The Mob and the City (28 page)

The
mafioso
lived knowing that he, too, could be eliminated by those around him. “Whenever a surprise meeting was called…there was always a sense, a fear, that this was it for you,” recalled Anthony “Tony Nap” Napoli.
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As FBI agent Joe Pistone explained, “Wiseguys wake up every day, aware that this may be the day that they get killed, at any moment, for lots of different reasons.”
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Although the Commission promised to protect wiseguys from arbitrary killings, there were no guarantees if you crossed the wrong man. “Goodfellows don't sue goodfellows,” said a
mafioso
on a surveillance bug. “Goodfellows kill goodfellows.”
²³
This realization helped fuel the fast times and high living of wiseguys.

Loansharking

Wiseguys went into loansharking because it was relatively simple, drew little attention from law enforcement, and was more profitable than bookmaking. Mob loansharks lent money above the maximum legal interest rates to bookmakers, gamblers, and overextended businessmen—people who could not get credit through banks. Of course, the terms and interest were steep: repayments at 2 to 5 percent or more
per week
(annual percentage rates of over 150 percent per year). “If a guy borrowed $10,000 and the loan shark charged him two points, he would have to pay $200 a week in interest—which was known as the vig or the juice—every week, and he still owed,” explained Philadelphia mobster Philip Leonetti.
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Despite—or because of—their reputation for knee-capping deadbeats, the
mob's collectors only had to resort to violence sparingly for ordinary debtors. They wanted repeat customers, and they mostly relied on implicit threats. Showing up at night on the debtor's doorstep was usually intimidating enough to ensure repayment. “There's only two people I had to hit to collect. Physically, hit, I mean. Only two people. I think that says something about the reputation I had,” Sammy Gravano said of his loansharking.
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Mobster John Dalessio actually took his daughter on debt-collection trips around Staten Island. “Once a week, we'd cruise the Island in the Caddy and make stops at people's houses so my father could collect debts owed from various gambling operations,” recalled his daughter. “He'd emerge seconds later carrying an envelope or paper bag.”
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The Mafia's trademark for violence had its advantages.

Criminal Receiver: Fencing Stolen Goods, Thievery, and Hijacking

Criminal receivers sold (“fenced”) stolen goods (“swag”). Receiving was often related to thefts and hijackings. Manhattan was full of high-end consumer goods that wiseguys loved to steal. Joe Valachi got his start as a burglar who stole silk and jewelry from Manhattan stores then sold the swag to professional fences.
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“The Mafia is not primarily an organization of murderers. First and foremost, the Mafia is made up of thieves,” said FBI agent Joe Pistone.
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The Cosa Nostra specialized in hijacking targeted trucks on the highways around New York City. For a split of the profits, they would get inside tips of a lucrative shipment. Sometimes, the driver himself was involved. “Pricey stuff gets shipped everywhere. Truck drivers out for a quick buck will turn to us,” said Louis Ferrante. “Some ask me to tie them up and leave them somewhere to make it look good.”
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Like on the waterfront, shippers put up with occasional thefts because the New York market was too large to abandon. The Mafia developed fencing operations, too. “Most of the hijack loads, whether it's cigarettes, liquor, furs, appliances, or food, are shipped by the mob to discount stores they own or have connections with,” Vinnie Teresa explained. “In a matter of hours it's distributed.”
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Alcohol Tax: Bootlegging, Moonshining, and Tax Evasion

Perhaps most surprising was the wiseguys’ continued role in illegal alcohol sales
after
the repeal of Prohibition in 1931. This was another example of how overregulation fostered organized crime. Through the 1950s, the federal excise tax on whiskey was extremely high at $10.50 a gallon. (If the excise tax had kept up with inflation, it would be $90 a gallon in 2013 dollars instead of its current rate of $13.50). State and local fees and regulations further drove up the price of booze. Bootlegged, tax-free liquor offered significant cost savings for New York's bars and nightclubs, in which mobsters often held hidden interests.
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7–1: Joseph DiPalermo, John Longo, Nicholas Palmotto, and Carmine Galante, arrested for alcohol tax violations in 1947. (Used by permission of the John Binder Collection)

After repeal, Carlo Gambino and his brothers became the leaders of “a notorious, daring group of bootleggers” that operated secret, unlicensed alcohol distilleries around Brooklyn, New York, and Newark, New Jersey. The Gambinos supplied huge quantities of untaxed booze to Manhattan bars and nightclubs. Mob-run gay bars were infamous for their bootleg liquors.
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The Mafia's bootleggers were significant enough to be targeted by federal law enforcement well into the 1950s. As we will see, the most important mob bust in history involved Treasury Department agents of the Alcohol and Tobacco Tax Division, who were investigating mob moonshiners around Apalachin, New York, in 1957.

Vending Machines

The Mafia's most peculiar business was coin-operated vending machines. Yet it makes sense in light of the mob's practices. Organized crime first got into vending machines as an offshoot of gambling slot machines. Wiseguys then created noncompetitive “routes” for their machines by coercing bars, restaurants, and stores into using
only
the mob's “union”-sanctioned machines. Joseph “Crazy Joe” Gallo, a.k.a. the “jukebox king,” got his nicknames for assaulting bar owners who replaced his machines.
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The racket was easy to monitor: Gallo's machines were either in the bar or they weren't. This currency-only business was also conducive to income tax evasion.
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Senator John McClellan's committee hearings of 1957–1959 documented pervasive racketeering in the vending-machine business in New York City. Charles Lichtman, a vending-machine jobber, became enmeshed in bizarre schemes by mobsters. After Lichtman sold a new game machine to a bar owner in 1930, his mechanic was kidnapped by Dutch Schultz's gang until he removed the machine. Later on, after Lichtman became a union leader in the business, he was paid by the Associated Amusement Machine Operators of New York to “protect the locations of the various [AAMONY] operators” by picketing businesses that put in new machines by outside vendors. The mob finally shut out Lichtman from the industry. “You have no racket connections, you are nobody, so you are out,” Joe Valachi told him bluntly.
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THE MOB'S MONEY

There has been much speculation about the Mafia's money. In 1967, the President's Commission on Law Enforcement estimated that organized crime made gambling profits “as high as one-third of gross revenue—or $6 to $7 billion each year.” The commission warned that it “cannot judge the accuracy of these figures” of gambling profits.
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Nevertheless, writers have seized on these unreliable figures to give distorted pictures of the mobster life. One criminologist claimed that “any given member of Cosa Nostra is more likely to be a millionaire than not.”
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Another book on the Mafia quotes a cop as stating, “Even a simple soldier these days can wind up a millionaire.”
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Mob insiders, however, have consistently refuted the notion that ordinary soldiers routinely became millionaires.
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At the other end of the spectrum, a new history book on the Mafia portrays the soldiers as indigents, and mob bosses like Vito Genovese and John Gotti as having “a middle-class lifestyle—but nothing more.”
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The book erroneously suggests that
mafiosi
had little wealth because their gambling operations made only small profits.
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Both side of this debate suffer from an incomplete analysis. The narrow focus on gambling presents a skewed picture of the Cosa Nostra's diverse sources of income. Furthermore, both sides fail to account for the spending habits of wiseguys. Members of the New York families could make substantial cash incomes. However, they typically consumed it in ways which did not foster long-term wealth.

Diversified Income: The Wiseguys’ Rackets

Mobsters had to deal with interruptions in their incomes. Rackets could dry up for long stretches of time, causing low-level wiseguys to struggle financially. Stints in prison were an occupational hazard, too. When the police busted down the door of Joseph “Joe Dogs” Iannuzi, he was worried less about the charges than the disruption to his illegal income. “I was now unemployed,” said Iannuzi.
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The New York families therefore diversified into a wide variety of criminal enterprises, racketeering activities, and quasi-legitimate businesses.
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Although
bookmaking was a common activity, as we saw in
chapter 2
, the wiseguys utilized it for basic “work” income and to raise capital for more profitable activities. Few wiseguys limited themselves
solely
to gambling. As shown in
table 7–1
, less than 10 percent of the New York soldiers identified by the 1963 McClellan Committee hearings were engaged only in gambling. Thus, it is inaccurate to project small profits from low-level bookmaking as representative of all the Mafia's income streams.

Many wiseguys were engaged in more profitable activities. Roughly 40 percent of the Mafia soldiers identified by the 1963 McClellan Committee hearings were engaged in narcotics trafficking, labor racketeering, or both (see tables
7–1
and
7–3
). High-level narcotics trafficking at the smuggling and wholesale level often generates extraordinary profits and income.
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This was especially true during the 1930s through 1960s when the New York Mafia had cartel power over America's wholesale heroin markets.
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Labor racketeering generated diverse and lucrative sources of income as well. “We got our money from gambling, but our real power, our real strength came from the unions,” testified Vincent “Fish” Cafaro.
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The mob's power over unions translated into various revenue streams, including receiving bloated union salaries and no-show jobs, embezzling union treasuries and pension funds, taking bribes from employers for “strike insurance racket” and “labor peace,” using unions to set up employer cartels and collect employers’ association dues, and leveraging power over unions to gain competitive advantages for mob-owned businesses.
⁴⁷
Lucchese Family associate Henry Hill remembered how
caporegime
Paulie Vario used his power over a bricklayers’ union to create no-show union construction jobs. “We didn't even show up regular enough to pick up our own paychecks. We had guys we knew who were really working on the job bring our money,” recalled Hill.
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Suburban Mobsters

Another indication of the
mafiosi
's economic mobility was the flight to the suburbs after the Second World War. By the 1950s, many wiseguys had achieved roughly middle-class lives in suburban communities around the New York metropolitan area.

Like other prospering New Yorkers, successful wiseguys began moving out of inner city neighborhoods to the suburbs. As we have seen, the Mafia's traditional strongholds were Italian East Harlem, Lower Manhattan, South Brooklyn, and, to a lesser extent, South/Central Bronx. Although mobsters would continue to go into “work” in these neighborhoods, many changed their personal residences to the outer boroughs and suburban communities. “So, in the 1930s and 1940s the racketeers were our neighbors on One Hundred and Seventh Street,” remembers Salvatore Mondello, a resident of East Harlem. “The wealthiest men on my street, they left first for better neighborhoods and newer horizons.”
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The statistics in
table 7–2
bear out Mondello's observation.
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