August 21, 2006

Nevada's Online State News Journal

 

.
   
 
Modern History:

 

[From "Organized Crime: 25 Years After Valachi," Hearings Before the Permanent Subcommittee on Investigations of the Committee on Governmental Affairs, United States Senate, 100th Congress, Second Session, US Government Printing Office, Washington: 1988, pp. 717-731]

717

STATEMENT OF

JAMES R. ZAZZALI

COMMISSIONER

NEW JERSEY STATE COMMISSION OF INVESTIGATION

BEFORE THE

U.S. SENATE PERMANENT SUBCOMMITTEE ON INVESTIGATIONS

HEARINGS ON

ORGANIZED CRIME: 25 YEARS AFTER VALACHI

Mr. Chairman and Members of the Subcommittee:

            Although I have been commissioner of New Jersey's State Commission of Investigation during a number of its inquiries into organized crime, I have brought with me our Chief of Organized Crime Intelligence, Justin Dintino, to assist me in answering any questions you may have at the conclusion of our presentation.

            Our Commission very much appreciates your invitation to address you on the current status of organized crime -- a subject that has been a statutorily mandated investigative target for us ever since the Commission was created 20 years ago. As you probably know, many La Cosa Nostra -- or LCN -- figures fled New Jersey, mostly to Florida, in the late 1960s and 1970s to escape our Commission's subpoenas. Most of these refugees have never returned. Nonetheless, organized crime activity in our State remains a problem -- although by no means as barefaced and wide-ranging as in our Commission's early years. What we are experiencing now in New Jersey, in the Northeast -- indeed, in every metropolitan area of this nation -- is an evolution of organized crime from domination largely by gangsters of Sicilian or other Italian origin since the 1930s to an even more deadly mixture of other ethnic immigrants from Colombia and other South American lands, from the Caribbean, from China, Japan, and other Asian countries, and even from the Soviet Union. As a recent U.S. News and World Report article described it in a cover story, this is the "New Face of Organized Crime." Therefore, although the LCN will be the topic of your opening discussions of organized crime, our Commission is gratified that you intend also to assess this ominous ethnic change in the structure of organized crime in America.

            In connection with this changing ethnic face of organized crime, I want to emphasize that while the Mafia remains a significant criminal threat, it is by no means the only organized crime problem, and it never has been. In fact, in terms of gang numbers and cash loot, other organized crime groups have surpassed the LCN. And, although our law enforcement efforts on the Federal and State levels against the Mafia have been increasingly effective, our attack on the so-called new emerging groups has been abysmally inadequate. The term "new emerging groups" is a misnomer because they are not new. They emerged some time ago. I prefer to refer to them as previously ignored groups.

718     

Statement/James R. Zazzali       2.        

            So far as traditional organized crime is concerned, the Mafia has been severely weakened in our region by recent investigations, indictments, and successful prosecutions in New Jersey, New York, and Pennsylvania. For example, almost half of the Bruno/Scarfo gang under the jail house leadership of Nicodemo Scarfo of Atlantic City is under indictment or facing criminal charges. The DeCavalcante/Riggi group of North Central New Jersey is being investigated by the U.S. Attorney's office, and the F.B.I. only recently raided the long invulnerable Riggi's labor union headquarters.

            At this point, since today's hearing is focused on the status of the La Cosa Nostra crime groups, I intend to very briefly cite the more significant LCN elements operating in and around our State, and our assessment of their present impact on New Jersey. We have assembled a supplement to my statement, which not only details the La Cosa Nostra gangs that have a New Jersey relationship but also provides for the Subcommittee's consideration a more detailed outline of the many non-traditional gangs that have been afflicting our State with increasing violence in recent years.

            Currently, at least 29 organized criminal organizations are operating in our State. Interestingly, only seven of these are Mafia gangs, while more than a score are the non-traditional criminal types. I would like to identify the La Cosa Nostra criminal organizations operating in and around the Garden State, aside from the previously mentioned Riggi and Scarfo organizations.

Genovese/Gigante.

            This is the most dominant traditional organization affecting New Jersey, with more than 275 "made" members, about 40 of whom reside in New Jersey. This criminal network's illicit activities feature labor racketeering and political corruption.

Gambino/Gotti

            This largest and most influential criminal organization in the greater New York metropolitan area consists of 30 made members and 650 associates. Its presence is felt most harshly in Northern New Jersey, in gambling, hijacking, fencing, extortion, loansharking, and narcotics. At present, the greatest mob threat to South Jersey is the strong Gambino/Gotti gang's influence over the weakened Scarfo organization.

Bonanno/Rastelli

            This group of approximately 100 members and 375 associates has had a declining impact on New Jersey. Before the death of Caporegime Joseph Zicarelli in 1983, the Bonanno organization operated an extensive gambling network in Northern

719

Statement/James R. Zazzali       3.

New Jersey which has since been taken over by elements of the Genovese and Jose Battles groups. At present, it has focused n controlling junket scams to Atlantic City's gambling casinos.

Lucchese/Corallo

            Compared to other organized crime groups, the Lucchese faction is small in numbers. However, it is in the forefront of lucrative gambling and narcotics rackets in New Jersey, a status that may be adversely affected by arrests and prosecutions. The entire Lucchese/Corallo leadership is either in prison or under indictment. Also, 21 other Lucchese gangsters have been charged with operating a racketeering empire.

            Finally, allow me to make several brief references to organized crime activities as they relate to casino gambling in Atlantic City.

            This famous resort, now one of the richest and most profitable gaming centers in the world, has been coveted by the mob ever since the casinos began to operate. The LCN has declared Atlantic City to be an open city, which means that any LCN group may operate there if it first touches base with the local Scarfo organization as a matter of courtesy and to prevent interference with other LCN activities. The Scarfo mob does not receive any percentage of any other LCN group's operation unless the project is a joint endeavor. It must be noted that almost all of the vice activity in the Atlantic City area has been controlled by Scarfo, despite the city's classification as an open city.

            Most recently, our Commission revealed the financial rewards that had accrued to a specialized corporate group of mob-owned construction firms that profited from private casino construction contracts and from public construction projects funded by Federal and State tax dollars. It was demonstrated that two Scarfo gang-controlled business entities amassed over $3 million from public projects and casino construction contracts over a seven-year period. As recommended by our Commission, the New Jersey Casino Control Act has recently been amended to prevent further profiteering by the mob at casino construction sites.

            Other organized crime operations in Atlantic City have

·        Lucchese/Corallo and DeCavalcante/Riggi mobsters have made real estate purchases and led junket enterprises.

·        The Pittsburgh-based La Rocca gang has sponsored gambling junkets between that city and Atlantic City.

            At this point, I am submitting a more detailed written report on both the traditional and the non-traditional organized crime scene in New Jersey.

720

Statement/James R. Zazzali       4.

            We will be happy to answer any questions.

---------- 0 ----------

            I would now like to identify in more detail both the La Cosa Nostra and non-traditional criminal organizations operating in New Jersey, starting with the LCN groups:

DeCavalcante/Riggi Crime Organization

            The DeCavalcante/Riggi criminal organization is relatively small, consisting of approximately 50 "made" members and 80 associates. The hub of this group's operations is the City of Elizabeth, in Union County in Northern New Jersey. Its most notorious leader, Simon -- Sam the Plumber -- DeCavalcante is in retirement in Dade County, Florida. John M. Riggi now heads that enterprise, whose illegal ventures include gambling, bookmaking, loansharking, narcotics, pornography production and distribution, extortion, labor racketeering, transport and dumping of toxic waste, official corruption, and conspiracies involving casino junkets and the recording industry. The geographic reach of this organization extends from southwestern Connecticut through areas of metropolitan New York and into Pennsylvania. In New Jersey, the organization is most active in the counties of Essex, Middlesex, Mercer, Monmouth, and Ocean in the north and central parts of our State.

            The greatest threat of Riggi's operation is its control of Laborers Union Local 394, a primary tool for manipulating labor and extorting contractors. Because of this gang's power to provide or withdraw essential labor at construction projects, contractors generally comply with any Riggi requests to utilize certain organized crime-favored companies for trucking, concrete, lumber, scaffolding, sand and gravel, dirt and garbage removal, landscaping, plumbing, and electrical work, which results in higher costs than customary for such work.

            The State Commission of Investigation confirmed during a 1981-1982 investigation that this criminal enterprise maintains cooperative relationships with the LCN groups in New York City. It also should be noted that Riggi met with Gambino family boss Paul Castellano in December, 1985, on the very day Castellano was assassinated in New York City.

Bruno/Scarfo Organization

            The Bruno/Scarfo crime organization, comprised of about 60 members and 250 associates, is in a state of disarray and deteriorating influence due to the inept but bloodthirsty leadership of boss Nicodemo (Little Nicky) Scarfo. Scarfo's violence contrasts sharply with the more placid style of former boss Angelo Bruno, who was aptly known as the "Docile Don."

721

Statement/James R. Zazzali       5.

            Scarfo's reign is dangerously threatened because Caporegime Thomas DelGiorno and soldier Nicholas Caramandi are cooperating with law enforcement authorities. At present, the organization's most influential members are incarcerated. As a result, Scarfo is almost certain to be replaced as boss soon. Potential successors are Albert (Reds) Pontani, a soldier from Mercer County, recently indicted for drug distribution and RICO offenses; Pasquale (Patty Specs) Martirano, a North Jersey capo, and Joseph (Chickie) Ciancaglini from Philadelphia. The weakened Scarfo organization may even be absorbed by such other LCN families as the Gambino/Gotti or Genovese/Gigante organizations.

            The Scarfo organization is engaged in the manufacture and  distribution of drugs, extortion, loansharking, illicit gambling, labor racketeering, political corruption -- and murder. It maintains interests in several legitimate industries such as vending, restaurants, bars, trucking, boxing promotion, and construction. Its area of control is Philadelphia and Southern New Jersey. It also has members in the Northern New Jersey counties of Union and Essex.

Gambino/Gotti Crime Organization

            The largest and most influential criminal organization in the greater New York metropolitan area, this criminal enterprise consists of approximately 300 members and 650 associates. Led by John Gotti, its influence extends from New York City to California and Florida. The Gambino organization's presence is felt throughout New Jersey. In Northern New Jersey, this group engages in gambling, hijacking, fencing, extortion, loansharking, and narcotics. Until recently, law enforcement authorities believed that a group operating in South Jersey was a faction of the Gambino/Gotti organization. While the principal members of this group had a blood relationship to Carlo Gambino, they also were an integral part of the Sicilian Mafia. Their primary criminal activities, heroin and alien smuggling, were conducted with approval of the American Gambino organization in exchange for a percentage of the profits. However, their major allegiance was to the Sicilian Mafia group in Palermo.

            In the early 1960s, the Gambino organization established an amicable relationship with the Bruno regime in Philadelphia. There is speculation that this working relationship could evolve into control of the Scarfo organization, particularly if Scarfo is convicted and incarcerated for the numerous murders he is alleged to have ordered, approved, or committed.

Genovese/Gigante Organized Crime Organization

            The most dominant traditional criminal organization affecting New Jersey is the Genovese/Gigante enterprise and its 275 members, supported by 600 associates. There are approximately 40 members and 70 associates who reside in New Jersey. This criminal network's illicit activities include illegal gambling,

722

Statement/James R. Zazzali       6.

narcotics distribution, loansharking, extortion, money laundering, labor racketeering, anti–trust violations, and the infiltration of legitimate businesses.

            With the incarceration of Anthony (Fat Tony) Salerno, this gang's leader now is Vincent (The Chin) Gigante. He is engaged in labor racketeering on the Hudson County waterfront through his subordinate, John DiGilio, a prominent soldier in Bayonne, New Jersey. Caporegimes Andrew Gerardo, Louis (Streaky) Gatto, Giuseppe (Pepe) Sabato, and DiGilio are the dominant members of the Genovese organization in New Jersey, and their criminal activities reach from North Jersey down to portions of Ocean and Atlantic counties. The Genovese organization's major threat is its influence over waterfront operations through labor unions, its ability to foment- political corruption, and its incursion of legitimate enterprises.        

Bonanno/Rastelli Organization

            The Bonanno/Rastelli network consists of approximately 100 members and 375 associates. Its former leader, Joseph Bonanno, is in retirement in California. The organization's most recently recognized boss, Philip Rastelli, was sentenced to 12 years in Federal prison in January, 1987, for directing a labor racketeering conspiracy through control of Teamsters Local 814 for more than 21 years. Because of his prison term and failing health, Rastelli is viewed as losing ground in the organization. Furthermore, Joseph Massino, the underboss of this enterprise, was also convicted on racketeering charges in the same conspiracy involving the Local 814 moving and storage union. Consigliere Anthony Spero now appears to be the Acting Boss, running the street operations for the organization. Spero is one of 16 defendants named in a civil racketeering complaint charging the Bonanno/Rastelli organization with using legitimate businesses to conduct criminal activities. The civil suit, filed by Brooklyn U.S. Attorney Andrew J. Maloney in August of 1987, seeks $1 million in damages. Another defendant is Gabriel Infanti of Bloomfield in New Jersey. On December 22, 1987, Infanti was reported missing and is presumed dead. He manages a lucrative gambling network out of East 4th Street in New York City.

            Before the death of Caporegime Joseph Zicarelli in 1983, the Bonanno organization operated an extensive gambling network in Northern New Jersey, which has since been taken over by elements of the Genovese and Jose Battle criminal groups. The Bonanno organization's recent criminal interests also have focused on junket scams to Atlantic City casinos. Caporegime Charles Musillo awaits trial on charges relating to these scams.

            Although the Bonanno/Rastelli outfit conducts most of its operations in the greater New York area, its threat to New Jersey centers on the expansion of illicit gambling and scams involving the casino industry in Atlantic City and on money

723

Statement/James R. Zazzali

laundering and narcotics smuggling as a result of US relationship with the Sicilian Mafia.

Lucchese/Corallo Crime Organizations

            Compared to most organized crime organizations affecting New Jersey, the Lucchese faction is small in numbers. Its lucrative gambling and narcotics operations have enlarged the influence of its 100 members and several hundred criminal associates. Criminal operations in New, Jersey are under the supervision of Anthony Accetturo and Joseph Abate, both caporegimes, and soldier Michael Taccetta. Accetturo has been exerting his influence in absentia since 1971, when he fled New Jersey, to avoid a subpoena issued by the State Commission of Investigation. Since then, Taccetta has served as Accetturo's coordinator.

            Criminal activities directed in New Jersey by the Lucchese/Corallo gang include illegal gambling, loansharking, narcotics trafficking, fraud, cigarette smuggling, extortion, horse race fixing, pornography, and stolen property, mostly in New Jersey. Accetturo and Taccetta have served as principal operatives in smuggling and distributing narcotics out of South America and the Caribbean into Florida and ultimately into New Jersey and New York.

            Currently, the entire Lucchese/Corallo hierarchy is in prison or under Federal indictment. Also, 21 of its members and associates have been charged with operating a racketeering empire. If these individuals are convicted, the Accetturo/Taccetta network would become vulnerable to a takeover, most probably by the Genovese or Gambino organizations.

Colombo/Persico Crime Organization

            The Colombo/Persico organization, once one of the more powerful of the five major New York LCN enterprises, now is in disarray due to Federal and State prosecutions and poor leadership. With 120 members and 450 associates, the organization is led by the jailed Carmine Persico through Victor Orena, a caporegime.

            Revenues from illicit gambling and loansharking activities finance this group's incursion of legitimate industries. Additionally, the organization is involved in arson, extortion, and labor racketeering.

Atlantic City, An Open City

            Before turning away from the LCN groups that affect New Jersey, an assessment of their activities in Atlantic City and New Jersey's rich casino gambling industry is necessary.

724

Statement/James R. Zazzali

            Atlantic City has been controlled by the Philadelphia-based La Cosa Nostra organization now headed by Nicodemo Scarfo. The legalization of casino gambling in November, 1976, rejuvenated a sluggish market-for LCN criminal activities.

            The LCN's National Commission declared Atlantic City an open city with the advent of casino gambling. An open city means that any other LCN organization crime group may operate there, but must first touch base with the Scarfo organization as a matter of courtesy and to prevent interference with another LCN activity.

            Almost all of the vice activity in the Atlantic City area, such as loansharking, labor racketeering, gambling, narcotics, extortion, corruption, has been controlled by the Scarfo gang. Other LCN groups that have been involved in Atlantic City include the Lucchese/Corallo and the DeCavalcante/Riggi organizations (real estate purchases and junket enterprises); La Rocca LCN organization in Pittsburgh (gambling junkets); and the Bufalino LCN (providing gamblers to various junket companies).

            At one time, Michael Insalaco, a member of the Bufalino LCN, was the only known LCN member to be licensed as a junket operator by New Jersey's Casino Control Commission. Ultimately, after an investigation, Insalaco's license was revoked, and his firm, Tiffany Group Tours, LTD., of Easton, Pennsylvania, was placed on a blacklist by the Casino Control Commission as an entity prohibited from doing business with a casino.

            Shortly after New Jersey's voters approved of casino gambling, Paul Volpe, an organized crime figure from Toronto, Canada, and his cousin Angelo Pucci, began purchasing real estate in the Atlantic City area via several corporate entities. An investigation conducted in New Jersey and in Canada confirmed that Pucci was acting as a "front" for Volpe. During November, 1983, Volpe was found slain in the trunk of his wife's car in Canada. It is surmised that Volpe was killed on orders of Toronto's gang boss, Remo Commisso, because Volpe had been cheating Commisso on real estate as well as in narcotics transactions. In December, 1983, Pucci was indicted by the New Jersey State Grand Jury for fraud and failure to file individual and corporate tax returns. Pucci pled guilty to lesser charges and was placed on probation and fined. He currently resides in Margate, New Jersey, and has built condominiums in nearby Brigantine. Ironically, the concrete work at the condominium project was provided by Scarf, Inc., a construction firm operated by underboss Philip Leonetti, the nephew of Nicky Scarfo.

            We now turn to the non-traditional organized crime groups which have had an ever-increasing impact on the New Jersey region, but which have long been ignored by law enforcement.

Colombian Groups

725

Statement/James R. Zazzali       9.

            The most aggravating organized crime problem confronting law enforcement authorities in our region are the Colombia cocaine networks. During the last two years, the New Jersey State Commission of Investigation has identified the following eight Colombian cocaine distribution groups operating within New Jersey:       Vanegas/Lopez, Uribe-Henao, Barco/Fernandez, Arce-Bentancourt, Martinez/San Clemente, Blandon/Cardona, Haya-Restrepo, and Londono.

            The Commission has identified other Colombian groups about which data is being compiled. Indeed, some Colombian groups have not been detected yet by law enforcement.

            Identified in the eight Colombian networks were 233 persons engaged in smuggling and distributing high-grade, uncut cocaine. Since 1986, more than 2,275 kilos of cocaine have been seized in New Jersey, mostly in North Jersey.

            The Colombian networks gain camouflage by moving throughout Hispanic communities and by buying residences that are chiefly used as "stash" houses. Their penchant for violence is terrifying. The Colombians are known to have eliminated entire families who were suspected of cooperating with the police or cheating the networks. The Colombian cocaine groups also are tightly knit, comprised mostly of family members, including females. Unfortunately, the cocaine networks have more financial resources than law enforcement, because of the huge profits from cocaine deals. Unlike in the past, however, the Colombians are now engaged in smaller trades and retail sales, making them more vulnerable to arrest.

Jose Battle (The Corporation)

            Operating in North Jersey for at least two decades, Jose Miguel Battle, Sr., leads the largest Cuban criminal enterprise in the country. Known as the "Corporation," its New Jersey base is in Hudson County, directly across from New York City.

            The Battle Organization has at least 2,500 members. Its principal activities include illicit gambling and money laundering. However, some Battle organization members have become more involved in cocaine trafficking.

            The Battle group also has a propensity for violence, and scores of killings have been attributed to it. Battle's top lieutenants in the New York/New Jersey area include several brothers -- Gustavo, Sergio, and Aldo. Other top echelon members include Abraham Rydz, brother-in-law Manuel Isaac Marquez-Lopez, Orlando Cordoves-Brito, Rigoberto Fernandez, Cesar Ramon Campa-Velis, and Antonio Garcia.

            Owing to the enormous profits generated from gambling and cocaine deals, the "Corporation" has become a holding company for many legitimate enterprises, including mortgage finance

726

Statement/James R. Zazzali       10.

agencies, realty companies, investment firms, and travel agencies. It is known to have attempted to actively subvert local government. Its international mobility has enabled the transfer of millions of dollars out of the United States.

Jamaican Organized Crime

            Jamaican criminals, operating in cells under a number of "posses," have existed in the United States for some 10 years. They first gained notoriety for extreme violence in August, 1985, at a shoot-out among several Jamaican posses at a picnic attended by 2,000 Jamaicans in Oakland, New Jersey. Three individuals were killed, and nine were wounded. A total of 33 handguns were recovered from the scene by police. This gun battle involved elements of the "Shower Posse" and the "Spangler Posse" from the Bronx and Brooklyn against Jamaicans from Boston attached to the "Dog Posse" and the "Tel Aviv Posse." Law enforcement intelligence has documented that elements of the Shower, Spangler, and Dog posses are operating in New Jersey. In addition, paid assassins called Junglelights, such as Temple Karl Bravo, who was arrested last June on a murder charge in Newark, also operate in New Jersey.

            The Shower Posse was the first to expand out of New York City into Southern New Jersey and has been operating along the entire East Coast, as well as in Dallas and Kansas City. These Jamaican criminals are primarily engaged in the distribution of crack, or rock cocaine, marijuana, and the theft or illegal purchase and exportation of firearms. Their confirmed use of violence eases the efforts of Jamaican posses to expand into new areas.

            The Shower Posse cell of Donovan Clarke has been active in drug distribution and sales since 1985 in Philadelphia and in the Southern New Jersey counties of Atlantic, Burlington, and Camden. Recent information indicates that some Dog Posse members have challenged the Shower Posse operation in New Jersey and Philadelphia.

American Black Organized Crime

            Black/Afro-American organized crime in New Jersey has become pervasive and highly structured. Any young Black from an inner city neighborhood can personally testify about its existence on the streets where he plays. Black organized crime is rapidly maturing and has expanded its own sophisticated narcotics distribution network, among many other illicit activities.

            Black organized crime was practically non-existent outside of inner cities or so-called ghetto areas until after World War II, when Blacks migrated to northern cities from the South in large numbers. Organized crime activities have enlisted many of these migrants and their descendants. One such group, known as the "Country Boys" and led by Frank Lucas, based in North

727

Statement/James R. Zazzali       11

Carolina and New York City, was notorious for the heroin it distributed in the New York-New Jersey area.

            In the 1970s, Leroy (Nicky) Barnes operated out of New York City, but he and a number of his top people lived in New Jersey. They became almost totally independent of traditional organized crime groups and had their own sophisticated organizational structure.

            In the 1960s and 1970s, a religious militant group emerged, known as the New World of Islam, which also was rigidly structured. Some Muslims became a violent splinter element within the Islamic sect. A main base in New Jersey for the sect was Temple 025 on South Orange Avenue in Newark. Six assassination murders are attributed to this group, including that of Minister James (McGregor) Shabazz, head of the Nation of Islam Temple #25. The deaths of two Newark police officers are also attributed to the group. The officers had intervened in an attempted bank holdup by New World of Islam members.

            Out of the New World of Islam emerged one of Essex County's and Northern Jersey's chief narcotics distribution networks, the Wayne (Akbar) Pray group, or "The Family." In 1985, Pray attempted to control all narcotics distributors in Newark. That attempt was unsuccessful, but Pray now supplies many independent dealers with cocaine, heroin, and other drugs in the North Jersey area. The Pray group's other business interests are boxing promotions, auto leasing and sales, and night club ownership. Its top people include Harold Breeden, a captain who owns a jewelry shop in Montclair and drives a Rolls Royce; Glen Hunter, another captain, who, with two lieutenants, is in charge of heroin distribution in Newark's Fourth Ward; and Howard McLeod, yet another captain who controls all illegal pills that are purchased out of Philadelphia.

            Throughout the State there are a number of Black organized crime groups operating primarily in the Black areas of the cities. Their criminal activities are narcotics distribution and gambling. For the most part, the narcotics trafficking is controlled by the Blacks with no ties to traditional organized crime. The gambling activities are controlled by the Blacks, but most groups utilize the La Cosa Nostra "lay off" services.

Asian Organized Crime

            Asian criminality has become immersed in Oriental communities in this country. The large Asian enclaves of New York and Philadelphia provide camouflage for Oriental criminal groups which directly impact on New Jersey.

            During 1984, the President's Commission on Organized Crime conducted the first extensive investigation of Asian organized crime, revealing that Chinese criminals linked with La Cosa Nostra groups facilitate the importation and distribution of

728

Statement/James R. Zazzali

heroin. Specifically disclosed were deliveries of Southeast Asian heroin to associates of. the Genovese LCN organization. Intelligence information reveals that Chinese Tongs are financing the importation of huge quantities of heroin into the Northeast.

            New Jersey law enforcement authorities anticipate an increase in Asian organized crime. They have particularly monitored the 1,000 Chinese restaurants that are operating throughout the State, since a number of these restaurants and other areas have been the victims of extortion and have knowingly hired Asian criminals. At the current time, we have documented several incidents of this type of criminal activity occurring in New Jersey.   

            Japanese criminality is suspected in North Jersey, where Japan is the leading foreign investor, and where most of Japan's 200 New Jersey-based companies are located. Law enforcement authorities in this State are on the look-out for Japanese crime groups such as the infamous Yakuza, which preys on Japanese tourists and oversees workers by blackmail and other tactics.

            Close to South  Jersey, a Vietnamese gang of about 25 males operates out of South Philadelphia's Italian Market area. Vietnamese gangsters do not establish -- or respect -- territorial boundaries, are highly mobile, and engage chiefly in burglary, extortion, and weapons offenses. In New Jersey, Hudson and Essex counties have the largest concentration of Vietnamese refugees.

            Organized prostitution under control of Korean criminals has developed in Philadelphia and in Camden and Wrightstown in New Jersey. Korean women are entering the country as "spouses" of military servicemen, who are being paid as much as $10,000 to marry them and then divorce them after entering the country.

Russian Organized Crime

            Russian criminal activity was first observed during 1975. Closest to New Jersey are two concentrations of Russian criminals commonly referred to as the Malina. The larger group is headquartered in the Brooklyn neighborhood of Brighton Beach, and the other is located in Northeast Philadelphia. An estimated 400 Russians are suspected of being involved in organized criminality in New York, as against approximately 100 Russians in the Philadelphia area. The Malina has been characterized as "loosely knit" and also as a confederation based on geographical origins of gang members. Certain gangs are known as the Odessa gang, the Kiev gang, the Moscow gang, the Potato Bag gang, the Leningrad gang, and the Gypsy gang. Crimes perpetrated by the Malina include homicide, extortion, narcotics distribution, counterfeiting, burglary, sophisticated insurance frauds, arson, auto theft and larceny, and shoplifting. The victims of such transgressions usually have been Russian immigrants or Jewish merchants, who reside or operate in Russian communities. Members of the Malina have allied themselves with the Colombo, Lucchese,

729

Statement/James R. Zazzali       13.

and Genovese crime organizations. Together they have controlled "no brand" gasoline distribution and retail sales on Long Island. It has been estimated that Russian mobsters working with the Colombo crime group evaded up to $90 million in Federal and State sales taxes between 1980 and 1986 by bootlegging gasoline.

Outlaw Motorcycle Gangs

            New Jersey is plagued by four active outlaw motorcycle gangs. In descending order of menace, the gangs are the Breed, the Pagans, the Warlocks, and the Wheels of Soul. The gangs operate predominately in New Jersey's southern counties. However, the Pagans have two chapters in Union County. Additionally, each gang has a chapter operating out of Philadelphia and Bucks County, Pennsylvania.

            The methamphetamine drug trade is the largest revenue-producing activity among the gangs. The Pagans probably once produced and distributed the largest amounts of methamphetamine in New Jersey, but the Breed boast of having taken over the trade since the Pagans began maintaining a low profile. Other criminal activities engaged in by the "bikers" are auto theft, counterfeiting, weapons offenses, fencing stolen property, fraud, forgery, assault, and larceny.

            Several members of the various gangs own legitimate businesses, such as tattoo parlors, auto repair shops, motorcycle shops, and janitorial services. These serve as fronts for their

illicit activities and provide "places of employment" for gang members.

            The Breed is the most prolific and fastest growing outlaw motorcycle gang in New Jersey. The Breed has three chapters: The Jersey chapter, which is the "Mother" chapter operating out of Middlesex County; a South Jersey chapter, operating out of Riverside; and the Trenton-Bucks chapter. The Breed consists of 90 members and approximately 50 associates. In 1983, the Breed aggressively recruited smaller motorcycle gangs. The Bandana motorcycle gang now is openly being recruited for Breed membership. A unit known as the Nomad Chapter is an elite element in the organization. It conducts all of the most serious gang business, ranging from homicide to child pornography. Nomads do not have to belong to any other chapter within the Breed because of their special responsibilities, loyalty, and stature in the gang.

            The Breed is as violent as any other motorcycle gang and is the largest operating in New Jersey. Its president, referred to as the "U.S.A.," is Salvatore DeIulio.

            Members of the Breed operate tattoo parlors in five New Jersey counties, from which methamphetamines are distributed. In addition, Breed member Ralph Esposito, owner of Rapid Motor Transport, a car carrier/transport company, ran a chop-shop

730

Statement/James R. Zazzali

operation from his facility. Earlier this year, he was arrested by Federal agents for counterfeiting $20 bills. The Breed's major criminal activity is narcotics distribution.

            With the Pagan gang deliberately maintaining a low profile, the Breed has been able to operate with little competition. Also, the Breed's membership expansion has made it the most threatening motorcycle gang in New Jersey.

            The Pagan motorcycle gang, once one of the nation's largest, has been maintaining a low profile since the arrest and incarceration of its national president, Paul (Ooch) Ferry. Moreover, the national headquarters of the "Pagan Nation" has been relocated from Long Island to Pittsburgh under the new leadership of Merrell (Jackpot) King. There are three New Jersey chapters of the Pagans Motorcycle Club. They are the North Jersey Chapter, operating primarily out of Union County; the. Elizabeth Chapter; and the South Jersey (or Atlantic City) Chapter. Several members of the Philadelphia Chapter, with approximately 24 members, also operate criminally in South Jersey.

            The leader of the Pagan chapters in New Jersey are Steven (Suds) Soderlind of the North Jersey chapter; Michael (Rocky) Matthews of the Elizabeth chapter; and Jay (Junior) Rasch of Atlantic City.

            Prior to the massive law enforcement crackdown of the Pagans, they were strong enough to deal directly with the Scarfo LCN. Much of the interaction between the Pagans and the Scarfo organization centered on the methamphetamine trade. That relationship broke down when Scarfo LCN associates and Pagan members started warring after Pagan associate Roland Kownacki was

robbed. In addition to the manufacture and distribution of methamphetamines, the Pagans are involved in fencing stolen property, burglary, and weapons offenses.

            Pagans in the New Jersey chapters reportedly have been ordered to cease drug trafficking and to avoid attracting law enforcement and media attention. It appears that the Pagans are consolidating and rebuilding while also guarding against losing members and turf to other gangs.

            The Warlock motorcycle gang, a regional gang based in Southeast Pennsylvania, also maintains a chapter in South Jersey. This chapter disbanded during the 1970s due to arrests and successful prosecutions. However, the South Jersey chapter, which has 25 members, is now vigorously recruiting new members under the leadership of Raymond (Clay) Ferrochio, the chapter president. The Warlocks are extremely violent. They are heavily involved in the manufacture and distribution of methamphetamines. The gang also trafficks in stolen vehicles and firearms. The Warlocks are linked to Roofers Union Local 30 through membership, and by conducting strong-arm tactics for the Local. (Roofers Union Local 30 has strong connections to the Scarfo LCN.)      The damage

731

Statement/James R. Zazzali       15.

inflicted on the Pagan Motorcycle Club by successful Federal prosecutions has resulted in an expansion of Warlock activity into traditional Pagan territory in Southern New Jersey.

            The Wheels of Soul motorcycle gang is an interracial gang consisting of predominantly Black members but also carrying a small White membership. This group consists of at least 36 members and approximately 25 associates. This gang's principal criminal activities are distributing methamphetamines, weapons offenses, dealing, in stolen property, counterfeiting, assault, fraud, and burglary. Operating throughout the southern half of New Jersey and in Philadelphia, the Wheels of Soul conducts most of its activities in Atlantic, Middlesex, Burlington, and Camden counties.

            The arch rival of this gang is the Pagan gang. Several years ago, the Wheels of Soul were violently competing against the Pagans for the Atlantic City methamphetamine drug market. Since the law enforcement crackdown on Pagan operations in South Jersey, the violence has ceased, and the Wheels of Soul now control the methamphetamine market in Atlantic City.

* * *