He explained that the organization he represented was not merely concerned with Seattle. It was a nation-wide network with a finger in many mud pies. Gambling was perhaps its largest interest, but it had many others. Gambling, however, was the specific bailiwick of Gino Goldberg.
“This syndicate—-this organization--we’re talking about the Mafia, aren’t we?” I pinned it down.
“We don’t like to define it that way. It’s bad public relations. ‘Mafia’ has such nasty connotations. But I won’t dispute your conclusion, Mr. Victor.”
Gino Goldberg went on to describe some of the technical aspects of the gambling operation, and just why the telephone plays such an important part. There are two major reasons. The first is that the vast majority of bets are phoned in to bookmakers. The second is the need for instant and continual communication between syndicate operations around the country and regional headquarters where points are laid off and odds are established.
Chiefly, two kinds of action are determined by this communication. The first is for sporting events such as baseball, football, basketball, boxing matches, etc. In the early stages of betting—the equivalent of horse racing’s “morning line,” as it were-—the odds and the point breaks are set arbitrarily on the basis of past performance, conditions of players, general popularity, and so forth. But as the bets start coming in, adjustments are made in order to maintain the syndicate’s edge over the action. This requires a constant reevaluation by regional computers as the day progresses. Bets are laid off? in farflung cities to maintain the balance. Fast communications-either by telephone or telegraph—are the one absolutely necessary ingredient to the operation.
The second major area concerns horse bets. Here the timing of communications is even more vital. The results of a race on the East Coast must be made available to gamblers on the West Coast in time for them to place their bets on the next race. Syndicate odds have to be adjusted to stay in line with pari-mutuel odds or the bangtail bettors will squawk. At the same time, quick adjustments have to be made to ensure that the edge isn’t lost. With an average of eight horses in each race, eight races at each track, and perhaps eight tracks running simultaneously around the country, the complexities involved are obvious. Again, communication is the key to controlling the action.
However, vital as it is, telephone communication is also the Achilles’ heel of syndicate gambling operations. It’s the area most vulnerable to detection by police. All the cops have to do is find one horse player and trace the number he calls. If they’re after bigger game than the local bookmaker, they may forgo a raid and tap the bookmaker’s line. Many a cop is on the pad to forestall just such actions, or to supply the tipoff when they’re in the offing.
What it adds up to is that the syndicate is constantly seeking better and more devious ways to improve its communications setup. In the beginning, some of the dodges used were quite simple. One of the earliest of these was known as a “breadbox.”
The “breadbox” was nothing more than a simple homemade switching device. The syndicate would have a telephone installed in some poor old lady’s digs, giving her a couple of dollars a week to “take their calls.” But the phone would never ring, which is where the “breadbox” came in. Gamblers who dialed the number would have their calls rerouted by the “breadbox,” and the phone would be answered in the bookie parlor. If the cops traced the number and staged a raid, all they’d find would be the innocent old lady and a dead phone.
However, as the syndicate operations grew, so did their need for more complicated telephone devices. They began courting Ma Bell technicians. Soon, in all the major cities, one or two switching-station employees were on the take. All they had to do was rearrange a few relays here and there, and the syndicate had the access to the long-lines it needed to keep the action under its thumb. Also, local bettors dialing the syndicate number might be routed through a whole complex of tandems without being aware of it, in order to make it more difficult to trace their calls.
Most recently, according to Gino Goldberg, the syndicate had become interested in ways of increasing its gambling profits by millions of dollars a year. Telephone communications were their single biggest operational expense, larger even than payoffs to the police. If a way could be found to function without that expense, the benefits would be immense. The possibility led them straight to the world of phone phreaks.
“It was my assignment,” Gino Goldberg told us. “We knew vaguely about M.F.-ers and how the phone phreaks were using them to outwit Ma Bell. What we were looking for was one that would suit our particular needs. We wanted to be able to hold long-distance lines open for hours at a time and to set up conference calls to a central national headquarters. We figured that if we put in a computer, we could stabilize all the action around the country and increase our edge by a half, maybe even a whole percentage point. That would mean perhaps an extra million a week right there. As you can see, Mr. Victor, there was more involved than just cutting our phone bills. We even envisioned toll-free calls from bettors—we’d mute them at the bookmaker’s end—as a way of encouraging more business. My job was to find just the right device and to arrange to have it mass-produced for us.”
“And that led you to Tom Swift,” I guessed. “That’s what all your calls to him were about.”
“Not at first. Swift came later. Our first contact was with a phone phreak known as ‘Bugs Ameche.’ He claimed to have just the device we needed. He asked for a ten-thousand-dollar advance to put it into production for us. We gave it to him.”
“What happened?”
“It turned out that Ameche didn’t have the device himself. I don’t think he actually intended to cheat us. In my judgment he would have been too afraid to do that. He simply knew that Swift had the device and overestimated his ability to persuade Swift to part with it. Generally, you see, phone phreaks trade off information and technical discoveries quite freely. But in this case, Swift balked at revealing the secrets of his invention to Ameche. Finally Ameche had no choice but to apprise me of the situation. That’s when I began calling Swift directly.”
“What happened to Ameche?”
“Nothing yet. But his prognosis, I’m afraid, is negative. He tried to ingratiate himself with us by informing us of the device perfected by Phoebe Phreeby. However, he’s a free spender, and confesses himself unable to return the ten thousand dollars we advanced him. It wouldn’t be good business for us to let Mr. Ameche go unpunished.”
“You still haven’t explained why you’re blowing up this building,” I remembered.
“It has to do with our inability to obtain Phoebe Phreeby’s device in time to forestall certain police actions here in Seattle. You see, Mr. Victor, our informant on the police-department gambling squad told us a short while back that one of our bookmaking establishments was under wiretap surveillance. A raid was being postponed because the police were hopeful that the tap would uncover the location of the syndicate’s area head- quarters. We are sitting in those headquarters at the moment, Mr. Victor. If we’d obtained the Phreeby M.F.-er, it would have enabled us to mislead the wiretap and to successfully conceal this location. Now, according to our police informant, it’s too late for that. Our equipment is spread out over this entire subbasement. It would be too costly, and there isn’t time to move it. Therefore, we must destroy it.”
“And the rest of the building as well,” I reminded him.
“A necessary red herring.”
“What do you mean by that?”
Gino Goldberg glanced at his watch. “I’ll explain in a moment,” he said. “Right now it’s time to call back and find out what the computer had decided regarding you.”