Assessing the Effectiveness of Organized Crime Control Strategies: A Review of the Literature
- 4.13 Undercover Operations and Information
- 4.14 Electronic Surveillance
- 4.15 Intelligence Analysis
- 4.16 Reducing the Supply of Illegal Goods and Services
- 4.17 Increasing Regulation and Establishing Public Benefits Corporations
- 4.18 Legalization or Decriminalization of Certain Goods and Services
Undercover work may involve one or more of: informants, who are usually suspects who have "flipped" and are exchanging information for consideration in terms of charges or at sentencing; paid agents, who are insiders receiving cash for information; or, undercover officers, who are police officers trying to infiltrate criminal organizations or obtain information about their operations (Beare, 1996:189).
Proceeds of crime and money laundering investigations, for example, often require sophisticated undercover work involving the establishment of elaborate storefront money laundering operations. These storefronts are staffed by individuals knowledgeable about financial transactions and laundering. The goal of such operations is to gain the confidence of the criminal organization toward the end of learning more about its personnel and operations. Sting operations of this type sometimes produce many convictions, but may be costly, involving many officers over a considerable period of time (Albanese, 1996:181).
Undercover work is dangerous—the danger appears to increase in proportion to the severity of sentences targets of such operations stand to serve—and open to manipulation (Beare, 1996:190-191). For example, informers might provide false information in order to receive payments or to punish competitors or enemies (Marx, 1988:152). Other informers may become overzealous "supercops" and create criminals, using prohibited methods. Because of their protected status, the information they provide and techniques they use to gather information are rarely challenged. Marx (1988:153) points out that informers are often unchallenged because they rarely appear in court. These court appearances are rare because
"the information they provide is used to obtain a warrant or they are "cut away" after providing an introduction for a sworn agent."
On the corrupting influence of undercover work, Marx (1988) notes that intimidation, entrapment, and duplicity are fairly common features of such work. It is not uncommon for officers to cross the line from creating opportunities for and observing criminal acts to inducing and tricking people to engage in those acts or even, on occasion, planting evidence. Aggressive undercover work that crosses this line is often prompted by incentives within a police department to "get the numbers up."
Also, undercover officers handling illicit proceeds of crime in the form of cash may succumb to temptation. They may also accept bribes in return for their tolerance of illicit transactions. Furthermore, they may develop sympathies for and be co-opted by targets, leading them to protect rather than vigorously investigate them (Marx, 1988:160).
Another concern is that undercover officers tend to be less experienced investigators and their supervision in the field may be insufficient (Brown, 1985; Miller, 1987). These agents may be exposed to great danger without adequate briefing or preparation. Undercover work can adversely affect third parties when officers facilitate and even encourage the commission of crimes as part of a sting operation (Marx, 1988). Undercover operations may compromise the privacy of investigation targets or third parties. One example involves the cultivation of a romantic relationship between an officer and spouse/lover of a target for the purpose of generating information relating to an investigation.
In recent years, several undercover agents have yielded numerous convictions. The best know agent is Joe Pistone, who worked undercover for six years as "Donnie Brasco" inside the Bonanno crime family in New York. His work led to more than 100 convictions of OC figures (Albanese, 1996:181). This infiltration was undoubtedly a blow to morale in La Cosa Nostra, raising concerns about secrets that had been revealed and questions as to whether other members were government agents (Jacobs and Gouldin, 1999:165).
An example of a successful Canadian undercover operation was that initiated by the RCMP and targeted currency-exchange houses (Beare, 1996:121). RCMP officers, posing as drug traffickers, exchanged amounts of cash that were so large they could have qualified as suspicious transactions and surpassed the $10,000 amount currently requiring the filing of a report to FINTRAC by financial institutions and specified individuals. Police exchanged a total of $3 million, including single transactions involving sums of up to $70,000. As a result of this operation, 190 criminal charges were anticipated against 36 corporations and 65 individuals.
Despite such indications of success, undercover work has not been the subject of more systematic, cost-benefit analyses that consider its far-reaching consequences. Miller (1987) notes that,
"There is little information about how effective undercover investigations are, what they cost (economically, psychologically, or constitutionally), or why they fail. Similarly, the extent to which police departments use the strategy is unknown."
Albanese (1996:181) adds:
The adjustment problems of undercover officers after completing their assignment has also not received enough attention from either police agencies or the public. The FBI claims that its undercover agents were responsible for 680 convictions, $5.7 million in forfeitures, and $741.1 million in potential economic losses prevented in a single year. Although these figures were modified somewhat by a General Accounting Office audit, the benefits of undercover work have not yet been objectively evaluated against their costs in terms of time invested, risk, manpower, and their impact on the officer, the police agency, and on affected third parties.
Albanese points out that agent Joe Pistone and his family had to relocate four times while he was testifying, that he did not see his family for three months while undercover, and that he resigned from the FBI prior to earning a pension because of threats against him. Pistone believes there is a large contract out on his life and he feels hunted by those he once investigated.
Marx (1988:113) lists the outcomes for a number of police sting operations set up to ensnare those involved in property crimes. While the tally of arrests and convictions seem impressive, these studies provide little comparison with other investigative methods and provide little information on the overall impact of these operations on crime in the relevant jurisdictions. Where such information was available, no impact on crime was observed. In any event, this evaluation did not pertain to undercover work in relation to large-scale criminal enterprises.
Ultimately, the value of information obtained through various undercover operations may defy quantification. Kenney and Finckenauer (1995:332) note that,
"there is no obvious way to measure the worth of an informant’s information against the costs of that information and the risks of unreliability and lack of credibility. This remains an exercise of professional judgment and discretion."
Electronic surveillance includes a number of techniques, varying in the extent to which they invade the privacy of the target. Some techniques are non-consensual, as none of the parties are aware that they are being monitored. Other techniques adopt one-party consensual monitoring, such as those in which undercover agents use a concealed tape recorder to record conversations or where one party to a telephone conversation consents to the recording of that conversation unbeknownst to the other party (Kenney and Finckenauer, 1995:337). Apart from tape recording and intercepting communications over a telephone line (or wiretapping), electronic surveillance may involve video recordings, eavesdropping through the use of hidden microphones (bugging), and more advanced laser and fiber optics technologies (Abadinsky, 2003:344).
Many law enforcement officials believe that the use of electronic surveillance is indispensable in the fight against OC because other sources of evidence are often unreliable or unavailable. Witnesses are often afraid to come forward, informants may be unreliable, and many criminal organizations are difficult to infiltrate. Furthermore, as the business of OC is usually conducted over the telephone and in meetings, there is a minimum of written communications that can be used to construct a paper trail of criminal transactions (Kenney and Finckenauer, 1995:337).
Despite the value of electronic surveillance, it constitutes a considerable invasion of privacy and hence must be governed by strict regulations in non-totalitarian societies. The extensive surveillance of civil rights leader Martin Luther King, Jr., in the 1960s, is just one example of the potential abuse of this investigative tool for political or other ends (Krajick, 1983:30).
Aside from concerns about the civil liberties of targets, the use of electronic surveillance is limited by its prohibitive cost. In the US, the cost per tap has risen from an average of $5,524 in 1970 to $46,492 in 1992 (Albanese, 1996:177). This elevated cost is partly due to regulations in the US that require the presence of a police officer who must listen to the beginning of each conversation and turn off the recorder, if the conversation is not related to the eavesdropping warrant. Also, tapes must be transcribed, conversations analyzed, and leads provided by the intercept must be followed-up through physical surveillance and other means. Furthermore, material from electronic intercepts often must be enhanced by specialists to reduce background noise (Abadinsky, 2003:347).
There are other practical problems associated with surveillance, as well as problems in interpreting material that has been intercepted. Schlegel (1988) points out that the planning of conspiratorial acts takes a considerable amount of time and often occurs in a variety of locations, thereby undermining the utility of electronic eavesdropping. There are also problems in interpreting conversations (e.g., a "hit" can refer to a murder or robbery) and in the validity of what people are overheard to say, as they may be lying or bragging.
In the US, the use of court-authorized electronic surveillance has grown measurably from 1970 to the 1990s (Albanese, 1996:175). Telephone taps have been the most popular means of surveillance, although interceptions of electronic communications have grown perceptibly since the late 1980s. The average length of surveillance operations has doubled from 19 to 38 days. Surveillance now is more likely to be used in drug and racketeering cases, but less often in gambling cases, reflecting the changing priorities of US law enforcement agencies (Albanese, 1996:176).
Albanese (1996:177) has found that three times as many conversations were intercepted in 1992 as in 1970, but that the percent of conversations containing incriminating information dropped from 45 percent to 19 percent during that same period. He interprets this finding to mean that crimes may be less conspiratorial and hence may produce fewer conversations that are crime-related. Or, alternatively, the cases selected for surveillance are becoming less appropriate. Another possibility is that there may be a saturation point beyond which surveillance is no longer useful in investigations. It may also be the case that members of criminal organizations are more aware that their communications may be intercepted by law enforcement are therefore more prudent with their communications.
The analysis conducted by Albanese indicates that the number of arrests and convictions arising from electronic surveillance in the US has increased from 1970 to 1992, although the number of arrests and convictions per tap has remained fairly stable. The National Wiretap Commission, a blue ribbon panel funded by Congress to examine police eavesdropping, stated that even though surveillance
"has resulted in the conviction of a very small number of upper echelon organized crime figures" it was
"generally unproductive" in terms of cost, manpower, and convictions (Albanese, 1996:178).
Many significant convictions achieved with the help of surveillance since that assessment in the 1970s, such as that of Gambino family boss John Gotti on racketeering and murder charges, might change that conclusion. Also, the experience in the State of New Jersey is worth considering. In 1969, the state’s legislature authorized electronic surveillance following revelations that mobsters had infiltrated the highest reaches of government and industry in the state (Krajick, 1983:31). A massive campaign of surveillance ensued for several years. The result was not only the incarceration of dozens of OC figures but the departure from the state of 40-50 high-level offenders. What is unknown is whether the incarcerated and the departed reconstituted their illicit networks at a later point or merely relocated their activities.
Albanese (1996:178) notes that what is needed is an assessment of the cost-benefit of electronic surveillance as opposed to other investigative tools. He further notes that research is required to identify the types of cases, locations, and suspects in relation to whom it is most cost effective, as well as the investigative tools with which it works best.
In Canada, Part XI of the Criminal Code acknowledges the necessary use of lawful information intercepts in combating OC. However, this review did not uncover any assessments of the use or impact of such intercepts.
Intelligence involves the collection, evaluation, and interpretation of information. The aim of intelligence work is to increase understanding about an issue, as well as to assist in preventive efforts and policy development (Abadinsky, 2003: 341). Tactical intelligence serves the more immediate law enforcement objectives of arrest and prosecution, while strategic intelligence serves more long range aims (e.g., understanding new patterns of OC activity and the threats they pose).
The sources of intelligence data are varied: court data, business and financial records, newspapers and other publications, physical and electronic surveillance, and statements or testimony by informants, victims, accomplices, and law enforcement personnel (Abadinsky, 2003: 342; Peterson, 1994). The analysis of intelligence data is similar to hypothesis testing in science, whereby an analyst systematically weighs the evidence in support of a given belief (e.g., OC has infiltrated a given industry in a certain city). If the hypothesis or belief withstands rigorous testing, it becomes the basis for an intelligence report.
Sound FBI intelligence work, for example, laid the groundwork for the successful prosecution of many members of New York City’s five Cosa Nostra families. Separate teams of FBI agents were responsible for describing each family’s organizational structure—identifying all members and their status within the organization—and determining the industries and rackets in which the family was involved (Jacobs and Gouldin, 1999: 163). After documenting the family’s command structure and illicit activities, the FBI squads obtained eavesdropping orders which provided evidence that inculpated members and could be used as leverage to obtain their cooperation. Prosecutors used the evidence in an ongoing series of criminal and civil proceedings.
The Organized Crime Agency of British Columbia (2001/2002) has adopted an intelligence led enforcement model. This agency uses intelligence to identify key OC figures in order to disrupt their activities through prosecution and through the seizing of assets. Tactical intelligence is disseminated to law enforcement partners. Internal assessments, primarily using operational measures, have shown some positive outcomes. For example, considerable evidence has been shared with law enforcement agencies and OCABC officers have provided expert evidence to broaden the understanding of OC activities by the courts.
Many American law enforcement agencies, however, have still not incorporated intelligence and its analysis into their OC control efforts (Peterson, 1994: 360). There may be a reluctance to deviate from more traditional investigative methods and police management may experience difficulty in evaluating the results of intelligence analyses. However, it would be difficult to imagine a successfully completed OC investigation without at least some rudimentary analysis (Peterson, 1994:384).
The evaluation of intelligence work in general is in its early stages. Peterson (1994) notes that few agencies in the US have attempted to quantify their analytical efforts, let alone evaluated them. These efforts are often assessed by the number of intelligence products generated, rather than their value in achieving certain organizational ends.
One methods of hampering the activities of OC groups is through interrupting or eradicating the supply of illicit goods and services. This approach has been referred to by Goldstock (1994) as
"opportunity blocking". Often, but not always, supply reduction occurs in tandem with the arrest and prosecution of those involved in the smuggling and distribution of contraband. This section will focus on drug trafficking, which is arguably the area in which this approach has been adopted most widely.
The US President’s Commission on Organized Crime (1986:477) referred to the interdiction of narcotics as
"at best a random and occasional threat." It also found that source country crop eradiction would not succeed
"unless it is comprehensive, long-term, and visibly supported by a national commitment" in the US to reduce demand.
Perhaps the best test of the potential of the law enforcement approach to dealing with the issue of illicit drugs was the "war on drugs" launched by President Reagan during the 1980s. His administration recruited an additional 1,000 agents for the Drug Enforcement Administration (DEA) and 200 new assistant US Attorneys. More stringent laws were introduced, 1,300 new beds were added to 11 federal prisons, and the military and Coast Guard was brought in to fight this war with assault helicopters, AWACS planes, satellites, and high-powered speedboats (Kenney and Finckenauer, 1995:193). The efforts could be branded a success from a narrow perspective, as this aggressive law enforcement effort yielded unprecedented totals in terms of seizures, indictments, arrests, convictions, and asset forfeitures. In 1986 alone, nearly one-half billion dollars in assets were seized. Cocaine seizures increased from 2,000 kilos in 1981 to 36,000 in 1987. DEA arrests doubled and, by 1987, over 40 percent of all new prison inmates went in for drug offences (Kenney and Finckenauer, 1995:194).
While these apparent successes were being achieved, the price for the target drugs was dropping and purity increased significantly. The domestic cultivation of marijuana rose dramatically and the supply of cocaine more than tripled from 1980 to 1988, from 40 to 140 metric tons per year (Kenney and Finckenauer, 1995:194). The "wholesale" price of cocaine in Miami dropped by 90 percent from 1980 to 1986, an indication of a major glut in the market (Shannon, 1988:367). During the same period, cocaine-related hospital emergencies rose more than six-fold. Examining the evidence as a whole, the United States’ Office of Technology Assessment (Kenney and Finckenauer, 1995:194) pronounced the aggressive supply-reduction effort a failure, noting that,
"Despite a doubling of Federal expenditures on interdiction over the past five years, the quantity of drugs smuggled into the United States is greater than ever."
The picture, however, is not totally negative. The retail price of cocaine on the streets of American cities did increase from 1989 to 1990, indicating that enforcement efforts may have started to pay off in the 1990s (Lyman and Potter, 1991:261).
Returning to the 1980s, many American cities became battlegrounds for gangs fighting over markets and the new drug cartels came to exert considerable influence in several Latin American and Caribbean countries. The drug war and its consequences strained America’s relations with several Latin American countries (Nadelmann, 1988). Moreover, the excesses of the zero tolerance approach were illustrated by the occasional large-scale asset forfeitures of vessels and vehicles carrying miniscule amounts of drugs (Kenney and Finckenauer, 1995:196). In one case, for example, a 52-foot vessel was impounded because of cocaine dust found on a rolled up dollar bill. In another case, an $80 million research vessel was seized after .01 ounce of marijuana was found in a crewman’s shaving kit. Such examples led some observers to comment that the war on drugs had significantly diminished the civil liberties of Americans.
Another illustration of the limitations of interdiction strategies was seen in the early 1980s, following the establishment of the South Florida Task Force in 1982. This broad, anti-drug effort reduced trafficking to Florida; however, the increased law enforcement pressure resulted in the displacement of drug smuggling to Gulf of Mexico and Eastern ports of entry. The successes achieved by the Florida multi-agency approach thereby
"exacerbated an already serious nationwide drug problem" (President’s Commission on Organized Crime, 1986:289). Nevertheless, this approach served as the basis for the 12 regional Organized Crime Drug Enforcement Task Forces established in 1983.
While the President’s Commission was supportive of the supply-reduction strategy and the targeting of high-level OC groups involved in drug trafficking, it expressed agreement with the concern that supply-reduction alone might be counterproductive in that it might strengthen more powerful criminal organizations. The Commission noted that such an approach might
"exacerbate the nation’s OC problem by enriching organized crime groups, eliminating their competitors, and encouraging trafficking organizations to become organized crime groups…" (President’s Commission on Organized Crime, 1986:388).
The President’s Commission (1986:421-425) was also skeptical about crop reduction/substitution and eradication programs. Source countries may have little incentive to reduce crop production as this may undermine the economic and political stability of their countries. Also, drugs that are illicit in North America may be consumed in those countries (often as part of local traditions); hence, consumption is viewed as an American problem. Farmers in these countries may not have alternative crops that can provide the income generated by illicit drug crops. Furthermore, governments in many producing countries are weak and unable to control crop production. They may also be hostile to the US and hence unmotivated to curtail production.
Most importantly, perhaps, the list of source countries is not fixed; therefore, crop reductions in one country are often compensated for by increases in other countries. With regard to the last point, the successful eradication with herbicides of opium poppies grown in some parts of Northern Mexico during the 1970s reduced Mexican heroin production; however, within five years this reduction was replaced by heroin from Southeast Asia. The use of spraying has also been objected to on the basis that the herbicides and pesticides used are highly toxic (Del Omo, 1987).
Crop eradication efforts aimed at the coca crop in Bolivia and Peru, and the poppy crop along the Afghan-Pakistani border, have also met with dismal failure (Shannon, 1988:364-367; Atlas, 1988). Bolivia, for example, received economic aid from Washington and the United Nations Fund for Drug-Abuse Control to compensate farmers for the transition from coca to legal crops, in return for its agreement, in 1987, to eradicate all coca grown for export within three years. Various domestic pressures in Bolivia conspired to undermine this plan and, by the end of the first year, just 500 acres of coca had been eradicated by the government.
Notwithstanding these concerns, the President’s Commission on Organized Crime (1986:425) did not rule out source country control programs. The Commission called for such programs to target countries and crops selectively, arguing that crop reduction could reduce the availability of illicit drugs on a temporary basis. It argued that these efforts should be pursued in those countries in which the political and economic climate was favourable to their successful application.
Overall, the Commission (1986:429) concluded that supply reduction has been of limited success and that the 75-year history of this approach in the US has
"not reduced the social, economic, or crime problems related to drugs…America’s war on drugs seems nowhere close to success. Now more than ever, drugs present problems of vast proportions."
As an indication of the limitations of the supply reduction strategy, the President’s Commission (1986:429) considered an estimated 10 percent interdiction rate, achieved in 1983, to be a success. Even if this rate could be increased, Latin America’s coca growing could be raised accordingly. Despite some high-profile drug seizures in South Florida in the 1980s, Customs agents can inspect just a small fraction of the seven million shipping containers landing each year in the US (Shannon, 1988:410). In 1992, US Customs inspected just 13 percent of full shipping containers from cocaine source and transit countries (US General Accounting Office, 1994:5). Even if agents could inspect each container arriving by sea from South America, the traffickers could still move cocaine and other contraband via inland routes through Mexico. Inspecting each truck at the Mexican border would paralyze commerce, causing delays that would cause fruits and vegetables to rot. Two-thirds of all cocaine entering the US is brought across the US-Mexico land border concealed in cargo (US General Accounting Office, 1994:5). As for interdiction of the airborne drug traffic, just 5 percent of planes crossing into the southwestern US are intercepted (Shannon, 1988:419).
The United States’ General Accounting Office (1994:1) has put it bluntly:
"Despite various US government interdiction efforts, Central America continues to be a primary transshipment point for cocaine shipments to the United States. Available evidence suggests that the supply of drugs entering the United States via Central America remains virtually uninterrupted." The GAO report says that Central American countries tend to lack the resources and institutional capacity to address the new drug trafficking modes. Also, drug traffickers are adept at adjusting their routes, modes of transportation and concealment, and times of entry in response to interdiction efforts (Reuter, Crawford, and Cave, 1988).
The problems of interdiction notwithstanding, an econometric analysis commissioned by the US Customs Service (Godshaw, Koppel, and Pancoast, 1987) revealed that interdiction strategies are more cost effective than domestic anti-drug investigations, as they yield greater amounts of contraband seized. In 1986, a dollar spent on interdiction yielded over seven dollars (retail value) in cocaine and marijuana seizures, whereas a dollar spent on investigation yielded just over three dollars in seizures. Interdiction at the border has the additional advantage of lessening the social costs of drugs, as intercepted substances never generate the social and health-related problems associated with drug distribution and use. This study also found that a ten percent increase in law enforcement expenditures increases the cost of illicit drugs and thereby occasions a 4 percent drop in marijuana consumption and a 2.4 percent drop in cocaine consumption. While cost may be a factor in consumption levels, other studies indicate that consumption is unrelated to availability, thereby undermining the supply-reduction approach (Jonas, 1999:127).
Moore (1990:148) argues that frustrating illicit transactions through law enforcement efforts and immobilizing trafficking networks may be more useful supply-reduction strategies than interdiction. He asserts, however, that the existing approach is based on
"bets and gambles" rather than hard evidence. Moore (1990:152) adds that
"it is vital that capacities be improved for measuring not only the impact of the supply-reduction strategy but also its operations. Without such measurements that provide evidence about what works and what does not, there is no prospect for improving either our knowledge or our performance."
Increasing regulation and enforcement in various industries may make them less vulnerable to infiltration by OC groups. For example, OC has been described as entrenched in the waste hauling industries in the states of New York and New Jersey (Carter, 1996/97: 32). The introduction of environmental regulations dramatically increased the cost of waste disposal, creating incentives for companies to do business with those who could provide this service at cut-rate prices. Criminal syndicates expanded their operations in the solid and hazardous waste hauling industries in response to the desire of corporations to externalize their responsibilities and minimize their costs in this area.
Historically, there has been a widespread reluctance, on the part of both regulators and the regulated, to treat environmental crime as crime. Criminal sanctions are generally viewed as a last resort. Voluntary compliance and civil or administrative sanctions have been the standard means of environmental crime control (Carter, 1996/97:28). Weak controls, however, have led to degradation of the environment and one study notes that inadequate sanctions probably increase rather than decrease OC activities (Reuter, 1987).
Carter’s (1996/97) analysis of the waste hauling and disposal industries provides some lessons in terms of regulation. A balance must be struck between inadequate regulation and its unnecessary proliferation, as the latter might hinder industrial activity. Carter asserts that regulations need to be comprehensive, so as to avoid loopholes that might be exploited by unscrupulous operators. The State of New York, for example, has permitted the disposal of construction materials on the property owner’s land without requiring a permit. OC groups took advantage of this situation by burying toxic waste along with construction debris, unbeknownst to property owners.
Carter adds that enforcers and regulators must be equipped with better tools to permanently revoke all permits, licenses, and other privileges to operate in an industry. Furthermore, he notes that penalties for deliberate violations of environmental laws should be increased and adequate resources must be available to enforcers.
Regulatory reform in a number of areas illustrates the promise of this approach. When Rudolph Giuliani, formerly a US attorney known for his vigorous prosecution of OC, became mayor of New York City, the city moved quickly to use its licensing power to remove corrupt unloading companies at the Fulton Fish Market (Jacobs and Gouldin, 1999:175). The Giuliani administration also used its regulatory authority and licensing powers to free the Feast of San Gennaro, one of New York’s most famous street fairs, from the grip of OC. The Cosa Nostra-dominated organization that for many years had run and profited from the festival was replaced by an organization with no OC connections and by the Roman Catholic Archdiocese (Jacobs and Gouldin, 1999:175).
Under Giuliani, the New York City Council also created the Trade Waste Commission TWC) in order to remove OC’s control over the waste hauling industry and to restore competition (Jacobs and Gouldin, 1999:175). The executive officers of this Commission included attorneys and police detectives with experience in OC investigations and prosecutions. The TWC was authorized to license carting companies and individuals with criminal records or known associations with OC or the mob-dominated cartel were denied licenses. The TWC also sought to strengthen the position of the customer by setting maximum rates, regulating contract duration, and by informing customers of their rights.
Jacobs and Gouldin (1999:176) are unequivocal about the achievements of this regulatory initiative in wresting control from OC in an industry that had been so tainted:
The TWC has been remarkably successful. By driving corrupt firms from the industry and simultaneously protecting customers from exploitation, new companies (with no ties to organized crime) have entered the industry…For the first time in history, national waste-hauling companies have entered the New York City market. In addition, waste-hauling rates have fallen dramatically (recent estimates claim decreases of 30-40 percent in the past two years)…Thus New York’s Cosa Nostra crime families have to contend with the loss of a significant revenue source and power base.
Another way of undercutting OC-dominated cartels, bid-rigging, and other anticompetitive practices is to establish public benefit corporations that disrupt illegal agreements by competing against those engaging in them (Goldstock,1994:436).
Whether the approach used is that of more regulation or the creation of public benefit corporations, the issue that remains to be answered by evaluators is whether the disruption of such cartels in an industry occasions a net loss for OC or whether crime syndicates re-emerge in other areas or industries. While the above-mentioned examples of increasing regulation show considerable promise, comprehensive evaluations must consider the potential adverse affects of additional regulation on an industry.
Rather than increasing regulation, the decriminalization of some goods and services provided by criminal networks might lessen the social demand that fuels OC. Products and services that are decriminalized may nevertheless be subject to regulation (Kenney and Finckenauer, 1995: 197).
For example, a number of arguments have been made for the decriminalization of the possession of various psychotropic drugs. The substantial expenditures associated with drug enforcement could be allocated elsewhere (e.g., for treatment) and the medical as well as social ills (including crime) associated with the illicit status of heroin and other substances could potentially be minimized. Drug enforcement is not only costly; it has also been shown to be limited in its ability to curtail supply (Lyman and Potter, 1991:325).
Also, it has been argued that the current approach drives up drug prices, thereby subsidizing rather than combating drug traffickers (Dennis, 1990). Prohibition in the US during the 1920s and 1930s transformed OC from small peddlers of vice into powerful crime syndicates with political connections, respectability that came from serving the public the alcohol they desired, and the organization to deliver contraband to large numbers of people (Lyman and Potter, 1991:323). Without the lucrative profits from drugs, criminal organizations might no longer be viable, although some evidence suggests that they might shift to other activities. In Colombia, for example, pressure against the drug cartels led some of their henchman to take up kidnapping for a living, thereby dramatically increasing the incidence of this crime (Abadinsky, 1994:512). Also, legalization in one country would have no bearing on the demand for illicit substances in other countries (President’s Commission on Organized Crime, 1986: 331). Thus, some of the major cartels would continue to operate.
The major downside of legalization is that consumption might increase with the greater acceptability and accessibility of various substances. Increasing consumption may be viewed as inherently undesirable and may create a variety of social, health, and economic costs (Abadinsky, 1994:512-513; President’s Commission on Organized Crime, 1986:330-331). Also, there is no guarantee that legalization necessarily cuts into the profits of OC. For example, the proliferation of state-run lotteries in the US during the 1970s was said to produce no threat to the revenues of illegal gambling operators (Reuter, 1984). This may be the case because the level of gambling and other behaviours that have been subject to prohibition is not fixed. State-run operations may simply increase participation in such activities. Furthermore, the regulation and taxation of drug markets may prove to be an insurmountable challenge. For example, there are so many foreign and domestic sources of marijuana, that much of its production and distribution would remain beyond the reach of regulators (Lyman and Potter, 1991:324).
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