Newsletter

ORGANIZED CRIME CONTROLS GAMING ROOMS: REPORT

A Korean government report has confirmed that most “adult video game rooms” are managed by organized crime syndicates, which also have a monopoly on the distribution network for the “gift certificates” given as prizes in order to avoid laws regarding cash awards.

A National Intelligence Service (NIS) report titled “The Urgent Need to Eradicate the Abuses of Gambling Game Rooms to Clean Up Social Evil,” given to the presidential office last month and obtained by The Hankyoreh, also finds that tax evasion in the adult game room and “adult PC (personal computer) room” industries totals 8.8 trillion won (9.14 billion USD) yearly. The game rooms, which prohibit access by minors, provide video or computer games which often feature components of gambling.

The NIS report details the activities of specific crime syndicates and explains how they are using money from computer game rooms and illegal casinos to fund their operations. It states that organized crime evades 4.5 trillion won in taxes from adult game rooms and 4.3 trillion won from PC gambling rooms each year. The NIS estimates that the market for adult game rooms, PC gambling rooms, and illegal casinos amount to 50 trillion, 36 trillion, and 2 trillion won, respectively. The Hankyoreh has learned that the NIS sent the report to the presidential office last month.

According to the NIS, 9.3 percent of Korea’s population – or 3.2 million people – is addicted to gambling, close to four times as much as Canada, where 2.6 percent of the population is addicted, and Australia, where 2.1 percent of the population suffers from gambling addiction.

The report says that even in small cities with fewer than 50,000 residents there are on average three to five mafia-operated game rooms, a phenomenon it says is sucking the life out of local businesses. In the small town of Pyeongchang, Gangwon Province, for example, there are 24 game rooms that together take in between 2 million won to as much as 10 million won every day. Nationally there were 11,000 registered game rooms in 2003, but the NIS estimates that their number has risen by 15 percent annually and that today they number 20,000, including ones that are unregistered and therefore illegal.

The report even quotes specific rumors about local officials accepting bribes from these gambling establishments. Among other government agencies, the report names the police station in Seoul’s Gangnam neighborhood as rumored to be on the take from a casino in Samseong-dong.

Aug.25,2006 The Hankyoreh

CRIMINAL INTELLIGENCE SERVICE CANADA ANNUAL REPORT 2006

In 2006, the CISC criminal intelligence community identified nearly 800 organized crime groups operating in
Canada. While many of these groups remain concentrated in and around major urban centres, a significant
number operate from smaller communities across the country. Organized crime groups can be found virtually
everywhere there is profit to be made from criminal ventures. The 2006 report (PDF) was reselased on 18 August 2006.

ZIMBABWE: ORGANISED CRIME ON THE RISE

FOUR phenomena in Zimbabwe point to the rise of organised crime — threats of violence against Reserve Bank of Zimbabwe Governor Dr Gideon Gono, organised criminal gangs, money laundering rings and the involvement of senior police officers in corruption. The question is: Are we seeing the evolution of Mafiosos in Zimbabwe?

A Mafia, as described by Annelise Anderson in “The Red Mafia: A legacy of Communism”, is “a group that is characterised by profit-oriented criminal activity, that uses violence or threats of violence, that uses its resources to discourage cooperation of its members with the police and that corrupts legitimate government authority”. The word Mafia, as Anderson notes, characterised some powerful Sicilian families engaged in violent criminal activities and who also achieved considerable control of economic activity.

The term was later adopted in the United States to describe organised criminal groups in the wake of the Great Depression.
Mafia groups thrive on illegal businesses and illegal markets. It is in the interests of Mafia groups to control the illegal market. Inevitably they are averse to economic reforms or any other policies that threaten the existence of illegal markets and their enterprises.

Such gangs have targets and the means to hit them (weapons). The Russian Mafia (also known as Red Mafia) for instance has, according to the Wilkipedia, 100 000 members owing allegiance to 8 000 crime groups. The Red Mafia controls about 80 percent of all private businesses and about 40 percent of the nation’s wealth. When Russia was undergoing economic reforms, which threatened illegal businesses, the Mafia targeted bank executives, reform-minded business leaders and investigative journalists. These were systematically murdered or kidnapped. Between 1992 and 1994, 10 bankers were killed.

Thus the threats of violence against Dr Gono’s life and the subsequent arson at his farm — coming in the wake of his announcement of progressive measures to curb illegal financial activities — are typically Mafia behaviour. Since Mafia groups are involved in many illegal activities, they have large structures to cope with the scope and sizes of their activities. While enforcement of their jungle laws in businesses is enhanced through violence, they also use bribes to control the legal system, from police officers to court officials.

It is not surprising that many cases involving corruption and other criminal cases are not successfully prosecuted. Organised criminals devote resources to corrupt judicial officials and investigative journalists, especially in an environment where these are poorly remunerated. These criminal groups, who are described by the Wilkipedia as criminals whose motivation is profit, have legitimate businesses to front their illegal ones. In order for their illicit activities to thrive, they need society’s “support” and they get it through violence, bribery, symbiotic relationships between their illegal businesses and the illegal ones and blackmail. Consequently, they target the judicial and police officers including legislators in order to control them through bribery, threats or both.

Legitimate businesses are used either as a cover or as a means to operate underground enterprises. For example in Zimbabwe, one might own a legitimate fuel business and through its legitimate licence, import the fuel. But very little of the liquid would be seen on the open market, as most of it ends up on the illegal parallel market. Some police and government officials would be corrupted because the Mafia thrives where there is little trust in government or the police. When those in authority know about, and are involved in the underground economy, bribery and extortion, there would be selection and enforcement of the laws. Only the small fish are netted and the recourse of going to the law becomes a futile and frustrating experience.

Konstantin Simis, a Soviet defence attorney who had numerous clients in the underground economy was quoted by Anderson commenting on the laundering of illegally earned cash saying it was a “criminal activity protected by the authorities against which ordinary recourse of going to the police proves unprofitable”. The recent arrest of two senior police officers (an Assistant Inspector and an Assistant Commissioner) who were allegedly caught with $5 million ($5 billion old value) in cash typifies the involvement of police officers in underhand economic activities.

Money laundering is one of the prime activities of the underground economy. The Wilkipedia aptly describes what it is and its specific purpose as, “engaging in specific financial transactions in order to conceal the identity, source and/or the destination of money and is a main operation of underground economy”. This is done to avoid detection and prosecution for illegal activities. Significantly, those people who have been caught with billions in cash, including prominent businesspeople with legitimate enterprises have “failed” to account for the source of their money and its destination (which was obviously not the banks”).

John McDowell, writing in “The Consequences of Money Laundering and Financial Crime,” notes that money laundering has devastating effects on the economy and national security. He adds: “It provides fuel for drug dealers, terrorists, illegal arms dealers, corrupt officials and others to operate and expand their criminal enterprises”. McDowell also notes that it increases cross border cash shipments to those, “with loose arrangements for detecting and recording the placement of cash in the financial system”.

Hence it is not surprising that many of Zimbabwe’s bearer cheques (used as legal tender) are smuggled to foreign countries. Barely a week after the new bearer cheques were introduced, they had found their way illegally out of the country and some people were arrested at border posts attempting to smuggle them.

Organised crime masterminded by Mafiosos leads to economic stagnation or depression. Pino Arlacchi, a historical sociologist, noted that during the 1970s and 1980s areas of southern Italy with high rates of organised crime had concomitantly poor economic growth rates. Analysts have also noted that one of the causes of the growth of organised crime is bureaucracy, especially when decisions are unclear and difficult to monitor. Bureaucrats, they argue, fuel corruption by demanding payment, tips, kickbacks and bribes for the awarding of tenders.

Bureaucratic corruption then takes the complexion of the Mafia when violence or threats of violence come into play. In fact some of the power struggles manifest in quasi-government institutions such as councils and parastatals are symptomatic of the struggle for underworld activities such as influencing awarding of tenders. Mafiosos also influence political decisions and legislation by ensuring that those who win political seats are either their kith and kin in crime or that they are corruptible.

Inevitably they manipulate the political system and its players either from within or behind the scenes. Gang leaders who have been arrested or those on the run in the country are a testimony of the prevalence of organised crime. These gangs range from burglars to armed robbers. The Irish Mafia (or Irish mob) is regarded as one of the oldest crime syndicates in the US (since its inception in 1800) and it is reputed for having run the most successful burglary rings in that country.

Slowly, in Zimbabwe, burglary syndicates are emerging and they are terrorising residents. Some of them are known and residents complain that they do not stay in custody for long. Armed robbery gang leaders such as Norman Karimanzira, who is now late, Musa Taj Abdul, Lucky Matambanadzo and Gift Mwale among others, are symbolic of the growth of organised syndicates in Zimbabwe. These gangs have become so disciplined and well connected to be considered part of the organised crime syndicate — Mafia.

While the Mafia usually operates underground, they may become so powerful that they can come out of their shells and become known through symbolic dressing and other means. For example the Japanese Mafia or the Yakuza (or Yokudo), the masters that control the underground market, make themselves distinct as they wear dark glasses and suits and are known to walk with “an arrogant gait”. At the rate organised crime is emerging in Zimbabwe, are we not likely to see such criminal arrogance one day?

The Herald (Harare) August 10, 2006

MCGUINTY GOVERNMENT ANNOUNCES SECOND MAJOR CRIME COURT

TORONTO — The McGuinty government will open Ontario’s second major crime court in north Toronto, Attorney General Michael Bryant announced today. “The new major crime court will ensure we are prepared as major prosecutions make their way through the court system,” said Bryant. “This courtroom, like the one we announced in May in downtown Toronto, will be equipped to meet the extraordinary needs of these complex trials that involve multiple accused.”

The province’s second major crime court will be located in the 2201 Finch Avenue West Courthouse. The courtroom will be enhanced with additional security measures and will be designed with prisoner boxes and holding cells that can accommodate multiple accused, additional counsel tables, larger jury boxes, a separate entrance for witnesses and specialized systems to allow for the presentation of large volumes of evidence.

While the courtroom will be designed specifically to meet the requirements of large, complex trials, many of the enhancements will be portable so they can be used in trials at other locations across the province. The courtroom at 2201 Finch will be used for other criminal trials when major-scale prosecutions are not before the courts. “This is the latest in a series of measures our government has taken to fight guns and gangs,” said Bryant. “Now we are upgrading courtrooms to increase the justice system’s ability to accommodate these cases as they make their way to trial.”

The construction will be done in phases with the first phase beginning immediately. It is expected the courtroom will be ready in fall 2007. The province’s first major crime court at the 361 University Avenue Courthouse, which was announced in May, is under construction and is expected to be ready by fall 2006.

Establishing major crime courts is one component of Ontario’s Organized Justice Strategy, which was designed to fight all types of organized crime, including gang and gun violence. The Attorney General is in St. John’s, Newfoundland today speaking to the Canadian Corporate Counsel Association about Ontario’s plan to combat organized crime on all fronts.

The McGuinty government is on the side of Ontario families concerned about crime and safety. That is why the government is implementing a $51-million package of initiatives to fight gun crimes. The package includes:

*Expanding the number of Crown prosecutors working on the Guns and Gangs Task Force to 64, including dedicated Crown prosecutors working in every region of the province
*Establishing a state-of-the-art provincial operations centre to allow for highly co-ordinated investigations and prosecutions of guns and gang-related offences. The centre will include the newly expanded Guns and Gangs Task Force which includes the Toronto Police Service, Ontario Provincial Police, a team of specialized Crown prosecutors, support staff, probation and parole officers and a victims unit.
*Fast-tracking the hiring of 1,000 additional police officers so that they can be on the streets by the end of 2006.

Ministry of the Attorney General
Ontario
August 14, 2006

UK THREAT ASSESSMENT 2006/7

The United Kingdom Threat Assessment (UKTA) describes and assesses the threats posed to the UK by serious organised criminals and considers how those threats may develop in future. The UKTA was previously produced by the National Criminal Intelligence Service (NCIS).
The 2006/07 edition has been produced by the new Serious Organised Crime Agency (SOCA), which replaced NCIS, the National Crime Squad (NCS), and parts of Her Majesty’s Revenue and Customs (HMRC) and the UK Immigration
Service (UKIS) on 1 April 2006. It was published on 31 July. (PDF)

NEW BOOK ‘CHASING DIRTY MONEY: THE FIGHT AGAINST MONEY LAUNDERING’

Peter Reuter & Edwin M. Truman

 

  • Paperback 248 pages (June 2005)
  • Publisher: The Institute for International Economics
  • Language: English
  • ISBN: 0881323705
  • Price: £14.50

 


Synopsis

National and international efforts to reduce money laundering were originally developed to reduce drug trafficking and have broadened over the years to address many other crimes and, most recently, terrorism. They now constitute a formidable regime applied to financial and nonfinancial institutions and transactions throughout much of the world. In this study, the authors (1) explore what is known about the scale and characteristics of money laundering, (2) describe the current anti-money laundering regime, (3) develop a framework for assessing the effectiveness of the regime, and (4) use that framework to assess how well the current system works and make proposals for its improvement.

ITALIAN MAFIA BOOSTED REVENUE BY 25% IN 2005, SOS IMPRESA SAYS

Italian crime syndicates, including the Sicilian Mafia, boosted their revenue by 25 percent last year, according to SOS Impresa, a Rome-based group that coordinates businesses that reject mob extortion.

Italy’s four main crime organizations drained 35 billion euros ($44.2 billion) from the legal economy in 2005, up from 28 billion euros the previous year, SOS Impresa said in its annual report. The figures exclude drugs and arms sales.

“This isn’t just a regional problem; it’s a big problem for the entire country,” said Marco Minniti, deputy minister of the interior, today after the presentation of the document. “The presence of the mafia makes Italy a weaker country.”

Incomes in Italy’s south, known as the Mezzogiorno, remained two-thirds those of the rest of the country over the last two decades because of organized crime, according to the Censis research institute in Rome. Average unemployment in the south is four times that of the north, topping 20 percent in some areas and reaching 38 percent for 15- to 24-year-olds, the government statistics office says. There are three main crime syndicates in Italy, all rooted in the Mezzogiorno. The Camorra thrives in Naples and the region of Campania, the ‘Ndrangheta controls much of Calabria, and Cosa Nostra has a tight grip on the island of Sicily.

Loan sharking and extortion make up more than half of mafia income, according to the report. The mafia forced 160,000 businesses to pay extortion last year, SOS Impresa says. Eighty percent of all businesses in Palermo and Catania, Sicily’s two biggest cities, gave kickbacks to the mob last year, the report said.

“In a quarter of Italy there’s no freedom to do business,” said Tano Grasso, Italy’s former anti-extortion commissioner. “Only 1 percent of all foreign investment in Italy goes to the Mezzogiorno, and that has a lot to do with organized crime.” Italian Prime Minister Romano Prodi, who took office just over two months ago, pledged during his campaign to make the fight against organized crime a top priority.

Cosa Nostra’s undisputed boss Bernardo Provenzano, 73, was captured a day after national elections in April after 43 years on the lam. Since his arrest, police have also picked up and charged most of the family bosses in the province of Palermo in an operation they called “Gotha.”

“The capture of Provenzano not only had symbolic meaning in Sicily, but it had an immediate impact on ongoing investigations,” said Senator Alfredo Mantovano, who was undersecretary to the Interior for the previous government.

While acknowledging the importance of Provenzano’s capture, SOS Impresa President Lino Busa underlined the territorial control exerted by crime syndicates and their growing power. “There’s nothing new about how they operate,” said Busa. “But the situation is enormously underestimated.”

SOS Impresa is sponsored by Confesercenti, Italy’s second-biggest retail lobby. Its numbers were based primarily on elaborations of figures from the Interior Ministry, government statistics office Istat, and surveys carried out by SWG Srl polling company.
July 24, 2006 (Bloomberg)

INTEGRATION IS KEY TO ORGANIZED CRIME FIGHT: PANEL

One of the best ways for Canadian law enforcement agencies to overcome the challenges behind lengthy, expensive and complex criminal investigations is to integrate-and then integrate some more. This was the overwhelming consensus reached by four panelists during an organized crime seminar held at the Canadian Police College last February.

“These investigations (into organized criminal activity) require a great deal of surveillance, so they are incredibly expensive to conduct,” said Toronto Police Chief William Blair. “We can only afford them if they are integrated efforts.”

It was a boon for law enforcers to have the new “criminal organization” charges introduced in 2001 under anti-gang legislation (Bill C-24), panellists agreed. According to C-24, those offenders found to be associated with a criminal organization are subject to 14 years over and above any substantive charges. Those who are found to be directing a criminal organization could face life in prison.

However, building a case that will support such charges is a formidable challenge for police investigators, said Blair, adding it requires a lot of intelligence-gathering, including extensive wiretapping efforts. Such an operation could go on for several years, after which time police need people to transcribe phone intercepts and pool all of the intelligence together into a comprehensive disclosure package that can be presented in court.

For past investigations involving criminal organization charges, which are found in section 467 of the Criminal Code, the Toronto Police Service has teamed up with other police agencies in the Greater Toronto Area, the RCMP and provincial prosecutors who are dedicated to the investigation from start to finish, Blair said.

George Dolhai, senior general counsel with the Department of Justice’s Federal Prosecution Service, said it’s crucial for the prosecution to consult with police from Day 1 of any investigation where criminal organization charges are the end goal. “The (eventual) trial in a complex case is often a trial of the investigation. The more police have an eye out for the prosecution’s (needs), the stronger position they will be in at the time of takedown.”

Police can also keep an investigation’s cost at bay by ensuring it has a clear focus and specific objective, added Graeme Cameron, deputy director of the Ontario Crown Law Office – Criminal. Sometimes it’s easy to lose sight of the overall goal, he said, especially during projects that span several years

RCMP Gazette Vol. 68, Issue 2 2006

REID PLANS ‘SUPER-ASBOS’ TO FIGHT MAJOR CRIME RINGS

Drug traffickers, fraudsters and smugglers are to be hit by “super-Asbos” designed to disrupt the activities of crime rings.

The Home Office said that the move would crack down on the “Mr Bigs” who considered themselves untouchable and deter other people from becoming involved in criminal gangs. The plan is the first in a series of measures from John Reid, the Home Secretary, designed to chart the way forward for his troubled department.

Known criminals against whom it is difficult to construct a criminal case could face restrictions similar to those faced by people receiving antisocial behaviour orders (Asbos). So-called serious crime prevention orders could include controls on where subjects travel and who they contact by telephone, limits on the amount of cash they can carry and bans on using certain bank or credit card accounts.

They would be imposed on civil standards of proof by courts, which would have to be satisfied the moves were proportionate and took into account the human rights of people affected. As with Asbos, breaches of the restrictions would constitute a criminal offence and would carry a maximum penalty of five years in jail.

The Home Office, which calculates that organised crime costs the country £20bn a year, says police have identified “over 1,000 individuals of interest” that could face the new orders. Mr Reid said: “The proposals we are putting forward are designed to prevent these criminals from operating on UK soil, to disrupt their activities, target them more effectively and make it harder for them to evade detection.” Restrictions could also be placed on companies suspected of “facilitating organised crime”.

The Home Office is also calling for improved data sharing between the public and private sector on suspected fraudsters, such as greater co-operation between police and the Department for Work and Pensions to detect the fraudulent use of national insurance numbers. And it is proposing a new offence of encouraging or assisting a criminal act to make it easier to bring to justice those involved in the margins of organised crime.

Nick Clegg, the Liberal Democrat home affairs spokesman, said: “The Government is now suggesting using a system designed to deal with young tearaways to tackle international criminal rackets run by the ‘Tony Sopranos’ of this world. At first glance this looks like the worst kind of half-baked gimmick based on a lazy view that the only way to fight crime is to circumvent the criminal justice system.”

David Davis, the shadow Home Secretary, said: “This looks like another measure to make up for the Government’s failure to get sufficient prosecutions.”

Mr Reid will set out his plans for the Home Office over the next week. He will announce proposals to overhaul its structure tomorrow, followed by moves to “rebalance” the criminal justice system towards the victims of crime. He is due to set out plans to reform the Immigration and Nationality Directorate early next week.

18 July 2006 The Independent

MELBOURNE: POLICE FOCUS ON NEXT GENERATION FELONS

TWO new police taskforces will investigate the organised crime syndicates that are planning to fill the void created by Melbourne’s bloody underworld war. The units will be modelled on the Purana taskforce that has laid charges or made progress in 17 gangland killings, effectively breaking the underworld code of silence.

The head of crime tasked operations, Detective Superintendent Richard Grant, said police planned to operate three Purana-type investigation groups. The two new groups to work alongside Purana will be known as taskforces 400 and 500. Mr Grant said each would comprise about 50 staff and would be able to call on a pool of more than 30 investigative accountants, lawyers and analysts. “It will be a multi-disciplinary approach designed to identify organised crime targets, investigate their activities and identify their assets,” he said.

Mr Grant said the taskforces would work with other government agencies, including the Tax Office, to try to strip suspects of their profits. They will also use the coercive powers of the chief examiner’s office to compel suspects to answer questions in secret interrogation hearings. Mr Grant said police were aware that criminal groups were positioning themselves to take over areas once dominated by gangsters who have been killed or jailed during Melbourne’s underworld war. “We are in the target development phase of identifying the suspects that we should concentrate on. We will be moving on the next generation and established networks.”

Mr Grant said police needed an accurate criminal intelligence bank to anticipate which criminals were likely to become major influences in Melbourne’s gangland. Police say the profits from drug trafficking mean little-known criminals can became major influences in months. Mr Grant said the crime department would become more flexible and equipped to handle complex organised crime investigations and to move on the next generation of drug entrepreneurs.

The new strategy means that as many as 50 police could investigate one suspect, a small group or a major syndicate. They will also investigate lawyers, accountants and financial advisers who are suspected of helping criminals launder funds to avoid asset seizure.

As part of the crime department restructure, eight squads — organised crime, tactical response, Asian, prison, homicide cold case, missing persons, fraud and casino — were closed two weeks ago to free detectives for new investigations. Senior police say the work of the closed squads will continue to be investigated by detectives.

But Police Association secretary Senior Sergeant Paul Mullett said the crime department restructure was “introduced by stealth to an artificial deadline”. “There has been no research conducted into how it will affect workloads and service delivery,” he said. He said there were some good initiatives in the new model but there was a need for greater investment in technology such as listening devices and phone taps.

The Purana taskforce has persuaded several insiders to provide information on Melbourne’s gangland war and on Friday arrested a man over the murder of gangster Mark Mallia, whose burnt body was found on August 18, 2003, in Sunshine.
Damian Cossu, 30, was arrested at gunpoint in Sydney and extradited to Melbourne where he was remanded in custody over the murder. Cossu, of Bonnyrigg in Sydney’s west, appeared briefly in court yesterday and showed no reaction as he was remanded to appear again on October 9.

Purana taskforce detectives arrested a second man about 3pm yesterday in Sunshine in relation to Mallia’s murder. Christopher Orfanidis, 22, of Ardeer, was charged with murder in an out-of-sessions hearing last night. He was remanded to appear in the Melbourne Magistrates Court at 10am today. Mallia’s charred body was found in a wheelie bin left in West Sunshine on August 18, 2003. He was identified by a tattoo on his shoulder.

The Age (www.age.com.au) July 18, 2006

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