From Wall Street to Mob Street

Lisa & Ian Murray seamus at accessone.com
Thu Sep 14 15:31:01 PDT 2000


[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.



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