The Changing Face of ORGANIZED CRIME IN NEW JERSEY – A Status Report – State of New Jersey Commission of Investigation 2004 Report

Recent census figures showed for the first time in United States history that people whose ancestry traces back to Spanish-speaking countries make up the largest ethnic minority group in the nation. In New Jersey, their ranks rose from 6.7 percent of the population in 1980 to 13.3 percent in 2000, not counting illegal immigrants. Those with Puerto Rican, Dominican, Mexican, Colombian and Cuban ancestry are the most numerous among Latino New Jerseyans. The overwhelming majority of Latinos, whether citizens, legal residents or illegal residents, are law-abiding and contribute positively to our society. Some, however, are involved in criminal activity, including those affiliated with notorious organized criminals that prey on the Latino population.

Earlier in this report, we described the key role of Latino crime groups – largely composed of operatives having Colombian, Dominican, Mexican or Puerto Rican ancestry – in the transnational and local narcotics trade. Although usually less sizeable, other Latino criminal rings organize illegal gambling, jewel-theft, prostitution, loansharking, extortion, cargo-theft and general thievery. Law enforcement authorities, for example, have become increasingly concerned over the proliferation of organized shoplifting gangs made up of undocumented aliens from Colombia, Ecuador, Peru, Chile and other Latin American nations. These groups engage in a lucrative practice known as “boosting” in which gang members, each assigned discrete roles, steal large quantities of merchandise, including clothing and jewelry, for sale on the black market. Police in northern New Jersey report that boosting incidents are occurring with increasing frequency in malls in Bergen, Morris and Passaic counties and that New Jersey essentially has become a “feeding ground” for such gangs.

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In terms of the larger organized Latino criminal groups, one particularly critical to New Jersey is the so-called “Cuban Mafia,” which has conducted diversified criminal operations in our state for decades.

Elements of Cuban organized crime emerged nearly four decades ago amidst the waves of political refugees who fled Cuba to escape Fidel Castro’s repressive revolutionary government. Initially centered in Miami, the Cuban émigré community soon branched out to establish roots in other urban areas, including northern New Jersey. Hudson County, directly across from New York, now is home to the largest domestic concentration of Cubans outside of southern Florida. Culturally close-knit, linguistically insular and highly motivated, the Cuban community has grown to become a major force in the state and local economy. At the same time, however, it has produced one of the most formidable criminal organizations this region has ever seen.

The most powerful component of Cuban organized crime remains an entity known as the José Battle Corporation. Named for its founder and leader, José Miguel Battle-Vargas – a former Havana vice officer who served in Fulgencio Battista’s army and later participated in the ill-fated Bay of Pigs invasion – the Corporation generates millions in illicit profits annually through a variety of criminal enterprises. These include video gambling, bookmaking, loan-sharking, narcotics trafficking, prostitution and cargo theft. Because such activities generate substantial amounts of cash, the Corporation also is involved heavily in money laundering. Moreover, the Cuban mob has demonstrated a clear penchant for violence over the years, lashing out at would-be competitors and cracking down ruthlessly on members and associates suspected of treachery. Battle and his operatives also have displayed a particular talent for corrupting local political and law enforcement officials in furtherance of their criminal activities.

The Cuban mob is similar to elements of traditional organized crime in its strictly defined organizational hierarchy. The Corporation essentially functions in a manner reflected by its name – through a “board of directors” structured according to criminal activity and managed in the fashion of a legitimate business running its various divisions.

For many years, José Battle-Vargas was the hands-on chairman of the board, overseeing the Corporation’s criminal enterprises in the United States and Latin America from his base in southern Florida. Recently, however, Battle’s influence and grip have waned due to advanced age, illness and legal problems. In late 1996, federal agents raided his Miami estate, seizing gambling ledgers, firearms and more than $87,000 in cash. He was convicted in federal court in 1997 of illegal possession of a weapon and sentenced to 18 months in prison. In a separate matter, Battle pled guilty to two counts of fraud in U.S. District Court in Miami based upon charges that he pasted his picture on another individual’s U.S. passport and used it to travel throughout Latin America between 1993 and 1996. He was sentenced to an additional six months in prison and three years supervised release. On March 18, 2004, the U. S. Attorney for the Southern District of Florida unsealed an indictment charging Battle and 24 other high-ranking individuals associated with the Corporation with racketeering and gambling. The terminology employed in this indictment to describe positions within the organization was revealing in its corporate overtones: “chairman”, “vice chairman”, “board of directors” and “bankers.” The indictment charged that the Corporation engaged in extensive illegal gambling enterprises, narcotics trafficking, theft of merchandise from hijacked trucks, and acts of violence and intimidation, including arson, assault and homicide over a period of four decades. The millions of dollars generated by the illicit activities are alleged to have been laundered through various paper companies in South Florida, as well as through the development and operation of a casino/hotel complex in Lima, Peru. In addition to these legal problems Battle is said by his attorneys to be suffering from advanced kidney disease.

Law enforcement officials say that because of the aforementioned factors, overall control of the Corporation’s directorate shifted into the hands of Battle’s family members and trusted associates with supervisory capability, including his son and possible heir apparent, Jose Miguel Battle-Rodriguez, also known as Battle, Jr. Despite this shift in control, however, the future viability of the Corporation remains in doubt as a result of the March 2004 federal indictments, which also snared Battle, Jr. and many other top lieutenants. Battle, Jr., also known as Jose R. Batlle, and within the organization as acting “Padrino”, was arrested at 4:30 a.m. on March 19 aboard a cruise ship in the central Caribbean. U.S. Coast Guard officials, in conjunction with Justice Department authorities, decided to take him into custody on the high seas in order to prevent a possible flight from prosecution once the ship reached its next port call in Costa Rica. Upon apprehension, Battle, Jr. was transferred to the confines of a nearby guided-missile cruiser, which was on routine counter-drug operations in the Caribbean.

Based in Miami, the group’s influence nonetheless extends to the New York/New Jersey region. The “board members” are principals in many of the group’s enterprises and specifically exert some measure of control over gambling, narcotics, money laundering and cargo-theft operations.

A key player is Gumersindo “Rolly” González-Herrera, who fulfills the role of high-level “super banker” for illicit gambling outlets operated by the Cuban mob in New York and New Jersey. In addition to Battle, Jr. and González-Herrera, the Commission has identified more than 40 other key players whose criminal activities impact on New Jersey.

The Corporation’s criminal activities in this region are centered in upper Manhattan, Brooklyn and The Bronx in New York City, and, in New Jersey, in northern Hudson County – primarily in the communities of Union City, West New York and Guttenberg – and parts of Bergen, Essex, Middlesex, Monmouth and Morris counties. The group also has established a limited presence in Bridgeton and Vineland in Cumberland County and in Atlantic County.

While the Cuban mob engages in the typical array of organized crime ventures, including drug trafficking, cargo theft, bribery, extortion and official corruption, its primary moneymaking endeavor is illegal gambling. The Corporation essentially controls all video gaming operations across northern New Jersey’s Latino community. Illicit machinery is routinely installed, maintained and overseen by Battle operatives in hundreds of small grocery stores, bars, bodegas, restaurants, delicatessens, laundries, video stores, pizza parlors and other venues. Owners who do not want the machines or do not appreciate the small share of profits they receive face threats, intimidation and the prospect of being driven out of business.

The leading suppliers of video gambling machines controlled by the Cuban mob are José A. “Chicho” Grana and his son, José Grana, Jr., who until 1999 operated a company known as Boardwalk Amusements. Law enforcement officials say machines originating with the Granas have been placed in more than 250 business venues in Hudson County alone. Another supplier known to have associated with members of the Cuban mob is identified as Funhouse Amusements, owned and operated by Miguel “Miguelito” Morales and his son, Miguel Morales, Jr.

The Corporation’s gambling empire, however, extends well beyond video machines. The group also draws substantial revenues from la bolita, the Latino version of an illegal numbers, or “policy,” racket. La bolita is derived from the pari-mutuel handle from one of the major horse racing tracks in the New York metropolitan area. Besides providing the Cuban mob with a steady and substantial profit stream with which to underwrite other criminal ventures, la bolita serves as an effective money laundering tool, along with illicit lottery operations based on the legitimate lotteries of the Commonwealth of Puerto Rico and the Dominican Republic. Tickets from those lotteries are transported north and illegally sold here on the streets at a premium, usually twice the face value of the tickets. Winners here are paid in cash with Corporation “dirty” money. Battle associates, in turn, take the actual winning tickets back to either of the respective Caribbean islands and redeem them for “clean” money.

The cash flow associated with these schemes is enormous. In one instance, law enforcement officials calculated that la bolita proceeds routed through a single Cuban mob “safe house” in upper Manhattan totaled more than $1 million per week. Among the Corporation’s principal numbers bosses in New York and New Jersey is Gumersindo “Rolly” González-Herrera. State Police Detective Sergeant Fernando Pineiro testified at the Commission’s public hearing that during February 1, 2000, gambling raid, authorities uncovered $250,000 in secret compartments located throughout González-Herrera’s North Bergen house.

The Cuban mob also has a hand in illegal sports betting, operating telephone- equipped bookmaking parlors known as “wire rooms” predominantly on the New York side of the Hudson. Former partnership arrangements worked out with elements of the traditional La Cosa Nostra, to which the Corporation once referred indebted gamblers for collection and repayment, are no longer necessary because the Cuban mob now collects its own debts. Law enforcement sources have identified at least two “super bankers” (so called because of the size of the gambling enterprise and their ability to cover the action placed) who serve as principal bookmaking bosses for the Corporation in New York and New Jersey.

SCI Special Agent Judith A. Gore testified at the public hearing as to the dominant role Cuban organized crime plays in serving Latino customers of illicit gambling:
Nearly all [Latino] groups place their wagers through Cuban organized crime, which controls its territory exclusively. While Puerto Rican or Dominican [criminals] may participate at the lower end of the hierarchy as runners or the neighborhood bookie, Cuban control dictates how and where their bets will be placed. There is no interference from La Cosa Nostra or traditional organized crime, as the two honor each other's boundaries. Included among [Cuban organized crime’s] nefarious activities are sports wagering, the bolita or lottery, video gambling, extortion and loan-sharking. Its large gambling enterprises allow Cuban organized crime to amass great wealth, … cover large payouts and service the entire state and beyond. Two bolita operations in the metropolitan New York area alone each bring in approximately one million dollars weekly.

Cuban organized crime then uses this profit to further finance its [other] criminal enterprises.

The Cuban [criminal] groups also use threats and intimidation to maintain their stronghold in the Latino community. In some cases, firebombing or arson and even homicide [are] employed to keep operatives in line. In New York, one [Latino] business owner, who no longer wanted his business used as a betting location by the Cuban mob, was firebombed by Cuban organized crime enforcers within a few days of his attempt to withdraw from the operation.

Recent investigations have shown that gambling proceeds are invested in retail businesses, car dealerships, botanical supply stores, large real estate acquisitions, or other illegal ventures such as narcotics trafficking. Attorney trust accounts are also used to funnel the gambling proceeds. Investigations have shown that the wealth and influence of organized crime has a significant impact in attempting, and at times succeeding, to corrupt public officials and law enforcement officers.

Detective Sergeant Pineiro testified that a 1999 investigation by the federal IRS, FBI, Hudson County Prosecutor’s Office and New York City Police Department led to the arrest of leaders and operatives of a Corporation offshoot known as “The Company.” Manuel Alvarez, Sr. of North Bergen and Manuel Alvarez, Jr. of Franklin Lakes in Bergen County ran the operation. The investigation resulted in the seizure of approximately $5.8 million. $982,000 in cash was seized at Alvarez, Sr.’s house and $262,000 was seized at Alvarez, Jr.’s house. Much of the money at Alvarez, Sr.’s residence had been there so long that the rubber bands holding it had dry rotted, according to Pineiro.

Pointing out that gambling violations usually are mere crimes of the third degree, Detective Sergeant Pineiro described the dissatisfying consequences of investigations that can be quite lengthy, expensive and complicated:
Basically, … in a lot of these investigations the individuals will plead guilty and surrender the money. The loss of the currency is nothing more than an operating expense or a temporary loss. The sheer volume that they're able to generate throughout these … communities, between New Jersey, New York, Florida and Connecticut, they make up their losses quite quickly. What would hurt them the most is to be out of commission … and face incarceration.

Special Agent Gore confirmed the frustration resulting from gambling prosecutions:
In the majority of the cases where illegal gambling was the only charge on the state level, the Cuban OC associates pleaded guilty and received probationary sentences, even as repeat offenders. The more successful prosecutions were the federal investigations brought as racketeering cases where the defendants were sentenced to considerable jail time despite negotiating guilty pleas. Whatever the penalties, and despite the successful investigations we’ve noted here, authorities have not been able to lastingly reduce, remove or deter Cuban organized crime gambling operations.

With regard to narcotics trafficking, elements of Cuban organized crime serve both as wholesale transporters and retail middlemen for various segments of the Colombian drug cartels. During José Battle, Sr.’s federal sentencing hearing in February 1998, two convicted drug traffickers linked Battle to the Colombia-based Medellin cartel. They testified that Battle paid them $500,000 in 1989 in exchange for transporting a large amount of Colombian cocaine into South Florida via the Bahamas. Associates of the Cuban mob are also known to “broker” shares of cocaine, heroin and marijuana for retail sale at the street level in New York and New Jersey. Moreover, a substantial network of Cuban trucking operators based in New York and northern New Jersey provide transportation services to the Colombian cartels. Although these truckers are not part of the Corporation per se, they interact with Cuban organized crime as the occasion demands. The Cuban-owned trucks regularly haul varying amounts of cocaine, marijuana and heroin – disguised as part of a legitimate cargo load usually consisting of agricultural produce – from pick-up points in the western and southwestern U.S. to destinations in the New York metropolitan area. When the Colombians take possession of these shipments, the truckers or transportation coordinators receive a fee, either cash – typically about $500 to $1,000 per kilo – or a small share of the drug haul.

In a concerted bid to evade law enforcement, Cuban mobsters have redoubled their efforts in recent years to acquire legitimate business interests that can serve as fronts for criminal activity. The array of businesses controlled by the Corporation in northern New Jersey now includes cargo and trucking companies, travel agencies, jewelry stores, nightclubs, video rental outlets, a clothing store chain, a large grocery franchise, medical clinics, medical transportation companies, real estate and title office and insurance brokerages. The Cuban mob also controls a number of personnel in key positions in several New Jersey banks, an aspect which, along with an elaborate network of affiliated business accounts, helps to facilitate the Corporation’s money-laundering enterprises.

Given that the Corporation spends most of its time on, and draws most of its ill- gotten gains from, activities as relatively innocuous as sports betting and numbers running, it is easy to minimize the danger posed by the Cuban mob to the public welfare. That would be a mistake. Illegal gambling to the extreme extent as engaged in by the Corporation is a huge engine helping to drive the underground economy. As a result of this group’s actions, tens of millions of dollars change hands every year beyond the reach of state and federal taxation. Moreover, the business of hiding these tainted millions has served to nurture an international money-laundering industry. Worse, the business of spending those millions has served to bankroll a host of other criminal endeavors, not the least of which is drug trafficking.

With so much money at their disposal, Cuban mobsters also have succeeded in corrupting law enforcement and subverting the system of public accountability. In one instance, they managed to transform the top ranks of West New York’s municipal police force into a racketeering enterprise throughout the 1990s. In the same community, they proved capable of undermining the state/local regulatory apparatus for proper licensure of bars, taverns and other establishments that dispense alcoholic beverages.

In January 1998, federal prosecutors unsealed a 69-count racketeering indictment charging that for nearly a decade between 1989 and 1997, members and associates of the Corporation had bought the services of nine police officers, including the former Chief, Alexander V. Oriente, in the City of West New York. The defendants were charged, among other things, with participating in a bribery and kickback scheme in which more than $600,000 was paid to police officers to protect prostitution, illegal gambling and after-hours liquor sales.

The bribe-paying businesses made payments directly to corrupt officers or through a designated bagman. Additionally, police officers extorted six dollars per towed car from the town’s towing operator. Federal criminal complaints also were issued against seven more defendants, three of whom were connected with the after-hours liquor sales. Several of the counts in the indictment stemmed from extortion and bribery schemes involving illegal licensing of establishments and after-hours sales at protected businesses. Corrupt police, including former Chief Oriente, protected the liquor schemes by accepting bribes and kickbacks totaling more than $95,000 in weekly cash payments of $100 to $800. For example, one owner of an unlicensed bar said he paid police officers an average of $250 a night to keep the bar open and to extend its closing time. In exchange for kickbacks, the corrupt officers also gave the protected gambling, liquor, and prostitution enterprises advance warning of raids or other legitimate attempts to uphold the law. The officers also threatened and punished competitors of the bribe-paying businesses.

Federal authorities called the West New York investigation the worst case of police corruption in the history of New Jersey. All told, the case produced 32 convictions of which 14 were police officers, 13 from the West New York Police Department and one from Union City. There were four acquittals and five resignations of police officers not charged in the indictment.

Richard G. Rivera, a former West New York Police Officer who blew the whistle to the FBI about police corruption in that city, testified at the Commission’s public hearing. He pointed out that many police officers in West New York were not corrupt. However, corrupt officers tested new officers to determine whether they would tolerate or assist the corrupt schemes. Mr. Rivera described the dilemma faced by the young officers:
It was a slippery slope. What had happened was Chief Oriente had his own crew of hoodlums that were operating within the Police Department and protecting illegal operations within the town, and also exploring other enterprises on their own. And … officers come in with a good intention. They want to do right. They want to abide by the law. They want to make some changes in their community. Only when they’re exposed to this type of environment do tough choices have to be made, whether you want to go along and play the game, or do you want to go against the grain. And I know several officers personally. I had my best friend who was my partner who went to prison for a year. And he wasn’t corrupt when we went to the academy for six months. But later on, that’s what happened. So the majority of the officers are hard-working, diligent individuals that are trying to do the right thing, but they’re held back by that very small group of rogue cops.

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