The FBI’s Unsuccessful Investigations into the New Orleans Mafia, 1977-1989

[Underworld_NOLA]

I wrote a graduate paper that I presented at a few conferences last winter on the unsuccessful investigations into the New Orleans Mafia. Thought this forum would enjoy. As far as sources go - I was unable upload a PDF of my paper and I can't copy/paste footnotes, so if anyone has a question about sources, please let me know! Most of the book sources are listed in the historiography section of the paper, and most of the primary documentation comes from FBI files.

The FBI’s Unsuccessful Investigations into the New Orleans Mafia, 1977-1989


At a time when the FBI was eliminating entire chains of command in East Coast Mafia families with numerous investigations, eventually culminating with sentencing the bosses of the infamous “Five Families” to 100 years each in prison, a structural RICO indictment of the New Orleans Mafia was never successful until after New Orleans Mafia boss Carlos Marcello’s death. Though the FBI’s 1981 BRILAB insurance kickback sting would send Marcello to prison, his conviction would later be thrown out by an appellate court in 1989; freeing Marcello after serving only 8 years of his 17 year sentence, which also included bribing a California federal judge in an unrelated matter. This would leave the FBI’s BRILAB sting the only successful FBI operation in a handful that targeted Marcello during the 70s and 80s. This paper will propose that the FBI’s lack of success when it came to Marcello at this time as threefold: a general lack of structural identity of the New Orleans Mafia, Marcello’s political connections, and the way Marcello handled his finances all shielded him from a major indictment. These three factors will be examined through three unsuccessful FBI investigations against Marcello, which occurred later in his criminal career: the abortive 1975 UNIRAC (Union Racketeering) Investigation, the 1980 St. James Parish corruption investigation, which was an offshoot of the overall BRILAB sting, and lastly the 1985 CAMTEX investigation.


Before the FBI’s efforts to further imprison Marcello are examined, a review of the historiography of the Marcello-era of the New Orleans Mafia is necessary. Compared to its East Coast counterparts, the New Orleans Mafia lacks extensive scholarship. Presently, the seminal work on the Marcello-era of the New Orleans Mafia is Mafia Kingfish by John H. Davis. Davis’ work is not only the first full account of Marcello’s life and underworld career, but Davis also successfully sued the FBI for the release of a portion of Marcello’s undercover BRILAB tape transcripts; the FBI sting that landed the Mafia boss in prison in which he personally describes the inner workings of his criminal enterprises. While Marcello is not the focus of Michael L. Kurtz’s Earl K. Long: The Saga of Uncle Earl and Louisiana Politics, Kurtz was able to obtain the FBI’s entire file on the Louisiana Mafia, and document to a great extent the symbiotic relationship between Louisiana politicians and the New Orleans Mafia. Lamar Waldron’s Legacy of Secrecy, which was the first book to detail the FBI’s CAMTEX (Carlos Marcello, Texas) operation against Marcello, Waldron was able to undercover the identities of the principal undercover informant and agent that participated in the operation, despite their names being redacted in the files, giving more depth to the investigation. It also must be noted that both Davis and Waldron’s works both delve into the conspiracy theory that Marcello was involved in plotting the assassination of President John F. Kennedy. Such theories sensationalize the criminal career of Marcello, for if a mob boss can get away with killing the President, why not get away with an array of other crimes? This paper will not only attempt to understand the structure of the New Orleans Mafia through comparison of mob families on the East Coast, but will also examine the political corruption and underworld economy that allowed Marcello’s organization to flourish in New Orleans and escape major prosecution.


The first major obstacle that hindered law enforcement in investigating the New Orleans Mafia from the start was identifying its structure. From the beginning of the government’s inquiry into investigating Marcello with the 1951 Kefauver Committee to the FBI’s 1985 CAMTEX investigation, little was known about the structure of the New Orleans Mafia besides the fact that Carlos Marcello was the head of it. Names of different associates, gamblers, and suspected members have always been tossed around, but the New Orleans Mafia seems to lack the detailed hierarchy of a traditional American Mafia “family” structure that we have seen with East Coast crime families. So absent is the structural knowledge of the New Orleans Mafia that historian Michael L. Kurtz doubts its existence in his article Organized Crime in Louisiana: Myth vs. Reality, saying that “the Louisiana “Mafia family” of which Carlos Marcello is “the boss” appears to exist only in fantasy.” Kurtz was correct in that applying the typical East Coast Mafia structure to New Orleans would make it a “fantasy”, but the evidence that Marcello was the boss of a criminal network in Louisiana is not. In his research into Marcello, John H. Davis described the structure of the New Orleans Mafia as not a strict hierarchical organization like the East Coast crime families, but “a spontaneous grouping of individuals of like mind and inclination, usually, but not always tied by bonds of kinship…a vast network of professional criminals, shady businessmen, corrupt law enforcement officials, politicians, and government bureaucrats that resembled a club more than a corporation.” The description of the New Orleans Mafia by Davis would resemble more of the “clientelistic structure of the (Sicilian) Mafia cosca, which is required to carry out a continual redistribution of funds among its ravenous members and which involves an endless fragmentation of corporate structures with a view to concealing their activities..” which would operate contradictory to the more vertically “capitalist corporation” styled Americanized structure of East Coast crime families.


The last major, and most ambitious, investigation against Marcello would be the 1985 CAMTEX investigation. Already incarcerated for the 1981 BRILAB undercover sting, the FBI learned that Marcello was still able to operate his criminal network from inside his cell in Texarkana Federal Prison. The major goal of the CAMTEX investigation was to “identify the hierarchy and criminal activities of the New Orleans LCN Family and secure a criminal enterprise prosecution”; similar to what the FBI was doing to the “Five Families” in New York. The FBI would openly admit that failure in intelligence gathering on the structure of the New Orleans Mafia (referred to as LCN, La Cosa Nostra, in FBI files) was a historic problem in dismantling the organization.


The FBI’s lack of structural knowledge of the New Orleans Mafia presented challenges in the CAMTEX investigation. One major problem is that because the FBI didn’t know exactly who key members of the organization were, they didn’t know who to focus their efforts on. Declassified FBI files show that the bureau believed that Marcello’s brother and longtime “underboss”, Joseph Marcello, was “street boss” while Marcello was in prison, and Marcello’s only son, Joseph Marcello, Jr., was also allegedly heavily involved in his father’s criminal network; but besides that the FBI had very little reliable information to go on. The FBI had already identified Anthony Carolla, son of Marcello’s deported predecessor Sylvestro “Silver Dollar Sam” Carolla, and Frank Gagliano, the son of another deported New Orleans mobster, Guiseppie Gagliano, as higher level mobsters in Marcello’s organization, but weren’t quite sure where they fit in. Because they were unable to identify them, the bureau was unable to penetrate Marcello’s criminal organization through lower ranking members either through surveillance or undercover operations, like the bureau did with New York crime families. Frustrated agents admit in teletype memos that the “traditional methods of investigation are not adequate in this case to develop a prosecutive case against the subjects.” A very logical reason the FBI ran into problems clearly identifying the structure of the New Orleans Mafia is because they were applying the strict vertical structure of the New York Mafia family model in investigating the New Orleans Mafia, where it didn’t fit. This can be seen clearly in the FBI’s own files, where they listed suspected members based off of their assumed positions in the organization. The bureau was looking for a straight vertically lined structure, when the New Orleans Mafia may have been more of a circle. Unable to identify members on the outside, the FBI would focus its CAMTEX investigation on Marcello himself; which would present its own set of challenges. The FBI would learn that “..Marcello is reluctant to participate in illegal acts with an individual whom he has just met and that he may require either a history of legitimate dealings or vouching for this individual by other organized crime leaders before he will develop acts…only long-standing, high-level members of the organized crime family or close associates of such are trusted enough to participate…informants have been unable to get close enough to subjects to provide detailed information as to exactly how these criminal acts are being done. Attempts to place informants in strategic positions within the LCN or hierarchy have been unsuccessful…” The FBI knew that Marcello would use the unique structure of his organization to insulate himself. Here the FBI was able to adapt and ensnare Marcello in an undercover sting that was similar to BRILAB; though this elaborate undercover operation would only target Marcello, not the entire structure of the New Orleans Mafia, which was not the original intent of CAMTEX. At the end of the undercover operation, the only illegal act that they could charge more than one member on was Marcello’s son trying to bribe a prison official to get his ailing father either better care or out of prison entirely. The bureau was not confident that “a jury would not convict a son trying to get his father in a better prison” and would not bother indicting neither Marcello nor his son; making the last large scale investigation against Marcello unsuccessful.

“I got connections, yeah. I know everybody from….Grand Isle all the way to Raceland, man…All the way to Houma, you know…It take me two days if I stop at each one of ‘em houses to say hello, right. Yea, it’s really somethin’ to see….I got two Italian boys. They state representatives, Guarisco and Siracusa…I know all these people…Go there and gotta get the right people. Say ‘here $5,000, $10,000…It takes time to get where I am at. To know all dese people – governors, businesses, the attorney general. They know me.” The words of longtime New Orleans Mafia boss Carlos Marcello being caught on tape during the FBI’s undercover BRILAB (Bribery, Labor) investigation would reveal the state wide political connections the underworld chieftain commanded. A second major obstacle that would prohibit a major indictment against Marcello and the New Orleans Mafia would be Marcello’s political connections. There is debate among authors and scholars of the New Orleans Mafia over when it was officially established. Some argue that the New Orleans Mafia predated the Civil War, while others argue that it wasn’t until Prohibition that the Mafia was merely an insignificant presence in the New Orleans underworld, and not until the Long political machine of the 1930s that the New Orleans Mafia was nurtured into the dominate criminal organization that Marcello would eventually be in control of. Since there is no proof of definitive lineage of leadership of the New Orleans Mafia, for the purposes of this paper, it will begin with the Governorship of Huey Long. Historian Michael L. Kurtz would cover the genesis of the symbiotic relationship between the New Orleans Mafia and modern Louisiana politicians with a chance meeting between then Governor Huey Long and Genovese crime family mobster Frank Costello in New York in August of 1933. A deal was struck between the two men that Costello would install his illegal slot machines into New Orleans establishments, with Long receiving a cut. Strong arming Costello’s “one armed bandits” into French Quarter bars at the behest of Costello and the Long machine would be the beginning of significant growth for Marcello’s career and the New Orleans Mafia (then led by Marcello’s predecessor Sylvestro “Silver Dollar Sam” Carolla before his deportation in 1947); and would establish a system of graft among Louisiana politicians and Marcello that would keep him insulated for several years against law enforcement. With the assassination of Governor Long and the later botched assassination against Costello that would force him into retirement, Marcello and Louisiana politicians, from Governors to parish level leaders, would continue this arrangement of corruption. For example, in 1948 the New Orleans FBI field office would remark that “Marcello was given the keys to the front door at Angola since Earl Long came to power.” Further examples of Marcello’s corruption of local politicians and law enforcement, and how they sometimes hampered, even inadvertently, federal investigations, can be seen in various documents in the St. James Parish investigation and the before mentioned CAMTEX investigation. During the undercover BRILAB investigation, the FBI recorded Marcello mentioning that he paid numerous bribes to the head of the police jury in St. James Parish, located in South Louisiana. While the overall BRILAB sting would be successful, this investigation was not. The head of the police jury, whose name is redacted in the files, had accesses to bids for the construction of a grain elevator in St. James Parish. Marcello would say on tape that the politician would purposefully inflate the bids by 10 to 15%, skimming money off the top of the construction cost, and splitting it between himself, the politician, and the man in charge accepting bids of the selected company, which was the Zen-Noh Grain Corporation of Louisiana. The FBI concluded that the St. James Parish politician would act in Marcello’s interest, since he was hesitant to be too involved because of his reputation as an underworld figure. Another way that Marcello would make money off of this construction job would be through extortion. A man with the company that the sprinkler system instillation on the grain elevator was awarded to was approached by someone demanding $10,000 to keep the “labor peace” and made several threats including violence and sabotage. While the name of the man making the threats was identified, his name was redacted in the declassified files, but there are several suggestions to his association with Marcello. When the FBI tried to get permission to rig up recording devices to get the politician on tape, the FBI denied the blanket use of recording devices because a public figure was involved, needing to request additional authority from headquarters for approval. The bureau would presumably abandon the operation, because the teletypes ends with a request to go forward or not. Neither Marcello, nor the St. James Policy Jury member was ever charged by the FBI for in this investigation, partly in due to the bureaucracy with a public figure being involved.

Two public officials would also make the before mentioned CAMTEX investigation harder for the FBI. Besides identifying the structure of the New Orleans Mafia during the CAMTEX investigation, agents were also charged with securing a “criminal enterprise prosecution.” The FBI would find out that Marcello’s “contacts at all levels of state government” were still being utilized from his jail cell in Texarkana. While trying to expose Marcello’s drug distribution network, it was discovered that a member of the South Louisiana port commission and the then Jefferson Parish sheriff were both aware and even cooperating with Marcello, who was bringing in tons of marijuana into South Louisiana. The FBI would attempt to get close enough to the unidentified port commission member, but was unable to gather any information that could have been of use to the investigation. There was also a point in the investigation where the FBI was suspicious of a leak coming from the New Orleans Attorney’s Office to Marcello, due to “setbacks” in the undercover aspects of the investigation.

A third major hurdle for the FBI to get a firm conviction against Marcello would be how Marcello handled his illegitimate finances. In 1975, the FBI’s UNIRAC investigation exposed the Mafia’s control over waterfront commerce on the East Coast. The International Longshoreman Union (ILA) was penetrated by both the Gambino and Genovese crime families. Anthony Scotto, a Gambino crime family capo, was one of the most powerful union leaders in the ILA. Though the Mafia’s control over the ILA seemed cemented, Scotto, along with Genovese mobster Michael Clemente and 33 union officials, would be indicted. By the time UNIRAC would end, 110 others along the eastern seaboard would be convicted. With their success along the east coast, the FBI wanted to end waterfront corruption along the Gulf Coast as well, leading them to investigate Marcello’s involvement with container companies. It’s not uncommon for mobsters to purchase legitimate businesses to act as “fronts”, but the UNIRAC investigation would reveal that Marcello took it one step further and not only purchased seedy establishments usually associated with the underworld like bars, restaurants, and strip clubs, but also hotels, insurance companies, shipping container companies, machine shops, landfills, and vast amounts of real estate and swampland. This would be corroborated in later investigations against Marcello, like the 1985 CAMTEX investigation, where the FBI would discover that Marcello’s primary strategy of money flow would be to “make money from drugs and (illegal) gambling and invest his money into real estate” and other legitimate enterprises. These investments would not only give Marcello a source of legitimate, taxable income, but were also extremely profitable.

A good example of the profitability of Marcello’s legitimate investments would be the company that would become the focus of the FBI’s waterfront investigation, a waterfront container company named Gulf Coast Fabricators. Bank statements would reveal that there was substantial cash flow from Gulf Coast Fabricators to Marcello, who was presumed to be a silent partner in the company. Bank records would also reveal that Marcello was the principal co-signer of a $400,000 loan for the company that allowed the purchase of a manufacturing plant from Crawford Industries in Schriever, Louisiana that was worth $900,000. Due to the national oil shortage of 1973-74, the owners of the Schriever plant needed to sell immediately, accounting for the low price. On June 5, 1975, the Schriever plant, valued at $900,000, was sold to Marcello as an individual by Gulf Coast Fabricators for $1.00. Assuming that he could get full value for the property and its contents, Marcello would net, after paying off the loan that he was only a co-signer on, a profit of almost a million dollars for a one dollar investment. While the strict legality of this business deal may come into question, the FBI was not presented with enough evidence to charge Marcello with any crime, much less the scathing RICO and perjury indictment they were seeking. Though with a lot of taking, also came alot of giving. Marcello’s bank statements would show that he would also divert funds from his personal checking account to the several companies in between the years of 1975 and 1976. While several of these companies, like Pelican Tomato Company, Jefferson Music Company, and the Town and Country Motel, are known Marcello businesses, there are several that aren’t, suggesting that Marcello may have had the same parasitic relationship with these legitimate businesses as he did with Gulf Coast Fabricators.


While the FBI would fail to get a structural RICO indictment against the New Orleans Mafia while Marcello was boss, the advent of the legalization of gambling in Louisiana would bring about the downfall of the New Orleans Mafia. Though Marcello was released from prison in 1989, the declining health of the 79 year old Mafia boss forced him into retirement, eventually succumbing to a series of strokes in March of 1993. Sometime during his latter period of incarceration, leadership of the New Orleans Mafia changed hands from Carlos, and his brother Joseph, to Anthony Carolla. Using the same strategy the FBI used to put Gambino crime family boss John Gotti in prison, the FBI would electronically bug Frank’s Deli, a small deli on Decatur St. in New Orleans’ French Quarter, which was the main HQ of the post-Marcello Mafia. Hidden electronic audio surveillance that was previously unsuccessful on Marcello revealed that not only was Carolla partnering up with the Genovese crime family in attempting to establish a skim off of Louisiana’s newly legalized video poker industry, but also that Gagliano’s son, Joe Gagliano, was organizing “cheating teams” and bilking the President’s Casino in neighboring Biloxi, Mississippi out of hundreds of thousands of dollars by cheating in blackjack. The structural RICO indictment that the FBI was able to put together out of this audio surveillance, nicknamed OPERATION HARDCRUST after the stale bread served on poboys at Frank’s Deli, would land the entire upper echelon of the New Orleans Mafia in prison; effectively leaving the organization in its defunct state that it’s in today. Carolla did not have the political connections or the scope of legitimate investments that Marcello had, which immediately opened him up to prosecution. By this time the FBI had also more of a grasp of how the structure of the New Orleans Mafia worked, thanks to the bug placed in Frank’s Deli, finally leading to the structural prosecution of the New Orleans Mafia.

[eboli]

Thanks for posting.