New Era of Organized Crime

New Era of Organized Crime

by Lisa Tortorice


According to a study published in 2001 by the Confederation of British Industry ("CBI"), 13% of the cybercrimes that occurred in the UK in 2000, were committed by organized crime.[1] Traditionally, organized criminals are known for their involvement in gambling, prostitution, drug trafficking, and their control over unions. One of the most obvious characteristics of organized crime is their threat and/or use of force. Making money to support their criminal enterprises is the main motive of organized crime, and with the additional money that can be made by committing computer crimes, organized crime groups have begun to make a transition into using new technologies. Some traditional crimes, such as money laundering translate very easily into this new environment, while others, such as drug trafficking do not. Credit card fraud and other Internet-based scams are a new source of income for these groups. This paper will provide background on three of the most prevalent organized crime groups and attempt to show which types of internet attacks these groups are using.


Organized crime is defined as "organized groups of professional criminals" in the Security Database. [2] The American Heritage College Dictionary defines organized crime as "1) widespread criminal activities that occur within a centrally controlled structure 2) the peoples and groups involved in such criminal activities." [3] The Federal Bureau of Investigation ("FBI") defines organized crime as "any group having some manner of a formalized structure and whose primary objective is to obtain money through illegal activities. Such groups maintain their position through the use of actual or threatened violence, corrupt public officials, graft, or extortion, and generally have a significant impact on the people in their locales, region, or the country as a whole." [4]

Crime itself is much more easily understood. As defined by the American Heritage College Dictionary it is "1) an act committed or omitted in violation of a law forbidding or commanding it and for which punishment is imposed upon conviction 2) unlawful activity 3) a serious offense, esp. one in violation of morality 4) an unjust, senseless, or disgraceful act or condition". [5] But what makes a crime "organized"? The above definitions for organized crime have one thing in common - organized criminals have some form of structure in their group. Typically there is a leader and all other members would fall into a defined hierarchy. For example, in the traditional (Italian) organized crime groups there is the consigliere, the bosses, the underbosses, made-men, and recruits. Each member has a defined role in the criminal organization and their individual efforts are combined to create the profits for the group.

Major Organized Crime Groups: A Brief History

Traditional (Italian) Organized Crime

Traditional organized crime began in the United States when Italian immigrants came to the country during the late nineteenth century through the early twentieth century. These immigrants placed an importance on family relationships, and continued to do so when they encountered difficulties in the United States. These family relationships translated very easily into the structure of organized crime.

During this time of immigration, in growing cities like Chicago and New York, saloons were becoming a center of social activity as well as political activity. Saloons were places where people could meet with others; there were mail services for sending letters, patrons could play billiards or bowl, and there was music, singing and dancing. Because saloons were a center of social activity they also became a center of political activity and the saloon keepers gained power in the world of politics. With the help of street gangs they influenced votes and intimidated voters. The political candidates would help those in need, bailing people out of jail, finding jobs for the unemployed and helping families who could not afford their rent - all in exchange for votes. Immigrants typically were the ones who required help from the politicians and some of them ended up in the street gangs.

Things changed in the 1920s when Prohibition laws were passed. Criminals started to bootleg liquor and conflicts began between rival bootlegging organizations. The street gangs gained power when it became necessary for the criminal organizations to protect themselves from rival organizations instead of from law enforcement agencies. The leaders of the street gangs emerged on top of the criminal organizations and in 1933, when Prohibition ended, they became the leaders of traditional organized crime. In order for the organizations to be successful they became territorial and each group was "asked" to remain on their own turf. The groups became more family centered with the consigliere, the boss, the underboss and made-men hierarchy.[6]

Traditional organized crime has continued to exist in the United States and elsewhere. In June, 2002, 31 members of the Gambino crime family were arrested and charged with racketeering, extortion, loan sharking, wire fraud, money laundering and witness tampering. Peter Gotti was one of the criminals arrested and is the brother of John "Teflon Don" Gotti, who was convicted in 1992 for racketeering, conspiracy to racketeer, defraud and obstruct justice, murder in the aid of racketeering, operating an illegal gambling business and witness tampering. Part of the indictment alleged the Gambino's influence on the International Longshoremen's Association union which represents 65,000 maritime workers. The charges also included alleged illegal influence on New York waterfront businesses and extortion of money from local businesses and workers.[7][8] In November, 2002, 20 members of the Bonanno organized crime family were arrested and charged with loan-sharking and the operation of illegal gambling. Robert Morgenthau, the Manhattan District Attorney, stated that "the defendants netted more than $2.5 million a year from their criminal activities".[9]

Colombian Organized Crime

Columbian organized crime is mostly associated with drug trafficking, especially that of cocaine. Prior to the 1970s Cuban organized crime groups were the suppliers of drugs in the United States and received their goods from Columbia. In 1976, the Columbians discovered the extent to which the Cubans were keeping extra profits and they resorted to violence, killing Cuban organized crime members in New York and Miami. [10] They then took over the operation and continue to be major suppliers of drugs in the United States and around the world.

Columbian drug cartels are most vulnerable to law enforcement agencies when they communicate with one another. Most communications are between members located in different countries. Wire taps are proving less effective in stopping shipments of cocaine due to new encryption technologies used by the members of these organized crime groups. In addition, they are also using the Internet to launder money.

East-European (Russian) Organized Crime

Organized crime has existed in Russia for hundreds of years. Until World War II the criminals existed to defy the law and reject authority of the government (Tsars). During World War II many of the outlaws fought the Germans along with support from the government. This led to a division among the organized crime groups in Russia. Some of the groups were more willing to work with their government after the War and did not reject the authority as they had previously. In addition, the criminals took a different attitude toward their crimes. They became more interested in making money for themselves, and less interested in committing crimes just to reject authority.

>From the 1960s until the collapse of the Soviet Union, underground criminals and government officials began to work together more and more until the legitimate and the illegitimate economies could not survive without each other. Legitimate business could not get the supplies they needed unless they bought them from the black markets. It is estimated that by the 1980s, 83% of the population used the services of organized crime to obtain the products that they used in their businesses. Government officials had also developed relationships with these organized crime groups.

Most Soviet leaders, until Gorbachev, supported this economic system of corruption. Gorbachev tried to reform it. Unfortunately his attempts at reform only succeeded in strengthening the ties between the elite class and organized crime, making both groups richer.[11] Today organized crime in Russia is still closely linked with legitimate businesses and like legitimate businesses are expanding their spheres of influence to the rest of the world. They are also moving to other markets of crime. According to the annual report of Criminal Intelligence Service Canada ("CISC") East-European organized crime groups' "criminal activities have expanded beyond street-level crimes and now include a variety of sophisticated fraud, theft, smuggling and counterfeit activities." [12]

Effect of Information Systems on Organized Crime Groups

Organized crime groups are able to take advantage of the technologies that legitimate businesses are using. Correspondence between organized criminals can occur via email just as we all correspond via email. This causes their communications to occur immediately and from anyplace where there is a computer and Internet connection. With new encryption technologies they are also able to hide their tracks from law enforcement making it difficult, and more expensive, for officials to follow an information trail. A re-mailer, or multiple re-mailers, can be used to remove identifying headers from emails and replace them with false information. The same holds true for cell phone use and the criminals' ability to prevent their communications from being traced. Phone calls can be sent through multiple carriers, both local phone companies and wireless and satellite networks. Organized criminals are also able to clone cellular phones by copying an electronic serial number and programming it on computer chips. These cloned phones cost the cellular phone industry millions of dollars a year and make it more difficult for law enforcement agencies to trace the calls with accuracy.

The Internet itself has become a tool by which organized criminals can commit their crimes. Money laundering may be easier and faster to do with the increased use of online banking systems. The transfer of money from one account to another can be completed by simply filling out an online form. This eliminates face-to-face interaction and can be done from anywhere in the world (and to anywhere in the world). The anonymity that the Internet offers allows criminals to commit their crimes with less of a chance of being caught. In addition, since these online banking systems, and credit card systems, contain so much information about their customers it is possible for organized crime groups to obtain bank account and credit card numbers by hacking into their systems. Organized crime groups are recruiting younger and more Internet savvy hackers to join their groups; and there is also evidence of these groups buying this type of information from hackers. Another means of defrauding Internet users is through websites which "sell" goods online. Customers purchase the product, but never see it, and organized criminals now have another credit card number.

The Internet has become a new means of distributing child pornography and has added a new dimension to the problem of sexual explotation and the trade of women. People can sell, buy, and advertise child pornography and prostitution online through the use of images and streaming videos. Scanners, digital cameras and digital video cameras are technologies that criminals employ to advertise their pornographic products on the Internet. Much of the child pornography online comes from the scanned images of pictures in magazines and films from the 1960s and 70s. These pornographic images of children are posted on online newsgroups. Through these advertising efforts organized criminals are able to let customers book appointments and ask questions about the brothel and the girls/women that they are interested in. Internet chats are also used as a way to "recruit" young women and children to run away and become prostitutes. Interactive DVDs are also being made. These DVDs allow the user to imagine that they are on a date or are engaging in sexual acts with the "actor" on their computer screen.[13]

The Internet is also used as a means by which organized criminals can sell illicit drugs and pirated copies of software, as well as conduct illegal gambling rackets. These crimes are becoming global in nature because the Internet does not follow traditional country boundaries. This is also a problem for law enforcement since cooperation between countries can be difficult because of differences in laws. Organized crime has taken advantage of the differences in many of the markets, especially in software piracy. It is easier for these criminals to conduct the piracy - the ripping of the CD-ROMs and replication of fake CD-ROMs and packaging in countries where the piracy laws are less rigid.

Imagine a world where you can get online and purchase cocaine, a DVD of child porn, an illegal copy of Microsoft XP and then spend a couple of hours gambling illegally. Or perhaps it is easier to imagine getting an email promoting a new stock from what looks like a legitimate sender. After reading through some of the materials online you think this is a great opportunity to make some money and hand over a good portion of your savings to organized criminals. Some of these crimes have already occurred and some of these may occur more often in the near future.

Examples of Attacks Committed By Organized Crime Groups

Money Laundering

Money laundering is the process by which illegally procured money is turned into "clean" money. In order for "dirty" money to be used in legitimate businesses it must appear to have been gained in a legal manner. In addition, dirty money can be used as evidence against criminals in an investigation and is often a target of seizure by law enforcement. Money laundering is a three-step process. First, the money obtained illegally must be placed somewhere. For example the money may be placed in a bank account obtained under a false name, or kept in a safe deposit box. Second, the money must be "layered". Usually it is transferred from one account to another, maybe across country lines, in order to make it difficult for law enforcement to follow the trail of the money. Finally, the money is "integrated". In this stage the money is made to appear that it was received through legitimate business. There are many ways in which this is done. Some of the techniques used are to create fake invoices for merchandise sold from one country to another, to purchase property and to make the money appear that it was obtained upon the sale of the property, and mixing the dirty money with clean money in a business bank account.[14]

Money laundering has been committed by organized crime for decades. Most of these groups deal with a lot of money, and seizure of this money by law enforcement officials is a major concern since it can be used as evidence against them during trial. Many banks are doing business online and this has made it easier for criminals to transfer their monies from one account to another, even across country boundaries. Money laundering has thus become a serious international problem. The layering (through online banking) and integrating (through online auctions, gambling, etc.) portions of the laundering process can be done more quickly and effectively online, and the criminals can also take advantage of the anonymity that the Internet can provide to them.


According to a study conducted by Microsoft, software piracy creates a $12 billion loss for the industry on an annual basis. Also, more than 80% of all business software created is pirated in one form or another. This is a relatively new industry and organized crime has begun to take advantage of it. In November, 2001, 31,000 copies of pirated software were found in Los Angeles. If sold at retail price they would be worth approximately $100 million. The software itself was made to appear legitimate, from the packaging down to the authentication codes. Among the products found were Windows 2000, NT and Millennium operating systems, Office 2000 and Norton AntiVirus. The authorities believed that the software originated in Taiwan and would have been sent to small software stores as well as being sold over the Internet.[15]

In December, 2002, a group of people who were pirating software across the United States were arrested during 100 coordinated raids. The organized criminals called themselves, DrinkorDie. The biggest difference between this group and other organized crime groups is that they claim to have committed their crime, not for the money, but for fun. Although not all of the evidence points to DrinkorDie being a typical organized crime group, they were still divided into groups of people with different tasks. In DrinkorDie's piracy efforts, as well as in other organized crime groups' efforts, "suppliers, often insiders at a software company, steal the program. Crackers strip the programs of their protections. Testers make sure that the unprotected versions of the software work properly and packers divide the programs into small files and distribute them."[16] According to a report of the Business Software Alliance, in the United States alone 118,000 jobs and $5.7 billion in wages were lost due to software piracy in 2002.

In addition to software piracy, organized crime has become involved in counterfeiting DVDs. Criminals have been operating in countries that do not have strict copyright laws. This allows them to have more of a chance of evading the law. Countries such as Russia and Malaysia have factories in which their counterfeiting takes place. Jack Valenti, president and CEO the Motion Picture Association of America testified before a House Judiciary subcommittee stating, "large, violent, highly organized criminal groups are getting rich from the theft of America's copyrighted products. Only when governments around the world effectively bring to bear the full powers of the state against these criminals, can we expect to make progress."[17]

Credit Card Fraud, Identity Theft and Extortion

One of the emerging trends in organized crime is the use of credit card fraud and identity theft to make money, either by stealing it from the victim or through extortion of the companies that owned the information. Organized crime has begun to either recruit younger "Internet generation" criminals or to buy credit card information from hackers. In June, 2002 computers at Arizona State University and several other colleges were attacked through the use of keystroke recording software. The software was used to steal the students' passwords and credit card numbers, and to break into students' email accounts. It is believed that these crimes were committed by Russian organized crime groups.[18]

In December, 1999 police in Toronto arrested 38 members of a Russian organized crime group. Although the group was based in Toronto, they had operations on at least four other continents across the globe. Allegedly the criminals gained access to credit-card information while it was being transmitted from stores to banks and also broke into ATM machines to obtain encrypted information. They also were able to create fake credit cards, and in using these stolen credit card and debit card numbers they were able to steal millions of dollars from banks and credit card customers. It is believed that the leader of the group hired someone to build equipment which could be use to intercept the information. In addition, they may have had the help of an insider to install the software on ATM machines and the credit card machines at the stores.[19]

In March, 2001 the FBI announced that more than one million credit card numbers may be in the hands of Eastern European organized crime. These numbers were obtained when extortionists attacked approximately 40 computer systems in 20 states in the U.S. and then offered to help fix the vulnerabilities in the Microsoft Windows NT operating system that allowed them to break into the secure computers. It is believed that many of the credit card numbers that were stolen were sold to organized crime groups.[20]

Identity theft is becoming a major issue in the United States. With the increase of commerce being conducted through the Internet, stolen credit card and social security numbers, and other personal information has become extremely valuable. It is estimated that in 2002 identity theft cost victims and financial institutions more than $700 million. Identity theft cases comprised 43% of all fraud-related crimes reported to the federal government in 2002. Organized criminals have discovered this lucrative business and are either hiring people (hackers or insiders) to obtain the information for them, or paying them for it. [21]

Wall Street Stock Scams

In June, 2000, 120 people, including members of all five New York organized crime families were arrested for their participation in a stock scam of grand proportion. The scam was estimated to have caused at least $50 million in losses for investors. The stocks that were targeted were "penny" stocks which do not trade on major exchanges. This allowed the criminals to avoid detection for some time since information about these stocks is relatively scarce and they are not followed by many investors. It is also simple to manipulate the data regarding the stocks by using the Internet (via chat rooms, email, and message boards). Criminals looked for stocks with .com in their name because they were popular at the time. In addition to the organized crime figures, the people arrested included Sebastian Ramette, CEO and James Chickara, vice chairman of the Ranch+1 Fast food chain, a NY Police Department detective, stock brokers, insiders and investment advisers.[22][23][24]

Online Gambling

Traditional organized crime has been involved in gambling rackets for almost a century. With the advance of technology illegal online gambling has become a problem. Criminals have used keystroke recording software as a means of obtaining credit card numbers for use in fraud and identity theft. That technology was used by the FBI in 2001 to break the computer code of a New Jersey organized crime member who is now accused of running an illegal gambling racket. Although the technology has proven useful, it may be an invasion of privacy and its use is still a matter of discussion among law makers. [25]

Child Pornography and Prostitution

In October, 2002, 80 people were arrested throughout Europe for their involvement in the trafficking of illegal immigrants. The criminals were arrested in Russia, Belarus, Poland, Spain, Portugal, Ukraine, Germany, France, and Austria. It is believed that the immigrants were being sold and forced into protitution or slavery. These arrests were linked to Russian and Italian organized crime groups.[26]

As mentioned above, organized crime groups try to commit international crimes in locations with regulations that are less strict. The cooperation between Russian organized crime and the Russian government has become a major problem in fighting the dissemination of pornography on the Internet. Moreover, these types of crimes are not prosecuted to the extent in Russia that they would be in other countries, making convictions all the more difficult.[27]

In President Bush's address to the United Nations on September 26, 2003, he discussed the need for countries to cooperate in the fight against the international sex trade industry. It is estimated that 20,000 people are brought to the United States each year to be used as "sex slaves" and about 900,000 children and women are kidnapped or tricked into becoming sex slaves around the world. Earlier in 2003, Bush signed a law that has made it illegal for U.S. citizens to have sex with children while traveling abroad and for people to come to the United States for the purpose of "sex tourism involving children". The profits made in the sex slave industry continue to provide money for other organized criminal activities.[28]

Effect of Organized Crime on Information Systems

As the Internet becomes a new forum for organized crime groups to expand their enterprises, everyone who uses the Internet can be affected by the illegal work of the groups or become one of their victims. As mentioned above, organized crime is taking advantage of the personal information available over the Internet. Credit card numbers and bank accounts are intercepted by hackers during the course of normal business routines and used by organized crime to commit fraud and identity theft. In most cases of identity theft it takes months, even years, to get a good credit rating back. Banks and credit card companies are forced to spend more money to protect their customer's information through specialized hardware and software, custom applications, and network monitoring tools in order to prevent criminals from obtaining it. E-commerce websites will also be affected, as fraudulent credit cards may be used to purchase merchandise online. The sheer number of pornographic websites on the Internet has created an entire industry of software designed to protect children from accessing those sites and to allow parents to monitor the sites that their children are visiting. The crimes that organized criminals are committing have had an effect on the safety of the Internet and "common sense" needs to be used more often by everyone online.

Globalization of Organized Crime

Dr. Mark Galeotti, a Keele University expert in organized crime in Russia and Eurasia, said: "The global underworld is evolving and globalizing every bit as rapidly as its legal counterpart and to a large extent in response to the same pressures and opportunities."[29] It has become clear that as we are moving towards a more global economy, crime has crossed international boundaries. With the use of the Internet and ease of travel between countries, criminals are discovering more methods to commit crimes. Organized crime groups whose main motivation is profit are taking advantage of these opportunities to steal money. As seen in the above examples one step in the money laundering process occurs when money crosses country boundaries. Piracy is committed in countries with weak copyright laws and the goods are then shipped across the world. Credit card numbers and identities are stolen and used internationally. It is increasingly important for law enforcement agencies in all countries to work together to create laws which can be upheld when international crimes have occurred.

Summary, Conclusions, and Further Work

Organized crime groups are a threat to information systems. The ability to communicate with one another via encrypted email, chat rooms and message boards provides anonymity. The ability to use the Internet to sell drugs, pirated software, and child pornography expands their reach to anyone across the world with a computer and Internet connection. Their increased use of young "Internet savvy" hackers to help them gain access to credit card and bank information poses a significant threat to anyone whose personal account information and passwords are on a computer system. Online scams are an easy way for organized criminals to trick people who are less familiar with the Internet into putting their life savings into a fake get-rich-quick scheme. Unfortunately, criminals are getting smarter and their use of the newest technology to commit crimes presents a problem for law enforcement officials. Robert Muller, Director of the FBI recently stated "The threat of today and of the future is a dangerous convergence of terrorist, intelligence and criminal groups all operating to a greater or lesser degree over the Internet and through interconnected sophisticated networks. And in this environment, the traditional distinctions between organized crime, cyber crime, espionage and terrorism have broken down."[30] The future will show how true this statement is, but if the ability to make money illegally in this environment continues, organized criminals will still attempt to take advantage of it.


[1] Study: Many UK businesses prey to cybercrime, Available at

[2] Cohen, Fred, Security Database, Available at

[3] American Heritage College Dictionary, 3rd Edition, 1993

[4] FBI Website, Available at

[5] American Heritage College Dictionary, 3rd Edition, 1993

[6] Abadinsky, Howard, Organized Crime, Nelson-Hall Chicago, 2nd Edition, 1985, pp. 84-93

[7] U.S. attorney announces indictments of alleged Gambino members, Available at

[8] U.S. indictments target organized crime, Available at

[9] 20 arrested in organized crime bust, Available at

[10] Abadinsky, Howard, Organized Crime, Nelson-Hall Chicago, 2nd Edition, 1985, pg. 160

[11] Heilman, Robert, Russian Organized Crime, Available at

[12] Organized Crime at a Glance, Available at

[13] Hughes, Donna M., The Use of New Communications and Information Technologies for Sexual Exploitation of Women and Children, Available at [14] Schroeder, William, Money Laundering: A Global Threat and the International Community's Response, FBI Law Enforcement Bulletin, May 2001

[15] Tech Live Staff, Pirates' Proficiency Worries Microsoft, November 19, 2001, Available at,23102,3361542,00.html

[16] Hacking into organized crime, Available at

[17] McCullagh, Declan, Antipiracy allies: Watch out for the Mob, Available at

[18] Hackers may Have Broken Into College Computers, June 20, 2002, Available at,24195,3388682,00.html

[19] Cohen, Fred, database, Available at, from Wired News Report, December 10, 1999

[20] FBI warns companies about Russian hacker attacks, Available at

[21] Identity Theft Doubles in 2002 to Account for 43% of Fraud Complaints, Organized Crime Digest, Vol. 24, No. 4, March 7, 2003, pg. 1

[22] Cohen, Fred, database, Available at, by Appleson, Gail, Reuters, June 14, 2000

[23] Cohen, Fred, database, Available at, from The Associated Press Special to CNET, June 14, 2000

[24] Gallo, Carmine, Stock Fraud Crackdown a Warning to Investors, June 14, 2000, Available at,23102,2587793,00.html

[25] FBI uses 'key logger' to crack mob code, Organized Crime Digest, October 15, 2001, pg 3

[26] 80 Arrested for human trafficking, Available at

[27] Hughes, Donna M., Prostitution in Russia, National Review Online, November 21, 2002, Available at

[28] McFeatters, White House Watch: A call to fight the international sex trade, Naples Daily News, September26, 2003, Available at

[29] Walker, Andrew, Criminal Entrepreneurs Taking the Place of Mafia Underworld, June 20, 2001, Available at

[30] Malone, Jim, FBI Director Warns Future Threats Could Include Convergence of Terrorism, Organized Crime, June 20, 2003, Available at