From Wall Street to Mob Street

["Lisa & Ian Murray" <seamus@xxxxxxxxxxxxx>]

[full article at http://www.iht.com/IHT/TODAY/FRI/FIN/mob.2.html ]
Paris, Friday, September 15, 2000
The Mob in the Markets: FBI Sees Bigger Presence


By Sandra Sugawara Washington Post Service

WASHINGTON - Organized crime's presence on Wall Street is growing and there
are increasing signs that foreign mobsters are trying to penetrate U.S.
stock markets, according to a top FBI official.
Thomas Fuentes, senior chief of the FBI's organized-crime section, said
Wednesday at a House of Representative hearing that organized crime's
involvement in the U.S. financial and securities markets ''has become
significant,'' although it has mainly been limited to low-priced, thinly
traded stocks that are not listed on major stock exchanges.

But he said the FBI was seeing a number of cases that involved
organized-crime groups from Eastern Europe and Russia that were trying to
raise money on major stock markets. Mr. Fuentes said after the hearing that
the FBI and the Securities and Exchange Commission were working on some
international cases that were complicated by conflicting laws and national
jurisdictions.

The suspected mob companies generally have manufacturing facilities in a
number of different countries, making it difficult to check their financial
statements. They often can get accounting companies to give them ''a clean
financial bill of health,'' Mr. Fuentes said.

''But we have inside information those books are fraudulent,'' he said. ''In
some cases, we have reports that the audit teams are being bribed in the
millions or that they are being threatened overseas not to do due
diligence.''

In addition, some countries do not have money-laundering statutes, and in
others the police are prevented from using undercover operations or
wiretaps, which Mr. Fuentes insisted were critical in these cases. So far,
Asian organized-crime groups have shown little interest in the securities
business, Mr. Fuentes said.

''For whatever reason, the Russians and Eastern Europeans are the ones who
are doing it,'' he said. ''They were already heavily involved in major
financial schemes to defraud their state back home. So they decided to apply
those same techniques globally, I guess.''

Few of the American crime families have tried to infiltrate securities
markets overseas, he added. ''This is a generational thing,'' Mr. Fuentes
added. ''The younger members of these groups are more Internet
knowledgeable. They are going to recognize the global opportunities. Right
now the bosses of the crime families don't.''

Representative Michael Oxley, the Ohio Republican who is chairman of the
House commerce subcommittee on finance and hazardous materials, said the mob
push was no surprise. ''I know from my own experience as a special agent in
the FBI that the mob will go where a dollar is being made,'' he said.
''Today that's Wall Street, so it's really not surprising that organized
crime is trying to suck some of the life out of the blossoming securities
market.''

Bradley Skolnik, president of the North American Securities Administrators
Association, said, ''Traditional weapons to sanction firms and brokers who
violate market regulations - such as administrative fines and suspensions -
have little effect on these criminals.'' The only deterrents are criminal
charges and prison, he added.

Richard Walker, the Securities and Exchange Commission director of
enforcement, said one reason the mob began focusing more on the securities
market was that it was ''driven from certain of its traditional havens, such
as garbage-hauling cartels.'' But he said aggressive enforcement actions
have closed some of the most notorious operations fraudulently selling
microcap stocks.