Tuesday, February 28, 2006

On The Take - From Petty Crooks to Presidents


















On The Take - From Petty Crooks to Presidents

excerpts from:
On The Take - From Petty Crooks to Presidents
William J. Chambliss�1978
Indiana University Press
ISBN 0-253-34244-9
269 pps. � First Edition � In-print
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An amazing book. Quite interesting. Documents a national system of pay-off and corruption.
Om
K
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ON THE TAKE
From Petty Crooks to Presidents

By William J. Chambliss

"Money is the oil of our present-day machinery, and elected public officials are the pistons that keep the machine operating .... Crime is an excellent producer of capitalism's oil . . . . [It] is not a by-product of an otherwise effectively working political economy: it is a main product of that political economy." -from the Introduction

From bagman to businessman, from pusher to politician, this is the story of the billion-dollar ripoff built on gambling, drugs, usury, business fraud, prostitution, theft, and blackmail. Chambliss begins with a detailed study of Seattle, Washington, and shows how the local crime network has been connected to national business and political interests and even to the White House. He could have studied dozens of other cities and found the same corruption and national connections-in Arizona, Maryland, Georgia.

Trained in law and sociology, Chambliss disguised himself as a truck driver ("two days' growth of beard, a pair of khaki pants, and an old shirt") and began his years of research by talking to small-time operators on skid row: tavern owners, cardroom and bingo parlor licensees, porn dispensers, drug pushers, and prostitutes. Gradually he gained the confidence of the higher echelon of the crime networkpolicemen, businessmen, journalists, and politicians.

Chambliss's findings are at odds with the view of organized crime held by the general public and by most academics. He found clear evidence that organized crime really consists of a coalition of politicians, law-enforcement people, businessmen, union leaders, andperhaps least important of all-Mafia-type racketeers. There is no "godfather" or small controlling group of criminals but rather an elaborate payoff system from which many benefit.

The conclusions of this study have farreaching implications for all Americans. Chambliss believes that "it is the bureaucratic nature of law enforcement, the search for profit and capital dictated by the economy, and the peculiar organization of American politics which creates and sustains organized crime throughout the United States at all levels: municipal, state, and national." The author vividly describes his often dangerous experiences and quotes extensively from interviews he taped. This colorful document of social science field research is a shocking expose of crime, business, and politics in America.

--from book jacket--
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CHAPTER THREE

Profits and Payoffs

BOB WILLIAMS (P)[Pseudonym] was only nineteen years old when he was arrested 'in the black neighborhood that was his turf. He was only nineteen when he was beaten to death in a jail while in the custody of the police. Like many other nineteen-year-old black youths, Bob Williams, judged by white middle-class standards, was sophisticated beyond his years. He knew how to turn a honky around, how to survive in what he called "the jungle," and how to buy cheap, sell dear, especially when he was buying and selling dope.

"I'm an independent. Some of these guys have all kinds of strings on 'em. Not me, man. I'm my own boss. Ain't nobody gonna pull me around by the nose."

According to a police sergeant on duty the night Bob Williams was taken in, "We had been watching Williams for some time. We knew he was heavily implicated in the narcotics traffic and we were just waiting for our chance. An informant told us he would have a lot of the shit on him that Friday so we picked him up."

Williams was arrested "on suspicion." At the time of his arrest he had over fifteen hundred dollars worth of heroin in his possession. The heroin, like whoever beat him to death, disappeared.

According to the policemen who arrested him, Bob called them names and tried to jump out of the car. I do not know what happened between eight p.m. and midnight, but shortly after midnight Bob was brought into the emergency ward of General Hospital badly beaten and unconscious. He was released back to the police the next day at twelve noon. The same intern who had patched him up Friday evening was still on duty Saturday about four p.m. when Bob was returned to the hospital again badly beaten, this time with a concussion. The police told the intern that "inmates in the cell keep beating him up." Bob Williams died at three a.m. Monday from a-brain hemorrhage caused by blows to the head.

The intern told me he believed the police had beaten him to death. The coroner listed the cause of death as "accidental." No one was ever charged with any criminal offense in connection with Bob's death.

Friday night, while Bob was in jail, a white physician who had lived in the city for a number of years drove through the black ghetto. His car weaved down the street and stopped near a corner. He took a .38 caliber revolver out of his glove compartment and began shooting into the night air. The police came, stopped him, and took him to jail. The police called his wife and she came to the jail. The doctor was released to his wife's custody. He had spent a total of forty-five minutes in custody.

On Saturday night, as Bob Williams lay dying, I played poker in a high-stakes poker game where thousands of dollars were illegally bet. A sergeant from the vice squad of the police department participated in that poker game.

Bob Williams paid a heavy price for his involvement in the drug business. Others who made all or part of their livelihood from the drug business were more fortunate. The informant who told the police when to pick up Williams was generously supplied with heroin by the police.

Behind this tragic case lies a fundamental truth about policing in America: the small, unprotected, unconnected entrepreneur furnishes the arrests and the "crime problem" that provide a smoke screen behind which profitable, organized, politically connected groups commit more serious, more profitable, and more common crimes.

Why the enforcement of the criminal law takes this shape is quite complicated in some ways. In one sense, however, it is very simple because it all reduces to money and profits. The money flowing through the rackets is large, and the profits are doubtless the highest of any industry in the world.

Item: From 1956 to 1970 each of eleven bingo parlors grossed over $300,000 a year. The owner of one bingo parlor netted $240,000 a year after all expenses, including payoffs to police and politicians, were paid.

Item: From 1960 to 1970 there were over 3,500 pinball machines licensed in the state. These machines grossed over 7 million dollars a year. The investment necessary for purchasing and servicing the machines was miniscule. The taxes were nonexistent since all returns were in cash and could be hidden. There was one "master license" for the county. It gave one organization the right to place pinball machines in the amusement parlors, cabarets, and restaurants. This small group of businessmen, closely tied to political and law-enforcement people, had a monopoly on one of the most profitable businesses in the state.

Item: In 1968 Seattle had the highest number of federal gambling stamps issued in any state in the U.S. except Nevada.

Item: A jeweler in Seattle was a major source of short-term loans to people in the drug business. Typically he would loan large sums of cash for a short period of time and receive in return a very high interest on the money. One transaction alone involved the loan of $220,000, with the understanding that the jeweler would receive back $350,000 "within thirty days."

Item: A consortium of businessmen, bankers, politicians, and racketeers invested in an "amusement center" which fraudulently issued stocks and netted the six investors over $100,000 apiece in six months on a $10,000 investment.

Item: High-stakes poker games that went on each night in dozens of locations throughout the city had stakes bet in an evening that often exceeded $100,000 Seven nights a week, 350 days a year, the people who organized and managed these games took away 10 percent of the pot. On a bad night for the house the management took home only $1,000 but on good nights management grossed $10,000, which was the rule rather than the exception.

The list could be expanded.

One of the reasons we fail to understand crime is because we put crime into a category that is separate and distinct from normal business. Much crime does not fit into a separate category. It is primarily a business activity. The fact that it is an illegal business activity is an historical accident beyond the control of those who engage in the business. But the mere fact of this historical accident does not change the basic character of the enterprise. The place to start the analysis is with the profit structure and with the business expenses required to keep the profits coming in.

In Seattle the rackets constituted one of the largest industries in the state. Gross profits from gambling alone amounted to more than fifty million dollars a year. Of course, this is only a rough estimate pieced together from information supplied by people who ran various gambling enterprises. It is, however, consistent with an intriguing variety of information I gathered from diverse sources. The following fact should give more than casual confidence in the reliability of this figure. A recent national survey shows the U.S. adult spends an average of thirty dollars a year on gambling. Over a million people live in Seattle, and if everyone spent the average on gambling, the total would be close to forty million dollars a year. Seattle is a favorite convention and tourist city and could easily run the total amount spent on gambling up to the estimate of fifty million dollars a year.

The profits are for the most part tax free. A pinball operator told me: "At the outside, our reported income is only one-third of what we actually take in. There isn't a federal agent in the world who can tell how much I skim off the top of a pinball machine once I've gotten to the counters."

"Fun nights" at the fraternal clubs, high-stakes poker games, cardrooms, etc. contributed huge sums. Not counted were all the other illegal businesses associated with some of the same people who ran, owned, financed, or profited from gambling. They include drugs, prostitution, cabarets run illegally, real-estate transactions, illegal stock and bond transactions, and stolen liquor.

The total profits of these various illegal businesses exceeded a hundred million dollars a year in Seattle, and this placed gambling, narcotics, fraud, usury, and organized theft among the state's two or three largest industries.

Legitimate business relies on the support of the law and the courts to ensure predictability and adherence to contracts. Illegal business cannot openly "go to court" if a debtor refuses to pay a gambling debt or to make good on an agreement to purchase a large supply of narcotics. But illegal business must be able to accomplish the same end or else the risk to the capital investment will be too great. The simplest, most direct way to ensure that the investment will return its potential profits is to include as partners those whose job it is to see that the illegal acts are punished by law. That is what happened in Seattle and what happens everywhere. Politicians, law-enforcement officials, professionals (especially lawyers, accountants, bankers, and realtors), and "legitimate" businessmen become partners in the illegal industry.

If I asked any of the dozens of people who practised the arts and crafts of gambling why the police did not enforce the laws prohibiting such acts, they gave the same answer: payoffs. Payoffs gave the police "a piece of the action," a part of the profits. And even a part of the profits was a lot of money.

At the operational level the cooperation of politicians and law enforcers takes place through the payoff. A bagman collects an established payment from every enterprise engaged in illegal business. Cardroom operators were surprisingly consistent in their reports of how much they paid off. The large operators paid $350 a month to the police and $300 a month to "the syndicate." Smaller operators paid $250 a month. Bingo parlor operators, "social club" owners, and gamblers in the Chinese, Japanese, and black ghettos paid less. The amount depended on the size of the operation and the amount of protection received.

Fred Lindesmith (P), a seventy-two-year-old man dying of arterial sclerosis, was on the police force in Seattle for twenty years. He participated in the payoff system and retired financially secure at age sixty-five. Fred had earned enough "extra money" as a partner in illegal business to send his two children to college with all their expenses paid. By the time he was seventy years old, however, he had grown disillusioned with the bastardization of police work he had helped to create. He was, he said, wanting to "set the record straight."

Q: Can you describe the payoff system?

A: Whoever was acting as official or unofficial treasurer would have the responsibility to see to it that the right people got their share. Skip Tower (P) did it for a while. Then Bob Furman (P) took his turn. Everyone involved got their share. When Ben Cichy was killed they sent someone out from downtown to burglarize his place. Three black dudes went out and tore up the floor looking for where he kept the monthly payoff money hidden. They left twenty thousand dollars worth of jewelry just sitting on the table. They were obviously not burglars, but people sent out from downtown. They terrorized Cichy's wife to death.

Q: Who got the money?

A: Everyone. The beat cop, the vice-squad captain, the prosecutor. Everyone. It depended on the gig. Narcotics payoffs went through the vice squad and the patrol division. Sooner or later it all went up to the top.

Q: Anyone else?

A: Of course the city council had its people with their hands out also.

Q: But how exactly

A: Okay. It's like this. There's a bagman who collects the money from tavern owners, the cardrooms, or the whorehouses. He brings it in. He takes a small cut. Then the sergeant in charge of the division, say the vice squad, takes his cut and passes it on to the police department's bagman, who takes it on up�a piece here, a piece there. Then it goes to the assistant chief, and he takes it on to people in the prosecutor's office and sends some over to the city council. The patrol division had their own payoff system. The patrol division was required to make its payoff to the mayor's office depending on whether the particular mayor was cooperating, and they all have, except one in recent years.... And there was a separate payoff system for burglary and narcotics. Burglary was probably as big as gambling. And individual narcotics ripoffs, sporadic but very lucrative payoffs in major narcotics transactions. Thousands of dollars in a single payoff.

Q: Who to?

A: To the narcotics dicks, then to be divided right up through the chain of command to the majors and lieutenants, and the assistant chief and the city councilmen.

Q: All on the local level?

A: Yes and no. There was another line that went to the state, and the state had its own gigs. Liquor licenses and payoffs for illegal booze, stolen whiskey from the state warehouses, watered-down whiskey and all that stuff went straight to the state. Frank Schneider (P) has for years been going between the governor's office and local payoff systems. People in the House of Representatives got theirs as well. In fact the guy who flies the payoff money to San Francisco every week is in the House of Representatives.

Q: What about different counties?

A: I'm not too sure about that setup, but it figures that they cooperated with one another-talked about how much profit there was and what each got from it. You should talk to _____ about that.

Q: You mentioned narcotics ripoffs....

A: Yeah. Narcotics was really big. Even bigger than pinballs or cardrooms. It's kind of long and involved. The police would use this guy _____ to set up narcotics dealers.

Q: Like Bob Williams?

A: Yeah. Like Bob Williams. You know what happened
to him?

Q: Yeah.

A: Well, they'd set up a narc dealer and make the arrest. Then they'd confiscate his stuff and turn it over to -1 who'd sell it, and the police would get a big share of the profit. The police would also have a fat narcotics arrest record, but the heroin and pills and stuff would still get to the street. I know the names of all those guys. I'm particularly close to the latest one who managed this operation, former lieutenant of the narcotics squad.

Q: At the state level, who do they work out of?

A: The state patrol; State Highway Patrol.

An item in the daily paper gave an indication of what happened to some of the profits. Lt. T. Ryther (P), who had been a police officer for thirteen years, died suddenly of a heart attack at age forty-one. At the time of his death he left an estate valued at $241,786. During his thirteen years as a police officer, Ryther had lived in a large, seventy-five-thousand-dollar home, owned two fully paid for expensive automobiles, and taken vacations in Hawaii. He had never earned over twelve thousand a year in salary from the city. He had, however, earned more than twice that amount in payoffs from illegal businesses in return for the protection and cooperation he gave them.

Both the King County prosecutor and the sheriff owned expensive homes in the city's most prestigious neighborhoods. The prosecutor also owned a fifty-foot ocean-going yacht. The assistant chief of police lived in an expensive house and built another for his son in an even more expensive neighborhood. The county prosecutor also directed unknown sums of money to state and local politicians who supported his kind of politics and his kind of criminality.

Policemen told a standard Joke in the department: "If you cleaned this city up, we'd all have to go on welfare 'cause none of us could live on our salary." Some of the policemen, ironically, lost a good percentage of their illegal earnings to the gamblers who were paying them off or to other police officers. Others spent large sums on whiskey and nights in cabarets. Still others invested in businesses and left the force. One ambitious and clever young officer saved enough money in three years working on the narcotics squad to purchase a large retail store in the downtown section of the city.

In a sense the illegal businesses were paying taxes in the form of monthly and annual payoffs to people at all levels of law enforcement and government. It is, however, misleading to see this network of money-flow as involving only profits and payoffs. In fact, what took place was a complicated set of illegal and legal business relationships which were the flesh and bones of a network of people engaged in the systematic reaping of profits, from illegal businesses.

This cartel constituted a crime network that was a subterranean organization which greatly affected, as surely as it undermined, the political economy of Seattle.

CHAPTER FOUR

The Crime Network

THERE WERE over a thousand people in Seattle who profited directly from the rackets, bootleg whiskey, organized theft and robbery, drug traffic, abortion rings, gambling, prostitution, land transactions, arson, phony stock sales, and usury. Everyone who successfully engages in these criminal activities must share the profits with someone or some group of people. The more regulated the criminal activities and the more successful the participants, the more systematized the profit sharing. The entire system is simply a collection of independent operators who cooperate and compete according to their ability, their power, and their interests.

Disparate as it is, widely distributed among people in different walks of life, and changing all the time, there is nonetheless a hierarchy. Some people are more important than others. In times of crisis some people have the power to make critical decisions while others do not. Not surprisingly, those who profit the most from the rackets and who also have the power to take action are the most likely to meet and discuss problems and prospects. In Seattle the group of power-holders who controlled and set policy for the illegal business enterprises varied. Over the years the more active participants included a King County prosecutor, a Seattle city council president, an assistant chief of police, city police captains, the King County sheriff, the King County jail chief, undersheriffs, the president of the Amusement Association of Washington (who had the only master's license for pinball machines in the county), a Seattle police major, and an official of the Teamsters Union. In addition there were persons from the business and professional community who were members of the network and who in a quiet, less conspicious way were as influential over illegal business activities as were the more visible operatives listed above. They included a leading attorney who defended network members and joined them in investments in illegal enterprises, a realtor who arranged real-estate transactions and shared investments, an officer of one of the state's leading banks, a board member of a finance company that loaned money exclusively to businesses or individuals who were either members of or under the control of the network, and various labor union officials�mostly in the Teamsters Union, but high-level officials of other labor unions were also involved from time to time.

One of the problems with determining the real power sources in an enterprise as inherently secretive and variable as a crime cartel is of course the line between active participant (or policymaker) and compliant benefactor. For example, a prosperous retail store-owner in the city often invested in and profited from illegal enterprises ranging from real-estate frauds to drug traffic. He also financed and arranged for the transportation of stolen jewelry out of the United States to Europe, where it could be recut and sold on the European market. He never set policy, never became involved in the day-to-day decisions, never allowed himself even to be consulted about the handling of a particular problem within the ongoing enterprises. Yet he knew of most of the problems and could well have been influential had he cared to make his wishes known. He preferred to remain silent. His decision, he told me, was based on the "good old American tradition of selfpreservation." He felt that the less he was involved in "administration," the more likely he was to remain unconnected publicly with the "seamy side of business." He acknowledged, however, that when a newspaper reported the death of a member of the network due to "accidental drowning," he knew it was no accident.

A further problem is to decide the point at which one has enough information to feel confident that the rumors and allegations being put forward as "facts" by informants match sufficiently with other data to be acceptable. The people mentioned so far were all well established in the minds of all my informants in a position to know. These people also exhibited life-styles which clearly showed incomes in excess of anything they could have had from their legal incomes. (The county prosecutor claimed publicly that his standard of living exceeded that which his salary could support because of monies his wife had inherited.)

But it was also alleged by some informants, who should have known, that the real power in the illegal business enterprises lay with high-ranking officials in state politics, a close associate in Seattle, and a former Seattle city council member. I was unable to establish the validity of these claims. In the end the consistency of informant reports convinced me that the governor was indeed a beneficiary of heavy political campaign contributions from network principals. He, like many others, benefited from the profits and left the management to others.

At one time (1963-65) it was fairly easy to identify seven people who constituted the backbone of the network. This group shifted, however, and some of the seven became less involved while some new people emerged as principals. Both composition and leadership are variable; success is determined by connections and profits. When drug trading becomes more precarious, the people involved may lose considerable influence; when cardrooms come under fire, those people whose profits or payoffs are principally in cardrooms lose their influence.

Whatever the composition, this coalition of shifting membership (but fairly constant leadership) persisted and had more to say about how the rackets were run than anyone else. It also met more or less regularly, but here too the pattern was not akin to a monthly board of directors' meeting but was more a series of meetings between key players from different walks of life. Politicians who were deeply involved in the network met regularly at their "businessmen's club" with members of the city council, the county board of supervisors, and several key businessmen who were profiting from the rackets. Law-enforcement officers met monthly with a pinball operator who was the head of the Amusement Association, an association of pinball operators which was the official lobby for the pinball machine owners. The head of the Amusement Association in turn met with other businessmen, at least one of whom was reputed to be the bagman for state politicians.

Some sense of the organized- disorganized nature of the rackets can be gleaned from a series of incidents in the mid 1960s which involved an attempt by Bill Bennett(P) to take over part of the pinball operation in the city. Bill's brother Frank was one of the prominent racketeers in town, a man generally believed to be involved in prostitution and the collection of payoffs for state officials (including the governor) as well as the police. Bill decided that he wanted a piece of the action in the pinball business. He tried at first to demand a territory but he met with resistance. Pinballs were at the time concentrated pretty much in the hands of several people. The only master license in the county was held by the Amusement Association. As president, Ben Cichy represented not only his own interests as the major pinball operator in the state, but also the interests of other pinball operators. Ben Cichy was well protected in his position. As president of the association that looked out for the pinball interests, he met regularly with and allegedly paid substantial sums of money to politicians, to Frank Bennett(P), and to members of the police department * In addition, the Amusement Association collected from all pinball operators a monthly fee that was used to ply state and local politicians with liquor, parties, and women for favors, not the least of which were large campaign contributions to politicians who worked in the interests of pinball owners. Thus Bill Bennett was taking on some formidable opponents when he tried to muscle into the pinball business. On the other hand, Bill and his brother Frank were well connected in political and business circles. Among others, Frank was closely allied with politiclans who were the political and personal enemies of the county prosecutor and might well have been favorably disposed toward an attempt to undermine part of his political base.

When Bill's efforts to gain part of the pinball operation were turned down by Cichy and the other owners, he filed what is referred to as an "underworld anti-trust suit." He and some of his men began throwing Molotov cocktails through the windows of places containing Cichy's machines. Some restaurant owners were roughed up. This caused some attention in the press, so people were getting nervous. To ralm[sic] things down, the pinball operators offered to let Bill in if he would agree to pay them twenty thousand dollars for the loss of their territory plus a fee of two dollars a month for each machine over and above the fifty cents per machine that went to the Amusement Association for lobbying.

The agreement reached by the other pinball operators was, however, not satisfactory to the chief of police, who saw Bill as a "hoodlum." This was one of the few occasions when the chief put his foot down. An informant in the police department said that "in all likelihood" the chief vetoed the agreement as a result of support and instructions from the county prosecutor. Because of the trouble Bill had caused, the chief insisted that he leave the state, which he did.

Several features of this event are important. First, it underlines the competition between different persons acting primarily as individuals out to increase the size of their business and their profits. It also illustrates, however, that when the entire enterprise is threatened, it is possible for a coalition of the more powerful members of the rackets to force less powerful members to acquiesce. The incident also indicates an important element in the way any network protects itself. The two-fifty a month which Bill would have to pay for each machine was divided between protection (two dollars a month) and lobbying (fifty cents a month). The one activity is presumably criminal (by statute), the other legal.

Was This Crime Network, Then, the Local Mafia?

I talked with many people about the possibility that this network was a local branch of the Mafia. A professional thief who had also worked in the rackets (gambling, prostitution, drugs, etc.) told me, "You can forget that Mafia stuff. We are Hoosiers out here. There is no organized crime like they have back east, like in Kansas City and Cleveland. We're too independent out here."

This same feeling was expressed time and again by people at all levels. Virtually everyone in a position to know anything about the rackets in Seattle echoed these sentiments: "Every time you check the Congressional Record and you see the FBI diagramming the Mafia families in San Francisco, you can tell them to shove it up their ass, because you can't diagram this. If you do diagram it, you can't read your diagram when you're done. It's all squiggly lines: the chain of command and who's in charge of any operation and who's entitled to what cut of the graft, it's all very changeable."

Q: Is the police force more or less an independent thing,
not controlled?

A: No, everybody has a part of the police department's ass. Really the police department is the biggest corporate hooker in the whole establishment. The Teamsters Union used them; Democrats at the time; the city council uses them; the license committee uses them; the prosecuting attorney also had an occasion to use the vice squad to make sure he is getting an honest count, if someone gives him trouble on pinballs. Police chief, or assistant chief, would use the department sometimes at cross-purposes to what the mayor or the prosecutor might like. The mayor or the prosecutor might not want trouble, let's say, from a bar operator, like Charlie MacDaniel. They really probably hated that, when that thing came to a head the way it did. The cops, however, went right in and hassled Charlie, because the cops were smarter. The cops know what's going on out in the street, and they knew better to make an example out of Charlie, even if it gets in the newspaper, than to lose control. The prosecutor is like any other crime boss. Something is wrong out there: he looks at a lieutenant, and he says, "Fix it." He might also add the admonition, "Don't be messy, fix it." And the henchman is a technician. Like any technician, he knows that sometimes you have to get your hands dirty when you fix the machinery. And the boss may not want any machine oil on the floor, but he may have to get some to get the machine fixed. So, beyond a certain point, if it gets messy, tough shit. Because the technician is responsible, and he doesn't It want to be held responsible. And if somebody like Charlie MacDaniel gets too far out of line, you take whatever measures are necessary to cover your own ass. You worry about the boss later, see? Right now you're thinking about staying out of the newspapers, staying out of prison. So, on any given occasion, the loyalties of the policemen might be very divided; and this political structure that is controlling the rackets is very fractured. At times it is fractured along the straight Democratic against Republican lines. At times it is fractured along straight county bureaucracy against city bureaucracy. At times it was fractured along city lines, depending on who was contending for power and money. And that's why you can't chart it. It's not neat.

Q: And they're all dependent on each other.

A: And each one requires the silence of the other; no matter how ugly the fighting gets, they've got to keep it under and out of sight. This is one reason why I think there was very little killing, comparatively speaking. When people are killed, they were people within the apparatus, little people. Or people like Ben Cichy if he was, in fact, murdered, who admittedly are very visible, but for some reason somebody determined at that time that it was desperately important that he had to die.

But who exactly was it that could decide that so-and-so had to die?

I was advised by a telephone call from someone I had met in a high-stakes poker game that I should go to Vito's(P) Cafe on the second Thursday of each month and see who always ate lunch there at a table in an alcove.

For six months I went to the cafe as advised. It was indeed interesting to see, week after week, gathered at one table and talking low enough not to be heard by anyone else: the assistant chief of police, an assistant prosecuting attorney, an undersheriff, and an attorney from a firm of lawyers that specialized in criminal law.

These four people met regularly every other Thursday. Rarely, however, was the luncheon limited to just the four. A local contractor, a realtor, a businessman whose firm specialized in "investments," the head of the Far West Novelty Company and president of the Amusement Association, a hotel owner, a member of the city council, a member of the county board of supervisors, an official of the local Teamsters Union, and once a newsman from one of the city's leading newspapers.

A friend told me that one of the regulars at the Thursday luncheon would like to talk to me. A meeting was arranged, and I met Von Bennett (P) at a bar. While we were drinking beer, I taped our conversation:

Q: ____ said you would tell me about the Thursday lunch group.

A: That's the meeting of the local Mafia.

Q: What do you mean by that?

A: They're the boys that run the rackets: drugs, gambling, girls, bootleg whiskey, pinballs�all that stuff.

Q: Well, that doesn't make sense to me. I have heard that ____ is the major person in the rackets-at least in some of the rackets-and he never goes there, does he? I at least haven't seen him.

A: Yeah, you're right, but that doesn't mean these guys don't run the rackets. It's like this: they work for guys with either political or police pull. They control those guys either because the big guys take a cut or because they have something on them. So this group kind of coordinates things. And they keep in touch with people in diverse fields, from bingo to booze.

Q: But how are they a Mafia?

A: Well, not like you read about a Mafia with a tightly knit organization, but these guys are as close as we come out here. They've got the most�a finger in every pie-but still, as you say, there's lots of others . . . all getting rich from the rackets....

The people who are getting wealthy from the rackets are not the cafe, tavern, or cardroom owners. The people who are getting wealthy are the businessmen with capital to invest in an expanding, high-profit business, politicians and law-enforcement officers who can convert political or police power into wealth. It is an interesting, fascinating illustration of the two-faced nature of the adage that wealth is power. That is certainly true, but the other side is equally true: power makes wealth as well.

The network members who met regularly were more or less elected representatives of the business, political, and law-enforcement groups that profited most from the rackets. For a while Charlie MacDaniel was a problem for them when he was refusing to pay off and later when he tried (in vain) to publicize the existence of widespread corruption in the police department. The inner circle of the network, after consulting with their bosses and co-owners who stayed in the shadows, tried various strategies to deal with him.

The kind of publicity created by MacDaniel was extremely bad for some of the most important people in the network. Businessmen who thrived on the image of Seattle as a "clean city" and a "nice place to live" knew of the underlying life of crime, but they wanted to keep those realities from public inspection at all cost. Politicians knew of the potential careers ruined by public exposure of links to anything smacking of organized crime, so they wished to keep things quiet as well. But there were cross-pressures at work that were equally important to the smooth functioning of a crime network. A person who refused to pay his proper share (whether through the payment to the police or to the "syndicate") was a threat to the entire system. If Charlie MacDaniel didn't pay, there would be a lot more tavern, cafe, cardroom, and other business owners on the fringe of legality who would take Charlie as a model and refuse to pay as well. Thus, if someone caused trouble for the organization of vice in the city, a calculation had to be made as to how best to deal with the threat. In the case of Charlie MacDaniel the calculation that evolved out of dealing with his periodic balking at "playing the game straight" resulted in his being run out of business, out of the city, and eventually out of the state.

Notice, however, that the acts which constituted a "policy" with respect to a "problem" were the result of a process, not of a decision. True, someone decided what to do, but it was a matter of a series of individual decisions made by people who shared the same interests and views rather than a ruling passed down by a boss. To the extent that there was a boss, he may or may not have agreed with what finally constituted the policy. But whether he agreed or not, the policy resulted from the process of coping with a problematic situation. And, of course, some of the different people and groups involved in network activities had different interests.

One feature of criminality that is almost always overlooked is the extent to which businessmen who operate a presumably legitimate and wholly legal enterprise are involved either overtly or covertly in criminal activities. More often than is ever acknowledged by law enforcers or investigators, businessmen are the financiers behind criminal operations. In Seattle one of the city's leading jewelers served simultaneously as a financier for large drug transactions and as a fence for stolen jewelry. Often businessmen are co-opted by business and friendship ties to members of the network. A vice-president of one of the city's leading banks was a close associate of the county prosecutor, lunched with him, contributed his personal endorsement to the prosecutor's political campaigns, invested in things the prosecutor recommended, supplied links to other businessmen for the prosecutor, arranged loans, and so forth. Both the vice-president of the bank and a jeweler were key members of the network. Their money financed criminal activities and they reaped huge profits from them.

Newsmen on the city's leading newspapers were also implicated. In one case it was principally through receiving gifts from various members of the network. There were also rumors that an editor received a monthly income from the network. This seems unlikely, for the editor was not only co-opted by friendship and small favors, but the newspaper was opposed to exposing any graft or corruption lest the city reassess the value of the newspaper's property. A local politician and one-time candidate for sheriff possessed information linking an editor of one of the newspapers with a national wire service that reported racing results. The police were also aware of these links. This information was never made public, perhaps because the keepers of the news are in the end the safest possible mediums for conducting illegal business activities.

There is clearly no "godfather" in the crime network, no single man or group of men whose word is law and who control all the various levels and kinds of criminal activities. There is, nonetheless, a coalition of businessmen, politicians, law enforcers and racketeers (see diagram) who have a greater interest in the rackets than anyone else, who stand to lose the most if the operation is exposed, and who also have the power to do something when it is called for. These men do not have unlimited power, to be sure, and they must assess their power in each incident to see what is the best strategy to follow. Thus, when someone firebombed competitors, there were some in the network who wanted to acquiesce to his demands, some who wanted to wait and see, and others who wanted to "kill that crazy son of a bitch." Killing him was a very dangerous alternative since it would surely create adverse publicity and hostility between various groups involved in the rackets. Letting him in might have the same effect. Eventually the head of the pinball operation agreed to let him in for a high price, with the tacit agreement of the other pinball operators. But the chief of police resisted and was apparently able to force Bill out of the state.

Incidentally, a leading state politician who was also involved in the rackets arranged for Bill to obtain employment with a criminal syndicate in another state. Bill apparently decided that discretion was the better part of valor.

Bill's brother Frank owned a string of taverns and cabarets, a few hotels, and the major jukebox distribution company in the state; and he allegedly controlled most of the white prostitution rings in the city. After a visit to one of his cabarets I made this record:

Frank plays with his keys constantly as he sits on the edge of his chair in his Starfire Room Cabaret. The naked women dancing on three stages simultaneously and the waitresses serving watered-down liquor stop by occasionally and ask him a question. He hands one of them the keys and gets up from time to time to do something in the back room. One of the women occasionally disappears upstairs with a customer. Frank looks totally bored by the scene. The money he's making, the naked women he's employing, the conversation about the rackets and his role in them are all old hat. What interests him is the possibility that once again, at age fifty-three, he may be going back to prison. This time it will be hard time. This time he does not have the promise of something big when he gets out. This time he will lose rather than gain.

Frank spent eighteen months in prison in 1942-43. Those months were "no picnic," but he was sustained that time by a promise given, the promise by a young politician that if Frank "took the fall" and served the sentence he would be 11 amply rewarded" when he was released. It was a fair deal, fair for the politician, fair for the others involved, and fair for Frank.

Frank was the son of a vegetable farmer in the county. His family was comfortable but neither notorious nor wealthy. He and some of his young friends were untouched by crime or rackets to any significant degree, but they were touched by the sin of many American men-womanizing. One of the women that Frank slept with regularly was only sixteen years old. She was also sleeping with several of Frank's friends. The young woman was arrested, and she confessed to the police that the older men had been having sex with her for some time. The police threatened all four of them with jail sentences. The four men denied the charge, and the police had only the uncorroborated testimony of the girl.

A young lawyer who was active in politics managed the business affairs of Frank's family. The four accused rapists fell to arguing among themselves as to how to get out of the predicament. They called in the family's lawyer to mediate. The lawyer contacted the police, who told him that someone had to stand trial. The police agreed, however, to drop charges on all but one of the defendants in return for a guilty plea. The lawyer took out a checklist and added up the pros and cons of having one of the four plead guilty to the charge. Some were married, some had businesses that would suffer; Frank was single and could afford the stigma. He was also only twenty-three, so the effect of having sex with a sixteen-year-old would look less awesome. The lawyer promised there would be no jail sentence, only probation or a suspended sentence. He also promised that when it was over the other men would put up the money to set Frank up in business.

The lawyer's power to negotiate a deal was less than he indicated it would be. He did get the charges dropped on everyone but Frank, but Frank had to spend eighteen months in the state reformatory. On release, however, the lawyer kept his promise and set Frank up with a liquor license, a tavern, and a going business, without Frank's having to invest any money.

While Frank was building his tavern business, the young
lawyer was building a political career that led all the way to
the state legislature. Frank and the lawyer-politician re-mained close and trusted friends. Frank, it was said be came the state politician's personal bagman. He went to the various rackets in the city and collected a monthly tithe. He collected, for example, a thousand dollars a month from the owners of bingo clubs. It was a substantial amount of money, but the profits from the bingo operation were sufficient to easily underwrite this and numerous other profit shares the owner made.

The next thirty years were good ones for Frank. He expanded his first club into the ownership of numerous other clubs, part ownership of the major jukebox distributorship in the area, partial control of some of the pinball operations, and he handled some of the organized prostitution in the city, especially the prostitution that ran out of taverns and nightclubs.

Frank also became a force to contend with. He was one of the people in the rackets who could stand up to county politicians and come away intact. On one occasion a leading politician called Frank in to put him in his place. According to someone who witnessed the encounter, when Frank entered the room, the politician said, "I understand you are the biggest pimp in the state." Frank replied, "Yeah, and I hear you like to play with little boys."

The politician had probably expected a humble racketeer to grovel at his feet. But Frank's own position in the rackets and his connections with state politicians plus some important influence in Washington, D.C., were sufficient to make it impossible for the local politico to squash him.

This did not elevate Frank to a position of omnipotence. Both he and the others would have eliminated their opponents in a moment if it could have been done without jeopardizing their own operations. But they could not. So an unappealing alliance prevailed year after year. Occasionally harsh words were spoken; threats and attempts to oust leading political supporters of each other's camps were made. But the detente persisted and indeed would persist today were it not for the fact that in time another faction emerged with the power to squash both parties to this alliance, but that gets us ahead of the story.

Two members of Seattle's leading families were also implicated through various business transactions with members of the network. The business transactions invariably came recommended by a leading local politician and brought the investors huge returns on small investments. They certainly should have realized that the enterprises were illegal, but in any case they participated and showed their appreciation by supporting the politician in the face of all sorts of opposition. When, for example, their political-business ally was threatened with exposure by a newly appointed U. S. attorney, these two businessmen flew to Washington, D.C., where they consulted with a personal friend who was an adviser to President Nixon. They asked him to have Nixon stop the inquiry. For reasons that will be taken up later their request was refused and the inquiry continued.

There were other positions (rather than individuals) that were crucial to the network's success. Two bear particular attention: the head of licensing for the county and the tax assessor. The people in these positions were never very powerful. Their careers were entirely in the hands of politicians. Nonetheless, what they did at their behest was of considerable importance to the network's continuance.

There were "considerate" assessments made on the taxable property Of the two leading newspapers, the fact of which could then be used to keep them from publishing news the prosecutor did not want made public. There was also a payoff made to some politicians, a small part of which was sent down to the assessor through a firm in Portland, Oregon. This firm was hired by at least two of the state's largest industrial firms to keep the tax assessments on their corporation properties much lower than they should have been. Small wonder that the owners of these businesses always supported the cooperative politicians when they ran for office.

The head of the licensing division of the county also received a share of the profits, as well as some smaller payoffs he arranged by himself. To operate a tavern, a cabaret, a cardroom, a taxicab, or even a tow-truck company, it was necessary to have a license issued by the city's licensing division. These licenses were no less than a piece of very valuable property. They virtually guaranteed substantial profit from investment. The number of such licenses was kept to a level where anyone who had the license was certain to have his services heavily in demand. A tow-truck license cost ten thousand dollars "under the board." Depending on its location and potential, a tavern or a cabaret could cost fifty thousand dollars (plus monthly payments) to license. A cardroom might cost only one thousand dollars since there was not the certainty of profit accumulation from the cardroom. Monthly payments, however, would vary according to profits, as we have seen.

Liquor licenses were handled at the state level. The liquor board consisted of three men, all appointed by the governor for staggered nine-year terms. This board was the source of incredibly large sums for "campaign contributions" and outright graft for state politicians, especially those in positions influencing licensing and liquor policies.

At the root of the crime network's operation was the money that got shuffled from the people who operated the rackets-the bookie, the numbers man, the whorehouse operator, the drug trafficker, the cardroom manager, tavern owner, or pinball operator-to the politicians, law enforcers, and businessmen who protected the network and its enterprises. The amount of money shuffled, as we have seen, was staggering.

The day-to-day decisions might have rested in the hands of seven, nine, or ten men who consulted regularly with the other principals in the network. But for such a widespread and profitable system to persist, a set of relations far more extensive than this and beyond mere payoffs had to develop, especially since the task of maintaining control over the various enterprises and the people involved was a task of major importance to everyone. As we shall see in the next chapter, the problem of maintaining control was much more complicated than first met the eye.

CHAPTER FIVE

Maintaining Control

SHARED INTERESTS are the root of the forces of social control that maintain silence and ensure mutual cooperation among the members of the network and those who work for it. The device by which all these people come to share an interest in maintaining corruption and widespread criminality is the payoff. Principally payoffs are in cash, the oil of capitalism's machinery. This money provides cash to meet monthly bills, to pay gambling debts, to finance political campaigns, to send children to private schools, to bribe officials for special favors, or simply to pay wages somewhat above those earned by comparable workers in "legitimate" employment.

There are gifts that supplement payoffs: a color television given to the newscaster, an antique automobile for a bank vice-president, a loan to a local businessman. And there is the use of public office to gather information that gives someone a special advantage in making a handsome profit from a small investment.

Those who cooperate and join the network are well rewarded. A routine and moderately paid government job can be turned into a source of wealth or at least considerable luxury. Seattle police captains received monthly stipends of five to eleven hundred dollars from the network. These, however, were the more blatant and in many respects less important techniques by which the network maintained control. More important by far were the people who moved from one position of power and influence in the government-business structures to another, all the time maintaining links with or control over important segments of crime enterprises. A few cases illustrate the interpenetration of different political and economic structures of network members.

1. A police officer and police inspector who worked directly under officers who coordinated payoffs within the police department was handpicked by a leading local politician to run for the office of sheriff when there was an opening. He was successful in his campaign. Afterward he received his salary as sheriff and large monthly sums as his share of network profits from the county.

2. A U.S. Coast Guard commander who was friendly with network members, upon retirement from the Coast Guard, was appointed to the state liquor board.

3. A fireman from the city cooperated with the crime interests by inspecting and harassing businesses or businessmen who refused to cooperate with the network. He also assisted in the destruction of some property network members wanted to burn in order to collect insurance. After five years as a fireman he joined the police force and was appointed to the vice squad, where he continued to work as a network member for seventeen years. With the support of leading people in the political power structure of the city, he was elected to the city council, where, along with the president of the council, he worked diligently to protect the interests of network members. While on the city council he was appointed head of the licensing committee, from where he was able to control the licensing of both legitimate and illegal businesses.

4. Agents of the Federal Bureau of Investigation who either worked closely with network members or were suspiciously unconcerned about corruption were able to remain in the Seattle office for unusual lengths of time. On retirement they were offered attractive jobs in government and business. Contacts with network members were then used to bring in substantial business to their companies or law firms. The companies were of course pleased with the business and with the political contacts a former federal law officer brought to the business. For his part, the agent might be increasingly important in network policies and could direct several businesses central to network interests.

5. A former sheriff who worked closely (but not too wisely) with the network was appointed to the state parole board. In this position he was able to manipulate prison terms for network members as well as to punish persons who did not cooperate with them. He was also in a position to shorten prison sentences for people able to make payoffs to leading members, including, of course, himself. Most important, he could see that network members were able to "do a favor" for a politician or businessman who wanted to "help out a friend" by getting someone out of prison. Such mutual aid was a crucial ingredient in maintaining control.

This list of people who moved from position to position as the network solidified its control over local and state politics and law enforcement could be expanded to include judges, state legislators, and political officeholders at all levels. The examples selected are neither extreme nor unusual. They are, in fact, quite typical of how a crime network maintains control. They are typical of how American politics works. The fact that the profits that underlay the establishment of the network of crime were from business ventures that were illegal does not alter the fundamental fact that the process by which these interrelationships developed and persisted was no different from the process by which the same networks and interdependencies emerge and persist between enterprises that are legal and the political law-enforcement system.

For the system to work effectively there must be enough income to warrant mutually shared interests protecting and perpetuating illegal activities. Such a network would not arise to protect the interest of people devoted to the rehabilitation of derelict alcoholics.

The Business Community

People engaged in the manufacture, sale, or distribution of goods or services that are legal get involved with crime networks by pursuing profits in precisely the same way they pursue profits in legitimate business. The "decision" to join a network is often more an accident than a design:

I met Jay(P) at the Rainier Club. We liked each other. We both had played sports in college and had a lot in common. We also like to drink and horse around. Then one day he called and told me he knew of a possibility for turning a nice profit if I had some unused cash lying around. It was a perfectly natural thing. Businessmen are always doing things like that. So I invested a good deal of money on Jay's recommendation. I guess I should have looked into it more carefully, but I had no reason not to trust him. After all, he was a well known politician at the time. He told me it was to be used to import some things from Taiwan. I never saw a bill of lading though I see now I should have asked. Only later did I discover that I had purchased ten percent of a heroin shipment. I doubled my money in two months. Naturally, I didn't want to ask too many questions with that kind of profit. The next time Jay called I was ready to sell my wife to make the investment. We bought land together and some phony business connected with an amusement company, and Jay passed on tips to me about land deals. I liked the guy, and we agreed politically on most Issues though he was a little too conservative for my blood. Still, in view of our friendship and everything I contributed heavily to his political campaigns and even supported him publicly....

Similar patterns prevailed throughout the community. A realtor became involved by learning of an opportunity to invest in a hotel. The realtor was approached by a lawyer who did not identify his clients. The lawyer's clients, the realtor was told, were interested in purchasing an old hotel suitable for renovation. The location was not important, but the hotel did have to be in poor condition. The realtor found a suitable hotel, which the lawyer then authorized the realtor to buy for his clients. The realtor agreed to accept a share of the hotel as his commission.

The lawyer and his clients formed a corporation. They became a public corporation and sold stock. The proposed purpose of the stock was to raise capital to renovate the hotel. Few of those who invested over a million dollars ever saw the hotel. Nor were they ever aware of the caper in which they took part.

The corporation borrowed several million dollars (from the bank of which a member was vice-president) on the strength of the capital raised by selling stock. Contracts were granted for reconstruction. The principal contractor was a man who had moved to Seattle from Detroit, where he had been a member of a crime network that controlled much of the building industry in that city. The contractor agreed beforehand to kick back to the lawyer and his clients 50 percent of the value of the contract. When reconstruction of the hotel supposedly began, the insurance was increased commensurate with the construction that was allegedly taking place.

The insurance was prorated according to reports given to the insurance company by the contractor as to how far along construction had progressed. When the construction was supposedly nearly completed and insurance was close to its peak, the hotel burned down. In actuality, of course, the hotel had barely been touched. The money that was to have gone for reconstruction had mostly been skimmed off by those who formed the corporation and by the contractor. The insurance company paid the full amount. The stockholders were paid off, the company was liquidated, the state purchased the vacant lot on which the hotel had stood, and the stockholders profited a little. The criminal network profited a lot. Not only had they increased their capital by making a "shrewd investment," but they had along the way gained the friendship and allegiance of an important local realtor, who was most pleased that his commission had turned into such a handsome profit. The insurance company raised the price of next year's insurance by a fraction of a penny to cover the loss.

Property and the State

State, county, and municipal governments manage an enormous amount of property. They manage buildings that house government offices, municipal parking lots, jails, courts, roads, highways, and public buildings. They also manage and control licenses, franchises, and other forms of property that are the source of incredible profit to those who can acquire them.

Property, whether in the form of land, buildings, or franchises and licenses, is the cornerstone of capitalism. The property managed by the government for the most part (but not entirely) is "soft" property in the form of licenses, franchises, and information. The governor of the state, the county board of supervisors, the municipal governing board or mayor, the heads of licensing committees in the legislature or in the government control much of the soft property. It is used for a variety of purposes, of which the cementing of power and the conversion of power into wealth are the most important.

In 1964 a Republican replaced the incumbent Democrat who had been governor for two terms. One of the new governor's first official acts was to transfer over one million dollars in state insurance to the insurance company for which the governor had worked before his election.[5] The outgoing governor amassed a personal fortune while in office. In one instance he purchased a piece of land for $8,327 and sold it for $250,000.

There are good reasons in the legitimate business community for a crime network. Many of the city's legal businesses thrive or decline to the extent that goods and services provided by a crime network are available. One such industry is tourism. Hotels, restaurants, and taverns profit and thrive on vice.

An important ingredient in Seattle's economy is tourism. An important fact of tourism, in turn, is the attraction of conventions. Men who come to conventions are attracted to cities where gambling, prostitution, pornography, and various other "pleasures" are readily available. No one has to articulate this fact of life in order to have people in politics, business, and law enforcement adopt policies that conform to it:

... everybody knew that a decent city that is growing has to have whores, has to have accessible liquor, prohibition or not, has to have a place where a guy can go and shoot craps, either for penny ante or high stakes, has to have a place where a guy can go and play cards. There's no reason putting somebody in jail for it, because it is what all good, righteous Christians do.


Law-Enforcement Agencies

Shared interests stretch farther than mere economic ties. Shared interests occur on a very broad level and should be understood as stemming basically from contradictions which inhere in the political and economic structure of American cities. To understand this, it will help to view the role of laws in the shaping of crime networks. Laws prohibiting gambling, prostitution, pornography, drug use, and high-interest rates on personal loans are laws about which there is a conspicuous lack of consensus. Even persons who agree that such behavior is improper and should be controlled by law disagree on the proper legal response. Should persons found guilty of taking drugs, gambling, or visiting a prostitute be imprisoned or counselled? Reflecting this dissension, large groups of people, some with considerable political power, insist on their right to enjoy the pleasures of vice without interference from the law.

Those involved in providing gambling and other vices enjoy pointing out that their services are profitable because of the demand for them by members of the respectable square-John community. Prostitutes work in apartments located on the fringes of the lower-class area of the city, rather than in the heart of the slums, precisely because they must maintain an appearance of respectability so that their clients will not feel contaminated by poverty. Professional pride may stimulate exaggeration on the part of the prostitutes, but their verbal reports are always to the effect that "all" of their clients are "very important people." My observations of the comings and goings in several apartment houses where prostitutes work generally verified the women's claims. Of some fifty persons seen going to prostitutes' rooms in apartment houses, only one was dressed in anything less casual than a business suit.

Watching those who frequented panorama gave me the same impression that the principal users of vice are middle and upper class. During several weeks of observations (leaning against the wall), I observed that more than 70 percent of the consumers of these pornographic vignettes were well-dressed, single-minded visitors to the slums who came for fifteen or twenty minutes of viewing and left as inconspicuously as possible. The remaining 30 percent were poorly dressed, older men who lived in the area.

Information on gambling and bookmaking in the permanently established or floating games is less readily available. Bookmakers report that the bulk of their "real business" comes from doctors, lawyers, and dentists in the city:

A: It's the big boys-your professionals�who do the betting down here. Of course, they don't come down themselves; they either send someone or they call up. Most of them call up, 'cause I know them or they know Mr. ____ [one of the key figures in the gambling operation].

Q: How 'bout the guys who walk off the street and bet?

A: Yeah, well, they're important. They do place bets and they sit around here and wait for the results. But that's mostly small stuff. I'd be out of business if I had to depend on them guys.

The poker and card games held throughout the city are of two types: 1) the small, daily game that caters almost exclusively to local residents of the area or working-class men who drop in for a hand or two while they are driving their delivery route or on their lunch hour, and 2) the action games that take place twenty-four hours a day and are located in more obscure places, such as a suite in a downtown hotel. Like prostitution, these games are on the edges of the lower-class areas. In Seattle the action games were the playground of men who were by manner, finances, and dress clearly well-to-do professionals and businessmen.

Not all business and professional men partake of the vices. Indeed, some of the leading citizens sincerely oppose the presence of vice in their city. Even larger numbers of the middle and working classes are adamant in their opposition to vice of all kinds. On occasion, they make their views forcefully known to the politicians and lawenforcement officers, thus requiring public officials to express their own opposition and appear to be snuffing out vice by enforcing the law.

The law-enforcement system is thus placed squarely in the middle of two essentially conflicting demands. On the one hand, the job obligates police to enforce the law, albeit with discretion; at the same time, considerable disagreement rages over whether or not some acts should be subject to legal sanction. This conflict is heightened by the fact that some influential persons in the community insist that all laws be rigorously enforced, while others demand that some laws not be enforced, at least not against themselves.

Faced with such a dilemma and such an ambivalent situation, the law enforcers do what any well-managed bureaucracy would do under similar circumstances. They follow the line of least resistance. Using the discretion inherent in their positions, they resolve the problem by establishing procedures that minimize organizational strains and that provide the greatest promise of rewards for the organization and the individuals involved. Typically, this means that law enforcers adopt a tolerance policy toward the vices, selectively enforcing the laws when it is to their advantage to do so. Since the persons demanding enforcement are generally middle-class and rarely venture into the less prosperous sections of the city, the enforcers can control visibility and minimize complaints merely by regulating the location of the vices. Limiting the visibility of such activity as sexual deviance, gambling, and prostitution appeases those who demand the enforcement of applicable laws. At the same time, since controlling visibility does not eliminate access for persons sufficiently interested to ferret out the tolerated vice areas, those demanding such services are also satisfied.

Cooperation and Control

The policy of cooperating in order to control the vices is also advantageous because it renders the legal system capable of exercising considerable control over potential sources of real trouble. For example, since gambling and prostitution are profitable, competition among persons desiring to provide these services is likely. Since legal remedies are lacking, the competition tends to become violent. If the legal system cannot control those running the vices, competing groups may well go to war to dominate the rackets. If, however, law-enforcement agents unofficially cooperate with some, there will be enough concentration of power to minimize conflicts. Prostitution can be kept clean if the law enforcers cooperate with the prostitutes; the law can thus lessen the chance, for instance, that a prostitute will steal money from a customer. In this and many other ways the law-enforcement system maximizes its visible effectiveness by creating and supporting a shadow government that manages the rackets.

Initially, people may have to be brought in from other cities to help set up the necessary organizational structure. Or the system may have to recruit and train local talent or simply co-opt, coerce, or purchase the knowledge and skills of entrepreneurs engaged in vice operations. This move often involves considerable strain, since some of those brought in may be uncooperative. Whatever the particulars, the ultimate result is the same: a crime network emerges�composed of politicians, law enforcers, and citizens�capable of supplying and controlling the vices in the city. The most efficient network is invariably one that contains representatives of all the leading centers of power. Businessmen and bankers must be involved because of their political influence, their ability to control the mass media, and their capital. The importance of cooperating businesses was demonstrated in Seattle by the case of a fledgling magazine that published an article intimating that several leading politicians, in particular the county prosecutor, were corrupt. Immediately major advertisers canceled their advertisements in the magazine. One large chain store refused to sell that issue of the magazine in any of its stores. When one of the leading members of the network was accused of accepting bribes, a number of the community's most prominent businessmen sponsored a large advertisement declaring their unfailing support for and confidence in the integrity of this "outstanding public servant."

The network must also have the cooperation of lawyers and businessmen in procuring the loans which enable them individually and collectively to purchase legitimate businesses, as well as to expand the vice enterprises. One member not only served along with others in the network on the board of directors of a loan agency, but he also helped wash money and advise associates on how to keep their earnings a secret. He served as a go-between, passing investment tips from associates to other businessmen in the community. In this way a crime network serves the economic interests of businessmen indirectly as well as directly.

The political influence of the network is more directly obtained. Huge tax-free profits make it possible to generously support political candidates. Often the network members assist both candidates in an election, thus assuring influence regardless of who wins. While usually there is a favorite, ultra-cooperative candidate who receives the greater portion of the contributions, everyone is likely to receive something.

Like all activities of the criminal network, political influence is obtained in a variety of ways. An ambitious and talented young lawyer decides to run for senator. He is running behind his opponent. He knows that his main problem is inadequate campaign financing. One night he receives a telephone call from a lawyer acquaintance asking to talk with him. They go for a drive, and in an isolated parking lot outside the city the young candidate is given an envelope containing thirty-five thousand dollars in onehundred-dollar bills. The acquaintance tells him, "This is from some of the businessmen downtown who want to support you in your campaign."

pps. 50-93
=====

CHAPTER SEVEN

The Higher Circles

DURING ONE OF Seattle's seemingly endless winters, I began to feel permanently enveloped in the greyness of sunshineless days. Basking in the gloom cast by the drizzle, I sat with a prominent local attorney in one of the better restaurants in the city. The attorney had on occasion invested in illegal ventures. We had become friends during the course of my research, and he had helped me penetrate the upper echelons of the criminal network that managed Seattle's illegal businesses. On this occasion he had called and asked me to lunch. After an appropriately unfocused conversation of fifteen minutes he paused and said, "Did you know that Meyer Lansky was in town the other day? You know his son lives in Olympia?" This attorney and I had talked about Meyer Lansky before. We both knew him to be one of the major financiers of illegal businesses in the United States. He continued, "Meyer contacted ___ [a lawyer known to be a principal go-between for network members]. He told him to pass the word to Rosellini that Meyer would pay everything necessary for Rosellini to run for governor."

That was as gloomy as the weather. It nonetheless brightened the conversation. We talked at length about why Lansky would be willing to invest such a large sum of money in the state's governorship. We did not unravel the mystery that afternoon, but this information started me in the direction I needed to understand not only Lansky's unusual offer but the connection between what was happening in Seattle and what was happening elsewhere in the United States at that time.

Outside Connections

When the crime network was in full swing, on the fifteenth of every month a member of the state House of Representatives flew from Seattle to a city a thousand miles away carrying a satchel full of one-hundred-dollar bills. This was "washed money," which had been filtered from gambling profits through a bank. The amount in the satchel varied depending on how much of the bookmaking profits had to be "laid off' during the preceding month, how much the investors from other cities had coming as their share of profits from various illegal transactions in the city, and how much (if any) local profiteers wished to invest in businesses run by network operators in other cities.

Despite the mythical character of the idea of a Mafia, there is nonetheless a national crime network, the structure and organization of which parallels rather closely the structure and organization of the network in Seattle. That is to say, it is a loose affiliation of businessmen, politicians, union leaders, and law-enforcement officials who cooperate to coordinate the production and distribution of illegal goods and services, for which there is a substantial consumer demand.

The satchel the state congressman carried out of Seattle every month flew with him to an expensive bar, to a lawyer who represented illegal interests in that city. The lawyer took the satchel with him to his office, where he added its contents to an even larger amount gathered from his own city's illegal businesses. The entire amount was then flown to Las Vegas, where a representative took the money. A few days later the currency was converted to larger bills, added to the "skim" from Las Vegas casinos, and flown to Florida. Meyer Lansky took his share of the profits and sent the remainder off to investors and associates in other citiesNew Orleans, Cleveland, Detroit, and New York-whose investments entitled them to a certain share of the profits from Seattle, San Francisco, Las Vegas, and Miami.

Crime networks flourished in the cities of America during prohibition. Many of the leading personalities in these associations had begun their upwardly mobile ascent out of poverty earlier, when they were employed by businesses as strikebreakers. Some were later employed by or actively engaged as members of labor unions to combat the violence of businesses that tried to break union inroads.

But prohibition was the impetus for the emergence of organized efforts to provide the illegal commodities that people wanted, namely alcoholic beverages, and the services they were willing to pay for: gambling, prostitution, high-interest loans, and so forth.

Following World War II the growth in wealth and power of crime networks was unmatched by the growth rate of any other industry. The nation's economy, which was thriving on the discovery of credit buying, on the wealth to be had from the expropriation of resources of less-developed nations, and on the markets won by dividing the world up with the Soviet Union, created an affluence that seemed boundless. Commodities and services that were illegal were in heavy demand. Profits were incredible. Restrictions were minimal..

The associations shared similar problems of existence. They had incredibly high profits from gambling, drugs, and usury which they wanted to invest. But where? How? The economy and criminal operations were expanding everywhere, and the investment of excess capital was critical. Furthermore, with their expanded operations, they were also in need of federal influence. The growth of the bureaucracy in Washington posed an ever-increasing threat to criminal operations. Payoffs and cooperation of local and state governments were sufficient to ensure relatively trouble-free operations locally, but federal agencies, controlling drugs and federal crimes as well as federal legislation that could either facilitate or impede operations, became increasingly important. Crime networks benefited from the same economic and political climate that benefited other businesses from 1945 on.

The situation was replete with opportunities for someone who could provide investment opportunities and federal political clout. As is always the case in situations such as this, someone came along for the job. That person was a man long associated with criminal operations in New York and a close associate of most of the leading crime figures of the thirties, Meyer Lansky.

Meyer Lansky had a shrewd businessman's eye for discovering new territories and creating impressively high profits for his associates, namely people who ran or profited from network operations in cities like Cleveland, New York, Cincinnati, and Kansas City.

Lansky's empire began with a fairly modest investment in Broward County, Florida. The Colonial Inn was south Florida's first major gambling and entertainment establishment outside of Miami Beach. Investors in the club included the major figure in Detroit's crime network, Mert Wertheimer, who owned one-third of the Colonial Inn, and Joe Adonis, leading racketeer in one of New York's networks, who owned 15 percent. Lansky kept 16 percent for himself and distributed the remainder among his close friends and relatives. The profits were staggering, even by syndicate standards where profits less than 20 percent are considered losses. From Florida, Lansky moved into Cuba, where profits were even more impressive and where he also purchased the goodwill, friendship, and protection of Fulgencio Batista, the Cuban president before the socialist revolution. To top off these investments, Lansky invested heavily in the heroin traffic from Turkey and France and opened a hotel gambling casino in Las Vegas. By so doing, Lansky assured himself of the undying loyalty and admiration of even the most anti,-Semitic members of crime networks across the nation. Mark it, however, that he was no 1, godfather." He was simply a well-respected, trustworthy investor with excellent political connections-connections which were able to get even Lucky Luciano out of prison on a pardon.

Lansky also had an almost unerring eye for the political payoff system. He chose his candidates well, but he also covered himself (and those who depended on him for help) by financing candidates who competed with each other. Thus, he paid handsomely into the campaigns of both Thomas E. Dewey and Franklin Roosevelt. He contributed to the political campaigns of Lyndon Johnson, as well as Hubert Humphrey, George Smathers, Russell Long (and Huey Long before him), John Connolly, Richard Daley' Albert Rosellini, and Edmund Brown, to mention only a few.[10] But he paid more here than there, a fact that was ultimately to be his undoing. Those who play the political payoff game take the chance of financing the loser. When that happens, their fortunes fall as surely as they rose when they financed the winner.

Like his brothers and sisters in private industry, a syndicate leader is measured by the profits he produces. The stockholders are the profiteers from crime operations in New York, Trenton, New Orleans, Las Vegas, Seattle, Portland, and cities across the country. Also, like his brothers and sisters in private industry, a successful syndicate operator must manage political payoffs to ensure the protection of crime network interests. Meyer Lansky probably has done both jobs better than anyone in the history of organized crime.

The years from 1932 until 1964 were Democratic years almost everywhere. Naturally Lansky placed his money, at least a disproportionate amount of it, in the hands of Democrats. In Seattle as elsewhere he worked diligently for Democrats. It paid off. judges were appointed, legislation passed, and protection provided. Lansky's investments in the Democratic Party were often coordinated with, or given through, trade unions, especially the Teamsters.[11] Whether given directly or indirectly, the money funneled to politicians in the form of "campaign contributions" or bribes was designed to purchase influence. As newscaster David Brinkley observed:

George Meany of the AFL-CIO is fawned over in Washington but not entirely for his intellectual brilliance. And not because he can deliver labor's votes. He can't. What he can deliver and does deliver is political money.

The present U.S. Ambassador to Great Britain was not appointed for his contributions to creative foreign policy and diplomacy but for his contribution of political money. This is not new. Back in the fifties, the President appointed one of his big contributors ambassador to a country, then it was found he didn't even know where the country was.

So, jobs like that, and Washington influence, are in effect for sale. All it takes is money, political contributions in election years. If you give enough, Washington's favors can be yours�influence, flattery, social success, invitations to swell affairs, and even ambassadorships to countries with nice climates and cheap servants. Perhaps more important, influence on domestic policy, such as taxes, affecting your own business and income.

Running for office has become incredibly expensive, and candidates have to get money somewhere. The Democrats get a lot of it from the unions, and the Republicans get a lot of it from rich individuals and corporations.

No doubt, there are some rich unions and people charitable soul, who will give money expecting nothing return, but they are scarce. A big political contribution usually is seen as an investment. It's a scandal everyone admits. But it's worse now, because running for office costs more. Public cynicism about politics and politicians already runs high. If this is not cleaned up, the political system will come apart-with influence, dominance, and even control put up for sale to the highest bidder.[12]


It has been commonly accepted by those who play the political game seriously that a major source of Democratic Party revenue for the past fifty years has been a laborunion-crime network coalition.

The most important source of political money for the Democrats and Republicans alike is, of course, the contributions that flow from "legitimate" business, that is, from those businesses whose principal product is a legal one, although the means by which the business is conducted may be highly illegal. The means of conducting the business and the business itself may, in fact, be far more harmful to more people than the business of organized crime. Nonetheless, it makes sense to differentiate businesess whose main product or service is illegal, since this difference in legality does create important differences in the way the businesses are managed and how they function.

Despite the fact that both Democratic and Republican parties receive their major share of financing from legal businesses, the sad fact (from the Democratic Party's point of view) is that the Republicans receive the greater share of that political money. However, the labor-union-crime network funds that oil the Democratic Party's machinery help to equalize the disproportionate share of political money that legitimate business and industry give to the Republican Party.

From the 1930s and into the 1960s, there emerged an unspoken detente between Republican and Democratic leaders with respect to some of the major sources of campaign contributions. The Democratic and Republican parties came to control different sources of the available political money. Obviously, if either party could undermine a major source of the other party's political money, the balance of power so crucial to any workable detente would be severely threatened as the money shifted into the coffers of one party.

Shortly after his election to the Presidency in 1968, Richard Nixon began a campaign which, had it been successful, would have shifted much of the labor-union-crime-network political money from the Democratic to the Republican Party. Whether this was a knowledgeable plan on the part of Nixon and his political advisers is something we do not know. judging from the now available insights into how this group of men planned numerous political forays to increase their position of power, one suspects that the attempt to corner funds for their political interests may have been quite rationally made. In any case, whether by design or simply as a by-product of other decisions, the consequence for the balance of power between the Republican and Democratic parties would have been the same.

Nixon had long-standing and very close ties to a number of people whose business profits derived at least in part from illegal businesses. Regardless of how heavily involved in crime enterprises these associates and partners of Nixon were, it is tempting to speculate that they were involved enough in such places as Dade County, Florida; the Bahamas; Costa Rica; and Las Vegas, and in such enterprises as drug trafficking, stock frauds, bank swindles, and gambling casinos to have the wherewithal to run illegal businesses profitably.

The Nixon administration's campaign against "organized crime" was in fact a campaign against those crime networks that were most closely connected with Nixon's political foes, Republicans and Democrats. This campaign had the effect of eliminating the entrenched owners and managers of crime cartels, thus affording Nixon's associates and partners an opportunity to increase their share of criminal enterprises. To bring this about, the Nixon administration systematically exposed networks in Democratic Party strongholds, while ignoring networks who supported Nixon's wing of the Republican Party.[13] At the same time, the campaign against organized crime attempted to purge Meyer Lansky from his position as a major link between different organized crime interests and the Democratic Party.

Lansky's empire was vast. The Republicans' first attack was on his Las Vegas holdings. For this attack Howard Hughes was available to invest in the casinos and hotels, which Lansky was being forced to sell by state political pressure that threatened to end the skimming of profits which made the casinos so profitable, by subpoenas and indictments brought by Republican-appointed U.S. attorneys where Democrats had reigned heretofore, by Internal Revenue agents under Republican control, and by FBI agents under Republican control. So he sold out of Las Vegas, and Howard Hughes came in. Immediately the profits that were for political payoffs began moving into the Nixon campaign fund and out of the Democrats'.

In south Florida Lansky was indicted by a Republicancontrolled grand jury for perjury. In Las Vegas he was indicted for tax evasion.

Control of a Miami-based bank shifted from Lansky to Nixon associate Bebe Rebozo. Union funds that had gone to Lansky for investment and into Lansky's banks were transferred. Law firms that had had lucrative union contracts lost them to Republican firms; the Teamsters hired Nixon's own law firm. For all of this, the Republicans paid off. Nixon granted Jimmy Hoffa executive clemency, and Hoffa was released from prison. Frank Fitzsimmons, who was the replacement for Hoffa as head of the Teamsters, was publicly acknowledged by Nixon as being "welcome in my office any time; the door is always open to Frank Fitzsimmons."

It was not only the door to his office that was open; so too was the door to his airplane. In January 1973 the Los Angeles office of the Federal Bureau of Investigation learned that a syndicate leader from the Midwest was coming to Los Angeles to work with Teamsters officials to arrange a billion-dollar health insurance contract for Teamsters' members. Frank Fitzsimmons came to attend the final meeting. The FBI bugged the offices for seventytwo hours preceding the major meeting, but when they requested permission to continue the bug (which by federal law they had to do), the attorney general's office turned down the request. The meeting between Fitzsimmons, a Midwest associate, and insurance company officials took place, and the contract was signed. Fitzsimmons left immediately to meet Richard Nixon in Palm Springs, and they flew back to Washington, D.C., together. The International Herald-Tribune reported these events in the April 30, 1973, edition as follows:

Two ranking officials to the Department of justice eight weeks ago turned down a request by the Federal Bureau of Investigation to continue electronic surveillance that had begun to penetrate Teamsters's union connections with the Mafia, according to reliable governmental sources. Attorney General Richard G. Kleindienst and Assistant Attorney General Henry E. Petersen were said to have made the decision after 40 days of FBI wiretapping had begun to help strip the cover from the Mafia plan to reap millions of dollars in payoffs from the welfare funds of the International Brotherhood of Teamsters. The officials acted on the grounds that investigation had failed to show "probable cause" to continue eavesdropping, the sources said.

They reportedly acted after having received a memorandum, prepared at the direction of L. Patrick Gray III, who was then the bureau's acting director. The memorandum, which made no recommendations, indicated the sensitivity of the investigation, which was reportedly producing disclosures potentially damaging and certainly embarrassing to the Teamsters' president, Frank E. Fitzsimmons, the Nixon administration's staunchest ally within the labor movement.

Endorsement

The administration's cultivation of the two-million-member union culminated last year in a Teamster endorsement of the President's reelection, and Mr. Nixon has made it clear that the door to his office is always open to Mr. Fitzsimmons.

The Kleindienst- Petersen decision came less than a month before Charles W. Colson, special counsel to the President, left the White House to join a Washington law firm to which Mr. Fitzsimmons had transferred the union's legal business.

Before leaving the White House, Mr. Colson had been instrumental in formulating administration political strategy regarding organized labor.

The electronic surveillance began on January 26, under an order of the Federal District Court in Los Angeles authorizing the FBI to tap 11 telephone numbers in the offices of People's Industrial Consultant, 9777 Wilshire Blvd., Los Angeles, justice Department sources said.

The consulting firm is a Mafia front set up to channel Teamster welfare money to underworld figures, the sources said.

On February 14, the court authorized an extension of the tap until March 6. The taps were requested and installed under the omnibus Crime Control and Safe Streets Act of 1968.

FBI Affidavit

What was learned from the taps was described in an FBI affidavit submitted to justice Department lawyers. The affidavit asked for continuance of the existing surveillance for 20 days and installation of new taps on a public telephone and the office telephone of an alleged mobster implicated in the plot to siphon money from the Teamsters.

The affidavit said that investigation up to then, including the use of electronic listening devices, had indicated "a pattern of racketeering activity-that is, a series of payments of commissions or kickbacks" flowing from corporations controlled by a doctor in league with the mob through People's Industrial Consultants "to the officers and agents of the employee-welfare benefit plan," in violation of federal statutes.

Mr. Petersen and Mr. Kleindienst, however, would not allow an application for renewal of the court order.

A request Friday to the justice Department for comment from the two government officials went unanswered.

The FBI affidavit cited information reportedly given to the bureau by an informant in contact with an associate of Allen Dorfman, consultant to the Teamsters' billion-dollar Central States, Southeast and Southwest Areas Pension Fund, who began a federal prison term a month ago for conspiring to receive a kickback in connection with a loan application made to the pension fund.

"Source No. 3"

The informant, identified in the affidavit as "source No. 3," said that on February 8, at the Mission Hills Country Club in Palm Springs, California, Dorfman's associate introduced Mr. Fitzsimmons to Peter Milano, Sam Sciortino and Joe Lamandri, identified, by the FBI as southern California members of the Mafia. The Teamster leader was in Palm Springs participating in the Bob Hope Desert Classic golf tournament.

justice Department sources reported that, according to the informant, the three men presented to Mr. Fitzsimmons a proposal for a prepaid health plan, under which members of the union covered by its welfare program would be provided with medical care by Dr. Bruce Frome, a Los Angeles physician. Monthly medical fees for each union member would be paid by the central states fund from the millions of dollars contributed to it by employers under Teamster contracts.

In a 15-minute conference with the three, the informant added, Mr. Fitzsimmons gave his tentative approval and sent the group to a Palm Springs residence for definitive discussions with Dorfman.

The FBI were said to have learned that the next day Mr. Fitzsimmons met with Lou Rosanova, identified by justice Department sources as an envoy for a Chicago crime syndicate, which sought a percentage of the Los Angeles mob's take on the health plan.

Justice Department investigators say that they have evidence that the Chicago branch of the Mafia is determined to retain the access it had to the pension fund through Dorfman during James R. Hoffa's Teamster presidency. Hoffa was imprisoned after being convicted of tampering with a federal jury and pension fund fraud.

As a result, according to the federal agents, the Chicago Mafia members have kept a sharp eye on Dorfman and Mr. Fitzsimmons since Mr. Fitzsimmons gained clear control of the union.

In 1971, President Nixon commuted Hoffa's eight-year prison sentence, with a provision that precludes his holding union office until 1980.

Nixon's Plane

Rosanova and Mr. Fitzsimmons had talks again on February 12 at La Costa, a plush resort and health spa in San Diego County, according to the Orange County and San Diego County authorities. The same authorities reported that a few hours after that meeting Mr. Fitzsimmons boarded President Nixon's plane and flew to Washington with the President. Both Rosanova-Fitzsimmons meetings were reportedly observed by informants of the Orange County District Attorney's Office. On February 27, at La Costa, the same informants say that they heard Rosanova boast of a future payoff split between him and Mr. Fitzsimmons.

In its affidavit seeking an extension and a broadening of electronic surveillance, the FBI cited as a basis for its request Title 18, Section 1954, of the U.S. code, which prohibits commissions and kickbacks to union and welfare plan officials in return for the placement of union business.

Corroboration

During the 40 days the devices were in operation, the sources said, recorded conversations greatly supplemented and tended to corroborate information gathered in other phases of the investigation being carried on by the bureau and authorities in Los Angeles, Riverside, San Diego, and Orange Counties.

On February 9, the day after Milano, Sciortino and Lamandri allegedly met with Mr. Fitzsimmons and Dorfman in Palm Springs, the taps at People's Industrial Consultants were said to have picked up a conversation between Dr. Frome and Raymond de Derosa, identified by the California authorities as a muscle man for Milano, who operates out of the consulting company's offices.

The FBI affidavit said that de Derosa had told the doctor that "the deal with the Teamsters is all set." De Derosa indicated to Dr. Frome, according to the affidavit, that People's Industrial was in the line for a 7 percent commission, and they talked about a possible $1 billion-a-year business.

In other tapped conversations, de Derosa reportedly said the PIC would get a 10 percent cut of the medical payments. He reportedly complained that the concern had to "give away three points (3 percent) to get the deal."

This is apparently a reference to that part of the deal surrendered by the Los Angeles Mafia figures to pacify the Chicago representatives.

Meyer Lansky was left out of the Teamsters-Republican Party coalition. Several years later it was reported that Nixon could get $1 million from the Teamsters Union. He told John Dean that this fund could be used for hush money. The Washington Star reported on Sept. 29, 1977:

. . . the $1 million may have been what Nixon referred to in the March 21, 1973, White House meeting with Dean concerning the Watergate burglars, demands for huge sums [of] money in return for keeping quiet.

According to a transcript of a tape of that conversation, Nixon said to Dean: "What I mean is you could get a million dollars ... And you could get it in cash. I know where it could be gotten.... We could get the money. There is no problem in that."

But Lansky's empire was much more than a link with the Teamsters. His investments in Las Vegas were supplemented by major holdings of casinos and hotels in the Bahamas, which he helped open up after Cuba was brutally thrust outside the gambling circuit for American tourists. Businessmen who supported the Republican Party attempted to wrest control from Lansky in the Bahamas by manipulating political leadership. Bebe Rebozo made extensive investments in hotels and casinos and tried to buy up and compete with Lansky's enterprises. Someone attempted to murder a leading politician who was favoring Rebozo in the struggle.

The final attack on Lansky was probably the most successful and the most serious. The Republicans attempted to close off his sources of heroin. They did this by pressuring the Turkish government to enforce the law prohibiting the growing of opium, the plant from which all heroin is refined. At that time (late 1960s) Turkey accounted for probably go percent of the opium processed into heroin and shipped to the United States. By 1972 Turkey was accounting for less than 40 percent, and Lansky had lost control over a major source of his financial empire.[14] The Republican administration also pressured the Latin American governments whose countries were layover points in the heroin route to America, and Lansky's principal Latin American coordinator of heroin traffic, Auguste Ricord, was forced out of Argentina, where he had been managing the traffic for years. He was eventually arrested in Paraguay.[15]

Meanwhile, the heroin traffic from southeast Asia, especially from the Golden Triangle of northern Thailand, Burma, and Laos, expanded production and a new source of heroin for the incredibly lucrative American market opened up. It is unknown whether this new heroin source was linked to Republican politicians, but the fact that the CIA and the South Vietnamese governments under generals Ky and Thieu actively aided the development of this heroin source suggests that such a link is not beyond the realm of possibility.[16]

Lansky must have known he was fighting for his life. Always a heavy contributor to the Presidential election, in 1968 he outdid himself by a good margin. Through his agent, Sam Levinson, Lansky contributed at least $240,000 to Hubert Humphrey's campaign against Nixon. Lansky also contributed heavily in support of the Democratic governor of Washington. In fact, so heavily did he contribute that according to political observers there the Democratic candidate was able to ignore altogether the usually timeconsuming task of raising campaign contributions.

The format of the attack against Democrat-controlled crime networks was much the same everywhere. Newly appointed Republican U.S. attorneys called grand juries to investigate corruption and racketeering. In Chicago one of Illinois's leading Democratic politicians, Otto Kerner, who had formerly been the governor of Illinois and was at the time of his exposure a U.S. judge, was indicted, tried, found guilty, and sentenced to prison for accepting a payoff while he was governor. As we have seen, in Seattle the bulk of the political, law-enforcement network members and even a few of the racketeers were indicted.

In the state the Democrats lost the governorship despite Lansky's heavy financing. Moreover, the state attorney general's office was also won by a Republican, and to make matters totally unliveable for the existing network, a Nixon-affiliated Republican won the county prosecutor's office. These shifts in state and local political fortunes would mean considerably less money for Democrats in the state, because the new network would be formed around a moderate Republican-oriented group. It would thus mean considerably more money for the Republicans.

Thus it was that the network in Seattle came to its demise. Newspaper reporters who reported the comings and goings of the network, and law-enforcement officers who exposed the guilty culprits took well-deserved pride in their role. The county prosecutor and the U.S. attorney, who worked long hours to build cases against network members, were pleased with their role. It was a marvelous experience in which the righteous thought they were spearheading a campaign against evil. What they did not realize was that they, in fact, were only pawns in a much larger game that was going on at the highest levels of government.

This began to dawn on some when, after the indictments were brought and some key players in the network had been removed from their positions of power and sufficiently compromised so that new appointments could be made, the word came from Washington, D.C., to stop further investigations. The governor suddenly cooled on the idea of seeing the indictments through to prison sentences. The FBI and other investigative units denied the rumor that gambling, drug trafficking, and prostitution were coming in again under new management. The Republican judge, whom the defendants had all agreed on as presiding judge, dismissed the indictments on all but three of the key defendants.

Or maybe those most involved in the network's demise simply turned their heads and began looking to their careers and their political futures. Maybe the reaction of a reporter who early on tried to expose the network was typical: "It's all over. There is no more gambling." This same reporter, six years before, had gone to see whether or not there was gambling. Now he was willing to accept the myth that prevailed that the network had been broken, that Seattle was "clean."

The network's demise did not usher in a new era of freedom from the rackets or from the influence of crime. The evidence at hand suggests that the whole process of exposing the crime network resulted from political and economic struggles taking place outside of Seattle, King County, and the state.

pps. 150-169
=====

CHAPTER EIGHT

The Enemy Is Us


IN THE MIDDLE AGES, when Anglo-American criminal law was being formed, there was no pretense of applying the law uniformly across class lines. When prostitution, gambling, public intoxication, drug use, and the like were made criminal, it was not intended nor was it the practice to apply these laws indiscriminately to all social classes. The upper classes were free to gamble, engage prostitutes, or take drugs without fear of interference from the state.

In time the emerging commercial, mercantile, and industry-owning classes sought to use the state as a means of equalizing their position vis a vis the heretofore dominant landed aristocracy. The law was one of the means through which this struggle was resolved. By insisting on the right to a trial by jury, by establishing an adversary system of justice, by creating a set of social relations built around contractual obligations, the emerging class of businessmen and manufacturers was able to bring the landed aristocracy to heel; at least the two ruling classes were made more or less equal in the law. The lower classes were of course excluded from this equality. The necessity of paying an attorney for protection in the courts assured that neither the aristocracy nor the nouveau riche would have to share state power with the working classes.

Thus was a solution forged: but so too were the seeds of conflict planted by that solution. Relying on the moral,,' principle of equality before the law and depicting the state, .as a value-neutral organ for settling disputes gave rise to endless criticism from those who observed that "some are more equal than others."

This process is lived over and over in the history of law: a solution is forged which attempts to resolve conflicts that' arise out of basic contradictions in the structure of social relations created by the political and economic forms of the era. The solution, however, creates social relations which themselves generate further conflicts reflecting underlying contradictions which generate further attempts to resolve the contradictions.

The first laws prohibiting gambling, bribery, official corruption, vice, prostitution, drug use, and usury were each in their turn an attempt to resolve problems stemming from contradictions. Some were intended to help control the "teeming masses of urban dwellers who walk the streets. seeking money by any means fair or foul." Others, such as' anti-opium laws, came as a consequence of international competition as it developed into a worldwide, allencompassing economic system.

Laws against usury are illustrative. They helped stabilize, the banking industry by reducing competition. Laws were enacted that established legal limits to the amount of interest that could be charged. They solved a problem of competition among moneylenders, helped stabilize financing for both industry and banking, made life more predictable and monopolies better able to form in the banking industry. At the same time, usury laws opened up the possibility for people to operate illegally. If the banks could not charge excessively high rates of interest, then they would not loan to people who were highly risky. Alas, risky people have as much need for money as those with good credit. Not being able to get credit in a bank does not reduce one's desire to borrow, but it may increase one's willingness to pay higher than legally allowable interest. Enter the usurer. For the usurer can charge excessively high interest and therefore make a profit even from customers who are a greater risk than banks will accept as borrowers. Result: a structurally induced illegal business is created as soon as the solution to competition and "chaos" in the banking industry is solved by establishing legal limits to interest. All, of course, done with the best of intentions.

Notice, however, that those who engage in usury face a number of administrative problems not faced by banks. Most important is the fact that usurers, because they are engaged in illegal acts, cannot turn to the state and ask that the law be invoked to force debtors to pay back what they have borrowed. Usurers thus, in order to protect their investments and guarantee their profits, must establish their own law-enforcement arm. They must employ a staff of people who are capable of "persuading" those who have borrowed but failed to pay back their debts that it is better to pay the debts than to have them hanging over their heads. Usurers utilize many of the same techniques that the law employs in the service of banks: they confiscate property, threaten to expose the person to public shame, and if none of these are effective they resort to corporal or at times even capital punishment. The latter is of course utilized only as a means of demonstrating to other wouldbe renegers that it is unwise not to pay your debts. The same principle, need it be said, underlies the justification for capital punishment when it is imposed by the state on people who presumably have committed acts that are "beyond the tolerance limits of the community." The acts vary; the problem that gives rise to them is identical, namely, that some people are not living up to the standards others with more power think they should. To keep the heresy from spreading, a life is taken.

It is ironic that those who are least likely to be able to afford the high interest of usurers are those most likely to have to turn to them for loans: the poor as well as the rich are protected from being charged more than the legal limit on interest by banks and licensed financiers.

It is an ironic manifestation of political economic contradictions that the laws that keep many illegal activities from being rampant in the "better neighborhoods" have the effect of concentrating them in precisely those parts of the city where the people are most likely to be already disillusioned by "The System," that is, in the slums. Thus a further contradiction: laws which were not initially intended to be enforced against the rich result in pushing illegal businesses into areas where the poor and working classes live and are thereby exposed to the hypocrisy of the law in everyday life.

Other Networks, Other Times

Robert Winter-Berger was for five years a lobbyist in Washington. On one of his frequent visits to the office of John McCormack, Speaker of the House of Representatives, the back door to the Speaker's office suddenly burst open and Lyndon Johnson, President of the United States, exploded into the room. Winter-Berger in Washington. Pay-Off reports:

Johnson disregarded me, but I can never forget the sight of him, crossing the room in great strides. In a loud, hyster-ical voice he said: "John, that son of a bitch is going to ruin me. If that cocksucker talks, I'm gonna land in jail." By the time he had finished these words he had reached the chair at McCormack's desk, sat down, and buried his face in his hands. Then I knew why he had come here, and I realized how desperate the situation must be.

To the best of my recollection at that shocking moment, McCormack said: "Mr. President, things may not be that bad." He got up and went to Johnson and placed a hand on his shoulder.

"Jesus Christ!" Johnson exclaimed. "Things couldn't be worse, and you know it. We've talked about this shit often enough. Why wasn't it killed, John?" When Johnson looked up at McCormack, I could see he was crying. He buried his face again.

"We tried, Lyndon;' McCormack said. "Everybody did."

Johnson said: "I practically raised that motherfucker, and now he's gonna make me the first President of the United States to spend the last days of his life behind bars." He was hysterical.

"You won't," McCormack said helplessly.

"How much money does the greedy bastard have to make?" Johnson said. "For a lousy five thousand bucks, he ruins his life, he ruins my life, and Christ knows who else's. Five thousand bucks, and the son of a bitch has millions."

"We all make mistakes," McCormack said, glancing at me. "How could he have known, Mr. President?"

"He should have given him the goddam machines," Johnson said. "He should have known better. Now we're all up shit creek. We're all gonna rot in jail."

"We'll think of something," McCormack said. He rubbed Johnson's shoulder. "Please. Calm down. Control yourself."

In a burst, Johnson said: "It's me they're after. It's me they want. Who the fuck is that shit heel? But they'll get him up there in front of an open committee and all the crap will come pouring out and it'll be my neck. Jesus Christ, John, my whole life is at stake!"

"Listen, Lyndon," McCormack said, "remember the sign Harry had on his desk-THE BUCK STOPS HERE? Maybe we can make this buck stop at Bobby."

"You have to," Johnson cried out. "He's got to take this rap himself. He's the one that made the goddam stupid mistake. Get to him. Find out how much more he wants, for crissake. I've got to be kept out of this."

"You will, Lyndon:' said McCormack. "You will."

The President moaned. "Oh, I tell you, John, it takes just one prick to ruin a man in this town. just one person has to rock the boat, and a man's life goes down the drain. And I'm getting fucked by two bastards-Bobby and that Williams son of a bitch. And all he wants is headlines."

"It'll pass, Lyndon," McCormack said. "This will pass

Johnson got angry. "Not if we just sit around on our asses and think we can watch it pass. You've got to get to Bobby, John. Tell him I expect him to take the rap for this one on his own. Tell him I'll make it worth his while. Remind him that I always have."

"All right, Lyndon ."[17]


Johnson had gone through this tirade with scant notice that Winter-Berger was in the room. When he finally took note of him, he asked McCormack if he was "all right." Assured that Winter-Berger was all right and a friend of Nat Voloshen, a major Washington lobbyist, Johnson asked Winter-Berger to take a message to Voloshen: "Tell Nat that I want him to get in touch with Bobby Baker as soon as possible-tomorrow, if he can. Tell Nat to tell Bobby that I will give him a million dollars if he takes this rap. Bobby must not talk. I'll see to it that he gets a million-dollar settlement. Then have Nat get back to John here, or to Eddie Adams later tomorrow, so I can know what Bobby says.

Bobby Baker, the "motherfucker" Johnson had "practically raised," began his Washington career at age fourteen as a page for the Senate. By 1955 he had been hired by Johnson, then Senate majority leader, as his secretary. His salary was nine thousand dollars a year, and his net worth, he stated, was eleven thousand dollars. By 1963, only eight years later, his personal fortune had grown to over two million dollars. Presumably another million was added when he "took the rap" and did not implicate the President. Baker's rise to fortune came by selling favors and influence and information and by investing in businesses owned and managed by racketeers: among them the vending machine business, which was in the end his downfall. Among the racketeers Bobby Baker was closest to was his and Lyndon Johnson's neighbor, Sam Levinson, one of Meyer Lansky's closest associates and a partner with Lansky in Las Vegas holdings. Levinson contributed $250,000 to Hubert Humphrey's 1968 Presidential campaign against Nixon.

The crimes for which Lyndon Johnson thought he might be the first President to end his term of office in prisonthe crimes he was willing to pay Bobby Baker one million dollars to conceal-were never disclosed. Abe Fortas, one of Johnson's appointees to the U.S. Supreme Court, was less fortunate, and, when his links with a notorious financial wheeler-dealer in Florida were revealed, Fortas had to resign from the Supreme Court. It is even possible that had Baker revealed even part of what he knew about Johnson's involvement in criminal acts, they would have paled what is publicly known now about Richard Nixon's involvements.

Richard Nixon continued the Johnson tradition of selling favors and protecting investments for those who supported him politically. The textile industry contributed over $400,000 to Nixon's reelection campaign and the oil industry over five million just one day before the law went into effect requiring public disclosure of campaign contributions. For their contribution the textile industry won a tariff on the importation of textiles from Japan which assured them of a high stable price for their products for years to come. According to columnist, Jack Anderson, in 1972 the president of McDonald's hamburger chain contributed $250,000 to Nixon's election and won in return an exemption of high school employees from the minimum wage law-an exemption personally written in by President Nixon and one which exempted most of McDonald's employees in the race to cover America with hamburgers. (In 1968 he contributed only $1000.)

The milk industry contributed a million dollars to Nixon's campaign and was rewarded with a boost in milk prices during a period when prices on everything were frozen to curb inflation. ITT promised to contribute $400,000 to underwrite the expenses of the Republican National Convention. The Department of justice subsequently dropped an antitrust suit against ITT.

As Richard Kleindienst said: "I am not a prophylactic sack with respect to the White House."[18} Meanwhile, as assistant attorney general, Kleindienst, it will be remembered, was one of the principal people in the Justice Department giving the green light for the U. S. attorney in the state of Washington to investigate and expose the organization of illegal businesses there. He was not, however, quite so concerned about such phenomena elsewhere. During his confirmation for U.S. attorney general, when John Mitchell resigned to take over the management of Nixon's reelection campaign, it was revealed that Kleindienst had cleared a U. S. attorney, Harry Steward, who had been charged with obstructing investigations into corruption in San Diego: Nixon territory. [19]

Nixon, Johnson, Kleindienst, Mitchell: these men are not aberrations in an otherwise well-working machine. They are merely acting out roles that emerge time and time again. Lincoln Steffens was not writing about 1900, and I am not writing about 1970. The story is told over and over.

George Washington started us off by unashamedly using the office of the Presidency to enhance his personal fortune. During the administration of Ulysses Grant the Union Pacific Railway directors were caught pocketing money from government bonds, and Grant's vice-president was implicated in the plot. During Grant's second term of office, frauds totaling some seventy-five million dollars were unveiled, and Grant's secretary of war (who was forced to resign) as well as his personal secretary were involved.

In the 1840s Martin Van Buren was reported to be so corrupt that there were songs written eulogizing his willingness to sell anything he controlled.

Warren Harding was perhaps less fortunate than his predecessor or those to follow, since his administration's scandal ("Teapot Dome") has become a pseudonym for political corruption (perhaps soon to be replaced by "Watergate"). The Teapot Dome Scandal was only one of many rumored during Harding's administration, and he was spared much of the torture of the scandal by his well-timed death. The scandal involved the leasing of government land at Teapot Dome, Wyoming, to the oil magnate H. D. Sinclair. In the end, the secretary of the interior, Albert B. Fall, was proven to have personally benefited substantially from this and other land leases. Fall was eventually tried, convicted, and sentenced to jail (one year) for having accepted a bribe.

President Roosevelt's administration was relatively free from scandal, although this is probably more a result of the crises (Depression and World War 11) during that administration acting as a smokescreen than the purity of the politicians.

Harry Truman's administration saw a White House military general, Harry H. Vaughn, accepting a deep freeze in return for using his influence. Donald Dawson, a close Truman aide, was implicated in a scandal involving the misuse of public funds and influence by the Reconstruction Finance Corporation. The Internal Revenue Service was involved in yet another Truman-era scandal which culminated in a conspiracy trial against Truman's former appointments secretary.

Sherman Adams, one of Eisenhower's closest associates, was found to have accepted numerous gifts (among them a vicuna coat) from Bernard Goldfine, who was at the time trying to influence the Federal Trade Commission. Sher-man Adams ultimately resigned as Eisenhower's special assistant.

On the state and local levels corruption of police and politicians is revealed with a regularity that is as certain as physical laws. On August 3, 1974, the Knapp Commission, which had been investigating rumors of corruption in the New York City Police Department, reported:

We found corruption to be widespread. It took various forms depending upon the activity involved, appearing at its most sophisticated among plainclothesmen assigned to enforce gambling laws.... Plainclothesmen, participating in what is known in police parlance as a "pad," collected regular biweekly or monthly payment's amounting to as much as $3,500 from each of the gambling establishments in the area under his Jurisdiction, and divided the take in equal shares. The monthly share per man (called the "nut") ranged from $300 and $400 in midtown Manhattan to $1,500 in Harlem. When supervisors were involved they received a share and a half...

The Commission found evidence that payoffs were widespread (though not always so well organized) in the other divisions of the New York Police Department as well. Frank Tannenbaum wrote in Crime and the Community:

It is clear from the evidence at hand-that a considerable measure of the crime in the community is made possible and perhaps inevitable by the peculiar connection that exists between the political organizations of our large cities and the criminal activities of various gangs that are permitted and even encouraged to operate.[20]

Just as criminal liaisons between law, economics, and politics are a mainstay of buying and selling public favors, so are they also a mainstay of regular business practices. The Far East and African sales manager for a leading European business-machine manufacturer explained to me how he sells his company's products by bribing government officials. In some countries the bribes are exorbitant; in some they are "a reasonable five or ten percent," but everywhere, whether selling to government, large corporations, or retail outlets, the principle is the same: the people who give you large orders expect and receive a bribe.

An example of a particularly exorbitant (but not unusual) transaction consummated by the above-mentioned sales manager was the sale of one million dollars worth of business machines to the Congolese government. To secure the sale it was first necessary for him to meet and wine and dine the fifteen top government officials who would have to approve the order. Once the order was placed, the company kicked back $250,000 to the fifteen people, including the minister of finance, the purchasing agent, and so forth. To mark the final irony, the machines were unusable as delivered since the order did not include requisition of an auxiliary machine necessary for the base machine to be operative. No one complained; the company was delighted not just by the size of the order ($750,000 after kickback) but also because the corrupt nature of the purchase enabled the company to double its usual price and thus vastly increase its profits. And of course the sales manager received credit for making a very impressive sale. Only the farmers and workers whose taxes supplied the funds were harmed by the transaction.

Kickbacks, bribes, collusion, and corruption are as much a part of corporate business as they are a part of crime networks everywhere. So too are public lies and disclaimers of businessmen and politicians caught in the act. In 1967 and 1968 the top executives and accountants of Lockheed Aircraft, with the complicity of high-ranking officers of the Air Force, falsified public reports of the cost of overruns on the C-5A airplane. Complicity of the Pentagon was purchased by the favors Lockheed does for the high-ranking officers, including, perhaps most significantly, the prospect of high-paying jobs in the aircraft industry upon retirement from the service.

Investigative agencies such as the FBI and the IRS are co-opted in similar if not identical ways. Retired FBI agents become "special investigators" or are employed by banks, corporations, or state governments at high-paying jobs.

Meat inspectors for the U.S. Department of Agriculture are systematically bribed by the meat industry through extra pay for overtime, free meat, and a variety of smaller "courtesies."[21] Those who do not accept the bribes or who push too hard to enforce meat-processing requirements are isolated, fired, or in some cases even criminally charged for malfeasance of office.

We could of course go on indefinitely with such examples but the point would be the same: there is an inherent tendency of business, law enforcement, and politics to engage systematically in criminal behavior. This is so not because there are too many laws but rather because criminal behavior is good business, it makes sense, it is by far the best, most efficient, most profitable way to organize the activities and operations of political offices, businesses, law enforcement agencies, and trade unions in a capitalist democracy.

It should not surprise us, then, that crime networks in the larger cities of the nation are ubiquitous. City after city has been exposed and particular network members purged, usually the least powerful ones: the owners of the taverns, gambling halls, whorehouses, and businesses that produce illegal goods and services. Occasionally the cleanup includes some political and law-enforcement people, normally lower-level, relatively powerless ones in the political economy of the city, state, or nation. Occasionally higherlevel people are implicated, even at times the President of the United States.

At the turn of the century the cities were New York, Philadelphia, Minneapolis, St. Louis, Kansas City, and Chicago. In the last ten years scandals have broken in New York, Seattle, Portland, Newark, Philadelphia, Chicago, Detroit, and Miami, to name but a few. Like the persistent "white-collar crime," nothing changes as a result. Networks come and go but the process by which they are produced goes on and the consequences remain the same. Whether it is Meyer Lansky or Santo Trafficante, Lyndon Johnson or Richard Nixon, the network remains in control of large segments of America's political economy.

By now it should be clear that the logic of capitalism is a logic within which the emergence of crime networks is inevitable. Capitalism is based on the private ownership of property. Property is acquired by selling products, providing services, or selling one's labor. By law most of the products and services which can be exchanged for money at a profit are legal-that is, the state has decreed that it is permissible for people to buy, sell, and exchange these goods and services. At one time in American history most of the products and services which support the crime industry were legal: gambling, high-interest loans, even prostitution and heroin. Thomas Jefferson himself established a brothel near the University of Virginia for Virginia's young intelligentsia to have a readily available outlet for their sexual urges.

In time some commodities and services came to be defined as illegal. But the demand for these things did not disappear with their transference from legality to illegality, nor did the profits to be had. Indeed, in some cases the profits increased as a consequence of their newly established illegality. Marketing procedures had to be adapted to the fact that these things were now illegal-new methods of collecting debts for example-but the process remained the same. Businessmen and politicians and entrepreneurs invested in, coordinated, and managed these (now) illegal industries in the same way they had managed them when they were legal.

Capitalism provides the basic conditions, but it is the organization of politics in the U.S. that joins the capitalist mode of production to make the ground fertile for crime networks. The key feature of American political organization that combines with markets and profits in illegal goods and services to create networks is the peculiar necessity for American politicians to spend vast sums of money in order to get elected to office.

Only recently has it been necessary for politicians to declare the size and sources of their campaign contributions. The results of their declarations are staggering. Richard Nixon admits to spending over sixty million dollars on his 1972 Presidential campaign. Disclosures of unreported campaign contributions suggest that even this figure may be a gross underestimate of the actual amount spent.

Nelson Rockefeller is reported to have spent over sixty million dollars in his campaign for the Presidential nomination and the governorship of New York.

An American politician must obtain an incredible amount of money if he or she is to be successful. Sources of funds are or course limited. Individual donors giving ten and twenty dollars cannot begin to provide the necessary funds. Especially desperate are those politicians who would run on a platform that does not appeal to the interests and ideology of the wealthiest people in their area. Thus a great irony results: it may even be that the politicians most likely to be vulnerable to the influence of crime networks are those who espouse the more egalitarian, working-class, or populist economic and political principles.

So far as election to public office in the U.S. is concerned, money is everything. In 1974, out of thirty successful candidates for the Senate, twenty-eight of them spent more money than their opponents.

Crime networks with access to billions of dollars in untaxed, unreported, and unaccountable funds are a valuable source of money to oil capitalism's political machinery. In the natural course of events some politicians will come to cooperate more fully than others, some will come to compete for a larger share of network profits, and some will come to reap the profits for their personal as well as their political use. Still others will grow dependent on the money to finance campaigns and occasionally to meet "personal emergencies." Through it all the crime network becomes an institutionalized, fixed, and permanent link in the chain of a nation's political economy. That is what has happened in America. That is why crime networks persist year after year with only the faces and methods of operation changing.

Nor have other capitalist countries escaped the plague. In 1969-70 1 researched the relationship between illegal and legal businesses in Nigeria and found essentially the same sorts of interrelations between politics, business, and systematic violation of the law that one finds in America.

What is perhaps more surprising, given our biases, is to discover that crime networks are also pervasive throughout Europe and Scandinavia. In 1975-76, a team of sociologists- lawyers from Sweden and I researched illegal businesses there. Despite the constant claims by the Swedish National Police to the contrary, we discovered an immense and highly organized consortium of businessmen with international connections and local penetration of politics that was firmly entrenched in the illegal enterprises of drug trafficking, gambling, usury, and even the ancient shakedown of "legitimate" business for "protection."

This is not to deny that there are differences. For some purposes the differences may be more important than the similarities: the extent to which the police are corrupt from the top to the bottom may vary from place to place. The variations, however important they may be, should not obscure the fact that the systematic organization of illegal activities for profit is as characteristic of capitalism as bureaucracy is characteristic of the modern state.

Is this to say that capitalism alone creates the networks? Hardly. I did not research systematically in Eastern Europe, but I was not on land ten minutes in Poland before I was offered the opportunity to exchange U.S. dollars on the black market for ten times the official rate. Stories of high-level payoffs and corruption abound. A large percentage of people in Poland report that they have to pay bribes to obtain official favors. Whether these isolated facts add up to a crime network and the systematic penetration of the political economy by the organization of illegal activities for profit is only guesswork, but it is suggestive of that possibility.

Does this weaken the argument that it is the structural characteristics of capitalist democracies (especially the contradictions that inhere in these political economies) that create and sustain crime networks? Not at all. Cigarette smoking causes lung cancer but other things cause lung cancer as well. The kind of "socialism" that is extant in the Soviet Union and Eastern Europe shares with Western capitalism many essential features: a rigid class system, the use of money for exchange, and the alienation of workers from the product of their labor, to mention only a few. It may be that these essential characteristics are fundamental. Unfortunately we lack the systematic comparisons with other countries to be very confident about such speculations.

What can be done? The answer depends on the question implied. To stop gambling, drug taking, prostitution, and usury would require a change in the political economy possible only through revolution. At the moment, that possibility seems rather remote. We must then lower our sights substantially and recognize that, as Murray Morgan said with respect to prostitution in Seattle in the early days of that city's checkered history, "where demand was so sustained and so obvious somebody was certain to try to hustle up an adequate supply." As long as providing things that are heavily in demand is illegal, then, given the political economy of capitalist democracies, crime networks of one sort or another are inevitable. Thus, to eliminate or at least reduce the magnitude and change the character of crime networks requires first and foremost the decriminalization of these things.

There are already some clear lessons to be learned from other countries. Years ago Great Britain placed the problem of opiate addiction (heroin, morphine, etc.) squarely in the hands of the medical profession. While the results of this move have not been to abolish completely traffic in opiates in Great Britain, the extent to which the enterprise is profitable, the degree to which the market has been controlled, and the general effectiveness of the program have kept crime networks from forming around the illicit traffic in opiates in Britain in anything like the same way they have formed around opiates in the United States, France, Sweden, and The Netherlands-to mention but a few countries.

The proposal that heroin use should be decriminalized and medical doctors permitted to prescribe heroin for addicts has been made time after time. After an extensive inquiry into the subject, the American Medical Association and the American Bar Association proposed that this policy be "seriously considered" over twenty years ago. Opposition by the federal agencies responsible for enforcing the laws (whose agents benefit directly and indirectly from the existence of crime networks) has meant certain defeat for such proposals.

We may, however, be in a somewhat better position with respect to the possibility of legalizing gambling. As the economic recession�inflation we are presently witnessing puts pressure on state and federal governments to increase tax revenues, gambling is more and more attractive as a source of untapped revenue. In other words, there are some powerful interests (the state itself) capable of legalizing gambling in order to increase their own revenues. When this happens we would be naive to suppose that the networks that have previously profited from the gambling would suddenly be replaced by legitimate businessmen. The networks, it must be remembered, are already populated by legitimate businessmen. The management would not change but legalized gambling would provide taxes, a reduction of associated illegal actions dictated by the illegal nature of crime networks, and a somewhat greater ability to oversee network activities. In short, we could expect to have the government and its bureaucracies relate to the organizations which supply gambling in much the same way they relate to other businesses. Is it better to have ITT buy my congressman and lobby for its own peculiar selfinterests, or is it better to have Meyer Lansky and Company doing it? Perhaps it makes no difference in the long run. I suspect that at least having a small amount of tax benefit that goes into welfare or education or roads is better than the present situation.

It seems quite certain that if drugs and gambling were decriminalized, crime networks as we have known them since the turn of the century would disappear. The fortunes made in these illegal enterprises could then become respectable in the same way that the fortunes of the robber barons-the Mellons, Rockefellers, Vanderbilts, and Kennedys�have become respectable. It would then be possible for us to see, in another generation or two, those who inherit the wealth of Meyer Lansky, David Beck, and Jimmy Hoffa running against a Dupont, a Rockefeller, a Mellon, a Heinz, or a Kennedy for President of the United States. That may not be progress, but it is consistent with historical precedent.

Whatever changes might be forthcoming, one fundamental truth must be grasped: It is not the goodness or badness of the people that matters. The people who ran (or run) the crime network in Seattle were (and are) not amoral men and women. On the contrary, they are for the most part moral, committed, hard-working, God-fearing politicians and businessmen. It seems paradoxical perhaps that someone could kill, threaten, and coerce people to protect himself and still adhere to a set of moral principles to which "all of us" adhere. But from his point of view he may be protecting far more important things than merely his own skin. He may be protecting an ideology for which he stands. He may be protecting the community from being taken over by people whose ideas are, from his viewpoint, bound to lead the community and the nation down the road to ruin. "The Fourth of July oration is the front for graft," Lincoln Steffens wrote. It is often the sincere belief of the grafters that they are also performing a public service and living up to the principles of the Fourth of July oration.

The people in the crime network in Seattle and those who cooperated with it were simply acting within both the logic and the values of America's political economy. They were operating to maximize profits, to protect their investments from competition, to expand markets, and to provide services and goods demanded by "the people." These are all the logical implications of a capitalist economy. These-or closely related-ideas also become values. Profit is a value: something intrinsically worth striving for. Being shrewd, pragmatic people, they know that whatever value one chooses to stress inevitably involves a compromise with some other values. Profit may necessitate compromising strict adherence to the law, but then so does mere survival in the realities of political life. You use whatever resources you can to maximize profits and increase capital. Whenever possible, you also operate to help your friends and business associates. These are values which all persons in crime networks share with many if not most other contemporary Americans. The members of crime networks fought for the protection of these values; some even died for them. Not surprisingly, they were willing to violate many laws�"mere technicalities"�to live up to the logic and values of their world.

pps. 169-188
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