August 16, 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. 623-659]

 

623

ORGANIZED CRIME IN PENNSYLVANIA:

TRADITIONAL AND NON-TRADITIONAL

Prepared for the

Permanent Subcommittee on Investigations

United States Senate

APRIL 15, 1988

By the

PENNSYLVANIA CRIME CONCESSION

WITNESSES: James H. Manning. Jr.. Esq. Commissioner

Frederick T. Martens Executive Director

624     

            Thank you, Mr. Chairman, for the opportunity to testify before this distinguished Committee. Your efforts in maintaining a pulse on organized crime are noteworthy and to be commended, for you have continued on the paths of your predecessors, Senators Kefauver and McClellan. We, at the state level, are fortunate to have this medium to discuss the problem of organized crime and the attendant organized crime control methods, techniques, and alternatives available to us, thanks to the efforts of this Committee.

            The reality of organized crime, its insidious, corrosive, and subtle impact, is a feature of this unique form of criminality that often goes undetected until it is too late to do anything preventive. Organized crime is often equated to a cancer, and its evolutionary growth is virtually identical. Initially, we see it begin with a complacency on the part of law enforcement and the community; something like "it can't happen to us." Then it takes on another dimension: small episodic events occur, the likes of which are viewed as isolated incidents. A bookmaking arrest is made; there are allegations of police corruption and perhaps a conviction is obtained, followed by the pronouncements that this was "one bad apple"; a "mob hit" may occur, but who really cares, "they're only killing their own"; and then the moral fabric of the community begins to be attacked by this most potent organism, quickly followed by the subversion of political, economic, and social institutions that are designed to prevent this deadly disease. Ultimately, the body politic is eroded, the

625

infrastructures of the community are destroyed, and the "will to live" no longer exists. One gives up, for as many before have found, "you can't fight city hall." In the end, you find communities that have driven business from their environs, undermining the financial structure; political institutions have been corrupted to the point that organized crime interests dominate political decisions; and the social institutions no longer have the power to prevent the demand for the illicit services that are being offered. The community is ravaged, plundered, exploited, and thrown to the forces of the fittest. Only the most powerful survive. This prognosis, if you will, is repeated in community after community throughout the United States, and only with the vigilance of Committees like this, crime commissions, and law enforcement on a state and local level, can we monitor, diagnose, prevent, and contain the growth of organized crime. Before we take corrective action, we must know what the problem is; for if we do not, what may be seen as a "successful" enforcement action--an arrest(s)--may be simply "blue-smoke and mirrors." We may, unconsciously, arrest an element (e.g. organism) that would have prevented the growth of organized crime--that independent criminal entrepreneur that cared little about eliminating competition through violence or corruption, expanding his or her territorial domain, and/or monopolizing an illicit market. I would suggest to you that organized crime enforcement requires the same level of sophistication in thought that cancer prevention demands; the analogy is well-worth heeding.

626

            Let me begin by discussing traditional, organized crime in Pennsylvania.

            The Italian-American Crime Syndicates are considered the most well-entrenched criminal groups operating in the United States. They derive substantial income from illegal activities such as gambling, loansharking, narcotics, extortion, prostitution, and any criminal venture which offers the opportunity for financial gain.

            That which distinguishes the Italian-American Crime Syndicates from other criminal groups is the insidious manner in which they have attained monopoly control over legitimate, as well as illegitimate, markets. Despite changes in personnel, the Italian-American Crime Syndicates have successfully employed violence and intimidation so as to assure compliance between other criminal groups, businessmen, labor leaders, and politicians in order to control competition within a specific market. In what has historically been termed "racketeering", the Italian-American Crime Syndicates participate in criminal conspiracies with the aforementioned entities in order to derive the financial benefits of a monopoly.

            These criminal conspiracies pose a serious threat to the integrity of our political and economic systems as was recently evidenced in Philadelphia when two independent real estate developers became victims of the joint extortion attempts of City

627

Councilman Leland Beloff and syndicate crime boss Nicodemo Scarfo. Both incidents are classic examples of the monopolistic control that can be exerted when politicians and crime syndicates engage in criminal partnerships.

            In the first incident, G. Willard Rouse, a nationally. known developer had undertaken a project valued from 700 million to one billion dollars to develop the Penn's Landing area of the Philadelphia waterfront. The project required substantial private financing as well as .a ten million dollar housing and urban development action grant. Approval for such a grant required guarantees by the city of Philadelphia in the form of legislation against certain potential losses that might be incurred by the developer. According to Philadelphia protocol, these legislative bills must be introduced by the city councilman in whose district the construction would occur; in this case, Councilman Beloff's district.

            Rouse was approached jointly by operatives of both Beloff and Scarfo who promised Rouse that Beloff would introduce the necessary legislation only in exchange for the sum of one million dollars; an amount which would ultimately be shared by both Beloff and Scarfo.

            In the second incident, developer John Bennett was similarly extorted by these same operatives to the sum of $25,000, in exchange for which they would guarantee Beloff's introduction and

628

assistance in the passage of necessary legislation required by Bennett: specifically, legislation which would confirm the Philadelphia Redevelopment Authority's selection of Bennett as the developer for a building project in Beloff's district. Moreover, Bennett was assured that his ongoing problems with certain labor unions could be alleviated at a cost of one hundred thousand dollars.

            I submit that this type criminal partnership is not an anomaly. An ongoing investigation of New York City's construction industry reveals that many businessmen readily accept such payments not as extortion, but rather as "the cost of doing business in certain markets."

            Within the Commonwealth of Pennsylvania there are four Italian-American Crime Syndicates, traditionally referred to as crime "families": the Scarfo Crime Family, the LaRocca Crime Family, the Bufalino Crime Family, and the Magaddino Crime Family.

The Scarfo Crime Family

            The Scarfo Crime Family operates primarily in the city of Philadelphia, the Southeast sector of the state, and New Jersey. Presently, the boss of this Family is Nicodemo "Little Nicky" Scarfo, age 58, of Atlantic City, New Jersey. Scarfo's nephew, Philip "Crazy Phil" Leonetti, age 34, and a resident of Longport,

629

New Jersey, maintains the position of "underboss." The Family "consigliere" is Scarfo's uncle, Nicholas "Nicky Buck" Piccolo, age 84, of Turnersville, New Jersey.

            I would like to comment briefly on the traumatic changes which have occurred in this Family over the past decade. These changes relate not only to personnel but to philosophical differences-in the manner in which the Family continues its criminal pursuits.

            Angelo Bruno Annalore had been "boss" of the Bruno Crime Family, as it has been formerly referred to, from 1959 until his murder on March 21, 1980. An unprecedented period of internecine violence followed Bruno's murder, resulting in what might accurately be described as a complete purge of the Bruno Crime Family so as to create the Scarfo Crime Family. To date, at least thirty Family members and associates have been murdered, many at the direction.of Nicky Scarfo.

            I might add that Phillip Testa, Bruno's underboss, not Nicky Scarfo, immediately succeeded Bruno as boss of the Family. Testa's tenure, however, was short-lived. He was killed by a bomb explosion on his front porch less than one year after having succeeded Bruno.

            Hence, it is Nicodemo Scarfo, having succeeded Testa, who is responsible for the current structure of the Family which I am about to describe.

630

            Unlike Bruno, Scarfo lacked the respect of the whole Family and saw violence as the only means of compensating for this inadequacy. Much of his decision making was irrational, paranoiac, and resulted in violence as a solution. Upon becoming boss of the Family, Scarfo immediately surrounded himself with young, aggressive, novice members of the organization who he promoted for their loyalty to him rather than their competency, talent, or skill at dispute resolution. Scarfo ostracized many of the Family's more experienced members, labeling them as Bruno loyalists and threats to his authority. Insecure in his ability as a leader, Scarfo ordered the murder of any member who he believed to be disloyal.

            As a consequence of Scarfo's paranoia, the Family underwent a complete turnover in personnel. Those members, who during Bruno's reign were responsible for controlling much of the Family's interests in such activities as gambling and loansharking were either killed or ostracized. With their removal, so went many of the political, business, and labor relationships that had taken years to cultivate.

            In their place, a legion of young immature members remained, absent a sophisticated network of relationships and devoid of any real criminal expertise. They sought to emulate the "gangsters" who controlled the rackets during Prohibition. Relying exclusively upon their proclivity towards violence, Scarfo Family

631

members imposed a "street tax" on the revenues of those criminal groups which were easy prey to physical intimidation, extorted businessmen and labor unions, and sought a dominant role in gambling and narcotics activities in Philadelphia. In the end, it was Scarfo's unmitigated greed, impulsive use of violence, and inexperience as a leader or boss of a crime family, plus the lack of respect for Scarfo among the more competent, mature, and experienced members of the Family, that caused the Family's tattered decline.

            In 1987, Family members Thomas DelGiorno and Nicholas Caramandi became government witnesses against Scarfo. Both feared that Scarfo considered them disloyal and was planning to have them murdered. DelGiorno's and Caramandi's testimony has resulted in an extortion conviction of Scarfo as well as several pending federal and state indictments against him and many members of the Family. These indictments, one of which could result in the death penalty--the first mob boss to face such a sanction since Louis Buchalter--and the extortion conviction will undoubtedly keep Scarfo behind bars for the better part of his remaining life, and force a restructuring of this Family.

The Bufalino Crime Family

            The Bufalino Crime Family operates primarily in the Northeast sector of the state. Russell Bufalino, age 84, of Kingston, Pennsylvania, continues to maintain the position of "boss", a position he has held since 1959. James Osticco, age 74, of

632

 

Pittston, Pennsylvania, holds the position of "underboss." The Family's '"consigliere" is Edward Sciandra, age 75, of Bellmore, New York.

            Russell Bufalino is presently' incarcerated and serving a ten year sentence for his participation in the attempted murder of a federal witness who was to testify against him. He is in poor health. James Osticco is also incarcerated in a federal penitentiary for his involvement in the tampering of a jury.

            Responsibility for the affairs of the Bufalino syndicate are currently divided among Edward Sciandra, the Family's consigliere, Anthony F. Guarnieri, a caporegime, and William D'Elia, a confidant of Bufalino who maintains regular contact with Bufalino and functions as his emissary in meetings with other members of the Family.

            Bufalino Family members and associates are involved in narcotics, loansharking, gambling, and labor racketeering. Members, inclusive of Bufalino, maintain a legitimate interest in various garment industry related businesses located in Pennsylvania and New York. Edward Sciandra, who was released from federal prison in 1982 after serving less than one year for income tax evasion, presently oversees a sports bookmaking operation in Manhattan. Soldier Frank Cannone, of New York, currently operates a sports bookmaking operation in Binghamton. Soldier Anthony J. Musco of Endicott, New York, was the business agent and is presently the steward of a teamster local in Binghamton, New York.

633

            The Bufalino Crime Family continues to shrink in membership, the result of select prosecutions and, more importantly, generational attrition. Those Family members who remain criminally active appear to operate autonomous of any central control. What we find interesting is that D'Elia, who was "employed" recently as a "night watchman" during the construction of the Philadelphia Industrial Correction Center, is meeting with members and associates of the LaRocca Crime Family in Pittsburgh. D'Elia appears to be an "up and coming" Family member who is central to Bufalino's control of the Family. Nonetheless: the influence and power of this Family has waned over the years' primarily because no "new blood" has been recruited or inducted, and the leaders of the Family are relatively old, dying, and/or incarcerated. Caporegine Guarnieri, who is in Florida under indictment for narcotics-related charges, in a conversation, subsequent to the indictment of Commission bosses in New York', states, "there's no more hiding: they [the government) can get us no matter where we go", a tribute, albeit, from a gangster, to the efforts of law enforcement.

The LaRocca Crime Family

            The LaRocca Crime Family operates primarily in Pittsburgh, Pennsylvania, and the southwest sector of the state. The current "boss" of the Family is Michael Genovese, age 68, of Gibsonia,

635

Pennsylvania, who succeeded John LaRocca in 1984 after the latter's death from natural causes. John Bazzano, Jr., age 60. of McMurray, Pennsylvania, became "underboss" when Joseph N.  Pecora died in March 1987.

            The LaRocca Family membership has diminished over the years, chiefly the result of generational attrition. Besides the deaths of LaRocca and Pecora, "caporegime" Joseph Regino and "soldiers" Louis Volpe, Samuel Fashionatta, and John Fontana have all died within recent years: "Soldiers" Joseph Sica, age 67, and Michael Trafficante, age 80, are both considered retired. Genovese has recently initiated a recruitment campaign to replenish .the Family ranks.

The Magaddino Crime Family

            The Buffalo, New York, based Magaddino Crime Family, formerly headed by the late Stefano Magaddino, has historically exerted a significant degree of control over criminal operations in Erie, Pennsylvania.

            Although many elderly members of the Family have remained residents of Erie, their status within the Family is probably best described as "retired."

            The fact that former "LCN informant" Raymond Ferritto was able to operate a large-scale gambling operation in Erie without syndicate retribution may indicate that Erie is most probably an "open city" subject to no control by the traditional syndicates. Ferritto was, of course, a government informant, who had testified against James Licavoli, boss of the Cleveland LCN Family, John Colandra, and Tony Liberatore in the murder of Danny Green, the Irish "mob boss" in Cleveland, Ohio. Despite Ferritto's testimony and his eventual defection from the witness protection program, Ferritto runs one of the largest gambling operations in Erie, PA.

            Joseph Todaro, of the Buffalo, New York, Crime Family, had been seen meeting with Nicodemo Scarfo and Edward Sciandra in Florida, lending support to intelligence data indicating Todaro has assumed control of the Magaddino Family.

ORGANIZED CRIME ENTERPRISES: BLACK AND HISPANIC

            It is appropriate at this time to establish a definitional distinction between the Italian-American criminal organizations, or "crime families", previously described and other organized crime groups or criminal "enterprises" which function in the illicit market.

636

            In Rackets Bureaus: Investigation and Prosecution of Organized Crime, Blakey, et al define organized crime-enterprises as "criminal groups...that provide illicit goods and services on a regular basis." In contrast organized crime "syndicates" are defined as:      

Criminal groups that regulate relations between various "enterprises." They may be metropolitan, regional, national, or international in scope. They may be concerned with only one field of endeavor or they may be concerned with a broad range of illicit activities. A "syndicate," therefore, is a criminal cartel or business organization. .It. fixes prices for illicit goods and services, allocates black markets and territories, acts as a criminal legislature and court, sets criminal policy, settles. disputes, levies "taxes," and offers protection from both rival groups and legal prosecution.

            Whereas the traditional Italian-American "crime families" satisfy the aforestated criteria of a crime "syndicate," the black and Hispanic criminal organizations which I am about to describe are characteristic of criminal "enterprises" vis-a-vis criminal "syndicates."    

            In much the same manner as the Italian-American crime syndicates evolved within the Italian communities of our major cities, black and Hispanic criminal enterprises evolve within their communities. Similar to legitimate entrepreneurs, the black and Hispanic criminal enterprises are established so as to satisfy the market demand for particular illicit goods or services and take advantage of opportunities for the moment.

            Historically, the illicit goods or services provided by these enterprises have been gambling and narcotics. I will begin by discussing gambling.

            Within most black communities of any sizable population, there exists illegal lottery operations commonly called "numbers." Similar to the state controlled lottery, a bettor is permitted to choose his own three-digit number and usually receives, upon winning, 500 to 600 times the amount of the denomination wagered. Unlike the state, the amount the bettor can wager is not fixed, and in many instances, he is extended short-term credit. These distinctions, coupled with a certain degree of convenience, has allowed illegal numbers operations to continue to flourish, despite the creation of legalized, state operated competitors. In fact, evidence suggests that legalized gambling may encourage and expand illegal gambling to persons heretofore never involved in gambling.

639

            The financiers of the illegal lotteries are called "numbers bankers" and their employees are called "numbers writers." Although some numbers writers accept bets on the street, major numbers operations use fixed locations, called "lead houses" in Philadelphia. These "lead houses" are generally grocery or variety stores where people can place their numbers bets with the writer. Lead houses often employ a doorman who allows customers to enter, watches for police, and warns the other employees of a potential police raid. As one might suspect, this characteristic of the business invites police corruption as a necessary expenditure so as not to disrupt the flow of business.

            In major cities such as Philadelphia, there can exist as many as twenty separate, yet economically interdependent black numbers bankers. This economic interdependence, which is based upon need for bankers to reciprocate in the exchange of excessive wagers on any one number, has led to what can be termed a "closed industry." There are very few new entrants into illegal lottery. Most bankers remain in business for relatively long periods of time and then usually transfer the business to a relative or loyal employee. Uninvited competition can effectively be deterred via a discrete phone call to the police.

            Some of the more significant black numbers bankers in Pennsylvania are,

        Richard Spraggins -- a numbers banker whose primary area of operation is North Philadelphia and Germantown. Spraggins has expanded into loansharking, and cocaine and heroin distribution.

        James Walton Nichols -- a numbers banker whose primary area of operation is West Philadelphia. Nichols employs in excess of forty "street writers." It is estimated that his operation has grossed in excess of ten million dollars annually. Nichols has branched out into cocaine distribution

        Clifford Ballard -- a numbers banker whose primary area of operation is North Central Philadelphia. Ballard utilizes seven to ten "lead houses" at which his customers can place wagers.

        Charles and Junious Blackwell Sr. -- both are partners in a numbers operation which operates primarily in Northwest Philadelphia and utilizes three to five "lead houses."

640

        William Edwards -- a numbers banker whose primary area of operations is West Philadelphia although he employs "street writers" from other Black populated areas of the city. Edwards utilizes at least five "lead houses."

        Isiah Ford -- a numbers banker who operates primarily in Northwest Philadelphia and utilizes as many as ten "lead houses."

.           Black and Hispanic enterprises which deal in the distribution of drugs are characteristically different from their gambling oriented counterparts. The lucrative profits derived from this illegal commodity are usually offset by the increased risks associated with violent cut-throat competition, "rip-offs," and law enforcement interdiction. A credible reputation for the use of violence is essential to a large-scale and continuing enterprise's success.

            Roland Bartlett, who, prior to his arrest in March 1987, operated one of the largest, if not the largest, heroin distribution enterprises in Philadelphia, effectively enhanced his reputation as someone who should not be "taken lightly.

            Bartlett, 43, was known for his violent proclivities, having hired two of his associates to murder his neighbor who had

641

filed a municipal complaint about Bartlett's dog. Bartlett is currently awaiting retrial on conspiracy charges (first trial resulted in hung jury) related to this incident. Bartlett began as a street dealer, worked his way up, until he developed connections with the New York-based Gambino Crime Family for direct purchases of heroin. Bartlett is, in a sense, a "rags to riches" story of "material success," similar to Leroy "Nicky" Barnes who became New York City's largest black heroin trafficker. Upon his arrest, Bartlett owned several residences in the Philadelphia area; a $750,000 home in New Jersey; two homes and property in a Susquehanna County resort development; the Club Fleetwood in Philadelphia; twelve racehorses and thoroughbred breeding horses, two Mercedes Benz automobiles and other automobiles, various men and women's jewelry; and communications and counter surveillance equipment worth approximately $1.75 million. He controlled as many as thirty-five workers, developed an organizational structure, and had the physical presence to inhibit any incursions into his territory. Bartlett did not fear, nor did he pay a "street tax" to the Scarfo LCN Family in Philadelphia. He was not intimidated by any overtures by the Scarfo Family to exact a "street tax." Bartlett operated independent of Scarfo's influence, and developed a significant presence and support within the black community. A "local hero" in many respects, Roland Bartlett is indicative of the numerous black criminal entrepreneurs that have emerged through narcotics in the last decade in our major urban centers. They represent, if you will, role models for some black

643

youth, who see no other means of upward mobility. Bartlett "made it," albeit through the criminal exploitation of his own community. Equally as significant, however, is that the government has successfully prosecuted Bartlett on drug-related charges and his ill-gotten proceeds have been seized, taking away not only his liberty, but what may be even more valuable to him--his possessions.

            The levels of sophistication characteristic of these enterprises cannot be understated. Major narcotics distribution organizations, such as Bartlett's, separated the divisions of labor into salesmen, cutting crew supervisors, and enforcers. Recruitment into the organization required a criminal act, in some cases the committing of a murder, so as to demonstrate loyalty.  Members carried beepers and avoided long telephone conversations that could be traced or tapped by law enforcement, authorities.

            Recently, another black criminal organization which refers to itself as the "Junior Black Mafia" has emerged in Philadelphia. This group is primarily involved in cocaine trafficking. Leaders of this group are Robert Mims, an inmate at Graterford Prison and former member of the Black Mafia in Philadelphia during the late 1960's and early 1970's, James Madison, head of the West Philadelphia faction of the group, and Michael Youngblood, leader of the group's North Philadelphia members. There are between 30 to 35 members in the group, some of whom reportedly paid an initiation fee of $1,000. There are indications that potential members were screened and only those without criminal records were being recruited.         

            Some members of the Junior Black Mafia have been flaunting their affluence in their communities. They have been observed wearing rings featuring the initials JBW encrusted in diamonds, and driving luxury dark-colored vehicles such as BMWs, Mercedes, and Jaguars.           -

            Most significantly, members of the Junior Black Mafia have been observed meeting with Joey Merlino, son of LCN member Salvatore Merlino. Reportedly these meetings are arranged to discuss means of controlling cocaine trafficking by blocks and whites in the Philadelphia area. Junior Black Mafia members have been extorting some established black street dealers for the privilege of selling cocaine at various street corners in Philadelphia.

            Some of the more significant black narcotics-traffickers operating in Pennsylvania are:

        Alfred Viner - a distributor of heroin and cocaine in West Philadelphia whose source of supply is New York City.

644

        David Holmes -- a distributor of cocaine and marijuana to West Chester, Downington, and Coatesville.  Holmes' source of supply is Florida.

        Richard Jones -- distributor of heroin and cocaine in Northwest Philadelphia.

        Willie Rispers -- the largest distributor of heroin to Philadelphia, replacing Roland Bartlett, whose Family network was interdicted by federal authorities in March, 1987. Rispers not only distributes on the retail level, but is the primary wholesaler to many of the lesser scale distributors, previously mentioned. Recently, Rispers pleaded guilty to federal income-tax evasion and is awaiting sentencing.

        Marcus Howell -- a major distributor of heroin in Pittsburgh, Howell is presently incarcerated, yet his distribution channels continue to operate under the supervision of his second in command, Alvin Duwan Frazier.

        Darryl Nelson - a distributor of heroin, cocaine, and marijuana in the city of Pittsburgh whose source of supply is New York City.

        James Brown - a distributor of heroin in Pittsburgh whose source of supply is also New York City.

645

        Cyler Reynolds -- a distributor of heroin to Pittsburgh's Hill District, the North Side and Homewood sections.

        Eric and Thomas Jones -- brothers who operate one of the largest heroin and cocaine network in Chester, distributing drugs out of the William Penn Homes public housing project.

        Warner, Anthony, and Philip Brooks -- brothers who distribute heroin and cocaine at the Ruth L. Bennett Homes, Chester, a public housing project.

        David Brightwell - Chester, PA, heads an organization that is becoming increasingly significant in heroin trafficking.

        Charles Winfield - distributes cocaine in the Harrisburg, PA area.

            In the city of Philadelphia, cocaine distribution has become so saturated with competitors that the Hispanic drug distribution enterprises control the sale of cocaine on specific street corners and label their product with colored tape so as to distinguish their product's quality from that of competitors.

            The Hernandez brothers' cocaine distribution enterprise of Philadelphia, which was recently interdicted by law enforcement, employed an accountant whose job it was to keep the payroll records of their retail street salesmen. These salesmen were

646

salaried employees of the organization who received a shift differential in their salaries, depending upon whether they worked day or evening hours.

            The principal Hispanic cocaine distribution organizations which operate in Philadelphia are:

        George Garcia -- leads a cocaine distribution organization whose retail distributors operate on the corners of 9th and Luzerne Streets and Marshall and Butler Streets. Garcia's organization distinguishes its product from competitors by labeling user dosages with green tape.

        Jose Rosa - heads a cocaine distribution organization whose retailers operate from the corners of 8th Street and Butler, 8th Street and Erie, Darien and Erie, Darien and Butler, and Franklin and Butler. Rosa distinguishes his product by labeling user dosages with blue tape. Rosa is presently incarcerated. His operation has been assumed by Jose Aroya. Rosa's wife Jeanette, supervises retail distributors who operate from the corner of Pike and Darien and label user dosages with white tape.

        Frank Rivera -- heads a cocaine distribution organization whose retail distributors label their user dosages with red tape and operate from the corners of Lehigh and Cambria Streets, Darien and Pike Streets, and 9th and Pike Streets.

647

        The Hernandez Brothers - Jose and Angel operate a major cocaine distribution organization whose retailers operate primarily in the Hunting Park section of Philadelphia. The Hernandez organization labels its product with yellow tape. In February 1988 the Hernandez Brothers pleaded guilty to charges that they operated a continuing criminal drug enterprise.

OUTLAW MOTORCYCLE GANGS.

            The two major outlaw motorcycle clubs which operate in the Commonwealth of Pennsylvania are the Warlocks and the Pagans. The Pagans are a much larger organization than the Warlocks and are nationally represented. The Pagan's maintain chapters as far west as Texas, as far north as New York, and as far south as Florida. Within Pennsylvania, the Pagans have local chapters in Delaware Valley, Philadelphia. Oxford, Lehigh Valley, Reading, York, Lancaster, Greensburg, Fayette City and Pittsburgh. The Warlocks are represented primarily in the southeastern sector of the state. Both clubs are structured and all members are subject to strict discipline and monetary dues requirements. These clubs are active in the distribution of drugs, specifically methamphetamine and cocaine.

648

            A select number of the clubs' members and associates are accomplished "cookers" or chemists of methamphetamine. The manufacture of methamphetamine is a costly procedure requiring the expensive controlled substance P2P (Phenyl-2-Propanone) as a precursor. Once the product is processed, it is provided to the club's membership who conduct retail sales. Within the Pagan organization, all drug distribution, whether it be methamphetamine or cocaine, is controlled by the Mother Club which is represented in each chapter by a Mother Club member or advisor. The Mother Club ultimately receives a portion of the revenues derived from each chapter's drug sales.

            The Pagans have utilized violence so as to intimidate their competitors in the drug trade.

Recently, four Pagan members pleaded guilty following an indictment by Federal authorities on charges that they tried to control the sale of methamphetamine in Chester County. They sought control through an organized policy of beatings, assaults, and death threats toward any retail methamphetamine distributor who did not purchase his supply from the Pagans.

            The Pagans Motorcycle Gang is a well-structured organized group with it's highest concentration in Pennsylvania. The governing body of the club is known as the Mother Club Chapter.

649

            The National Officials are: National President: Merle "Jackpot" King, Pennsylvania; National Vice President: Roland "Petey" Cline, Pennsylvania; National Secretary/ Treasurer: Samuel "Roach" Avampato, Pennsylvania; and National Sergeant-At-Arms: Danield "Dirty Dan" Delp, Ohio.

            Although Merle King has been identified as wearing the "colors" of the national "President," intelligence indicates that Kerby "Bear" Keller, from        Pennsylvania, is the true leader. Keller appears to be directing the activities of the club but has given up wearing the national president "colors" to avoid law enforcement pressure.

            These four national officers oversee eleven Mother Club advisors, five of whom are from Pennsylvania.

            Each of the eleven Pagan chapters in Pennsylvania is run by chapter officers consisting of a president, vice president, secretary/treasurer, and sergeant-at-arms.

ASIAN ORGANIZED CRIME

            My discussion of Asian organized crime within the Commonwealth of Pennsylvania will pertain to the Philadelphia metropolitan area and will be segregated by Chinese, Vietnamese, and Korean criminal groups.

651

            Asian influence in organized criminal activity is nothing new. Historically, Asians have played a significant role in the evolution of organized crime in America, despite recent pronouncements to the contrary. Nonetheless, not until last year did we find their influence extending beyond the borders of Chinatown. It is estimated that at least 40% of the heroin in the United States is imported and distributed by Chinese criminal organizations. This suggests that the Chinese have gained a substantial hold on the heroin market, once predominantly a La Cosa Nostra monopoly. Moreover, we are finding greater interaction between black, Italian, end Chinese criminal networks than we had in the past. Thus, it is important that we begin to recognize the significance of these criminal networks and develop a strong intelligence base for successful prosecutions.           

Chinese Tongs

            Philadelphia's Chinatown is dominated by three major tongs or merchants' associations; the Hip Sing Tong, On Leong Tong, and Tsung Tsin Association. These tongs are represented nationally in most major cities with a significant Chinese population. The Philadelphia tongs appear to maintain a subservient relationship to their New York City counterparts.

            In Philadelphia, these associations or tong have a history of involvement in illegal gambling casinos whose clientele is limited almost exclusively to Asians. The casinos employ as many as twenty people who function as doormen, guards, dealers, and money counters.

            These casinos are "high-stake" operations, featuring games such as pai gow, fan tan, mah-jongg, thirteen-card poker, and blackjack. The casinos are operated at the associations' headquarters or on association-owned property. Key members of the associations control the casinos and the associations retain the profits.

            Each tong employs a specific street gang to protect its casinos from robberies and extortion from other Asian groups. The Hip Sing Tong, On Leong Tong, and Tsung Tsin Association in New York are affiliated respectively with the Flying Dragons, Ghost Shadows, and Tung On Boys street gangs. When the Hip Sing Tong and On Leong Tong in Philadelphia were extorted by a Chinese street gang in early 1987, each Tong sent a representative to their parent association in New York City, who responded by sending gang members from New York City to Philadelphia to provide protection.

652

            It appears that Chinese organized crime is very well run in Philadelphia, and that one of the major figures is. Tom Min-Ling, Aka John Tom, 216 North 9th Street, Philadelphia. Tom, formerly identified as a member of the "Flying Dragons" in New York, is well-respected in the Chinese community, and maintains frequent liaisons with tong associates in New York City.

            He is a prominent figure in the operation of the Hip Sing Tong's Casino. Another major figure is Wei Sin Yeung, under whose leadership the Tsung Tsin's casino has grown to be the largest in Chinatown.

            Chinese gang members who came to Philadelphia to extort restaurants have been arrested by the police, and we have not witnessed the internecine violence that has beset San Francisco's and New York's Chinatowns. There appears to be an "understanding" between the Philadelphia and New York tongs, that Philadelphia is a "safe city," and should not be disturbed or undergo displays of public violence.

Vietnamese Street Gangs

            Vietnamese street gangs, consisting of members in their late teens and early twenties, have evolved in most cities with sizable Vietnamese populations. In Philadelphia several gangs have been identified, each with about 20 to 30 members.

653

            The Vietnamese gangs have been extorting money from Asian merchants in Philadelphia. Often, gang members "borrow" money repeatedly from merchants with no intentions of repaying Sometimes they will run up tabs in restaurants and leave without paying their bills. Other gang members are involved in narcotics trafficking, armed robberies, assaults, and residential and auto burglaries. Many gang members commit crimes to support their drug habits.

            Transient Vietnamese gangs have also appeared in Philadelphia. A mobile Vietnamese gang robbed a massage parlor in Chinatown in November of 1986 and four members were arrested the. same day in Connecticut with more than $17,000.in cash.

Korean Criminal Organizations

            The organization of crime within the Korean community in Philadelphia appears to be very narrowly circumscribed. Essentially, Korean organized criminals are involved in the prostitution rackets, running several massage parlors. Our investigative efforts have identified the following massage parlors as locations where prostitution is occurring:

        Orient Studio , 1437 Vine Street, Philadelphia, PA

654

        Oriental Delight 1812 Ludlow Street, Philadelphia, PA

        Fun City,  6 N. 19th Street, Philadelphia, PA

        Rimi's Health Club/ Bangkok Health Spa 1017 Spring Garden Street, Philadelphia, PA

An Analysis of Law Enforcement's Efforts Against Organized Crime

            Let me begin by saying, law enforcement primarily at the Federal level, and with some notable exceptions at the state level, have taken a Herculean step toward addressing the systemic nature of traditional organized crime, commonly referred to as the Mafia or La Cosa Nostra. At no time in the history of law enforcement has there been such an effective, concerted, and directed effort against the LCN. Let's look at the evidence that leads me to this conclusion:

        In New York, the "bosses" of the five LCN "Families have either been convicted and sentenced to lengthy prison terms, or are under indictment.

        In New Jersey, the "boss" of the "Luchese Family" and twenty members/associates are on -trial for their involvement in illegal gambling, narcotics, and murder in the "Garden State."

        In Pennsylvania, Nicodemo Scarfo, the "boss" of the former "Bruno Crime Family" is incarcerated and facing the death penalty. The "boss" of the "Bufalino Family," Russell Bufalino is in Federal prison and John LaRocca, the "boss" of the "LaRocca Family" recently passed away.

        The Federal government is in the process of initiating a RICO case against the Teamsters Union. In New Jersey, the mob-infested Teamsters Local 560 is under a court-appointed trustee.  

        A RICO indictment has been brought against the "Bonanno Crime Family" in New York, as well as the Fulton Fish Market (N.Y.).

            I can go on and on across the country. The evidence is overwhelming: the LCN has been seriously destabilized and, given the competition that it now has in illegal markets, it is questionable whether it will ever gain its previous dominance in the illegal economy again.

657

            Mr. Chairman, not only have the efforts of government been effective at destabilizing the LCN, they have proven that the system of criminal justice can be tasked with this onerous responsibility of controlling organized crime and respond accordingly. But I dare say, I do not believe that we have learned from our successes and failures of the past.

            In 1967, the President's Task Force on 'Organized Crime strongly recommended that law enforcement invest in strategic intelligence. Some twenty years later, we find that law enforcement is no better at identifying, structuring, or assessing what we shall call "new," "emerging," or "ignored" organized criminal groups than we were in 1967. That is, it took us some 40 years to play "catch up" with the LCN, and we are decades behind in assessing the capabilities of other criminal organizations. We have initiated criminal prosecutions against some of the individuals who comprised these groups, but there is little understanding of the scope, dimensions, or capabilities of these groups. The term "intelligence" has taken on a number of conflicting meanings, most of which are negative and reflect unfairly on this most vital process. To a large extent, the unwillingness or inability of law enforcement to recognize and infuse analytical functions into its intelligence activities--a recommendation of the 1967 Task Force--has retarded the sophistication and ability of intelligence units. I do not see this situation changing substantially in years hence.

            Ironically, had it not been for the commitment made to assessing traditional organized crime, using our intelligence data bases and a variety of analytical skills, the successes we are witnessing today may never have come to fruition. Our continued ignorance of anything other than traditional organized crime is a direct outgrowth of our failure to invest in strategic intelligence.

            Another important lesson of history depicts a second failure in our current efforts. Intelligence programs, hence organized crime control efforts, are only as good as the informational sources at their disposal. Unfortunately, the law enforcement community has been slow at accepting minority group members into its ranks, diminishing the effectiveness of its information-collection efforts. Black, Hispanic, and Asian criminal organizations are part of the organized criminal landscape. Nonetheless, our knowledge of these groups is quite primitive at best. There is a need for a greater commitment among organized crime units to recruit minority group members into its ranks. Absent this infusion of "new-blood," we are likely to again witness a forty year period of "benign ignorance."

            Lastly, it is important for law enforcement to recognize that the days wherein investigators and attorneys could function independent of one another are quickly coming to an end. Again,

658

the historical evidence, while short-lived, is convincing: RICO prosecutions are the direct result of a mutually-cooperative role between investigators and prosecutors. The bulwark of the Federal effort against organized crime has been the RICO law. We need investigators who are proficient in collecting evidence necessary for RICO prosecutions, and attorneys who possess the legal skills to bring these cases to a successful conclusion. RICO is a complex statute that requires a mutual understanding as to the elements of the law. It can not be used effectively if attorneys are excluded from the investigatory process. States like New York, Arizona, Florida, and New Jersey have recognized this and developed institutional structures to accommodate this reality. We must encourage this type of "task forcing" if we are to continue in the footsteps of the Federal authorities who have perfected this investigative technique.  

            On November 14, 1957, an obscure New York State Trooper, Edgar Crosswell, uncovered the so-called "Apalachin Convention." That was thirty-one years ago. The power, prestige, and vitality of these crime families are waning, but the threat of organized crime is ever-as-much serious and real. Whether organized crime was predominantly controlled by LCN as was indicated in the 1967 Task Force Report, or we chose to ignore the other groups that were involved in organized criminal behavior, we can no longer afford another decade of "benign neglect." We in the law enforcement community must have at our disposal, intelligence,

659

investigative, and prosecutorial resources to encumber those criminal organizations which are equally as powerful and deleterious to the social fabric of our communities, as was the La Cosa Nostra.

            Thank you.