Franchising crime
Mob muscle spreads fear
NWI Times
May 26, 1991
http://www.nwitimes.com/uncategorized/franchising-crime-mob-muscle-spreads-fear/article_fb9208b1-1026-5cff-bfae-a6848c45f3a6.html
The scheduled July trial of 15 reputed organized crime figures in Hammond could be a summer rerun of a "program" first aired in 1959.
It was in June of that year that the U.S. Senate rackets committee, led by its counsel, Robert F. Kennedy, turned the spotlight on the Lake County arm of the Chicago Outfit.
One of those named as the Northwest Indiana gambling kingpin in 1959 was Gaetano "Tommy" Morgano of Gary. Convicted of illegal gambling, Morgano returned to his native Sicily in 1963 rather than go to prison.
Indicted in December 1990 was Bernard "Snooky" Morgano, 54, Tommy's son, who lives in rural Porter County.
The government intends to show how the Outfit muscles its way into the widespread illegal gambling business in Northwest Indiana and how it maintains its sway through fear and intimidation.
Gambling, the federal government alleges, is the lifeblood of organized crime, providing its bankroll to buy into legitimate business fronts. Most of the traditional mob families have shunned trafficking in narcotics, at least on an organized level, federal authorities say.
With the changing of the guard in the Chicago Outfit, such considerations may change, said FBI Supervisor Robert Pertuso, in charge of the organized crime unit in the agency's Merrillville office.
He said current mob bosses John "No Nose" DeFronzo and Sam "Wings" Carlisi are not seen as opposed to large scale, coordinated drug trafficking as were their predecessors.
A pattern may have been set in the last decade when one of New York City's five crime "families," the Bonnano family, broke ranks with the other four and sanctioned narcotics traffic as a way to raise cash quickly.
According to the FBI, the largest gambling operation in Lake County is run by Sam Nuzzo Jr., 45, of Merrillville, who is said to control more than 80 percent of the illegal gambling in the county, primarily in Merrillville and Gary.
A number of bookmakers in the county are independent, but "lay off" a portion of their bets to the Nuzzo syndicate, a confidential informant has told the FBI.
In other areas, the government has identified major gambling operators who are not connected with the Nuzzos but are linked with the Chicago Outfit, who run games like barbooth, a fast-paced, high-stakes dice game long associated with the Greek community; bolita, a Latino version of the lottery; and the policy, or numbers, rackets in predominantly black neighborhoods.
These include Efrain "Puerto Rican Frankie" Santos, who runs the bolita operations in East Chicago, and James A. "Sonny" Peterson, of East Chicago, who controls the policy (numbers) rackets in predominantly black neighborhoods.
Much of the following information is from sealed court records on a government request to tap the telephones of organized crime figures in Northwest Indiana from the mid to late 1980s.
The application obtained by The Times, which was granted, detailed allegations of how the mob operates and persuaded a federal judge more necessary information could be found by tapping the phones of Morgano and Leone. Information in that record includes facts upon which the December 1990 indictments are based.
Vicente "Pee Wee" Lozada, 65, a Merrillville gambling operator, told undercover Gary police officer Fred Bemish he originally worked for "Snooky" Morgano, to whom he paid a 10 percent street tax through Morgan's nephew, Anthony Leone.
Setbacks which led Leone to owe Lozada $10,000 forced Lozada to switch to working for Santos, who demanded 15 percent of his gross take. He also said Santos was a partner in the bolita operation with Ken "Tokyo Joe" Eto, a Chicago hoodlum who turned government witness after two Outfit hit men botched an assassination attempt on him.
Even when Lozada was working for Leone, Bemish said, he had to pay the 15 percent to Santos. "All Latins involved in illegal activity paid street tax to Puerto Rican Frankie," Bemish said. "Those are Lozada's words, not mine."
According to federal court records, Lozada told Bemish - who was posing as a corrput police officer - that Santos was so successul that he was regarded in Chicago as bigger than "Snooky" Morgano.
By Christmas 1985, Leone had again taken over the Lozada operation, and was now demanding 10 percent plus $1,000 a month went out of business when Lozada could not come up with the demanded 10 percent plus $1,000 monthly street tax.
Lozada told Bemish he did not feel he could complain to Santos because Leone, Morgano, Santos and Leon'e street tax collector, Peter "Cadillac Pete" Petros, all were allied with the Chicago Outfit.
Leone was convicted in 1988 of running the illegal lottery and sentenced to eight years in federal prison. Lozada was convicted in the same trial and given three years in prison. He was again indicted in 1990 as part of the December anti-mob strike.
The FBI said Santos owns F&K Printing in East Chicago, and is also an officer with the International Longshoreman's Association, one of four national unions that are considered to be mob-infiltrated. He and mob figure Eugene "Geno" Izzi were convicted in federal court in San Juan, Puerto Rico, in April 1977, of smuggling 122 pounds of heroin into Puerto Rico and selling it to undercover FBI agents. Both were given eight years in prison in a plea bargain.
Several of the Chicago Heights mobsters are connected with one of the other reputed mob-dominated unions, the Laborer's Union. Former South Side boss Alfred Pilotto, whose brother, Henry, was once Chicago Heights police chief, was the president of Laborer's Local 5 in Chicago Heights.
Pilotto is currently serving a federal prison term. Two of the reputed hoodlums indicted last December in federal court in Hammond, Dominick "Tootsie" Palermo and Albert "Nicky" Guzzino, are also officers of Local 5.
Most of the gambling operators must go up the local chain of command when reporting to Chicago, but FBI Supervisor Robert Pertuso, the chief of the organized crime specialists in the Merrillville office, said Santos and Peterson are so well established they can go directly to Chicago - either South Suburban street crew boss Palermo or above.
Nuzzo, his brother, Arthur, his father, Sam Sr., and his sisters, Jennifer Kaufman and Sandra Mynes, were among the 15 indicted in December. Confidential informants have told the FBI Nuzzo pays "street tax" to Chicago, as do all mob organized illegal gamblers.
"You just can't have illegal gambling and not pay street tax," Pertuso said.
"The only exceptions would be some of the small, independent numbers operators, mostly in the black community. They run out of gas stations, mom-and-pop groceries, and they're just too hard for the Outfit to keep track of. It's not worth their time."
Bigger operators pay the extortion, or "street tax," to continue operation, or they face being shut down.
Such was the case with independent Gary bookmaker Franklin Burton, who took over the bookmaking operations of the late James "Jungle Jim" Tonevich when Tonevich became ill in 1986.
Burton told Bemish he had been told in 1984 by an Outfit street tax collector he identified as Peter "Cadillac Pete" Petros that Burton would have to pay $1,000 a month street tax or close down. Burton closed down.
When he reopened in 1986, he began to get threatening telephone calls, then two shots were fired through a window of his business. The next night, a caller told him, "We warned you a long time ago. Cadillac Pete told you two years ago to get out of the gambling business. This isn't a joke. We're going to start on your family next."
Burton then met with Gary gambling figure Sam "Frog" Glorioso, 49, who asked him if anyone had inquired about his business starting up again. When Burton told Glorioso of his problems, Glorioso told him "new people" were in charge and wanted their cut - and that "they mean business."
Burton later met Glorioso at Hydad's, a bar at 31 W. 80th Place, Merrillville, owned by Nuzzo. Burton met Nuzzo there, and was told, "Everything is okay, you're with the right people."
Nuzzo said the "new people" were "from the Heights," meaning they were connected with the Chicago Heights branch of the Outfit.
It was determined later that some of the phone calls to Burton had been made from Hydad's, and FBI surveillance allegedly showed Morgano, Leone and Glorioso in the bar at the time.
Glorioso was set up as Burton's collector for a $700 a month payment. When Burton met gambling figure Louis "Mr. G" Gerodemos, who placed bets with Burton, Gerodemos told him he would be collecting the money for "them," and that "they" was "Snooks," a nickname for Bernard Morgano.
In the December indictment, Glorioso and Petros were charged, and Burton and Gerodemos were named as victims of attempted mob shakedowns.
During the period in 1986 and 1987, FBI agents tailed Morgano and Leone to meetings in various restaurants, including the Taste of Italy in Calumet City, the Parogon in Hobart, Schoop's Hamburgers in Munster, the Round The Corner Pub in Hobart and the former Carrie's Pepper Pot Pizza in Hobart.
The Pepper Pot pizza restaurants, which had locations in Highland and Gary, were at one time owned by Frank Nick Zizzo, the boss of organized crime in Northwest Indiana. Morgano inherited his mantle when Zizzo died in the spring of 1986. Zizzo's son, Anthony, is described as a street boss in the western Chicago suburbs and a rising star in the Outfit.
Another local Outfit gambler, Steve "Bozo" Sfouris, 56, of Munster, owned the Broadway Book Shoppe, an adult book store in Gary, the Duchess Lounge, a now-defunct nightclub in Gary, which was a front for prostitution and also owned the Indiana Restaurant in East Chicago, described by the FBI as the location of "an all night, high stakes barbooth game on the second floor."
Sfouris ran afoul of Morgano in early 1987, and on Feb. 3, Morgano was overheard by FBI agents to tell Leone, "We'll give (Sfouris) three more weeks."
On Feb. 25, the three met at the Duchess Lounge and drove to the parking lot of the Handy Andy Lumber Company in Munster, where they met Albert N. "Nicky" Guzzino. They talked for 20 minutes, after which they all left.
Morgano was followed by the FBI to the Automotive Parts and Services store in Hobart owned by Arnold "Jew Arnie" Bard, 50, of Munster, a reputed gambler who has a 1980 federal gambling arrest.
Morgano and Sfouris met again in March at the Builders Square in Homewood, where they again met with Guzzino. They spoke for seven minutes, then left.
It is not known what the substance or outcome of the conversations was, but Sfouris and Guzzino were among the 15 indicted in December. Sfouris has subsequently fled the country, and is believed to be living in Greece.
On April 2, Morgano and Leone met at the Azar's Big Boy restaurant in Merrillville, from which Leone drove to the Beer Barrel restaurant in unincorporated Ross Township and met with owner Ned Pujo. The Beer Barrel is "tied to Nuzzo," FBI Supervisor Pertuso said, and although a legitimate business itself, is also a hot spot for football parley card gambling. Pujo and his wife, Yolande, were among the 15 indicted in December.
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