Cocaine, gambling, ‘pizzo’: The dirty ways the mob makes money

When boarding a Greyhound bus in Winnipeg with a one-way ticket to Vancouver in 2012, Erwin Speckert carried a backpack stuffed with $1.3 million in bundled cash. He was a courier for a betting ring jointly run by associates of the Mafia and the Hells Angels.

The discovery is a shocking hint of the money coming in from blackmarket gambling — but it isn’t the mob’s biggest moneymaker.

How does do mobsters make money? The short answer is: anyway they can. If they can conceive of it, someone will try it. That’s the truth, but not the whole truth.

Despite an old belief — particularly popular in the 1960s and 70s — that the traditional Italian Mafia doesn’t sell drugs, the drug trade is the biggest source of profit for major Mafia groups.

Major Giuseppe De Felice, who specializes in anti-Mafia investigations with the Carabinieri, a national police force in Italy, said the ’Ndrangheta, the Mafia born in the Italian region of Calabria and expanded into Canada, has three primary interests: “cocaine, cocaine, cocaine.”

The ’Ndrangheta in Canada climbed “to the top of the criminal world,” Italian prosecutors said, by becoming masters of the global drug trade by establishing a “continuous flow of cocaine” from South America.

Drugs are as important to the mob today as alcohol was during Prohibition. At its essence, it’s the same game. The money it accrues to the powerful Mafia families, both globally and locally, is immense.

This is just a gift from you to me? This isn’t a payment for a service? Is this the proceeds of crime?

Gambling likely comes in second place. It remains a huge moneymaker for mobsters in Canada.

High-stakes poker games in the backroom of social clubs are the image of how mobsters make gambling money, but day-to-day, the poker is only to get gamblers in the door. Once inside, mobsters push them towards the video gaming machines; that’s where they earn the real dough.

Sports betting is another huge cash cow, as the Winnipeg bus terminal arrest shows. The operation that courier worked for became the template for modern mob bookies: Platinum Sports Book. It had computer servers in Costa Rica; toll-free phone lines and a phone app allowed thousands of clients to place bets. It grossed at least $103 million in a few years.

Often hand-in-hand with gambling, loansharking is big business for the mob. It is an age-old practice and often still called “shylocking” after the ruthless moneylender in Shakespeare’s The Merchant of Venice.

Mobsters lend cash out on the street at exorbitant rates of interest. Collections are enforced by threats of violence and actual violence, making borrowing a dangerous game.

Extortion payments were a part of life in southern Italy, where paying “pizzo” was the traditional business model. Pizzo is a regular “tax” paid by a business to a mobster to prevent him damaging the business or hurting staff or the owner.  They call it protection money.

In Canada it is not as ubiquitous but still routinely happens, especially in areas with a high mob concentration. Italian-owned businesses are most likely to be victimized. Sometimes businesses are forced to use specific suppliers, such as a mob-approved cheese importer or coffee wholesaler.

I once witnessed an attempted shakedown.

A heavy-set man swaggered into a new nightclub ignoring the doorman’s request for the cover charge. When the manager asked him what he wanted, the man said, “I’m here to make sure nuttin’ happens.” After an amusing to-and-fro trying to communicate over the loud music, with the manager pretending to misunderstand the man’s intent by thanking him for his neighbourly kindness and the gangster repeating “you don’t understand” as menacingly as he could, the man grew increasingly agitated and stormed off saying he would be back.

They are often more successful.

Increasingly, mobsters embrace financial crimes, particularly mortgage frauds, various bank frauds and stock market scams. A popular one is to use false identities to obtain bank financing for high-priced business equipment, often construction vehicles. An associate poses as a representative of a company in need of equipment and another as a supplier providing it. The bank learns of the deception long after the money has been paid and moved offshore.

Although mobsters like to think they are a cut above simple street crooks, they still get their hands dirty. Members and associates happily go out on robberies, knocking over jewelry stores, doing home invasions and cargo heists. Lots of cargo heists.

They often are a step above the average thief, though, more often targeting high-end jobs armed with inside information or hitting entire shipments from hijacked trucks or warehouses. The goods are resold, a process called fencing.

Bikers arrive at the Hells Angels clubhouse in S.E. Calgary for a large party on Saturday July 22, 2017.

Not all mobsters are involved in all of these crimes. Some mafiosi are too old to hunt like they used to. Some are too rich and smart to risk prison on smaller scams.

And some have become bosses.

Bosses don’t have to hustle like the soldiers. Money always flows up in the Mafia. The underworld is not a trickle-down economy. It more resembles a feudal state, with peasants paying up to lords.

As a general rule, mob associates making money in a mob-controlled area or working with a specific mobster pass a significant portion of their proceeds to their Mafia contact.

That Mafia soldier will be a part of a crew, a platoon of mobsters working together, and the soldier must pass a portion of what he earns — both from his own schemes and his cut from his associates’ schemes — up to his captain, or capo, who leads the crew.

The captains, in turn, kick-up to the boss, and other members of the family’s top administration.

This is how a boss makes much of his money. It helps insulate him from prosecution by not getting his hands too dirty.

It generally works.

I’m here to make sure nuttin’ happens

A man reputed to be a major Mafia boss in Toronto has a routine whenever gangsters present him tribute money. Before he takes the envelope, he asks questions that appear to be written by a lawyer, along the lines of: “This is just a gift from you to me? This isn’t a payment for a service? Is this the proceeds of crime?”

Only when the gangster answers “yes, no, no,” he takes the envelope and tucks it into his pocket nodding his thanks.

That’s what makes him rich, no matter what else he does. The combination of his reputation and position are all the heavy lifting he needs to do.

How much mob soldiers make varies widely. Some are rich while others struggle. There is a lot of dirty money being made, though, as shown when mobsters are arrested. Large stashes of cash and luxury goods are often found when police raid their homes and businesses.

A veteran Mafia insider said it isn’t always worth it. He described life in the mob this way: “Everything is good and then 10 minutes later they come and kill (you).”

Heck of a way to make a living.

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This article was originally posted here