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Mafia Tied to Racketeering at N.Y. Post

TIMES STAFF WRITER

The newspaper wars in New York City took a strange turn Thursday when a captain in the Bonanno organized crime family and a dozen of his associates were indicted on charges of operating a criminal enterprise at the New York Post and helping the tabloid’s top management intentionally defraud advertisers by falsely inflating circulation figures.

The New York Post Corp. pleaded guilty to the felony of scheming to defraud in the first degree and was fined $10,000. Richard T. Nasti, the paper’s vice president and general manager and Steven Bumbaca, a vice president and the controller of the Post, pleaded guilty to misdemeanor violations of the New York State Labor Law.

The indictment charged that the executives of the newspaper, which was founded by Alexander Hamilton in 1801, inflated daily circulation by 50,000 phantom copies a day--11% of total circulation--or 9.9 million copies a year. It said this was done with false financial records, doctored bank accounts, phony delivery routes and incorrect reports of press runs.

The inflated data was given to the Audit Bureau of Circulation, a nonprofit organization whose reports are used by advertisers to help determine marketing strategies.

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“The purposes of the scheme, among others, were to mislead the ABC and the Post’s advertisers and to induce advertisers to place advertising based on the higher circulation figures,” a separate indictment against the Post said.

Manhattan Dist. Atty. Robert M. Morgenthau, who announced the indictment, said Nasti directed the conspiracy while Bumbaca supervised the falsification of business records and coordinated the efforts of conspirators.

A 99-count racketeering indictment charged that Mafia mobsters controlled the Post’s circulation department through extortion, coercion, larceny, bribery and other crimes.

The members of organized crime stored and sold guns at the newspaper plant, situated in lower Manhattan near the Brooklyn Bridge, stole money by falsifying its payroll, lent money to Post employees at usurious rates and helped the Post’s management in its plot to defraud advertisers and the circulation bureau, the larger indictment charged.

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“The common purpose of the defendants was to control the circulation department of the New York Post . . . and thereby reap the financial rewards of their criminal conduct,” the court papers said.

Among those named in the indictment were Al Embarrato, a captain in the Bonanno crime family. He worked as a foreman at the newspaper, as did Richard Cantarella, a soldier in the family nicknamed “Shellackhead.” Also named as defendants were Robert Perrino, the Post’s delivery superintendent and Anthony Michele, the paper’s circulation director.

When detectives followed some of the newspaper’s deliverymen, they reported uncovering a major heroin ring linked to the Bonanno and Genovese crime families. Ten people, including crime family captains, were named in a separate but related indictment.

The guilty pleas by the two Post executives were entered in New York State Supreme Court last week and unsealed Thursday.

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“The guilty plea by the Post should send a loud and clear message that business fraud will not be tolerated in any industry, even one as important to New York City as its newspaper business,” Morgenthau said.

Law enforcement sources indicated that Morgenthau’s investigation of the New York newspaper industry has spread to the New York Times and the Daily News. These sources said New York Newsday, which competes with the Times, News and Post, was not involved in the scrutiny.

“This investigation has demonstrated that organized crime has had a stranglehold over the delivery of newspapers in New York City which affects the ability of a free press to function in an increasingly competitive market,” the district attorney said.

“This indictment is just the first step in our effort to eliminate the pervasive organized crime influence in this aspect of the newspaper industry. This indictment is merely the first phase of our attack. I expect additional announcements in the very near future.”

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At a news conference in his offices, Morgenthau said that Peter S. Kalikow, the Post’s publisher, was unaware of the circulation scheme.

“These misleading circulation practices were a dumb and stupid business,” Kalikow said in a statement.

“While we are distressed by this entire episode, we would note that after inaccurate circulation data was discovered by the Audit Bureau of Circulation, we took immediate steps to remedy those inaccuracies.

“We accepted in full, and without protest of any kind, the ABC’s own determination and then set in motion a plan to notify every New York Post advertiser of the inaccurate figure. . . . After notification of the district attorney’s activities, on my instructions, the New York Post cooperated fully with the district attorney to insure a thorough and comprehensive investigation.”

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According to latest ABC figures for the six months ending March 31, the Post has an actual average Monday-to-Friday paid circulation of 470,987 copies and Saturday circulation of 335,638. A spokesman for the audit bureau said that as a result of its and the district attorney’s investigations, the Post figures had been adjusted downward 60,901 copies on weekdays and 10,126 copies on Saturdays for the six months ending Sept. 30, 1991. The New York Post does not publish on Sunday.

The indictment against the newspaper charged that from April 1, 1991, to April 20, 1992, the Post systematically falsified its circulation.

“Prior to the period of the scheme, the New York Post endured a decline in circulation due to market trends, which raised the concern among the conspirators that Post advertisers would lose confidence in the relative value of the Post as an advertising vehicle,” the indictment said.

Lou Colasuonno, the Post’s editor, said that both Nasti and Bumbaca remained with the newspaper as valued employees.

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“We are happy the organized crime grip on our circulation and delivery has been broken,” Colasuonno said. He said the indictments “will be an upfront story” in the tabloid he edits.

“It’s a good local news story,” Colasuonno added.


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