphia mob in drug trafficking and extortions, while the Corporation (estimated annual net profit: $45 million) operates numbers games in New York and New Jersey. The Cubans reportedly surrender a small percentage of their gross revenues to the Genoveses and Bonannos. But in Gambino territory the split goes the other way. To keep the peace, the Gambinos give 35% of all gambling proceeds—horses, casinos, and numbers—to the Cubans.
