60

Too little is known about the effects on the economy of organized crime's entry into the business world, but the examples above indicate the harm done to the public and at least suggest how criminal cartels can undermine free competition.61 The ordinary businessman is hard pressed to compete with a syndicate enterprise. From its gambling and other illegal revenue-on most of which no taxes are paid-the criminal group always has a ready source of cash with which to enter any business. Through union connections, the business run by organized crime either prevents unionization or secures "sweetheart" contracts from existing unions.62 These tactics are used effectively in combination. In one city, organized crime gained a monopoly in garbage collection by preserving the business's nonunion status and by using cash reserves to offset temporary losses incurred when the criminal group lowered prices to drive competitors out of business.63

Strong-arm tactics are used to enforce unfair business. policy and to obtain customers. A restaurant chain controlled by organized crime used the guise of "quality control" to insure that individual restaurant franchise holders bought products only from other syndicate-owned businesses. In one city, every business with a particular kind of waste product useful in another line of industry sold that product to a syndicate-controlled business at onethird the price offered by legitimate business.

The cumulative effect of the infiltration of legitimate business in America cannot be measured.65 Law enforcement officials agree that entry into legitimate business is continually increasing and that it has not decreased organized crime's control over gambling, usury and other profitable, low-risk criminal enterprises.

Labor Racketeering.66 Control of labor supply and infiltration of labor unions by organized crime prevent unionization of some industries, provide opportunities for stealing from union funds and extorting money by threats of possible labor strife, and provide funds from the enormous union pension and welfare systems for business ventures controlled by organized criminals. Union control also may enhance other illegal activities. Trucking, construction, and waterfront shipping entrepreneurs, in return for assurance that business operations will not be interrupted by labor discord, countenance gambling, loan sharking, and pilferage on company property. Organized criminals either direct these activities or grant "concessions" to others in return for a percentage of the profits. Some of organized crime's effects on labor union affairs, particularly in the abuse of pension and welfare funds, were disclosed in investigations by Senator John McClellan's committee. In one case, almost immediately after

60 "There can be little doubt that the public suffers from gangster penetration into legitimate business. It suffers because higher prices must be paid for articles and services which it must buy. . . . The public suffers because it may have to put up with shoddy and inferior merchandise in fields where gangsters have been able to obtain a monopoly." Kefanver Comm., 3d Interim Rep., s. REP. NO. 307, 82d Cong., 1st Sess. 170-71 (1951).

61 See Johnson, Organized Crime: Challenge to the American Legal System (pt. 1), 53 J. CRIM. L., C. & P.S. 399, 406-07.

62 See generally McClellan, Labor-Mgt. Reps., 1st Interim Rep., s. REP. NO. 1417, 85th Cong., 2d Sess. (1958), 2d Interim Rep. (pts. 1 & 2), s. REP. No. 621, 86th Cong., 1st Sess. (1959), Final Rep. (pts. 1-4), s. REP. No. 1139, 86th Cong., 2d Sess. (1960).

63 Information submitted to Commission by a Federal agency.

61 "When organized crime embarks on a venture in legitimate business it ordinarily brings to that venture all the techniques of violence and intimidation which are employed in its illegal enterprises." Johnson, Organized Crime: Challenge to the American Legal System (pt. 1), 53 J. CRIM. L., C. & P.S. 399, 402-04 (1963).

65 For a discussion of the criminal infiltration of legitimate activities, see Woetzel, An Overview of Organized Crime: Mores versus Morality, Annals, May

receiving a license as an insurance broker, the son of a major organized crime figure in New York City was chosen as the broker for a number of such funds, with significant commissions to be earned and made available for distribution to "silent partners." The youthful broker's only explanation for his success was that he had advertised in the classified telephone directory.67

In New York City, early in 1966, the head of one organized crime group was revealed to be a partner in a labor relations consulting firm. One client of the firm, a nationally prominent builder, said he did not oppose unions but that better and cheaper houses could be built without them. The question of why a legitimate businessman would seek the services of an untrained consultant with a criminal record to handle his labor relations was not answered.

LOCATION OF ORGANIZED CRIME ACTIVITIES

Organized criminal groups are known to operate in all sections of the Nation. In response to a Commission survey of 71 cities, the police departments in 80 percent of the cities with over 1 million residents, in 20 percent of the cities with a population between one-half million and a million, in 20 percent of the cities with between 250,000 and 500,000 population, and in over 50 percent of the cities between 100,000 and 250,000, indicated that organized criminal groups exist in their cities. In some instances Federal agency intelligence indicated the presence of organized crime where local reports denied it.68 Of the nine cities not responding to the Commission survey,69 six are known to Federal agencies to have extensive organized crime problems. Where the existence of organized crime was acknowledged, all police departments indicated that the criminal group would continue even though a top leader died or was incarcerated.

70

Organized crime in small cities is more difficult to assess. Law enforcement personnel are aware of many instances in which local racket figures controlled crime in a smaller city and received aid from and paid tribute to organized criminal groups located in a nearby large city. In one Eastern town, for example, the local racket figure combined with outside organized criminal groups to establish horse and numbers gambling grossing $1.3 million annually, an organized dice game drawing customers from four states and having an employee payroll of $350,000 annually, and a still capable of producing $4 million worth of alcohol each year. The town's population was less than 100,000. Organized crime cannot be seen as merely a big-city problem.

71

1963, pp. 1, 6-7. For an excellent discussion of criminal infiltration into business in Chicago, see Peterson, Chicago: Shades of Capone, Annals, May 1963, pp. 30,

32-39.

66 For a detailed examination of labor racketeering, see McClellan, Labor-Mgt. Reps., 1st Interim Rep., s. REP. NO. 1417, 85th Cong., 2d Sess. (1958), 2d Interim Rep. (pts. 1 & 2), s. REP. No. 621, 86th Cong., 1st Sess. (1959), Final Rep. (pts. 1-4), s. REP. NO. 1139, 86th Cong., 2d Sess. (1960).

67 Interview with James P. Kelly, former investigator for Sen. Select Comm. on Improper Activities in the Labor or Management Field, Nov. 23, 1966.

68 Information submitted to Commission by a Federal agency. The Kefauver Committee encountered similar inconsistencies in responses of certain local law enforcement officials: "Whether out of ignorance or indolence is not clear, but some local authorities insisted, orally and in writing, that there was no organized crime in their jurisdiction, although the subsequent testimony proved them pathetically in error" Kefauver Comm., 2d Interim Rep., s. REP. NO. 141, 82d Cong., 1st Sess. 7 (1951).

Buffalo, N.Y.; Flint, Mich., Kansas City, Kans.; Milwaukee, Wis.; Mobile, Ala.; Nashville, Tenn.; New Orleans, La.; Oakland, Calif.; Youngstown, Ohio. TO Information submitted to Commission by a Federal agency.

1 Ibid.

CORRUPTION OF THE ENFORCEMENT AND POLITICAL SYSTEMS 72

Today's corruption is less visible, more subtle, and therefore more difficult to detect and assess than the corruption of the prohibition era. All available data indicate All available data indicate that organized crime flourishes only where it has corrupted local officials. As the scope and variety of organized crime's activities have expanded, its need to involve public officials at every level of local government has grown. And as government regulation expands into more and more areas of private and business activity, the power to corrupt likewise affords the corrupter more control over matters affecting the everyday life of each citizen.

Contrast, for example, the way governmental action in contract procurement or zoning functions today with the way it functioned only a few years ago. The potential harm of corruption is greater today if only because the scope of governmental activity is greater. In different places at different times, organized crime has corrupted police officials, prosecutors, legislators, judges, regulatory agency officials, mayors, councilmen, and other public officials, whose legitimate exercise of duties would block organized crime and whose illegal exercise of duties helps it.74

Neutralizing local law enforcement is central to organized crime's operations. What can the public do if no one investigates the investigators, and the political figures are neutralized by their alliance with organized crime? Anyone reporting corrupt activities may merely be telling his story to the corrupted; in a recent "investigation" of widespread corruption, the prosecutor announced that any citizen coming forward with evidence of payments to public officials to secure government action would be prosecuted for participating in such unlawful conduct.

In recent years some local governments have been dominated by criminal groups. Today, no large city is completely controlled by organized crime, but in many there is a considerable degree of corruption.75

Organized crime currently is directing its efforts to corrupt law enforcement at the chief or at least middle-level supervisory officials. The corrupt political executive who ties the hands of police officials who want to act against organized crime is even more effective for organized crime's purposes. To secure political power organized crime tries by bribes or political contributions to corrupt the nonoffice-holding political leaders to whom judges, mayors, prosecuting attorneys, and correctional officials may be responsive.

76

It is impossible to determine how extensive the corruption of public officials by organized crime has been. We do know that there must be more vigilance against such corruption, and we know that there must be better ways for the public to communicate information about corruption to appropriate governmental personnel.

72 "Finally, the public suffers because the vast economic resources that gangsters and racketeers control [enable] them to consolidate their economic and political positions. Money, and particularly ready cash, is power in any community and over and over again this committee has found instances where racketeers' money has been used to exercise influence with Federal, state, and local officials and agencies of government . . . The money used by hoodlums to buy economic and political control is also used to induce public apathy." Kefauver Comm., 3d Interim Rep., S. REP. NO. 307, 82d Cong., 1st Sess. 171 (1951).

13 "[C]orruption by organized crime is a normal condition of American local government and politics." Moynihan, The Private Government of Organized Crime, The Reporter, July 6, 1961, p. 14.

See, for example, United States v. Kahaner, 317 F.2d 459, cert. denied, 375 U.S. 836 (1963), in which a State judge, a Federal prosecutor, and a racketeer were involved in a conspiracy to obstruct justice in connection with the sentencing of a Federal law violator. See also Johnson, supra note 61, at 419-22.

Some law enforcement officials define organized crime as those groups engaged in gambling, or narcotics pushing, or loan sharking, or with illegal business or labor interests. This is useful to the extent that it eliminates certain other criminal groups from consideration, such as youth gangs, pickpocket rings, and professional criminal groups who may also commit many types of crimes, but whose groups are ad hoc. But when law enforcement officials focus exclusively on the crime instead of the organization, their target is likely to be the lowest-level criminals who commit the visible crimes. This has little effect on the organization.78

The Commission believes that before a strategy to combat organized crime's threat to America can be developed, that threat must be assessed by a close examination of organized crime's distinctive characteristics and methods of operation.

NATIONAL SCOPE OF ORGANIZED CRIME

In 1951 the Kefauver Committee declared that a nationwide crime syndicate known as the Mafia operated in many large cities and that the leaders of the Mafia usually controlled the most lucrative rackets in their cities.79

In 1957, 20 of organized crime's top leaders were convicted (later reversed on appeal) 80 of a criminal charge arising from a meeting at Apalachin, N.Y. At the sentencing the judge stated that they had sought to corrupt and infiltrate the political mainstreams of the country, that they had led double lives of crime and respectability, and that their probation reports read "like a tale of horrors."

Today the core of organized crime in the United States consists of 24 groups operating as criminal cartels in large cities across the Nation. Their membership is exclusively men of Italian descent, they are in frequent communication with each other, and their smooth functioning is insured by a national body of overseers.81 To date, only the Federal Bureau of Investigation has been able to document fully the national scope of these groups, and FBI intelligence indicates that the organization as a whole has changed its name from the Mafia to La Cosa Nostra. In 1966 J. Edgar Hoover told a House of Representatives Appropriations Subcommittee:

75 Information submitted to Commission by a Federal agency.

70 "The largest single factor in the breakdown of law enforcement agencies in dealing with organized crime is the corruption and connivance of many public officials." ABA, REPORT ON ORGANIZED CRIME AND LAW ENFORCEMENT 16 (1952). 77 See generally Cressey, supra note 27. For detailed information on organized crime members and their activities in various areas of the country, see McClellan, Narcotics Hearings, 88th Cong., 1st Sess., pts. 1 & 2 (1963), 1st & 2d Sess., pts. 3 & 4 (1963-64), 2d Sess., pt. 5 (1964).

78 "Minor members... may be imprisoned, but the top leaders remain relatively untouched by law enforcement agencies." ABA, op. cit. supra note 76, Kefauver Comm., 3d Interim Rep., s. REP. No. 307, 82d Cong., 1st Sess. 150 (1951).

at 13.

80 United States v. Bufalino, 285 F.2d 408 (2d Cir. 1960).

81 See testimony of J. Edgar Hoover, supra note 32, at 272-74.

It operates on a nationwide basis, with international implications, and until recent years it carried on its activities with almost complete secrecy. It functions as a criminal cartel, adhering to its own body of "law" and "justice" and, in so doing, thwarts and usurps the authority of legally constituted judicial bodies. . .82

In individual cities, the local core group may also be known as the "outfit," the "syndicate," or the "mob." 83 These 24 groups work with and control other racket groups, whose leaders are of various ethnic derivations. In addition, the thousands of employees who perform the street-level functions of organized crime's gambling, usury, and other illegal activities represent a cross section of the Nation's population groups.

The present confederation of organized crime groups arose after Prohibition, during which Italian, German, Irish, and Jewish groups had competed with one another in racket operations. The Italian groups were successful in switching their enterprises from prostitution and bootlegging to gambling, extortion, and other illegal activities. They consolidated their power through murder and violence. 84

Today, members of the 24 core groups reside and are active in the States shown on the The map. and

scope

States in Which Organized Crime Core Group Members Both Reside and Operate

effect of their criminal operations and penetration of legitimate businesses vary from area to area. The wealthiest and most influential core groups operate in States including New York, New Jersey, Illinois, Florida, Louisiana, Nevada, Michigan, and Rhode Island.85 Not shown on the map are many States in which members of core groups control criminal activity even though they do not reside there. For example, a variety of illegal activities, in New England is controlled from Rhode Island.86

Recognition of the common ethnic tie of the 5,000 or more members of organized crime's core groups 87 is essential to understanding the structure of these groups today. Some have been concerned that past identification of Cosa Nostra's ethnic character has reflected on ItalianAmericans generally. This false implication was elo

Id. at 272.

See testimony of former New York City Police Comm'r Michael J. Murphy, McClellan, Narcotics Hearings, 88th Cong., 1st Sess., pt. 1, at 63 (1963); testimony of Capt. William Duffy, id. pt. 2, at 506; OFFICE OF THE N.Y. COUNSEL TO THE GOVERNOR, COMBATING ORGANIZED CRIME A REPORT OF THE 1965 OYSTER BAY, NEW YORK, CONFERENCES ON COMBATING ORGANIZED CRIME 24 (1966).

84 See generally ORGANIZED CRIME IN AMERICA 147-224 (Tyler ed. 1962). Information submitted to Commission by a Federal agency.

So Ibid.

quently refuted by one of the Nation's outstanding experts on organized crime, Sgt. Ralph Salerno of the New York City Police Department. City Police Department. When an Italian-American racketeer complained to him, "Why does it have to be one of your own kind that hurts you?", Sgt. Salerno answered:

I'm not your kind and you're not my kind. My manners, morals, and mores are not yours. The only thing we have in common is that we both spring from an Italian heritage and culture-and you are the traitor to that heritage and culture which I am proud to be part of 88

Organized crime in its totality thus consists of these 24 groups allied with other racket enterprises to form a loose confederation operating in large and small cities. In the core groups, because of their permanency of form, strength of organization and ability to control other racketeer operations, resides the power that organized crime has in America today.

Each of the 24 groups is known as a "family," with membership varying from as many as 700 men to as few as 20. Most cities with organized crime have only one family; New York City has five. Each family can participate in the full range of activities in which organized crime generally is known to engage. Family organization is rationally designed with an integrated set of positions geared to maximize profits. Like any large corporation, the organization functions regardless of personnel changes, and no individual-not even the leader-is indispensable. If he dies or goes to jail, business goes on.

The heirarchical structure of the families resembles that of the Mafia groups that have operated for almost a century on the island of Sicily. Each family is headed by one man, the "boss," whose primary functions are maintaining order and maximizing profits. Subject only to the possibility of being overruled by the national advisory group, which will be discussed below, his authority in all matters relating to his family is absolute.

Beneath each boss is an "underboss," the vice president or deputy director of the family. He collects information for the boss; he relays messages to him and passes his instructions down to his own underlings. In the absence of the boss, the underboss acts for him.

On the same level as the underboss, but operating in a staff capacity, is the consigliere, who is a counselor, or adviser. Often an elder member of the family who has partially retired from a career in crime, he gives advice to family members, including the boss and underboss, and thereby enjoys considerable influence and power.

Below the level of the underboss are the caporegime, some of whom serve as buffers between the top members of the family and the lower-echelon personnel. To maintain their insulation from the police, the leaders of the hierarchy (particularly the boss) avoid direct communication with the workers. All commands, information, complaints, and money flow back and forth through a

87 Testimony of J. Edgar Hoover, Hearings Before the Subcomm. on Dep'ts of State, Justice, and Commerce, the Judiciary, and Related Agencies Appropriations of the House Comm. on Appropriations, 89th Cong., 2d Sess. 273 (1966). 88 Grutzner, City Police Expert on Mafia Retiring from Force, N.Y. Times, Jan. 21, 1967, p. 65, col. 3.

80 For an extensive discussion of the internal structure of the organized crime groups, see Cressey, The Functions and Structure of Criminal Syndicates, Sept. 1966, at 31-40, printed as appendix A of this volume. See also McClellan, Narcotics Hearings, 88th Cong., 1st Sess., pts. 1 & 2 (1963), 1st & 2d Sess., pts. 3 & 4 (1963-64), 2d Sess., pt. 5 (1964).

trusted go-between. A caporegima fulfilling this buffer capacity, however, unlike the underboss, does not make decisions or assume any of the authority of his boss.

Other caporegime serve as chiefs of operating units. The number of men supervised in each unit varies with the size and activities of particular families. Often the caporegima has one or two associates who work closely with him, carrying orders, information, and money to the men who belong to his unit. From a business standpoint, the caporegima is analogous to plant supervisor or sales manager.

The lowest level "members" of a family are the soldati, the soldiers or "button" men who report to the caporegime. A soldier may operate a particular illicit enterprise, e.g., a loan-sharking operation, a dice game, a lottery, a bookmaking operation, a smuggling operation, on a commission basis, or he may "own" the enterprise and pay a portion of its profit to the organization, in return for the right to operate. Partnerships are common between two or more soldiers and between soldiers and men higher up in the hierarchy. Some soldiers and most upper-echelon family members have interests in more than one business.

Beneath the soldiers in the hierarchy are large numbers of employees and commission agents who are not members of the family and are not necessarily of Italian descent. These are the people who do most of the actual work in the various enterprises. They have no buffers or other insulation from law enforcement. They take bets, drive trucks, answer telephones, sell narcotics, tend the stills, work in the legitimate businesses. For example, in a major lottery business that operated in Negro neighborhoods in Chicago, the workers were Negroes; the bankers for the lottery were Japanese-Americans; but the game, including the banking operation, was licensed, for a fee, by a family member.90

The structure and activities of a typical family are shown in the chart on the following page.

There are at least two aspects of organized crime that characterize it as a unique form of criminal activity. The first is the element of corruption. The second is the element of enforcement, which is necessary for the maintenance of both internal discipline and the regularity of business transactions. In the hierarchy of organized crime there are positions for people fulfilling both of these functions. But neither is essential to the long-term operation of other types of criminal The mem-f^ groups. bers of a pickpocket troupe or check-passing ring, for example, are likely to take punitive action against any member who holds out more than his share of the spoils, or betrays the group to the police; but they do not recruit or train for a well-established position of "enforcer." Organized crime groups, on the other hand, are believed to contain one or more fixed positions for "enforcers," whose duty it is to maintain organizational integrity by arranging for the maiming and killing of recalcitrant members. And there is a position for a "corrupter," whose function is to establish relationships with those public officials and other influential persons whose assistance is necessary to achieve the organization's

90 Information submitted to Commission by a Federal agency.

91 Federal agency intelligence indicates that the consigiliere frequently acts as the "corrupter." In this connection, the Kefauver Committee underscored the sinister influence Frank Costello exercised upon the New York County Democratic organization. Kefauver Comm., 3d Interim Rep., s. REP. No. 307, 82d Cong., 1st Sess. 143-44 (1951).

The highest ruling body of the 24 families is the "commission." This body serves as a combination legislature, supreme court, board of directors, and arbitration board; its principal functions are judicial. Family members look to the commission as the ultimate authority on organizational and jurisdictional disputes. It is composed of the bosses of the Nation's most powerful families but has authority over all 24. The composition of the commission varies from 9 to 12 men. According to current information, there are presently 9 families represented, 5 from New York City and 1 each from Philadelphia, Buffalo, Detroit, and Chicago."

93

The commission is not a representative legislative assembly or an elected judicial body. Members of this council do not regard each other as equals. Those with long tenure on the commission and those who head large families, or possess unusual wealth, exercise greater authority and receive utmost respect. The balance of power on this nationwide council rests with the leaders of New York's 5 families. They have always served on the commission and consider New York as at least the unofficial headquarters of the entire organization.

In recent years organized crime has become increasingly diversified and sophisticated. One consequence appears to be significant organizational restructuring. As in any organization, authority in organized crime may derive either from rank based on incumbency in a high position or from expertise based on possession of technical knowledge and skill. Traditionally, organized crime groups, like totalitarian governments, have maintained discipline through the unthinking acceptance of orders by underlings who have respected the rank of their superiors. However, since 1931, organized crime has gained power and respectability by moving out of bootlegging and prostitution and into gambling, usury, and control of legitimate business. Its need for expertise, based on technical knowledge and skill, has increased. Currently both the structure and operation of illicit enterprises reveal some indecision brought about by attempting to follow both patterns at the same time. Organized crime's "experts" are not fungible, or interchangeable, like the "soldiers" and street workers, and since experts are included within an organization, discipline and structure inevitably assume new forms. It may be awareness of these facts that is leading many family members to send their sons to universities to learn business administration skills.

As the bosses realize that they cannot handle the complicated problems of business and finance alone, their authority will be delegated. Decisionmaking will be decentralized, and individual freedom of action will tend to increase. New problems of discipline and authority may occur if greater emphasis on expertise within the ranks denies unskilled members of the families an opportunity to rise to positions of leadership. The unthinking acceptance of rank authority may be difficult to maintain when experts are placed above long-term, loyal soldiers. Primarily because of fear of infiltration by law enforce

92 "[I]n effect organized crime constitutes a kind of private government whose power rivals and often supplants that of elected public government." Moynihan, supra note 73, at 15. 93 Information submitted to Commission by a Federal agency.