L.A. Mob Does Vegas

It's a case that began with surveillance of a Las Vegas storefront and ended with the assassination of one of the gambling mecca's most notorious underworld figures. It includes some 1,700 audio- and videotapes, confidential informants, and a former defendant-turned-witness who says he has Tourette's syndrome and attention deficit disorder.

And according to federal law enforcement, it's very bad news for organized crime in Southern California. "We have dealt a serious blow to the Los Angeles mob," Bobby Siller, agent in charge of the Las Vegas FBI office, told reporters.

Members of that group have often been depicted as loosely organized and utterly incompetent imitations of East Coast wise guys - no match in mayhem to the street gangs that flourished in L.A. over the past decade. Former LAPD Chief Daryl Gates even labeled them the "Mickey Mouse Mafia." But in a 50-count indictment, the U.S. Attorney's Office in Las Vegas alleges that L.A. and Buffalo mobsters joined forces in 1995 to muscle in on Vegas rackets ranging from loan-sharking to the extortion of escort-service and smog-check businesses.

Most seriously, they allegedly conspired to eliminate a bulky obstacle to that effort, Herbert "Fat Herbie" Blitzstein, who was found shot dead in his home in January 1997.

Six of the 16 defendants - reputed L.A. "mob member" Stephen Cino, a Buffalo mob figure and four associates of Cosa Nostra members - are specifically charged with the gangland-style slaying of Blitzstein, a former right-hand man to Chicago mob enforcer Anthony Spilotro. Each of those accused has denied the government's charges. The lawyer for one, Las Vegas resident Alfred Mauriello, accused of commissioning the hit, ridiculed the indictment. Attorney Lamond Mills said of his client, "He's 69 years old. He lives off Social Security, gets food stamps, and Medicaid pays his medical for his three heart attacks. If this is organized crime, then it's the most unorganized and poorest paying outfit that I've ever seen." But U.S. Attorney General Janet Reno is taking the prosecution seriously. She is expected to decide shortly whether the defendants in the murder case will face the death penalty at a trial now set for November.

In addition, the indictment says Carmen Milano - alleged underboss of the L.A. family and brother of reputed boss Peter John Milano - demanded a piece of Blitzstein's loan-sharking action "as a tribute for sanctioning" the hit. Rather than compete with Blitzstein, says Las Vegas FBI spokesman Aurelio Flores, "They went the old-fashioned, 1930s way and decided to kill him."

If so, the L.A. gangsters were acting somewhat out of character. In recent years, the traditional Italian Mafia, or La Cosa Nostra (LCN), of Southern California has tended to shun gangland violence. Indeed, while L.A. has had its share of high-profile mob figures through the years, among them Mickey Cohen, Jack Dragna and Mike Rizzitello, organized crime here has tended to live in the shadow of - and be subservient to - the East Coast families. Louis Tom Dragna, who succeeded his uncle Jack as local "godfather" in the 1970s, was noted for his timidity about committing acts of violence.

The party line from local law enforcement has been that organized crime, if it existed at all, wasn't to be taken too seriously. "We see the mob scratching and digging out here," Captain Stuart Finck, then head of the LAPD's Organized Crime Intelligence Division (OCID), said dismissively in 1987.

Peter Milano, a Westlake Village businessman whose father was identified by law enforcement as a longtime underboss of the Cleveland crime family, allegedly took over the LCN family in Los Angeles in the early 1980s. He and his brother Carmen, of Tarzana, were among 20 reputed mobsters arrested in 1984 for trying to muscle in on a $1-million-a-week bookmaking operation. Charges were not brought, because of lack of evidence. But four years later, the Milanos and several alleged subordinates - Stephen Cino, a Las Vegas resident who previously lived in Chatsworth; Vincent Caci; his brother Charles Caci, a former Palm Springs nightclub singer who performed under the name Bobby Milano; and Rocco James Zangari, also of Palm Springs, who once managed a card room for the Cabazon Indian tribe - pleaded guilty to racketeering and other charges in return for lenient sentences. As one prosecutor referred to the case, "I think it has absolutely crippled the family here."

According to the current head of the multiagency Los Angeles Organized Crime Strike Force, there hasn't been much Mafia activity lately in the L.A. area. "We don't see a large, active presence," says Assistant U.S. Attorney James Walsh. "We devote most of our time and effort to other areas, such as Asian and Russian organized crime . . . Their activities are more sinister and far more prevalent and widespread."

Other observers of the Cosa Nostra aren't quite so sanguine. "The [Los Angeles] garment industry has a lot of organized-crime people involved in it," says former OCID detective Mike Rothmiller. "Anyplace you have a lot of cash, you're going to have them infiltrating." Agrees an ex-LAPD investigator who asked not to be identified: "They try to go anywhere where they think they can make a buck . . . They're people you don't want to mess with."  

Like so many mob groups before them, the Milano family allegedly saw opportunity in Las Vegas. According to the government, they made their entree through local topless bars, late-night restaurants, and a storefront social club run by Fat Tony Angioletti, a former associate of Rizzitello and an FBI informant. In the Vegas underworld, the person they absolutely had to know was Herbie Blitzstein, one of the last remnants of the wise-guy era captured in the book and movie Casino.

Blitzstein, an expert fence of stolen goods with a striking resemblance to opera star Luciano Pavarotti, had been a valued associate for Spilotro in the late 1970s and early '80s, working out of the jewelry store that was a front for the Chicago mobster's operations. "They were always together," says his attorney, John Momot. After Spilotro turned up dead in an Indiana corn field in 1986, Blitzstein was sentenced to eight years in prison for tax evasion. By the time he was paroled in 1991, diabetes had cost him several toes, and he had undergone two heart bypass operations.

Back on the Vegas streets, Blitzstein opened a business called Any Auto Repair and liked to say he had retired from the criminal life. But the feds claim the business was actually a front for an auto-insurance-fraud racket. And, says Flores, he "controlled the lending of money to gamblers."

In early 1996, Blitzstein allegedly devised a "diamond switch" scheme with his friend Dominic Spinale, Carmen Milano and reputed L.A. mob associate Peter Vincent Caruso. The fraud involved showing a "large genuine diamond" to a buyer and then secretly switching it with a similar, fake stone after taking the buyer's money. Although at least two prospective buyers were shown the diamond, no deal was concluded. According to the indictment, Milano complained to Fat Tony that "too many people were involved" to make it worthwhile.

By October 1996, Blitzstein may have become more of a target than a partner. "He was not paying tribute to any family," Flores says, "and associates of the L.A. family that were here . . . thought they could take over his business." Caruso, Cino and reputed Buffalo mobster Robert Panaro allegedly began extorting him to hand over his insurance-fraud and loan-sharking operations to them. Even though he had no one of Spilotro's fearsome stature to protect him, Fat Herbie, 63, refused to oblige. On January 7, 1997, he was found dead in his living room, a single bullet in his head.

At the time of his death, Blitzstein was battling his nomination by state gaming regulators to Nevada's "Black Book" of undesirables banned from casinos. Many in Las Vegas still find his bloody demise hard to believe. "I thought those days were over in Vegas," says Oscar Goodman, Spilotro's former attorney.

In a grand-jury indictment unsealed in April 1997, only Caruso and two other reputed L.A. mob associates - Alfred Mauriello and Antone Davi - were charged with Blitzstein's murder. The expanded, 50-count case announced in February added Cino, Panaro and Richard Friedman, the accused shooter, to that list, and alleged that Carmen Milano and others sanctioned the hit. While Milano, 67, was not charged with murder, the counts against him include the diamond fraud, racketeering and money laundering.

The Caci brothers and Rocco Zangari also surfaced in the indictment, accused of taking part in a scheme to sell counterfeit traveler's checks and U.S. currency. The defendants "account for the hierarchy of the LCN in Los Angeles as it now exists," says Flores.

Carmen Milano, who has a home in Las Vegas, in proclaiming his innocence, has accused the government of mounting a vendetta against Italian-Americans. "There's a big story that should be told," he said cryptically after a court hearing in February. But the feds have that mountain of tapes, some made in Los Angeles, and the testimony of confidential informants and undercover agents. The last mob case of comparable magnitude in Las Vegas was "when we got after Herbie," says prosecutor Kurt Schulke, head of the city's Organized Crime Strike Force.

One informant, John Branco, is a former Rizzitello crew member who allegedly acted as liaison for the L.A. mobsters in Vegas. Branco assisted authorities once before - in 1989, helping bring down a police officer who was moonlighting as a contract killer. The FBI says Branco was at a meeting where Milano and Cino hatched the plan to take over Blitzstein's rackets. He also helped distribute cash stolen from the victim's home after the killing.  

Another witness is Alfred Mauriello's son Stephen, a Tourette's patient who pleaded guilty in November to extorting nearly $5,000 from the owner of a smog-check business. According to an affidavit, Stephen Mauriello told the FBI that his father hired Friedman and Davi to kill Blitzstein. "You've got guys falling over themselves" to cooperate, says Don Campbell, a former assistant U.S. attorney in Las Vegas.

Still, the government may have some explaining of its own to do at trial. For one thing, if FBI agents picked up the murder conspiracy against Blitzstein on their wiretaps, why did they not warn him that his life was in danger? Fumes Goodman: "They knew everything that was going to happen, but they didn't care." Another puzzle is how Peter Milano avoided the government's grasp. According to the indictment, a family capo met with Branco in November 1996 "and represented that Los Angeles LCN Family boss, Peter Milano, wanted to know the details" of Branco's purchases of phony traveler's checks.

Assistant U.S. Attorney Schulke says Goodman is "flat wrong" about law enforcement having prior knowledge of the Blitzstein hit. He declined to comment on whether Peter Milano is under investigation.

Could an attempted takeover in Las Vegas really spell doom for L.A.'s wise guys? "Because of the [suspects] involved, our opinion is that our investigation has had a significant impact on the [LCN] hierarchy," says Agent Flores. But former investigator Rothmiller believes the mob machine will barely miss a beat. "For each guy [they take down], half a dozen more are able and willing to fill their shoes," he cautions. "They're just exchanging one crook for another."

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