Sunday, August 2, 2015

Low Crime, High Profit Mafia Scam

Before the internet became an international staple with its easily available pornography, there were 1-900 phone numbers or 1-976 phone numbers set up.  Someone would dial up the toll number and reach a menu of choices.   These choices were prerecorded sexual fantasies. Later they developed to become live women or men that would talk out your sexual scenarios.  People would receive huge phone bills from their kids or others who dialed the 900-numbers from within their home.

The Gambino family was heavily involved in the phone sex racket.  In fact, they might have perpetrated the biggest consumer fraud at the time.  The mastermind behind the scheme was Richard Martino, a Made Gambino Soldier in Capo Tore Locascio’s crew.  The combined theft from phone sex which developed into internet porn was a staggering 650 million dollar haul.  This was the gross amount stolen.  Even after you subtract the operating costs for the necessities of doing business, it's still a huge amount of cash.

Richard Martino kicked up 8 million dollars alone to Locascio during his run and another 40 million to other Gambinos.  

Richard Martino and company built a web of 64 different companies to keep their scam going.  

They were hit with so many charge backs that they had to keep moving their processing banks.   They moved to offshore banks to stop Visa fraud detection from shutting them down quickly.  

They eventually bought their own bank and phone company.

Richard Martino gave a straw buyer $3 million to buy Garden City Bank in Garden City, Missouri, so they could process their own credit card payments.  

He also purchased a small telephone company, CassTel, or Cass County Telephone Company, with just 8,000 customers so they could continue their phone “Cramming” scam.

Cramming was what it was called when they would sucker consumers into using one of their now free 1-800 numbers, and then they would place a charge on the user's phone bill for voice mail services and it would be recurring. They did the same thing for their Porn websites.  They would guide people to the sites and then offer a free preview of the websites.  The catch was the user would have to have a credit card to verify their age, but the site told them they would not be charged. They would get each customer for about 90 dollars each in that scam.

They then set up another billing company they named USP&C to place these charges on customer’s bills.  USP&C had their own call center to handle customers who wanted a refund and then they were instructed to only refund less than half of the original fraudulent charge.

They stole another 9 million dollars from a Federally supervised program run by the Universal Service Administrative Co. and the National Exchange Carriers Association by grossly overbilling.

John Gotti was caught on tape praising these young soldiers in a meeting above the Ravenite Club in Little Italy.  He said he wanted more young guys like them inducted into the family.  Guys who could do more than kill.  

The whole scheme blew up, but they all pled out and Richard Martino and Tore Locascio both took pleas for 10 years. They had to give up a lot of cash (which was only a small percentage of their profit) but both are free today.

It was a very profitable crime that was pulled off without a lot of violence.  They did kidnap and beat up one worker in one of their scams that ripped off a million dollars from them, but no guns were pulled and no one died in this line of profitable mafia business.

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