Assessing the Effectiveness of Organized Crime Control Strategies ...

Assessing the Effectiveness of Organized Crime Control Strategies:
A Review of the Literature
the early 1980s “spawned at least two dozen other criminal networks in the same neighbourhood
as replacements for the crime group that had been targeted.”
Lyman and Potter (1997) attribute the poor outcomes of headhunting strategies to
misunderstandings about the workings of OC. They note that crime syndicates have learned to
adapt their structures and practices in the form of decentralization and relationships that are more
short-term. As headhunting disables just a small proportion of OC entrepreneurs at any given
time, it may actually strengthen some groups by weeding out their inefficient competitors.
Another shortcoming of the headhunting strategy is that they often target easier cases involving
highly visible, but not necessarily influential, crime figures. Targeting high-profile gangsters
who are relatively easy to convict makes for good press, but will yield little in terms of impact.
Lyman and Potter (1997:436) contend that, “It is the relative immunity of major figures in
organized crime, such as corrupt officials, money launderers, and others who serve as bridges
between the underworld and the upper world that so clearly demonstrates the deficiencies in the
headhunting strategy.”
4.3 Prosecutions Through the Use of Taxation Laws
Citizens have obligations as taxpayers to file tax returns, make truthful declarations, and
maintain complete business records. When income cannot be accounted for, whether connected
to illicit acts or otherwise, recourse exists in the form of prosecutions for failing to report it. The
Internal Revenue Service in the United States, for example, employs special agents who are
charged with gathering evidence of criminal violations for prosecution by the Department of
Justice.
Tax-related fraud can be established via direct and indirect methods (Abadinsky, 2003:313). The
direct method involves the identification of unreported taxable receipts, overstated costs and
expenses, and improper claims for credit or exemption. The advantage of this method is that the
evidence is easier for jurors to understand.
OC figures, however, tend to avoid a paper trail—dealing in cash and maintaining few records—
or set up legitimate businesses as fronts to conceal the illicit sources of their income. One
indirect method of ascertaining their income is the net-worth method. Using this approach, a
taxpayer’s net worth is established as precisely as possible at the beginning of the taxation
period. This amount is then subtracted from his or her net worth at the end of that taxation
period. The net gain is considered the taxpayer’s income, which is then compared with the
income declared for that period. The government does not need to show a probable source of
the gain in net worth that is unreported. Other indirect methods compare expenditures and bank
deposits with reported income (Albanese, 1996:170).
The most celebrated target of this type of financial investigation was Al Capone. He could not
account for over $100,000 of expenditures a year through legitimate income and was ultimately
convicted for failing to pay taxes on $1 million of illegal income (Albanese, 1996:171). From
1960 to 1965, over half of all convictions of OC leaders in the United States stemmed from tax
investigations (Rhodes, 1984).
22 | Research and Statistics Division / Department of Justice Canada