MOB ASSOCIATE ACCUSED OF HIDING $3 MILLION IN CHICAGO CONDO DEAL
Federal authorities say a ranking member of a Chicago mob family siphoned $3 million.
An ABC7 I-Team Investigation
By Chuck Goudie
CHICAGO (WLS) --
How do you hide $3 million? Federal authorities say a ranking member of a Chicago mob family siphoned that much through an intricate scheme to avoid paying taxes.
Federal prosecutors are going after Salvatore "Sammy" Galioto the old fashioned way; the maneuver they used 80 years ago to take down Al Capone - tax evasion charges.
Authorities say Galioto tried to hide a $3 million consulting fee from a downtown condo deal. Galioto is part of a family that for 20 years has been into all sorts of deals - real estate, strip clubs, labor unions, health care and gambling.
"Where's the exit?" Galioto shouted to a courthouse deputy Thursday as he walked with urgency out of the Dirksen Federal Building.
The 54-year-old Kenilworth resident had just given up DNA and posted bail on these federal charges that he evaded U.S. income taxes by concealing $3 million in personal income.
Investigators say the scheme involved a Loop high-rise known as the Pittsfield Building; in 2007 Galioto received the handsome consulting for the sale of just nine floors. Instead of reporting the income, they say he filed false paperwork to cover it up and paid no taxes.
The beefy Galioto hails from a family with deep outfit connections.
He and his father - a one-time Chicago policeman - were first listed as mob associates on a Chicago crime commission list nearly 20 years ago.
Mobologists say the Galiotos were aligned with the late Tackets boss Sam "Wings" Carlisi, and that imprisoned mob boss Little Jimmy Marcello is related by marriage to the family.
Galioto and his father William were in the middle of a West Side movie studio groundbreaking in 1995 that was torpedoed once the family's history surfaced. After initially backing the deal, once the family's mob ties were made known, the administration of then-Mayor Richard M. Daley stumbled through damage control.
A few years later in Missouri, Galioto was indicted for Medicare fraud, money laundering and conspiracy. He pleaded guilty and was sentenced to 10 months in prison.
On Thursday after court, neither Galioto nor his attorney would discuss the latest criminal charges.
While it may seem unusual that Galioto was made to give up DNA in tax evasion case, federal prosecutors and Galioto's attorney say it is normal even in white collar cases.
His lawyer Cindy Giacchetti says nothing should be read into that as significant.
If convicted of all counts, Galioto faces 12 years in jail and a $1million fine.
Las Vegas' first female FBI agent was master of disguise
Jane Ann Morrison writes on topics from politics to human interest. Her column appears Thursdays in the Nevada News section.
Tall and slim, with long, blond hair, Deborah Richard could look like an expensive call girl or a bag lady. She could wear an auburn wig and heavy makeup and look like a hooker. She could be the perfect ditz or the perfect waitress.
But it was quick thinking that made Las Vegas' first female FBI agent an undercover success. She started undercover work through assignments at the Huntington Beach Police Department, her first law enforcement job. Once she posed as a model and would-be hooker and convinced a man the wire he felt was a pacemaker. She was in her early 20s at the time.
After the FBI recruited her, Richard came to Las Vegas in 1977 and for two years worked undercover doing surveillance and gathering intelligence in the bureau's intense effort to indict Tony Spilotro, the Chicago mob's watchdog in Las Vegas. She was 27 but looked younger.
"A lot of my work was being a fly on the wall," she said.
She will be on the Mob Museum's Nov. 7 panel discussing what was real in the movie "Casino" about Spilotro, mob associate Frank "Lefty" Rosenthal and Rosenthal's wife (and Spilotro's lover), Geri.
Richard, who has retired to Las Vegas, shocked me Sunday when she said Geri had also been a source for the FBI, which is not the same as a top echelon informant like Rosenthal and didn't require a paper trail.
Richard knew this because she worked with the late FBI agent Al Zimmerman, who worked with both Rosenthals. Richard said sometimes Zimmerman met with both Rosenthals the same night, without each other's knowledge.
While preparing for the museum panel, which includes former Mayor Oscar Goodman, she told him Geri was a source for the FBI. He was stunned, she said.
"Both of them?" he blurted out.
As the attorney for both Rosenthal and Spilotro, Goodman always denied Rosenthal was an informant, even after I confirmed it with multiple law enforcement sources following Rosenthal's death in 2008. The mob lawyer always boasted proudly he never represented a snitch.
Richard didn't know what kind of information Rosenthal provided because she didn't have any reason to go to the informant file and Zimmerman didn't say.
By the FBI's definition and during the time period Richard was undercover, the Top Echelon Criminal Informant Program established in 1961, was to "develop particularly qualified, live sources within the upper echelon of the organized hoodlum element who will be capable of furnishing the quality information" needed to attack organized crime.
Calling the Rosenthal's marriage tumultuous is an understatement, as the movie showed quite well. "I'm pretty sure she cried on his (Zimmerman's) shoulder," Richard said. Geri also provided information about her husband's activities.
Rosenthal was secretly running the Stardust and the skimming operation while supposedly holding midlevel jobs there. Holding titles like entertainment director and food and beverage director, he was controlling Argent Corp. resorts — owned by San Diego businessman Allen Glick — the Stardust, the Fremont, the Hacienda and the Marina. The money skimmed traveled back to mob families in the Midwest.
Other members of the panel, besides Richard and Goodman, will be former FBI agent Marc Kasper, retired television reporter Gwen Castaldi and former state gaming regulator Jeff Silver. Tickets for "The Real Story Behind 'Casino'" are $25 for the public.
As the three key players are dead, it should be intriguing to see how much more is divulged that evening.
"I don't think I'm going to be divulging any secrets (about investigative techniques) they haven't seen on TV," Richard laughed.
One example of her quick thinking involved seeking Spilotro out at the Las Vegas Country Club with its tight security. She dressed in a cute tennis outfit and told the guard she was playing tennis with a member as her ruse to get into the property. Inside the country club, she told the hostess she was meeting someone and might want to join as an associate member.
"She was more than happy to show me around and then let me wander about to check everything out," Richard recalled. "It worked. I had the run of the place and was able to observe our target and his friends for a little while."
Richard would go to restaurants to watch Spilotro and Rosenthal. "The bureau wouldn't pay for me to have dinner, it's too expensive," she said over sliders at the Chicago Brewery.
Part of her observations were used to obtain wiretaps in the Spilotro investigation. She also was among the agents who listened to those wiretaps and monitored minimization. Agents were supposed to turn off the tape if mobsters were talking noncriminal activities or something involving attorney-client privilege.
During the federal wiretap suppression hearings, Goodman attacked her on the stand about minimization, trying to make it seem Spilotro was a victim of wrongdoing by the FBI.
The wiretaps held up and were admitted in the trial, which ended with a mistrial. Spilotro and his brother were murdered in 1986 and buried in an Indiana cornfield before the next trial.
Richard described Spilotro as "volatile. I never saw a guy with as quick a temper." The FBI suspected he killed at least 22 people, but he was never convicted of any murder.
Spilotro was known as "Tony the Ant" because he was about 5 feet 4 inches tall. Richard was 2 inches taller and a knockout. Although his wife, Nancy, was petite and shorter than he was, in his extracurricular activities, he liked tall showgirls, according to Richard.
"I'd follow him into casinos, see who he was meeting with, watch the relationship he had with Rosenthal. I couldn't get close enough to hear what they were saying. I had to keep a distance, I was too afraid he (Spilotro) would hit on me. I wouldn't take a hit for the team," she said.
Plus, she has a distinctive voice, a combination of California and New England. She could change her looks, she said. "You can't change your voice."
In 1979, she transferred to Boston to work undercover in organized crime cases.
Some of her efforts are detailed in the book "The Underboss" about how the FBI obtained wiretap information and convicted members of a Mafia family in Boston headed by Gennaro Angiulo. Wiretaps there included discussions of crimes committed by James "Whitey" Bulger, the subject of the new movie "Black Mass" and another top echelon informant.
Are Japan's crime clans going out of business? Tea with a yakuza.
Often romanticized for a strict chivalrous code, the yakuza still operate openly in Japan, handing out name cards at meetings. But as public opprobrium rises, their numbers are falling sharply.
By Gavin Blair, Correspondent OCTOBER 11, 2015
TOKYO — Like many Japanese business leaders, Masatoshi Kumagai worries about the future. Industry conditions are changing and he must globalize. Finding capable people is difficult. Regulations are proliferating. The younger generation lacks that hungry spirit that rebuilt postwar Japan.
Yet as Mr. Kumagai eyes a security camera screen with an occasional intense, steely look, it becomes clear his is no typical corporate office.
Kumagai is in fact a yakuza crime boss, part of Japan's gang underworld. For decades, the yakuza have been seen in romantic terms for their strict codes and secret ties to business and finance, while occupying a semi-legal grey zone, mostly out of the reach of Japanese police and courts.
But today, Kumagai says, the yakuza face “the biggest change in the postwar period" as public sentiment turns against them and anti-gang laws challenge their existence.
His office exudes a yakuza style: Rather than uniformed, demure young ladies, two smartly dressed, stocky young men whose every move bespeaks a ritual language serve the green tea and wagashi sweets.
The emblems on the tea cups belong to the Inagawa-kai, the third-largest syndicate of crime clans, one that the US Treasury Department in 2013 designated a transnational criminal organization.
The Kumagai-gumi, with Kumagai at its head, is a member of that syndicate.
Yakuza members falling sharply
To the outsider, the yakuza appear to operate with a startling openness. They have offices, name cards, pay rent and mortgages, and sport well-known brand emblems.
But their numbers are dropping sharply, from a peak of 180,000 members in the 1960s to about 53,500 in 2014, according to the national police agency.
The Inagawa-kai has nearly 3,000 members, and a similar number of associates. The group formed in 1949 in Atami, a coastal resort 60 miles southwest of Tokyo. That postwar period saw the yakuza transformed from street gangs into major enterprises with interests and influence that extend deep into business and politics.
Membership of ninkyo dantai or “chivalrous organizations” – as they call themselves – is not illegal. They are protected by the freedom of association guaranteed in the Japanese constitution, and by a tacit public acceptance that crime, like almost everything in Japanese society, is better organized than disorganized.
But that tacit understanding has been breaking down.
One watershed came in 2007 with the murder of a public official, the mayor of Nagasaki, by a senior member of the largest syndicate, the Yamaguchi-gumi. (The Yamaguchi-gumi made headlines last month when it split into two factions.)
Since 2011, a series of laws at the prefecture level have exerted a slow but sharp squeeze on the yakuza that have begun to immobilize them through a variety of civil actions and law suits. Members are unable to open bank accounts, get life insurance or rent property, notes Kumagai.
One crucial change is that bosses are legally responsible for the actions of all of their underlings. Bosses have long been liable for violence perpetrated by gang members. But upper echelon bosses can now be found liable under civil law for financial damage suffered by victims.
Pushed back out of legitimate enterprises
The first cases resulting from these legal reforms are already emerging.
In January, a restaurant manager in Nagoya sued Yamaguchi-gumi godfather Shinobu Tsukasa for the return of seven years of protection money and damages amounting to approximately $270,000.
Last month the owner of two pachinko parlors – gambling halls that operate in a legal grey area – in the city of Kitakyushu filed suit against three bosses of local Yamguchi-gumi rival, the Kudo-kai, for the return of $330,000 in protection money paid over 15 years.
Back in the 1980s, syndicates expanded into real estate, the stock market, and other legitimate enterprises. But they are being pushed out of these sectors, according to Kumagai.
"As the country and economy changes, so the underworld can't remain unchanged,” he says. “We've been through the bursting of the [economic] bubble, the Asian currency crisis [1997] and then the aftermath of the Lehman Brothers' collapse. Reading and responding to those changes is the job of bosses; those organizations that can't adapt will cease to exist.”
Japan's post-1980s economic swoon hasn't been all bad. Yakuza made money from "cleaning up" bad loans, distressed assets and bankrupt companies. "Dispute resolution" remains a core activity, partly due to Japan's notoriously slow and expensive legal system. "We can get things done quicker," says Kumagai.
Kumagai's own entrance to the yakuza world came as a teenager, following what he calls a troubled upbringing. He had wanted to join the police force. But then he took revenge on two members of a gang from another area who had badly beaten an older friend. "I was scared but I went after them even though they were five years older than me and one was carrying a samurai sword," he says.
He wounded two gang members, and served an 18-month sentence. Then a local senior yakuza decided to recruit him.
"Even after I refused a number of times, they kept on. They took me out to the kind of bars I had never been to. They dressed well, had beautiful women around and drove nice cars. They bought me new clothes because they saw I was always dressed in the same ones. Looking back now, I realize they were reeling me in like a fish on a hook."
Too late to start a new life
He joined in 1980 with the intent to quickly leave. “I thought if I left by 30, I could still start a new life."
By 28 he was head of the local clan, though his rising trajectory within the Inagawa-kai took a hit when he turned up on the wrong side of a succession dispute 10 years ago.
Despite the Inagawa-kai being designated an international organization, Mr. Kumagai believes Japan's crime clans remain too parochial.
"With the restrictions we are facing in Japan, we have to make connections with the underground economy in other countries. I tell my subordinates that they need to think more globally," says Kumagai, who now works to forge links with counterparts in Asia.
Like other yakuza, Kumagai defends his organization as helping to maintain order on Japan's famously safe streets by eschewing petty crime and imposing rules on the underworld. Should the authorities succeed in their clampdown and wipe them out, there will be consequences, he warns.
"Other groups who do what we do would emerge, but without the rules and discipline we have. It's already happening with some of these foreign criminals and 'hangure' [street and motorcyle gangs, some of which have been designated as ‘semi-yakuza’]."
"Outlaws," he adds dismissively in English.
