Saturday, September 22, 2007

Robert Friedman Red Mafiya Jewish Mafia or Russian mafia 2/6

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A few days after Agron was found in a pool of his own blood, his driver, Boris Nayfeld, strolled into what had been Agron's modest office at the El Caribe Country Club in Brighton Beach. He was there to begin his new job as the driver and bodyguard of the man who bene­fited the most from the execution of Evsei Agron: Marat Balagula, the new godfather of the Russian mob.
Virtually everyone in law enforcement who has had anything to do with investigating the Russian mob believes Balagula ordered the hit, but he has always denied it. "Evsei used to come to the Odessa [restaurant] and pick fights," Balagula claims. "Sometimes ten or twenty people would get into a brawl. Maybe Evsei was killed by someone he fought with before."
Balagula had been serving as Agron's consigliere for sev­eral years, and while he was always careful to pay Agron the
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respect due a "great man' he had his own ideas. All along, he had been forging a rival criminal syndicate of his own, and as Balagula's star began to rise, explains a former insider, Agron "wanted a piece of the action. Because of his status, Agron expected something." What Agron got, of course, was two bullets in the head.
Within a few months of seizing power, Balagula demon­strated that he was the very model of a modern don. Unlike Agron, who had been a thuggish neighborhood extortionist, Balagula was a brilliant, coldly efficient crime boss who was soon not only conspicuously enjoying the lushest version of the American dream but bestowing his largesse on mem­bers of the small Russian emigre community.
"Marat was the king of Brighton Beach," recalled a for­mer employee. "He had a Robin Hood complex. People would come over from Russia and he'd give them jobs. He liked professional men. Guys came over and couldn't prac­tice medicine or use their engineering degrees. He sought them out. He was fascinated with intellectuals. He co-opted them. He put them into the gasoline business, he put them into car washes or taxi companies. He'd reinvest his own money in their business if they were having trouble. He had a heart." Such generosity was, of course, also good for building loyalty. It seemed that everyone in Brighton Beach owed him a favor, and he wasn't hesitant about col­lecting on them.
Though Brighton Beach residents had good reason to be tight-lipped about Balagula, tales of his enormous wealth began circulating in cafes and over dinner tables: he tried to purchase an island off the coast of South Africa to set up a bank for money laundering; he circled Manhattan on luxury yachts, holding all-night drug and sex orgies; he rode in a custom stretch limo, white and immaculate, with a black-liveried chauffeur and stocked with ice-cold bottles of
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vodka. "Marat throws around diamonds the way we throw around dollar bills," Joe Galizia, a soldier in the Genovese family, enviously told an associate in a conversation taped by police.
"Everybody in Brighton Beach talked about Balagula in hushed tones," says Ray Jermyn, former chief of the Rack­ets Bureau for the Suffok County DA in New York. "These were people who knew him from the Old Country. They were really, genuinely scared of this guy."
Marat Balagula was born in 1943 in Orenburg, a small Russian town, at the height of World War II. His mother, Zinaida, fled with the children from their home in Odessa as the German Wehrmacht swept across the Russian steppes. Marat's father, Jakov, was a lieutenant in the Red Army; Balagula claims that he was with one of the armored corps that stormed Berlin during the last desperate hours of the war.
In the harshness of the Stalin era, the Balagulas led a comfortable, middle-class life. Jakov worked in a factory manufacturing locks, as did his wife. Young Marat, an average high school student, was drafted into the Soviet army at the age of nineteen and served as a bursar for three years, after which the party assigned him to manage a small food co-op in Odessa. Determined to get ahead, Marat attended night school, receiving a diploma as a teacher of mathematics and then a business degree in eco­nomics and mathematics. Like many ambitious Russians with a capitalist predilection, he promptly plunged into the country's flourishing black market. He quickly learned to attend to the demanding appetites of the apparatchiks, making certain the choicest meats and produce was diverted to them.
He was only twenty-two years old when he was
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rewarded with a prestigious job as a bursar on the Ivan Frankel, a Soviet cruise ship that catered to foreign tourists. According to American law enforcement sources and Brighton Beach colleagues, party bosses slipped Balagula currency, gold, valuable Russian artifacts, and stolen art­work to sell to the tourists or to fence in Europe. "It was a good job," Balagula recalls. "I got good money. My salary was in dollars and rubles. I traveled to Australia, France, England, and Italy. The KGB gave me visas, no problem. I brought back lots of stuff: stereos, cameras. I was not middle-class. I was upper-middle-class. I had a nice apart­ment in Odessa, a dacha on the Black Sea."
He met his wife, Alexandra, at a friend's wedding party in 1965 and married her the following year. Because she didn't like his traveling, in 1971, after five years at sea, he got himself appointed manager of the largest food co-op in the Ukraine, a huge promotion that allowed him to rise to even greater heights as a black marketeer. On his thirtieth birthday, the flourishing Balagula threw himself a gala party at his dacha in the sunny Crimea. Many of the region's elite were in attendance—including Mikhail Gorbachev, then a young regional party boss, who posed for a photo with Marat and his wife. Balagula later bragged to his Brighton Beach mob associates that Gorbachev was on his pad, a claim that seems doubtful: even then, Gorbachev was a stern reformer. It would have been impossible, however, for a Soviet party boss to avoid dealing with black marke­teers in some way, since they played such an integral role in the economic life of the country.
The fact that Balagula was Jewish apparently never hin­dered his career, even though government-sponsored anti-Semitism surged after Israel's victory over five Arab armies in the June 1967 Six Day War. "I never felt anti-Semitism," Balagula says, though he admits he was only nominally a
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Jew: he never attended Odessa's lone synagogue and was ignorant of Jewish history and religion. "Jews had some of the best positions in the country. They were the big artists, musicians—they had big money."
When he decided to journey to America, therefore, it was not because he suffered as a Jew, though he concedes, "I used that as an excuse when I applied for my visa." Although he was leading the charmed life of a high-flying black marketeer, he decided to leave it behind when "I saw with my own eyes how people lived in the West," says Bal-agula. "This pushed me to move." A business associate explains: "Marat said he read about capitalism and knew he could do well over here."
On January 13, 1977, Balagula, his wife, and their two young daughters, together with his elderly parents and younger brother, Leon, moved to Washington Heights in upper Manhattan, where a small enclave of German Jews who had fled from Hitler lived precariously among drug dealers and boom-box din. Balagula attended English classes arranged by a Manhattan-based organization that settles Soviet Jews, which then found him a job in the gar­ment district. He worked for six months as a textile cutter for $3.50 an hour, claims Alexandra, his wife. "It was hard for us, with no language, no money," she says.
Balagula's fortunes improved markedly when he relo­cated his family to Brighton Beach and he started to work for the infamous vor Evsei Agron. "Everybody knew his name," Alexandra cheerfully recalled. "He was so much in the [Russian] newspapers."
Agron, it turned out, was no match for the ambitious Balagula. While Agron's technical expertise didn't go beyond seeking sadistic new uses for his electric cattle prod, Balagula wanted to lead the Organizatsiya into the upscale world of white-collar crime, and with the experi-
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ence he had gained in the Soviet Union, he developed a business acumen that put him in a class by himself. Sur­rounded by a cadre of Russian economists and math prodi­gies at the Odessa restaurant, he acquired a knowledge of global markets that enabled him to make millions in the arcane world of commodities trading. He also energeti­cally cultivated the Italian mobsters he met as Agron's consigliere. After Agron was executed, Balagula organized his followers in a hierarchy, much like the Italian Mafia, and before long, he succeeded in transforming the Orga-nizatsiya into a multibillion-dollar-a-year criminal enter­prise that stretched across the tatters of communist Eastern Europe, Africa, and Southeast Asia. Ultimately, however, it was Balagula's spectacular success in the gaso­line bootlegging business — a scheme that would report­edly earn him hundreds of millions of dollars and an honored position with the Italian Mafia—that would usher in the first Golden Age of Russian organized crime in America.
Balagula's bootlegging career began modestly enough. Within just a year after arriving in New York, he managed to gain control over fourteen gas stations. He then formed two fuel dealerships, and bought gas from a corporation owned by the Nayfeld brothers. This transaction was the founda­tion for an ingenious way to avoid paying billions of dollars of gasoline taxes.
Gasoline bootleggers, mostly Turkish and Greek immi­grants, had been operating in New York since the early 1960s. They simply collected taxes at the pump and instead of turning the money over to the government, pock­eted the cash and disappeared before the IRS caught on. "They'd make their $600,000 and go back and buy an island and you'd never hear from them again," says Sam
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Racer, a Russian-born attorney who has represented Balag-ula. "It was a nice scam until it got into the hands of the Russians. They bought Rollses and Ferraris and walked around Atlantic City with stacks of hundred-dollar bills, and suddenly the IRS realized they were getting fucked for hundreds of millions of dollars."
What the Russians had discovered was a way to expand the scam into the biggest tax heist in U.S. history. Prior to 1982, thousands of individual gas stations in New York State were responsible for collecting state and federal taxes—amounting to as much as 28 cents a gallon—and then passing them on to the relevant authorities. Because of rampant cheating, however, state lawmakers decided that year to shift the responsibility to New York's four hundred gasoline distributors, who had to assess the fuel before it was moved to the stations. But clever Russians like Balagula found in fact that the new tax law presented opportunities for even larger scores. They would first set up a welter of phony distributorships. One of these com­panies would then purchase a large shipment of gasoline and, on paper at least, move it to another distributor through a so-called daisy chain. The transactions were car­ried out quickly and generated a blizzard of paper. One of the dummy enterprises was designated as the "burn com­pany," the one that was required to pay the taxes to the IRS. Instead, the burn company sold the gas at cut-rate prices to independent retailers with a phony invoice stamped "All taxes paid." The bootleggers pocketed the money, and the burn company— no more than a post office box and a corporate principal, usually a Russian emigre liv­ing in a rooming house on Brighton Beach Avenue—disap­peared. By the time the IRS came looking for the taxes due, the revenue agents were buried under an intricate paper trail that led nowhere.
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Balagula proved a master at this scheme, and he, along with many other Russian groups, began amassing enormous sums from it. Through their control of gasoline distributor­ships in the New York metropolitan area and elsewhere, the Russian mobsters evaded as much as $8 billion a year in state and federal taxes by 1985.
Balagula's fraudulent fuel syndicate received a major boost from the involvement of Power Test, a midsize, $160-million-a-year gasoline company on Long Island that was itself being driven into bankruptcy by independent stations selling cheap or bootleg gas. (Indeed, by 1980 half of all unbranded gas sold on Long Island was bootlegged, destroying the livelihood of many honest businessmen who couldn't afford to compete against cut-rate prices.) Rather than see his company fail, Power Test CEO Leo Liebowitz decided to join the bootleggers. According to court testimony and interviews, he instructed two Power Test executives, John Byrne, a district sales manager and former New York City police sergeant, and Robert Eisen-berg, the company's in-house counsel, to buy bootleg gas. Byrne and Eisenberg then set up bootlegging companies with Balagula that would sell "cheap" gas exclusively to Power Test.
The plan worked—so successfully, in fact, that Power Test soon had enough cash to begin negotiating with Texaco to purchase Getty Oil, one of the fabled Seven Sisters. (Because of antitrust problems, Texaco was being forced to sell the East Coast marketing operation of Getty, which it had acquired in 1984.) According to a Power Test insider, Liebowitz had joined the bootleggers not merely to save his company but also because of his aspirations to become a major player in the oil business. "Leo started talking to Tex­aco in the winter of 1983," recalls the insider. "If he was going into receivership, he couldn't talk to Texaco. He had
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to keep the company solvent. So he did deals with gasoline bootleggers. He did lots of those deals."
In 1985, Power Test concluded the deal for Getty, and Liebowitz—triumphant atop the $1.3 billion company that adopted the lustrous Getty name—was lauded in Forbes as one of the most brilliant businessmen in America. "The sky's the limit," Liebowitz told Newsday. "We are the largest independent in the United States and we are just getting started!"
Six years later Getty became the first major oil cor­poration in recent history to be convicted of gasoline bootlegging. John Byrne and Robert Eisenberg escaped prosecution by becoming government witnesses. Two senior company executives were convicted and sentenced to jail terms, and Getty was fined $400,000. Liebowitz, to the surprise of many, was never indicted. Getty's role in the scheme was uncovered by the Long Island Motor Fuel Task Force, a group of federal, state, and local prosecutors and investigators formed to combat gasoline bootlegging. "Gasoline excise tax evasion is no longer a local problem. It's a national problem," said James Rodio, a tax attorney with the U.S. Justice Department and a member of the task force. "Cheating of this magnitude has to stop," U.S. District Court Judge Leonard Wexler chided during sen­tencing.
By this time, however, the money from bootlegging had spread far beyond the gasoline industry. It was being used, New York and federal officials feared, to corrupt politi­cians, labor unions, and law enforcement itself. Consider the revelations of Lawrence Iorizzo, a six-foot, 450-pound, self-confessed bigamist who became a government infor­mant after he was indicted for stealing $1.1 million in gas taxes in 1984. A New York gasoline company executive who is credited with inventing the daisy chain, Iorizzo ran
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an enormously successful bootlegging empire in the early to mid-1980s with the help of Michael Franzese, the vicious "Yuppie Don" of the Colombo crime family and a consor­tium of Russian and Eastern European gangsters. In sworn testimony before the oversight subcommittee of the House Ways and Means Committee, Iorizzo charged that one of his former partners, Martin Carey, had skimmed millions of dollars of tax money from his Long Island gas stations and illegally channeled it into the campaign treasury of his older brother, Hugh, then the governor of New York. Martin Carey escaped prosecution because he had been granted immunity by testifying in another case.
Incredibly, Iorizzo's charges of political corruption were never investigated. In 1987, when Jeremiah McKenna, the counsel to New York's Crime and Correc­tion Committee, called for a hearing to probe Iorizzo's allegations, he was forced to resign by New York governor Mario Cuomo, who had been Carey's running mate as lieu­tenant governor in 1978. Cuomo complained that McKenna, a respected Republican investigator, was spread­ing false and malicious stories. Iorizzo had previously testi­fied to Congress that he had made political contributions to Governor Cuomo's 1984 campaign from some of these bootleg funds, asserting that he had done so at the "direc­tions of people above me."*
Though Iorizzo's allegations about political corruption were ignored by prosecutors, his court testimony did help break up the powerful Russian-Italian bootlegging combine
*NBC-TV national news later reported that it was Franzese who had ordered Iorizzo and the heads of the Russian consortium to send checks for $5,000 drawn on their shell company accounts to Cuomo's campaign. In all, $25,000 was diverted to Cuomo in this way. Confronted with this revela­tion, Cuomo replied that it was impossible to do due diligence on each and every political donation.
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led by Franzese, which paved the way for Balagula to gain uncontested control of the operation. By 1985, Balagula was well on his way to becoming the undisputed king of American bootleggers: his domain was a self-contained, vertically integrated behemoth that included oceangoing tankers, seven terminals, a fleet of gasoline trucks, truck stops (including even their greasy spoon diners), and more than one hundred gas stations, all operated by fiercely loyal Soviet Jewish emigres. Balagula even negotiated to take over oil-refining terminals in Eastern bloc countries, which would process fuel waste products known as derivatives, then sell shiploads of the toxic by-products in North America. Balagula's headquarters in New Rochelle, New York—which ironically stood next to an FBI building — looked like a scene in a Stanley Kubrick black comedy. Russian secretaries wearing identical zebra-print dresses and fur hats worked at computer terminals while video cameras scanned the office. "The obsession with security," says one of Balagula's associates, "came from the paranoid Russian personality that one develops growing up in a police state."
Flush with cash, Balagula began to run his empire like a profligate oil sheik. Joe Ezra, a former attorney for Balagula, once accompanied the Russian godfather and his retinue on an epicurean "business trip" to Europe, to broker oil deals with Marc Rich, the billionaire fugitive commodities trader. The group paid visits to Cartier shops in every airport along the way, spending thousands of dollars on "shit like little leather-bound address books that cost $300 each," Ezra remembered. Often, they would stop in a city and take over entire whorehouses and go on food binges. "They'd go to meals in Germany with ten people, and when they fin­ished, somebody would say, 'I'm still hungry,' and [Marat] would order a second meal for everybody." Most of the
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food would be thrown away. "If a bill was $1,500, the tip would be $1,500. If a guy would come over and sing a song, Marat would give him a hundred-dollar bill. I remember saying to myself, 'These people need intensive psychiatric help.'"
Balagula was also a compulsive gambler, and the joke in Brighton Beach was that you would know how he did at the craps tables over the weekend by the price of gas at the pump on Monday. "Marat says he's got a photographic memory, but he don't," grumbled a powerful Genovese crime family figure who went to Atlantic City with Balagula after the Russian boasted that he could count cards. "We lost $20,000. I told Marat, 'How the fuck do you remem­ber anything?'"
Befitting his new status, Balagula bought a $1.2 million home on Long Island, to which he relocated his family from Brighton Beach. His reputation as Little Odessa's godfa­ther, however, was met with consternation by his new neighbors and caused his younger daughter a bit of grief in school. "I love my dad very much. My father's my world to me," Aksana, a sullen, curly haired, nineteen-year-old optometry student told me in a 1992 interview. "There was a lot of harassment, a lot of fights," she recalled. Once, after a classmate called her father a gangster, "I just got very upset and I threw a book at his head. They [the school] made me see a psychologist."
As Balagula's wealth grew, so did the violence in Brighton Beach. At least fifteen unsolved homicides were attributed to his turf wars with rival Russian mobsters. "Marat ordered many murders. I know1." insisted an Italian mob boss. Many of the gangland-style slayings were brazen, broad-daylight shootings carried out in Brighton Beach restaurants in front of numerous witnesses. "These
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guys are worse than the [Italian] wiseguys," says Ray Jermyn. "They have no hesitation at all to whack some­body. They are cowboys."
Balagula may have employed enough wild, Uzi-wielding Russians to reign supreme in Brighton Beach, but he didn't dare fight with the Italians. When a Mafia associate told John Gotti in 1986 about the Russian-dominated gasoline bootlegging scam, the "Dapper Don" was heard to reply over a government bug, "I gotta do it right nowl Right now I gotta do it!" He wasn't alone in coveting a share of this business: heads of four of the five New York Italian Mafia families imposed a 2-cents-per-gallon "family tax" on the Russian bootleggers, and the levy became their second largest source of revenue after drugs, worth an estimated $100 million a year. Genovese soldiers guarded the family's take at Balagula's terminals in Westchester, while Christo­pher "Christie Tick" Furnari, then the sixty-eight-year-old underboss of the Lucchese crime family and one of the most powerful mobsters in the country, got Brooklyn, Queens, and Staten Island.
Balagula's closest aides had argued to keep the Italians out of the bootlegging operation. Marat had "capable guys," said a key associate. "They weren't afraid of fights." But Balagula believed he could never win a war with the Italians, so he invited them in, confident he could outsmart them into accepting less than they had agreed upon. Marat "didn't realize how insidious they were," says the associate. "He fell for their charm. He had watched too many American movies.
"The LCN didn't want to know the ins and outs of the gas business," but simply wanted their cut, the source asserts. "The LCN reminded Balagula of the apparatchiks in the Soviet Union. He thought as long as he gave them something they'd be valuable allies" with their political
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connections and muscle. "Then all of a sudden he was at risk of being killed if he couldn't pay to the penny."
Whatever it cost him in lost revenue, Marat was grate­ful to have the Italians on his side. According to a mob source, their new relationship enabled him to forge a pro­tective alliance with the Genovese and Lucchese families against the Colombo family's Yuppie Don, Michael Franzese. One of Franzese's crew, Frankie "the Bug" Sciortino, had been going around with a Gotti soldier "shaking down a bunch of Russian bootleggers," says Jermyn. "They would just go into places in Brooklyn and make them pay $25,000 a clip for protection, or else they'd use a ball peen hammer on them. The Russians are scared to death of the Italians. They scored over half a million dollars by shaking these guys down."
At around the same time, Franzese himself "tried to hustle Marat," says a well-placed Genovese underworld fig­ure. "I showed up at a restaurant, and two of Franzese's guys was sitting with Marat. I said, 'Who are these guys?'"
"They are not with me," Balagula said.
"The next time I saw Michael [Franzese] and men­tioned Marat, his face went white," the Genovese gangster says with a laugh. "Christie Tick had put out the word that Marat was under his protection."
When in 1986 the Brooklyn office of Balagula's com­pany Platenum Energy was riddled with Uzi submachine gunfire, killing one of Balagula's bodyguards with eight shots in the chest and two in the head, it was the Italians who came to Balagula's aid. According to law enforcement sources, the shooters were two Russians, Michael Vax and Vladimir Reznikov, who were disgruntled because Balagula had sold them invalid state gasoline distributorship licenses. (Balagula told me the shooting was an attempted robbery.)
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A short time after the Platenum Energy incident, Reznikov, an infamous Brighton Beach hit man, stuck a gun in Balagula's face outside the Odessa restaurant and demanded $600,000 and a partnership in his bootlegging empire. Balagula was so frightened by the assault that he suffered a heart attack but refused to go to the hospital. Instead, he persuaded his doctors to set up a makeshift intensive care unit in the bedroom of his fortresslike man­sion, whose sandstone spires bristled with gunmen. "When we went to Marat's house, I remember seeing Marat in bed hooked up to all kinds of machines," Anthony "Gas Pipe" Casso, a Lucchese mob boss turncoat, recalled.*
On June 13, 1986, Reznikov was lured to the Odessa to parley with Balagula, who was actually in California conva­lescing. When Balagula didn't appear, Reznikov strolled back across Brighton Beach Avenue and climbed into his new brown Nissan. Suddenly, Lucchese soldier Joe Testa emerged from behind a car and pumped six bullets from a .380 automatic handgun into Reznikov's arm, leg, and hip. As the grievously wounded Russian grabbed for his own weapon, Testa fired a fatal shot to his head. "After that," Casso said, "Marat did not have any more problems from any other Russians."
However greatly the Russians may have feared the Ital­ian Mafia, they had little regard for American law enforce­ment, manipulating the FBI as easily as they had the apparats in the Soviet Union. "As soon as they knew they were in trouble and law enforcement was breathing down their necks," says Ray Jermyn, "they ran to the counterin-telligence guys [the FBI and CIA] and tried to sell what
*Casso, speaking behind a black veil, testified to a Senate panel probing the Russian mob in 1996.
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they considered to be secrets and stuff." In the years before glasnost, the strategy often worked, for the FBI routinely placed advertisements in New York's Russian-language newspapers, offering cash rewards for information about KGB spies. When a Russian gangster became an intelligence asset, the feds would often shelve pending investigations targeting him. "We never stopped doing stuff because we were requested to," Jermyn says. "But a lot of times the agents would change their focus and slow down. . . . You put it on the back burner, and then it kind of goes away."
Jermyn pleaded with the FBI to lend him Russian-speaking agents to monitor the voluminous, court-autho­rized wiretaps of Russian bootleggers. "We were always asking for agents to give us assistance to do translations," he recalls. "They wouldn't help. They said they were too busy, they are working at the [Soviet] embassy" in New York.
"Then I got a phone call from a woman who said she was a deputy counsel in the CIA. I thought somebody was pulling my leg. She gave a callback number, and, sure enough, she worked for the Central Intelligence Agency. She was trying to bring to our attention that there was this guy who was a driver for Marat who had been a Russian submarine captain. She said that he had performed many valuable services for the agency and that he was still coop­erating. And that's when the bureau really first started to make inquiries [about our investigation]." When the court-authorized wiretaps revealed that Balagula and his com­rades were major players in the bootlegging business, the bureau suddenly "gave us an agent full-time who had a Russian background and who had counterintelligence train­ing," Jermyn explained.
The intelligence community's interest in Balagula was undoubtedly heightened by his many friendships with KGB spies, corrupt Third World despots, and international ter-
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rorists. Exploiting his connections within the Russian crim­inal diaspora, Balagula had begun forming criminal net­works with outposts in Russia, Europe, and Asia. In a typical transaction that exploited this international reach, his henchmen would buy automatic weapons in Florida, move them up the East Coast to New York, and ship them to the U.S.S.R., where firearms of this sort were extremely difficult to come by.
But these were relatively small ventures for Balagula. From Brighton Beach, he and his cronies virtually ran the small, diamond-rich West African nation of Sierra Leone, whose president, Joseph Momoh, allowed the Russian mob­sters to set up a global smuggling and money laundering operation there. Diamonds smuggled out of Sierra Leone were transported to Thailand, where they were swapped for heroin, which was then distributed in Europe by Balagula's close friend Efim Laskin, who had been deported by the United States as an undesirable in 1986, and who had been arrested for illegally importing weapons and explosives to the Red Brigades in Milan.* The Russians even brought Gen-ovese crime family members to Sierra Leone, where, among other activities, they plundered diamond mines with the help of corrupt tribal chieftains. The Italian gangsters, who helped bankroll Momoh's 1985 presidential campaign, became so prevalent in Freetown that when he was sworn in, a contingent of Genovese goodfellas stood proudly on the dais next to Balagula under a fierce tropical sun.
*In 1990, Laskin accepted a large advance on a heroin deal from two Italian organized crime drug traffickers, Renato Pantanella and Francesco Guar-nacchia, says a secret FBI report. He reneged on the deal. In May 1991, Laskin was attacked in the parking garage outside his Munich apartment. One attacker shoved a gun to his head, and squeezed the trigger. It jammed. The assailant then took out a knife and stabbed him. As Laskin struggled, another assassin stepped out of the shadows and stabbed him eleven more times. "He gutted him like a pig," said a source.
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Balagula's main contact in Sierra Leone was Shabtai Kalmanovitch, a charming, tanned Russian-Israeli entrepre­neur. The two hatched numerous deals together, including one to import gasoline to Sierra Leone, which was brokered through the Spanish office of Marc Rich by Rabbi Ronald Greenwald, and another to import whiskey; the pair even had a contract to print Sierra Leone's paper currency at a plant in Great Britain. Kalmanovitch also handled President Momoh's personal security. In 1986, his Israeli-trained palace guard crushed an attempted coup; according to one account, Kalmanovitch pulled Momoh out of his bed just before rebels sprayed it with machine gunfire. As a reward, Kalmanovitch was granted major fishing and mining con­cessions and was allowed to run the nation's largest bus company. He was also an operative for Mossad, Israel's intelligence agency. Kalmanovitch's Freetown office was a prized listening post in a city with a large, prosperous Afro-Lebanese Shi'ite Muslim community in close contact with Lebanon's then warring Shi'ite militias. It was only later that Mossad discovered that Kalmanovitch was not as valu­able an asset as it had supposed: in 1988 he was arrested in Tel Aviv and charged with being a KGB spy. Yitzhak Rabin, then defense minister, said he was "almost certain" that the Soviets had passed on information obtained from Kalmanovitch to Syria and other Arab countries hostile to Israel. Wolf Blitzer, at the time a correspondent for the Jerusalem Post, reported speculation that sensitive material stolen by Israeli spy Jonathan Pollard was passed on to the KGB by Kalmanovitch.*
*In 1999, U.S. government sources leaked to Newsday and The New Yorker that in exchange for Soviet Jewish immigrants, Pollard gave the Soviets, among other things, a computer file that allowed them to identify American foreign agents in the field.
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It was the peripatetic Rabbi Greenwald who introduced Kalmanovitch and Balagula to moneymaking opportunities in Africa. In May 1980, the rabbi had been asked by Lucas Mangope, the president of Bophuthatswana, one of the so-called independent black homelands inside South Africa during apartheid, to be its economic adviser with the rank of ambassador in New York and Washington.
"But because there is a strong black opinion here and a strong liberal opinion that the black homelands are just an extension of apartheid," Greenwald said, "I told Mangope that there was only so much I could do for him in the U.S. and he would be more successful dealing with Israel. Israel is closer, Israel doesn't have political restrictions with South Africa like America has. I suggested they hire Shab-tai,." who was a close friend and business associate.
Within several years after being introduced to Man­gope, Kalmanovitch was a millionaire. Through a newly formed company called Liat, he landed lucrative contracts to build a soccer stadium, and imported Israeli specialists to train the Bantustan's police and security service. In Febru­ary 1987, when rebel armies revolted and placed Mangope in the soccer stadium Kalmanovitch had built, the Russian took his considerable wealth and relocated to Sierra Leone, using Greenwald's contacts in the government.
Eventually, the Russian and Italian gangsters were to lose more than $3 million in deals with Kalmanovitch. The Russian mobsters became so furious with Kalmanovitch that they threatened to kill him, said the Genovese source, who mediated peace talks between Kalmanovitch and Bal­agula. "The Russian mobsters wanted their money," he said. "Marat said, 'Don't kill him, you can attract more flies with honey than vinegar.'"
In order to pay back his business losses, Kalmanovitch entered into an intricate scheme with Russian and Italian
60 RED MAFIYA
gangsters to defraud Merrill Lynch, according to several of the participants. These sources say that the Russian mob­sters bribed a Merrill Lynch employee to steal unused com­pany checks worth more than $27 million by illegally accessing the company's computer. The employee also stole valid signature stamps. The checks and stamps were then sent by courier to Kalmanovitch.
According to Interpol reports and sources involved in the scheme, on April 27, 1987, Kalmanovitch, Greenwald, and an associate left Kalmanovitch's lavish home in Cannes and drove to Monte Carlo where the associate opened up a business account at Republic National Bank for a paper company called Clouns International. He then desposited a number of fraudulently endorsed checks worth some $2.7 million. When the checks cleared three days later, Green­wald and the associate returned to the bank, where Green­wald was given $400,000 in cash from the Merrill Lynch funds. Greenwald carried the money in a large black bag via Germany to Switzerland, where he allegedly turned the cash over to Balagula's representatives in a Zurich hotel men's room. According to the scheme's participants, Greenwald was paid $50,000, an allegation the rabbi flatly denies.
On May 22 of that year, Scotland Yard arrested Kalmanovitch at the Sheraton Park Tower Hotel in London at 3:00 A.M. It found three rubber stamps used to endorse the checks in Kalmanovitch's room. Earlier that day, Kalmanovitch had had lunch with Uri Lubrani, the head of Israeli intelligence in south Lebanon, according to a source who attended the meeting.
While Kalmanovitch was being led away in handcuffs, Greenwald, who was also staying at the Sheraton, threw his bags together and, without paying his bill, caught a Con­corde flight back to America, according to the FBI and an
BRIGHTON BEACH GOODFELLAS 61
associate of Greenwald. Greenwald returned home just in time for the Friday night Sabbath meal.
Kalmanovitch was extradited to America to stand trial on fraud charges. (The FBI questioned Greenwald three times, but didn't arrest him.) Greenwald rounded up a select group of prominent Americans and Israelis to provide character references, including New York Republican con­gressman Benjamin Gilman, who wrote that "Mr. Kalmanovitch enjoys a wide reputation for his integrity and business acumen." He obtained bail and flew to Israel, where he was immediately arrested for being a Soviet spy.
In 1986, at the height of his power, Marat made a reck­less error. Robert Fasano, a small-time hood who traveled around Brooklyn in an ostentatious white Excalibur, phoned Balagula with an interesting proposition. Fasano had obtained the numbers of two dozen Merrill Lynch credit cards with six-figure authorization codes. Fasano also had sheets of white plastic and a machine that could emboss the stolen numbers on dummy cards. All he needed to use the material was some cooperative merchants who would agree to accept the phony cards to charge merchan­dise. The merchants would get a cut, though the goods, of course, would never leave the stores. At a meeting with Fasano, Balagula agreed to introduce him to Russian mer­chants in New York and Philadelphia. He then instructed two of his henchmen to accompany Fasano to the stores.
The scam worked as planned, and the men took in more than $750,000, stopping only long enough in their shopping spree to feast at Russian restaurants. But Fasano was arrested by the Secret Service not long afterward, and agreed to wear a wire in meetings with Balagula. In those discussions Balagula not only implicated himself in the "white plastic" fraud, but also commiserated with Fasano
62 RED MAFIYA
about their sexual problems; both men, it seems, had trou­ble achieving erections. Fasano had found a doctor in New York who prescribed a plastic hand pump for genital stimu­lation, and recommended it to Balagula. The prosecution later played the tape at Balagula's trial in Philadelphia to prove the men had more than a casual relationship.
"Go out and get a ten-pound bag of shit and try to put it in a five-pound bag and that's Fasano," said Joe Ezra, one of the five defense attorneys Balagula brought to Philadel­phia at a cost of nearly $1 million. Lead attorney Barry Slot-nick, renowned for his successful defense of Bernhard Goetz, was dismissed on the first day of the trial by the judge because of a conflict of interest: his firm already rep­resented one of Balagula's co-defendants, Benjamin Nayfeld. Slotnick, who received a $125,000 fee, camped out at the Hershey Hotel, where he debriefed Balagula's lawyers at the end of each session and advised them on their strategy for the following day.
Nevertheless, Balagula was convicted of credit card fraud, and there is even now a great deal of rancor among Balagula's defense team. Some charge that Slotnick's back­seat lawyering hurt the case; others claim that one defense lawyer received a large bribe to fix the trial. Marat himself believed that the money was being used to grease the sys­tem. After his conviction, Balagula was taken by Rabbi Greenwald to attorney Alan Dershowitz to discuss an appeal. Instead, Balagula asked the esteemed lawyer to bribe the appeals judge. An indignant Dershowitz refused. Just three days before his November 1986 sentencing, the mobster fled to Antwerp with his mistress, former model Natalia Shevchencko.
Secret Service agent Harold Bibb admits he feared that Balagula "would turn rabbit" after the government rejected the crime boss's offer to ferret out Soviet spies in Brighton
BRIGHTON BEACH GOODFELLAS 63
Beach in return for setting aside his conviction. In addition to protecting the president and foreign dignitaries, the Se­cret Service investigates credit card fraud and counterfeit­ing. Ironically, Bibb, a born-again Christian from Tennessee, had once been assigned to the security detail protecting Israeli cabinet minister Moshe Dayan during U.S. fund-raising trips on behalf of Soviet Jews in the early 1970s. He had now been given the task of hunting down the most dan­gerous of those Soviet Jews, the godfather of the Russian mob.
In February 1987, four months after Balagula left the country, Bibb tracked him down in Johannesburg, where he was living with his mistress and her daughter, who had enrolled at a local university. "You have to understand how to chase a fugitive,' Bibb explained in his spartan Secret Service office in Memphis. "You either find the hole that they're living in, you find the people that they are talking to, or you find out how they are getting funded." In this case, Bibb found Balagula by tracing his girlfriend's credit card receipts. He also discovered that Balagula was receiving monthly deliveries of $50,000 in cash from his New York underlings. The money, stuffed in a worn black leather bag, was hand-delivered to Balagula's Johannes­burg apartment by Balagula's driver, the ex-submarine commander.
Bibb had intended to tail the driver to Balagula's hide­out. But the Secret Service was too cheap to pay for his plane ticket, the agent said. So he contacted the security officer at the American embassy in Pretoria, who in turn alerted the police, supplying them with photos of the driver and Balagula. However, Bibb suspects that the constable who was dispatched to make the arrest let Balagula go free when the Russian handed him the monthly payment. Again with his mistress in tow, Balagula next fled to Sierra Leone,
64 RED MAFIYA
where he bought Sierra Leonean and Paraguayan diplomatic passports for $20,000.
Over the next three years of Balagula's exile, he jetted to thirty-six separate countries, including Switzerland, Paraguay, and Hong Kong, where he worked "in the jewelry business," according to the Genovese family figure close to him. Bibb even heard that he was once spotted playing craps in Atlantic City. Finally, on February 27, 1989, an especially alert border guard at the Frankfurt airport recog­nized the Russian godfather from his picture on the "Red Notice," the wanted poster distributed by Interpol. After being apprehended, Balagula claimed, "It's very difficult to be a fugitive. I can't see my family. In the last year I started to work in the open. I wanted to get caught."
Balagula's close association with Efim Laskin earned him detention in a maximum security "terrorist jail" in Germany. (One of his cell mates was Mohammed Ali Hamadei, the Lebanese who hijacked TWA Flight 847, during which a Navy SEAL was brutally murdered.) The New York Times reported that, during his extradition hear­ing, rumors circulated about a large bribe that was to be paid to free the Brighton Beach mobster. The Times also noted that, according to informants cited in U.S. intelli­gence reports, Balagula may have had connections to Soviet intelligence—a charge Balagula denied in a sworn state­ment to the FBI.
Meanwhile, in New York, Barry Slotnick met with U.S. Attorney Charles Rose, hoping to broker a deal that would keep Balagula out of an American jail. Balagula pro­posed setting up a company in Europe to entrap traders in stolen American technology. "Marat also tried to present himself as a secret agent to help track down KGB spies in Little Odessa and Eastern Europe," says one of Balagula's attorneys Sam Racer. "He claimed Little Odessa was
BRIGHTON BEACH GOODFELLAS 65
teeming with KGB and that they were using the gas stations as a front."
In return for his cooperation, said Charles Rose, Balag-ula "obviously wanted the authority to travel, which was important to him. We had FBI agents who were familiar with foreign counterintelligence stuff talk to him. It was all very cloak-and-daggerish. The theory was that he would be so valuable to us that we would not want him to be in jail. . . . We never really paid much attention, and said we wanted to prosecute the guy."
In December 1989, federal marshals wearing flak jack­ets escorted Balagula aboard a C-5A military transport bound for New York, where he was placed in the tomblike Metropolitan Correctional Center to await sentencing for his four-year-old conviction on credit card fraud. "He called me from MCC crying, 'Why am I in solitary?'" recalls Sam Racer. According to Racer, a contact in the Bureau of Pris­ons told Slotnick that "a group of terrorists from Europe was in New York to break Balagula out."
His rescuers never appeared, however, and Balagula received an eight-year sentence for the credit card fraud. In November 1992, he was sentenced to an additional ten years for evading federal taxes on the sale of four million gallons of gasoline. "This was supposed to be a haven for you," declared U.S. District Court Judge Leonard Wexler. "It turned out to be a hell for us."
Balagula was domiciled in Lewisburg federal peniten­tiary, situated on one thousand acres of rolling Pennsylvania farmland. The shady, tree-lined blacktop leading to the prison from the highway looks like the entrance to an elite country club. The maximum security prison, however, is a vast stone fortress, with thirty-foot-high walls and eight gun turrets bristling with automatic weapons. Balagula shared a
66 RED MAFIYA
dormitory room with thirty-six dope dealers, rapists, and murderers. He was one of only a handful of inmates at Lewisburg convicted of a white-collar crime, and he was also the only mob boss allegedly running "family" business from the facility.
I had always heard Balagula described as a man of King Kong-like proportions. But when prison guards ushered him into a smoky ground-floor visiting room, dressed in an orange jumpsuit and bound in manacles and chains, he looked haggard. He sat down heavily, a thick chain wrapped snugly around his soft paunch, and lit a Marlboro with yellow-stained fingers.
It was his twenty-fifth wedding anniversary, and Alexandra, his tall, elegant blond wife, was in another wait­ing room. She was in a foul mood. Prison authorities had just told her that Balagula had been receiving visits from his mistress, Natalia Shevchencko. "It was hell" when his wife found out, Balagula hissed.
Balagula was spending his days working as a prison jani­tor, practicing his English, reading Russian detective novels and academic books on economics. "They claim I made $25 million dollars per day bootlegging. It's crazy! I got nothing. What have I got? The government took my apartment in Manhattan, my house on Long Island, $300,000 in cash. They said, 'If you don't cooperate you'll go to jail for twenty years.' The prosecutors wrote a letter to the judge that I'm a Mafia big shot so they put me here.
"They want me to tell them about the Mafia, about gasoline [bootlegging], about hits," Balagula told me, glow­ering. "Forget it. All these charges are bullshit! All my life I like to help people. Just because a lot of people come to me for advice, everybody thinks I'm a boss. I came to America to find work, support myself, and create a future for my children."
BRIGHTON BEACH GOODFELLAS 67
Balagula, who is eligible for parole in March 2003, has not only refused to give the authorities any information about the Russian mob's activities in America, but denies that he ever heard of such an enterprise. "There is no such thing as the Russian Mafiya. Two or three friends hang out together. That's a Mafiya?"
4
OPERATION
RED DAISY
One after another, a parade of stretch limousines 'pulled up in front of an unremarkable two-story building squatting on the corner of a blighted stretch of Coney Island Avenue. Out of each stepped a massive Russian in a tuxedo, more often than not accompa­nied by a slender blonde in a low-cut gold lame evening gown. As they entered the etched brown metal doors, they were ushered into another world, a world that resembled nothing so much as the set of a B movie made six thousand miles away.
Black-and-brown imported Italian marble covered the floor of the foyer where a hand-painted mural of St. Peters­burg's skyline led arriving guests into a cavernous nightclub and to tables covered with rose-colored tablecloths laden with slabs of sable, skewers of beef, and ice-cold bottles of Stolys. As multicolored lasers crisscrossed the room,
70 RED MAFIYA
Joseph Kobzon, a renowned Russian pop star, crooned Top 40 tunes from the motherland and, for the honored guests that evening, Sinatra ballads.
This was Rasputin, the Winter Palace of Brooklyn.
Off to the side stood two barrel-chested men, beaming, almost giddy. For the Zilber brothers, Vladimir, thirty-two, and Alex, thirty-four, everything had led up to this June 1992 gala opening. They had arrived in Brooklyn as penni­less Jewish refugees from Odessa thirteen years earlier. Their father was a foreman in a New Jersey pillow factory, their mother a seamstress there. The boys, however, had quickly realized that the honest, hardworking immigrant was a chump game; they had made more than their parents ever dreamed possible from gasoline bootlegging, money laundering, and casinos and aluminum factories in the for­mer Soviet Union. The Zilber brothers—Vladimir as infor­mal head of U.S. operations, Alex as their Russian liaison—had become dons in the Brighton Beach mob; this was their Russian cotillion.
When the Zilbers took their place at the head table — where a row of dark-suited Italian-Americans, all members of the Genovese crime family, peered across nearly empty vodka bottles at an equal number of hard-faced Russians — it symbolized a new era in organized crime in America. The Russians had always loved films about the American Mafia and took great pains to emulate their predecessors' sense of sartorial style. But on this night, the two groups had more in common than a taste for heavy gold chains and open col­lars. The Russians had finally become powerful enough to sit at the same table with the Italians. No longer semicomic Godfather pretenders, the Russians were now arguably just as ruthless and, by many accounts, considerably wealthier than their more long-established counterparts.
The Italians were not entirely flattered by the gaudy
OPERATION RED DAISY 71
imitation; they had warned their Russian colleagues against indulging in glitzy nightclubs that might attract the atten­tion of the FBI and the media. (Indeed, in November 1994, the New York Times featured Rasputin in its Living Sec­tion.) Not long after Rasputin's grand opening, investigators examined its books. The ledgers showed the restaurant had been renovated for $800,000, but according to one Gen-ovese crime family figure, the men's bathroom alone cost half a million dollars. In fact, more than $4 million had been spent on upgrading Rasputin. "No legit guy is gonna invest that kind of money in a restaurant," said the Genovese source. "The Zilbers wanted a place to sit with a big cigar, and then fuck the broads that come in there.
"The restaurant is gonna be their downfall."
The Genoveses had good reason to be concerned about the Zilber brothers' ostentatious lifestyle. They had staked Vladimir Zilber's gasoline bootlegging operation in exchange for a percentage of the tens of millions of dollars he made evading state and federal excise taxes. But he had gotten reckless, shaking down a team of FBI/IRS under­cover agents posing as gasoline distributors in Ewing Town­ship, New Jersey, and then, in February 1992, allegedly ordering the torching of the undercover business when they refused to pay a "mob tax."
On November 20, 1992, Vladimir was summoned to a meeting in Manhattan with Genovese crime family figures, who accused him of jeopardizing the business. A huge man with a trip-wire personality, Zilber was not cowed. "If I go down, you go, too," Zilber told the Italians. "I'm not going to prison."
"Zilber had big balls," said the Genovese associate. "Unfortunately, he used them for brains."
Zilber's sour-tempered performance only stoked the Italians' fears. If he talked, he could implicate, among others,
72 RED MAFIYA
Daniel Pagano, a forty-two-year-old Genovese capo who not only got a penny out of every 27 cents in gasoline taxes that the Russians stole, but was also involved in the record industry, loan sharking, and gambling. (An additional penny went to Gambino capo Anthony "Fat Tony" Morelli, who delivered a weekly cut to Gambino boss John Gotti at the Bergin Hunt and Fish Social Club. The cash reeked of gaso­line.) Pagano was mob royalty. His late father, Joseph, a convicted narcotics trafficker, had been fingered by Mafia snitch Joseph Valachi as a hit man for the Genovese crime family in the 1950s.
After the acrimonious Manhattan discussions, Zilber was supposed to go to a sit-down with representatives of Pagano in Brooklyn, says a well-placed Russian mob source. According to the Genovese figure, however, on the day of the meeting, Zilber was actually heading to Brooklyn to work out the details of a new gasoline scam, which he was concealing from Pagano and Morelli. Whatever version was true, this much is known: although he often traveled with four Genovese bodyguards, Zilber was alone when he steered his father-in-law's battered 1989 Ford Taurus south toward the FDR Drive off-ramp onto the Brooklyn Bridge during rush hour. As he approached the ramp, a car braked in front of him. Another car with four Russians pulled up alongside. A shotgun blast hit Zilber in the side of the head, blowing away his optic nerve and filling his brain with bullet fragments. If his window had been open, doctors say, Zilber would have been killed.
After the shooting, Fat Tony Morelli materialized next to Zilber's bed in Bellevue Hospital's intensive care unit. Morelli whispered something to the wounded Russian, and Zilber subsequently refused to talk to the police, although sources say he had recognized the triggerman. Vladimir did rant to the staff that he had been the victim of a mob hit,
OPERATION RED DAISY 73
although the police had initially told the doctors that he was the victim of road rage. His physician noted in his med­ical chart that Zilber was a "delusional, paranoid schizo­phrenic." Knowing better, Alex Zilber surrounded his brother's room with round-the-clock bodyguards.
The police found the shooters' car abandoned at South Street Seaport, a popular tourist attraction in lower Man­hattan. Inside was the shotgun used to shoot Zilber, as well as a rifle, a baseball cap, and a hair band of the type that Russian gangsters fancy for their flamboyant ponytails.
Shortly after the incident, the real reason for Zilber's hit became clear. Through informants in the New York Police Department, the Italian Mafia had learned that fed­eral indictments were being prepared. Zilber would be a serious liability when they were issued. "He's lucky his head wasn't blown off," said the Genovese figure. "Vladimir was a loose cannon. Shutting him up was an act of survival." Indeed, the hit could not have taken place, Russian and Italian underworld sources, as well as federal authorities, agree, if Pagano and Morelli had not sanctioned it. "The shooters would need somebody's permission on the Italian side to kill the primary goose that was laying the golden egg," says a federal prosecutor.
The attempt on Zilber's life prodded the authorities into action. On November 22, 1992, two days after the ambush on the FDR, an army of federal agents, under the code name Operation Red Daisy, fanned out across New York, New Jersey, Pennsylvania, and Florida, with more than two hundred search warrants, confiscating evidence and freezing assets of the alleged gasoline bootleggers. After years of neglect, law enforcement had finally begun to mar­shal its forces and pay serious attention to the Russian threat. Operation Red Daisy would be by far its most suc­cessful foray against the Russian mob to date.
74 RED MAFIYA
But in general, state and federal law enforcement agen­cies were loath to go after Russian mobsters, instead devot­ing their energies to bagging Italian wiseguys, a traditional route to promotion. And because the Russian mob was mostly Jewish, it was a political hot potato, especially in the New York area, where the vast majority of refugees were being resettled by Jewish welfare agencies. As for the New York City Police Department, it had almost no Russian-speaking cops, and even fewer reliable informants in the Russian emigre community. For years, the NYPD's intelli­gence unit couldn't find a single detective to monitor the Russian mob, because many cops were scared. "The Russians are just as crazy as the Jamaican drug gangs," a Ukrainian-speaking detective, who declined to work the Russian beat, told me in 1992. "They won't hesitate to go after a cop's family."
The NYPD was apparently unaware of the existence of the Russian mob until December 7, 1982, when detectives were summoned to a luxury apartment building on Man­hattan's East 49th Street, near the United Nations. There they found a middle-aged man sprawled across a bed on his back—his arms outstretched, feet dangling over the edge and touching the floor, his eyes wide open. At first glance, lead detective Barry Drubin, a gruff police veteran, believed the deceased was a heart attack victim. The body lay in peaceful repose. There were no signs of a forced entry or struggle, and the dead man was still carrying his wallet and wearing an expensive gold watch and a black leather jacket. When Drubin looked more closely, however, he noticed that the vessels in one eye had burst, filling it with a dollop of blood. Drubin gently raised the man's head and saw that blood had coagulated in the back of the man's hair. There was no blood on the bed. The victim had been shot
OPERATION RED DAISY 75
once, execution-style, at close range above the right ear at the hairline with a .25 caliber handgun. "We traced the bul­let hole from the back of the head to the entry wound," Drubin says. "It was a professional hit."
Drubin's men searched the three-room apartment, which was decorated with expensive artwork. Nothing appeared to be disturbed or missing and they turned up no shell casings or suspicious fingerprints. A large, open attache case in the living room was empty, save for a jew­eler's loupe, a magnifying lens used to examine gems. The briefcase was subsequently checked for trace elements of drugs, but the tests were negative. Inside a credenza in the den, the detectives found $50,000 wrapped in cellophane, tucked away next to a VCR and an extensive video porn collection. A small amount of recreational hash was nearby.
The victim was soon identified as forty-nine-year-old Yuri Brokhin—the man with whom Monya Elson had first teamed up with when he arrived in Brighton Beach, and with whom he had enjoyed a great deal of success robbing and smuggling precious gems. But as Drubin soon discov­ered, Brokhin had been leading a paradoxical double life. Most of the world knew him as a prominent Russian Jewish dissident, author, and filmmaker, who had immigrated to the United States with his wife, Tanya, on November 16, 1972. He lived in an expensive apartment on Manhattan's East Side, bought a small country home on Long Island, and frequently treated friends to dinner at Elaine's, a famous hangout for the city's literati, and evenings at jazz clubs in Greenwich Village. He also owned a black stretch limou­sine and a beat-up Mercedes-Benz that he spent thousands of dollars to refurbish.
While Tanya took a job at Radio Liberty, earning $20,000 a year, Brokhin worked to maintain his reputation as a writer of import. He had published two books, which received
76 RED MAFIYA
mixed to poor reviews, including The Big Red Machine, an expose of corruption inside the Soviet sports establishment, which was published by Random House in 1978.
Brokhin's anti-Soviet diatribes soon brought him to the attention of New York Democratic senator Daniel Patrick Moynihan, then vice chairman of the Senate Intelligence Committee. Brokhin was introduced to Moynihan by his chief of staff on the Intelligence Committee, Eric Breindel, an avid cold warrior. Brokhin supplied the committee with information about alleged Soviet agents who had pene­trated America posing as Jewish refugees. Although Moyni­han has no memory of having met Brokhin, Brokhin and Breindel developed an enthusiastic friendship, according to David Luchins, the senator's longtime liaison to the Ortho­dox Jewish community.
When Brokhin was discovered murdered, Breindel leaked a story to the press that he had been killed by the KGB because he was at work on a devastating expose of the personal life of Yuri Andropov, the newly installed Soviet general secretary, and onetime KGB head. Breindel told Moynihan that Brokhin's execution was reminiscent of the highly publicized assassination of a Bulgarian dissident and anti-Soviet writer in England, who was stabbed with the poisonous tip of an umbrella by communist agents and later succumbed to the lethal toxin.* "After he put a bee in
*'Shortly after Brokhin's death, Breindel faced his own investigation. On May 23, 1983, the Senate aide was arrested at a Holiday Inn in northeast Washington after purchasing five bags of heroin from an undercover cop for $150. Breindel, who had top security clearance, was ignominiously fired by Moynihan. The senator said in a statement to the press that he had no rea­son to believe that there had been any "intelligence losses attributed to Breindel," somberly adding that "this is a matter for further and thorough investigation." Breindel's career miraculously recovered and thrived. The onetime Harvard Crimson editor went on to become the editorial page edi­tor of the New York Post and vice president of Rupert Murdoch's News Corporation before he died in 1998.
OPERATION RED DAISY 77
Moynihan's bonnet," as Luchins recalls, Breindel encour­aged the senator to publicly call on the FBI to probe whether the Russian emigre had been slain by a foreign intelligence agency. The bureau dutifully complied, assign­ing William Moschella, one of its counterintelligence agents, to help Drubin unravel Brokhin's homicide. "Moschella was not one of their big brain trusts, I can tell you that," observed Drubin dryly. The NYPD's Peter Gri-nenko, a Ukrainian- and Russian-speaking cop, was trans­ferred from an auto theft detail to work with Moschella.
Brokhin's body had been discovered at 4:15 P.M. by his girlfriend, Tina Ragsdale, who called 911 after returning home from her photo editor's job. (Brokhin's wife, Tanya, was found drowned in the bathtub in their apartment a year earlier. Brokhin had recently taken out a $150,000 insur­ance policy on her life. Police ruled the death an accident. He collected double indemnity.) Ragsdale, a waif of a girl from Little Rock, immediately aroused Drubin's suspicion. "She was in her twenties and he was forty-nine," recalled Drubin, a circumspect man with a careful memory. "You had to really wonder what's wrong with this love-starved, overly romantic young woman. He wasn't a particularly good-looking guy. In fact, he was quite ugly. He was hard and severe-looking. And she was relatively attractive."
"Yuri and I were interested in the same things: photog­raphy and art," Ragsdale insisted when interviewed fifteen years after her boyfriend's homicide. "That was our com­mon meeting ground."
She had given Drubin precisely the same explanation, but he didn't buy it. "We got bad vibes from Tina. We felt she was holding back. We found the cash, hashish by the television, and the pornography tapes, and we didn't feel she was giving us information."
After hours of relentless grilling, a tearful Ragsdale
78 RED MAFIYA
finally surrendered what the police wanted: the names of Brokhin's closest friends—people to whom she also had grown close and may have had reason to protect. Although Ragsdale had given him a long list of names, Drubin didn't recognize any of them. "There was nobody to tell you who these people were like there would be with the Italians,' he explained.
At this point in time, Russian crime was recognized by the authorities as a growing problem, but not an organized one, and Russian criminals, when they were caught in petty food stamp scams or even quite large Medicare frauds, were treated as isolated cases. However, the NYPD had become sufficiently concerned with the rise in Russian arrests to have recently authorized setting up a two-man intelligence unit under detective Joel Campanella to begin monitoring the phenomenon. Though he had only just begun his investigation, Campanella was at the time the closest thing to an expert on the subject, and when Drubin eventually turned to him for assistance, he helped confirm that Ragsdale's list of names was a menacing collection of Russian underworld figures.
Drubin hauled in dozens of these men for interrogation, all of whom were coarse, Gulag-hardened thugs whom Ragsdale knew from smoke-filled parties, high-stakes card games, and vodka-laced nights in Russian cabarets. One sus­pect sat across Drubin's desk in the squad room, contemp­tuously chomping on a .22 caliber bullet. "He would remove the bullet from the shell and chew on it. I don't know what kind of lead poisoning he has. And when I asked him if he had any more of those, he showed me a whole box of bullets. And my next question was the same question that you would have asked. Do you have a gun that goes with the bullets? The next thing on the desk is the gun."
Drubin quickly realized that the Russians held him in
OPERATION RED DAISY 79
very low regard. "I had one suspect look me in the face and say, 'I did time on the Arctic Circle. Do you think anything you're going to do is going to bother me?'"
Even the godfather of the Brighton Beach mob at the time, Evsei Agron, was brought in for questioning after one informant claimed that it had been he who had killed Brokhin. Agron, however, had an alibi: he had been playing cards with his friends. "They all had alibis," Drubin com­plained. Before Agron exited the station house, Drubin did manage to relieve him of his favorite, ever-present electric cattle prod.
Although Drubin was having little success in identifying the killer, he and Campanella were unearthing a huge amount of information about the workings of the Russian mob, and Campanella quickly set up a database in his unit. One of Campanula's most shocking discoveries was that many of his fellow cops in Brighton Beach were on the Organizatsiya's payroll. Employed as bodyguards, bagmen, and chauffeurs for Russian godfathers, the dirty cops made $150 a night or more for special jobs. "Everyone knew, including Internal Affairs, that cops in cheap suits who looked like gangsters worked the door as bouncers and sat in the front tables at Russian mob joints," said criminal defense attorney James DiPietro. In the late 1980s, Campanella wrote to Internal Affairs about the problem; his complaint was ignored.
Unaddressed, the problem persisted. In the summer of 1994, New York State tax investigator Roger Berger, acting on a tip from an underworld source, likewise contacted Internal Affairs, telling them about police working at the Rasputin and Metropole nightclubs, as well as traffic cops participating in phony-car-accident scams with the Rus­sians. Instead of investigating the complaint, however, IA tried to browbeat him into revealing his sources. "I said,
80 RED MAFIYA
'First of all, these cops are conduits of information between the precinct and the Russians,'" Berger recalls. "'And that would be just perfect, to turn my informant over to you so he can get killed.'"
"Russians [in Brighton Beach] still don't trust the local cops because they see them work as bouncers at the local mobbed-up restaurants," says Gregory Stasiuk, an investi­gator with the New York State Organized Crime Task Force. "The Task Force had me go out and do interviews with Russians rather than the NYPD. The Russian commu­nity thinks the cops are on the take. The 60th and 61st precincts are very corrupt. We can't even do surveillance because the local cops make us in our vans. Every move we make is reported to the Russian gangsters by the dirty cops."
Barry Drubin was also warned "to be careful about whom I talked to and what I said"— in Brighton Beach— "because a lot of cops were on the mob's payroll. Detec­tives were working as bodyguards, they were making collections, they were doing a little strong-arm shit, and I said forget about this stuff here. I'm not going near this with a ten-foot pole. These cops weren't going to lead me to the guys that shot Yuri Brokhin."
The Moynihan-inspired investigation by the Moschella and Grinenko team wasn't much help in Brighton Beach either. Drubin considered them buffoons, and recalled one incident in which he crashed a bar mitzvah with them just to show their faces and apply a little pressure to the mob­sters. "It was at the Sadko restaurant," Drubin recalled, an infamous mob joint. "Grinenko and Moschella got shit-faced, and Peter [Grinenko] starts dancing with all the Russian women, even breaking in on the husbands." The sit­uation was only exacerbated by the deep animosity between Grinenko and Drubin, which stemmed from Gri-
OPERATION RED DAISY 81
nenko's supposed anti-Semitism. Grinenko allegedly told Drubin that he believed Jews were "genetically inferior." When Drubin countered that Grinenko was an anti-Semitic Cossack, the cops nearly came to blows.*
Despite the numerous obstacles, Drubin and Cam-panella were making some progress, at least in uncovering the truth about Yuri Brokhin. Beneath the facade of a Soviet critic and intellectual lay a mobbed-up international drug dealer, jewel thief, and confidence man. Brokhin was constantly in debt, and the paltry income from his writing career, which could amount to no more than a few thou­sand dollars a year, certainly did not account for his rather affluent lifestyle, which included frequent trips to Atlantic City gaming tables and the Aqueduct Race Track. A com­pulsive gambler, he also spent many evenings playing cards with his friends in the Russian mob—godfathers, future
*In an August 1994 interview with the New York Times, Peter Grinenko, by then an investigator in Brooklyn DA Joe Hynes's office, downplayed the threat posed by Russian organized crime "As organized crime in America, they are a flea on a horse " In an interview with the author, Grinenko said, "My assessment is that there are too many fucking reporters out there that are making [Russian] godfathers How does that sound7 Would you quote me on that7"
Grinenko openly admits that he has had extensive business ventures in the former Soviet Union, including a project to manufacture an American cigarette there Law enforcement officials experienced in Russian crime remark that it can be difficult to conduct such business without working out an accommodation with organized crime According to The Economist, cig­arettes are a gangster-ridden industry in Russia "Two Philip Morris execu­tives had to leave Moscow in a hurry in 1997 after they trod on the toes of the tobacco mafia," the magazine reported
"If Grinenko is making money in Russia, I mean, how do you do that without playing the [mob] game'" pondered an assistant U S attorney in New York who believes that his activities in the former Soviet Union create the potential for a conflict of interest Grinenko responded "They don't know what they are talking about You can work over there if you know what you're doing " The Brooklyn DA's office declined to comment.
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godfathers, hit men, and extortionists, who gathered to gamble in a fortified Brooklyn "social club." "He made a lot and he played a lot," said Ivan, a Russian mobster whose friendship with Brokhin dated back to Moscow, where Brokhin specialized in robbing copulating couples in public parks. "Yuri was very close with the godfather Evsei Agron," explained Ivan, who remembered how happy Brokhin was when Agron invited him to Canada to attend the godfather's younger sister's wedding.
But there was an even more duplicitous side to Brokhin, Drubin later learned from federal counterintelligence agents. Brokhin and his criminal cronies took frequent trips to Bulgaria. Its spas were a favorite hangout for Brighton Beach gangsters, KGB agents, and Soviet black marketeers. The spas were cheap, conducive to conducting business, and within close proximity to the U.S.S.R. A great deal of contraband, such as narcotics, flowed in and out of the Soviet Union through Bulgaria, as did intelligence informa­tion. Sofia was also a principal money laundering center for the KGB and the Brighton Beach mob. Brokhin was fre­quently observed by U.S. intelligence agents slipping in and out of the Soviet Union from Bulgaria and then returning to New York. U.S. counterintelligence officials believed that he was not only trading in contraband, but supplying the KGB with information about his new homeland. If he was a Soviet mole, as these officials believed, he could easily use his status as a dissident intellectual and friend of the Senate Intelligence Committee to provide valuable information he may have gleaned through his relationship with Breindel.
But Brokhin was killed, not because of Cold War intrigue, but because of a dispute among thieves. On the morning of Brokhin's homicide, he had had breakfast at the National restaurant in Brighton Beach with Ivan. Then the men drove into Manhattan, where Ivan dropped
OPERATION RED DAISY 83
him off at his home. "Yuri did something wrong," Ivan recalled. "Yuri told me that he was going to go and live in Europe. 'I'm finished over here. Wednesday I'm going to get a lot of money, sell the apartment, and I'm going.'"
Sometime that afternoon, two unidentified men entered Brokhin's apartment. "He knew the people he let in," Drubin said. "He did not know he was getting hit. Everything was laid out—the briefcase, the jeweler's loupe—like he was doing business. He was a burly guy, about five ten. He would have put up a struggle if he knew he was about to get it. And he laid down so nicely on the bed after he was killed, he hardly rumpled the bedcover."
Drubin, who had interviewed more than a hundred sus­pects, concluded that Brokhin had probably been killed in a jewelry scam gone wrong, and that Balagula's old nemesis, Vladimir Reznikov, had been the triggerman. "Yuri was pulling some con on West 47th Street and maybe there were some diamonds involved," Drubin suggested. "Brokhin owed some money and pissed somebody off and he was killed."
Incredibly, in the years between Brokhin's homicide and the launch of Operation Red Daisy, law enforcement did little to stem the rising red tide of the Russian mob. Despite the efforts of individuals like Drubin and Cam-panella, and despite the glaring evidence that came to light in a few scattered prosecutions, such as that of Marat Bal-agula, there were still few authorities who understood, or even believed, that the Russian mob was a deadly threat. "Nobody takes the Russian mob seriously," the soft-spoken Campanella said a few years after the Brokhin incident. "The lack of interest of law enforcement has given the Rus­sians time to grow."
A large part of the problem was political: the Russian
84 RED MAFIYA
mob was predominantly Jewish. It was for that reason, asserted Campanella and other New York State and federal law enforcement officials, that seven years after Cam-panella's two-man Russian mob unit in the NYPD was inaugurated, it was shut down in a highly politicized, char­acteristically New York City type of reaction. The effort had come under considerable criticism from the Jewish establishment, which complained that the adverse publicity generated in the hunt for Russian Jewish criminals would foster anti-Semitism and jeopardize the continued emigra­tion of Russian Jews to Israel and the West.
In Germany, where the arrival of the Brighton Beach mob was quickly recognized as a serious problem, police formed a task force of one hundred specially trained inves­tigators in the early 1990s to combat the Russians, accord­ing to a classified report prepared by the German Federal Police in Wiesbaden. The Russian crime wave, which included bloody rubouts in fashionable restaurants on Berlin's Fasanenstrasse, forced authorities to overcome their "supersensitivity ... to the Jewish aspect of emigre crime," said the report. But in the United States, according to several top law enforcement officials, Jewish organiza­tions continued to lobby the Justice Department to down­play the threat posed by the Russian mob. "The Russian Mafia has the lowest priority on the criminal pecking order," admitted FBI spokesman Joe Valiquette during a 1992 interview.
Some of Valiquette's colleagues were harshly critical of the bureau's lack of attention to the threat. They believed that the Organizatsiya had already developed into a new version of the Mafia; one that was just as ruthless as the Italian brand but potentially very much more difficult to tackle. "The Italian mobsters play boccie ball, the Russian gangsters play chess," said one law enforcement source who
OPERATION RED DAISY 85
marveled at their growing sophistication. And while the Russian mob may not have had the cumulative force of sev­enty years of tradition behind it, like La Cosa Nostra, by the early 1990s, some five thousand hard-core Russian criminals had already established themselves in the New York region, a criminal presence that was as large as all the Italian Mafia families combined.
"The Russians are an emerging crime group," Justice Department prosecutor Patrick J. Cotter, a member of the team that convicted John Gotti, said in 1992. "They make tons of money, they kill people, they are international, they are moving into drugs—but we don't have a single unit of the FBI that's devoted to going after them. We've got a Bonanno squad, we've got a Lucchese squad, but we don't have a Russian squad—so there is your problem. If we don't begin to address the problem now, we'll be running around asking ourselves how the hell this Russian organized crime got so big and how we can get rid of them.
"Money is power in crime as in everything else in this world," Cotter continued. "If you ignore the fact that the Russians are reaping huge profits, you're making a bad mis­take. They're not going to invest in IRAs. They're going to buy businesses, they're going to buy power. If we want to stop these guys, we better do it before they buy those things. If I've learned one thing from prosecuting the Mafia the last five years, I've learned that that's the toughest kind of mob influence to rub out. It's relatively easy to get the drug sellers, the gun sellers, the protection racketeers. It's real tough to get the corporation that's partly owned by the mob, or the union that's been corrupted."
There was, in fact, one official at FBI headquarters in Washington, D.C., who did believe that if the government didn't quickly launch a full-scale assault on the Russian mob, it would become untouchable. James Moody, a strap-
86 RED MAFIYA
ping six-foot-three organized crime expert, spent his youth in the backwoods of Oklahoma—a large, barefoot boy in overalls, hunting and fishing with his brothers. His great­grandfather was the first chief of police in Stroud, his tiny hometown. Moody joined the FBI at age twenty-nine in 1970 after a six-year stint in the military that included two tours in Vietnam.
In August 1989, Moody was appointed chief of the FBI's organized crime section. Examining the bureau's past record, he realized that former director J. Edgar Hoover had not paid sufficient attention to the Italian Mafia, having instead devoted the majority of his resources to his corro­sive obsession: combating domestic subversion and the per­ceived communist penetration of America. In the 1960s, when New York's five Italian crime families controlled labor unions, the garment industry, and the docks, there was only one FBI field agent in Manhattan assigned to orga­nized crime, whose very existence, Hoover had proclaimed, was "baloney." The FBI had to wait until Hoover's death in 1972 to undertake a serious investigation of La Cosa Nos-tra, but by then, it had become a criminal colossus. Moody didn't want to repeat that error with the surging Russian mob.
Still, he was having trouble convincing colleagues of the seriousness of the threat; the FBI continued to be allowed to pursue individual Russian crimes only when it came across them. Then, in 1992, during the heady first days after the fall of communism, Moody received a visit from Mikhail Konstantinovich Yegorov, the first deputy minister of the interior for the Russian Federation. The Russian pro­posed an immediate cooperation agreement with American law enforcement to combat jointly the Russian mob.
"I can't do it because we have so much of a past history of being enemies," Moody told Yegorov, after spending a
OPERATION RED DAISY 87
day chauffeuring him around the American capital. "We're going to have to kind of take it a step at a time."
But Yegorov would not be so easily dissuaded, and asked, "Okay, what can I do to improve the relationship and get it moving a little faster?"
"I don't know of a specific thing right now, but when­ever I identify one, I'll get back in touch with you," Moody replied.
It didn't take Moody long to propose a specific plan. Two fugitives from Red Daisy—David Shuster and an accomplice—were known to be hiding out in Moscow. Moody wanted them, but Yegorov reminded him that the countries didn't have an extradition treaty.
"That's true," Moody admitted. "We don't have any treaties whatsoever. But expel those guys from your coun­try as being bad," he urged him, as a way to jump-start relations.
"About two days later, maybe three," Moody recalled, "I come walking into my office and there's a handwritten fax on my desk."
"Mr. Moody, we've got them," the note said. "Please come and get them."
The previous day, a Russian commando unit wearing sky blue ski masks and bulletproof vests had stormed Shuster's "import-export" firm in downtown Moscow; a furious gun battle ensued. When the shooting stopped, Shuster was on his back, being pummeled by members of the Russian Spe­cial Forces, but putting up an impressive fight all the same. "My understanding is that Shuster broke two sets of Rus­sian handcuffs," Moody said. "He's not a very tall guy, but he's strong as hell."
At first, the Russians didn't know what to do with him; Shuster was, in fact, being illegally detained. If they put him in jail, the Russian federal prosecutor's office would
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learn that the Ministry of Interior was covertly working with the FBI and the event could spark a Cold War-style political firestorm. So in typically brutal Russian style, Shuster was transported to a dense forest outside of Moscow, dumped into a hole, and buried up to his neck in gravel.
The Russians informed the FBI that they would have to retrieve Shuster within three days, at which point he would be released. The bureau scrambled, but obtaining a Russian visa on short notice wasn't easy in those days, even for a U.S. government agency. Finally, Klaus C. Rohr, an old orga­nized crime hand and the FBI's assistant legate in Bonn, made it into Russia, and was taken directly to Shuster. "We don't have any jurisdiction in Russia," Rohr told him, after identifying himself as an agent of the FBI. "But we're going to put you on a plane and take you back to the United States, and I'm going to arrest you once we get back to America. If you give me any problems, I'm going to leave you in the hole."
"No problem," Shuster replied.
Moody immediately took the fax from Yegorov relaying the news of Shuster's capture to Larry Potts, the assistant director of the FBI's Criminal Investigative Division. He hoped to use the document to make a case for starting a Russian organized crime squad and for cooperating with Russian police and security officials — initiatives vocifer­ously opposed by the foreign counterintelligence side of the FBI, which considered the Russians to be an everlasting threat to national security, perestroika or not.
"You might say all of our obstacles suddenly disap­peared" after the Shuster snatch, Moody explained. With the strong backing of Attorney General Janet Reno, the FBI set up a Russian organized crime subsection at its Washing­ton, D.C., headquarters in early 1993, which would report
OPERATION RED DAISY 89
directly to Moody, and which received full authority to investigate the Russian mob as an organized criminal cartel.
Entrenched bureaucrats with Cold War hangovers con­tinued to fight the new initiatives. It was only in May 1994 that the FBI office in New York, commanded by William A. Gavin, finally set up a squad specifically targeted to fighting Russian organized crime, and even then, he didn't seem to realize just how late he had entered the battle. "I had a problem getting Gavin's attention," Moody explained, cit­ing Gavin's resistance to setting up a Russian force. "He said he liked to do his own thing. I said, 'Okay, you go do your own thing, but you're not going to do it with my man­power.'" It wasn't until Moody started shifting personnel out of the New York office that Gavin capitulated. "I basi­cally forced him into setting up the [Russian] squad," Moody acknowledged. It was dubbed the C-24 squad.
With few informants and only a superficial knowledge of New York's 300,000-strong Russian emigre community, the FBI realized how handicapped it was in this effort. Based on its early reports, Raymond C. Kerr, the head of the new Russian unit under Gavin, believed that there were three or four major Russian crime families operating in Brighton Beach, with outposts in at least five other U.S. cities. The largest family consisted primarily of Jewish emi­gres, many of them from Odessa; a second family was from Tashkent, in Uzbekistan. The FBI had identified them as Muslim; people in the community insisted they were Jews. A third family was from Ekaterinburg, in Russia. As far as the FBI's Gavin and Kerr could determine, each of the fam­ilies had a Cosa Nostra-like pyramid structure with bosses or godfathers poised at the top, and beneath them the con-siglieres, or advisers, and then the crews.
But virtually everyone else in law enforcement with a knowledge of the Russian mob challenged the FBI model.
90 RED MAFIYA
"You can't put them in a family," one DEA official explained. "One day, two guys are trying to kill each other, and the next day they are doing a dope deal together." He added that while Italian wiseguys often specialized in par­ticular criminal enterprises, the Russians tended to be gen-eralists. "Whatever opportunity affords itself—that's what they do that day."
Meanwhile, with Shuster in hand, federal prosecutors moved forward with trying the Red Daisy case. Bootlegging czar Vladimir Zilber and six other Russians, as well as five Gambino crime family figures, had been indicted in Newark, New Jersey, for federal excise tax fraud, money laundering, and racketeering. But to solidify the case, the prosecutors still needed members of the criminal enter­prise to cooperate and so they offered Shuster a deal he couldn't refuse: if he agreed to testify against members of the massive bootlegging conspiracy, he would be given a let­ter that promises to petition the judge for leniency at sen­tencing as a reward for cooperation.
As part of his proffer agreement, or deal with the gov­ernment, which required him to confess to every crime he had ever committed, Shuster admitted that he was an international pickpocket, gasoline bootlegger, and had dab­bled in dealing Turkish heroin. The government confiscated $6 million from him, as well as seventeen cars and real estate, then stashed him in a safe house until the trial.
Local police were furious that Shuster had gotten a deal. They suspected that he had ordered a jewelry store heist in Lodi, New Jersey, that had led to the shooting death of an off-duty cop. The investigating officers had sev­eral witnesses, including gang members who were at the scene of the execution. The federal prosecutors were given the information, but chose to ignore it. As far as the police were concerned, Shuster—who vehemently denied his
OPERATION RED DAISY 91
involvement in the affair—had lied to get his letter, and had gotten off the hook for killing a cop.
Zilber's case was severed from the others; his attorneys alleged that brain damage from his attack on the FDR left him incompetent to stand trial. Whether or not he went to court hardly mattered. The government seized $550,000 in cash from his safe deposit box, and his $1.2 million house in New Jersey was put in foreclosure. His wife walked out on him. His brother, Alex, fled with the family fortune, heading first for Brazil, and then to Moscow, where he eventually ran an aluminum factory and a casino for the Genovese crime family. Vladimir spends his days on a bench on the Coney Island boardwalk gazing absently out to sea, or holed up in his meager apartment, listening to CNN. He receives free meals at Rasputin and his old gang pitched in to buy him a live-in whore. "The one thing I hear that's still functioning well without any inhibitions is a lust for women of all ages," a federal prosecutor related. "Vladimir has no control over himself. If his grandmother was in the room, he'd go after her. I think, no pun intended, his brain is really shot." Even with Zilber's forced retirement, however, his crowning achievement, Rasputin, continued to be a magnet for wiseguys from Little Italy to the Volga.
With Vladimir Zilber excused from testifying, Gam-bino capo Anthony "Fat Tony" Morelli became Red Daisy's marquee defendant. Morelli was accused of directing sub­ordinates to use intimidation and violence to collect the "mob tax" from the Russian bootleggers. A wealthy shylock and fence who was notoriously stingy, Morelli had retained high-priced attorney Barry Slotnick to represent his bag­man Edward Dougherty, but then refused to pay his full fee. Slotnick's enthusiasm for the case understandably waned, and when Dougherty deduced that Morelli was set-
92 RED MAFIYA
ting him up to be the fall guy, he joined the government's growing cast of cooperating witnesses.
Although Morelli could afford to hire the best criminal lawyer in New York for himself, he retained a second-string Gambino house attorney by the name of Richard Rehbock, who regularly annoyed juries with his constant, seemingly irrelevant objections and bombastic speeches. It hardly helped Morelli's cause when, about one month into the Red Daisy trial, Rehbock was the subject of a humiliating, front­page expose in the New York Post. Star gossip columnist Cindy Adams quoted Rehbock's estranged wife, Sylvia DiPietro, as alleging that her husband had hidden $100,000 of mob cash in a suit in his clothes closet, and kept three sets of accounting books.
Having already angered Morelli as a result of his wife's vexatious accusations, Rehbock further put himself in dis­favor with his questionable trial strategy. Early in the case, for example, he made a colossal blunder when the govern­ment introduced Colombo soldier Frankie "the Bug" Sciortino's personal phone book into evidence. The book was valuable to the prosecution's case in that it listed Morelli's various private phone numbers, as well as the tele­phone numbers of numerous Russian bootleggers and Ital­ian gangsters involved in the Red Daisy bootlegging scam, and therefore helped establish the web of relationships in the Russian-Italian bootleg combine about which Dougherty, Shuster, and others were going to testify. The FBI had arrested the Bug on September 29, 1989, initially for witness tampering; the agent responsible for his appre­hension was called to the stand merely to place the confis­cated phone book into evidence.
In his cross-examination of the agent, however, Rehbock inadvertently helped prove the government's case. Apparently unaware that the FBI agent was a well-known
OPERATION RED DAISY 93
expert on organized crime and, moreover, had investigated every name in the Bug's thick black book, Rehbock asked, "Agent, this doesn't say, Phone Book of Frankie Sciortino's Mob Friends, does it?"
"No, it just says address book, or telephone book," the agent replied.
"Is the book entitled All My Gangster Friends?"
"No."
"The first entry, is he in the gas business?"
"I don't know."
"Is he a gangster?" Rehbock asked, his confidence grow­ing.
"I can't tell you."
"Is he a person that's listed on the little charts that you have on the wall in the F.B.I, office as an Organized Crime member?"
"I don't know."
Emboldened even further, Rehbock ventured forth. "How about the next one, Artie Goldstein, do you know him?"
"I believe he is in business on Long Island—a shylock victim."
"That's what, a customer of Mr. Sciortino? Is that what you're saying?"
"He had a loan with Mr. Sciortino."
By asking the witness to characterize whether the peo­ple listed in Sciortino's book were mobsters, Rehbock had opened the door for the government to do the same thing on redirect.
"Let's go through some of the names," said prosecutor Robert Stahl. "Anthony in Florida."
"I believe that's Anthony Trentascosta—a made mem­ber of the Gambino crime family," replied the G-man.
"Go to page forty-five. Benny A."
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"That would be Benny Aloi. I believe he's a Colombo made member."
After identifying a number of wiseguys, as well as Frankie "the Bug's" loan shark victims, Stahl stopped just before Morelli's name, by which point, "the jury was just laughing," Stahl recalled. "We took a break, and Morelli says loud enough for us to hear, 'Hey, Richie, whaddaya gonna do, the fuckin' twenty years for me now?'"
The gangster's prediction proved to be all too accurate; he was convicted and sentenced to exactly twenty years. In addition, eleven defendants were also convicted. Shuster was released from custody not long after the trial and is liv­ing somewhere in Brooklyn. Since he only testified against Italians, he has nothing to fear from the Russians.
However groundbreaking an effort the Red Daisy pros­ecutions— and several successful bootlegging prosecutions thereafter—they scarcely had any repercussions on the Russian mob, which continued to make tons of money as it spread across America. "The cancer is beyond the lymph nodes," New York State taxman Berger glumly noted in 1994. Nevertheless, recognizing the severe destabilizing effect that organized crime was having on Russia's tenuous democracy, FBI director Louis Freeh told a Senate subcom­mittee in May 1994 that the war against the Russian mob "is critical—not just for the Russians but for all of us, because the fall of democracy there poses a direct threat to our national security and to world peace." Freeh traveled to Russia, where he proposed launching "a lawful, massive, and coordinated law enforcement response" against Russian organized crime. He suggested setting up an international databank and training Russian police in American investiga­tive methods. That year, the FBI established such an acad­emy for ex-Eastern bloc law enforcement officials in Budapest.
OPERATION RED DAISY 95
The relationship Moody worked so hard to forge quickly foundered. "There is a great distrust on the Ameri­can side of the integrity of Russian law enforcement," says Rutgers criminologist James Fickenauer, who was awarded a grant from the Justice Department to study Russian orga­nized crime. "They want to sell their information. They think if the information is valuable, it must be worth some­thing. These are badly underpaid people who are looking for money from wherever they can get it." And, as the Gen-ovese crime figure who backed Rasputin says, "We'll always be able to pay more than the FBI."However short it fell of its goals, the Red Daisy cam­paign did mark the belated recognition by American law enforcement of how serious a threat the Russian mob actu­ally posed. But although the FBI, along with other local and federal agencies like the DEA and Customs Bureau, could now focus some of its energies on penetrating the Mafiya's extensive web of influence and corruption, the effort may have come too late. For looming just over the horizon was a force that dwarfed the Brighton Beach Mafiya in size and power, and it was headed directly for U.S. shores.

2 comments:

KP Ryan said...

This is turning into one of the best non-fictional accounts of Italian/Russian/Jewish Mafia I've ever had the pleasure of reading.

Thanks for publishing it online for all to read.

KP Ryan said...
This comment has been removed by the author.