Street Gangs Clean Up on White Collar Crime

Violent street gangs that have historically focused on drug trafficking and gun running are expanding into white collar crime. According to a report released last Friday by the Federal Bureau of Investigation, members from a slew of gangs, including the Bloods, Crips, Gangster Disciples, Vice Lords and Latin Kings are branching out into mortgage fraud, identity theft, the manufacturing of counterfeit checks, and bank fraud, among other crimes.
In February of this year, for example, law enforcement officials arrested 74 members of the Los Angeles-based Armenian Power gang. In addition to charges for kidnapping, extortion, illegal gambling and narcotics trafficking, gang associates were also charged with sophisticated white-collar crimes, including a $2 million "credit card scheme that victimized hundreds of customers of 99 Cents Only Stores throughout Southern California," and a "large-scale check fraud scheme in which they unlawfully obtained customer information for high-value bank accounts, impersonated the bank customers to acquire checks, and then cashed and deposited checks in an effort to deplete the accounts."

According to Thom Mrozek, spokesman for the U.S. Attorney's Office in Los Angeles, the February indictments are the first time in history that a racketeering case in Southern California has focused on a gang's white collar crimes. "Generally, large-scale racketeering charges focus on drug trafficking activities. The allegations against the [Armenian Power] are noteworthy because they deal primarily with white-collar crime and various types of fraud." Multiple requests for comment from the defendants' lawyers for this article went unanswered.

Counterfeit Checks, Mortgage Scams

While there's no hard data on the growing involvement of street gangs in white collar crimes, a quick search of news headlines demonstrates the trend. According to National Public Radio, in the last four years in Chicago alone, members of the Black Disciples gang participated in mortgage fraud totaling $70 million, while the Vice Lords engaged in similar mortgage scams totaling $80 million. In Los Angeles, the Long Beach chapter of the Crips, as well as members of the Mexican mafia, have been involved with identity theft, reports the Los Angeles Times.

The Trentonian, a New Jersey newspaper, reported in 2009, that eight members of the Nine Trey Gangsters, a sub-group of the infamous Bloods, were charged in a counterfeit check scam valued at $654,000. "This investigation reveals the Bloods on new turf, defrauding banks of hundreds of thousands of dollars using counterfeit checks," said New Jersey Attorney General Anne Milgram. "Just as we have targeted the financial crimes of traditional organized crime through the years, we will crush any inroads by street gangs into these activities, which could bankroll more drug dealing and death."

White collar crime not only funds other gang activity, it can also be used to launder dirty money. "Depending on the gang's needs, if they want to detach themselves from the real money maker, for example, which would be dealing drugs or trafficking guns, they'll create some sort of front to launder the money," says Jason Boone, a research associate at the nonprofit National White Collar Crime Center. "It's a very classic gang and mob behavior. Like in the movies, the nice little restaurant with all sorts of guns and drugs in the back." Except now, the criminals are using drug money to buy and flip properties in fraudulent mortgage transactions, for example.

Internet Makes Crime Easier, Safer

The increase in white collar crime among street gangs is also explained by the shifting economic landscape. "Most criminals are opportunists," explains Calvin Shivers, assistant section chief of violent criminal threats at the FBI. "They seek to make money anywhere they can. With mortgage fraud, for example, with the economy over the last couple of years, there's an increase in mortgage fraud as a whole, and criminal organizations are taking advantage of that. If they're in a neighborhood where there are a lot of houses in foreclosure, there is a greater opportunity to engage in fraud."

According to Boone, technology has also paved the way for street gangs to expand into fraud like identity theft. "With the Internet, there's a lot more anonymity, in terms of your role in the scam, so it's perceived as safer than being out on the street."

Street gangs also consider white collar crime less risky in terms of potential punishment if caught. "If you have the choice between charges for some kind of violence, murder, assault, armed robbery, things like that, and some sort of fraud, like larceny, they're thinking that the potential consequences will be a lot less," explains Boone.

However, as Shivers cautions, the calculation isn't that simple. "Sentencing has an entire formula that considers a number of factors. Was there violence involved? What was the amount of money lost? Were there prior convictions? Drug sentencing tends to be stiffer, but it all depends on the magnitude of the crime. Look at Bernie Madoff."

Though street gangs are unlikely to rival Madoff's historic Ponzi scheme anytime soon, they are expanding their domain. "I wouldn't say that white collar crime is replacing drug dealing and other traditional street gang crimes," says Shivers. "It's more an issue of diversification."

Loren Berlin is a reporter with the AOL Huffington Post Media Group. She can be reached at loren.berlin@teamaol.com, on Twitter at @LorenBerlin, and on Facebook.

Source: http://www.dailyfinance.com/2011/10/28/street-gangs-new-dirty-moneymaker-white-collar-crime/

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