LUCKY LUCIANO: Criminal Mastermind

He downsized, he restructured and he used Standard & Poor's as much as Smith & Wesson to change forever the face of organized crime

By Edna Buchanan Monday, Dec. 07, 1998

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    Lucky Luciano excited the American imagination, always captivated by bad guys. A reporter who tracked him down in the twilight of his life asked if he would do it all again. "I'd do it legal," Lucky replied. "I learned too late that you need just as good a brain to make a crooked million as an honest million. These days you apply for a license to steal from the public. If I had my time again, I'd make sure I got that license first."

    Novelist Edna Buchanan's Garden of Evil will be published next year. She won the Pulitzer Prize in 1986

    Enterprising Criminals Have Always Found an Opportunity

    The unofficial social law of newcomers is that the "first generation gets on, the second generation gets honor, and the third generation gets honest." Irish, Italians, Jews, Russians, Dominicans, Vietnamese and Chinese have been led from ethnic enclaves into the mainstream, at least in part, by criminal enterprise. So Lucky Luciano wasn't the only hyphenated-American mobster to realize that opportunities for profit existed in the world of business and were available without the usual qualifications of education, experience and aptitude.

    Labor "leader"
    The son of a hardware-store owner on Manhattan's Lower East Side, Louis ("Lepke") Buchalter emerged from a Jewish ghetto to change the face of American labor in the 1930s. Although his fame comes from his leadership of the notorious Murder, Incorporated, Lepke was a pioneer labor racketeer. He learned early that if all the workers in an industry were members of a union, then the selective enforcement of union contracts could lead to domination of entire industries. Employers who paid off gangsters to ignore contracts could produce goods for less and gain a bulletproof advantage. At the height of his power, Lepke ran New York City's garment trade.

    Gasoline Powered


    More recently, members of the Russian mafia developed a scheme with implications for society as profound as Lepke's. They realized that the American tax code offered what speculators might call an opportunistic arbitrage in commodities like gasoline. Here's how it works: only about 60% of the retail price of gasoline is represented by the cost of production and distribution; the rest of it is taxes. The Russians moved into the gasoline wholesale business, setting up phony companies to buy gasoline and then folding the firms before the government could collect the taxes.

    Without the government's take, the Russians could undercut the competition and still reap huge profits on the gas sales. By the early 1990s Russian mobsters dominated most of the gasoline wholesale business on the East Coast of the U.S. Estimates of Russian profits from just this one scam run into the billions of dollars, making the Russian mob a formidable new force in American crime.

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