“La mafia è come la coronavirus—ti prenderà dovunque.” [The mafia is like the coronavirus—it will get you wherever you are.]
— Sergio Nazzaro, spokesperson for the president of Italy’s Anti-mafia parliamentary commission, to the Global Initiative Against Transnational Organized Crime
“This is a perfect opportunity for scams, and some of my former associates on the street are into it right now.”
— Michael Franzese, a former capo of the Colombo crime family, to Forbes
If transnational organized crime had its own stock market, it would have taken a serious beating this month like the world’s legitimate stock exchanges have suffered. Sealed borders are not exactly helpful for smuggling-supply chains of any type of contraband. Nor are locked-down streets of much value to drug dealers. In Bosnia, where vehicle theft is a massive problem, thieves are complaining that it’s harder to steal cars without being detected when streets are quiet and devoid of people—according to the Global Initiative Against Transnational Organized Crime [GI-TOC]. In China, where I traveled two decades ago to document its role as the world’s capital of counterfeiting, GI-TOC reports that Chinese factories on lockdown are leaving criminal enterprises without alternative sources of supply.
But before you shed any tears for the earth’s mobsters, their stock market is climbing again, as new opportunities are emerging, thanks to the pandemic—opportunities that may even be long-term. Think of mafia groups as viruses themselves, always aggressively adapting and morphing to infect societies for power and profit.
Yesterday, GI-TOC, a renowned Geneva-based network of more than 500 organized crime experts, released a valuable report titled “Crime and Contagion: The impact of a pandemic on organized crime.” The paper provides various examples from around the world of how organized crime (OC in law enforcement parlance) is coping and ultimately exploiting the COVID-19 nightmare.
[First, a hat tip to investigative journalist Vladimir Kozlovsky for alerting me to the GI-TOC report. Vlad, a colleague of mine on a current project, has covered about 100 Russian mob trials in U.S. courts over the past four decades.]
In Switzerland—of all places, considering it’s one of the safest countries in the world—GI-TOC cites reports of criminal groups looking to loot properties. How so? “They claim to be from official state agencies and request access to properties with a view to disinfecting the areas of coronavirus.” Meanwhile, in China and Laos, traders have been falsely marketing rhino horn products as “cures” for the virus.
In Rio de Janeiro, GI-TOC has found social media posts claiming that criminal groups have begun to enforce a lockdown at night, and that (if true) suggests that criminal groups will seek to use the pandemic as a way to build their own social legitimacy in what are essentially partnerships with the state. “If the government won’t do the right thing, organized crime will,” reads a painted notice in one of Rio’s slums. In fact, two days ago, the “Red Command” gang leaders who control one slum ordered residents to stay at home, and, according to reporters in Rio for The Guardian, a video circulated on social media this week showing a loudspeaker broadcasting this alert: “Anyone found messing or walking around outside will be punished.”
Retired FBI official Ray Kerr, a former head of the Bureau’s Eurasian Organized Task Force, points out to Forbes that many undeveloped or developing countries in the world “have serious corruption problems that exacerbate their responses to OC groups.” The U.S., he says, “while not totally immune to corruptible elements, is in a much better position to be able to monitor and contain the OC criminal elements throughout the present emergency.”
That said, Kerr worries that American law enforcement agencies may be understaffed in the area of targeting such OC groups—considering the public announcements that police and federal agencies have officers and support staff being quarantined for two-week periods. On the other hand, one thing that may favor law enforcement is that organized crime members may not be as mobile in this environment “and may resort to using electronic methods which are more susceptible to technical surveillance.”
Kerr believes sports is an arena where organized crime is hurting badly now. “The complete cessation of professional and collegiate sports has severely impacted the money supply for the LCN's [La Cosa Nostra’s] lucrative gambling operations. One of the biggest money makers for the LCN was always the annual NCAA tournament. Other criminal operations are surely being impacted by the imposition of curfews and the mandatory closure of non-essential businesses. That certainly would include ‘front’ companies operated by OC groups.”
In countries where organized crime has infiltrated health systems, lifesaving resources are diverted, thus “weakening the response of states to the health emergency when it is most needed,” according to the GI-TOC report. Even the U.S. healthcare system has long been a target for criminal groups, with a 2012 report by Thompson Reuters estimating that as much as 10% of the value of healthcare spent is stolen every year. “With the pandemic, rising demand and limited resources create the perfect conditions for corruption to worsen,” warns GI-TOC.
[Incidentally, in Italy—a recent epicenter of COVID-19—police in 2018 uncovered illegal healthcare industry arrangements between politicians and a mafia clan in a city in southern Italy. That mob was able to take control of the ambulance industry and medical supply provision. In the U.S., in 2017, then-Attorney General Jeff Sessions noted that many health care professionals have themselves made their practices into multimillion dollar criminal enterprises, in effect becoming OC groups.]
In Mexico, where as many as six in every 10 medical products are falsified, expired or stolen, the Jalisco New Generation cartel—one of the most widespread criminal organizations operating in the country—promotes the production of pirated drugs and then forces many pharmacies to sell them, reports GI-TOC. Meanwhile, authorities in Iran, Ukraine and Azerbaijan have intercepted attempts to smuggle essential stocks of medical face masks and hand sanitizer, while in Italy, police have seized counterfeit masks in Milan and Rome.
Earlier this month, INTERPOL coordinated raids that the agency says resulted in 121 arrests worldwide, and the dismantlement of 37 organized crime groups. Seized by law enforcement agents: More than 34,000 items, such as counterfeit masks, substandard hand sanitizers, “corona spray,” “coronavirus packages,” and unauthorized antiviral medications. All of it was being peddled online through some 2,000 websites.
Nonexistent medical products are being peddled by telephone in the U.S. “In the last three days, I’ve been on the phone every half hour with different people pushing everything from coronavirus disease test kits to masks, and all of them full of baloney,” Michael Franzese, a former capo for the Colombo mafia family, tells Forbes. “I know there are scammers behind it because I know what questions to ask. And some of them are definitely connected with some of my former associates.”
Mob-Certified Medical Masks: “On your face the mafia’s false security, which doesn’t protect you, but kills you.”
Sergio Nazzaro, anti-mafia expert in Italy
Franzese is getting the calls, he says, because a ministry he has run for two decades recently partnered with a pharmacist to help send young people with opioid addictions to treatment centers. He predicts that predatory frauds will grow and spread as long as the pandemic continues. “Anytime there’s something like this, organized crime is moving right in—we’re gonna try to fill that gap,” he recalls from his years in the mafia. “We’re gonna make as much money as we possibly can, and we don’t care who we scam. And this is a perfect opportunity.”
Fortunately, Franzese still keeps his ear to the ground on what the mob world is doing, but has zero interest in taking advantage of anyone. He quit La Cosa Nostra in 1995, and has since given talks to young gang members in prisons and juvenile detection centers in five countries to urge them to stay out of crime. (With a fellow former mobster, he also recently launched a promising pizza franchise enterprise, which I wrote about two weeks ago.)
Over the years, Nigerian crime groups have had great success using “advance-fee scams” with emails. Typically, they involve offering a person a share in large sums of money from a bank on the condition that the soon-to-be-victim helps transfer the money out of Nigeria. In South Africa right now, similar frauds are underway involving the coronavirus. The country’s National Reserve Bank released a public warning about scammers claiming to be representatives of the bank “collecting” banknotes they claim are “contaminated” with the virus. (With the country reporting its first COVID-19 deaths today, one can reasonably assume that this scam will gain even more traction.)
What’s more, a series of coronavirus-related phishing scams have emerged in which cybercriminals have impersonated the World Health Organization, to spread malware or steal personal information.
In the FBI’s New York office, Rich Jacobs is the assistant special agent in charge (ASAC) of the cybercrime branch. “There are two broad categories of scams we are seeing related to COVID-19,” he says. “One falls more into the generic fraud world—the solicitation of funds for things like test kits and vaccines and cures, and even investments in companies that are allegedly producing such things. The other piece is a pure cyber attack, involving phishing emails and fake websites, which are designed to install malware on computer, or to get people to provide user IDs and passwords [for accessing their bank accounts, as one example].”
Agent Jacobs has found that a lot of the malware is related to “information resources” about the coronavirus. “You know, ‘Check out this website for more information on how the virus is spreading,’ or ways you can protect yourself, or locations where you can get cures for it.” Are organized crime groups behind it? “I don’t know that we can say that, at this stage. In all likelihood, there are going to be groups engaging in this type of criminal activity, and in other cases it could be just a lone wolf.”
Jacobs asks that if the public (that includes you, cooped-up-at-home Forbes readers) spots suspicious emails or links to websites that look fraudulent to please report them to the IC3—the Bureau’s Internet Crime Complaint Center. That’s where all the complaints are being “collected, triaged and analyzed,” he explains, to determine where the hot points are that need more focus, and to try and identify who is behind them.
“A lot of these complaints are coming in and there’s no single type that dominates the others,” says Jacobs. “As you can imagine, this is a good opportunity to launch these emails and fraudulent websites. There were similar crimes taking place during Hurricane Sandy. It’s about the exploitation of a crisis when people are at their most vulnerable and are more willing perhaps to give out information or click on that link without doing the research necessary. They are more willing to do those things when they are under stress than they are under normal times.”