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Monday, December 8, 2008

Tony Soprano Is Going To Love Obama's Infrastructure Stimulus Plan

The stimulus plan proposed by Barack Obama focuses on public infrastructure projects, which have a long history of cost overruns, corruption, and construction incompetence. Public infrastructure construction and maintenance is important, it's just not an efficient use of funds if a quick economic stimulus is desired, or a suitable way to build long-lasting job growth. This misplaced focus is compounded by the "use it or lose it" component to Obama's plan, which will force projects through state bureaucratic systems which are having trouble handling current projects.

There is one group, however, which must be dancing with joy at the prospect of hundreds of billions of federal dollars being thrown at large infrastructure projects: Organized Crime.

For decades organized crime has infiltrated the construction industry, particularly in and around New York City. In 2001, reporter and writer Steven Malanga noted the pervasive influence of the mob, and cautioned against the tendency to believe that law enforcement efforts had eliminated mob control:

Recently, criminologists have proclaimed that organized crime is dead in Gotham. This report is, emphatically, premature. True, over the last decade, prosecutors have at last begun to figure out how to break the mob’s hold; they have thrown some big racketeers in jail and forcibly injected economic competition into mobbed-up industries. What’s more, both Mayor Rudy Giuliani and Governor George Pataki have shown a lot more backbone in fighting gangsters than their predecessors and have gotten real results. But recent indictments in the construction industry are a stark reminder that the mob’s costly, malignant influence persists, so that prosecutors must intensify their efforts to clean up mob-corrupted markets and politicians must be willing to legislate changes that make industries less liable to mob influence. It will take unflagging political will to get the job done.
The fictional television character, Tony Soprano, on the HBO hit The Sopranos, was a caricature of a construction industry mobster, controlling labor at job sites in New Jersey. There was truth to the caricature. Commissions, task forces, indictments, and mass arrests have proven that despite the best efforts of law enforcement, the mob still has a stranglehold on large construction projects:

  • The 1987 Final Report of the New York State Organized Crime Taskforce laid out in gruesome detail the pervasive mob control of construction in New York City. Then Mayor Ed Koch admitted that "he agreed .... that a large segment of New York City's construction industry is dominated by mobsters."
  • In 1988, Genovese crime soldier Vincent “Fish” Cafaro told prosecutors: “With the unions behind us, we could shut down the city, or the country, for that matter, if we needed to get our way. . . . We got power over every businessman in New York. With the unions behind us, we could make or break the construction industry, the garment business, to name a few.”
  • A 1990 article in The New York Times blamed mob control on "secret pacts between the Mafia, union officials and corrupt contractors."
  • In 2000, a 57-count indictment against 38 mobsters charged that the Luchese family reentered the construction business in the mid-'90s, extorting contractors by promising protection from other mob families and by buying off corrupt union bosses.
  • In 2003 Indictments claimed that members of the Colombo and Genovese crime families used extortion and intimidation to exert control over International Union of Operating Engineers' Local 14, based in Flushing, and Local 15, based in Manhattan. Beginning in 1999, prosecutors investigated corruption at construction projects that included the General Post Office building in Brooklyn; Kingsboro Community College and the Marine Park Bridge, also in that borough; and minor league baseball stadiums in Brooklyn and Staten Island. The probe also involved an addition to the Museum of Modern Art in Manhattan.
  • In 2004, indictments were handed down alleging a mob-controlled $10 million fraud in the construction of the Metropolitan Transit Authority's new headquarters.
  • In February 2008, "A massive 80-count racketeering indictment charged 62 alleged mob bosses, underlings and associates of the Gambino, Bonanno and Genovese crime families with a slew of crimes over three decades, including murder, theft of union benefits and extortion at the site in Bloomfield where NASCAR proposed to put an 80,000-seat racetrack."
  • The FBI continues to focus on the "ready-mix concrete" business as a key to mob control. "The Ready-Mix Concrete Industry in New York City is an area of investigative focus by the FBI due to its history of being controlled by the La Cosa Nostra (LCN) through labor racketeering activities. At one time, the LCN effectively regulated the concrete industry through its control of the two unions involved in manufacturing and delivering most of the concrete utilized in Manhattan construction projects."
In 2008, despite years of indictments and law enforcement action, Steven Malanga again noted the continuing control over construction. Malagna pointed to influence over labor unions and the staffing of construction jobs as a key to mob control:

At the heart of the problem are outdated labor practices that leave construction operating like few other businesses. In most unionized industries, for instance, a business hires workers who then join the union. But in construction, labor law allows contracts between builders and unions in which unions have de facto power over hiring - letting a union enlist workers, then send them out on jobs.

Wise guys have used this control of hiring to dominate the industry in New York. Mobsters can place cronies in key positions, sending them to oversee construction sites - where these mob "associates" shake down contractors and enforce mob discipline among union members.

Most of the infrastructure projects to be funded under the Obama plan will utilize union labor (a fact trumpeted by supporters). The good intentions of state transportation officials and honest labor leaders will be tested as never before as the mob is drawn to the unprecedented sums of money being thrown at large construction projects on short notice under threat of "use it or lose it." It may be enough to make Tony Soprano come out of retirement.

1 comment:

  1. Great work, William. I re-posted this at The Union Label Blog giving you full credit, of course.