Feature Articles

By John William Tuohy

How the Mafia cleans its blood money

In the Mafia, its all about money.

Understand that, and you understand the mob.

They problem is, until the money is laundered, made to appear as a legitimate source of income, the mountain of cash they generate is virtually useless.

That's where the experts come in.

Cleaning the mobs money is not only incredibly profitable, it's practically risk free. Automated transactions make it close too impossible to track the monies' origin, and the new digital currency...cyber banks....not only create complicated jurisdictional problems, they have no physical organization to monitor.

The problem with all this, cyber banks, international jurisdiction and so on, is that it leaves the appearance of being a victimless crime, and blurs the fact that the money being washed by somber faced bankers in Brooks Brothers suites is nothing more then blood money.

You have to remember where the money comes from.

Back in Rhode Island, I knew a character named Benny the Booster. I never knew his real name. I'm not sure he had a real name.

Benny was thief, but strictly small time.

Working out of the trunk of an ancient Dodge Dart in an empty lot at the end of our street, Benny sold anything that fell off the back of truck or slipped off a freight car. One week he'd have a car load of baseballs and the next week a thousand bottles of perfumes.

The guy was like a mobile K Mart.

I heard a story that when he was low on cash, Benny would break into newly built house's and steal the bath tubs, toilets and sinks. The contractor would put in a claim with the insurance company for the stolen item, and after they paid his claim, Benny would sell him back the stuff he'd stolen for ten cents on a dollar.

Yet Benny wasn't a Wise Guy, he was a Wise Guy wanna-be, or least he was until one day in 1973, when he got hooked up with some real gangsters out of Providence.

The way I heard it, Benny got busted for melting down coins in a smelting factory that fronted as a vending machine company.

Since he had some priors, the judge tossed Benny in a federal can for five years.

A decade came and went before I saw Benny the Booster again. I ran into him at the Diplomat Lounge, a pleasant place up on Federal Hill in Providence, that used to serve decent Italian food. A Made Guy's girlfriend owned the place and Benny was a regular.

I didn't recognize him when I sat next to him. He'd put on fifty, maybe sixty pounds since I'd last seen him. His hair was styled, he dropped his street clothes for a shiny three piece suit, and the old Dodge Dart with the endless trunk had been replaced by a new cream white caddy....probably stolen, but a caddy nonetheless.

Since Benny interested me the way some people are interested in bad car wrecks, I talked to him.

He told me he was in the used car business and that things were going really good, and he tossed a thick roll of tens and twenties onto the bar to prove it.

I obliged Benny's fragile ego by acting duly impressed and started to look for the exit when he slipped his hand under my nose and pointed to the ring on his pinky finger.

"See that ring? ...5 G's, five grand"

It was one hell of a ring, all right. A huge rock with a wide gold band that was a little feminine for my taste, but, I gotta say, on Benny, it worked .

I learned later that Benny the Booster was the Tuinel King of the Ocean State, selling as many as a thousand downers a day to school kids and anybody else who could fork over the money for bag of the yellow and green pills.

That was how Benny the Booster got his oversized pinky ring and his cream white Cadillac. He pushed pills to kids. And, that's to the money laundering centers of the world, he could prove every nickel as a straight income.

Crime pays. But, laundering crime money pays better and the market is enormous. This year alone, dirty money will absorb $600 billion, or 5% of the world's gross domestic product.

Early this year, the secret and dangerous twilight world of laundering mob money was mildly shaken when the government of the tiny European nation of Liechtenstein announced measures to tighten its otherwise lax....some in law enforcement say nonexistent....laws on cleaning dirty money for the underworld.

The bill, if it passes, will obligate banks and other financial institutions to report suspicious deposits, make more thorough checks on the origin of questionable funds and attempt to curb official bribery, which, for decades has virtually been this nation-states second largest, albeit, unofficial second source of income.

Most Europeans believe, and rightfully so, that the move by Liechtenstein is more intended to clean up the principality's seamy reputation as a first rate international drug money laundering center, and has very little to do with stopping the flow of narco dollars into its score of banks.

There are so many billions of blood stained dollars belonging to Mafia Dons and Russian gangsters floating around European banking centers, that when officials in Switzerland proudly announced that they had frozen $16.8 million linked to a Russian money-laundering case, the howls of laughter over the "chump change scandal" could be heard from Bogota to Berlin.

But the psychotic dope dealers who prey on our nations weak and poor need not fret over the momentary reluctance of guilt-ridden European bankers.

There are still plenty of places in China, Hong Kong, Macau, Philippines, India...where ten billion was cleaned last year alone...Indonesia , Dominica, Antigua and Naura and perhaps as many as 500 off shore, lightly regulated banks, who are more then willing to help the thugs clean as much Narco money as they can for as large a cut as they can get.

In the old days, before the mob was drenched in drug money and the IRS was less diligent in these matters, squirreling away a couple of million was an easy thing to accomplish.

Meyer Lanksy and Jimmy Alo laundered their cash by filtering it into dummy investment groups and dumping it into film production companies that worked on the same movie for a decade or two, allowing the hoods to take massive salaries as executive producers.

That, by the way, explains some big dollar epic clunkers churned out by Hollywood in the mid 1960s.

Paul Ricca and Sam Giancana buried their money in banks that they owned outright while hundreds of other gangsters simply deposited their excess cash across the boarder in Mexico.

But things change.

The enormous profits offered by narco cash have obliged the wise guys to do things they hate to do, think, work and be inventive.

The September 1999 IRS sting operation against Gloria Granata is a point in case. Gloria's husband, Frank Granata, was allegedly part of Chicago mobsters Joe Ferriola Street crew before he died of heart complications in 1995.

According to the indictment, in one 14-month period, Granata allegedly laundered $650,000 in cash that allegedly came from cocaine deals, stolen goods and gambling.

They allegedly funneled the cash through one of several health care clinics owned by the mob. Once the cash was delivered, the clinics issued checks or money orders to phony corporations, taking out a healthy cut for their services. Allegedly.

On a higher scale, where the transaction involves millions of dollars that need to be cleaned in a shorter period, the cash is moved around the country, state by state, from one dummy company to another, to make it appear to be proceeds of legitimate business activity.

When moving the cash seems safe, its sent to a larger financial institution in New York, and then usually moved off to London, the hub in the channeling of Mafia mob money from the West to the East and East to West.

How much money gets moved in one day? Well, accounts from just one institution, The Bank of New York, is suspected of laundering at least four billion dollars in one year.

Once the money is wired to London, its moved through accounts at banks branches in England, back to New York, back to London, off to Hong Kong, Lima, Bombay and so on, until it appears clean...or untraceable...and then socked away in a numbered bank account in one of a dozen countries.

And its all done with the touch of a finger on a computer keyboard....cyber-finance, and its all upscale, even if its done in the darker corners of the world of finance. The bankers involved in laundering the profits of narcotics, loan sharking, gambling and financial scams, are sophisticated, well educated, upper-middle class professionals, who would never, otherwise, have anything to do with the underworld.

But money is a great motivator, and the net for laundering one dirty American dollar can be as high as 60 to eighty cents.

Better yet, the chances of being caught are remote, and even if they are apprehended in the act, investigators say that proving a money-laundering case would be difficult because they would have to show the funds came from specific criminal activity.

And that's in the United States. The situation gets better for Bankers in other parts of the world.

Hong Kong is a favorite depository of Southeast Asian drug lords and a major transit point on the international money laundering trek.

That government, under pressure from the White House, has drawn up a series of strict laws to stop money laundering on its current massive scale, including a mandatory twenty-year prison sentence, but no enactment date has been set, nor is one ever expected to be set.

In India, a new bill intended to cool off the red hot money laundering market there, would fine the offenders as much as 500,000 rupees...or $11,495 dollars. Pocket change.

But, said one Indian official "Drug money laundering will be very difficult to detect and track even after the new law is put in place"....trans lation "fugetaboutit"

At least the Indians cared enough to put up a front. Indonesia didn't even bother doing that much. The country does not plan to introduce anti-laundering bills or to supervision or regulation its banks.

"We have more pressing problems" said the country's president. One of those pressing problems may be what to do about the $80,000,000 dollars that was secretly transferred out of the Bank of Bali into the accounts of friends linked to...you guessed it...the President.

In those nations that do have good, solid anti-laundering laws on the books, such as Switzerland and Liechtenstein, official corruption and strict banking secrecy laws over shadow enforcement.

Its the same in third world countries, such as the Philippines, where banks have lobbied hard against enforcement, out of fear that any changes to their secrecy laws would cause a flight of capital, a serious concern in these cash strapped nations.

Eventually the money finds its way back into the US as clean money, usually in the form of real estate joint venture groups, over priced hotel purchases, cross-boarder cash transfers, insurance companies, and the always reliable Front Man.

Once here, the cash can buy high-priced lawyers, big house's, fancy cars, or, according to the CIA, political protection. The agency says that the mobsters are filtering their excess cash into political campaigns across the U.S. on every level.

The real losers in this no lose situation, are the American people. The cost of narcotics is staggering. Tougher drug laws jeopardize our personnel freedoms by increasing powers of the policing agencies, and create a plethora of otherwise unneeded laws that clog our courts and jam our prisons to standing room only capacity.

However, the true cost of narcotics is the toll it takes on me and on you.

It diverts desperately needed cash from our schools, our elderly and our poor, and we are only left to shake our heads in disbelief over the gruesome toll its takes on our young people.

Drugs murder. It rips apart families, brings misery to those in our society whose fragile lives can least afford another failure, another set back, another loss, another crushed dream.

And for what?

So punk's Benny the Booster can have bigger pinky rings.

Mr. Tuohy can be reached at MobStudy@aol.com

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