CHAPTER 15

Transformation of Organized Crime Groups in Theory and Practice

Enterprises change—adapt or perish. Formerly, the low-tech environment of society generally enabled organized criminals to use low-tech methods successfully. For example, the use or threatened use of violence makes extortion; this may be accomplished without high-tech. However, add high-tech and extortion is possible long distance, including the hijacking of websites, sextortion, and discovery of the vulnerable many miles away. The computer has become more valuable than the car or even the firearm to effectuate organized crime.

However, not everything has changed. Secrecy and intransparency are still essential: organized crime is not overtly capitalized through Nasdaq or the New York Stock Exchange (NYSE). Its capital increases surreptitiously in accounts undisclosed or under-disclosed. Moreover, organized crime does not issue financial statements, neither audited nor reviewed, through the U.S. Securities and Exchange Commission. It is not a club that can be joined directly through the worldwide web, yet it comprises an intangible web among participants, facilitators, and beneficiaries for communication of instruction and secretion of assets.

The closest socially accepted analogue would be intelligence agencies such as the U.S. Central Intelligence Agency (CIA) that operate largely without adequate direct inspection and oversight by the public. Intransparency enables wrongdoing by preventing exposure; that of which we are unaware proceeds at its own unchecked pace. Moreover, there is no inspector general with immediate oversight responsibility for organized crime.

As organizations become too large and unwieldy, they collapse or significantly shrink (e.g., the traditional five mafia families in the New York City metropolitan area). However, some small, effective groups become larger (e.g., smaller Mexican groups morphing into larger cartels) (Clancy 2019). However, the center cannot hold and distributed activity is the norm.

Then as now organized crime is dependent on profitability (i.e., the accumulation of surplus financial resources) (Mob Museum n.d.). Profitability is the residual interest after revenues have been extorted (e.g., protection money, sextortion demands); after funds have been received from sales of illicit goods (e.g., drugs, firearms), and obtained from other means (e.g., gambling, stock swindles). Expenses paid to associates and other facilitators (e.g., lawyers, corrupted government officials) signal a cost of doing business. In brief, financial resources are boosted from the marks (e.g., customers—willing and not willing) and repercussions, potential or actual, are fixed (i.e., conflicts deescalated or deflated, if discovered at all) through influential connections with criminal investigative agencies, public prosecutors, the judiciary, the civil bar, and so on. Indeed, organized crime effectiveness depends not only on internal resources but external factors.

Traditionally, organized crime groups such as the New York City-based five crime families of the Gambinos, Luccheses, Bonannos, Colombos, and Genoveses could survive and thrive by their own wit, connections, and intimidation. These attributes are still important, but the top-down organizational structure was too vulnerable to withstand the new law enforcement tools and policy changes extended to the U.S. Department of Justice. Moreover, this top-down organizational approach to crime management was overstated in efficacy as the required influence spread from primarily local venues to a globalized village of participants and facilitators. Merely being able to corrupt the local police force was not enough.

In modernity, the gig organized crime matrices exploit opportunity structures that demand flexibility in reach by organized criminals. Presently, the flatter supply and value chains lack rigorous centralization, with decentralization essential for thriving illicitly; this distributed weblike superstructure is intangible, not subject to extirpation by law enforcement agencies based exclusively on Long Island, New York or primarily in Washington, D.C. The problem is cross-border—transnational.

Compared to earlier models of organized crime such as top-down hierarchical organizational structures, organized crime has become transformed along with the macro trend of globalization of national political economies, the result of which is an international and fluid network of criminal actors and facilitators more often than not adept in the tools of modernity (e.g., computer-based methods of committing and concealing crime) (Bjelopera and Finklea 2012a, 2). Presently, organized crime at the local, regional, and global levels is modeled on licit and illicit network development and sustainability.

In lieu of a predominantly vertical and pyramidal structure, a horizontal, cross-border, virtual highway with informal toll booths serving as nodes from which and to which communications about logistics and financial flows travel.

Perhaps, the most mysterious attribute of organized crime groups is their initial capitalization. Analysts can trace financial flows and discover exchanges of real goods and services provided for cash, but where did the capital come from? Query if the five families were stripped of resources and high managerial agents, what entities provided the necessary substitution, and how so? Have organized crime core activities such as drugs, firearms, human trafficking, sex slaves, child pornography, gambling, prostitution, and so on been largely eradicated? Statistically, Figure 15.1 graphically indirectly suggests that law enforcement’s assault on the five families in the 1980s had little effect on subsequent narcotics and drugs prosecutions by the U.S. Department of Justice.

Also, observe the trend of federally prosecuted weapons offenses in Figure 15.2 below. The statistics suggest indirectly but strongly that the take down of the five families had little positive effect on the persistence and growth of weapons offenses.

Moreover, the trend of federal organized crime prosecutions, peaking in the Clinton administration, suggests that organized crime, as least measured by these prosecutions, is waning or undetected. The prosecution of underlying core offenses like drug and firearms distributions do not correlate with the organized crime prosecutions.

Figure 15.1 Federal narcotic and drug prosecutions, fiscal years 1986–2019

Source: Transactional Records Access Clearinghouse at Syracuse University (TRACfed)

Figure 15.2 Federal weapons prosecutions, fiscal years 1986–2019

Source: Transactional Records Access Clearinghouse at Syracuse University (TRACfed)

In fact, if organized crime as conceived, theorized, and prosecuted by the U.S. law enforcement were the source of many social harms, the significant decline in organized crime prosecutions would suggest that a different source(s) is responsible for the persistent predicate crime offenses such as importation of drugs and exportation of firearms. These glocal criminal acts are not committed by rogue individuals but through organizational structures different from those conceived traditionally such as entrepreneurial and opportunistic matrices and networks discussed herein. However, from the activity of federal prosecutors, it would seem that organized crime was conquered but the constituent criminal activities continue independently.

Figure 15.3 Federal organized crime prosecutions, fiscal years 1986–2019

Source: Transactional Records Access Clearinghouse at Syracuse University (TRACfed)

In brief, core organized crime activities were not monopolized by groups such as the five families. These groups did not in fact form an influential cartel like the organization of petroleum exporting countries (OPEC); though they were not bit players, the leadership was more notorious and infamous than necessary and significant to the worldwide supply and demand inherent to organized crime activities.

While the public sector generally and law enforcement agencies specifically have experienced mixed successes with respect to the minimization of the risks and harms incident to glocal organized crime groups, there seems widely shared agreement as to what is required to mitigate the hazards presented by such criminal matrices: The financial and analytical capacities of law enforcement agencies need development (Council of Europe 2015, p. 21). Organized crime groups thrive on exploiting this vulnerability of criminal investigators, public prosecutors, and regulatory agencies. These control agencies in the public and independent (e.g., non governmental organizations) sectors are not as prepared as they could and should be. The criminal network obtains, moves, secretes, and disguises financial resources, including bulk cash and electronic money, such that only a well-coordinated, globally focused counter-group of detective and preventive control mechanisms can meet the challenges.

However, this is not to suggest that focus on an abstract conception of organized crime groups as a global phenomenon exclusively demands transnational or cross-border solutions. Problems incident to organized criminal activity begin in response to local conditions. Networks form from the connections between groups and individuals locally (Hobbs and Dunnighan 1998, 298). Thus, the structure of an organized criminal group is grounded in and developed from the socio economic conditions of the specific locality. These attendant circumstances nurture the creation, persistence, evolution, and even dissolution of organized criminal activity. The question is “what are present and absent in the local community that contribute to organized criminal activity?”

The theory that a strong state can quash organized crime is in a sense plausible. However, this changes the conditions on the ground such that other forms of organized crime may evolve (e.g., corruption of public officials, private commercial bribery, legislation favoring special interests at the expense of the general welfare). A strong state may be particularly vulnerable to organized economic exploitation that, while causing significant public harm, is technically neither criminal nor unlawful. The crime may be what is legal.

State controls and emergency powers put in place in response to alleged threats posed by organized crime groups may be pretextual, especially where details about such groups are sparse and speculative. Extension of state power may be obtained under exaggerated threats of organized criminal activities; this extension may be used not only to further state interests in support of special interests (e.g., mining operations, deforestation, agriculture) but to suppress local protest (Papadovassilakis 2020). Organized crime groups have historically and recently provided the skeleton for a frightening boogeyman to convince the uninformed public at large of the great need for the implementation of potent control mechanisms available to law enforcement and national intelligence agencies (e.g., mass surveillance). The larger question remains: has the fear of transnational organized crime been inflated for reasons that have little to do with staunching illicit importing and exporting of contraband?

In a sense, glocal demands too much from governments. To interpret and analyze the organized criminal group as a functioning unit analogous to a publicly filing corporation with subsidiaries, divisions, and fixed company agents across the globe is to miss the dynamic aspect of the organized criminal group: it arises from deficient local socio economic conditions by exploiting the vulnerabilities of individuals seeking extralegal means to accomplish their objectives. For example, U.S. college admissions may be corrupted by small groups of individuals, including consultants, college officials, parents, and students, to obtain special consideration. Where the stakes are high and access and acceptance can be purchased, this fact pattern will recur.

Without a sense of proportion and humility, the analyst will not conceive of the essential properties of organized crime—how these morph and persist contingent on existing and readily created opportunity structures notwithstanding whether the host country is “developed, emerging, or undeveloped.” Gaming the rules depends on the specific rules, and all rules in human affairs can be gamed (except the rule that there are no rules!). The policymaker can wrongheadedly allow him- or herself to become enmeshed in and dependent on a misleading paradigm. While stronger connections among organized criminals are local, transient and fluid connectivity characterize global relationships. Thus, there is a deep offshore bench for replacing international participants and facilitators.

Often, governments’ priorities ebb and flow, depending on their current leadership and its perceptions of public opinions, which are more often manipulable and myopic than fixed and persistent in expressed preferences. Organized crime can appear as formidable as the instruments of media depict, or it may seem a problem largely solved by modern law enforcement techniques, including the deployment of deep and wide electronic surveillance tools. For example, after the 9/11 attacks in the United States, investigative and intelligence priorities were shifted dramatically (U.S. Department of Justice Office of the Inspector General 2004, ii).

Like many public policy issues, the measurement of the threat of organized crime is left to experts such as criminologists, economists, sociologists, and other social scientists. They aggregate and interpret the data to be used, usually statistics prepared by a bureaucracy within the government, according to quantitative models using regression analysis, surveys, and sources that are unauditable. Dependent variables may include the level of organized crime convictions per capita, and independent variables may include society wide demographic data. The substance and quality of Inferences are debatable.

Undoubtedly, the models developed by social scientists using governmental data are flawed; however, the difficulty is how flawed? As in the dilemma faced by investors with respect to public companies that know some management assertions and some public auditor reports are invalid and unreliable—the objective uncertainty about distinguishing the valid and reliable from the invalid and unreliable creates more a predicament than a problem: it is not timely solvable with limited resources.

In 1970, the RICO Act was enacted in the United States, empowering the federal government and private parties to make both legitimate and illegitimate enterprises and their high managerial agents liable for criminal and unlawful activities. These criminal and civil actions are premised on the commission of a pattern of racketeering activity by any enterprise. Thus, sophisticated criminal networks could be disabled from the topdown (Blakey 1990, 879–80). With high penalties, including long prison terms and treble damage awards, the deterrent effect on organized crime seemed palpable.

Table 15.1 depicts a selected series of key data elements arising from the criminal investigation and public prosecution by the U.S. Department of Justice under the program category of organized crime. No data are available prior to 1986, and some data are not available until 1992.

In brief, the responsiveness to criminal referrals by criminal investigators (primarily, the Federal Bureau of Investigation) to public prosecutors (primarily, the district Offices of the United States Attorneys) seems fairly consistent for the period fiscal years 1986 through 2018. However, the increase in median prison terms over the past several years suggests that the gravity of harm committed by organized crime in the United States might have become more serious. Alternatively, only the punishments became more severe. Nonetheless, the number of prosecutions at recent levels (i.e., post-2013) might suggest that the puzzle of organized crime control has been solved. Of course, the mystery of the persistence of core predicate criminal activities has not been resolved, with crimes such as drug and firearm distributions largely unaffected by organized crime prosecutions. The paradigm of organized crime as an output of the big evil man (e.g., Capone, Genovese, Gotti) is not helpful.

Table 15.1 Criminal prosecutions under U.S. DoJ’s organized crime program category

Source: Data from Transactional Records Access Clearinghouse at Syracuse University (TRACfed)