organized crime has become a significant problem for California
law enforcement agencies. During the past several years, some
Russian emigres have established a growing number of loosely structured
criminal networks in this state that are involved in sophisticated
criminal activities. The law enforcement intelligence community
has also become aware of at least four structured Russian criminal
organizations operating in California.
organized crime includes crime groups from all the republics which
comprised the former Soviet Union. These crime groups are operating
in many of the major cities in California including Los Angeles,
San Francisco, San Jose, Sacramento, and San Diego. Russian crime
figures have been identified in cases involving extortion, prostitution,
insurance and medical fraud, auto theft, counterfeiting, credit
card forgery, narcotics trafficking, fuel tax fraud, money laundering,
organized crime networks are also operating in New York, Boston,
Chicago, Miami, Cleveland, Philadelphia, and Seattle. Many of
the California-based networks communicate and, in many cases,
are connected with these out-of-state groups in their criminal
Crime in the Former Soviet Union
Russian organized crime groups in the United States have ties
to organized crime groups in Russia. A report on organized crime
presented to President Boris Yeltsin by Russia's Analytical Center
for Social and Economic Policies, stated "The growth of organized
crime threatens the political and economic development of Russia
and creates conditions that could help bring the national socialists
estimated 80 percent of the private enterprises and commercial
banks in Russia's major cities are forced to pay a tribute of
10 to 20 percent of their profits to organized crime.
April 21, 1994, during a Senate hearing, CIA Director R. James
Woolsey said, "Organized crime is so rampant in Russia that
it threatens Boris Yeltsin's presidency and raises concern that
syndicates will obtain and smuggle Russian nuclear weapons to
terrorists or foreign agents."
revealed that organized crime syndicates from Russia, Asia, and
Africa are forming alliances with traditional Italian and Latin
American organizations, creating a formidable threat to international
peace and stability.
recognition of this threat, the FBI recently established a Moscow
office that will focus on Russian organized crime encroachment
into the United States along with the potentially disastrous threat
of trafficking in nuclear weapons. U.S. Aftorney General Janet
Reno has named Russian organized crime groups in the United States
a priority target for the U.S. Department of Justice. Law enforcement
agencies throughout the U.S. now consider Russian organized crime
a major threat and are developing strategies and forming task
forces to counter that threat.
the 1970s and 1980s, according to the U.S. Immigration and Naturalization
Service, approximately 200,000 Soviet citizens, many who were
Russian-Jewish refugees, immigrated to the U.S. Although the Soviet
government liberalized its Jewish immigration policy, it is believed
that under this guise the KGB also emptied their prisons of hard-core
criminals, much like Cuban dictator Fidel Castro did during the
Mariel boatlift of 1980. Many of these criminals are believed
to have continued their life of crime in the United States.
flow of Soviet refugees increased following congressional enactment
of the Lautenberg Amendment in November 1989, which allows up
to 50,000 Soviet refugees to enter the U.S. each year. This was
followed by the adoption in May 1991, of Russia's first law granting
its citizens the right to immigrate and travel freely.
1994, according to the U.S. Immigration and Naturalization Service,
the majority of former Soviet emigres and refugees entering the
U.S. declared as their intended state of residence New York, followed
by California, Washington, Illinois, Pennsylvania, Massachusetts,
Maryland, New Jersey, Ohio, and Oregon.
to an April 1986 report by the President's Commission on Organized
Crime, the first indication of an organized crime element among
Russian immigrants came in 1975 when a gang from the Odessa region
of Russia was discovered to be involved in major fraud. The victims
were other Russians living throughout the United States. The group
became known as the "Potato Bag Gang" because victims
believed they had bought a sack of gold coins but actually received
only a bag of potatoes.
criminal networks gradually expanded into other criminal activities
such as extortion, theft, prostitution, and actively preyed upon
newly arriving groups of Russian emigres by extorting money from
them. The Brighton Beach area of New York City became the hub
for Russian organized crime in this country during the mid-1970s.
There, Russian criminals developed a working relationship with
the La Cosa Nostra (LCN) which allowed them to establish fuel
tax fraud schemes in certain areas of New York. The LCN forced
the Russian criminals involved in these frauds to pay a large
portion of their proceeds as a "tax" to operate.
Organized Crime Groups and Structure in Russia - In early 1993,
the Russian Ministry of Internal Affairs reported there were over
5,000 organized crime groups operating in Russia. These groups
were comprised of an estimated 100,000 members with a leadership
of 18,000. Although Russian authorities have currently identified
over 5,000 criminal groups in that country, Russian officials
believe that only approximately 300 of those have some identifiable
structure. Organized crime groups in Russia are not nearly as
structured as those in the U.S., such as the LCN.
sources within the Financial Crimes Enforcement Network (FinCEN)
have provided one model of the structure of groups in Russia.
The principle behind this structure is to minimize contact with
other cells that could lead to the identification of the entire
boss, called a "pakhan," controls four criminal cells
through an intermediary called a "brigadier." The boss
employs two spies that watch over the action of the brigadier
to ensure loyalty and that he does not get too powerful. At the
bottom of the structure are criminal cells specializing in various
types of criminal activity or functions such as drugs, prostitution,
political contacts, and "enforcers." A similar structure
places an elite leadership on top which is buffered by support
and security personnel from the street operators who are commifting
the crimes. Street operators are not privy to the identity of
their leadership. Strategy and planning is done only at the top
echelon in order to minimize the risk of detection.
to law enforcement sources, those structures described above would
fall into the old style of Soviet criminal enterprises. It is
quite possible as organized crime has changed in Russia, so has
the structure of these groups.
Code of Conduct - There is a traditional code of conduct within
this old style of organized crime in Russia called "Vory
v Zakone," or thieves in law. This group existed throughout
the Soviet era and continues today throughout the republics of
the former Soviet Union. In this society the thieves in law live
and obey the "Vorovskoy Zakon," the thieves' code. The
members are bound by 18 codes and if they are broken, the transgression
is punishable by death.
enforcement officials in the former Soviet Union indicate that
most of the organized crime groups are well organized with sophisticated
technical equipment, computers, transportation, financial support,
and an excellent counterintelligence network. Those groups are
involved in extortion, precious metal and raw material smuggling,
money laundering, fraud, weapons smuggling, narcotics trafficking,
and black marketing.
thief is bound by the Code to:
his relatives--mother, father, brothers, sisters...
2.Not have a family of his own -- no wife, no children; this does
not however, preclude him from having a lover.
3.Never, under any circumstances work, no mafter how much difficulty
this brings-, live only on means gleaned from thievery.
4.Help other thieves -- both by moral and material support, utilizing
the commune of thieves.
5.Keep secret information about the whereabouts of accomplices
(i.e. dens, districts, hideouts, safe apartments, etc.).
6.In unavoidable situations (if a thief is under investigation)
to take the blame for someone else's crime; this buys the other
person time of freedom.
7.Demand a convocation of inquiry for the purpose of resolving
disputes in the event of a conflict between oneself and other
thieves, or between thieves.
8.If necessary, participate in such inquiries.
9.Carry out the punishment of the offending thief as decided by
10.Not resist carrying out the decision of punishing the offending
thief who is found guilty, with punishment determined by the convocation.
11.Have good command of the thieves'jargon ("Fehnay").
12.Not gamble without being abie to cover losses.
13.Teach the trade to young beginners.
14.Have, if possible, informants from the rank and file of thieves.
15.Not lose your reasoning ability when using alcohol.
16.Have nothing to do with the authorities (particularly with
the ITU [Correctional Labor Authority]), not participate in public
activities, nor join any community organizations.
17.Not take weapons from the hands of authorities; not serve in
18.Make good on promises given to other thieves.
Vladimir Kuz'mich Belko, and Igor Mikhailovich Isupov.
(Occupation of authors unknown.)
Russian Organized Crime Groups in the
Russian organized crime activity in the United States has been
expanding for the past 20 years, its most significant growth has
occurred during the past five years. In August 1993, the FBI reported
there were 15 organized crime groups in the United States with
former Soviet ethnic origins. There is considerable debate in
the law enforcement community as to the level of organization
and structure of Russian organized crime groups in the United
States. Additionally, many of the Russian emigres who are involved
in criminal activity in this country may be career criminals specializing
in crime areas having little or nothing to do with Russian organized
information indicates that most Russian organized crime groups
are loosely organized and do not have elaborate levels of structure.
These groups are often influenced by their ethnic or regional
backgrounds. They have formed networks that operate in situations
of mutual interest and often shift alliances to meet particular
is ample information that Russian crime groups operating on the
East Coast cooperate and communicate with West Coast groups. Additionally,
Russian organized crime groups in the U.S. communicate and operate
with organized crime groups in Russia. FBI Director Louis Freeh
stated that over 200 of Russia's 6,000-odd crime gangs operate
with American counterparts in 17 U.S. cities in 14 states. According
to intelligence reports, members of criminal groups in Russia
are sent to reinforce and consolidate links between groups in
Russia and the United States. Russian organized crime figures
are also sent to this country to perform a service such as a gangland
murder or extortion.
following example provides some insight into this activity.
to law enforcement sources, Vyatcheslav Ivankov ("Little
Japanese") a Russian organized crime leader, was believed
to have traveled to the United States to organize ROC groups in
the U.S. and establish links to ROC groups in the former Soviet
Union. Ivankov is considered to be a highranking organized crime
leader, or thief in law, both in Russia and the U.S. Ivankov was
arrested in Brooklyn, New York, on June 8, 1995, for trying to
extort $3.5 million from a Wall Street investment firm.
Ivankov Some descriptions of the more publicized Russian organized
crime groups in the United States are as follows:
to law enforcement sources, there are approximately 300 former
Soviet Union crime figures and associates in the San Francisco
Bay Area, including San Jose. There are approximately 600 to 800
Russian crime figures and associates in the Los Angeles area,
home to the second largest number of Russian immigrants in the
United States. These figures include members of the Russian and
Armenian organized crime groups.
California Auto Theft Group - A Northern California auto theft
group came to the attention of law enforcement personnel in Sacramento
and other parts of Northern California, Oregon, and Washington
State in early 1993. This group is primarily made up of blue collar
type workers from the Ukraine and Western Russia. Specializing
in auto theft and VIN switching, younger members of this group
steal vehicles while the older members operate body shops. This
group utilizes Interstate 5 to travel to Oregon and Washington
to sell the stolen vehicle parts to other Ukrainian and Russian
criminals. Additionally, this group is becoming involved in extortion,
cellular telephone fraud, prostitution, and trafficking small
amounts of narcotics. Group members have been known to carry weapons
and are becoming increasingly violent.
group does not appear to have any clear cut, well defined structure,
though its members appear to have formed networks and cooperate
with each other in their criminal endeavors.
Mafia - The Odessa Mafia is considered the dominant Russian organized
crime group in the United States. This group established itself
in the Brighton Beach area of New York City between 1975 to 1981.
In the early 1980s the Odessa Mafia sent two sub-groups to San
Francisco and Los Angeles with their leadership remaining in Brighton
Beach. The San Francisco Bay Area Odessa Mafia group, unlike their
southern counterpart, appear to be highly structured and well
surrounds their activities and the language barrier creates additional
problems for law enforcement authorities. This has resulted in
very liftle information concerning the hierarchy, the scope of
their operations, and the number of members. This crime group
is believed to be involved in extortion, money laundering, fraud,
loan sharking, and homicide.
Organized Crime Groups - The Hollywood area of Los Angeles and
the city of Glendale are the focal points for Armenian organized
crime activity. This area has the largest Armenian population
outside of the Republic of Armenia.
to law enforcement sources, several Armenian organized crime groups
are becoming well organized with a structured hierarchy. There
are in excess of 450 members and associates of these groups. These
crime groups are involved in extortion, fuel frauds, credit card
fraud, murder, kidnap, and narcotics trafficking. One group is
believed to have approximately 150-200 members. Several members
of this organized crime group were convicted in 1994 in Los Angeles
of attempted murder, kidnaping, and extortion. This group is believed
to be responsible for extorting a number of victims in the Armenian
Organized Criminal Activities in California
organized crime in California is involved in extortion, narcotics,
murder, auto theft, and loan sharking, as well as insurance, fuel,
telecommunication, and credit card frauds. The following cases
are examples of several different crime categories.
- Five members of an Armenian organized crime group in Los Angeles
were convicted in 1994 for extortion, kidnaping, and attempted
murder. They forcibly detained and threatened victims and their
families with great bodily harm unless they paid the suspects
money. This group is believed to have extorted the Armenian community
in the Los Angeles area for the last 13 years.
Frauds - Fuel frauds, mostly in Los Angeles and New York, cost
both the federal and state governments approximately $2 billion
annually in tax revenue. The majority of the fuel frauds are committed
by Russian and Armenian organized crime groups operating in Southern
California. There are a variety of schemes involving the fuel
fraud including falsifying state and federal tax forms, use of
fictitious companies, known as a "burn" company, extending
fuel by blending tax free additives such as transmix or alcohol,
rigging fuel pumps, manipulating dyed fuels designated for off-road
purposes, and selling lower grade fuel as a premium product.
"daisy chain" scheme is the predominate method of fuel
tax fraud. The daisy chain scheme starts with a string of companies
created by Russian and Armenian organized crime groups and is
designed to create a massive paper trail. In the daisy chain,
a "burn" company is created and exists only on paper.
By the time auditors and investigators unravel the series of transactions
to determine the tax liability, the "burn" company has
disappeared without a trace of records or assets. These groups
are pocketing up to 50 cents per gallon in federal and state taxes
which enables them to sell the petroleum products below cost.
Selling fuel below cost forces the legitimate operators out of
business. Often these groups force legitimate businesses out of
business using intimidation tactics through kidnaping, assaults,
September 13, 1995, 13 Russian Armenian subjects were arrested
and charged with racketeering, including multiple acts of mail
and wire fraud, money laundering, extortion, and distribution
of heroin and other narcotic controlled substances. The Russian
Armenian group, called the Mikaelian Organization, after the group's
leader and self professed "godfather" of the Russian
Mafia, Hovsep Mikaelian, ran a black market diesel fuel network
that supplied gas stations and truck stops throughout Southern
California. They defrauded the Internal Revenue Service and the
California Board of Equalization through various fraudulent schemes,
by purchasing millions of gallons of diesel fuel and avoiding
a huge tax liability.
Mikaelian Organization used wholesale permits obtained fraudulently
to purchase tax-free diesel fuel that was intended to be used
solely for off-road purposes such as farming and construction.
The fuel was then diverted and sold at numerous independent diesel
fuel stations, several of which were controlled by this organization.
Up to 42 cents per gallon of the federal and state tax collected
at the time of sale was pocketed by this organized crime group.
group was also involved in gaining control, through threats and
extortion, of a large segment of the independent diesel fuel wholesale
and retail service station and truck stop markets. Permits were
also obtained by submitting fraudulent paperwork. In some cases,
jet fuel, which can be purchased tax free, was added to the diesel
fuel and sold at the service stations and truck stops.
to the U.S. Aftorney in Los Angeles, this group managed to avoid
paying $3.6 million in taxes in just one year. The arrests culminated
a two-year joint task force investigation conducted by the Federal
Bureau of Investigation, the Internal Revenue Service, the Los
Angeles Police Department, the Long Beach Police Department, the
California Department of Justice, the Department of Defense, and
the Department of Transportation. The task force confiscated more
than $2 million in cash and property, including a BMW, Jaguar,
and two Rolls Royces.
order to counter the diesel tax frauds, Senate Bill 840, introduced
by former Senator Robert Presley and former Assembly member Johan
Klehs, was passed into law and took effect July 1, 1995. The purpose
of the new law, which now parallels federal law, is to reduce
diesel fuel frauds by imposing tax collection at a higher point
(terminal level) in the distribution chain. Under the new law,
taxes will be collected on tax exempt fuel by the terminal operator
and refunded by the state (tax refund). A terminal is defined
as a storage facility where fuel is stored and delivered to buyers.
Fuel is delivered to the terminal directly from the refinery which
is the first level in the distribution chain.
Fraud - Russian crime figures in the Los Angeles area are extensively
involved in telecommunications fraud (cloned cellular phones).
Law enforcement sources indicate that the activity is spreading
to Northern California. This illegal process involves stealing
electronic serial numbers of customers' cellular phones and programming
them into computer chips, thus making a duplicate or clone of
the telephones. While cloning has been going on for some time,
it has grown rapidly and become more sophisticated as the industry
has expanded. One cellular station in the Hollywood area is losing
approximately $2 million a month in fraudulent calls made on cloned
cellular telephones. Armenian organized crime figures are believed
to be responsible for the majority of this fraudulent activity.
- ROC groups are not extensively involved in narcotics distribution
in California. However, there have been significant events and
cases that indicate a possible future trend in this area.
March 4, 1993, a Russian emigre was arrested for pefty theft.
The Burbank Police Department recovered two kilos of cocaine
and $2,200 in cash from the emigre's vehicle. It was later learned
the emigre was also involved in shipping stolen vehicles to
On May 1, 1993, a Russian emigre was arrested for immigration
violations. Information from the Immigration and Naturalization
Service indicates that the emigre was involved in smuggling
cocaine from the U.S. to Russia through his import/export business
in Southern California. This emigre had spent 13 years in a
In February 1995, Tracey Hill, believed to be a courier for
a ROC group, was arrested in Redding, California, for possession
of 18 kilos of cocaine. Hill was en route to Vancouver, B.C.,
from the Los Angeles area.
On May 4, 1995, seven kilos of heroin was seized from a member
of an Armenian organized crime group based in the Glendale area.
The heroin came from the Middle East and was intended for distribution
in the United States.
Medical/insurance Fraud - In Los Angeles,
Russian organized crime figures have been involved in various
frauds that run the gamut from staged auto accidents to false
billing schemes. In 1991, in a case considered the largest of
its kind, the U.S. Aftorney's Office in Los Angeles charged
13 defendants in a $1 billion false medical billing scheme that
was headed by two Russian emigre brothers, Michael and David
Smushkevich. The Smushkevich brothers have long been suspected
of being part of a loosely organized Soviet crime syndicate
operating in the Los Angeles area during the late 1980s and
early 1990S. .14 The 175 count indictment capped a six-year
investigation by federal, state, and local agencies.
reported that the brothers orchestrated a massive fraud scheme
to use mobile medical laboratories to conduct unnecessary and
false tests on patients. They then sent inflated and false bills
to insurance companies and collected large fees. The scam eventually
spread to Missouri, Illinois, and Florida. On September 20, 1994,
the alleged ringleader, Michael Smushkevich was sentenced to 21
years in prison for fraud, conspiracy, racketeering, and money
laundering. Smushkevich was also ordered to forfeit $50 million
in assets, pay more than $41 million in restitution to government
agencies and insurance companies victimized by the scheme, and
pay a $2.75 million fine. David Smushkevich testified for the
prosecution and received probation. It is estimated that the Smushkevich
brothers pocketed between $50 and $80 million in profits. It is
believed the brothers hid their money in an unknown country.
Sharking - In October 1991, two Russian organized crime figures
were convicted in Los Angeles of extorting a Russian emigre businessman.
The two Russian organized crime figures lent money to the victim
at a 30 percent interest rate. The victim borrowed $125,000 and
over eight years had paid back $480,000 but still owed $120,000.
The suspects threatened the victim and his family if they didn't
pay the rest of the money that was owed.
Theft - The Northern California auto theft group specializes in
auto theft and operates in Sacramento, other parts of Northern
California, Oregon and Washington. Younger members of this group
steal vehicles while the older members operate body shops. The
body shops are used as chop shops where stolen auto parts are
used to reconstruct vehicles bought from salvage pools. Vehicles
are also stolen, surgically stripped, and the hulls dumped where
they are easily found by law enforcement personnel. These vehicles
end up at salvage yards where members of this auto theft group
buy the surgically stripped hull and ultimately put the vehicle
back together at the chop shops. Vehicles are also bought at the
salvage pools for their VIN numbers. The VIN numbers are switched
to stolen vehicles.
vehicles are then taken out of state and re-registered in an attempt
to conceal or clear the salvaged title. Many of the stolen vehicles
are believed to be shipped out of the country through Seattle,
Oakland, and other port cities. This crime group may be using
Russian organized crime groups to ship the vehicles to Europe
or Russia where they are sold for substantial profits.
- Andrey Kuznetsov and an associate, Vladimir Litvinenko, were
shot to death in Kuznetsov's rented house in West Hollywood on
January 26, 1992. Kuznetsov was believed to have been the leader
of a Los Angeles fraud ring with ties to Russian organized crime
in New York and Russia. His widow claimed he introduced her to
Russian organized crime leaders and members in Los Angeles and
Angeles Sheriffs Deputies arrested two Russian emigres at the
murder scene. Sergei Ivanov was drenched in blood and carrying
a handgun. An accomplice, Alexander Nikolaev, was also arrested
with Ivanov. Sheriffs deputies found the two suspects in the act
of cufting off the victims' fingers to hinder identification.
Found in the house along with the bodies were numerous boxes of
electronic equipment, copiers, TV sets, fax machines, and stereo
components. Authorities state most of the equipment was stolen
or bought illegally through the use of fraudulent'credit cards
and check kiting.
Laundering - Russian organized crime groups in the former Soviet
Union are wire transferring huge amounts of money, ranging from
several thousand to millions of dollars from bank accounts located
in Finland, Cayman Islands, and Europe to U.S. banks.
source of this money is believed to come from narcotics activity,
illegal trade in arms and antiques, and prostitution. Money is
also stolen from the Russian government. According to a Russian
newspaper, upwards of 1.5 trillion rubles (worth in excess of
$1 billion) were stolen from the state with forged documents in
1992 to 1993.
groups launder the money through a elaborate trail of fictitious
companies set up in Russia. The money is wire transferred to "tax
haven" countries such as those in the Caribbean Islands.
Money is also reportedly wire transferred to other countries in
Europe, such as Switzerland and Finland. A substantial amount
of this money is ending up in U.S. banks. Most of the wire transfer
activity is occurring in California's larger cities such as San
Francisco and Los Angeles. It is believed that once the money
has been exchanged into U.S. dollars, some of the money is sent
back to Russia and is invested in lucrative financial and industrial
projects, real estate, enterprises, and banks.
Russian emigres connected to the U.S. bank accounts are opening
import/export businesses in the Los Angeles and San Francisco
areas. These business may be set up for the sole purpose of shipping
large amounts of U.S. dollars to and from Russia.
With Other Organized Crime Groups
New York, the LCN and Russian organized crime figures have formed
working relationships in areas of fraudulent fuel tax schemes.
The LCN is believed to have forced the Russians to pay tribute
on the profits they made on these schemes.
is no information indicating that the LCN is exacting tribute
from Russian fuel tax fraud operations in California.
cocaine distributors are believed to have formed an alliance with
organized crime groups in Russia to import large quantities of
cocaine into that country. These ties became evident after a 1.1
metric ton shipment of cocaine was seized in St. Petersburg, Russia
in February 1993.
intelligence reports indicate Russian organized crime groups are
not extensively involved in narcotics distribution in California.
However, the following significant case illustrates a possible
future trend and the alliances that are forming.
September 8, 1993, several Russian crime figures were arrested
in St. Augustine, Florida for conspiracy and intent to import
800 kilos of cocaine. These subjects were attempting to establish
a drug distribution route from Florida to Detroit and New York.
It is believed groups of Russian organized crime figures in Los
Angeles and New York were part of this operation. The Russian
group was dealing with Costa Rican drug traffickers and had plans
to smuggle a large quantity of cocaine from Colombia to Italy
aboard a vessel. The Russian group was dealing with the Sicilian
Mafia in this venture.
at the present time law enforcement authorities are not aware
of any additional ties between Russian organized crime groups
in California and other organized crime groups, it is probable
that formalized alliances will occur in the future.
the mid 1960's to the 1980's, approximately 35 million people
were incarcerated in Soviet prisons. Approximately 28 to 30 million
Russian inmates were tattooed. According to criminologist Arkady
G. Bronnikov, who has studied taftoos of Russian prisoners for
30 years, inmates wore tattoos only after they had committed a
crime. The more convictions a criminal received, and as the terms
of incarceration became more severe, the more tattoos a convict
spell out lives of crime and establish the hierarchy of inmates.
According to Bronnikov, at the top of the hierarchy are "pakhans"
or organized crime bosses. The pakhans use the second level of
the echelon known as the "authorities," (also known
as enforcers, fighters, or soldiers) to carry out their orders.
The "men" are the hard laborers and are the third level
in the hierarchy. The lowest category are the "outcasts."
These individuals are basically slaves to the upper levels of
tattoos present a picture of the inmate's criminal history. According
to Bronnikov, "Tattoos are like a passport, a biography,
a uniform with medals. They reflect the convict's interests, his
outlook on life, his world view." A prisoner with an incorrect
or unauthorized tattoo could be punished or killed by fellow inmates.
Enforcement agencies in California and the United States can expect
to see more of these tattoos as the Russian criminal element surfaces.
The tattoos may be of assistance in determining the subject's
criminal background and activity.
the most significant organized crime groups to come to the aftention
of law enforcement in California in recent years, are the Russian
organized crime groups. These criminal organizations have the
potential to become part of large international networks allowing
them to launder money, smuggle goods, and narcotics, and import
criminals to carry out specific crimes.
to the U.S. Immigration and Naturalization Service, California
is attracting the second largest number of Russian emigres settling
in any state in this country. California is also experiencing
a migration of Russian crime figures from the East Coast. This
may be occurring because of the lack of strength the LCN has on
the West Coast. The Russian organized crime groups would not have
to pay a mob tax or tribute, thereby increasing their profits.
comparison can be drawn between Russian immigration and that of
previous emigrant groups who have become organized crime powers
in the United States such as the La Cosa Nostra and Triads. These
new Russian emigres will be a fertile source for recruitment by
existing Russian organized crime groups. Many of these groups
are still in an embryonic stage such as the Northern California
auto theft group. However, as immigration increases, these Russian
crime groups can be expected to expand and new groups will be
organized crime groups in the United States and Russia have formed
alliances with the La Cosa Nostra, the Colombian cocaine cartels,
and the Sicilian Mafia. These alliances allow these groups to
potentially become a dominant wholesale cocaine and heroin distribution
factor in California.
Russian organized crime continues to expand in California, it
is probable they will form working relationships with other criminal
groups such as the LCN, white collar criminals, or other non-traditional
organized crime groups.
of their experience at "working the system" in the former
Soviet Union, Russian organized crime groups can be expected to
continue their involvement in sophisticated criminal schemes,
such as fuel and insurance frauds in the United States. Russian
organized crime groups specialize in targets of opportunity and
take advantage of bureaucratic mazes to build their profit base.
They bring with them knowledge and methods to operate complicated
fraud schemes which allow these white collar criminals to flourish.
While public and law enforcement attention is drawn to gangs and
street violence, Russian organized crime groups will make inroads
into California using these complex criminal schemes requiring
extensive investigative efforts.
enforcement sources directly involved in the investigation of
fuel frauds indicate that SB 840 will not eliminate the fraudulent
schemes. Russian and Armenian organized crime groups will continue
to defraud state and federal governments out of excise fuel taxes
by coming up with elaborate refund schemes. It is believed that
these groups will pool their resources to purchase their own terminals.
Once in possession of a terminal and using falsified federal and
state tax exemption forms the criminal groups can hide the true
ownership of the fuel. They will continue to blend fuels, under-report
volume of fuel sold, improperly dispose and store hazardous waste,
and sell lower grades of fuel as a premium product. Legitimate
terminal operators may be bribed or even threatened into accepting
fraudulent state and federal tax exemption forms.
criminal groups will import tax exempt fuels from other states
or Mexico. Fuel will be exported out of state. Once exported out
of state, the tax liability will be extremely difficult to track.
groups discriminately use violence to intimidate competing fuel
distributors to force them out of business or sell their business
to the criminal groups at reduced prices. These frauds also allow
the criminal groups to sell fuel below market price which forces
the legitimate operator out of business or into illegal activity
to maintain their livelihoods.
of Russian organized crime groups are violent but violence is
usually employed for specific reasons such as eliminating competition
and informants or punishing those who abscond with funds. They
are much like the LCN and not like street gangs who use indiscriminate
violence. Additionally, law enforcement authorities in California
have had several confrontations with crime figures from the former
Soviet Union. These crime figures are not afraid of American law
enforcement or the criminal justice system and pose a potential
threat to police officers.
to law enforcement sources, drug trafficking has not yet become
a major focus for Russian organized crime groups in this state.
Given the profits to be made and the experience many of these
groups have with drugs in the former Soviet Union, it is highly
probable that this will become a growing part of their illicit
operations in California. Law enforcement agencies in California
have begun to make some inroads against Russian organized crime.
However, more information and resources are needed to determine
the scope of their criminal operations, the structure and size
of their organizations, intra and interstate networks, and their
international ties to organized crime in Russia.
there is a lack of intelligence data relating to Russian organized
crime groups and their structure in this country, it is almost
impossible at the present time to determine their magnitude or
scope of operations. Based upon this lack of information, it is
difficult to develop efficient strategies to counter them.
law enforcement community needs to work together in order to combat
this new threat. In California efforts to combat Russian organized
crime are underway. Three law enforcement groups meet routinely
to share criminal intelligence and information on these organized
Threaten the World's Nuke Safety CIA Chief Says." Boston
Globe, April 1994.
G. Bronnikov, "Special Dictionary of Criminal Jargon."
Joseph, "Glasnost Gangsters in Los Angeles." Los Angeles
Times, April 10, 1992.
Tattoos in Russian Prisons." Natural History Magazine, November
Sylvian. "Top Echelon of Mobsters Pose Threat." New
York Times, August 23,1994.
Looting of Russia." U.S. News and World Report, March 7,