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. Last Updated: 07/27/2016

Mobsters Branch Out to Internet Porn Sites

NEW YORK -- In the late 1990s, Richard Martino and other investors made a killing by peddling pornography on the Internet. The problem, U.S. federal prosecutors say, was twofold: Customers' credit cards were billed without their permission, and millions of dollars went to the mob.

The $230 million Internet fraud scheme -- believed to be the largest ever prosecuted -- produced a series of recent arrests of alleged members and associates of the Gambino organized crime family.

"I have never been involved ... with any business regarding the sex industry -- EVER!" John "Junior" Gotti, the former acting boss of the Gambinos, wrote after reading about the case in prison. Gotti is serving a five- to seven-year federal term for racketeering, bribery, extortion conspiracy and illegal gambling.

Prosecutors allege that Martino, as customary for a Gambino soldier, "kicked up" an $8 million cut to Salvatore LoCascio, a reputed Gambino captain. LoCascio, Martino, porn publisher Bruce Chew and advertising executive Norman Chanes have denied any wrongdoing.

According to documents filed in a New York court, the Gambinos' foray into the lucrative world of web porn began in 1996 when the defendants opened an adult entertainment business. Along with magazines and 900 telephone numbers, they launched several web sites using content from Chew's porn magazines, including High Society and Young Girl.

The sites offered "free tours" for anyone who presented credit card information as proof of age, promising "Your card will not be billed." But thousands of consumers in the United States, Europe and Asia were still charged recurring monthly rates of $90 before they realized they had been cheated, prosecutors said.

From there, Martino "used a plethora of corporations to funnel money to himself and his captain to avoid detection by law enforcement authorities," prosecutor Linda Lacewell said in court papers. "The fraud was relatively simple, but the money laundering was complex and worthy of the most sophisticated white-collar criminal."

With his gift for consumer fraud, Martino became one of the Gambino's major assets, authorities said. His schemes allegedly earned LoCascio more than $40 million, including $8 million for the Internet porn scam.

In response to a flood of complaints by consumers and credit card companies, the Federal Trade Commission began an inquiry of the web sites. A follow-up investigation uncovered the money trail leading to the Gambino family, authorities said.

Prosecutors say the evidence includes a 1990 surveillance tape of "Junior's" father, the late Gambino boss John Gotti, discussing Martino's future. On it, the late Gotti said he likes prospects like Martino who can "do more than killing." Said Gotti: "Ten years from now, these young guys we straightened out, we're going to be really proud of them."