Tuesday, July 2, 2002 | 11:06 a.m.
Editor's note: This is the third of a three-part series on the FBI's last major assault on organized crime in Las Vegas.
It is the inside story of how longtime underworld figure John Branco became the government's most significant witness against the mob locally in two decades.
Branco and FBI agents tell the Sun exclusively about the inner workings of "Operation Thin Crust," the undercover investigation that led to prison terms for ranking crime figures while costing mobster Herbie Blitzstein his life.
If the FBI learned anything from "Operation Thin Crust" at the close of the last millennium, it was that the mob's influence in Las Vegas has declined dramatically.
"I think we've cut their legs out from underneath them in terms of their principal source of income in Las Vegas," said Jerry Hanford, supervisor of the FBI's Organized Crime Squad in Las Vegas. "When the casinos were taken away from them, this just became another city to the mob."
That was evident during Thin Crust, a two-year undercover investigation, as FBI agents saw firsthand how the mob concentrates on traditional street crimes in Las Vegas.
The number of Mafia families that maintain a presence in Las Vegas, long regarded as an "open city" for all families, also has declined, as law enforcement authorities have sent more than 200 ranking mobsters across the country to prison in the past decade.
In the early 1980s authorities concluded that most of the 26 crime families at the time were doing business in Las Vegas.
But today, according to Hanford, only six families are active in Las Vegas. They are the five crime syndicates in New York -- Gambino, Bonanno, Genovese, Lucchese and Colombo -- and the Chicago family, which no longer dominates street rackets as it did in the 1980s under the leadership of its local overseer, Anthony Spilotro.
Of the estimated 1,000 La Cosa Nostra members across the country, Hanford said, only about a dozen call Las Vegas home today. And some of those are in federal prison.
"I think the FBI has done an excellent job of hitting at the core of the crime families," said Deputy Chief Bill Young, who oversees Metro Police's Organized Crime Bureau. "The real power brokers within the mob now are either behind bars or dying off.
"Spilotro and his crew were really the last of the major organized crime guys operating here."
Thin Crust, although it was marred by the death of one-time Spilotro associate Herbie Blitzstein, took the Los Angeles and Buffalo mob families out of play in Las Vegas.
The undercover racketeering investigation smashed a crime syndicates' plot to take over street rackets. In all, 39 people -- including Carmen Milano, a reputed Los Angeles mob underboss, and several of its capos, were convicted on racketeering charges and sent to prison.
Peter Caruso, the mastermind behind Blitzstein's slaying, died of heart failure while awaiting trial. But Alfred Mauriello, the man hired to carry out the hit, and Antone Davi and Richard Friedman, the two men who shot Blitzstein at his home, pleaded guilty and were given prison terms of 15, 20 and 25 years respectively.
Joe DeLuca -- who had betrayed Blitzstein to participate in the murder plot only to later turn on his co-conspirators and testify for the government -- was sentenced to 10 years in prison under tight security.
Two reputed mob members linked to the Buffalo crime family, Robert Panaro and Stephen Cino, were charged with participating in the conspiracy to kill Blitzstein, but they were acquitted following a federal trial. Both, however, were convicted in the scheme to muscle in on Blitzstein's loan-sharking operation. Panaro was sentenced to 7 1/2 years in prison, and Cino received 15 years behind bars.
Defense lawyers attacked the credibility of John Branco, the government's star witness, and they criticized the FBI for not doing enough to protect Blitzstein during Thin Crust.
In his closing argument, Assistant U.S. Attorney Eric Johnson, a veteran of years of prosecuting organized crime cases, acknowledged that he considered Branco a bad guy.
"You cannot infiltrate a criminal organization like the LCN, or any criminal organization, with priests, Boy Scouts or the common person off the street," Johnson told the jurors. "When you open a sewer and you look inside, you do not see swans swimming."
But Johnson also defended the use of Branco as an undercover informant to ensnare other mob figures on the street.
"John Branco served a purpose," Johnson told the jurors. "You can debate and ponder whether or not he should have received all that he received, but he played an important role in an important investigation."
It was an investigation that was called a success, even though it was cut short by Blitzstein's death.
"All of those we intended to get, we got," former Las Vegas FBI chief Bobby Siller, who oversaw the two-year racketeering probe, said. "I don't think too many people escaped charges."
The probe left little doubt that the mob no longer wields the kind of influence on the Strip it did in 1970s and 1980s.
In those days Mafia families from Chicago and Kansas City, Mo., were able to skim millions of dollars from casinos until state and federal authorities mounted an intense crackdown on the secret operations.
The mob lost more ground as Las Vegas casino companies went corporate and turned to Wall Street for leadership. State gaming regulations also gradually toughened, making it virtually impossible for hidden mob interests to escape the attention of authorities.
"The casinos have been taken out as a factor," Hanford said. "(The mob) isn't really going to be able to mount any kind of an organization to infiltrate a casino. There are just too many background checks that are made before somebody's allowed into the industry.
"Most of the companies now are major corporations, and nobody wants that kind of stain on their organization."
Former state Control Board Chairman Steve DuCharme said the mob simply doesn't have access to the kind of capital it takes to run a major Strip casino.
"For the most part they're involved in things like vending or playing angles on sports wagering," DuCharme said.
Organized crime's inability to penetrate the gaming industry also has forced it to set its sights on less ambitious telemarketing, credit card and slot cheating schemes in Las Vegas, Hanford said.
And traditional mob crimes, such as loan-sharking, narcotics trafficking, robbery and extortion, also continue to play a role in the underworld's presence in Las Vegas, Hanford said.
"They're more bottom dwellers now," Young added. "They're not sucking money out of the back door of casinos any longer."
But Young said he believes the underworld has stepped up its presence in the fast-growing sex industry, primarily at adult nightclubs and outcall services.
"There's just a ton of money to be made in that industry," he said. "It's a natural cash business for the mob."
Thin Crust, however, demonstrated that organized crime is anything but organized -- and not always that smart. FBI agents were able to watch mob figures plan their crimes at a social club that agents had set up during the probe.
"These guys were crude," said Frank Cullotta, a government witness against the mob in the 1980s. "I can guarantee you that my generation would have gotten more respect out of law enforcement authorities than these guys got."
Cullotta, who lives under a different identity outside Nevada, was a close Spilotro associate until he "rolled over" on the Chicago mob kingpin.
Spilotro's organization, Cullotta said, was far more sophisticated and created a larger challenge for lawmen than the underworld figures nabbed in Thin Crust.
Branco, considered the most important mob witness in Las Vegas since Cullotta, agreed.
"They've become two-bit crooks," said Branco, who played a key undercover role in Thin Crust. "It's nickel and dime stuff."
Both Cullotta and Branco, who also has a new identity, said the mob in Las Vegas today lacks an enforcer such as Spilotro, who was able to mediate disputes between crime families and keep local mobsters in line until his gangland slaying in 1986.
Spilotro, with an army of associates, oversaw street rackets in Las Vegas for the Chicago mob, as well as its hidden interests in Strip casinos.
"Those guys were the real deal," said former FBI agent Michael Howey, who retired last year after investigating organized crime locally for 20 of his 25 years with the bureau. "There was no question about it.
"Anytime you've got enough organization and enough control to orchestrate a pretty sophisticated skim at these hotels, it's the real deal."
Howey, who often saw Spilotro in action, said huge amounts of money were being skimmed by Spilotro cronies at the Stardust and Fremont and by Kansas City mobsters at the Tropicana.
"They took the money before it was even counted," Howey said. "I saw them leave with huge shopping basket-size bags."
Howey called Las Vegas a "real dynamic town" in those days, a description shared by Dennis Arnoldy, another former FBI agent who investigated Spilotro.
"It was fun for us," Arnoldy said. "It was a great time to be an agent. Every morning you didn't know what the headline was going to be."
Arnoldy said Spilotro surrounded himself with a "tough bunch of guys" willing to commit any kind of crime.
"They were not wusses by any stretch of the imagination," Arnoldy said. "And you could tell that Spilotro was in charge. He had some leadership skills."
Today, however, the mob is not as dynamic in Las Vegas, and it has been relegated to a much lesser role in the overall crime picture, Hanford said.
"I think it's a trend that's going to continue," he said.
In recent years lawmen have noticed that Las Vegas has become a retirement community for senior Mafia members, just as it has for many Americans, Hanford said.
"We get a fair number of made members and mob associates who just come out here to retire," he said. "So we keep an eye on their activities to see if they're engaging in anything illegal."
DuCharme said state agents also have witnessed the influx of underworld associates looking to spend their remaining years in Las Vegas.
"We aren't seeing the young Turks who are hard-charging and active," he said. "We're seeing the old guys coming here, and it's hard to teach an old dog new tricks. These guys associate with each other, and they go to their favorite place, a deli or a sandwich shop, and they're opportunistic.
"If something comes up, they'll take a shot at it, but it's not the muscle and hardcore stuff one would think from organized crime."
Former FBI chief Bobby Siller, now a Gaming Control Board member, said informants such as Branco and Cullotta have been one of the biggest weapons in helping the FBI break up the mob.
"Nobody really wants to be the boss anymore," he said. "You become an instant target. And you've got the threat from within and the threat from the outside."
Siller added there's no such thing as loyalty within organized crime today.
"It happens in the movies, but in reality they snitch each other off like any other criminal group," he said.
Charles Maurer, lead undercover agent in Thin Crust, said law enforcement agencies have made great strides in dismantling the traditional mob across the country.
"I think that law enforcement has done a lot of damage to the Mafia," said Maurer, who runs the FBI's Surveillance Squad in Las Vegas. "There are very few families that are strong anymore. New York is about the only place where there's really a Mafia now."
Those words are backed up by statistics.
Within the last decade, 14 crime family bosses, seven underbosses, 11 consiglieres (advisers), 97 capos and 114 solders across the country have been convicted on federal racketeering charges and sent to prison, according to the FBI. It believes the number of active mob families has declined from 26 to 22 during this period.
DuCharme said you can tell that the mob's influence in Las Vegas has slipped because fewer organized crime figures are being nominated for Nevada's Black Book of undesirables banned from casinos.
Until the last several year mobsters dominated the names in the book, he said.
"But now you'll see just as many slot cheats or gaming cheats in the Black Book as you will organized crime figures because they're just as big a threat to the industry," DuCharme said.
Street gangs and Asian organized crime rings are having a greater impact than the mob on the quality of life in Las Vegas, lawmen say.
Authorities have begun to take a more intense look at those groups and no longer are focusing solely on traditional organized crime.
The agents who worked Thin Crust said there's little question the mob has been hit hard heading into the 21st century.
But Branco says: "They're hurting, but eventually they're going to come back again."