back, created too much heat. Drug smugglers are particularly active in Puerto Rico, and even buy up winning lottery tickets at a premium on the black market as yet another supposed justification for their large incomes.
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Of far greater importance are Swiss banks. The mob ships in huge amounts of money that only such bigtime operators as the "gnomes of Zurich" can absorb. There are many ways funds are laundered through Swiss banks. One is investing, tax free, in blue-chip American firms, as well as playing anonymous and rather dirty tricks in the stock market, such as rigging prices. Another way is the loan-back. In their book,
Dirty Money
, Thurston Clarke and John Tigue Jr., who investigated and prosecuted a wide range of international swindlers and rogues, describe the loan-back thusly:
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 | | A New Jersey gambler bas a half million dollars in profits salted away in a numbered Swiss bank account. He buys a string of car washes for $1 million, financing it with $50,000 down and $450,000 with a legitimate first mortgage. Then be "borrows" the other ball million from bis Swiss bank. Actually be is borrowing bis own money and repays the ball million as though it too is a legitimate loan. That means be bas interest charges. This charade allows him to pay himself interest and deduct the interest at the same time from bis taxes. Thus, be brings bis money back into the country. True, it eventually goes back out of the country. But that is no problem; once be pays off the loan to himself, be can relend it again to himself. The Swiss bank does not necessarily know it is involved with a mobster because the loans go through a number of layers of insulation through dummy foreign companies.
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One New Jersey mobster, Angelo "the Gyp" DeCarlo, was known to have laundered $600,000 through Swiss bank accounts established for him by Gerald Zelmanowitz, a confessed dirty-money business consultant to organized crime. (DeCarlo eventually went to prison for 12 years, but was pardoned in 1972 after doing only 33 months by President Richard M. Nixon. Nixon about that time was himself becoming acutely aware of the problems of laundering money, which as John Dean informed him, "is the sort of thing Mafia people can do," and the president replied thoughtfully, "maybe it takes a gang to do that [launder money].")
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The fact that Swiss banks maintain what are known as "omnibus accounts" at American brokerage houses makes it easy for the Mafia to buy into U.S. business by purchasing anonymously the shares of blue-chip companies. Naturally, if they make a profit they pay no capital gains tax because there are no records of their names in the United States tying them to the stock purchases, and the Swiss banks are bound by their country's laws never to reveal their identities to the American government. The mob can also play hob with margin rules and disguise insider trading simply by buying blocks of stock through different Swiss banks. Then by exercising their proxies, they can determine how a company will be run.
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Laundering is a sophisticated business, and the mafiosi involved in it have come a long way from the crude Black Hand rackets and bootleg wars which got them started. But cash has no name. It is anonymous and it can move around the world without a trace if the person who owns it wants it that way. The mob wants it that way and will pay the operating costs.
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Lepke, Louis (18971944): Syndicate leader
In the 1930s, Louis Buchalter, better known as Louis Lepke, was the foremost labor racket czar in the United States. He was also the only top-echelon leader of the national crime syndicate to be executed, dying the richest man in American history ever to go to the electric chair.
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Only 5 feet 7 inches and of slender build, Lepke usually dressed conservatively, and looked entirely the part of a dignified successful businessman rather than the greatest high-level exponent of violence in the rackets. As a Lepke associate once put it, "Lep loves to hurt people." His behavior was in counterpoint to his very nickname; "Lepke" derived from "Lepkeleh," an affectionate Yiddish diminutive meaning Little Louis (which his mother used). In the real world, the name Lepke was not held in affection but rather in unadulterated fear.
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In the early 1920s, while most underworld characters were attracted to the fast, easy money available through bootlegging, Lepke, as a protégé of criminal mastermind Arnold Rothstein, opted for a field with more permanence. Realizing that if he worked fast and ruthlessly he could have the labor racketeering field in New York sewed up tight, he moved quickly into the lush garment industry. Eventually, through control of the tailors and cutters unions, he milked millions from the field. It was little wonder Thomas E. Dewey referred to him as the worst industrial racketeer in America, and J. Edgar Hoover, belatedly and ever-hopeful of being number one with the press, labeled him "the most dangerous criminal in the United States."
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In the early 1920s, Lepke and another thug, Jacob "Gurrah" Shapiro, with whom he had worked since their teenage days, linked up with Little Augie Orgen, the top labor racketeer of the period. Little Augie concentrated on offering strikebreaking services to garment industry employers and unions, which Lepke realized was merely scratching the surface of the opportunities
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