Part 1 (1/2)
Nothing but Money.
How the Mob Infiltrated Wall Street.
by Greg B. Smith.
AUTHOR'S NOTE
Long before U.S. taxpayers began bailing out Wall Street with billions of their hard-earned dollars, there was the original Black Friday of 1869. It was spectacular and disastrous and caused millions in losses to investors from coast to coast, and it was mostly the work of one man-Jay Gould. When he died of tuberculosis at age fifty-six, one of his peers told reporters a.s.sembled on the doorstep of his Fifth Avenue mansion, ”Wall Street has never seen his equal and never will.”
In 1869 Gould was one of the richest men in America, a man who controlled one out of every ten miles of railroad in the nation. Although he was truly a very wealthy man, wealth has a way of making its owners believe there is always a little more just down the road. The source of just a little more, Gould decided, was gold.
His scheme was simple but inspired. He would run up the price of gold, which would, in turn, pump up the price of wheat. Western wheat farmers would then sell their wheat as fast as they could, which would require wheat to be transported East over Gould's railroads. He was counting on fear and greed to line his pockets. It was a clever idea, and therefore, it turned into one of the worst financial disasters in Wall Street history.
Gould and his co-conspirators began buying up gold, inspiring others who saw his investment choices as a bellwether to jump in, too. The price of gold began to rise at an alarming pace, awakening the administration of Ulysses S. Grant from its slumber. President Grant then tried to put the brakes on the runaway train, ordering a major sell-off of government gold.
The sell-off had a different effect. That morning gold had reached a peak of $162. The White House ”sell” message reached Wall Street at five minutes past noon that Friday, September 24, 1869, and within 15 minutes the price of gold had dropped to $133. In the words of the Brooklyn Eagle, ”Half of Wall Street was ruined.”
In a system that relies on self-interest, these things are bound to happen. Gould had his reasons and explanations for his behavior, and he sought to make the case that he was just doing what capitalism demanded. Of course, this was not to be the final Black Friday or Unholy Thursday or b.l.o.o.d.y Monday or whatever other modifier the press could dream up to ill.u.s.trate the shock and horror of a sudden and allegedly unexpected crash. There would be many more, and although results of these market ”corrections” were often different-sometimes the crash lasted awhile, sometimes there was a quick rebound-the underlying explanation often seemed quite similar. Everybody saw a run-up and wanted to get their's before the money stopped flowing. Sometimes that involved cutting corners here and there. Sometimes that involved breaking laws. But the logic of Wall Street was consistent-if everybody else is doing it, I'd be a fool not to.
Such was the case during the dot-com craze of the late 1990s, a time of irrational exuberance that, looking back, now seems merely irrational. This was a time when small ”companies” with absolutely no a.s.sets went public and money fell from the sky. This was the dawn of ”pump and dump,” when the American Mafia decided it was time to take what they could out of Wall Street. It didn't last long. Just as Jay Gould's brilliant idea became Black Friday back in 1869, the party ended in a bad way. But if you were there when it all took off, for a while it seemed like there was nothing but money.
Greg B. Smith March 9, 2009
CHAPTER ONE.
December 17, 1987.
Arthur Kill Road is the far end of nowhere in New York City. Running along the western edge of New York's smallest borough, Staten Island, it is not what you'd call a tourist destination. The camera-wielding busloads that flood Manhattan religiously check out the Statue of Liberty, the Empire State Building, the Brooklyn Bridge. These are icons meant for collecting. Tourists might even hop the ferry to Staten Island, but then-immediately-return to Manhattan. If any out-of-towner found himself on the winding curves of Arthur Kill Road heading into the heart of Staten Island, the borough of landfills and subdivisions, he would only be there because he got lost. Very extremely lost. There is really no reason to go there if you are a tourist, or even a regular person. There are no pleasant sights to see. There are no hip restaurants, no cutting-edge galleries, no timeless museums. This is the working edge of New York. This is where people dump things.
In the frigid darkness of almost midnight, there were no cars of any type-save one. A lone driver made his way down the road, his headlights knifing into the December darkness. He couldn't see it, but out there, just a few yards away, dividing New York from New Jersey, was the Arthur Kill, a fetid river that had been polluted by the captains of industry since the nineteenth century. The fish were dead; birds avoided the place. The water was the color of black coffee, and on this night, its petroleum content kept it from freezing. The driver pa.s.sed refineries with peppery smells and midnight fires. He pa.s.sed a s.h.i.+p graveyard where the sad skeletons of freighters and tugboats named after somebody's mother or girlfriend were left to rot. n.o.body else was in sight. He was happy the road was so lonely. He could see if he was being followed. He pa.s.sed an auto graveyard, capturing it in his headlights, and then, finally, a lone sign-”Island Wholesale Fence.” The driver, Robert Lino, dutiful son of a hopelessly corrupt father, had arrived.
Robert Lino was twenty-two years old, and he had barely finished the sixth grade. His writing was like that of a fourth grader. He had spent his entire life in the middle of Brooklyn, where he learned what he learned and never thought that there might be another way to live. While other kids from Brooklyn thought about basketball scholars.h.i.+ps or nailing their Regents exams in high school to go on to a decent college and all the rest, Robert Lino acquired different expectations. Robert Lino was going to be part of the American Mafia. This was an almost unstoppable destination. He had grown up surrounded by it. His father was in the Mafia, his father's brother, his father's cousin. All were made members of organized crime, the way that some fathers were vice presidents of international banks or partners in law firms or professors of French literature.
Robert a.s.sumed his father was already at the spot on Arthur Kill Road where Robert had been told to show up. His father was Robert Lino Sr.-Bobby Senior. He was a drug dealer. He dabbled in loan-sharking, collected protection payments, ran sports betting. He could also be called upon to shoot you in the head and roll you up in a rug. He had an official t.i.tle in one of New York's five crime families, the Bonanno group. He was what they called a soldier, although the concept of rank and hierarchy was pretty flexible within the Bonanno group. Bobby Senior earned that t.i.tle by being as devoted to a life of perfidy and deceit as a priest is to his order. Getting over was his religion. He loved the life, and he was hoping his son, Robert, would someday follow in his footsteps. That was why the father had phoned the son late on this December night and asked him to drive out to this desolate spot on the edge of the edge, on Arthur Kill Road in Staten Island.
It was heading toward midnight, and Robert Lino had to know what was about to occur. He was twenty-two years old now. No longer just a kid taking bets for his dad's sports-bookmaking operation. This was more than getting coffee for the guys at the social club. This ride in the middle of the night, this was the real deal. He knew his father well. He knew his father's friends and cousins. He knew that when they called him to come out here like this, he was now officially on his way to becoming just like them.
There was cousin Frankie Lino. Officially, he was another honored soldier in the legion of deceit named after Joseph ”Joe Bananas” Bonanno. Frankie was a made guy ten years in now, one of the originals. He was famous among a certain set for a photograph in the newspaper from a long time ago. There he was being led by two detectives in that great New York tradition known as the perp walk, and Frankie was leering into the camera, his eyes black-and-blue, his cheek bruised, his hair wild. He was the very image of the stand-up guy. The New York City Police Department had dragged him to the precinct to ask him some questions about the shooting of a cop. This was 1962, and Frankie had said nothing, even when they enthusiastically applied cigarettes to his genitals. When Frankie limped out of court with his arm in a sling and his face all black-and-blue, Frankie's brother, Anthony, had hollered out for the benefit of the a.s.sembled press, ”Lookit what they did!” Frank had dutifully scowled and muttered, ”Shut up, you moron-ya!” and walked away. This experience with the cops and the cigarettes had a profound effect on Frankie. From that day, he would be unable to control nervous blinking, earning him a second nickname, ”Blinky,” among a small number of acquaintances from the neighborhood.
Then there was cousin Eddie Lino. Officially he was a proud member of the Gambino organized crime family, run by the world's most famous gangster, John Gotti. Eddie was considered a big deal within the Lino family. The FBI had told everyone that Gotti was Public Enemy Number One and that the Gambinos were the worst of the worst, more powerful than Bechtel or IBM. And Eddie was one of them. He told people John Gotti was one of his close personal friends. Plus Eddie was known to be crazy. He once decided to shoot a man in the head because the man said something nasty about the wife of one of cousin Eddie's friends. Actually Eddie shot the guy because he just didn't like him. In a few years Eddie would be found sitting in his Lincoln, shot in his own head, but for now he and Robert Lino's father and cousin Frankie were the best of friends. They broke all the laws they could find together-New York Penal Code, Federal Criminal Code, you name it.
Driving in Staten Island in the dark hours before dawn, Robert Lino knew what was coming. He pulled off Arthur Kill Road into the fence company parking lot he'd been instructed to find. His tires growled on the gravel, the spokes of his headlights swimming through a sea of blackness. The Island Wholesale Fence sign was the only object providing light, a ghostly presence in the claustrophobic blackness. There was nothing else out here but the lonely Outerbridge Crossing, the southernmost bridge in New York City that took you out of Staten Island and into the wilds of New Jersey. In the headlight beams, Robert could make out a beat-up white trailer, probably the fence company's office, stacks of concrete barriers choked with weeds, rusting rows of abandoned vehicles with leering gap-toothed grills. And then he saw what he was looking for-a group of men standing around, rubbing their hands and stomping their feet against the cold. In the center of the group something lay on the ground, unmoving.
Robert Lino now knew precisely what he would be doing for the next hour. He got out of the car, and there was his father and cousin Frankie. There was also a guy everybody called Kojak because he'd shaved his head, along with a friend of Frankie's named Ronnie, and worst of all, a guy named Tommy ”Karate” Pitera. Robert knew all of these guys, but sometimes wished he didn't know Tommy Karate. Tommy was the kind of guy who liked to kill people, really enjoyed it. Plus he liked what happened after, when he would personally cut up his victims into pieces convenient for disposal. He was known to have his own method. He'd shoot you in your house, drag you to your own bathtub, slit your throat to drain the blood, cut off your head and hands to eliminate identification issues, then go to work with a hacksaw to create four or five bagfuls of parts. On this night, however, Tommy Karate apparently did not have access to a bathtub because there, on the frozen ground, was Gabriel Infanti-dead, but in one piece.
This was the reason the father had summoned the son in the middle of the night. Not to take in a baseball game. Not to help paint the living room. Not to spend some quality time chatting about the best way to land a striper or who was the best athlete of all time, Babe Ruth or Muhammad Ali or Michael Jordan. This was an unusual father-son outing, one chosen by the father. And the son had done his part. He'd shown up. He had not questioned the father. Something needed to be done, and like any good son, Robert Lino did what he was told.
It was just a job. It was like everything else about this life. There was a problem; you fixed it. Take the guy on the ground, Gabriel Infanti. For years, Infanti was not a problem. He was a go-to guy within the family Bonanno, doing a piece of work when requested, kicking tribute up the ladder, the whole thing. He was one of the guys, a man of honor. Now he was just a problem. First he had failed what would appear to have been a fairly simple a.s.signment. He'd been told to dispose of the body of yet another colleague. The colleague had been placed inside a metal drum and concrete poured in with him, and Infanti was supposed to make sure the drum and its contents disappeared. It didn't work out as planned, and the New Jersey State Police discovered this special little package inside a warehouse in New Jersey days after the homicide. Strike one against Infanti. Then, during another bad day at the office, Infanti-the only made guy on the scene-was supposed to be present when another victim was dispatched. If Infanti had been where he was supposed to be, he would have had the authority to call off the hit because the victim was waiting to meet another guy who wasn't supposed to be a victim. As it turned out, Infanti got nervous before the job and stepped out for coffee at Nathan's. As a result, the hit went forward, and now they had to kill two guys-the guy they were supposed to kill and the guy who showed up without making an appointment. All of this caused much anxiety for the leaders.h.i.+p down at Bonanno corporate headquarters, plus it raised doubts about Infanti's commitment to the cause. If a person is a partic.i.p.ant in a murder conspiracy, that person is as vulnerable as everyone else. He is a part of the team. If that person chooses to step out for coffee at Nathan's at just the right moment, questions are raised as to motive. The implications are that a person is attempting to extricate himself from criminal activity, something that implies the person may actually and truly be secretly cooperating with other organizations. Specifically, the FBI. The bosses of the Bonanno family decided Infanti was about to sign up as an informant and go on the government payroll, so it was decided that Infanti had to go.
Not surprisingly, Tommy Karate was the guy who did the deed. Everything was arranged. Infanti was supposed to meet a guy at an empty office s.p.a.ce in Ridgewood, Queens, unaware that Tommy Karate was there already, waiting. So was Frankie Lino, who waited outside as lookout while Robert's father, Bobby Senior, waited inside in the dark. Cousins in crime. Frank saw Infanti driven up to the office in Queens by a Bonanno gangster named Louie, and he saw the two men walk into the building. Frank waited a minute or two, then followed them inside. There lay Gabriel Infanti on the floor of the empty office, blood pouring from a head wound. The guy Louie looked like he was going to wet himself. He'd been standing next to Infanti when he was shot. Tommy Karate was still holding the pistol with the silencer. They rolled Infanti up in a rug and carted him out to Arthur Kill Road.
And here Infanti was, stretched out on the ground, no longer a man of honor. And there was Robert Lino, ready to help out his dad.
It wasn't going to be easy. The problem was obvious. It was December, and the earth of Staten Island was harder than Arctic ice. Tommy Karate and Kojak were banging away with their shovels. Frankie Lino tried for a bit. So did Bobby Senior. Now Robert Lino stepped in and took the shovel in his hand. The only light came from the headlights of the a.s.sembled cars.
Robert Lino was a small guy-five feet two inches tall, squarish but not terribly bulked up. Little Robert, his uncles called him, mostly because of his father with the same name but also because of his size. He looked a lot like the other Linos-prominent nose, thick black eyebrows, hair black as a Lincoln. Here he stood, the youngest man in the group, ready to do his part. He swung the shovel and hit the ground and nothing came of it. Again and again. They all did. Tommy dug, Kojak dug, Frankie, Bobby Senior and Robert Lino-they all tried their best, chipping away at the hardened ground, all to no avail. It was like trying to clear a beach of sand with a tablespoon. You worked and worked and nothing seemed to change, and digging a hole the size of a man is a lot of work. Ideally you have to dig pretty deep so if the rain comes a hand or a leg or a head won't come popping out of the ground. In December, with the ground frozen, getting the job done right could take a long time.
And time was important on a job like this. For instance, it would not be a good idea to be standing out there with Gabriel Infanti lying on the permafrost when the sun came up and people started showing up to buy split rails or pickets or whatever they needed to fence in their little slice of Staten Island heaven. The men continued chipping away. In a few minutes, everybody was out of breath.
Tommy Karate and Kojak said they would handle the job themselves. Tommy was a very practical guy. He had brought along a bucket of lye. The lye would go on Gabriel Infanti, and in no time at all, Gabriel would be all gone. For Tommy Karate, Gabriel Infanti was just another job. Standing there in the headlights, he and the bald guy, Kojak, began to joke about how scared Louie looked the moment Tommy shot Infanti in the head. Kojak cracked up thinking about how he'd fished $2,500 cash out of Infanti's pants after Tommy had put a bullet in the guy's brain. All that was easy. This business of making Gabriel Infanti disappear, this was anything but. They'd thought they'd come out here and dig a hole and dump in Gabriel and the lye and then everybody goes home to their nice warm beds. Who would have thought they'd still be out here after two miserable, frigid hours, with nothing to show for it but Gabriel still lying there and the sun coming up at any time?
But they kept at it, and soon the hole was dug, the body dumped, the lye applied. The work was over. Robert Lino, the good son, said good night to his father, as if they had just watched a baseball game at Yankee Stadium and now it was time to go home. Bobby Senior and cousin Frankie drove off for a late dinner at one of their favorite restaurants, Villa Borghese in Brooklyn. They were hungry. That's what you did when you were hungry. Robert didn't quite have the appet.i.te. He drove back to his home in Midwood, Brooklyn. The night's work was done.
It was different now for Robert. Now he was officially implicated. He was what the lawyers called an accessory after the fact, the fact being a homicide, the after being the digging part. And this was because of his own father. This was how the father wanted it for his son. In murder, if you're there when they bury the body and you don't run to the police, you're an official accomplice. A co-conspirator. That was Robert Lino's new relations.h.i.+p with his father; instead of ”Hey Dad,” or ”Hey son,” they could say, ”Hey co-conspirator.” Perhaps the father thought this would bring him closer to the son. Perhaps the father did not think at all.
In a few hours, the sun rose on Arthur Kill Road. Off the gravel road by the Island Wholesale Fence warehouse, a mound of freshly dug dirt could be seen-if you knew where to look. The crew had done a good job of making Infanti disappear. He was hidden by rotting wrecks and weeds and concrete barriers. Customers would show up and buy their wares, and business would be transacted as it had been yesterday and the day before. In a few days, Gabriel Infanti's wife in New Jersey would report Infanti as a missing person. She'd tell the police that he'd left the house with a big pile of cash. He was going to buy a car from a guy. That was all she knew. That was pretty much the extent of what she knew in general about her husband. He was always going off to see a guy about a thing. She was upset, but for the Bonanno crime family, it was as if nothing had happened at all. Christmas was coming, and Gabriel Infanti would be spoken of no more.
CHAPTER TWO.
October 19, 1987.
The young man of means awoke in his thirty-eighth-floor Manhattan aerie high above the East River. Below he watched the sun rise up over Queens and spread across the towers of the Upper East Side. He could see the millions just beginning to awaken. The lights on the 59th Street Bridge still twinkled in the gray dawn, and one by one, the good people of Manhattan were rising to face the day. Lights went on all around him. He was up at 5:30 a.m. every weekday, out the door by 6:30, at his desk by 7. He embraced his early morning enthusiasm. He couldn't wait to get to work. He was going to make money, lots of money, more money than a young man of twenty-seven deserved to make. This was it. He had arrived. He stepped into the shower and prepared to march forward.
He told people he lived on Sutton Place, an address synonymous with wealth and Upper East Side taste. He told people he lived down the street from the secretary general of the United Nations, who lived in a house built for the daughter of J. P. Morgan. Henry Kissinger was his neighbor.
Marilyn Monroe and Arthur Miller once lived within these city blocks of exclusivity. Sutton Place was a place unto itself, blocks from the subway but attractive to people who wouldn't think of riding the A train. Buildings designed by architects famous twenty years ago. A ”TAXI” light from the 1940s on the corner of Sutton and 57th Street that hadn't stopped a cab in years. This was Sutton Place, a neighborhood that stubbornly clung to Old New York. An address steeped in old money. A place where guys who wanted everybody to know they'd made it might choose to live.
Of course, he really didn't live on Sutton Place.
Actually he lived a block away, on East 54th Street and First Avenue. But he still had the views, and for somebody who didn't know the difference, he could keep the line going. Sutton Place was where he lived, as far as he was concerned. And Sutton Place or not, he had come a long way.
When he started out, he had almost nothing. He had come to believe that, through sheer force of will and a good story line, he could do anything he wanted to do and be anyone he wished to be. Women inevitably loved him. Men wanted to be him. He was handsome in a predictable way. People often told him he looked like the actor Mickey Rourke, with square jaw and sly smile turned up at the corner. He was always tan-summer, winter, spring or fall. He knew how to turn on the boyish charm. He was a Wall Street buccaneer, the lone rider on the plains of Capitalism with no attachments, no real responsibilities other than to continue making money for people who already had plenty. He was up with every sunrise and ready to be at his desk at Oppenheimer by seven. That was the Wall Street way.
This was the 1980s. This was Reagan and supply-side and trickle-down. This was a market trading in the thousands after trading in the hundreds for decades. Money was the new frontier. Every day the heroes of Wall Street came up with new ways to make more and more money. And there was so much money floating around, you couldn't spend it all. There weren't enough hours in the day. Maybe the old guard still took the subway to work, but the new guard knew better. Why hide success? Screw the subway. Hire a limo. Order top-shelf, smoke Cubans, collect Italian suits. Spending theatrically sent a message, made a statement, proclaimed that you were a man of substance who spent only what he'd earned. Excess was acceptable, even expected. The young man's apartment may have been a block from Sutton Place, but the suits and the guy waiting to drive him down to Broad Street were real enough. They were what was required if you wanted to be somebody down on Wall Street.
Getting ready for the office, the young man was quite aware that he was the luckiest guy in the world. Ten years earlier a lot of guys his age would have been struggling to work their way up the ladder, nowhere near this wealthy this soon. His timing had been impeccable. He lived top-of-the-line, in a high-rise with a twenty-four-hour doorman in an old-money section of Midtown Manhattan perched over FDR Drive and inhabited by people whose money dated back to the robber barons of the last century. Some of these people had been born into it, but some had had to sc.r.a.pe their way up to be allowed to live on Sutton Place (or at least near it). Many of these people would have been shocked at all that the young man had a.s.sembled in such a short period of time.