Chapter 12 organized crime in labor, business and money laundering PDF

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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. 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 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. 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. 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. Laborer’s 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.

Hotel employees and restaurant employees international union - 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. International longshoremen's association - 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 day’s wage.

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 York–New 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. International brotherhood of teamsters - 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.

Jimmy hoffa, tony provenzano john diogaurdi, anthony corallo allen dorman jacie 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. Hoffa v 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 man’s 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.

Business racketeering - There is no hard-and-fast line separating labor racketeering from business racketeering —one 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. Garment center - Business racketeering in NY’s 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 Gambino’s sons. - 1992 plea deal: Gambino brothers pled guilty to restraint of trade violations and agreed to quit NYC’s garment center and pay a fine of $12 million.

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.

Construction industry - OC can limit 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. 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 member’s business.

Criminals in legitimate business - Six reasons for OC involvement in legitimate business: - Profit - Diversification - Transfer - Services - Front - Taxes 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.

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.

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....