Copyright 1988 The Times Mirror Company; Los Angeles Times

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Los Angeles Times
May 20, 1988, Friday, Home Edition
SECTION: Part 1; Page 1; Column 5; National Desk

LENGTH: 877 words

HEADLINE: MAFIA DOMINATES BUILDING TRADE IN N.Y., STUDY FINDS

BYLINE: By JOHN J. GOLDMAN, Times Staff Writer

DATELINE: NEW YORK

BODY:
A major New York state study concluded Thursday that organized crime is involved in every phase of the construction industry in New York City and the Mafia is so entrenched that builders see it as a necessary evil to keep projects running smoothly.

"The picture that emerges is one of longstanding, pervasive corruption and racketeering touching virtually every phase of the construction process and dominated by the operation of criminal syndicates," Ronald Goldstock, director of the New York State Organized Crime Task Force, said in a letter to Gov. Mario M. Cuomo, who requested the report.

"The industry is in danger of falling still further into the grip of organized crime. Legitimate businesses face the danger of being squeezed out altogether," Goldstock warned. "Those in construction who want to conduct themselves honestly find it hard to maintain their values. Construction workers who want to participate in unions free of corruption find themselves increasingly frustrated. All New Yorkers suffer the consequences of the industry's problems."

"The implications of Cosa Nostra's domination of the construction industry are profound," the report concluded. "During the past five decades, Cosa Nostra has become an entrenched part of the industry. Its presence is, to a large extent, accepted by developers, contractors and suppliers -- in some instances as a necessary evil providing stability and predictability, in other instances as an organization which can provide valuable services.

"Even those who resent Cosa Nostra's presence in the industry perceive it as a necessary evil which society is powerless to remove."

In a 130-page report that took two years to prepare, the organized crime task force not only outlined startling mob penetration of unions and contractors but massive featherbedding leading to inflated labor costs.

On construction sites, a two-member crew from different union locals routinely operates hydraulic cranes that need only one operator. The sole responsibility of a compressor operator is to start the machinery in the morning and to turn it off at night. One local of the Mason Tenders Union requires that a gateman be hired on large projects just to open the entrance gate in the morning, a task that could easily be accomplished by security guards.

"A contractor who attempted to avoid the consequences of Balkanization by hiring from only one union where two or three might be required inevitably faces job actions or strikes," the report said. "The result is that the construction industry is filled with inefficiencies and featherbedding.

"The existence of so much inefficiency provides a strong incentive either to pay off union officials not to press their jurisdictional claims or to reach out to racketeers who can dictate accommodations between competing unions."
 
Create Specialists

In such an environment, the report said, New York's five Mafia families have created construction industry specialists within their ranks. These specialists solve problems on building sites, help resolve conflicts between competing crime families and organize joint ventures among the five Mafia groups.

"Corruption in New York City's construction industry is so pervasive and open that it inevitably contributes to a general impression that the only crime is getting caught," the task force said.

"The power, influence, and criminal activities of New York City's racketeers affect all who participate in the construction industry, creating an environment in which many suppliers, contractors, craftsmen and laborers are deterred from performing an honest day's work for an honest day's pay.

" . . . The patterns of corruption and racketeering which so plague New York City's construction deter contractors in other cities from bidding on New York City projects," it added. "The industry's reputation for being mob-dominated also frustrates law enforcement." In specific detail, the report spelled out how mobsters have infiltrated the building business. Criminally controlled unions shake down contractors who need labor peace to complete jobs on schedule. Bribes are a way of life. Theft is rampant. Fraudulent billing for work not performed or materials not used is common. Construction union pension funds are drained by mobsters.
 
Form Shell Corporations

The report said also that unethical contractors set up shell corporations and use them for bribery or to funnel cash to themselves for living expenses. Dissident members of mob-controlled unions are murdered. Sabotage at construction sites is designed to prevent contractors from dealing with honest unions. Bid rigging by mob-controlled contractors is common. The mob finances gambling and loan sharking at construction sites.

"The New York City construction industry annually undertakes construction projects worth billions of dollars," the report concluded. "At any given time, there may be several billion-dollar projects and dozens of projects in excess of one hundred million dollars in progress. Thus, huge sums of money are at stake. A skim of only 1% represents tens of millions of dollars annually. For this reason alone, the construction industry is highly attractive to racketeers inside and outside the industry."