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John Xanthoudakis's introduction to the intimate connection between conventional business and criminal business came in the form of brass knuckles. Late on a Friday afternoon in November, 2005, the investment banker arrived at a law office in Place Ville Marie in downtown Montreal. Xanthoudakis was the former CEO of a $1-billion hedge-fund firm, Norshield Financial Group. It was a dire time for Xanthoudakis: Norshield had collapsed a few months earlier, with more than $400 million of investors' money lost. Even his own palatial house in Laval had been seized.
Xanthoudakis had come to the law firm for a meeting with some investors, who turned out to be three lieutenants of Montreal's notorious Rizzuto crime family. The three men got down to business quickly, demanding Xanthoudakis make good on the $5 million the Rizzutos had apparently lost in Norshield's meltdown.
"We represent a group of people who aren't very happy," the largest of the men told Xanthoudakis. "As a matter of fact, they are very unhappy and their unhappiness makes me very, very unhappy."
To drive home the point, "one guy sneaked behind John and whacked him," relates Montreal businessman William Urseth, a friend of Xanthoudakis's. "There was blood all over the room." The brass knuckles snagged Xanthoudakis just above his right eye, leaving a gash.
Montreal crime boss Vito Rizzuto is languishing in a Colorado prison for participating in the gangland slaying of three fellow mobsters (KC Armstrong)
There was nothing complicated in the assault—the Rizzutos simply wanted their money back. The incident is unusual only in that it has become public. Countless points of contact exist between the legitimate business world and organized crime. "If you look closely, you will see there are distinctions in the underworld that reflect crudely the distinctions in the upper world," says Diego Gambetta, an Oxford University sociologist and expert on the Mafia. "[The Mafia] wouldn't have lasted 150 years if they had been just a gang of extortionists. They served the interests of various portions of the business world."
The pattern is reflected in the case of the Rizzutos. Led by Nicolò Rizzuto and his son Vito—with Vito acting as CEO and front man, and his father and a close-knit group of top lieutenants functioning as senior management—this crime family began infiltrating the business community decades ago. "These are guys who think globally and make full use of global financial markets," says Lee Lamothe, a Toronto journalist who co-authored a book on the Rizzutos, The Sixth Family. "They use lawyers and sharp accountants, and weaknesses in stock market regulation, and are able to get the money they need to do deals."
Today, the Rizzuto leadership is mostly behind bars. Sixty-two-year-old Vito is languishing in a prison in Colorado for participating in the 1981 gangland slaying of three fellow mobsters, while his 84-year-old father and 90 of their street bosses and soldiers were swept up two years ago in an RCMP-led crackdown called Projet Colisée. Facing roughly 1,000 charges for drug importing, extortion, gangsterism and bookmaking, the Rizzuto gang are slated to go to trial this fall.
The trial, if it proceeds, will inevitably underline how organized crime can simply be commerce of a different hue, involving the same sorts of challenges with personnel and competition that legitimate businesses face. Carlo Morselli, a criminologist at the Université de Montréal, believes that successful gangsters require exceptional business skills. They work on a tightrope of alternately competing against, and working with, their rivals, while agreeing to deals that can't be enforced by law. Not to mention risking everything at the hands of the police. "The only difference between them and real businessmen is there's no room for error," says Pierre Boucher, a lieutenant with the Sûreté du Québec who has investigated organized crime for many years. Actually, there's one other difference. "You can kill your competition."
More important than the resemblance between the two spheres is the way the border between the two is blurring. While dollar sums are impossible to compile, police sources and other evidence suggest organized crime is growing in Canada, and increasingly bleeding into the legitimate economy. The old stereotypes of greasy goombahs and bikers is being supplanted by profit-minded professionals with top legal help. And Canada, with its porous borders, proximity to the U.S. market, and light sentences for criminal activity, is considered by police to be a haven for organized crime.
Internationally, annual revenues generated by organized crime exceed $800 billion (U.S.)—up dramatically from $595 billion (U.S.) in 2001—according to estimates by Friedrich Schneider, an economist at the Johannes Kepler University of Linz in Austria. Estimates of the portion of the GDP controlled by organized crime reach as high as 13.1% in Italy and, startlingly, 11% in the U.S. As for Canada, the International Monetary Fund suggests that money laundering alone accounts for between 2% to 5% of GDP—or somewhere between $30 billion and $77 billion. Nationwide narcotics sales may be as high as $40 billion a year—as much as our domestic mining production—or even higher. In B.C., as much as 5% of GDP is estimated to stem from marijuana production.
