History of Organized Crime: Origins, Revenue, and Intelligence

More than a century of motion pictures and more than half a century of television productions have created a somewhat romanticized version of organized crime, as typified by The Godfather series. Indeed, there is even a National Museum of Organized Crime and Law Enforcement — commonly known as "The Mob Museum" — in Las Vegas, which has become a popular tourist destination (Green, 2013). The reality of organized crime, however, contrasts sharply with any romanticized depiction. The Federal Bureau of Investigation (FBI) emphasizes that organized crime is not only prevalent in the United States but has also become far more complex and broader in scope compared to the past. To examine the facts about the history of organized crime, this paper provides a background and overview, followed by an analysis of some of the main revenue sources for these criminal organizations. Finally, the paper concludes with an analysis of current and emerging intelligence methods directed at organized crime, along with a summary of important findings.

According to the general definition provided by the FBI, organized crime is "any group having some manner of a formalized structure and whose primary objective is to obtain money through illegal activities" (Organized crime, 2016, para. 4). Clearly, this definition encompasses an enormous array of activities that subvert the law in some fashion and frequently include violence as a means of enforcement. Not surprisingly, these criminal organizations have a profoundly adverse effect on the communities in which they operate, as well as on the state, region, and entire nation (Organized crime, 2016).

While a broad application of the FBI's definition suggests that organized crime has existed for as long as the country itself, the formal analysis of organized crime only dates back to the early 20th century. Some of the first research into organized crime was conducted as part of the Illinois Crime Survey by John Landesco in 1929 (Kelly & Chin, 1999). This seminal research found that the roots of organized crime could be traced to members' community-level social structures. In sum, Landesco determined that "the members of the crime syndicate came from neighborhoods 'where the gang tradition is old' and where the residents could absorb the attitudes and skills necessary to enter into the world of organized crime" (as cited in Kelly & Chin, 1999, p. 333).

Law enforcement authorities first began specifically targeting organized crime in 1967, when the New York City Police Department's Italian branch commander grew concerned over the Black Hand's extortion of the local Italian community and residents' natural reluctance to cooperate with investigations (Kelly & Chin, 1999). In an ill-fated response, the police commander planned to examine Sicilian police records to discover grounds for deporting Black Hand leaders. However, the leaders learned of the plan, and the commander was assassinated (Kelly & Chin, 1999). The Black Hand leader suspected of ordering the assassination was dining with an Italian parliamentarian at the time and therefore had an ironclad alibi (Kelly & Chin, 1999). Three-quarters of a century later, organized crime remains a nationwide problem requiring a multifaceted enforcement strategy. As Kelly and Chin conclude, "The business of organized crime continued and continues apace, as do the law enforcement efforts to combat it" (1999, p. 333).

As noted in the introduction, the general public's perception of organized crime contrasts sharply with today's reality. Organized crime has become a transnational phenomenon, and many of the criminal organizations operating in the U.S. today are involved in activities that transcend conventional views of the Mafia. In this regard, Kelly and Chin (1999) point out that "asked to define 'organized crime,' many ordinary citizens would conjure up a vision of the Mafia or La Cosa Nostra (LCN), and the popular image is not limited to the public" (p. 334). In fact, this skewed perception even influenced the framing of the Racketeer Influenced and Corrupt Organizations (RICO) Act in 1970 (Kelly & Chin, 1999). As a result, initial law enforcement efforts were almost entirely focused on Italian-Sicilian organizations; however, by 1987, federal authorities began to include other ethnic groups, including South and Central Americans and Asians (Kelly & Chin, 1999).

Today, other ethnic groups have become the focus of law enforcement efforts to combat organized crime, including the following:

• Russian mobsters who fled to the U.S. in the wake of the Soviet Union's collapse;
• Groups from African countries such as Nigeria that engage in drug trafficking and financial scams;
• Chinese tongs, Japanese Boryokudan, and other Asian crime rings; and
• Enterprises based in Eastern European nations such as Hungary and Romania (Organized crime, 2016, para. 4).

Each of these criminal organizations is active in the United States, and the Internet has facilitated the development of sophisticated networks between formerly disparate groups that recognize the benefits of cooperation. For instance, Calderon (2015) emphasizes that "transnational organized crime operates through intricate nets of complicity. The activity of criminal organizations related with smuggling drugs, weapons, and even humans, transcends borders" (p. 52). Moreover, the continuous reinvestment of criminal proceeds into legitimate businesses has further fueled the proliferation and growth of these organizations (Musumeci, 2014). Although the full economic impact of organized crime is difficult to assess, current estimates place the figure at approximately $1 trillion annually on a global basis (Organized crime, 2016).

Although the broad FBI definition of organized crime can include virtually any criminal enterprise intended to generate illegal profits, the specific practices covered under the RICO Act include the following federal-level crimes:

• Bribery;
• Sports Bribery;
• Counterfeiting;
• Embezzlement of Union Funds;
• Mail Fraud;
• Wire Fraud;
• Money Laundering;
• Obstruction of Justice;
• Murder for Hire;
• Drug Trafficking;
• Prostitution;
• Sexual Exploitation of Children;
• Alien Smuggling;
• Trafficking in Counterfeit Goods;
• Theft from Interstate Shipment; and
• Interstate Transportation of Stolen Property.

In addition, the following practices are state-level crimes under RICO:

• Murder;
• Kidnapping;
• Gambling (in jurisdictions where it is outlawed);
• Arson;
• Robbery;
• Bribery;
• Extortion; and
• Drugs (Organized crime, 2016).

Although all of these activities can constitute lucrative criminal enterprises, two in particular — drug trafficking and money laundering — have been the focus of increasing law enforcement attention, as discussed below.

The United Nations Office on Drugs and Crime (2016) defines drug trafficking as "a global illicit trade involving the cultivation, manufacture, distribution and sale of substances which are subject to drug prohibition laws" (Drug trafficking, 2016, para. 1). There has been a concerted nationwide effort to combat drug trafficking, beginning with President Nixon's "war on drugs" in 1971 (Calderon, 2015). Like the overall economic impact of organized crime in general, the precise amount of illicit proceeds generated by drug trafficking is not known, but the heroin and cocaine trades alone are estimated to be worth tens of billions of dollars (Drug trafficking, 2016) — estimates that do not even include methamphetamine, Ecstasy, or cannabis (Zill & Bergman, 2014). As a result, drug trafficking has become one of the most significant revenue sources for criminal organizations despite the corresponding multi-billion dollar war on drugs (Calderon, 2015). Today, the United States is the world's largest market for illegal drugs (Zill & Bergman, 2014).

Based on its geographic proximity to the U.S., Mexico remains a major source of drugs being trafficked into this country (Morris, 2012). The potential effects of efforts to build a wall between the U.S. and Mexico remain unclear, but it is reasonable to suggest that major drug cartels will continue to identify ways to smuggle drugs into the U.S. as long as large profits are available (Morris, 2012). Flush with billions of dollars in U.S. cash, organized crime groups in Mexico have been able to prosper and grow in power and influence despite aggressive bilateral efforts to combat them. As Morris points out, "Corruption facilitates the operation of Mexico's vast and powerful criminal-business enterprises while simultaneously debilitating the state's efforts to confront them" (2012, p. 30).

Given the complexity of the transnational logistics required to engage in drug trafficking, organized crime is nearly always involved at some or all stages of the process. In this regard, Calderon (2015) notes that "drug trafficking and organized crime are intertwined and correlated. Drug trafficking has been the origin and is still the main source of income for many criminal organizations" (p. 53). In addition, because of the enormous amounts of cash generated by drug trafficking, money laundering operations are frequently involved as well, as discussed below.

The definition of money laundering provided by Black's Law Dictionary (1990) states that this is "the term used to describe investment or other transfer of money flowing from racketeering, drug transactions, and other illegal sources into legitimate channels so that its original source cannot be traced" (p. 864). As noted above, many organized crime groups reinvest their illicit proceeds in legitimate businesses specifically to increase their influence and to launder "dirty money." For example, Zill and Bergman (2014) note that "like any cash rich business, drug trafficking organizations invest in the legitimate economy of their own country and use investment advisors in financial instruments available in the international marketplace" (p. 3).