132 Cong Rec H 942 Monday, March 10, 1986
Congressional Record -- House
Monday, March 10, 1986
99th Cong. 2nd Sess.
132 Cong Rec H 942
REFERENCE: Vol. 132 No. 27
TITLE: RACKETEERING
SPEAKER: Mr. LUNGREN
TEXT: The SPEAKER pro tempore.
Under a previous order of the House, the gentleman from California [Mr. Lungren]
is recognized for 60 minutes.
Mr. LUNGREN. Mr. Speaker, last Tuesday evening, CBS television broadcast "A
Deadly Business," a film which profiled the control of parts of the toxic
waste disposal industry by organized crime. The film provided a graphic picture
of the brutality and danger to society inherent in this sort of Mafia activity.
But it only hinted at the peril to America posed by the integration of the mob
into the legitimate sectors of our society.
Next to narcotics, racketeering remains the most insidious of Mafia operations.
Experts in law enforcement and empirical evidence confirm that the manipulation
of businesses and unions by mobsters has assumed huge
proportions, both from a geographical standpoint and in terms of its cost to the
average citizen. Further, a new generation of racketeers now seems poised to
continue mob exploitation into the next century. The dimensions of this problem
make the investigation of new ways to combat it an inescapable responsibility.
Mr. comments this afternoon constitute the second installment of my review of
the findings of the President's Commission on Organized Crime. They do not form
an attempt to criticize revision of the RICO statutes, or to stand in judgment
of organized labor. I myself believe that some curtailment of the civil RICO
provisions is necessary to insure that the law is used in accord with its
original intent -- to attack racketeering enterprises -- and not as an element
in run of the mill civil cases. As for unions, an evaluation of
racketeering reveals three critical facts: First, unions and
their members are the victims of racketeers; second, mobsters do not distinguish
between extortion from unions and extortion from business;
third, the vast majority of union locals are guided by men of
integrity.
On another point, Mr. Speaker, I should say that talking about the Mafia or La
Cosa Nostra is not to be taken as a criticism of Italian-Americans. There has
been some sensitivity expressed by some, even to the extent of denying there
exists organized crime structure known as the Mafia or La Cosa Nostra.
I think that the last 20 years' investigation and prosecution by administration
after administration, whether Democrat or Republican, has revealed that La Cosa
Nostra does exist. The testimony taken publicly, under oath, by those informants
who have left La Cosa Nostra indicates without one doubt that in fact that
criminal enterprise does exist.
The other point that I would like to make, Mr. Speaker, is that many of the
toughest prosecutors that we have, on both the local and the Federal level,
happen themselves to be Italian-Americans. So it seems to me to criticize any
suggestions that La Cosa Nostra or the Mafia exists, and that somehow it is a
criticism of Italian-Americans in general or specifically is, I think,
unfounded.
I think we do a bad service to those prosecutors, whatever their ethnic
background, but particularly those prosecutors who happen to be
Italian-Americans, who are every day putting their jobs, and yes, in some cases,
their lives, on the line to try and root out this most corrupt enterprise that
has existed for generations and against which we must take a fresh attack.
On February 10, 1983, Mr. Ken Eto, an associate of organized crime figures in
the Chicago area, drove to a local Italian restaurant with two fellow Mafia
personnel. When he parked his car at the restaurant, his comrades, Johnny
Gattuso and Jay Campise, shot him three times in the head. Miraculously, Eto
survived. His former friends, however, were not so fortunate. Authorities
discovered their bodies in a trunk on July 14, 1983. Gattuso and Campise had
been strangled and repeatedly stabbed. Every major organ in their bodies had
been slashed.
These grisly incidents induced Mr. Eto to join a growing number of former
Mafiosos who have turned away from a life of cruelty, and turned toward
assisting Federal and State investigations. This assistance has enabled law
enforcement officials to gain indictments and a new understanding of how the
higher echelons of the Mafia operate their rackets.
Based on these connections, the use of electronic surveillance and other methods
of investigation, Federal and State officials have now painted a portrait of
racketeering that is shocking in its dimensions. The President's Commission on
Organized Crime conducted a poll last year of some 750 local police agencies and
50 field offices of the FBI. Their nationwide survey revealed that law
enforcement officials most frequently encounter organized crime not through
prostitution, gambling, or narcotics, but through labor racketeering and the
infiltration of legitimate businesses.
The implications of these statistics appear very grave. According to the
December 19 edition of the Christian Science Monitor:
The grip of organized crime extends beyond *** corrupt politicians, bribed union
officials, and unscrupulous businessmen. It extends right into the pockets of
practically every American citizen.
Anyone who has had garbage picked up in certain areas of the Northeast, bought a
candy bar in a vending machine, tried to construct a building in New York City,
or dined on filet of sole in Manhattan restaurants has, to some extent, made a
contribution to the coffers of the underworld bosses.
New York City provides a particularly instructive window on racketeering, in
large part because law enforcement officials there have been so energetic.
Criminal investigations have exposed a wide range of racketeering activities,
notably in the construction and carting industries. John L. Hogan, until
recently the chief of the FBI's New York office, described the situation in this
way:
The aggregate cost of organized crime to the average citizen is astronomical ***
. It hits our pocketbooks, hits us on the job, hits us in stores, hits the
houses we live in, on the roads we drive on. It accelerates our costs.
New York State Attorney General Robert Abrams recently elaborated on the latter
statement. In filing an antitrust suit against eight concrete companies -- three
of which may have connections with organized crime, Abrams contended that the
concrete industry was overcharging builders in New York by as much as $50
million each year. Rudolph Giulani, U.S. attorney for the southern district of
New York, has stated that extortion in the construction industry has driven up
building costs by about 20 percent. Naturally, higher construction prices
translate into higher rents, higher costs for the goods sold by companies using
the buildings, and higher Government taxes to pay for expensive public works
projects.
The President's Commission on Organized Crime has confirmed this information.
One New York City construction manager told the panel that the Mafia exercises
influence over all construction contracts valued between $500,000 and $100
million. The Commission's executive director, James Harmon, also believes that
Mafia connections are presently unavoidable.
In New York City, a builder cannot construct a building from the ground up
without dealing with a union that is controlled by organized
crime *** . I can even take it a step further. A builder cannot even tear down
an existing building before constructing a new building without dealing with a union
that is controlled by organized crime.
La Cosa Nostra, therefore, extorts not only from business and unions,
but from ordinary New Yorkers ranging from the entrepreneur building a
condominium to the secretary living in an apartment.
Unfortunately, the carting industry provides a second arena for victimization.
Ronald Goldstock, who heads the New York State Organized Crime Strike Force, has
stated that the Lucchese organization, allegedly one of the five Mafia families
of New York, dominated carting businesses in Long Island. They obtained this
hegemony through, in Mr. Goldstock's words, "threats of physical injury,
economic injury, property damage" and the manipulation of the key unions
in the field, the Employees' Association. Mr. Goldstock has observed that the
mob's monopoly costs consumers roughly $10 million per year. And commercial
establishments may be paying the mobsters a 400-percent premium to have their
garbage picked up.
Federal and State officials are thus convinced that the same men who profit from
prostitution and poisonous drugs are now exploiting vital sectors of our economy
-- at the expense of the American people. Their generalizations, however, pale
in comparison with actual cases presented before Federal courts and the
President's Commission. These cases reveal not only the extortionate profits
gained by the mob, but the almost dictatorial power they have acquired over
individuals and organizations.
The besieged construction industry provides the framework for one of the most
disturbing cases, the trial of purported Colombo crime family members that began
in December 1985, Mr. Ralph Scopo played an essential role in the development of
the Federal prosecutor's argument.
Scopo had served for many years as the president of the New York district
council of the Cement & Concrete Workers Union. He was also
alleged to be an associate of the Colombo "family." The prosecution
contended that, in his capacity as a union leader, Scopo
required payoffs from concrete contractors for the benefit of his Mafia
superiors. Concrete contractors testified to this effect, but the most damaging
evidence came from tape recordings.
One tape recorded a conversation between Scopi, Gennaro Langella, Dominic
Montemarano, and Louis Foceri. According to the prosecution, Langella had
functioned as "acting boss" for the Colombo family; Montemarano was a
Colombo "captain"; and union official Foceri was a
"soldier" for the Lucchese family. At one point, Scopo tells his
friends that he wants $50,000 from contractor Peter DeGaetano within a few days.
Referring to the merger of two construction companies, Foceri states that "Paullie
wants his money and Tony wants his money." He did not identify which Tony
he was referring to, but "Paullie" was apparently Paul Castellano,
head of the Gambino family until his assasination in December. Foceri later
added that an obstinate contractor had been compelled to "pay money"
and that he had been "taught a lesson." Mr. Foceri, however, had also
taught the jury a lesson -- about the association of major union
officials with the most ruthless criminals.
During an earlier round of testimony, the prosecution had played a tape
involving Scopo and contractor David Assalti. The tape provided an astonishing
record of Mr. Scopo's opinions on extortion. Assalti had testified that, in
exchange for labor peace, he had paid Scopo $600 during the building of
LaGuardia Community College and $2,000 during the construction of St. Albans
Parish Hall in Queens. In the tapes, Scopo tells Assalti, "You gotta pay,
there's no two ways about it *** . Money ain't everything." He adds that he
wishes that he himself paid off people: "You know, it gives you peace of
mind." Finally Scopo recounts the difficulty he had with one union
official over his extortionate actions. Joseph Paradiso, he says, was "from
the old days," and "honest as the day was long." When Mr.
Paradiso questioned Scopo's activities, Scopo told Assalti, "I had to talk
my way out of it and lie like a son of a gun to get out of it." The sad
implications of Scopo's conversations are clear: Racketeers not only hold sway
over parts of the construction industry, but their secure authority has acquired
an arrogant swagger.
The misadventures of Matthew (Matty the Horse) Ianiello suggest that the mob may
be gloating over much more than concrete. Federal prosecutors allege that
Ianiello, purportedly a captain in the Genovese crime family, worked with a Mr.
Benjamin Cohen to operate bars and restaurants in "a pattern of
racketeering." The two men supposedly skimmed $2 million from these
businesses. They concealed their control of the facilities, at one point
acquiring fraudulent liquor licenses. Then they failed to report the taxable
income they gained from the establishments. The industrious Mr. Ianiello may
have also secretly controlled carting companies that handled millions of dollars
in waste-removal contracts for the Consolidated Edison Co. He faces Federal
charges on these grounds as well.
Unfortunately, the threats, violence and thefts employed by racketeersextend far
beyond the world of Matty the Horse and the boroughs of New York City. The
Kansas City trial of reputed mobsters from Kansas City, Chicago, and Milwaukee
revealed racketeering activites that grasp across State boundaries for millions
of dollars in profits.
Former Las Vegas casino proprietor Allen Glick provided frightening testimony to
this effect in November 1985. In 1974, Glick purchased the Stardust and Fremont
hotels on the Las Vegas strip. He did so with a $62.75 million loan from the
Teamsters, an arrangement made in concert with purported Milwaukee Mafia boss
Frank Balistrieri. Balistrieri soon insisted that Glick hire Frank Rosenthal,
reputedly a mob enforcer, as the chief of his Nevada operations. To Glick's
distress, Rosenthal soon began hiring and firing people on his own authority. He
even ordered Glick's secretaries to spy on him. Glick protested, but Rosenthal,
Glick recalls, gave him an icy response. "I think it's about time we had a
discussion, Glick. You're not my boss. And when I say you're not my boss, I'm
talking not just from an administrative position, but healthwise. If you
interfere with what's going on here, you will never leave this corporation
alive. Test me." Amazingly, Glick continued to quarrel with Rosenthal, The
latter finally demanded that Glick fly to Kansas City, where he met with another
alleged Mafia chieftain, Nick Civella, Civella, not a subtle individual, decided
to give Glick an easy clue as to his identity: "You don't know me, but if
it would be my choice, you wouldn't leave this room alive." Civella then
stated that he too had played a role in the Teamsters loan. He assured Glick
that he would not receive the new loan from that organization which Glick was
then seeking. Glick in fact received no further assistance from the Teamsters,
and eventually sold his casinos.
Obviously, the implications of Glick's testimony present severe dilemmas for law
enforcement. Government officials must combat an enemy with the financial
resources of large corporations. They must confront a criminal organization with
the flexibility that interstate connections provide. And they must seek to
apprehend individuals with a medieval tradition of ruthlessness.
Of course, one might dismiss such anxiety, perhaps contending that the
information presented in the Kansas City trial constitutes only one instance of
the abuse of union funds. But testimony before the President's
Commission strongly suggests otherwise. David Williams, an official of the
Department of Labor and an investigator for the President's Commission,
testified that labor racketeers have manipulated union
financial resources to pay for their attorneys:
The fact that labor racketeers are capable of forcing their victims to pay their
legal fees is a dramatic demonstration of the level of control and domination
racketeers hold over these captive unions. A number of methods
are employed for extracting these legal fees.
In some instances, labor racketeers' legal fees are paid directly by the union
or pension fund that they are convicted of plundering. Frequently, sham
authorization is obtained from puppet-like trustees installed by the racketeers.
A second method frequently employed is for union officials
under investigation or indictment to receive legal representation from attorneys
on retainer by the victim union. Upon closer inspection, the
substantive duties of such attorneys appear to have been solely to keep union
mobsters out of prison and to protect them from the legal recourses of their own
membership.
Williams revealed that these practices, obscene as they might be, are only the
tip of the proverbial iceberg.
When the Government somethimes steps in to prevent these blatantly abusive
practices, the racketeers force the unions' insurance companies
to pay for their improper expenditures. Those insurance companies merely recoup
these losses by raising their fiduciary insurance rates to the union,
and the victimized membership continues to pay indirectly for the legal fees of
the men who have been charged with plundering their treasuries.
If these methods fail, the racketeer recoups his legal expenses by collecting
"voluntary contributionsd" from his membership, who are often
dependent upon him for work assignments. These collections most commonly take
the form of defense funds and testimonial dinners.
All of these methods are structured and designed to provide racketeers with free
legal services, typically at astronomical costs to the membership.
Possibly the most offensive aspect of these practices are schemes designed to
pay legal expenses for mobsters not connected in any way with the union.
Frequently, this scheme is employed when union racketeers are
brought to justice with their associates in organized crime groups, including
the La Costa Nostra. When joint defense fees are incurred on behalf of a number
of defendants, such as those related to private detective work and accounting
services, the defendant whose fees are paid by a union entity
claims the entire joint costs of such services rather than pro rating them among
all defendants. The defendants who have plundered the unions
but are not eligible for legal fee reimbursement, have many of their costs
transferred to eligible union racketeer defendants.
These legal fees do far more than cover labor racketeers' expenses during
trials. Increasingly, union monies are expended to combat and
head off ongoing government investigations aimed at cleaning up these mob-dominatedunions.
Private investigators are engaged to follow the actions of federal
investigators. Attorneys with important influence are hired to plead with high
level Justice Department [officials] to halt or abandon union
probes.
Williams provided an important empirical foundation for these contentions.
A case study has been selected by the staff to illustrate the abuses outlined in
this statement. The information was obtained through Commission subpoenas and
interviews. The study centers upon the legal fees paid by various Teamster labor
entities in the government investigation of attempts to bribe former U.S.
Senator Howard Cannon of Nevada. In the subsequent trial, United States vs.
Dorfman, all defendants were found guilty of all charges. Yet Teamster
organizations paid over $2,385,000 in legal fees for these defendants. An
additional $1.7 million was paid by a service provider firm whose sole source of
income was Teamster fees. One of the Teamster organizations, the Central States
Southeast and Southwest Areas Pension and Health and Welfare Fund, known as the
Central States, actually changed its requisitions during the case to
retroactively allow such legal fees to be paid. The defense payments not only
benefitted IBT President Roy Williams, Trustees Advisor Andrew Massa and Thomas
O'Malley, but aided in the defense of reputed mobsters Allen Dorfman and Joey
Lombardo. Roy Williams' million-dollar defense was paid by Central States, the
Central Conference of Teamsters and the International Brotherhood of Teamsters.
Central States Trustees Massa and O'Malley had $1.3 million paid by the Central
States for their defense expenses. Reputed mobster Allen Dorfman's $1.7 million
defense fees were paid for by his insurance and claims processing firms whose
sole customers were Teamster entities. Both Dorfman and Lombardo received the
considerable benefit of private investigators and transcription services paidfor
by the Central States Pension Fund, Dorfman, a reputed affiliate of La Cosa
Nostra, and Joey Lombardo, a reputed La Cosa Nostra leader, were used to such
treatment by the Central States' Funds. In 1975, the Central States paid
$160,000 to the Arthur Young accounting firm to defend Alley Dorfman and Joey
Lombardo along with other defendants in United States verses Weiner.
In the end, the elderly Teamster pensioners paid for the extravagant defense of
the racketeers who have held their unions captive during their
entire lives.
As the legal fees were being authorized by the Central States Trustees to
benefit criminal elements and the Fund, Atlanta Teamster Glenn Hall was
struggling desperately and unsuccessfully to obtain his pension from the same
Trustees. Mr. Hall, unlike Dorfman and Lombardo, had been a Teamster for 28
years. While the Teamsters unqustionably paid millions for the defense fees of
other, Mr. Hall had to wait five long years before U.S. courts compelled the
Trustees to give Mr. Hall his well earned pension benefit.
In a sense, Mr. Williams' statement demonstrates the acute unfairness of broadly
whitewashing unions as the residences of the mob. Such
characterizations bypass the fact that certain corrupt individuals in the
organization have extorted money not just from the pension and health funds, but
from the hard-working union members whose money comprises those
funds. Racketeers are thieves on the grandest of scales, stealing from the
retirement and medical needs of unionists.
In this context, it is encouraging to mention the testimony of Mr. George Lehr,
executive director of the Teamster's central states, southeast and southwest
areas health and welfare and pension funds. Mr. Lehr told the President's
Commission that since his appointment in 1981, his unit has instituted
professional management practices and hired a staff of professional accountants
and financial experts. He also stated that under the leadership of Morgan
Stanley, the fiduciary for the funds, investments in Nevada gambling
establishments have dwindled from $260.6 million to $34.7 million.
In contrast, the Commission's final conclusions about other key unions
was very discouraging indeed. Two locals of the New York Harbor union,
it says, are "firmly under the control of the Gambino and Genovese"
organizations. Locals in New York and New Jersey of HERE -- the Hotel Employees
and Restaurant Employees Union -- which contains some 400,000
members, may be heavily infiltrated by organized crime, and the final report
asserted that the Mafia exercises an "almost unfettered control" over
the New York-New Jersey waterfront through the International Longshoremen's
Association. The latter organization numbers some 200,000 members.
Statements before the Commission regarding the Laborers'
International Union proved equally disheartening. Ken Eto, the
victim of the attempted assassination I reported above, discussed the identity
of key officials in that union. He stated that Vince Solano,
president of local 1 in Chicago, is a territorial boss of the Mafia on that
city's north side. As a territorial boss, Eto maintained, Solano controls
gambling, poker games, horse bookmaking, sport bookmaking, extortion of topless
clubs, strip joints, massage parlors, adult bookstores, gay bars, vending
machines and even jukeboxes. Eto added that Al Pilotto, president of local 5,
functions as another territorial boss in Chicago. And John Fecarotta, who holds
a position on the union's central States board, reportedly acts
as an enforcer for the Chicago Mafia.
If Commission testimony is correct, the resumes of some Laborers'
officials in New York are equally grim. A New York labor official, whoasked to
remain anonymous out of fear for his life, identified the following individuals:
Vincent "Vinnie the Chin" Giganti, purportedly of the Genovese family,
who dominates local 95; Paul Varo, reputedly a captain in the Lucchese family,
who dominates local 1298, Christopher Fornari, Allegedly a counselor of the
Lucchese family, who governs local 731; Samuel Cavalieri, possibly a member of
the Lucchese organization, who "owns" Blasters Local 29; Vinnie
DiNapoli, another reported member of the Lucchese unit, who "controls"
local 18-A. These connections would certainly appear to confirm the view that
high construction costs in New York do not arise from inflation alone.
Judge Irving Kaufman, chairman of the President's Commission, observed in an
opening statement before the first hearing that mob influence in particularly
strategic locals translates into mob influence over the national level of the union.
He believed this to be the case with the Laborers' Union. The
testimony of Robert Powell, while lacking in direct references to Mafia ties,
may be interpreted as support for these views. Mr. Powell rose from a
ditch-digger to the first vice-presidency of the Laborers Union.
He participated actively in the civil rights movement of the 1960's, working
with the NAACP, the Urban League and the Southern Christian Leadership
Conference. He also encouraged efforts to eliminate criminal corruption from
selected locals of the union. Mr. Powell's background, however,
did not make him impervious to fear of his superiors in the union.
During his testimony, Powell listed three reasons for his anxiety about the union
leadership. In 1981, rumors had circulated that Mr. Powell would seek the
presidency of his union, then held by Mr. Angelo Fosco. At a
July dinner at the Hay-Adams hotel, Mr. Powell recalled, Fosco commented:
"I understand that you are running against me and you got certain people on
the staff as your campaign manager *** Powell, you're dead, you're dead."
Since Powell believed that Fosco may have been linked to the Chicago Mafia, he
took this threat seriously. He also took seriously the comments of Arthur Coia,
the union's secretary-treasurer, regarding his potential
candidacy for the presidency. In Mr. Powell's words, "We had a conversation
one time *** he told me that the Italians had organized the laborers
and that nobody black or anyone else was going to ever take control."
Following the convention that reelected Fosco, Powell discovered that Coia was
not just speaking for himself. He found a dead rat and then a dead pigeon in his
car, and then received threatening phone calls, asking him if he had adequate
insurance and if he was breathing comfortably. The sum of these events have lead
Mr. Powell, in presenting his testimony, to strongly urge the Government to take
action against criminal elements in unions. According to Mr.
Powell, the responsible union members are often too frightened
to do so.
During a later session of the Commission's hearings, Acting Chairman Samuel
Skinner asked why the Government had for so long been unable to fully respond to
those fears. Ronald Goldstock, director of the New York State Organized Crime
Task Force, offered an explanation. First, the Mafia code of silence ruled the
"family" members without question into the 1960's. Second, although
the Mafia had been in existence since at least 1930, the FBI did not recognize
its full dimensions until the late 1950's. Third, key statutes such at the RICO
legislation, permission of electronic eavesdropping and provisions for
testimonial immunity did not pass the Congress until 1968 and 1970. Fourth, Mr.
Goldstock believes that Federal prosecutors did not make adequate use of the
RICO statutes until the mid-1970's. Clearly, the Mafia's web, at once so
pervasive and so intricate, requires the most painstaking of efforts to
understand, let alone disentangle.
The Federal investigation of Teamsters Local 560 in New Jersey provides
exceptional verification of this statement. It constituted the first civil
action ever against labor racketeers under the RICO statutes. Robert Stewart,
chief of the Organized Crime Strike Force in Newark, reported on the case for
the President's Commission last April.
By way of background, Local 560 had gained national notoriety as far back as
June of 1963, when Life magazine ran a cover story about the murder of Walter
Glockner, a prominent 560 dissident. Some twelve years later, the local and
Anthony Provenzano were again in the national limelight following the
disappearance of former Teamster Union President James R.
Hoffa. The publicity was such that one Executive Board Member was later
constrained to admit on the witness stand that the public perception of local
560 was that of a "racket-ridden" union.
The Government noted this perception and, on March 9, 1982, filed the first
civil RICO complaint of its kind in the 14-year history of the RICO statute.
This complaint alleged that local 560 was a "captive labor
organization", which the Provenzano Crime Group had dominated through fear
and intimidation and had exploited through fraud and corruption. There followed
a 15-week trial during early 1983; and on February 8, 1984, Federal District
Judge Harold A. Ackerman granted injunctive relief -- holding, inter alia, that
the Provenzano Group had been a well-disciplined conspiratorial organization in
substantially continual existence throughout the past 30 years; that it had
utilized a "climate of fear and intimidation" to capture and exploit
Local 560; and that the racketeering violations which had victimized both the
membership of the local and the affected portions of the trucking industry were
likely to recur unless the conditions within the local which had created that
situation were alleviated. To that end, Judge Ackerman ordered the removal of
the entire Executive Board and placed the local under trusteeship. In addition,
he permanently enjoined those defendants who weremembers of the Provenzano Crime
Group from any future dealings, direct or indirect, with any labor organization
or employee benefit plan.
Mr. Stewart outlined four cornerstones of the Government's case against the
Provenzano crime group. First, former associates of Mr. Provenzano provided
testimony that showed: The group had engaged in racketeering activities; the
group engaged in a range of activities far beyond any one conspiratorial act;
the group would remain viable regardless of the deaths of some of its principal
leaders. Second, the prosecution provided evidence pertaining to what Judge
Ackerman called "a multifaceted orgy of criminal activity." This
"orgy," which had previously lead to nine criminal convictions,
included two murders, three incidents of payoffs for "labor peace,"
one episode of a loansharking conspiracy and one of a counterfeiting conspiracy.
The Provenzano associates could not at that time be charged with any criminal
actions, but thanks to the civil application of the RICO statute, they could be
cited for violations of the Hobbs Act's protection of union
democracy. Judge Ackerman's decision that the "climate of
intimidation" present in the local did apply to the Hobbs Act provided the
third cornerstone of the prosecution's case. Interestingly, the defendants
provided the fourth cornerstone. In the context of a criminal case, a prosecutor
would have to be unstable to believe that organized crime defendants would
provide useful evidence. But Stewart observed that in civil litigation,
"silence can be probative of deliberate concealment and can support the
commonsense inference that a truhtful answer would be detrimental to one's
position."
I might just defer for a second here and say that essentially that means, in
other words, that in a criminal case when you take the fifth, the jury is
instructed not to take anything from that fact. They cannot impute anything from
that fact. They cannot impute any sort of proof from the fact that a defendant
has taken the fifth.
In a civil action, however, when something comes up which could be answered by
an individual, that is, an individual defendant has information on that question
and yet does not come forward with information on that question, his or her
silence can be taken as a commonsense inference that a truthful answer would be
detrimental to his particular cause or his particular case.
To return to the quote:
To avoid this consequence, the defendant must explain his conduct. Thus, when
business agent Andrew Reynolds refused during the deposition process to answer a
series of questions about meetings which he had had with members of the Genovese
family concerning the affairs of local 560, the court drew the adverse
inference.
Subsequently, a series of transparent lies by other defendants also damaged
their situation, making clear that the Provenzano crime group remained viable.
In sum, the civil application of the RICO statute provided an exceptional avenue
-- the only one available -- to a potential containment of labor racketeers in
New Jersey. But Mr. Stewart's description of the case makes clear the difficulty
in grappling with a multifaceted creature like the Mafia. To bolster this
impression, we need only to learn that the final version of the complaint
consisted of some 347 pages, including 77 exhibits; that the trial lasted 15
weeks; and that historical research over a 20-year period was necessary. It is
more disturbing to discover that Mr. Stewart feels that the "jury is still
out" on the question of the cleansing of local 560. The Mafia is infamous
for its capacity to periodically surge out of an ostensible containment.
Sadly, recent court cases confirm this contention. Six years ago, prosecutors in
southern California scored a major victory over organized crime in that area
through convictions of its key leaders. But James Henderson, until recently the
chief of the Federal Organized Crime Task Force, believes that Mafia leaders
from other parts of the country have moved to southern California to fill the
mob vacuum left by those convictions. In June 1985, Federal prosecutors charged
Vito Spillone, allegedly a member of the Chicago syndicate, with loan sharking
in Bell, CA. Spillone, who spent 5 years in Federal prison before moving to
California, purportedly conspired to supplant local loan sharks and bookmakers
at Los Angeles-area poker clubs.
In December, Michael J. Franzese, reputedly a member of the New York Colombo
crime organization, was indicted on racketeering and embezzlement charges.
Prosecutors said that Franzese owned or operated 18 companies for the explicit
purpose of embezzling funds. To conduct this operation, the accused individuals
allegedly persuaded employees of legitimate firms to lie and cover up illegal
operations. On other occasions, they used dummy corporations. In a number of
other instances, the defendants purportedly threatened or assaulted individuals
to compel acquiescence in the schemes. Prosecutor Edward McDonald stated:
The Franzese group operated a criminal enterprise not through common street
crimes, but through fraudulent schemes for which they infiltrated some of this
country's most respected and established industries and businesses.
Reports in the December 20 edition of the New York Times detailed the
indictment. In one instance:
The defendants financed two automobile dealerships on Long Island -- Lynn Mazda
and Rumplik Chevrolet -- by extorting more than $1 million from the Beneficial
Commerce Corp. *** The indictment said the group, using counterfeit loans as
collateral, entered into an agreement with Beneficial under which the company
made a series of loans so that the dealers could buy cars from the
manufacturers. The manufacturers supplied the new cars and the documents needed
to register and obtain the titles to each new car.
But the defendants, according to the indictment, failed to pay Beneficial for
the cars sold and withheld the proper documents from customers.
The prosecutors identified one defendant, Gerard R. Moore, 59, of Wyckoff, NJ,
as a vice president of Beneficial who assisted the group in carrying out the
fraud.
Another defendant, Walter Doner, 53, of Ronkonkoma, Long Island, was identified
as the president of Rumplik Chevrolet. The prosecutors said Mr. Doner made false
statements to obtain a $500,000 loan for the dealership from the Small Business
Administration. Both dealerships have filed for bankruptcy.
According to the Times:
Mr. Franzese is also charged with transferring $2.5 million from various
businesses to his private movie production company, and to his wife, so they
could purchase a home on Long Island.
The racketeers of organized crime, therefore, remain incipient corrupters of our
society. Within their bastions, whether they be bookmaking centers or exploited unions,
they can obtain an almost autocratic rule. They have demonstrated the ability to
command huge financial resources. From New York to Kansas City to Bell, CA, they
have proven their geographic mobility. And, if the Franzese case is not
atypical, they may be adapting to the economic sophistication of the 1980's.
In confronting this formidable enemy, the leaders of our society may easily fall
prey to despair and defeatism. This is a reprehensible alternative. As Thomas
McBride, a member of the President's Commission, stated at the end of its
hearings on this subject:
There are simply too many human tragedies in these [acts of] violence and
threats, too much economic loss, and really a very fundamental assault on our
democratic fabric. The notion that these mob outfits with [the] dominating [of] unions
can have government of their own, operating by their own rules and seemingly
untouchable by the agencies of the government is simply something that I cannot
abide.
Neither can I. Instead of accepting these afflictions, we need to evaluate new
methods for combating the racketeers. New methods can be effective, as the
innovative efforts of Rudolph Giulani have shown. As a starting point, we might
evaluate the feasibility of planning future commissions every 5 or 10 years, in
order to continually expose an industry that thrives in secrecy. We might
consider revisions in the procedures of the National Labor Relations Board, in
order that union democracy might have a more vigorous voice.
National leaders may wish to follow two of President Reagan's suggestions in
this area, as outlined in the January 12 edition of the New York Times Magazine.
First, they might encourage States to enact legislation authorizing law
enforcement agencies to conduct court supervised electronic surveillance.
Second, they might promote the passage of RICO statutes on the State level --
since 27 States have yet to do so.
As for the imposition of trusteeships on locals that are particularly menaced by
the mob, I can only state that the manipulation of hundreds of thousands of
hard-working unionists is too grave a situation for Government decisionmakers
either to blindly accept or casually dismiss such a tactic. Before a verdict is
reached on such measures, Congress, the courts, and the executive branch must
evaluate internal union efforts at reform and the effectiveness
of actions like those taken in New Jersey by Judge Ackerman.
Finally, there is one potential response that I am convinced is absolutely
necessary. We in the Congress must certainly and immediately pass money
laundering legislation, in order to cripple the other leg upon which the Mafia
stands. Money is the lifeblood of organized crime and the lack of it hit the mob
where it hurts the most. After all, the Mafia is not invincible. Its members are
just as human as the people they prey upon.
Mr. Speaker, I am happy that the chairman of the Crime Subcommittee, the
gentleman from New Jersey [Mr. Hughes], has indicated that we will be moving on
money-laundering legislation in the very near future. I expect that we will get
the same cooperation from the chairman of the Judiciary Committee so that we
might enact that legislation and bring a bill to the floor of the House of
Representatives so that we might work in concert with the U.S. Senate in
providing this necessary tool so that we might be able to fight the mob even
more effectively.
Racketeering, that is, that type of activity involved in by major organized
crime organizations, and also major drug activities, some of it involved with
major organized organizations, some other of it independent, those types of
activities thrive on and, in fact, must be sustained by money laundering.
Money laundering, as I said in previous special orders, is basically the process
by which dirty money becomes clean. Money that is obtained in these types of
illegal activities somehow is cleansed. It is either through a bank, sometimes
going to places such as horseracing facilities, sometimes going to small and
large businesses, in one case using a string or chain of pizza houses in order
to do it. We need legislation to make illegal the activity of money laundering.