Saturday, September 15, 2007

Media Mafia: Corruption in the Cable Industry (Part Six) - The Pizza Connection (and Alberto Gonzalez, too)

Edited by Alex Constantine

From: Combatting Transnational Crime: Concepts, Activities and Responses, by Dimitri Vlassis, Phil Williams, Routledge Press, 2001

Page 129: "Members of organized crime groups are reported to be owners of restaurants, coffee shops, nightclubs, movie companies, CABLE television companies ... ",M1
July 2002
The Rouse House Revisited:

Unraveling the Enigma of Murder,
Police Corruption, and Organized Crime
By Terry M. Mors, Ph.D.

Many organized crime articles and textbooks have made reference to the Rouse Casino or the Rouse House. However, those publications did not fully explain the Rouse Casino. It was more than the typical back room parlor. The Rouse mansion was a classic case of organized crime co-existing with police corruption. Crooked police officials and organized crime figures cashed in on a family tragedy. This article explains the history of the Rouse Casino and how organized crime gained a foothold in Libertyville, Illinois.

Libertyville is a sleepy little bedroom community located in the heart of Lake County, Illinois. One of the most affluent counties in Illinois, Lake County is located in the northeast corner of the state. Residents of the tiny town of Libertyville are not accustomed to violent crime. So when the brutal murder of two of their most prominent residents occurred, it sent shock waves through the community. As shocking as the double murders were, no one expected what else was about to be uncovered.

Bruce Rouse, age 44 at the time of his death, was a self-made millionaire. He earned his money through the ownership of four gasoline service stations, numerous real estate transactions, and PART OWNERSHIP IN A CABLE TELEVISION COMPANY. He lived in a mansion on the north side of unincorporated Libertyville with his wife Darlene, age 38 at the time of her death, and their three children. The oldest child was a son, Kurt, age 20. Kurt resided in a coach house located behind the main house. Their daughter, Robin age 16, and son, Billy age 15, lived in the main house. Their bedrooms were on the second floor of the mansion.

At 8:30 on the morning of June 6, 1980, Robin answered the ringing telephone. It was the manager of one of her father's gas stations. He was calling to get the combination to the safe, as Bruce Rouse had not shown up for work. Robin entered her parents' bedroom only to find a grisly murder scene. Bruce and Darlene had each been shot in the face at close range with a shotgun. Bruce had also been bludgeoned about the head and repeatedly stabbed in the chest. Robin immediately got her brother, Billy, who telephoned police.

On the night their parents were brutally murdered, Kurt claimed to have been with his girlfriend in the coach house. Robin was at a party in Lake Forest, and claimed to have returned home around midnight. Billy was allegedly home all night watching television in a downstairs room. The coroner established the time of death as being around 2:30 in the morning. Despite being home at the time of their parents' death, none of the children claimed to have heard the gunshots. Attorneys for the children were quick to point out that a thunderstorm that night explained why the children didn't hear the gunshots. The Lake County Sheriff's Police Department was called in to conduct the homicide investigation. Police stated there were no signs of forced entry, and no murder weapons were found at the scene. A 16-gauge shotgun and several knives were missing from Mr. Rouse's personal gun collection. Police suspected the missing 16-gauge shotgun was the murder weapon Robbery was ruled out as a motive, because the murder(s) took nothing with them, except for the shotgun and knives. In fact, Bruce Rouse's wallet still contained $300 in cash. Lake County Sheriff, Tom Brown, was quoted as saying the murders were "an act of hatred".

A coroner's inquest ruled that the deaths were a result of homicide, and ordered the Rouse mansion sealed. Lake County Sheriff's deputies provided around the clock security for the crime scene while the investigation proceeded. Several theories for the murders emerged, including organized crime being responsible. However, the Sheriff's Department began to focus on the Rouse children. The three children invoked their Fifth Amendment right against self-incrimination at the inquest, refusing to answer questions. They also refused to take a lie detector test offered by the Sheriff's Police. The Sheriff's Police had searched nearby fields, ponds, gravel pits, and the Des Plaines River for the murder weapons with no luck. With no new leads, the investigation bogged down to a standstill. Private security replaced the Sheriff's department, who had been keeping a steady vigil over the crime scene.

Gloss Guard and Investigative Services, Incorporated of Waukegan was hired by the Rouse estate to provide security. Security guard Richard Vogel, 18, was allegedly attacked one Tuesday about 10:40 at night. Vogel was struck over the head from behind with a blunt object. He lost consciousness temporarily. He was taken to Condell Hospital for observation and treatment of head wounds. The attack was never solved, and it remains unknown if it was directly related to the Rouse murders. With the investigation going nowhere, the Coroner's Office ordered the crime scene could be released. The private security was withdrawn.
Smile - You're on Candid Cable Surveillance Camera!

The Voice of the White House

Washington, D.C., August 10, 2007: “How do they watch you? Let me count the ways. With the new surveillance law being voted in by a weak-kneed Congress, the useless AG, Gonzales can now listen to any conversation or read any email without a court order. I have several additional comments to be made on this subject. Let’ s consider a means by which you can be spied on without a warrant. The first is by using your very own television set to listen to you. Sounds fantastic? Another nutty blog idea? Think again. Here I am quoting from an in-house memorandum: ‘The methodology of using a commercial television set connected to a cable network system being used as a transmitter as well as a receive, allowing other parties to hear conversations conducted in the vicinity of the set utilizes the medium of a digital oscillator installed in television sets. This use is only for a set itself connected to a cable system. The additional use of a cable box connected to the television set is the only means by which the set can be used to listen to nearby conversations because these boxes are designed to feed back information through the cable system. This feedback makes it possible for a subscriber to cable to use his telephone to call the cable company for the inclusion of a special program to the subscriber’s system. The cable company is automatically able to ascertain the telephone number from the call and using that information, send the desired program to the television set via their network and the box. The subscriber code of the subscriber matches the data on the subscriber’s box. This makes the use of the box as an instrument of clandestine surveillance possible.. It is then possible for such information to be fed into other channels, including investigative ones. The use by private parties of the cable system to obtain clandestine information in this manner would be difficult if not impossible but the NSA and FBI techniques in other electronic surveillance matters are more than sufficient to ensure electronic eavesdropping.
Fred Thompson, CableAmerica & the Mob

Following his shaky response to allegations that he lobbied for an abortion rights group, Fred Thompson was rocked today by allegations that he also lobbied for pornographers and organizations with long-suspected ties to organized crime. An old story in a previously obscure publication revealed that Thompson's former clients include soft-core porn provider CableAmerica.... Senator Thompson has thus far failed to comment either on the amount of money he earned from the cable porn industry.... Fred Thompson lobbied for cable providers and for the Teamsters, but does that mean that he should be shamed as a lobbyist for the porn industry or the mob? ...

An Italian Story
April 26, 2001

Milano 2 gave birth to Mr Berlusconi’s television empire. In 1978, he launched a local cable-television station for Milano 2, called Telemilano. This scheme became far grander. Mr Berlusconi’s ambition was to challenge RAI’s monopoly on national television advertising, for which there was huge pent-up demand. Telemilano became Canale 5 in 1980.There was one major snag: only RAI was permitted by law to broadcast nationally.

Although private commercial television was unregulated in most respects, a court ruling in 1980 allowed private television stations to broadcast only on a local basis.But Mr Berlusconi soon found a way round this ruling. He bought programmes, especially American films and soaps, and offered them at very low prices to small, regional television stations. Mr Berlusconi collected the revenue from pre-recorded advertising slots that he inserted. Each station in the Canale 5 circuit agreed to broadcast the same programmes at the same time. In this way, he secured his national audience.

How did Mr Berlusconi finance his budding television empire? Part of the answer is with bank debt. He had a large helping hand from public-sector banks, which provided bigger loans than Fininvest’s creditworthiness seemed to merit. But the rest of the answer is not clear at all. In 1978, at the birth of his television group, Mr Berlusconi set up the 22 holding companies that control Fininvest. From 1978 to 1985, 93.9 billion lire (387 billion lire in today’s money) flowed into the 22 companies, ostensibly from Mr Berlusconi.

In 1997, a financier with links to the Mafia alleged to magistrates in Sicily that Mr Berlusconi had used 20 billion lire of Mafia money to build up his television interests. The magistrates asked the Bank of Italy to help the anti-Mafia division investigate. Two officials spent 18 months combing the shareholder, banking and accounting records of the 22 companies. The Economist has a copy of their reports, which run to over 700 pages. The two main findings are startling.

The first is Mr Berlusconi’s lack of openness with the two trust companies that he instructed to be the registered holder of his shares in the 22 companies. The trust companies were subsidiaries of Banca Nazionale del Lavoro (BNL), a large bank. Mr Berlusconi put money into the holding companies through two little-known Italian banks, rather than through BNL itself. Thus, BNL’s trust companies had no clear picture of the ultimate source of these funds. In 1994, BNL’s managers were so concerned about this that they carried out two inspections of BNL’s relations with the 22 companies.

These inspections revealed other anomalies, such as share sales that were registered solely on Mr Berlusconi’s word, and with no documentary evidence. For instance, when he sold shares in one of the holding companies to a Fininvest subsidiary for 165 billion lire, the funds bypassed the trust companies altogether. So they had no idea how, or even whether, the buyer had paid for the shares.

The second finding is that the ultimate source of the money put into the 22 companies cannot be traced. There were three reasons for this. First, 29.7 billion lire had been paid in cash, or cash equivalents. Second, the investigators had found no extant supporting documents in the records of the trust companies, banks or holding companies for 20.6 billion lire. Third, Mr Berlusconi had been adept at sending funds round in circles.

Why did Mr Berlusconi want to do this? The investigators were baffled. One company, Palina, ostensibly a third party, had sent 27.7 billion lire to the trust companies, which had then transferred this sum to the holding companies. From there, the funds went to Fininvest, and then, through a Fininvest subsidiary, back to Palina. All these transactions took place on the same day and at the same bank. The investigators found that hidden behind Palina was Mr Berlusconi. He had used a 75-year-old stroke-victim to front for him. Soon after the transactions took place, Palina was liquidated. Its books had been kept blank.

So the true source of the 93.9 billion lire that flowed into the 22 companies in 1978-85 remains a mystery that only Mr Berlusconi can solve. We have sent him questions about this, in writing, but he has declined to answer. A close reading of the reports suggests that the possibility of money-laundering in the 22 companies cannot be ruled out. Banca Rasini, one of the little-known banks used by Mr Berlusconi and once his father’s employer, cropped up in trials of several money-launderers in the 1980s. But the anti-Mafia investigators found no evidence to support the allegation that had triggered their work.

They clearly hoped to produce a second report, but the time limit for the investigation had by then expired.

A friend in need

After he bought his two largest private competitors, Italia 1, in 1983, and Retequattro, in 1984, Mr Berlusconi had secured a virtual monopoly in private television. To skirt round the law and broadcast nationwide, he needed help from political friends. None helped more than Bettino Craxi, who became leader of the Socialist Party in 1976 and prime minister in 1983. Mr Berlusconi, through his two main networks, had a powerful political weapon to offer.

In October 1984, officials in several Italian cities shut down his television stations for broadcasting illegally. This spelled potential disaster for the heavily indebted Fininvest group. Within days, Craxi, who died in Tunisia last year after being sentenced in absentia to prison for corruption, signed a decree that allowed Mr Berlusconi’s stations to stay on air. After some parliamentary tussles, this decree became law. Craxi’s decree did nothing to prevent concentration of ownership. But neither did the Mammi law (named after Oscar Mammi, the telecoms minister), passed in 1990. Tailor-made to suit Mr Berlusconi with his three national networks, it said that no single group could own more than three out of the 12 networks that would be licensed. The coalition government of the day, which depended heavily on Craxi’s Socialist Party, pushed through this controversial measure despite the resignation of five ministers in protest. In effect, this law entrenched the duopoly between Mediaset and RAI. In 1991 and 1992, Mr Berlusconi paid a total of 23 billion lire into Craxi’s offshore bank accounts from a clandestine part of his Fininvest empire, known as All Iberian. ...

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