Discussion Board Topic: What types of crimes do organized crime groups commit? Why do you feel that these types of criminal actions are chosen? How do some of these crimes harm legitimate businesses? Use evidence from your readings and module videos to support your thoughts.
Discussion Board Guidelines: Submit an answer to the discussion board. Each discussion board post will be between 250 350 words long. Refer & cite current resources in your answer.
CHAPTER THIRTEEN
Organized Crime in Labor, Business,
and Money Laundering
Abadinsky, Organized Crime 10th ed.
In 1957, Albert Anastasia, boss of the Gambino Family
and unofficial ruler of the Brooklyn waterfront, was
murdered in a barber’s chair at a New York hotel. His
brother, (“Tough”) Tony Anastasio, a member of the
Gambino Family and official ruler of the Brooklyn
waterfront, remained head of International
Longshoremen’s Local 1814 in Red Hook, Brooklyn, until
his natural death in 1963.
This chapter discusses the four international unions
connected to OC.
2
LABOR RACKETEERING
Infiltration, domination, and use of a union for
personal benefit by illegal, violent, and fraudulent
means.
Labor rackets assume 3 basic forms:
Sale of strike insurance.
Sweetheart deal.
Siphoning of union funds.
3
ORGANIZED LABOR IN AMERICA
Civil War led to dramatic industrialization of U.S.
Industrialization led to unionization.
Labor wars.
Wagner Act of 1935: Right of workers to organize
and engage in collective bargaining.
4
LABOR RACKETEERING:
IN THE BEGINNING
In the early days, labor unions provided muscle from
the ranks of their membership to deal with
management Pinkerton agents and strikebreakers.
Abuse of power, needless strikes, extortionate
practices.
Benjamin Dopey Fein: Jewish gang leader, part of
Jewish labor movement.
Protected pickets and union delegates against
management goons.
5
LEPKE BUCHALTER
Worked as strong-arm for labor-industrial racketeers.
Revolutionized labor racketeering.
Infiltrated unions and management to gain control.
Extorted wealth from NY garment, leather, baking,
trucking industries.
6
LABOR RACKETEERING AND THE BIG FOUR
Unions also fought with each other.
During struggles over jurisdiction and representation
between the AFL and the CIO, both sides resorted to
muscle from organized crime.
Many locals and some internationals were delivered
into the hands of organized crime.
1982 congressional committee: International unions
(LIUNA, HEREIU, ILA, IBT) are dominated by OC.
7
LABORERS INTERNATIONAL UNION
OF NORTH AMERICA (LIUNA)
Close ties to the Outfit.
Surveillance tapes of New Jersey Family boss Sam
DeCavalcante, discussing how control of Laborers
Union locals enabled him to shake down building
contractors who wanted to avoid using expensive
union labor.
2000: 127 LIUNA officials found to be OC members or
associates.
8
HOTEL EMPLOYEES AND RESTAURANT
EMPLOYEES INTERNATIONAL UNION (HEREIU)
HEREIU charters often provided the basis for extortion.
If an owner knew what was good for him, he agreed to
have his place unionized upon the first visit of the
organizer.
The Philadelphia local was controlled by the Family
headed by Angelo Bruno.
Bruno Family members forced hotels in Atlantic City to
buy supplies and provisions from companies they own.
9
INTERNATIONAL LONGSHOREMENS
ASSOCIATION (ILA)
The NY waterfront harbor plays a critical role in the
movement of goods throughout the Eastern seaboard.
Without government regulation, OC controlled it.
In control of the ILA, OC targeted the shipping
industry.
Ship turnaround time is crucial to shippers.
Shakedown shippers by threatening walkouts.
The shape up provided corrupt ILA officials with
kickbacks from workers eager for a days wage.
10
WATERFRONT COMMISSION
In 1952, it was revealed that OC, using its control of the ILA,
had for years been levying the equivalent of a 5 percent tax on
all general cargo moving in and out of the harbor.
Outrage led to the 1953 establishment of the New YorkNew
Jersey Waterfront Commission.
Commission has banned persons with serious criminal records
from the docks.
Eliminated the shape-up.
Convicted criminals prohibited from holding office in waterfront
unions.
Commission audits books and records of licensed stevedore
firms to guard against illegal payoffs and other violations.
11
INTERNATIONAL BROTHERHOOD
OF TEAMSTERS (IBT)
IBT is the most important union to come under the
domination of organized crime because virtually every
consumer product needs to be trucked.
Largest labor union in U.S.
1.4+ million truckers, delivery drivers, warehouse
workers, flight attendants, and other workers.
Lost membership since 1970s.
Once represented 80 percent of long-haul truck
drivers, but now represents only about 8 percent.
12
JIMMY HOFFA, TONY PROVENZANO (TONY PRO),
JOHN DIOGUARDI AND ANTHONY CORALLO,
ALLEN DORFMAN, JACKIE PRESSER
Some of these went from union reformer to labor
racketeer. Others began as racketeers.
They used corrupt methods to gain high position in
the union, and used union funds for personal use.
Most were convicted of crimes. Some were acquitted
when witnesses were murdered.
Several corrupt local unions were placed in
trusteeships by the government.
13
HOFFA VERSUS KENNEDY
Hoffa was subpoenaed to appear before the Senate Select
Committee on Improper Activities in the Labor or
Management Field.
He referred to committee counsel Robert Kennedy as
Bob or Bobby and as nothing but a rich mans kid.
1960: John F. Kennedy was elected president of the United
States and appointed his brother Robert attorney general.
Robert Kennedy made the Labor Racketeering Unit of the
Criminal Division his personal Get Hoffa Squad.
Hoffa was subsequently accused of trying to bribe jurors
and in 1964 was convicted of jury tampering and
sentenced to eight years imprisonment.
14
BUSINESS RACKETEERING
There is no hard-and-fast line separating labor
racketeering from business racketeeringone is often
an integral part of the other.
In many schemes involving corrupt union officials,
legitimate businessmen have willingly cooperated in
order to derive benefits such as decreased labor costs,
inflated prices, or increased business in the market.
15
THE GARMENT CENTER
Business racketeering in NYs garment industry dates back
to Lepke Buchalter.
Today it centers on racketeer control of local trucking:
whoever controls trucking controls the industry.
The fast-paced nature of the fashion industry cannot
countenance delays in shipping garments.
Until 1992, garment center trucking was controlled by
Carlo Gambinos sons.
1992 plea deal: Gambino brothers pled guilty to restraint
of trade violations and agreed to quit NYCs garment
center and pay a fine of $12 million.
16
RESTRAINT OF TRADE
Bid rigging and customer allocation are restraint of
trade violations of the Sherman Act.
Maximum fine for corporations: $100 million.
OC provides a restraint-of-trade policing service.
Sometimes, OC “muscles in” to extort a part, when
otherwise legitimate businesses have illegal restraint
of trade agreements among themselves.
17
CONSTRUCTION INDUSTRY
OC can limitt competition by enforcing a system of
collusive bidding.
Construction contractors, assisted or led by union
officials and LCN family members, allocate jobs among
themselves and exclude non-cartel.
Participant companies are beneficiaries, not victims,
since the benefits of the cartel offset the increased
costs it imposes.
18
PRIVATE SOLID WASTE CARTING
Companies faced with the constant threat of
cutthroat competition are tempted to pay gangsters
for protection against competitors.
Competition drives down profits until, with or without
help from OC, an association is formed.
Members divide up the industry, allocating territories
or specific customers.
Members (illegally) agree not to compete for another
members business.
19
CRIMINALS IN A LEGITIMATE BUSINESS
6 reasons for OC involvement in legitimate business:
Profit
Diversification
Transfer
Services
Front
Taxes
20
THE SCAM / BUST OUT
Bankruptcy fraud that victimizes wholesale providers
of various goods and sometimes insurance companies
The business used as the basis for a scam may be set
up with that scheme as its purpose, or it may be an
established business that has fallen into OC control as
a result of gambling or loan shark debt.
21
STOCK FRAUD
Through the OC network, stolen securities can be
transferred to a country with strict bank secrecy laws.
The securities are deposited in a bank, which issues a
letter of credit, which is used to secure loans that are
then defaulted.
Used as collateral for bank loans from cooperative
loan officials or rented to legitimate businessmen
in need of collateral for instant credit.
22
MONEY LAUNDERING
Cash-rich criminals have a problem: laundering their
illegal gains.
Modern financial systems permit instant transfer of
millions of dollars through personal computers and
satellite dishes.
Money is laundered through currency exchange
houses, stock brokerage houses, gold dealers, casinos,
automobile dealerships, insurance companies, and
trading companies.
23 CHAPTER ELEVEN
Organized Crime: Goods And Services
Gambling, Loansharking, Theft, Fencing,
Sex, Trafficking In Persons, Arms,
And Counterfeit Products
Abadinsky, Organized Crime 10th ed.
On a corner in New York’s Chinatown, a woman
approaches the salesman. He takes a pamphlet from his
pocket and shows her pictures of Coach, Gucci, and
Louis Vuitton handbags. The woman asks a few
questions, points to her selection, and gives him cash.
He makes a cell phone call and soon another man
appears carrying a plastic bag. Inside is the handbag she
paid fora counterfeit Gucci. The woman walks away
with her purchase, smiling.
In this chapter we examine the global market in a wide
range of illegal goods and services.
2
ORANIZED CRIME AND THE PROVIDERS OF
ILLEGAL GOODS AD SERVICES
3
The business of organized crime is the provision of
goods and services that happen to be illegal.
Translating morality into a statute backed by legal
sanctions does not provide for greater morality.
Widens law
Creates temptation
Creates opportunity
3 FORMS OF CONNECTION BETWEEN
ORGANIZED CRIME AND LEGAL BUSINESS
Parasitic: Members of a criminal organization extort
money from illegal entrepreneurs under a threat of
violence.
Reciprocal: Members of a criminal organization require
legitimate or illegal entrepreneurs to pay a fixed or
percentage amount but in return provide services, such as
restricting market entry, debt collection, and arbitration.
Entrepreneurship: A member of a criminal organization
provides an illegal good such as drugs or a service, such as
enforcement of restraint of trade agreements.
4
GOODS AND SERVICES OR EXTORTION?
The business of organized crime is extortion.
Providers of illegal goods and services
are victims of OC extortion.
Pay for the privilege of doing business.
Pay street tax to avoid being killed.
Pay to license their business operations.
5
Those who
somehow
missed
Butchs
silent
message
became
corpses.
GAMBLING
Gambling enforcement has a low priority with police
and with the public.
Cell phones and the internet make the crime easier.
1983-1995: Illegal betting increased tenfold (est.)
Arrests declined.
1960: 123,000 persons arrested for illegal gambling.
1995: approx. 15,000 arrested.
6
BOOKMAKING
2 types:
1. Horse races and dog races.
2. Sporting events.
In the past, horse parlors or wire rooms were set up in
the back of a legitimate business.
Now, bets are placed by telephone directly or through a
roving handbook, runner, or sheetwriter who
transmits the bet to the bookmaker.
To maintain security, some bookmakers change locations
frequently, often monthly, or they may use cell phones.
Call back system: The bettor calls an answering service or
machine and leaves his or her number. The bookmaker returns
the call from a variety of locations, and the bet is placed.
7
SPORTS WAGERING
King of bookmaking. Large dollar proceeds.
Bookmaker seeks balance between team bets.
Uses a line or pointsthe expected difference
between the favored team and the underdog.
vigorish: The requirement, built into the odds, that
$11 is bet in order to win $10. Also called juice.
This guarantees the bookmaker a 10% profit.
8
ORGANIZED CRIME AND BOOKMAKING
In the past, bookmaking was an important source of income for
OC.
OC ran the operation or licensed syndicate bookmakers.
OC controlled the wire service that provided race results.
Phones used now.
1995: police raided a major bookmaking operationestimated
gross $65 million, net 20 %.
Computers used custom sports betting program. The
computers were linked to an online service from Las Vegas
that provided the latest line on sporting events.
The operation connected to Colombo and Gambino Families.
9
LOTTERIES
American colonies authorized lotteries.
Lottery used (unsuccessfully) to help finance the
Revolutionary War.
Supported by lotteries years ago: Rhode Island College
(now Brown), Columbia, Harvard, University of North
Carolina, William and Mary, and Yale.
19th century: Many lotteries.
1890: U.S. prohibited lotteries from using the mail.
This prohibition created opportunity for an illegal lottery,
the numbers business.
10
CASINO GAMBLING
AND RELATED ACTIVITIES
Some cities have a tradition of holding Las Vegas
Nights.
Approval and protection of organized crime unit,
using front of a religious or charitable organization.
OC provides gambling devices, personnel, and
financing, and shares profits with the sponsor.
OC organized or sponsored high stakes card or dice
games, taking a cut of every pot.
Games may be operated in the home of a person in
debt to a loan shark to pay the loan.
11
LAS VEGAS
1931: Nevada legalized gambling during the Depression.
1946: Bugsy Siegel, OC figure, saw the potential.
Financed by OC leaders throughout the country, Siegel
built the Flamingo Hotel, the first elaborate LV gambling
establishment.
LV hotels were controlled by OC units around the country.
Funds skimmed before being counted for tax purposes.
Distributed to OC bosses in proportion to their ownership.
1973 to 1983, at least $14 million was skimmed from just one
hotel, the Stardust.
OC now only on fringes of LV scene.
12
CYBER-GAMBLING
Online bingo, poker, blackjack, roulette, and other, 24 hours a
day.
If legal where licensed, bookmakers are beyond U.S.
jurisdiction.
Cyber-bookie Calvin Ayre: headquartered in Costa Rica;
operates online casino with 145,000 customers, most in the U.S.
Not a U.S. citizen; no physical presence in U.S.; pays no U.S. taxes;
net worth about $1 billion.
2009: Members of the Lucchese Family arrested for running an
offshore sports betting business.
Access codes enabled customers to place bets over the Internet.
U.S. gamblers are required to declare their winnings on tax
returns, but cyber-bookies do not file reports with the IRS.
13
CYBER-CRIME
Transnational OC is increasingly involved.
Costs consumers billions, threatens corporate and
government computer networks, and undermines
confidence in the international financial system.
Computer crime is not necessarily cyber-crime.
2008: A Russian criminal organization took almost $10
million from the U.S. banking system.
Artificially inflated balances on prepaid credit or cash cards.
Distributed cards to dozens of “money mules.
Withdrew millions from ATMs in cities across the country in
a coordinated operation that took less than 24 hours.
14
CYBER-CRIME
Criminal activity is facilitated by the use of encryption.
Accessible through retail software and hardware.
OC can launder dollars, rubles, yuan, any currency.
Employ hackers.
Extort payments from hacked companies.
Infiltrate businessphysically and/or electronically.
Gambino Family piggybacked bogus charges onto
credit cards and phone bills; $650 million taken.
15
BOTNETS AND PROXY SERVERS
Botnets are networks of compromised computers
controlled remotely.
Originally a useful tool for legitimate business users.
Can infiltrate and modify web pages.
Criminals rent or sell their botnets or operate them as
a part of their criminal organization portfolio.
Proxy-servers conceal online activity, inhibiting law
enforcement pursuit of cyber-criminals.
16
LOANSHARKING (USURY)
1880-1915: salary lending thrived in the U.S.
Provided loans to salaried workers at usurious rates.
After 1911: Laws licensed small lenders and set
ceilings on interest.
Created opportunity for OC illicit credit business.
2 features:
Exorbitant interest rates
Threat of violence
17
Usury:
loaning
money at an
exorbitant
interest rate.
OC USURY DURING
THE GREAT DEPRESSION
After Prohibition, OC had lots of cash, no place to
invest it, except the cash-poor economy.
Lend to legitimate and illegitimate business.
2 types of usurious loans:
knockdown: Specified schedule of repayment,
including principle and interest.
vig: A 6-for-5 loan; for every $5 borrowed on
Monday, $6 is due the following Monday.
The $1 interest is the vigorish or juice.
18
FENCING
A fence provides a market for stolen goods.
For OC, it is a part of the illegal business portfolio.
OC may require thieves to deal with a certain fence.
19
COMMERCIAL SEX: PROSTITUTION
Late 19th, early 20th century: Prostitution houses were
an important social phenomenon.
1910: Mann Act (White Slave Act) prohibited
interstate transportation of women for immoral
purpose.
After Prohibition, OC organized the independent
brothels, requiring madams to pay protection.
Today, in some Chicago suburbs, brothels and sex
entertainment bars pay street taxes to the Outfit.
20
COMMERCIAL SEX: PORNOGRAPHY
Formerly, almost exclusively controlled by OC.
Now, liberal court decisions legalized the genre and
legitimate entrepreneurs entered the market.
In Los Angeles, the Dragna crime family was convicted
of extorting money from porn shop owners.
Because they were no longer illegitimate, porn
operators were able to go to the authorities about
the extortion attempt.
21
TRAFFICKING IN PERSONS, ARMS,
AND COUNTERFEIT PRODUCTS
The globalization of organized crime has greatly
expanded the portfolios of criminal organizations,
particularly trafficking in persons, arms, and
counterfeit products.
22
TRAFFICKING IN PERSONS (TIP)
Modern slavery
Victims lured with false promises of good jobs; forced
to work in brutal, inhumane conditions.
Debt, violence, threats, and deception create a pliant
and exploitable work force.
2 broad categories:
Undocumented workers in bonded servitude.
Trade in persons for the commercial sex industry.
23
HUMAN TRAFFICKING EXAMPLES
Abducted or recruited in the country of origin.
Transferred through transit regions.
Exploited in the destination country.
Agricultural workers brought into the U.S.
Child camel jockeys in Dubai.
Indonesian women doing domestic work.
Child victims of sexual exploitation in Thailand.
Child soldiers in Uganda.
24
TRAFFICKING IN ARMS
OC facilitates trade in conflict and post-conflict areas
and urban gangs, especially Africa and Latin America.
Drug trafficking generates a demand for illegal arms.
Linked to global crimes in multiple ways: shared
trafficking routes, same distribution networks and
money-laundering infrastructure, and exchange of
guns for drugs or other commodities.
25
TRAFFICKING IN COUNTERFEIT PRODUCTS
Products: intellectual property (books, music, videos,
software); brand-name and designer clothing,
handbags, and jewelry; and pharmaceuticals.
The factory owner does not make the big money.
Thats for the networks running importation and
distribution.
Camorra clans traffic in counterfeit goods, controlling
thousands of Chinese factories making fashion goods,
legally and illegally, for distribution around the world.
26
SHOW MORE…
Campaign Plan
Need some advice please see attachment
MMC 6950_Fall B 2018 Professor Heather Radi-Bermudez
Structuring a Campaign Plan (Project A) GSC Program
There is no exact way to organize and assemble your plan book. However, it is critical
to make sure all of the information you gathered, the analysis you did, and the
conclusions/recommendations you are making are presented in a logical manner.
Your campaign plan both tells a story and makes a case. You might know something,
but if it isnt written on paper or presented in a logical manner, it wont make sense to
the readers. In other words, you wont make your case. Likewise, all assertions in your
book MUST be attributed if they are not, your book will read like the opinion page of
The Miami Herald, instead of the factual analysis and decision-making tool it should be.
Of utmost importance is to give credit and attribution whenever you borrow ideas or
material from others. Please remember that committing plagiarism will have serious
implications. With that in mind, below are all of the sections and subsections a typical
campaign plan includes. The major sections of the plan are in bold.
1. Title Page (sample provided to you in orientation packet)
2. Table of Contents
3. Executive Summary – A short summary of the entire plan, describing the
process undertaken to conduct the study and brief reference to select
recommendations; usually the last item to be prepared, but the first item in the
book.
Research Section
4. Problem Statement – Describes, as succinctly as possible, the problem facing
the client and the issue to be tackled with this plan.
5. Situation Analysis – Contains data and information to illustrate the problem and
the client overview of the current situation. Includes benchmarks relevant to the
company or industry. Typically includes all items pertaining to secondary
research:
Company analysis (history, mission, vision, values, organization,
IMC resources)
Product, brand, and/or service analysis (history, description,
growth, historical sales, volumes)
Analysis of existing markets/buyer behavior/current user evaluation
(demographics, psychographics, seasonality)
Competitive analysis (competitive sales, competitive media,
direct/indirect competitors)
Pricing/distribution analysis, if appropriate
Analysis of past IMC and overall communications efforts
Market and environmental analysis; market opportunity analysis if
its a new product to be launched
Other information gathered in secondary research
Implications and guide or rationale for primary research
Primary Research:
MMC 6950_Fall B 2018 Professor Heather Radi-Bermudez
Objectives (What did we want to find out? What are the research
questions addressed with this research?)
Methodology and sample (How, where, when, and who did we
consult to find it out?)
KEY research findings, observations, and results (whichever is
appropriate)
Implications (THOROUGH analysis of all of the research leading
the reader to the strategy section)
SWOT (summarizes internal strengths and weaknesses of the company,
product or service, and external opportunities and threats facing the
organization, the industry, and/or the environment.) NOTE: The findings
and SWOT form the basis for justifying the recommendations to be
presented in the next sections.
A note about the research: If you include key findings in chart or graph form, they must
have narrative explanations before the graph or chart. All data, listing sources or
borrowed ideas must be cited using APA style, in both the body of the plan and at the
end of the plan. If its doesnt come from your head, you need to credit someone else
with the thought, idea, statement or research.
Strategy
6. IMC Goal – What is the desired outcome of the campaign? What will determine
its success?
7. Target Market Profile Demographic, psychographics described in DETAIL
8. IMC Strategies – Include narrative on the overall strategic, how are we going to
achieve the goal? What overall message will be communicated?
Tactics
9. Advertising/Public Relations/Sales Promotion, Merchandising and Point of
Sale/Direct Marketing/Event Marketing Recommendations – Include all
advertising media to be used, all public relations tactics to be deployed, all sales
promotion tactics to be carried out including but not limited to special events,
exhibitions, and trade shows. Include one or more fully executed samples, as
applicable, for each discipline used, including but not limited to, direct mail cards
and collateral. For example:
Strategy #1
Advertising tactics
PR tactics
Sales promotion, merchandising and point-of-purchase tactics
Direct marketing tactics
Event marketing tactics
Other tactical recommendations sponsorships, partnerships,
personal selling, viral marketing, packaging, word-of-mouth, etc.
Implementation (if needed or appropriate)
MMC 6950_Fall B 2018 Professor Heather Radi-Bermudez
10. Budget – All projected campaign costs to be included here, including agency
fees.
11. Implementation Schedule – Include a week-by-week or month-by-month
schedule of ALL advertising, public relations and sales promotion strategies for
the length of the campaign.
Evaluation Section
12. Evaluation —
Preparation, implementation, impact evaluations
Methods, pre/post testing, concept testing, costs, KPIs
Appendix
13. Appendices, footnotes, research, survey questionnaire, summary of
responses/data collection, and all other relevant supporting material
Student Bio