The Outfit

by Gus Russo

  Jefferson simultaneously established a brothel near his University of Virginia so that the white-collar intelligentsia would have a respite from the stresses of academic life.

  The Blue Bloods Set the Standard for America’s Underworld

  Law? What do I care for the law? Hain’t I got the power?

  -Commodore Vanderbilt

  I owe the public nothing.

  -J. P. Morgan

  If you steal $25 you’re a thief. If you steal $250,000, you’re an embezzler. If you steal $2,500,000, you’re a financier.

  -An unknown Roaring Twenties journalist

  Simultaneous with the Western land grabs was the consolidation of the American infrastructure by the “robber barons.” These upperworld gangsters (Rockefeller, Morgan, Whitney, Vanderbilt, etc.) systematically bribed and/or blackmailed state and federal officials to allow them to loot the country’s natural resources such as oil and iron ore. During the upperworld’s formative years in the New World, they manipulated enough congressional votes to have the government turn over all the land they needed to construct railroads, an area equaling that of the state of Texas. Instead of taking over the unions, a la Curly Humphreys, the white-collar criminals destroyed them, allowing the entrepreneurs to mine the new country’s natural resources by utilizing the sweat of slaves, indentured or otherwise. After destroying labor unions such as the National Labor Union and the Knights of Labor, the industrialists forced Irish, Italian, Chinese, and other non-WASP immigrants to build their railroads and dig their mines.

  Worker safety was rarely addressed, and then only if it increased the profit margin. Nineteenth-century mine fatalities alone are estimated at two thousand per year. Working fourteen-hour days, six days per week, men, women, and children took home a scant $15 per week, while one of the wealthiest men in the country, Secretary of the Treasury Andrew Mellon, slashed the taxes of the upper class from 50 to 25 percent (while the poor saw a minuscule drop from 4 to 3 percent.) In the 1930s, billionaire Andrew Mellon told a Senate committee that he indeed used thugs to break workers’ unions in building his empire. “You couldn’t run without them,” he callously testified. In his 1976 study, Gamblers and Gambling, sociologist Robert D. Herman concluded, “Many of America’s great family fortunes were not so much built as taken.”

  In creating his oil monopoly, John D. Rockefeller in essence formed what Capone biographer Laurence Bergreen called “the most lucrative racket in the country.” The notorious monopolist used bribery, collusion, and predatory pricing to establish Standard Oil. As America’s biggest racketeer, Rockefeller also burned down the oil derricks of competitors such as Pennsylvania’s Sun Oil. When one feisty competitor, Tidewater Pipeline Company, refused to cave in, Rockefeller’s boys plugged up its pipelines and bribed judges to enjoin its bonds. His great-grandson Senator John D. “Jay” Rockefeller admitted, “The business practices then were completely different from those of the modern era.” Capone’s descendants must wish they could use the same excuse.

  In the Outfit’s home base of Chicago, financier Samuel “Emperor” Insull, the founder of General Electric, invested in rigged stocks and, like Capone, contributed heavily to the campaigns of the corrupt Mayor Bill Thompson, the better to guarantee that his power monopoly remain unscathed by officialdom. When Insull required protection from his many enemies, he hired none other than Capone and the Syndicate, who obliged until they learned that the stingy Insull refused to pay the bodyguards’ salaries. Likewise, publishing magnate Moe Annenberg built his fortune on the backs of Capone’s and O’Banion’s gangsters.

  The institutionalized crime of the upperworld became so flagrant that poet-songwriter Woody Guthrie memorialized it in his song “Pretty Boy Floyd”:

  Now as through this world I ramble,

  I see lots of funny men,

  Some will rob you with a six gun,

  And some with a fountain pen.

  But as through this life you travel

  And as through your life you roam,

  You won’t ever see an outlaw

  Drive a family from their home.1

  In the very year that Al Capone was sent to Alcatraz for cheating the IRS out of $215,000 in income tax, the richest man in the world, J. Pierpont Morgan, paid not one cent to the taxman. Supreme Court justice Louis Brandeis wrote that J. P. Morgan symbolized ’monopolistic and predatory control over the financial resources of the country.’ (Morgan’s father had made a fortune during the Civil War, in which he dodged service, by buying defective carbine rifles from the government and then selling them back to the unsuspecting feds at an enormous profit. Morgan was not the only upperworld Civil War profiteer. The Du Pont family formed a cartel of gunpowder manufacturers by bombing their competitors’ plants into oblivion.)

  As if to construct a physical metaphor for the double standard of justice that allowed them to thrive, the white-collar criminals used their plunder to appropriate all the prime Long Island beachfronts, then walled out the great unwashed. Robert A. Caro, in his profile of builder Robert Moses, The Power Broker, brilliantly depicted how the upperworld gangster elite used their collective clout to prevent city dwellers from availing themselves of the beautiful North and South Shore waterfronts. Not only did they purchase immense tracts of land, much of it used only to prevent public access, they also prevented the roadways from being repaired or expanded beyond two lanes. During the steamy New York summers, the upperworld scions sat outside at their walled estates, laughing at the bumper-to-bumper traffic that searched in vain for a. public beach. “If they swam on Long Island,” Caro wrote, “they swam in their cars in their sweat.”

  “They feared that [New York’s] ’foreigners,’ hordes of long-haired Slavs, hook-nosed Jews, and unwashed Irishmen, would descend on and befoul their beautiful beaches at the first slackening in their vigilance,” wrote Caro. When the Mosquito Control Commission solicited contributions for spraying, blue bloods such as Mrs. Robert Hollins declined, fearing that without the pests, more “foreigners” might attempt to move in. “I’d rather have the mosquitoes,” said Hollins.

  By 1934, both AT&T and Western Union, which had made millions leasing their wires to the mob, had smooth-talked their way out of congressional censure and Justice Department indictments. When Truman’s underworld sponsor, Tom Pendergast, was convicted in 1939, little attention was given to his upperwrorld partners, executives of four insurance companies who had paid Pendergast $750,000 in bribes, then skated free. Likewise, when the American Tobacco Company was caught bribing federal judge Martin Manton to the tune of $250,000, Manton was convicted; the tobacco executive who had made the bribe arrangements was promoted to vice president of the company.

  The upperworld gangsters extended their reach throughout the hemisphere, where they routinely paid for the overthrows of unfriendly heads of state. In Europe, the Du Ponts and Fords joined International Telephone and Telegraph building factories that profited through selling planes, tanks, and fuel to the regime of Adolf Hitler. And when World War II ended, these same entities collected $27 million from the U.S. government as reparations for damage the Allies had inflicted on their German factories. In the early fifties, Meyer Ditlove, Joe Siciliano, and others were jailed for their roles in Chicago’s “horseburger” episode. The spiking of ground beef with horsemeat was not known to have sickened, let alone killed, anyone. At the same time, according to the U.S. Department of Agriculture, upperworld-owned food-processing plants knowingly sold food contaminated with cockroaches, flies, rodents, mouse droppings, fecal and urine waste, pesticides, mercury, and salmonella, resulting in four thousand food-poisoning deaths per year and millions of cases of nonfatal food poisoning. The deaths were expedited by the routine bribing of U.S. Department of Agriculture inspectors by the food industry. It is believed that, unlike the horsemeat scammers, no food industry executive has ever been imprisoned for the processing crimes.

  In 1954, Westinghouse and General Electric held secret meetings in a conspiracy to ac
quire lucrative government contracts, the result of which cheated government out of $1 billion. After a seven-year investigation, forty-five executives were indicted, but only five went to prison, for twenty-five days each.

  Also during the midfifties, Brown & Williamson Tobacco executives discussed in secret memos “burying unfavorable test results” on their product, which they confidentially referred to as “nicotine delivery systems.” One such memo noted that the product contained the powerful carcinogen benzopyrene. Since the midfifties, it is estimated that cigarette smoke has killed more than fifteen million people. No tobacco executive has served a day in prison.

  In 1958, Hooker Chemical Company learned that the twenty million pounds of chemical waste it had dumped in an abandoned waterway near Niagara Falls, New York, contained not only dioxin, but benzene, which was considered, according to Hooker’s own documents, “the most powerful carcinogen known.” In efforts to avoid a $50-million cleanup, Hooker failed to tell the Love Canal school board, to whom they had sold the property to erect a school. The chickens came home to roost years later, when many of those who had attended the elementary school grew up and tried to have their own children. A survey by the New York health commissioner noted: “In a neighborhood not far from Love Canal, only one of the sixteen pregnancies in 1979 ended in the birth of a healthy baby, while four ended in miscarriages, two babies were stillborn, and nine were born deformed.” After sixteen years of court wrangling, Hooker’s parent company, Occidental Petroleum, agreed to pay for the cost of the clean up. No one went to prison.

  Similarly, the Environmental Protection Agency (EPA) found that Dow Chemical, best known for producing napalm, Agent Orange, and feelgood television commercials, was releasing six times the accepted limit of dioxin into the air around its Midland, Michigan, plant, the cause, or so suspected by the EPA, of a local infant mortality rate 67 percent above normal. No one has ever been charged.

  Even before they sold their first Pinto model in the 1970s, the Ford Motor Company discovered that the car had a gas tank design flaw that would cause the car to explode on rear impact. Although the company’s actuarial studies predicted more than 180 deaths would occur, they calculated that settling the resultant lawsuits would be far cheaper ($49.5 million) than retooling the production line ($137 million) and thus decided to sell the deadly fireball compact car. In doing so, the callous executives were merely following the dictates of their founder, Henry Ford, who once said, “There is something sacred about big business. Anything which is economically right is morally right.”

  Ford spokesmen later said that only twenty-six people had died from the Pinto explosions, but independent studies by others such as Ralph Nader put the figure closer to five hundred. No Ford executive was ever imprisoned for what the families of those victimized accurately termed serial murder. In 1979, writer Mark Dowie observed: “One wonders how long Ford would continue to market lethal cars were Chairman Henry Ford II and [President] Lee Iacocca serving twenty-year terms in Leaven­worth for consumer homicide.” One can only imagine the outcry had Joe Accardo or Mooney Giancana murdered five hundred total strangers in order to fill the Outfit’s coffers.

  In the 1980s major cocaine smuggler Bert Gordon flew Columbian coke from the Bahamas into the United States, using Florida’s Homestead Air Force Base as a landing point. Gordon did this with the assistance of U.S. customs agents. “We’d come into Homestead,” Gordon told senior NBC investigator Ira Silverman, “and they’d use a customs van, back up to the plane, and we’d load it up - about one thousand kilos at a time.” Although Gordon was eventually sent to prison, the customs officers went unscathed; one now operates a lucrative commercial fishing venture in the Bahamas.

  On July 17,1981, a concrete sky bridge on the Kansas City Hyatt Hotel collapsed, killing 111 and injuring another 200. Although the National Bureau of Standards found that engineers had knowingly violated Kansas City building codes, no one was even indicted.

  Meanwhile in Washington, the Reagan-Bush administrations guaranteed that corporate greed would be encouraged and rewarded. During the 1980s, thanks to federal decrees, the income of the country’s wealthiest 5 percent increased by 60 percent, while the poorest 20 percent saw only a 3 percent rise; the wealthy also realized a 10 percent tax decrease, while those in the lowest 20 percent bracket experienced a tax increase of 16 percent. As the widening financial gulf between the rich and the poor exacerbated the polarization of the social classes, the crackdown on underworld crime escalated, with the Department of Justice trumpeting its RICO successes.

  In the mid-1980s, after Operation Strawman, the upperworld took over Las Vegas and pronounced that everything was now sanitized enough to bring the kiddies along. Much of “the New Vegas” was financed by fraudulent “junk bonds,” floated by Michael Milken and others. The new veneer in fact only eliminated the underworld gangs’ skim operations; the essential immorality of the rigged games remains in place. B. J. Jahoda was an Outfit soldier in charge of running the games in the Vegas casinos from 1975 until the Strawman trial, in which he was a key witness. In 1992, Jahoda wrote to Robert Fuesel, the director of the Chicago Crime Commission, and gave his educated opinion of “the New Vegas”:

  All organized gambling, legal and illegal, is a zero-sum game intentionally designed so that, over time, the player ends up with the zero and the house ends up with the sum. It has always been so and so it will always remain.

  Organized gambling creates and manufactures nothing except smoke, false promises, and hard dollars at the expense of the unwary.

  And while all forms of organized gambling are parasitic by their very nature, none, not even the Outfit’s, can match or exceed the predatory and rat-hearted level at which many of the major casinos routinely operate.

  It was just as Commission partner Meyer Lansky had predicted in his diary, which was released by his granddaughter Cynthia Duncan in 2001. “The whole thing will be taken over by the Puritan establishment,” Lansky had written years earlier. Lansky added, “My crime is now accepted and made legal in most of our states. And gambling taken over by the hypocritical mob of stock swindlers with the protection of all law enforcement who until now would call casino gambling immoral.”

  In the 1990s, the new “clean” Vegas owners contributed over $16 million to both political parties in a successful attempt to stall legislation aimed at outlawing betting on college sports (a $2-billion-per-year business), which remains legal only in Nevada. The college betting boom started in 1974, when Vegas bookies “persuaded” Congress to drop the 10 percent tax surcharge on sports betting to a negligible 2 percent. The game-rigging, bribes, and point-shaving that have since gone hand in hand with “the Vegas line” have resulted in the expulsion and imprisonment of numerous college athletes, many of whom shaved points to get out from under massive gambling debts. National politicians such as Trent Lott, Richard Gephardt, Orrin Hatch, and Charles Rangel have received the royal treatment, including junkets on corporate jets, from Vegas moguls such as Steve Wynn, founder of the Mirage. Senator Hatch initially promised to cosponsor the remedial legislation, only to do a last-minute about-face. A Senate staffer told Time magazine, “[Hatch] told them it would impact his ability to raise money for [the GOP’s Senate fund-raising committee] from the gambling industry.” Although the NCAA favors a legislative ban, they are not allowed to make congressional contributions due to their tax-exempt status and have minimal lobbying funds available to counteract the corporate deluge.

  The cost of paying off Phoenix real estate developer Charles Keating’s debts for his fraudulent S&L, Lincoln Savings and Loan, came to $3.4 billion, far more than the total loss in all the bank robberies committed by the underworld for the last hundred years. Yet 91 percent of hoods who are convicted of bank robbery go to jail, while only 17 percent of those convicted of major bank embezzlement are sent away - and an even smaller percentage of embezzlers are ever convicted in the first place. During the period of the Lincoln S&L scam, the Keating
family was paid $34 million, at a cost to twenty thousand bank customers who were knowingly sold worthless junk bonds to finance the scheme. One Lincoln sales memo noted: “The weak, meek, and ignorant are always good targets.” Keating was eventually convicted on seventy-three counts, which could have called for a 525-year prison term. Keating served a mere three years before his federal conviction was overturned in 1996 on a technicality.

  In 1988, the Ford Motor Company was once again shown to have sacrificed lives in its zeal to save money on gas tank repairs. In its desire to avoid making $76 million in improvements to the gas tanks of its bus fleet, Ford allowed unsafe vehicles to be sold to the unsuspecting public. On May 14, 1988, the gas tank of a Ford-built Kentucky school bus exploded, killing twenty-four children and three adults. In the lawsuit that followed, the court said, “The conduct of Ford’s management was reprehensible in the extreme. It exhibited a conscious and callous disregard of public safety in order to maximize corporate profits.” Ford was fined $10 million in the 1988 episode, the same year it turned nearly a $500-million profit.

  In 1989, a Department of Energy nuclear weapons plant in Rocky Flats, Colorado, was found to be so contaminated that it will remain dangerous for twenty-four thousand years. The cleanup is estimated to cost $2 billion. Worse still was the finding that Rockwell International, which ran the plant, had been dumping radioactive waste into local rivers. In 1989, the Justice Department refused to sign criminal grand jury indictments, opting instead to accept a plea-bargained $18.5-million fine. However, the Department of Energy simultaneously gave Rockwell a $22.6-million “performance bonus,” which resulted in a $4.1-million profit for the year. No one went to jail.