eli5:How did the mafia rackets work?


I get how some of them worked, so I am more so asking about, using examples from TV shows and movies, skimming a casino or “busting out” a business? How did they use the unions and construction businesses to make money, other than the traditional, non-mafia, way?

In: 0

Force and fear. You’d be surprised what people will do when they’re scared for their (or their families) lives

One of the big things back in the day was demanding payment for protection. Basically any business, like dry cleaners, pizza parlor, deli, etc would have to pay the mafia money every week or month. If they didn’t pay they would send people in to damage things in the store, beat up the owners etc.

The construction stuff I think was just all around corruption. City would award a contract for a project and there were always extra people brought on. All they essentially had to do was “lean on a shovel” to collect a paycheck.

Lots of ways, all of them illegal. I drove for a trucking company that always hauled heavier than the law allowed. They hauled say 20% heavier than was allowed, and they got paid for the tonnage so it looked like they were hauling more loads and paying more drivers and for more trucks than they actually ran. All that ‘extra’ money was on the books as drivers and trucks that didn’t really exist, and it was just pocketed. It was hundreds of thousands a year.

There was a case where organized crime bosses bought tons of cheese that had been condemned and was useless. They stored it at a warehouse business they owned, doctored documents to show it as legitimate and valuable foodstuff and then burned the warehouse for the insurance on the alleged high value contents.

Mafia members and associates bribed and intimidated Union leaders and other Union members to gain influence and in some cases have their associates hold positions of authority within the unions themselves. Once a labor union is taken over, the mobsters have access to pension fund accounts which they skim from and use for their own business investments. The power they had within the Unions allowed them to extort legitimate businesses by threatening strikes and other labor problems. Being connected to unions allowed the Mafia to gain in-roads into legitimate businesses where they could hide their dirty money.

Small time money comes from protection. You own a small store or business and some ‘associates’ collect insurance on your business not being burned or vandalized. Pay the ‘insurance’ or be driven out of business or possibly mysteriously mugged and severely beaten.

If you don’t pay the construction unions the mafia controls, you don’t get your project built.

To hire those unions, you have to pay more than you would if the mafia wasn’t involved. For instance, windows might cost $100 per, but to get the mafia to let you build, you had to pay $500 for them.

Then the mafia made sure that no other unions could exist, or more likely took over the leadership of the unions (“making” existing leadership “disappear” if necessary).

P.S. And then you had the old dependable ways of making illegal money i.e. loansharking, gambling, drugs, prostitution etc.

Broadly speaking, there’s two ways to establish a racket.

The first is the extortion way. You demand that local businesses pay you a cut of their profits OR ELSE. This could be any kind of business, like a grocery store, restaurant, dry cleaners, or clothing store. During the 19th and early 20th century, the most common way the Mafia and Camorra extorted money from businesses was through the Black Hand. This involved people being sent a letter demanding money and often signed with a Black Handprint, which is where its name came from.

The second way is when a business owner chooses to get involved with organized crime without extortion. This can have some benefits, since you can use the Mafia to drive out competitors and such, though it comes with major strings. You have to pay up whenever you’re asked, since you really don’t want to be in debt to a professional criminal. The movie *Goodfellas* has an example of a restaurant owner, Sonny, and Henry Hill’s monologue explains the many ways money can be wrung out a restaurant, the drawbacks, and how these deals often end:

>Now the guy’s got Paulie as a partner. Any problems, he goes to Paulie. Trouble with the bill? He can go to Paulie. Trouble with the cops, deliveries, Tommy, he can call Paulie. But now the guy’s gotta come up with Paulie’s money every week, no matter what. Business bad? Fuck you, pay me. Oh, you had a fire? Fuck you, pay me. Place got hit by lightning, huh? Fuck you, pay me. Also, Paulie could do anything. Especially run up bills on the joint’s credit. And why not? Nobody’s gonna pay for it anyway. And as soon as the deliveries are made in the front door, you move the stuff out the back and sell it at a discount. You take a two hundred dollar case of booze and you sell it for a hundred. It doesn’t matter. It’s all profit. And then finally, when there’s nothing left, when you can’t borrow another buck from the bank or buy another case of booze, you bust the joint out. You light a match.

I didn’t mention it before, but there are also a fair number of businesses that were fronts for organized crime from the beginning, being founded with the express purpose of laundering money. (That is, make money earned from criminal activities look like it had a legitimate source.)

Back in the day Organized crime figures might also be paying off police and politicians to look the other way.