OC M6A1
CHAPTER NINE
Russian Organized Crime
Abadinsky, Organized Crime 10th ed.
Criminals from the former Soviet Union (FSU) have proven capable of engaging in a virtual smorgasbord of crimes in the United States, some pedestrian, such as drug trafficking, others requiring the technical skills often possessed by FSU immigrants.
In this chapter we will look at organized crime in the FSU and Russian organized crime (ROC) in the U.S.
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WHO ARE THE RUSSIAN ORGANIZED CRIMINALS?
“Russian” encompasses any ethnic group—such as Armenian, Chechen, Estonian, Georgian, Jewish, Latvian, Lithuanian, Tatar, Ukrainian—from the territory of the former Soviet Union, and maybe Albanians.
“Russian OC” identifies those whose origins are the territory of the former Soviet Union.
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ROOTS OF RUSSIAN ORGANIZED CRIME RUSSIA: 1547 -1991
Czarist Russia 1547-1917
Russian Army losses 1905 (Japan) and Germany (WWI) angered the populace and led to rioting in the cities.
1917: overthrow and execution of Czar Nicholas and family.
Communists formed USSR
1922-1953: Brutal Stalinist regime.
Economic stagnation.
1991: perestroika (restructuring); breakup of Soviet Union.
Citizens distrusted all these governments.
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PERESTROIKA / RESTRUCTURING
The Post-1987 economic liberalization:
Awoke the entrepreneurial spirit of capitalism.
Criminal organizations seized wealth and power.
General populace suffered hyperinflation, unemployment, and a drop in standard of living.
The economy shrank despite great natural resource wealth, a well-educated population, and a diverse (but dilapidated) industrial base.
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THE SHADOW ECONOMY
The state mutated into a new entity that incorporates criminal, political, and economic sources of power.
Under communism, managers of state-owned manufacturing diverted goods for sale outside of government control—a shadow economy.
Economic reforms gave managers, in collusion with local officials, the opportunity to purchase their firms.
Criminals provided the capital for the purchases.
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Black Market
THE EVOLUTION OF RUSSIAN ORGANIZED CRIME
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The legal system failed to keep pace with the changes.
lacked property rights law
lacked contract law
lacked business dispute resolution mechanisms
Criminal organizations filled the vacuum.
Private protection services.
“shadow justice:” Do-it-yourself, or hire criminals.
CRIMINALS STRUGGLE TO CLAIM STATE ENTERPRISES AND PROPERTY
Informal agreements allotted territories and functional boundaries.
Criminals became deeply entrenched in the economy.
Criminal experience with corruption and an underground economy thrived in the nascent capitalist environment.
A new form of non-state based authoritarianism.
Citizens live in fear of non-state criminal actors.
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ORANIZED CRIME ACTIVITIES
Protection, dispute resolution, debt collection.
Criminals have access to capital; legitimate businesses do not and must go to the mobsters for it.
Extortionate interest rates.
Criminals have market knowledge and skills.
Trafficking in synthetic drugs, or protecting the trafficking networks.
Nuclear trafficking, human trafficking, labor exploitation.
Women trafficked in Europe, Asia. Abuse. Murder.
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sex trafficking
THREE TYPES OF RUSSIAN OC 1. VETERANS AND SPORTSMEN
Minimal connection to the criminal subculture Poorly paid, badly housed, demoralized military
personnel. Arms trafficking Private security forces A “roof” to protect a businessman from extortion.
Sports clubs and fitness centers: racketeer gangs Powerful gangs emerged, offering protection for a
fee. Conspicuous jewelry, haircuts, leather jackets—
gangster chic. Credentialed.
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THREE TYPES OF RUSSIAN OC 2. ETHNIC-BASED GROUPS
Clan legacy from FSU.
Kinship, friendship, unwritten rules, norms, practices.
Governed by elder’s council and/or senior members.
Associations with transnational OC groups.
Control territory for trafficking routes.
Linked to local crime groups and drug mafias.
Ex-Soviet states don’t arrest; privately support them.
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ETHNIC-BASED GROUP: CHECHENS
Largely Muslim, legendary warriors, hostile to Moscow.
Falsely accused of Nazi collaboration during WWII.
Strong family loyalty; sense of personal honor.
adat requires vengeance to uphold family honor.
Strict hierarchical clan structure
1991: Declared independence; violent conflict with Russian military ensued.
Credentialing: Reputation for fearlessness and violence.
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CHECHENS (CONT.)
Criminals conduct spectacular scams.
The capital, Grozny, became a hub for unsanctioned flights hauling contraband and outlaws.
Middle East, Turkey, central Asia.
Narcotics, “duty free” goods, bandits in hiding.
Mafiosi rob cargo trains traveling through Chechen.
Crimes: arms trafficking, currency and financial document counterfeiting, restraint of trade.
Contract crimes in U.S.: murder, extortion, fraud.
The only group that does not respect vory territories.
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THREE TYPES OF RUSSIAN OC 3. VORY
Professional underworld dates from end of 17th century.
Gangs of itinerant petty criminals formed criminal hierarchy: vory v zakone, “thieves with a code of honor.”
Thrived among prison inmates.
20th century: political dissidents sent to prison camps.
Transformed vory code:
Forbade adherence to conventional lifestyle.
Forbade involvement in politics or collaboration with state (except prison authorities).
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VORY V. ZAKONE
Stalin’s Gulags filled up with political dissidents.
WWII: developed regional corporate-type structure.
vory split into 2 factions, later reunited:
patriots supported efforts to defeat Nazis;
traditionalists were aloof.
Code: abandon family; have no wife or children; loyalty to world of crime; never insult or attack a vory; have no job; learn vory code and language.
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VORY TATTOOS
Tattoos express a coded vory language decipherable only by vory.
Serve as an identity card. Credentialing.
Tattoo shows status in organization hierarchy.
Tattoo shows criminal specialty.
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VORY DURING AND AFTER COMMUNISM
Managers of state-owned enterprises became unofficial entrepreneurs.
To meet quotas, they established informal networks for supplies from other state-owned enterprises.
Gap between government-controlled rice and market price created opportunity for crime.
Managers sold best goods to vory at premium prices; vory extorted money from managers.
When Russia privatize, the corrupt managers and their vory partners purchased the state enterprises.
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VYACHESLAV IVANKOV (YAPONCHIK—”LITTLE JAP”)
High-ranking vor v zakonye with Solntsevskaya Bratva (Solntevo Brotherhood) of Moscow.
1991: Released early from from prison. Went on campaign of extortion, torturing victims; ordered killings, including journalists and police officers.
Vor leadership banished him to U.S., with $1.5 million in a suitcase. Violent leading Russian crime boss in U.S.
1995: arrested for Hobbs Act extortion of immigrant businessmen. 9-year sentence. Released 2007,deported.
2009: Assassinated in Moscow.
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CRIMINAL OR BUSINESSMAN?
Leaders of criminal organizations invested their capital in the businesses they were protecting. They became capitalists and their role changed. They contract with licensed security agencies and hire
lawyers, accountants, and PR professionals. Liberalization and privatization made OC groups legal and
transformed entrepreneurs with illegally gained capital into legitimate businesspersons.
In the 19th century, the U.S. Robber Barons laundered their infamy, separating their names from the methods they used to achieve incredible wealth.
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FROM GANG TO FINANCIAL-INDUSTRIAL ENTERPRISE
Uralmashevskaya: Sports club toughs illegal alcohol and extortion. Invested assets in cash-needy businesses. 1992-3: defeated vory in Ekaterinberg.
Solntsevskaya Bratva: Boss Semion Mogilevich Soviet era: part of Moscow crime group.
Defrauded fellow Jews who were fleeing to U.S. Hungary: owns nightclubs and big part of arms industry. U.S.: operatives launder money and do contract
murders.
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RUSSIAN ORGANIZED CRIME IN THE UNITED STATES
Russian émigrés are urban in origin, well-educated, and industrially and technologically skilled; many are military- skilled, many Ph.D.s in math, physics, engineering.
Not closed off from ladders of upward mobility.
Excel in organized crime.
Jewish émigrés settled in Brighton Beach part of Brooklyn.
Russian Jewish criminals exploit Jewish émigrés.
Enterprise organizational style. Fluid. Not hierarchical.
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THE BUSINESS OF RUSSIAN ORGANIZED CRIME
ROC engages in sophisticated crimes: insurance fraud, Medicare scams, securities-related fraud, identity theft, counterfeiting, and tax fraud. “Daisy chain with a vanishing point:” A classic scam. Taxes due when fuel is delivered to retailer. Pass fuel (on paper) through multiple companies. Final company does not exist. No tax paid.
Blue alcohol (2000): Russian criminals in U.S. got American distilleries to disguise their
product by adding dye, shipping it in huge vats labeled windshield wiper fluid, cologne, mouthwash, or solvent.
In Russia, the dye was removed, vodka flavoring added, and product sold evading alcohol import duties and taxes.
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ROC MEDICARE FRAUD
Mirzoyan-Terdjanian Organization (Armenian American)
2010: 73 members and associates indicted.
Headquarters in NY and LA, operates worldwide.
Stole identities of Medicare beneficiaries and doctors; got space, PO Box, bank account.
Billed Medicare for services not provided.
Medicare shut down clinics, new ones established.
Investigation uncovered 118+ phony clinics in 25 states.
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