OUTLOOK FOR ORGANIZED CRIME
The
family had settled down for dinner when the masked men burst through the
kitchen door. Waving semi-automatic pistols, they yelled instructions and
insults in Vietnamese. The family was rounded up and duct-taped to chairs,
except for the father. Blindfolded and forced to ride with two gang members
to his company's warehouse, the man was forced to help the men load crate
after crate into a rental truck. Failure to cooperate meant his hostage
family, being eyed by the remaining gang members, would be killed.
The products in the crates were worth US$10,000 a pound. And the
gang took millions of dollars away in the van that night. The man and his
family would have been killed had a confidential informant not made a phone
call, alerting law-enforcement authorities to the plan, and allowing them
to stop the gang on the way to the man's house.
Was the man about to pay the ultimate price for dealing in illicit
merchandise? Hardly - the crates were filled with silicon computer chips,
worth more by weight than cocaine and heroin, and this true story happened
in San Francisco last year.
Everyone knows that Taipan tracks high-technology issues, financial
markets, and world-wide organized crime, but even our researchers were surprised
by this incident.
It incorporates almost everything we've been warning you about
for years: organized crime families are becoming more and more international,
they are becoming more high-tech, and even the most brutal and unsophisticated
recognize the changing face of technology and its fair market value.
Organized Crime in Russia and the former Soviet Union
No one has tasted more of the fruit of the free market than the
Russian "Mafiya." As we reported to you last year, they have deeply
ingrained themselves in all aspects of the Russian underground economy,
controlling smuggling, prostitution, drugs, and the protection rackets.
As we described, the Russian crime bosses were desperately trying
to become the retail sales division of the Russian nuclear arsenal, a plan
that has been temporarily put on hold by increased aid from the U.S. and
Europe. These new agreements should make it harder for a crime family to
smuggle out a nuclear weapon, but they do not indicate the end of these
groups' reach outside the former Soviet Union.
The Russian Mafiya may have arisen to supply and control the black
market for goods and services under communism, but they have become more
sophisticated and ruthless in the past six years, branching out into banking
and finance under the free market.
It is estimated by our sources in Russia that approximately 65%
of the legitimate banking, lending, and financial institutions in Russia
are directly controlled by organized crime families.
This stranglehold of control the mobs have over banking in Russia
has produced one of the most friendly money-laundering environments in history,
easily surpassing the Caribbean banks that became famous in the 1980s as
places to convert illegal dollars to legitimate income.
Federal Reserve officials have publicly stated that US$40 billion
in new US$100 bills have been shipped to Russia since 1994, a figure that
exceeds the total number of rubles in circulation! To feed this frenzy of
hard dollar consumption, sources estimate that on any given night of the
week, around US$100 million is flown from New York's John F. Kennedy airport
to Moscow, and this goes on every night.
This cash is being used to anchor the organized crime families'
control over their own territory, and help fuel the rapid expansion of Russian
crime organizations through out the world.
The Russian Mob in the United States
In their expansion across the United States and Europe, the Russian
Mafiya have been quick learners. They understand that they can't compete
with the Colombians and Triads in heroin and cocaine trafficking, or influence
the commercial unions like the Cosa Nostra, and they can't win against the
violent terror of the Jamaican crack "posses." What they can do
is run a black market for goods and services under any conditions.
The Mafiya deals in prostitution, extortion, and drug-trafficking
in the United States, but on a much smaller scale than many of their competitors.
What they have done better than any other organized crime unit is run mid-level
scams of petroleum distribution, black-market freon deals that net more
per pound than heroin, and telecommunications fraud. They deal in tax-free
gas and cigarettes, sell stolen cellular phone codes, and make a killing
at fraudulent health insurance schemes.
Another area of spectacular success for the Russians has been car
theft. Rings are organized around a legitimate body or "chop"
shop. The younger members of a gang steal cars and drive them to the shop,
where they are stripped for their parts, which are re-sold... untraceable
and highly profitable for the ring. Or they steal luxury cars, pack them
onto freighters and ship them back to Russia, where they are re-sold to
other gangsters (all those US$100 bills have to be spent on something, right?).
Car theft and chop shops are hardly new to the United States, but
no one has ever seen organizations sprawled across six states like the one
that was recently busted in the Pacific Northwest. In some cases, they control
entire cities, like in Philadelphia.
Russian car theft rings can have stolen vehicles on freighters
out of the city faster than you can report them stolen. And most of the
cars that are stolen and vanish are believed to have been taken by the Russians
and sent back to the motherland.
The strongest Russian crime family in the United States is the
Odessa Mafia, based in the Brighton Beach area of New York City. Commonly
called "Little Odessa," this neighborhood of Brooklyn serves as
the nerve center for the national expansion of the Russian Mob in the United
States.
In 1981, the leadership dispatched two units of the family to set
up operations in Los Angeles and San Francisco. The L.A. division of the
Odessa Mafia encountered a lot of resistance from local gangs and law enforcement,
but their brothers in San Francisco have become quite strong, making alliances
with the Chinese Tongs and building power on the West Coast.
Crime in the Crimea
Odessa is a Russian city which is no longer part of Russia - it's
in Ukraine, or rather in the Crimea, a peninsula, as well as an administrative
entity with the kind of limited autonomy the West Bank and Gaza have in
Israel.
Politically, it still remains fiercely pro-Russian. That particular
point was driven home a couple of months ago when we heard that the Crimean
Supreme Soviet had dismissed its speaker, Yevhen Supruniuk, for being too
pro-Ukrainian.
The pro-Russian factions in Parliament sealed his fate by organizing
an "Anti-Crime Opposition." The irony is that these same factions
have close ties to Russian organized crime (the latter uses the peninsula,
and the port of Odessa in particular, as a stepping-stone to Cyprus, an
off-shore haven for all kinds of "business" transactions).
Odessa may no longer be the crime capital of Russia, but it certainly
is playing that role in Ukraine. There were almost 100 contract killings
in 1995, which were not followed by a single arrest (Russia boldly stood
up to the challenge and chalked up no fewer than 450 gangland murders in
the first nine months of 1996)!
One of the reasons crime flourishes undeterred is that it is closely
tied to local politics. The Communist Party is the largest party on the
peninsula, and its leader, Leonid Grach, has cynically admitted that people
tend to enter politics primarily for the financial rewards to be had.
These include the pickings from the privatization of former state
enterprises and the "benefits" derived from the control of the
new private monopolies. At one time the cooperation between organized crime
and the police became so apparent, a special counter-intelligence unit had
to be created to fight it, which was directly subordinated to Kiev.
According to our sources there are at least one hundred and twenty
active criminal gangs in the Crimea, of which about fifty are organized
into Mafia-style groups. Three of these extend their influence throughout
the peninsula and beyond, into Ukraine, Russia, and even Western Europe.
The accumulated capital of these three Mafia groups reportedly exceeds that
of the Crimean annual budget.
Organized crime groups have control over deliveries of metal and
oil into the Crimea and abroad, as well as over local banks and enterprises
involved in tourism and transportation. They have shown strong interest
and will move into the oil and gas sector when deposits off Crimea's coast
are developed. Even more lucrative than that is the arms trade in which
they are involved: arms are mostly sold to the breakaway Trans Dniester
republic in Moldova and to the Chechens in Russia.
The Chinese Tong
These crime families based in China, Taiwan, and Hong Kong have
long held power over commerce - legal and illegal - in that region, so it
should come as little surprise that Chinese immigrants to the United States
and Canada continue to be victimized by the same crime families that robbed
them back in the old country.
The Chinese Tongs are among the oldest organized crime families
in the world, their organization, structure, and traditions are as old as
the culture they came from, and they have remained more or less intact thorough
the centuries.
It also looks like they will continue to do so unabated. The recent
free-market reforms in mainland China have given re-birth to the organized
crime families of Peking and Shanghai, and these groups have recently come
to the understanding that when Hong Kong and its gangster organizations
come under the control of China next year, its going to be business as usual
for everyone.
There had been some suspicion that the capitalism-loving Hong Kong
families would run for North America when the communists took control, but
our sources tell us that the Hong Kong-based Tongs have committed to working
with the mainland crime groups. They have even begun bribing their way into
power with the communists, ensuring that they will continue to have their
finger in every pocket of the economy when the political change arrives
next year.
The Tongs or "Triads" in the United States have maintained
their level of operations mostly within the Chinese-American community.
In a similar role to the one played by the Cosa Nostra among new immigrants
to the United States from Italy earlier this century, the Tongs run protection
rackets and control gambling, prostitution, narcotics, gun smuggling, and
real-estate deals.
One of the Triads' biggest areas of crime is in illegal immigration.
Responsible for most of the illegal immigration to the United States from
China and Taiwan, the Tongs charge families exorbitant fees for passage
to the U.S. on freighters. In many cases, they require smuggled adults to
work what is virtually slave labor in illegal garment manufacturing or restaurants,
and in some cases they force women into prostitution as payment for the
trip.
In Philadelphia, it is estimated that there are over 2,000 illegal
textile factories within three mile of the city's medium-sized Chinatown,
with many of these facilities run by the Triads. In New York City's Chinatown,
so popular with tourists, 75% of the local businesses are forced to pay
the local crime family protection money.
This monthly or weekly payment to the gang insures that no one
from the "family" will burn down the business or harass the owner.
The gangs create the threat, and then protect the innocent from it. Our
sources in San Francisco report even higher rates of corruption on the part
of the deeply entrenched Tongs in that city.
India
Far less famous than its counterparts in other parts of the world,
the Indian Mafia runs many businesses and controls much of the underworld
in Bombay. While all the headlines and television news programs are watching
the Yakuza in Japan, Asian Triads, and the Italian Mafia, the Hindu Mafia
rules supreme over the city of Bombay's huge business community.
In a sense, the criminals of Bombay have become sub-contractors
to the business community of the city, working to settle disputes, usually
through violent means. In Bombay the idea of a "hostile takeover"
of a company takes on a whole different meaning compare to the Western business
view of the term.
At the end of 1995, East-West Airlines, a large airline based in
Bombay, was embroiled in business disputes with its competitors. The solution?
A hail of gunshots, and Thakiyuddin A. Wahid, managing director of the company,
was cut down by hitmen - the business dispute settled by violence. The same
fate befell Sunit Khatau, managing director of Khatua Makanji Spinning and
Weaving. His crime? He complained to law enforcement officials of criminal
harassment by his competitors.
The police cannot stop these crimes because it is the cream of
Bombay society who are hiring the hitmen. Ganglords of the city are held
in high social regard, so when a gang member gets arrested, there's a good
chance he's going to go free because of his leader's friendships and connections.
Without credible rule of law, there will be little impediment to the gangs'
influence in this region.