Download Chapter 5 - Bakersfield College

Organized Crime
SIXTH EDITION
CHAPTER
5
The Business of
Organized Crime
Organized Crime, Sixth Edition
Michael D. Lyman | Gary W. Potter
Copyright © 2015 by Pearson Education, Inc.
All Rights Reserved
Delivery of Illicit Goods and
Services
• Organized crime provides a wide array
of illegal goods and services to millions
of customers on a daily basis.
• Some organizations operate worldwide.
 Organized crime also conducts its
business in a legal way.
Organized Crime, Sixth Edition
Michael D. Lyman | Gary W. Potter
Copyright © 2015 by Pearson Education, Inc.
All Rights Reserved
Corruption
• Corrupt relationships between
organized criminals and public officials
must occur:
 At the law enforcement level.
 Between the organized criminals who
infiltrate businesses and the public
officials who regulate these businesses.
Organized Crime, Sixth Edition
Michael D. Lyman | Gary W. Potter
Copyright © 2015 by Pearson Education, Inc.
All Rights Reserved
Pornography
• Soft-Core
 Results from restrictiveness of public
policy that prohibits hard-core
pornography. (Simulated sex.)
• Hard-Core
 Depict more specific and explicit sexual
acts (and private parts of the body).
Organized Crime, Sixth Edition
Michael D. Lyman | Gary W. Potter
Copyright © 2015 by Pearson Education, Inc.
All Rights Reserved
Prostitution
• Any sexual exchange in which the
reward is neither sexual nor affection
• Legal definition: (Something of
monetary value)
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Cash
Promiscuity
Relationship to a sexual partner
Subtlety
Organized Crime, Sixth Edition
Michael D. Lyman | Gary W. Potter
Copyright © 2015 by Pearson Education, Inc.
All Rights Reserved
Prostitution
• Types of Prostitutes
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Streetwalkers
Massage Parlor
Stag Party Girls
Hotel and Convention
Bar Girls
Escort Service
Organized Crime, Sixth Edition
Michael D. Lyman | Gary W. Potter
Copyright © 2015 by Pearson Education, Inc.
All Rights Reserved
Drug Trafficking
• The Distribution Chain
 Importers bring large quantities of
cocaine or heroin into US.
 Importer hires skilled smugglers to
transport the drugs.
 Once drug is in US, wholesaler
purchases drugs from importer.
 Mules or runners – transport drugs for
wholesaler.
Organized Crime, Sixth Edition
Michael D. Lyman | Gary W. Potter
Copyright © 2015 by Pearson Education, Inc.
All Rights Reserved
Drug Trafficking
• Wholesalers receive nearly pure drugs.
• Drugs must be diluted (stepped on)
with chemicals to increase the amount
of the drug.
Organized Crime, Sixth Edition
Michael D. Lyman | Gary W. Potter
Copyright © 2015 by Pearson Education, Inc.
All Rights Reserved
Drug Trafficking
• Drugs, Guns, and Armed Conflict
 Transfer of Arms in “Gray” Market
• Fraudulent documents issued by the
company, may be used to disguise the
actual customer.
• Fraudulent documents may disguise the
military nature of the goods.
Organized Crime, Sixth Edition
Michael D. Lyman | Gary W. Potter
Copyright © 2015 by Pearson Education, Inc.
All Rights Reserved
Drug Trafficking
• Drugs, Guns, and Armed Conflict
 Transfer of Arms in “Gray” Market
• False declarations by the company may
hide the actual identity of the supplier.
• The arms transfer may be disguised as
humanitarian.
• Difficult to do without corrupt customs
officials.
Organized Crime, Sixth Edition
Michael D. Lyman | Gary W. Potter
Copyright © 2015 by Pearson Education, Inc.
All Rights Reserved
Contraband Smuggling
• Seeks to achieve high levels of illicit
profits by avoiding taxes, tariffs, and
duties on certain consumer items.
• US is a primary transit country for
contraband being shipped to other
destinations.
• US is a major source of considerable
contraband.
 Automobiles, alcohol, tobacco products.
Organized Crime, Sixth Edition
Michael D. Lyman | Gary W. Potter
Copyright © 2015 by Pearson Education, Inc.
All Rights Reserved
Counterfeiting Currency
• Typically outside the portfolio of
organized crime
 High risk
 Labor intensive
 Relatively low yield profits
• Half of the counterfeit money is produced
in US.
• Therefore; half the counterfeit money is
produced outside the US!
Organized Crime, Sixth Edition
Michael D. Lyman | Gary W. Potter
Copyright © 2015 by Pearson Education, Inc.
All Rights Reserved
Counterfeiting Consumer Goods
• Counterfeit goods are called knockoffs
and is global.
• Consumer goods that are desirable and
easy to produce are targets of
counterfeiting.
Organized Crime, Sixth Edition
Michael D. Lyman | Gary W. Potter
Copyright © 2015 by Pearson Education, Inc.
All Rights Reserved
Gambling
• The Process
 Writers - write bets
 Bets taken to central office.
 Layoff bank covers extraordinary high
bets.
 Banker is the person that supplies
capital to establish the business.
Organized Crime, Sixth Edition
Michael D. Lyman | Gary W. Potter
Copyright © 2015 by Pearson Education, Inc.
All Rights Reserved
Loan Sharking
• Provides money at a high interest rate
to people who have little choice but to
go to such sources in search of financial
support.
• Because the loan is illegal, default
cannot be sought in a court of law
“unclean hands doctrine”. This leads to
“self-help measures” to collect the
debt.
Organized Crime, Sixth Edition
Michael D. Lyman | Gary W. Potter
Copyright © 2015 by Pearson Education, Inc.
All Rights Reserved
Environmental Crime
• Legitimate business of waste removal
for organized crime.
• Illegal waste disposal.
• Illegal international trade in animal
parts.
• Unsafe shipping of Hazardous Materials.
Organized Crime, Sixth Edition
Michael D. Lyman | Gary W. Potter
Copyright © 2015 by Pearson Education, Inc.
All Rights Reserved
Business Racketeering
• Reasons to seek Legitimacy
 Organized crime groups seek profitable
and safe investments.
 Active participation in legitimate
business enhance the integration of
crime group members with members of
the business community.
Organized Crime, Sixth Edition
Michael D. Lyman | Gary W. Potter
Copyright © 2015 by Pearson Education, Inc.
All Rights Reserved
Business Racketeering
• Reasons to seek Legitimacy:
 Organized crime often supplies
investment capital that would otherwise
not be available from other sources.
 Provides money laundering opportunity.
Organized Crime, Sixth Edition
Michael D. Lyman | Gary W. Potter
Copyright © 2015 by Pearson Education, Inc.
All Rights Reserved
Labor Racketeering
• The use of union power for personal
profit.
• Major activities by which organized
crime realizes illicit profits:
 Sweetheart contracts.
 The misuse of union benefit funds.
 Extortion or “strike insurance.”
Organized Crime, Sixth Edition
Michael D. Lyman | Gary W. Potter
Copyright © 2015 by Pearson Education, Inc.
All Rights Reserved
High-Tech Crime
• Target computer networks:
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Government entities
Public utilities
Industries
Businesses
Financial institutions
Organized Crime, Sixth Edition
Michael D. Lyman | Gary W. Potter
Copyright © 2015 by Pearson Education, Inc.
All Rights Reserved
High-Tech Crime
• “Computer Crimes” (Any crime in which
a computer is utilized):
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Identity Theft & Subsequent Purchases
Trading in “kitty porn”
Arranging Prostitution
Communicating Conspiracies
Soliciting Financial Schemes
Organized Crime, Sixth Edition
Michael D. Lyman | Gary W. Potter
Copyright © 2015 by Pearson Education, Inc.
All Rights Reserved
Human Trafficking
• A significant current crime problem.
• Individuals are usually sold for forced
into agricultural or industrial labor.
Organized Crime, Sixth Edition
Michael D. Lyman | Gary W. Potter
Copyright © 2015 by Pearson Education, Inc.
All Rights Reserved
Trafficking in Women and Children
• Source Countries of Traffickers
 Poor economic and employment
prospects for women.
 Well-defined and organized extant
criminal organizations.
 A culture that emphasizes a subordinate
role for women in society (e.g. Asia,
Middle East).
Organized Crime, Sixth Edition
Michael D. Lyman | Gary W. Potter
Copyright © 2015 by Pearson Education, Inc.
All Rights Reserved
Money Laundering
• Process where criminals conceal or
disguise the proceeds of their crimes or
convert those proceeds into goods and
services.
• Money Laundering Process:
 Placement stage
 Layering stage
 Integration stage
Organized Crime, Sixth Edition
Michael D. Lyman | Gary W. Potter
Copyright © 2015 by Pearson Education, Inc.
All Rights Reserved
Money Laundering
• Methods:
 Bulk movement strategy
 Use of financial institutions
 Use of nonfinancial and commercial
businesses
 Movement through the underground
banking system
 The Underground Banking System
Organized Crime, Sixth Edition
Michael D. Lyman | Gary W. Potter
Copyright © 2015 by Pearson Education, Inc.
All Rights Reserved