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I'LL MAKE YOU AN OFFER YOU CAN'T REFUSEInsider Business Tips from a Former Mob Boss
By Michael Franzese
Thomas NelsonCopyright © 2011 Michael Franzese
All right reserved.
Chapter OneMob Up Your Business
Most people don't like reading long quotes. Indulge me:
CRIME PAYS. Annual gross income from the rackets will probably exceed $50 billion this year. That makes the mob's business greater than all U.S. iron, steel, copper, and aluminum manufacturing combined, or about 1.1% of GNP. These figures, compiled for the President's Commission on Organized Crime, include only revenues from traditional mob businesses, such as narcotics, loan-sharking, illegal gambling, and prostitution. They do not include billions more brought in from the mob's diversification into such legitimate enterprises as entertainment, construction, trucking, and food and liquor wholesaling.... The organization chart of a crime family or syndicate mirrors the management structure of a corporation. At the top of the pyramid is a boss, or chief executive. Below him are an underboss (chief operating officer) and a consigliore (general counsel). Then follow the ranks of capos (vice presidents) and soldiers (lower level employees who carry out the bosses' orders). Like corporations, crime groups often rely on outside consultants.... Consultants are almost as popular with organized crime families as they are with corporations. These special counselors—lawyers, labor experts, and political advisors—shuttle between members of the mob and moviemakers, hotel and casino operators, owners of professional sports franchises, corporate chief executives, and public officeholders...."
Organized crime, a $50 billion annual industry? Revenues greater than U.S. Steel? Consultants, lawyers, and labor experts? A business structure similar to a major corporation?
Tony Soprano, what the heck happened to you?
No doubt about it: The information presented to the President's Commission on Organized Crime paints a far different picture of the mob's business operations than the one portrayed by Tony's sometimes inept crew of not-so-merry "made men."
How do I know? I was a capo in the Colombo crime family when the commission made its report in the 1980s. I can tell you firsthand that Tony and his men may be entertaining, but they miss the mark when it comes to the mob's extensive and complex business dealings. Not to mention that if a real mob boss was caught pouring out his heart to some sexy psychiatrist, you can bet he'd end up in the trunk of a car by the end of the week. At the latest. We didn't reveal our secrets to outsiders, not about business, not about anything. That would be considered a breach of confidence. And breaches of confidence are not tolerated in "the life," more commonly known as La Cosa Nostra, translated from Italian as "this thing of ours."
Business in "the Life"
Fortune magazine covered the Commission's report. It was 1986, and the editors ranked the fifty biggest mob bosses in terms of wealth and power—like the Fortune 500 for wise-guys. I was one of the mobsters featured in the twelve-page spread. At thirty-five years of age, I held the distinction of being the youngest mobster to make the list. I ranked just five slots below John Gotti. The "Dapper Don" himself was ranked number thirteen, and that was after he allegedly orchestrated the infamous rubout of Gambino family boss "Big Paul" Castellano.
The reporter devoted a full page to summarizing the various operations I controlled and the intricate business scams I was alleged to have masterminded.
I had interests in labor unions, construction, entertainment, and sports. I ran numbers, bookmaking, and loan-sharking operations. I operated auto dealerships and repair shops. I had interests in nightclubs, restaurants, and catering halls. I controlled bankers and accountants. I had vice presidents and CEOs of major corporations on my payroll. I even dabbled in the stock market. And I was the boss of what proved to be the most lucrative enterprise the mob had seen since Prohibition, the wholesale gasoline business (more about that later).
My operation was pulling in $6 to $8 million a week, give or take a mil. Vanity Fair called me "one of the biggest money earners the mob had seen since Al Capone." Tom Brokaw called me a "prince of the mafia, as rich as royalty." I wonder if Jack Welch would have hired me to run a division of GE, or if I could have gone all the way and survived a season of Trump's The Apprentice. Oh, well. Life can sometimes be an endless string of blown opportunities.
My dad was happy. Sonny Franzese, my father, was the underboss of the Colombo family. He proposed my membership into the family. At the time, he was serving fifty years in the federal pen for a phony bank-robbery rap. But he was real proud of me as I shot up through the mob ranks, generating money from the streets in the way that Michael Milken was generating money from his junk bonds. Back then, and especially when he was out on parole,we—the mob's elder statesman and its young rising star—were quite the team to be reckoned with.
And there was a reckoning.
Calling It Quits
Former Manhattan U.S. attorney Rudolph Giuliani was the first G-Man to take a shot at me as a made man. He tried pinning a conviction for racketeering on me. Though Giuliani's office was stealing national headlines as the most aggressive gang-busting squad of G-Men since the days of the Southern District's own Thomas Dewey, I managed to beat the case.
Next came Ed McDonald and the Organized Crime Strike Force in Brooklyn. McDonald and his team of FBI special agents had a bull's eye on my back for years. Let me tell you: these guys were relentless. McDonald had managed to make quite a name for himself a few years earlier when he flipped Henry Hill and took down the guys allegedly involved in the infamous Lufthansa robbery at New York's Idlewild Airport (since rechristened JFK International Airport). His accomplishment was so lauded that he was later cast to play himself in the movie Goodfellas. McDonald assembled a massive fourteen-agency government team, the "Michael Franzese Task Force." They created a colored chart that outlined my business interests and needed twenty Magic Marker colors to isolate all my streams of income. It took them months to figure out my organization. But they finally linked it all up.
Toward the end of 1985, McDonald hit me and members of my crew with a twenty-eight-count, ninety-eight-page racketeering bombshell. The charges were the garden variety, things like loan sharking, extortion, wire fraud, and labor racketeering. The usual. I had a few additional charges that were unique to my own personal misdeeds, mainly those pertaining to my scheme to defraud Uncle Sam of a few billion dollars in gas-tax money.
It was a complicated scheme that involved a considerable amount of ingenuity to pull off. And it worked like a charm for years. Every gallon sold by the cartel I controlled cost the government thirty-five cents in unpaid taxes. And we sold a lot—a half billion gallons of bootleg gas every month at our peak. We had a near monopoly on independent gas stations in Northeastern and Atlantic seaboard states.
The irony of the scheme was that while the government treasury was being defrauded, the price of gas at the pump went down. With a thirty-five-cent advantage over our major branded competitors, we lowered our prices to the gas stations, which, in turn, lowered their prices to the consumer at the pump. I stole from the rich and passed on the savings to the consumer. A veritable modern-day Robin Hood! Of course, I made sure both myself and the Colombo Family took a healthy cut of the action in the middle.
The Department of Justice didn't consider our beneficiaries akin to the poor people of Sherwood Forest. The feds were onto us. It was only a matter of time before they squeezed cooperation out of an insider who would eventually bring me and the enterprise into a federal courtroom to answer charges. That day came on December 16, 1985, just three days before the Castellano hit. Having been indicted and tried four times previously by both state and federal law-enforcement agencies, and after never being convicted of anything, it appeared I would be squaring off with the feds for yet a fifth go-round, this time in a Brooklyn federal courthouse.
"You could beat this rap," I remember my lawyer saying. "We beat Giuliani; we can beat McDonald too."
But I didn't. I didn't try. I ended it. All of it. I decided to quit the mob. Easier said than done. How I managed to do that and live is covered in a previously written book.
Business Is Business
That was then. I did my time and no longer consider myself a member of organized crime, having renounced the blood oath I took more than thirty years ago when I was inducted into the Colombo crime family. I no longer engage in mob-related activities or run multimillion-dollar business operations. That chapter of my life is closed. Mostly.
For the purposes of this book, I want to pull out a few pages, specifically to share with you what I learned during the years I managed booming enterprises for the Colombo family.
Some of you might wonder what possible similarities there are between running a mob enterprise and operating a legitimate business. What can be taken from a mobster's approach to business that can prove beneficial in the straight workplace? After all, mob guys are criminals. They are in the "business" of crime (the operative word being "business").
Organized crime in America has been thriving for almost a century. It has raked in billions of dollars year after year through a plethora of lucrative endeavors—plenty of them clean as a whistle, or pretty close. The mob has extended its influence to almost every industry known throughout the United States, from the stodgy boardrooms of Manhattan, to the spine-tingling sound stages of Hollywood, to the revered halls of our nation's capital. Make no mistake about it. The mob has made its formidable presence known everywhere. Want proof? Just ask the Department of Justice and the various law-enforcement agencies throughout the country that have been trying for decades to strip the mob of its massive web of business interests.
I assure you, none of this has been accomplished by accident. To operate any business successfully, one must possess certain qualities and adhere to a certain philosophy critical to the success of that business. The men who run the business of organized crime are more than qualified to do so. Without ever earning a bachelor's degree, a master's degree, or a PhD, and in many cases without even graduating from high school, mobsters have managed to operate and dominate legitimate businesses having annual revenues in the hundreds of millions of dollars.
Law enforcement will have you believe that this is accomplished through fear and intimidation, by using a gun and a lead pipe instead of PowerPoint and a spreadsheet. In some cases that's true, but in most cases I can tell you it's just not practical to wave a gun in the boardroom. And usually it's not even necessary. Anyone who sells the mob short when it comes to its ingenuity, its ability to connect with people from all walks of life, and its substantial profit margins is simply kidding themselves.
There is no doubt in my mind that many of the mob executives who succeeded in the business of organized crime would have been equally successful in the boardrooms and business offices of corporate America. Mob executives possess unique instincts, a "street sense" that isn't taught in the classrooms at Harvard or the Wharton School of Business. They're acquired through living a lifestyle where almost every day presents a challenge just to survive, where every friend is your potential enemy, where a board meeting just might prove to be your last encounter on earth. Mob executives whose bottom line is penciled in red ink don't get fired. They end up lying in something red. Blood. Their own. Hostile takeovers amount to either racketeering indictments and business seizures from raiders on the outside, or a bloody war waged from traitors within. That's bound to engender a certain knack for survival.
Don't get me wrong. Before we go any further, I want to make it crystal clear that in no way am I suggesting to the readers of this book or to anyone in general that they be involved in any kind of criminal activity, in or out of the workplace. Crime at any level has no place in our society, and I know that better than most. It's destructive, immoral, and harmful to innocent people.
And don't fool yourself: You cannot get away with criminal activity in this country. Not in the long run. For most people not in the short run either. Law enforcement is too sophisticated and has garnered too many technological and legal weapons to fight crime in the streets as well as in the boardrooms. My indictment, conviction, and imprisonment make this point all too well. The federal and state governments have beefed up their arsenals of crime-fighting weapons over the past twenty years, particularly in the area of white-collar crime. White-collar criminals no longer receive a slap on the wrist in a federal courthouse. These days they get hit with a swift, hard kick in the tuchas. After all the corporate scandals of the last few years and the financial meltdown of 2008, you can bet that trend will continue.
Often, it's when a corporate executive is least aware that eyes are on him or her. Just ask the boys from Enron and WorldCom who are donning orange cotton instead of Italian suits. Had Dennis Kozlowski been paying a little more attention, he might have figured out that people tend to notice six-thousand-dollar shower curtains. And Martha Stewart might have avoided an extended stay at the fed's country inn had she realized that the diva routine does not bode well with the all-powerful Department of Justice. A little humility on her end when facing the DOJ lawyers might have kept her cooking in the studio kitchen instead of planting seeds in the prison garden.
Finally, in no way is it my intent to glorify organized crime or the mobsters who run it—me included. I'm going to tell you how it is, but I'm also the first guy to tell you the life is bad, and that no one who chooses it should be held in high regard.
No Magic Formula
There is no shortage today of people willing to share their secret formulas for business success. Books on the subject are as plentiful as mob guys at the racetrack. Visit any airport bookstore and you are sure to see the latest offering from the likes of Donald Trump, telling you why he wants you to be rich, how to get rich, and how to find your way to the top. That's right: The Donald will share with you his best-kept secrets.
Well, here's a not-so-well-kept secret about The Donald, one that Trump has in common with a few other famous billionaires, like J. Paul Getty and Howard Hughes Jr. When they were coming up, these guys all inherited huge fortunes from their fathers. The senior Trump amassed a $400 million fortune, which was largely left to his children, forming the bulk of Donald Trump's wealth. Similar story for Getty. "While I did make money—and quite a bit of it—on my own, I doubt if there would be a 'Getty Empire' today if I had not taken over my father's thriving oil business after his death," he wrote in his autobiography. And Hughes? Dad created the fortune that Howard Jr. inherited at the age of eighteen. The company he created, the Hughes Tool Company, when taken public in 1972, earned Howard Hughes Jr. $150 million in one day.
There are exceptions, but a generous number of multimillionaires, including Bill Gates, got a head start from parents or grandparents. I am not taking anything away from their accomplishments. By all accounts, they were or are very intelligent entrepreneurs who worked hard and made the most of what advantages they were given. But let's be honest: it's hard to take a guy's word on success when his pop bankrolls him to the tune of a few hundred million. Besides, if a guy like Trump really had the secret, would he tell? Not even Tony, on his couch, would spill those beans.
So how do you make it? Trump says, "Everything in life is luck." Getty's closer: "Rise early, work hard, strike oil." Hard work and an early start to the day are helpful for success. I'll talk more about that later. Inheriting the substantial bankroll needed to dig for oil doesn't hurt either. And the success of any business is helped by a stroke of good luck, along with a few hundred million in inheritance. Hardworking, wealthy businesspeople seem to have all the luck.
Excerpted from I'LL MAKE YOU AN OFFER YOU CAN'T REFUSE by Michael Franzese Copyright © 2011 by Michael Franzese. Excerpted by permission of Thomas Nelson. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
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