The mob: from 42nd Street to Wall Street
| Pages | 325-341 |
| DOI | https://doi.org/10.1108/13590790410809275 |
| Published date | 01 October 2004 |
| Date | 01 October 2004 |
| Author | P. Kevin Carwile,Valerie Hollis |
| Subject Matter | Accounting & finance |
The Mob: From 42nd Street to Wall Street
P. Kevin Carwile and Valerie Hollis
INTRODUCTION
Imagining two mobsters on 42nd Street in New York
City secretly planning to murder a member of a
rival crime family is easy. Television and movies
have familiarised everyone with images of organised
crime: barbaric hoodlums `roughing up' innocent
store merchants for protection money, threatening
public ocials in order to secure building permits or
running a prostitution ring. But how familiar is the
public with images of `mobsters' in three-piece
suits studying the Wall Street Journal? These are not
images we associate with organised crime or crime
families, because the mob is normally thought of as
participating only in street crime or violent crime.
However, the mob is expanding its reach. It is no
longer con®ned to running strip clubs and fencing
designer watches Ð now it does these things and has
a hand in how much investors pay to buy a particular
stock. But does organised crime constitute an actual
threat to the stock market?
This paper will focus on the in®ltration of the US
stock market by organised crime, speci®cally, La
Cosa Nostra (LCN). It will begin by de®ning organised
crime, and then discuss the type and genre of crimes
LCN has been associated with in the past, as well as
its motivations and reasons for tackling Wall Street.
It will then review the schemes used by organised
crime to in®ltrate the stock market, analyse two speci-
®c cases of LCN in®ltration (`Mob Stocks' and
`Operation Uptick') and brie¯y analyse the breadth
and impact of organised crime on the stock market.
WHAT IS ORGANISED CRIME?
In order to discuss the problem of organised crime, the
de®nition must be clear. `Organised crime' is a nebu-
lous term that for most Americans is synonymous
with the Mob or the Ma®a, which conjures up
images of the movie The Godfather.
1
The media have
taught the USA that organised crime consists of the
illegal activities of a handful of Italian families in
New York City. But at the very least organised
crime includes the Russian ma®ya, Chinese triads,
Jamaican posses, Japanese boryokudan, and at one time
Irish and Jewish gangs. At the most, it incorporates
biker gangs and street gangs.
Several de®nitions of organised crime have been
used in dierent circumstances, yet none is particularly
serviceable. This may be the reason the topic of orga-
nised crime is often addressed without ever being
de®ned (such as in the Organised Crime Control
Act of 1970). The President's Commission on Orga-
nized Crime reasons that:
`The problem in de®ning organized crime stems
not from the word ``crime'', but from the word
``organized''. While society generally recognizes
and accepts certain behavior and actions as criminal,
there is no standard acceptance as to when a criminal
group is organized. The fact that organized criminal
activity is not necessarily organized crime compli-
cates that de®nition process.'
2
The Omnibus Crime Control and Safe Streets Act
of 1968 uses the following de®nition: `Organized
crime means the unlawful activities of members of a
highly organized, disciplined association engaged in
supplying illegal goods and services, including but
not limited to gambling, prostitution, loan sharking,
narcotics, labor racketeering, and other unlawful
activities of members of such associations.'
3
This de®-
nition suers from being ad hominem (it focuses on the
person committing the act and not the acts them-
selves), while also not listing the acts that necessarily
constitute `organised crime'.
4
In comparison, the leg-
islature of Ohio created the following de®nition:
`Organized criminal activity means any combina-
tion or conspiracy to engage in criminal activity
as a signi®cant source of income or livelihood, to
violate or aid, abet, facilitate, conceal, or dispose
of the proceeds of the violation of, criminal laws
relating to prostitution, gambling, counterfeiting,
obscenity, extortion, loan sharking, drug abuse or
illegal drug distribution, or corruption of law
enforcement ocers or other ocers, ocials, or
employees.'
5
This de®nition is an improvement in that it does
not focus solely on the substantive violation Ð
any activity related to the violation is included. But
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Journalof FinancialCrime
Vol.11,No. 4,2004,pp.325 ±340
#HenryStewart Publications
ISSN1359-0790
conspicuously missing from the list are arson, hijack-
ing, murder and labour racketeering.
6
Unlike legislatures, social scientists focus more on
the relationships between the members of the organi-
sation than on the actual crimes. Donald R. Cressey, a
criminologist, de®nes organised crime as `any crime
committed by a person occupying, in an established
division of labor, a position designed for the commis-
sion of crime providing that such division of labor also
includes at least one position for a corrupter, one posi-
tion for a corruptee, and one position for an enforcer.'
7
According to this de®nition, any crime that the
corrupter, corruptee and enforcer commit would
qualify as organised.
While de®ning organised crime has proven di-
cult, enforcement agencies and researchers have
successfully identi®ed certain characteristics or attri-
butes indicative of the phenomenon.
8
Most organised
crime groups have several, if not all, of the following
attributes.
(1) Non-ideological: `An organized crime group is not
motivated by social doctrine, political beliefs, or
ideological concerns; its goals are money and
power.'
9
This is what distinguishes an organised
crime group from the Ku Klux Klan or a terrorist
group.
10
However, having `an ideology should
not necessarily excuse it from consideration as
an organized crime group'.
11
(2) Hierarchical: There is a vertical power structure
and the power is inherent in the position regard-
less of who occupies it.
12
The hierarchy is `main-
tained by force or other means'.
13
(3) Limited or exclusive membership incorporating a
bonding ritual: Membership is limited and usually
dependent on `ethnic background, kinship, race,
[or] criminal record . . . Those who meet the
basic quali®cation(s) for membership usually
require a sponsor, typically a ranking member,
and must also prove quali®ed for membership
by their behavior' (ie willingness to commit
crimes, follow orders, and maintain secrets).
14
`Many organized crime groups have rituals that
appear to combine mysticism, fraternity initia-
tion rites, and the process of being made a
partner in a law ®rm.'
15
There are several
reasons for these rituals: (1) to `reinforce the
feeling of separateness: ``It's us against them'','
(2) to `give those on the lower rungs ...agoal,
which keeps them in line while they work their
way up to membership,' and (3) to `make it
easier to accept that those at the top rule the
roost'.
16
(4) Continuity:An organised crime group is designed
to last beyond the life of the current members.
Members assume that their membership, and
that of the others, is for life.
17
This is what sepa-
rates the Capone organisation from the James
gang. The Capone organisation continued even
after Al Capone was imprisoned, but the James
gang ended when Jesse James was killed.
18
Continuity also describes the enterprise itself.
Organised crime consists of a continuing enter-
prise, not a string of separate crimes that can be
`investigated and prosecuted separately'.
19
(5) Willingness to use violence and bribery: `Violence is
a readily available and accepted resource.'
20
The
members' use of violence and bribery is limited
not by ethical concerns but by practical limita-
tions.
21
`Physical violence is almost always
necessary.'
22
If not against a victim (as in the
case of a `victimless crime'), then because `dis-
putes continually arise within and between
organizations; if they cannot be settled peace-
fully by the disputants', then violence will be
required against the competing group or
against `its employees, customers, and associates'
to keep down rebellion.
23
Drug tracking and
fencing stolen goods often involve selling to
and involving outsiders who may be addicts
and petty criminals who if caught turn into
informers and work with the police; therefore,
it is `more expedient to make payos to police,
prosecutors, and judges than to attempt to
keep all their customers in line'.
24
The cor-
ruption frequently includes private individuals
who agree to provide information to or look
the other way for the organised crime group.
25
(6) Specialisation/division of labour: `An organised
crime group will have certain functional posi-
tions ®lled by quali®ed members . . . The enfor-
cer . . . carries out dicult assignments involving
the use of violence, including murder, in a
rational manner . . . The ®xer excels in develop-
ing contacts with criminal justice and/or politi-
cal ocials and . . . arranges for corruption. The
money mover is an expert at ``laundering'' illi-
citly obtained money . . . and investing it in legit-
imate enterprises.'
26
But the roles may change
from enterprise to enterprise Ð `relationships
are often task-dependent and changeable'.
27
(7) Monopolistic: An organised crime group seeks
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Carwile and Hollis
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