By Mike La Sorte, Professor Emeritus
Rackets are organized illegal activities. Racketeers commit crimes such as extortion, loansharking, bribery, trafficking, and obstruction of justice in furtherance of illegal businesses and the monopolizing of commodities.
Racketeering is a form of corporate criminal organization that is rooted in the very fabric of the social and cultural structures of society. It thrives through the connivance of dishonest officials and entrepreneurs, and the ability to afford high-powered legal advice. When it comes to racketeering, legitimate businesses come under special scrutiny, especially the larger units such as corporations and trusts.
"It’s sometimes difficult to distinguish among the businessmen, labor leaders, politicians and racketeers. They hobnob with each other, and work out schemes through which they manage to profit at his expense of the public." (New York Magazine, July 25, 1983)
"Without crooked politicians, the triangular collusion of gangsters/cops/public servants could have lost a leg, tottered, and collapsed. The gangsters delivered money and services to the pols, who controlled the cops, who as ordered would jail the gangsters or not: a self-enclosed, self-generating machine. The final power of an autonomous decision usually rested with the politicians—except for certain times and places. Yet while the politicians held the ultimate authority, they were also the most vulnerable of the triangular collusion." (Stephen Fox, Blood and Power, 1989)
Racketeers as scamsters derive their influence and profits through the control of segments of the market economy and by engaging in a variety of vices. Where there is an opportunity for substantial ill-gotten gains, there will be rackets.
Top racketeers insulate themselves by maintaining legitimate business fronts, which cover or disguise for another activity, especially something of a disreputable nature. Rackets fund both legal and criminal enterprises, and capital ventures. They provide illegal services to a willing public. These practices can have a corrupting influence on the social and moral orders of a society by fostering a liberal attitude toward criminal behavior. When the corrupt Teamsters’ leader Jimmy Hoffa, who got cozy with the mob, was reelected in 1961, The New York Times noted: "Most teamsters seem perfectly content to ride along with Mr. Hoffa in his crass and cynical conviction that anything goes as long as he keeps delivering higher wages and fatter benefits to his members."
Racketeering is a specific type of criminal activity. Someone who engages in gambling is simply a gambler, but a gambler who receives payments from other gamblers as protection money against extortion by himself or other criminals is engaged in racketeering.
Businesses that front for criminal mobs are appendages to a range of illicit enterprises. The most obvious type of racketeering in the legitimate economy involves the control of a market industry, such as waste cartage, trucking or construction.
Labor unions especially have played important roles in establishing significant racketeering influence. There can be a cooperativeness and willingness of assumed legitimate businessmen to voluntary engage in racketeering. The attractions of criminal partnerships open up money opportunities enabling mobsters to become partners of legitimate persons and (covertly) of politicians who believe that such arrangements are advantageous and without regrettable consequences.
"Labor racketeering in America is a pervasive and persistent problem not easily controlled by conventional statutes." (G. Robert Blakey, author of the 1970 RICO legislation)
One of the most fruitful fields of corruption in New York City has been the construction industry. To cite a notable example, New York’s reputed most powerful racketeer was Vincent Di Napoli, born in 1937. A member of the Genovese crime family, he reportedly earned millions from extortions, shakedowns, rigging bids and dominating firms. Di Napoli founded the Plasterers Local 530. His Cambridge Drywall and Inner City Company scored lucrative contracts in Harlem and the South Bronx. The team of Di Napoli, boss Anthony "Fat Tony" Salerno and Edward Holloran, owner of the Holloran Certified Concrete Company, colluded to corner the market.
The term "racket" comes from the Italian word ricatto (blackmail). It was originally used to describe the lavish parties thrown by gangs (circa 1850s) located in the Five Points section of downtown Manhattan. Corrupt politicians sold tickets to these events through coercion and threatening ultimatums. "Racket" in the sense of its second definition in the Webster dictionary: "…social whirl or excitement, reveling, merry making." The term "racketeering" was coined by the Employers’ Association of Chicago in June of 1927 in a statement about the influence of organized crime in the Teamsters union.
"Racketeers controlling the railroad and steamship terminals in New York collect millions yearly in tribute by ‘shaking down’ shippers at the rate of 3 cents on every hundred pounds of merchandize transported into or out of New York City." (Chicago Daily Tribune, November 22, 1930)
"George E. Browne and Willie Bioff, Chicago hoodlums who won control of the 125,000 members of the International Alliance of Theatrical Stage Employees, were found guilty in Federal Court yesterday of violating the anti-racketeering statute on three counts." (The New York Times, November 7, 1941)
The Teamsters Union has been at the center of the history of American racketeering. The organization grew rapidly in the 1920s and 1930s, during an era of violence and insecurity, which created openings for criminal gangs that could supply protection. In some cases, Teamster locals were taken over by organized crime; in others, local union leaders openly sought alliances with criminals to obtain services and the means to strong-arm competition. The Teamsters were not unique in this respect. Organized crime also penetrated other sectors of the economy, including that of fish and fruit dealers. Regional and national union leaders were unable to purge gangsters from membership in local union branches because of the decentralized nature of such industries as trucking.
With accusations of racketeering used to denounce the labor movement, by the government from the thirties into the fifties, labor found itself in a dilemma. Proposed changes would legitimize the use of federal antiracketeering measures to curtail the growing strength of labor. At the same time that the unions had to deal with the threat posed by racketeers and the consequent escalation of corrupt practices, they had to contend with the harassment and persecution of federal agencies.
Harold Seidman concluded (Labor Czars: A History of Labor Racketeering, 1938) that the Teamsters Union had become "perhaps the most racket-ridden union in the United States." In the late 1980s, the President’s Commission on Organized Crime ranked the Teamsters as one of the "four international unions most frequently associated with organized crime." The Teamsters had come to symbolize the pesky problem of widespread corruption and a model by which we come to understand the concept of racketeering.
The origins of racketeering on a large scale date back to the First World War, at which time the Wickershaw Commission declared that "crime of this type is widespread, especially in the large cities," thereby engaging a wide swath of the nation’s economy. The new and troublesome element in that era was the ascendancy of organized crime, which was stretching it tentacles from urban vice into industrial racketeering. The vice gangs began to evolve into "entrepreneurial gangs." As one example, in New York’s Lower East Side, Louis "Lepke" Buchalter and Jacob Shapiro built a powerful entrepreneurial outfit not based on bootlegging but on range of activities that included serving as mercenaries in labor disputes. Labor’s susceptibility to criminal penetration was coming of age.
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