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May 21, 2006
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A life changed: Former Mafia boss tells cops about fraud and organized crime
By GREG WELTER - Staff Writer

Former mob boss Michael Franzese makes a point about how organized crime does business as he speaks to law enforcement officers from throughout Northern California Thursday at a conference on fraud. (Greg Welter/Enterprise-Record)

All Chico E-R photos are available here.

OROVILLE -- Once an East Coast mob figure in a class with John Gotti and Al Capone, Michael Franzese is now an author, inspirational speaker and coaches his son's Little League team in Southern California.

Talking to about 75 law enforcement officials gathered in Oroville Thursday for a conference on fraud, Franzese said he escaped the Mafia not through the charm and wit that rocketed him to the top of a La Costra Nostra family, but by going to prison and outliving his enemies.

At 53, Franzese has been out of the mob for more than 15 years. It's been 31 years since he became a sworn "made" member of a crime family.

"That was Halloween night, 1975," Franzese recalled. He said six other men officially became La Costra Nostra members that night in an indoctrination with several curious religious overtones. Among them, each man was required to suffer a blood-letting cut to a finger and hold a burning picture of a saint.

Franzese said all six of the men he pledged with that night in a "blood covenant" are now dead from violent means.

The former Mafioso, once dubbed the "Long Island Don" and "Prince of the Mafia," rose to prominence in the early 1980s by participating in a scheme to defraud the government of federal tax from gasoline sales.

He and a partner contracted to sell gasoline to East Coast service stations at a discount, with Franzese telling his customers he would cover the federal tax.

He collected millions from the gasoline sales, but delayed paying the tax for a year, then absconded with the money before the government could move in. Franzese figured he was making about 41 cents' profit on each gallon sold.

It reportedly made him the biggest moneymaker in the mob since Capone.

He also participated heavily in sports gambling frauds, especially at the college level.

"It's a very easy sell," Franzese said. Mob members cozy up to a good athlete from a college, but not a pro prospect, and get them to shave points so the favored team doesn't cover the spread, he explained.

He said a player may earn $10,000 each time they participate. "The problem is, they want to get out after they've done it once, twice or three times, but the mob is greedy," Franzese said. "You get out when we say you get out," Franzese said the players are generally told.

All Internet gambling on sports is illegal, but most is operated from offshore, and perpetrators are nearly impossible to track down.

Identity theft collected through gambling sites is rampant, Franzese said.

Franzese said it's a misconception that organized crime simply muscles its way into legitimate business for its own gain. "In each and every case, and I mean every case, it was someone who came from that business from within, an employee or somebody in a high position, that came to me with a way to defraud that company, and they came to me because of my connections."

He admitted to the roomful of police officers Thursday that he had participated in violent acts to enforce his schemes, but was never charged with a violent crime. He decided to plead guilty to a racketeering charge (not in connection with the gas tax fraud) and was sentenced to 10 years in federal prison.

He served nearly eight years in different facilities, including Lompoc in Santa Barbara County, where he said he probably came closest to having a hit made on him.

He got six months knocked off his sentence for agreeing to appear in an anti-gambling video being produced by the National Basketball Association.

That experience, Franzese said, launched his new career speaking and writing about organized crime and fraud.

He also formed a foundation to assist convicted criminals from reoffending.

When he got out of prison, most of the people Franzese considered his enemies were either dead or in prison themselves. Still, Franzese said, the government gave him a list of 500 people he was no longer allowed to have contact with.

Some of them were dead.

"This is the last thing I thought I'd ever be doing in my life, but I've been blessed with a second chance. You're looking at someone who should certainly either be dead or in prison for life, that's certainly what I earned in my life."

Franzese said the best way for the public to combat fraud of all kinds is through education.

"Anyone committing a fraud will never have the proper documentation to back it up. People have to check into these things before they act."

"If I had to solve the problem with fraud, it would be through education and awareness," he emphasized.

Franzese's casual style and confidence at a lectern might suggest his separation from the Mafia was easy, but nothing could be further from the truth: In reality, he isn't completely free even now from its code of the vendetta.

"I don't think I could go back to Brooklyn. I probably wouldn't last a day," he said.

Franzese spent three years in premed school at Hofstra University, but had always longed for a life on "the street." He grew up with it, recalling that his father, a kingpin in the Colombo crime family, was almost constantly under surveillance by the FBI.

"They would even follow us into a restaurant when we went to dinner," he said.

Franzese's rise through the ranks of La Costra Nostra was nearly unprecedented, and he earned millions, perhaps billions, of dollars.

When asked by a police officer what became of the money, Franzese said he opened dozens of accounts in the Cayman Islands, and even bought a bank in Austria. "But if it's out there, I doubt that I'll ever have the use of it," he said.

He paid restitution of $15 million at the time of his conviction on racketeering.

Franzese is married and has seven children.

Staff writer Greg Welter can be reached at 896-7768 or gwelter@chicoer.com.

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