|
David E. Kaplan and Alec Dubro
Yakuza Japan's Criminal Underworld
To America
In 1975, an unusual gangster film starring Robert Mitchum and Japanese actor Ken Takakura opened in the United States to generally indifferent audiences. The unconvincing plot, the strange and highly stylized Japanese acting, and the exotic setting didn't send Americans flocking to the box office. But viewers were probably amused by the outlandish and anachronistic swordplay, and found the finger-cutting sequences both compelling and gruesome. In any case, the movie, entitled simply The Yakuza, enjoyed a short run to nearly empty houses. It deserved better. It still plays occasionally on late-night television and it's on home video, but in 1975 Americans neither knew nor cared about the subject matter—Japanese organized crime.
By the early 1980s, that had begun to change. Americans other than Hawaiians were slowly becoming aware of the yakuza through the news media, and indirectly because of the new posture of U.S. law enforcement. Press reports of official statements about the yakuza conveyed a note of panic, with headlines like "Japanese Organized Criminals Invading West," and "FBI Chief Warns of Japanese Crime Ring."
A number of top Washington law enforcement officials, including Ronald Reagan's Attorney General William French Smith and FBI chief William Webster, warned on several occasions that the yakuza presented a threat to the nation that warranted swift action. Partly as a response to this clamor, members of the Reagan administration decided to include the yakuza in the agenda of the 1983 President's Commission on Organized Crime. Some previous panels, like the Kefauver and McLellan Senate committees, had made a discernible impact on organized crime by putting pressure on law enforcement and increasing citizen awareness. But the Reagan commission was the first to expand the definition of organized crime, observing that it was no longer the exclusive domain of the Mafia—not that it truly ever was.
California authorities recognized this change rather early, owing perhaps to the weak position of traditional Italian syndicates in that state. In the 1980s, state authorities paid less attention to the Italian groups and more to the "nontraditional" gangs, which include everyone else. In its 1981 report to the legislature, the California Bureau of Organized Crime and Criminal Intelligence (BOCCI) devoted as much space to Israeli, Vietnamese, and Japanese groups as to the Mafia. By 1984, it had become clear that this broader version of organized crime was firmly entrenched on the national level, and that it included the yakuza.
The president's commission held its second public hearing in New York in March 1984, focusing on money laundering, a requisite task of all organized crime groups, including the yakuza. Cash, according to commission director James Harmon, is "the life-support system without which organized crime cannot exist." The commission discovered that the money to be laundered for the $50 billion annual U.S. drug trade, for example, comes from all points of the compass—East Asia as well as Latin America—and that many U.S. bankers have been only too willing to oblige organized crime.
Finally, in its third hearing, held on October 25, 1984, the commission gathered in New York to address the issue of Asian organized crime, and the yakuza was to occupy one-third of the agenda. Certainly, the attention was by then justified. Verifiable police reports placed yakuza from Roanoke, Virginia, to Arizona to Seattle. The yakuza were highly involved in the Japanese tourist industry, were smuggling guns and pornography out of the country, allying themselves with American gangsters and gamblers, and laundering funds. They were, in short, getting well entrenched in America, and it was time to place them under closer scrutiny.
The first witness called before the president's commission appeared shrouded in a black robe and hood, looking somewhat like a ninja. He was led across the floor of the high-ceilinged, columned hall to a seat behind a screen that shielded him from the press and audience. Chief Counsel Harmon then revealed to the commission and audience that the man was an oyabun, or leader, in a major Japanese organized crime gang. The twelve commission members present listened carefully as the witness described tattooing and yubitsume, or ritual finger-cutting, and provided a graphic account of how that painful act is accomplished. "The actual procedure is to take . . . what they in Japanese yakuza call little silver knife—on a table—and you pull it towards you and bend over and your body weight will snap your finger off. . . . The finger that is severed is put in a small bottle with alcohol and your name is written on and it is sent to whoever you're repenting to as a sign that you are sorry."
The nameless oyabun also elaborated on the organizational charts of the Yamaguchi-gumi and Sumiyoshi-rengo that the commission had provided, and explained how the yakuza are active in his own specialty, economic crime. Gangsters in Japan, he told the panel, try to find companies in financial trouble, and engage in a number of schemes to take them over. Through bogus notes and threats to company officials and creditors, they assume control of the ailing business, sell off the assets, and profit from the failure.
This yakuza had personally run high-stakes card games two or three times a month in Japan. Because of his status, he retained 40 percent of the profits, which amounted to $40,000 to $60,000. After expenses, he realized about $16,000 per game. Money, though, had to be passed up to the very highest echelons; yakuza leaders maintained control through money, and lower members rose by passing it on. Nonetheless, said the witness, "I would say that I lived a very good life, probably equivalent to the presidency of a company employing three hundred to five hundred people."
Later in the day, another hooded witness made an appearance. Also a Japanese national, this anonymous informant had been a U.S. resident for ten years, and he described yakuza activity in New York. Card games, with stakes in the many thousands of dollars, were being run by a combination of yakuza, yakuza associates, and Italian American hoodlums. The customers were both Japanese nationals and Japanese Americans. He believed that the Italians, who wore guns and sold stolen goods at the games, were actually in charge of the action.
Less dramatic than the hooded witnesses, perhaps, but equally revealing was the testimony of three American policemen, all knowledgeable in the workings of the yakuza in the United States: Inspector John McKenna of the San Francisco Police Department; Detective George Min of the Los Angeles Police Department; and Bernard Ching of the Honolulu Police Department. The three intelligence cops described in brief how the yakuza were gaining crucial footholds in their respective communities.
Bernard Ching described the Hawaiian yakuza scene in much the same terms he had used to reporters nearly three years earlier: gun smuggling, prostitution, pornography, extortion, and drugs. What was new to some observers, however, was the admission that yakuza activity was not confined to the islands. Detective Min of Los Angeles presented an impressive list of yakuza activities in the large Japanese communities of Southern California. "I have seen many crimes instituted by the yakuza," he told the panel. "We have cases of homicide, prison escape, gun smuggling, money laundering . . ." Inspector McKenna, for his part, added that the SFPD had identified members of the Sumiyoshi-rengo in the San Francisco area. He believed that a pattern of intimidation and extortion existed within the Japanese business community.
None of the testimony by police, and little by the witnesses—except the finger-cutting and other exotic Japanese customs—was particularly startling crime news. Activities from money laundering to murder are, of course, the basic stuff of organized crime. No, the news was that it was Japanese, and it was occurring both in Japan and in the United States, and it contradicted popularly held beliefs. The public, to the extent that they thought about it at all, believed that the Japanese had virtually no crime problem, and that Japanese Americans were the most law-abiding of citizens. Now, the issue of yakuza coming to America would stir up some ugly ghosts from the past.
Ron Wakabayashi, the national director of the Japanese American Citizens League, told the New York Times that yakuza-hunting could "fan anti-Asian sentiment," and given the American predilection for periodic attacks on Asians, it was a well-founded warning. Because of economic competition from Japan, many Americans had begun to blame Asians—any Asians—for their problems. In 1982, for instance, two disgruntled and intoxicated auto workers in the Detroit area attacked a bachelor party of Chinese Americans, killing the prospective bridegroom with a baseball bat. The assailants' defense hinged in part on their having mistaken the victims for Japanese, and the court handed down extremely lenient sentences.
From government commissions and committees, from news reports, books, articles, and movies, the subject of organized crime from across the Pacific had crept into the U.S. consciousness . . . and onto the agenda of law enforcement. By the late 1980s, Asian organized crime had become a priority for the FBI and other U.S. law enforcement agencies. Yakuza money launderers, Chinese drug smugglers, Korean prostitution rackets, and more were now of pressing interest to American cops. New hearings were held before the U.S. Congress in 1992, in which the yakuza's reach into the United States was detailed. The billion-dollar developments in Hawaii were highlighted, as were similar investments on the mainland from New York to California. It had taken U.S. law enforcement some fifty years to acknowledge the existence of the Mafia; now, some twenty years after the modern yakuza had landed in America, the Yamaguchi-gumi was suddenly a topic of national discussion.
That year, the FBI publicly warned that yakuza activity had reached a major level of concern. Japanese crime syndicates exert "a growing influence on the state of Hawaii, and are significantly represented coast to coast on the U.S. mainland," the Bureau said in a report. Officials identified the Yamaguchi-gumi, Sumiyoshi-kai, Inagawa-kai, and Toa Yuai as all being active in the U.S., and warned of the threat they posed "through the laundering of ill-gotten gains and the infiltration of legitimate businesses in the United States." DEA intelligence reports, meanwhile, suggested that Japan had become a major trans-shipment point for narcotics. It was an ideal situation for smugglers. Because of Japan's squeaky clean image, U.S. Customs did few if any checks on cargo coming from there. DEA agents in Tokyo found that between 1987 and 1989, at least 750 kilograms of heroin were shipped through Japan to the U.S. by Thais, Chinese, Nigerians, Americans, and Japanese.
Over the years, American law enforcement gained an education in Japanese organized crime and began to realize that this was no passing fad. By 1994, for instance, the FBI had eight Japanese speakers on its payroll. Police bulletins informed intelligence units of developments in the yakuza, and law enforcement groups devoted to Asian crime were meeting regularly. All this began to produce results. During Japanese holiday seasons, alert Customs and Immigration officials have stopped hundreds of yakuza attempting to enter the United States. One watchful Customs inspector even found a yakuza with a false fingertip. A few years earlier, these characters would have slipped by undetected. By the end of the '90s, yakuza investigations had occurred in Los Angeles, San Francisco, Las Vegas, Honolulu, New York, and Denver. Police had even identified yakuza tactics such as jiageya under way in areas like San Francisco.
Yet there was still something of a fad in the approach to tackling Japanese organized crime. Instant experts abounded in law enforcement, often with little clue of how the gangs really operated. This held true regarding much of Asian organized crime, which for too long had been shielded in America by a bamboo curtain that separated immigrant communities from the rest of the country. Few cops on Asian gang squads were even aware, for example, that Japanese crime syndicates not only had a future in America, they had a past.
The history of Japanese organized crime in America actually dates to the early twentieth century. As in other immigrant communities, organized crime arose nearly as soon as the Japanese population grew large enough to support permanent gangs. By and large, those gangs controlled vice, principally gambling. By 1910 there were over 70,000 people of Japanese descent in the United States, with at least a third of those living in and around Los Angeles. The center of Japanese activity in the United States was in the downtown L.A. community of Little Tokyo. And controlling all the gambling, as well as other aspects of the community, was the Tokyo Club, situated atop a three-story building at Jackson Street and Central Avenue.
Based in Los Angeles, the Tokyo Club had branches—or more correctly, franchises—all over the West, from Seattle to the Mexican border. The bulk of the operation was in California, with eight Tokyo Clubs in the Central Valley alone. It was a very successful operation. In the 1920s, it counted a profit of more than $1 million a year, a considerable sum in those days. Because it held the biggest accumulation of capital in the Japanese community, the Tokyo Club functioned as a bank as well. It also supported sports teams and lined the pockets of police and city officials.
The men who ran the Tokyo Club were businessmen-gangsters. Recalled Howard M. Imazeki, the late editor of Hokubei Mainichi, San Francisco's Japanese American daily, "We didn't call them yakuza then, but now I think that's probably what they were." Power struggles frequently occurred within the club, sometimes erupting into gunfire.
Wrote criminologist Isami Waugh, "In the cases of insubordination and disobedience Club President Itatani was severe in meting out the penalty; he sent his gang of powerful burly men to take care of these rebels in the Chicago gangland manner . . . In two or three extreme cases, so the grapevine reported, men were actually murdered and their bodies were disposed of so well that even the police detection failed."
Small-time rackets were not the only criminal interests of America's forgotten yakuza. Americans may find it difficult to believe, but in the 1930s, Japan held a position similar to that which Colombia holds today—the heart of the narcotic menace. Harry J. Anslinger, the crusading and fervent chief of the U.S. Bureau of Narcotics for much of its existence, commented that in the prewar years, "We should not be far short of the mark if we said that 90 percent of all the illicit 'white drugs' of the world are of Japanese origin, manufactured in the Japanese Concession of Tientsin, around Tientsin, in and around Dairen, or in other cities of Manchuria, Jehol, and occupied China, and this always . . . under Japanese supervision."
A slightly more academic 1942 study by Institute of Pacific Relations and the Foreign Policy Association, entitled Japan and the Opium Menace, described Japan's domination of the drug trade. After invading China in the '30s, the Japanese government wielded control over much of the world opium trade. "During these years (1932 to 1937)," wrote the authors, "the Japanese Concession in Tientsin became the headquarters for a vast opium and narcotic drug industry. Whole sections of the Concession, particularly along Hashidate Street, were honeycombed with narcotic drug dens and small laboratories manufacturing various types of heroin powder and cigarettes." Moreover, opium dens in occupied China were also run by the Japanese, or by associated Taiwanese and Korean drug dealers. "Armed Japanese gangsters," noted the study, "were often stationed outside dens to prevent interference with their operation."
Unfortunately, a good deal of prewar propaganda colored evaluations of Japanese criminal activity, but even if chief Anslinger exaggerated by two or three times the percentage of Japanese-manufactured narcotics, that still left a lot of white drugs. And some of them found their way into the United States.
The Bureau of Narcotics began to notice Japanese morphine, called "cotton morphine" because of its appearance, as early as 1932, just one year after the Japanese takeover of Manchuria. The following year, the grave concern voiced by the bureau began to show signs of justification, although the quantities seized were still rather small. Japanese were arrested with cotton morphine in Tacoma, Washington; Portland, Oregon; and Hawaii. All the arrests involved Japanese residents of America. In Portland, four tins seized in a February 24, 1933, raid bore the label "Japan Pharmaceutical Establishment" and contained morphine hydrochloride. The other arrests involved a similar type of morphine.
For the next five or six years, there were numerous arrests of Japanese passengers and crew members of steamships, most sailing under Japanese flags. They brought in morphine, heroin, and sometimes even cocaine. There were also functioning American distribution networks, headed by Japanese.
In April of 1935, California authorities arrested Fujiyuki Motomura, a major San Pedro drug trafficker, with over $5,000 worth of cocaine and morphine, about ten pounds in those days. Police believed that Motomura was tied to an additional fifty pounds of drugs found elsewhere in Southern California. The following year, California authorities again made a major arrest when state narcotics police in Los Angeles arrested Toshiyoshi Nagai for attempting to sell five pounds of morphine to undercover officers. Nagai told the prospective buyers that his brother owned a morphine factory in Japan and that he, Toshiyoshi, could supply any amount the buyers wanted. The smugglers were apparently using a number of routes, most of them successful; in 1938, the American representative at the Geneva drug conference told the assembled officials that 650 kilos of heroin from Japan had been captured by American agents on the West Coast. Using the usual law enforcement formula of ten to one—for every pound or kilo seized, police assume that ten get through—the Japanese may have accounted for some 6,500 kilos of heroin in the period described.
In addition to their own operations, the Japanese were responsible for supplying huge amounts of heroin to the biggest drug rings in the United States. These gangs at the time were under the control of Jewish and Italian gangsters operating all over the country. In San Francisco, for instance, mobster Mario Balestreri, successor to the mob run by "Black Tony" Parmagini, decided to increase his take and buy directly from the producers. He sent his men to purchase from Japanese dealers in Kobe, Japan, and Shanghai, China, then in Japanese hands. In 1939, police discovered that two of Louis "Lepke" Buchalter's lieutenants, Yanis Tsounias and George Mexis, had fled to the Japanese Concession at Tientsin and set up a heroin operation. The two were shipping enough to the United States to supply 10,000 addicts for a year, according to the Bureau of Narcotics.
Japanese racketeers and drug traffickers ceased doing business in America once war began. Japanese and Korean drug dealers continued to work in the occupied territories of Asia, but few if any shipments made their way to the States. The gangsters who ran the Tokyo Club and the drug smuggling rings, meanwhile, were interned along with the rest of the Japanese population early in 1942. Like the yakuza in Japan, many of them appeared to harbor ultranationalist sentiments. Openly rightist Japanese in the camps were sent to a special section at the camp in Tule Lake, California, and many of these were repatriated to Japan after the war. There have been no follow-up studies on the Tokyo Club leaders, but it's more than possible that many of them returned to their ancestral land. In any case, after the Tokyo Club closed its doors in 1941, it never reopened.
With the criminal leadership gone, and the post-internment community far too traumatized to engage in open lawlessness, organized crime in the postwar Japanese American community was at a virtual standstill. Study after study reported a phenomenally low arrest rate among Americans of Japanese ancestry through the 1950s and 1960s. Gambling did not disappear, of course, and the Japanese were part of the poker clubs that made their appearance in the Los Angeles suburb of Gardena, but these were legalized operations. It was, according to Los Angeles police, not until the late 1960s that Japanese-Hawaiian gamblers drifted over from the islands and began to set up illegal bookmaking operations.
Los Angeles has a lot to attract the yakuza. Besides the climate, the money, and the glamour, Los Angeles has the largest Japanese community on the mainland. All told, over 200,000 people of Japanese descent reside in the L.A. area. More than 99 percent of these have no connection with the underworld, but a growing number of yakuza have slipped into the Japanese community there, and some are doing quite well.
As early as 1981, the California Department of Justice warned of growing yakuza activity in an annual report:
Law enforcement authorities have noted during the past several years that a number of Japanese organized crime members have immigrated from Japan and are now residing in the San Francisco and Los Angeles areas. There are approximately fifty gang members and associates now living in California.
Law enforcement sources indicate that Japanese organized crime groups are operating tour agencies, Japanese gift shops and night clubs. Their criminal activities include extortion of Japanese businesses, harassment of Japanese tourists, prostitution, gun and pornography smuggling, narcotics distribution and laundering money.
In 1982, one who surfaced was Tetsuo "Leo" Orii, who ran the Club Niji, a modern-day successor to the Tokyo Club. A hostess bar that offered an assortment of barely clad Asian and other women as companions, Niji catered mostly to businessmen from Japan. Orii was involved in various business ventures in and around Los Angeles, and at least one police intelligence report called him "the most influential figure of the Japanese organized crime faction" in the city.
Orii was quite open and respectful of his links with the yakuza. "I've entertained the oyabun of Sumiyoshi when they come here," he boasted. "We are brothers of the same family. When the chief of Sumiyoshi came to the U.S., he stayed at my house. They come to my bar."
Orii said he joined the yakuza at age sixteen and spent the next ten years fighting his way through prison and the tough Sumiyoshi-kai gangs that dominate much of Tokyo. He made a name for himself by extorting money out of college kids in Tokyo's busy Ginza district. But, he says, after a decade with the yakuza, he'd had enough. "The only way out was to leave Japan, but I'm still in. They won't let you out."
So, young Tetsuo arrived in America, went into legitimate business, and claimed he kept up his unbreakable link with the yakuza only by putting up oyabun at his Pacific Palisades home. Even if he wanted to, he said, he could not be a real yakuza in America. He admitted there was some yakuza activity in Hawaii, but not on the mainland. "Yakuza are not into California because it's not profitable," he argued. "They can make twice as much money in Japan. They can't speak English very well, so they go where the Japanese are."
The problem, maintained Orii, was the police. The LAPD's Asian Task Force, he said, picked him on because "they need to show a reason for their existence." Most gangsters, of course, like to claim that they are simply honest citizens who just happen to have a few shady associates. Orii, however, got caught. In 1975 he and his partner, Tomonao Miyashiro, a.k.a. Tony Kawada, were arrested and convicted of shaking down a Japanese businessman. LAPD brought charges of conspiracy, extortion, kidnapping, and assault with a deadly weapon against Miyashiro, who tried to shoot the victim. Orii, apparently not present at the shooting, was charged only with attempted extortion.
Time, apparently, did not wither Orii's ambition. A 1993 intelligence report on the Sumiyoshi-kai asserted that they engaged in drugs, extortion, prostitution, pornography, gambling, weapons smuggling, money laundering. Among their alleged numbers was one Leo Orii, considered by federal intelligence officials to be "the most influential figure of the Boryokudan in Los Angeles." Orii, though, is only one individual in a rather large, fluid group of yakuza-connected Japanese in the Los Angeles area. Members of this group allegedly engage in racketeering and investment scams. Names appear and reappear on various watch lists, but there are few arrests.
For deeply held cultural reasons, and because they are strangers in the United States, Japanese nationals here are extremely reluctant to talk with American police about their troubles with the gangsters. Victims of yakuza shakedowns will most likely just suffer the loss and try to forget it. One group in Los Angeles that tried hard to break through this barrier is the LAPD's Asian Task Force. Criticized by some as a public relations outfit, the task force has indeed put a lot of effort into simply maintaining a presence in the various Asian communities in Los Angeles, including the Japanese. One problem they found in dealing with the yakuza is that they had not caused nearly as much trouble as local Chinese or Vietnamese gangs, and therefore did not lead police to spend the time or money to pursue them.
Nonetheless, as the exploits of Orii's partner, Miyashiro, demonstrated, the yakuza in California were not necessarily delicate in their tactics. A pair of unsolved crimes, reminiscent of the Tokyo Club killings of fifty years earlier, was evidence that the yakuza had to be taken seriously. Two Asian male bodies found in remote parts of Southern California, one in a shallow grave near Oxnard on the coast north of L.A., and a second found near Castaic Lake in the Angeles National Forest, pointed strongly to yakuza skullduggery. "We never could identify the bodies," said LAPD Detective George Min, "but one was heavily tattooed, and the other was also believed to be yakuza."
Another Japanese murder victim surfaced in 1984, and was also believed to be the victim of yakuza violence. Hiroshi Eto, reportedly running from massive gambling debts in Japan, had been found strangled in his room at the Los Angeles Hilton. A Japanese newspaper reported that Eto, a "dating club" operator, had heavily insured his life with an American carrier prior to his leaving Tokyo. Upon Eto's death, a Taiwanese male stood to collect about $315,000 in yen in what is by now a standard, and gruesome, yakuza method of collecting back debts. Some yakuza in L.A. apparently make their living as hit men for this and similar tasks.
Beyond the shakedowns and outright murders, a key yakuza activity in Southern California is money laundering, a tough operation for police to detect. Here, as in Hawaii and elsewhere, the easiest, most efficient money laundry is a high-volume cash business, such as a bar, restaurant, or gift shop. But the yakuza have also invested in non-cash businesses in the Los Angeles area, investigators say. As in East Asia, investment and import-export firms are favorites of the gangs, and the LAPD has kept watch over a number of Japanese-owned firms. As officials in Hawaii noted, though, law enforcement can trace money back to Japan and run into a stone wall. "Japanese bankers," said one Honolulu official, "are like Swiss bankers. They reveal nothing."
Such frustration was echoed in a report by detectives Jimmy Sakoda and Yoichi Ikuta. Sakoda, an investigator with the L.A. County District Attorney's office, and Ikuta, with the LAPD's organized crime intelligence unit, are two of the most respected, savviest yakuza investigators in the U.S. Wrote Sakoda and Ikuta:
Over the years, United States law enforcement have expressed frustration over not being able to confirm whether or not a Japanese investor is associated in any way with JOC [Japanese organized crime]. Strict privacy laws and dummy companies made it difficult, if not impossible, for United States law enforcement to trace the flow and sources of investment funds. Creating further confusion and complications, under Japanese laws it was not illegal for a gangster to take his gambling or extortion proceeds and invest it in real estate or any other legitimate business venture.
The largest U.S. firm with known ties to a yakuza or former yakuza has for years been headquartered in the Los Angeles area. This is Machii-Ross Petroleum, an investment of one of Japan's best-known yakuza leaders, the ubiquitous Hisayuki Machii. Apparently, when the Korean head of the Towa Yuai Jigyo Kumiai decided to invest in an American enterprise, he chose a prestigious type of business, and one that is decidedly non-yakuza: oil.
Machii-Ross was incorporated in 1970 as an oil exploration company and invested in wells principally in the Wattenburg field in central Colorado. From its Santa Monica offices, the company has also explored in Texas and, through a subsidiary operation, built and run a natural gas processing plant. Machii invested over $1 million in the business, which seems to have paid off handsomely.
The American partner of the company is Kenneth Ross, a genial former lobbyist and California state assemblyman. Ross claimed that he was a little surprised when informed of his partner's colorful background. "When we began the company," said Ross, "all I knew was that he was a wealthy Korean living in Japan. I had never heard of the yakuza."
Over the course of their partnership, Ross got to know Machii quite well, despite the fact that they needed a translator to communicate. Machii's criminal activities, said Ross, are in the past, and his partner regretted the reputation he must carry. Nonetheless, Machii told Ross, "I'm proud of what I did. Proud of my activities fighting Communism." Machii, of course, fought Communism so successfully that he was able to amass considerable wealth. "Machii," said Ross in 1984, "lives almost like Howard Hughes, in a huge five-story home that he rarely leaves. I suspect that he's worth well over a billion dollars . . . maybe twice that."
Machii's American investments do not represent, then, a significant part of his overall fortune. They did, however, attract the attention of U.S. officials. Ross, who has been regarded by American police as clean, was visited a number of times by both local and federal authorities and questioned about Machii. No specific charges or even allegations came out of these visits.
In a police intelligence report, however, an unnamed but remarkably similar company was accused of using suspect funds. The report referred to a "Japanese-based oil leasing and exploration company with offices in California and Colorado." The suspicions were anything but vague: "It is suspected that money made from illicit drug trafficking is being funneled through this company." Other police intelligence placed Machii-Ross in a network of yakuza-related enterprises, without leveling specific charges.
Ross, who has run the American end of the business without much help or interference from Machii, denies any possibility of wrongdoing. He pointed to the reputably obtained audits of the firm, and the records of funds transferred from Japan to the United States by way of Mitsui and Manufacturers Hanover banks. He did not know the exact source of the funds invested, but added, "As far as I know, the [gang] disbanded in 1967."
For many American and European men, Asian women hold a special allure. Likewise, for many Japanese men, Caucasian women are the object of sexual fascination. Call it the lure of the exotic.
In the early 1980s, Tokyo-based journalist Jean Sather investigated the trade and the special attraction white women hold for Japanese men. Sather, then with the Asahi newspapers, wrote:
Many expensive clubs, and their customers, prefer the "exoticism" of Western women. This is part of a general tendency in modern Japan to see Caucasian women as more beautiful and much sexier than Japanese women. Caucasian models are used heavily in advertising, porno films that feature white women are popular, and many Japanese women still visit plastic surgeons to have their eyes made rounder and their noses more prominent.
Gyo Hani, then executive editor of the Japan Times, told Sather:
Attitudes are not really changing towards Caucasians. They're not creatures from outer space, but close to it. Asian aliens look like us, but if you have a woman who's fair-skinned, blue-eyed, with blond hair, then you have a treasure.
Japanese technology is still incapable of filling this particular domestic need, and thus Japan, in this case, requires imports. To meet the demand, the women must somehow be attracted to the homeland, either with their consent or, as often, through subterfuge and trickery. The former Soviet republics have become a major source of the traffic in Caucasian women, but the Japanese sex industry is always eager to recruit Americans. The so-called white slave trade from North America is relatively small, but it exists and has proved nightmarish for those who have fallen victim.
The yakuza, naturally, are only too willing to attempt to cash in on the market, but they have a problem: few yakuza speak English well enough to entice women to come to Japan. They have, therefore, tended to operate through fronts or paid agents on the West Coast. According to various police reports, these agents usually obtain women by placing ads for singers and dancers in the entertainment press, publications such as L.A.'s Dramalogue. These have listings for "cattle call" drama auditions, as well as for seamier performances, such as nude modeling and porn pictures. Talent agents design these ads to appeal to the starving actress or singer. Some agencies have recruited farther afield, in San Francisco and Portland, Oregon, among other cities.
What happens to the women in Japan varies. Some of the women, having worked as prostitutes at home, are under few illusions about what the ad was actually seeking, but others have expected straight jobs as singers or dancers, only to be forced to add tasks ranging from "hostessing" in bars to outright prostitution. Treatment can be brutal and escape difficult. One American woman recruited from Los Angeles told her story to the Japan Times just hours before she fled Japan. Her stay included two attempted rapes as well as violations of her contract. Her employer, one Kanji Chiba, "insisted that she relinquish her [return air] ticket for 'safekeeping,' which she did." Some of the women are duped into cooperating with their exploiters, ever hopeful for a better future. Said one: "A lot of the mistakes have been mine. You're naive, vulnerable, ambitious—you dream. That's what these people capitalize on—your dreams."
Women who return from what is often a hellish experience in the yakuza clubs often seek revenge, but usually get little satisfaction. Few of the recruiting agents can be located, and the victims have little in the way of legal recourse against those few who can be found. American law holds that the agents must have knowingly sent the women to houses of prostitution, and this is difficult, if not impossible, to prove. A number of civil suits were launched by women against the talent agents in the 1980s. After seeing an ad in the San Francisco Chronicle for entertainers, aspiring singer Lisa Petrides went to a San Francisco agency for "a very professional audition," but wound up at the Little Club in Tokyo, where her yakuza bosses insisted that she forget about singing and concentrate on hostessing. She called the agency from Japan, but her former agent refused to help her. When Petrides returned to California, she sued the agency and got a small out-of-court settlement. The agency remained in operation.
Another victim of the talent ruse, Kristina Kirstin of Los Angeles, filed a $15 million lawsuit in 1982. She named three defendants: her American agent, the agent's counterpart in Japan, and Alexander Haig, then secretary of state. Haig was charged because Kirstin alleged that the U.S. Embassy in Japan refused to help her when she wished to flee Japan. The embassy, maintained Kirstin, was indifferent to her plight at the Mil Members Club in Kyoto, even though it was a known yakuza operation. U.S. officials at the State Department had told her that, by law, she was on her own and they could do nothing.
Bad publicity has helped curb the number of "entertainers" heading to Japan, although not before their number reached into the hundreds. A few agencies are still around, say police, searching for new victims. As one investigator noted, "The demand for Caucasian prostitutes is so great over there it can't be filled."
When one thinks of the trade in precision machinery between the United States and Japan, the flow seems to be heavily toward the States. But there is one instrument that is entirely an export item from the United States to Japan. Thanks to a combination of high quality, availability, and minimal legal encumbrances, American firearms are sought and acquired by the Japanese. The distributors, and in this case the customers, of the product are primarily the yakuza. Americans have competition from various foreign producers, but they are by far the yakuza's largest single source of weaponry—providing one-third of all handguns seized between 1994 and 1998. This is twice the amount provided by the nearest rival source, China. The United States is, in effect, arming the Japanese underworld.
Eddie Kurimata (not his real name) is typical of the yakuza's mainland connections. A Japanese American, naturalized here, he was no stranger to the world of crime before he met any yakuza. After he did time for drugs, he met a few Japanese gangsters in San Francisco and took them up on what he thought was an excellent offer. He became a gun scout for them. "I'm straight now," he insisted. "But I've made money off the yakuza here. They need us. There's no way they can get all the guns they need in Japan."
For three years, Eddie traveled to scores of gun shops throughout the Bay Area. He'd purchase three pistols in Daly City, four in Oakland, two in San Rafael. A good sale to his yakuza customers could be as few as twelve guns, but it paid off. "I worked for them," he said, "but just for the money. It was too good to pass up." Kurimata could realize a profit of $1,000 per handgun.
The possibility of such profits exists largely because of the discrepancy between Japanese and American gun laws. For all practical purposes, guns aren't allowed in Japan, and they are freely permitted in the United States. This, in turn, creates a huge price differential. A pistol that sells legally for $250 will command up to ten times that amount in Japan. Ammunition frequently sells for $5 to $12 a bullet there.
While the United States rarely imports illegal firearms, it is a key source of illegal exports for those overseas. For gun buyers, America is a wide-open gun supermarket with few restrictions. As one West Coast official of the U.S. Bureau of Alcohol, Tobacco, and Firearms (ATF) put it, "Most foreign police regard American gun laws as a joke." Japanese laws, however, are anything but a joke.
The idea of a civilian population with easy access to firearms flies in the face of a Japanese tradition that stretches back nearly four centuries. For two hundred years, the Japanese conducted a remarkable social experiment by banning all firearms on the islands. It began in the early seventeenth century, largely as a reaction to the cold-bloodedness of combat with firearms, and as a gesture of commitment to the sword, an enduring symbol of honor and stature in Japan. It was also an expeditious way to maintain power in the central government.
As Noel Perrin details in his fascinating book Giving Up the Gun, Japan's gunsmiths were summoned to a single city in 1642, forced to work for a government monopoly, and slowly starved out of business. Japan's feudal rulers impounded massive numbers of firearms, and for the next two hundred years the development of modern weaponry virtually stopped. When Commodore Perry arrived in 1853, his sailors wryly noted that the Japanese shore batteries defending Tokyo harbor could fit inside and be fired out of their ships' cannons.
A tradition of gun control survived the Industrial Revolution and even World War II. In 1958, the Diet enacted the Firearms and Swords Control Act, which had the effect of making Japan relatively free of handgun murders. Even with a sharp increase over the past decade, Japan remains among the safest countries in the world. In 1996, for instance, handguns were used to murder 9,390 in the United States. That year in Japan, seventeen people died as a result of firearms.
There are virtually no legal handguns in Japan at all, except those used by military and police. Only a few dozen civilians—all sportsmen—have permits to own arms. By contrast, there are an estimated 260 million firearms in private hands in the U.S. The scarcity of guns has helped make them a source of fascination to the Japanese. Tourists, along with movie stars, writers, cops, and crooks, make visits to firing ranges a standard stop while traveling abroad. An entire magazine is devoted to expensively detailed, high-tech fake weapons, some of which run to hundreds of dollars and only shoot plastic pellets a few yards. The lack of guns has caused some inventive yakuza to actually refit the plastic replicas; others have ingeniously fashioned ballpoint pens into pistols that shoot a .22 caliber bullet by pressing the clip.
But it is the real model that Japanese crooks want. To help Japan with its gun gap, the yakuza have moved tens of thousands of handguns illegally into Japan. Guns smuggled into Japan do not go to collectors or to citizens interested in protecting their homes; they typically go to the gangs. A 1981 NPA report noted that 89.5 percent of all handguns seized came from "criminal syndicates." But as handguns poured into Japan in the 1990s, the gun market started attracting other customers. The proliferation of cheap handguns and a rash of public shootings in the 1990s sparked reports that illegal arms were spreading from yakuza to petty crooks and unstable individuals. Indeed, once-rare handguns became a common accessory for Japanese criminals. A 1989 NPA White Paper noted that the ratio of yakuza to handguns had been ten to one, but was now closer to one to one. Police believed as many as 150,000 illegal handguns were in circulation. The fall in price itself suggests the boom in gun sales. A Smith & Wesson .38 caliber revolver, bought for $275 in the U.S., fetched as much as $4,000 on the back streets of Tokyo in 1990; by 1997, the price had fallen to as little as $500.
Americans have been involved in gun smuggling ever since the first days of the postwar firearms ban. For gun couriers, the varied syndicates have employed Japanese Americans, Guamanian Americans, U.S. military, tourists, students, and anyone else who might slip through Customs with a small arsenal. Officials have tracked the shipment of thousands of U.S.-made guns to Japan from Chicago, Tucson, Los Angeles, and other cities. Many of the yakuza's American partners have been military personnel. This is hardly surprising, considering the tens of thousands of U.S. troops stationed in Japan. Many of them are bored, lonely, and low on cash, and many have access to stores of American weapons. In one 1989 case, soldiers of an eighty-man Green Beret unit were accused of smuggling over two hundred guns, Thai gold, jewelry, and pharmaceutical drugs to an Okinawa yakuza gang.
A key point of contact for American gunrunners, suggested a DEA report, is the off-base bars where GIs and others go for drink, women, and drugs. Just how this connection can work was revealed to law enforcement officials by Air Force veteran James Anthony Bridgeport. In early 1983, a joint operation by ATF, Japanese Customs, and the U.S. Air Force broke up a twelve-man smuggling ring headed by Bridgeport. Based in Tucson, Arizona, the ring had been sending guns to Japan via military air transport. Bridgeport began his association with the yakuza while stationed in Japan. "It basically started with little favors, money loans," Bridgeport later testified. "I just got in over my head, began to meet people, and borrow. And it ended up where I was a little bit deeper than I should have been. And then when I tried to get out, it was impossible."
Bridgeport claimed that he had been pressured by the yakuza into smuggling—first amphetamines, then guns. When he failed to recover a package of amphetamines—his first assignment—Bridgeport was beaten by yakuza members and threatened by having a gun placed in his mouth. He later succeeded in smuggling a shipment of speed from Korea to Japan. When he returned to the United States, the yakuza tracked him down and forced him to move guns. All told, over a two-year period, Bridgeport netted a total of $250,000 for gunrunning. Although the money was sweet, he lived in fear, until one of his cohorts was seized in San Francisco with thirty-eight handguns and revealed the operation.
The majority of gun shipments to Japan, though, have been handled by civilians rather than military people. Some of the smuggling methods show a great deal of ingenuity. Guns are taken from the United States into Japan in false-bottom bags, inside folk craft articles, in cassette players and travel irons, television cameras, and even inside pineapples, an item commonly carried by Japanese returning from Hawaii. Larger quantities require roomier conveyances, and in 1980 Japanese police discovered five pistols in the gas tank of a British Jensen automobile arriving from the United States. American-built cars are used as well, and it is perhaps no coincidence that yakuza oyabun are the principal purchasers of imported American cars.
The trans-Pacific gun route was, by 1985, sufficiently well developed that smugglers could respond to particular crises in Japan with special orders for guns. For instance, when Masahisa Takenaka, newly crowned oyabun of the Yamaguchi-gumi, was assassinated in January 1985 by a hit team from the recently splintered Ichiwa-kai, U.S. police knew that shipments of guns would soon be leaving for Japan. DEA agents were able to turn early leads into a yearlong investigation of gunrunning, drug dealing, and murder conspiracy that ended with the arrest of two of the Yamaguchi-gumi's highest-ranking bosses in Honolulu. But even this, police agree, made only a small dent in the yakuza's gun purchasing.
Three years later, the U.S.-Japan pipeline made news. In August 1988, the Panamanian ambassador to Japan received four heavy attaché cases by diplomatic pouch from Oklahoma. Inside, to his surprise, were twenty handguns and 866 rounds of ammunition. The ambassador duly reported the shipment to Japanese authorities, who found the ambassador's own secretary was involved with the yakuza in running guns to Japan. The twenty guns, all .38s, would have likely fetched $100,000 or more on the black market.
It is a dismal way to alleviate the foreign trade crisis: Japanese gangsters buying American handguns and hiring American entertainers and prostitutes. But the yakuza, as recent events have shown, are not content simply to buy American. Like good businessmen everywhere, they have become investors, and they have expanded activities here in part due to a strong foothold in their favorite base of operations abroad—the tourist trade.
Along with oranges and grapes, Japanese tourists ought to be considered lucrative cash crops for the state of California. Hundreds of thousands of Japanese visit the state each year, leaving behind hundreds of millions of dollars. Yet much of this booming tourist industry tends to be a closed system. Tourists typically fly in aboard Japan Air Lines, stay at Japanese-owned hotels, eat in Japanese restaurants, shop at Japanese-owned boutiques, ride about in Japanese tour buses, and patronize Japanese purveyors of drink, guns, and vice. Police suspect yakuza involvement in a good deal of the racket. As early as 1981, state investigators noted that the gangs had apparently launched a drive "to dominate the Japanese tourism industry in San Francisco and Los Angeles." The report described a common pattern of accosting cash-laden Japanese tourists and, through deception or intimidation, forcing them to participate in selected tours.
Police on the West Coast are aware of questionable practices in the Japanese tourist trade, but they have been largely unable to make many cases, due in part to the reluctance of witnesses to come forward. Another problem is figuring out exactly what is going on in the often sleazy tourist districts. In one incident, police got a notion of just how dangerous Japanese tourism can be. An entrepreneur named Stuart "Steve" Conn opened a gift shop called Nikkaido in downtown San Francisco that catered to Japanese tourists. The store offered Western wear, which for a time the Japanese loved. And, in a separate room in the back, there was a huge selection of pornographic magazines, films, videotapes, and plastic paraphernalia. The operation was typical of Japanese tourist traps up and down the West Coast. According to one police report, Conn also adopted the hard-sell techniques of many tourist traps. "Japanese are lured into the shop by Japanese-speaking 'hustlers.'{hrs}" it read. "Once inside the shop, they are intimidated into buying gifts at very high prices. Victims rarely complain to police for fear of retaliation and losing face among their people."
In July 1984, the pugnacious Conn was found by police near the city's Japan Town with bullet holes in his leg and shoulder. From his bed in San Francisco General Hospital, Conn claimed to any who would listen that his assailants were yakuza. Because Conn had numerous enemies, police weren't convinced that yakuza were, in fact, the gunmen. But it also turned out that Conn had a silent partner in the operation: the son of Japanese speedboat racing czar, neofascist, and yakuza friend, Ryoichi Sasakawa.
Sasakawa had already rung alarms by trying to buy into American business, and it was bigger than a gift shop. In 1978, Takashi Sasakawa, Ryoichi's second son, publicly joined with well-known Japanese restaurateur, speedboat racer, and balloonist Hiroaki "Rocky" Aoki to announce plans to lease the aging Shelburne Hotel in Atlantic City and turn it into a casino. The gambling boom was hitting the East Coast, and Sasakawa, for one, wanted to be in on it. Aoki, owner of the famed Benihana chain, felt he could add an exotic touch to the Jersey Shore.
The actual deal was a hopelessly complicated affair involving several paper corporations in both America and Japan, and several hundred million dollars. Of this, Takashi openly owned 47 percent of the enterprise, although no knowledgeable observer believed Takashi was the real investor. His New York attorney asserted to the press that Takashi's father was "far removed from the deal," but few were convinced.
Within months, the U.S. Securities and Exchange Commission charged Takashi Sasakawa and Aoki with insider stock trading. The two men had purchased 60,000 shares of the Hardwicke Company, knowing that they would later engage that company to manage the planned Shelburne Benihana. This move inflated the value of the stock, a patently illegal move. Sasakawa was forced to make restitution to the sellers of the original Hardwicke stock.
The Sasakawas were reportedly quite taken aback by this wrinkle; Ryoichi was used to manipulating stock values for his own profiteering without a peep from the Japanese government. Following that unpleasantness, Sasakawa continued to pump money into the Shelburne project, but without his previous enthusiasm. There were indications that the casino would not fly, and not only because the SEC was on his tail. Sasakawa's seedy background had caught up with him. Because of Sasakawa's dossier, American banks refused to "anchor" the project with domestic loans, and New Jersey law enforcement let it be known that any project with the Sasakawa name on it would have a hard time getting a casino license. If New Jersey wanted to keep mob-connected Americans out of Atlantic City, it could hardly open the door to yakuza-connected Japanese.
Sasakawa's interest in Atlantic City made a good deal of sense, and he brought to it plenty of expertise. The boat racing czar already knew the gambling business from the ground—or the water—up, and could run large-scale betting operations as well as anyone. Some law enforcement people worried that, had it succeeded, it could have served as the biggest Japanese-owned laundry in the United States, which is why they helped scuttle the deal. By the time the Sasakawas, Aoki, and the silent partners bailed out—selling their interest to a Philadelphia real estate developer in 1981—they had lost an estimated $27 million.
Undaunted, in February of 1983, Ryoichi arrived in San Francisco to receive the Linus Pauling Medal for Humanitarianism for his generous donation of $770,000 to the Linus Pauling Institute of Science and Medicine. The man who once called himself "the world's wealthiest fascist" was now out to become the world's greatest philanthropist.
Sasakawa's efforts at self-aggrandizement were boggling. Prior to the black-tie dinner given by the Pauling Institute, he held a luncheon at San Francisco's posh Bohemian Club—which is anything but—and spent the morning giving interviews to the local media. At the luncheon, Sasakawa received the guests bowing like a buoy in a rough sea and smiling continuously. His publicist, flown out from the giant New York firm of Doremus, told the assembled that Sasakawa was, among other things, a patriot, a man unashamed to love his country and his mother. In fact, Sasakawa erected a statue in Japan of himself carrying his aged mother on his back, but the object of his veneration was less the mother than the bearer.
He also denounced any hint of his ultranationalist past. When the authors pointed out to him at a San Francisco press conference that U.S. Army documents were quite explicit about his plundering in China, he proclaimed, "I have not exploited one yen or one penny. What I did was to donate several million tuberculosis injections to China." Any other stories were "Communist-inspired." He was equally vehement in denying any relations with the yakuza, conveniently forgetting that he had publicly boasted of including the late Yamaguchi-gumi boss Kazuo Taoka among his drinking companions.
In spite of Sasakawa's indifferent results in cleaning up Japanese history and his place in it, the grand old kuromaku continued to make a name for himself as a philanthropist and promoter. By 1994, his Japan Shipbuilding Industry Foundation was bringing in nearly $1.4 billion annually, and had doled out more than 1 trillion yen around the world. The aging ultranationalist had become the largest private donor to the United Nations and was funding international health centers, Ivy League universities, and even the presidential library of Jimmy Carter, who praised his "good work for peace."
Sasakawa's most ambitious giveaway in America was the United States-Japan Foundation, headquartered in New York and begun in 1980 with a generous $48 million endowment from Sasakawa. To orchestrate its efforts, the foundation's original American working group included such luminaries as Henry Kissinger; Chairman Angier Biddle Duke, former ambassador to four countries and heir to a tobacco fortune; James A. Linen, former president of Time, Inc.; former RCA chairman Robert Sarnoff; and former New York mayor John Lindsay. Among its "honorary advisers" were Jimmy Carter and Gerald Ford.
The expressed goal of the U.S.-Japan Foundation was to enhance, through grants and education, cooperation between the two countries, primarily of an economic nature. But there was another, more covert goal, and that was to raise the value of Sasakawa's personal stock among the movers and shakers. According to Rocky Aoki, Sasakawa's former business partner, the old ultranationalist was angling for the Nobel Peace Prize, and he was willing to spend almost any amount of money to get it. He even set up an office in Oslo, Norway, in order to better lobby the Nobel Committee, and in 1985 he was actually nominated for a prize.
Despite all his do-gooding and donating, Sasakawa remained a gambling czar with strong ties to the extreme right in Japan, and with less overt but definite ties to the yakuza. In his native Japan, Sasakawa remained terribly controversial, with many organizations reluctant to go near his money. In 1993, when a reporter for Japan's most respected journal, Bungei Shunju, ran a six-month investigation of Sasakawa's power, he received death threats and went into hiding. Sasakawa's reputation proved tough to shake, and even in the West many institutions, such as National Public Radio, engaged in public hand wringing over whether to accept his money. If, as Dr. Linus Pauling said of Sasakawa's philanthropy, "Perhaps he's just trying to make up for past misdeeds," he never entirely succeeded.
In 1996, Ryoichi Sasakawa finally passed away. He was nearly a century old, and had reinvented himself as few have in recent history. Today, the most tangible evidence of Sasakawa is a life-size statue of the man covered with adoring children of all races which stands outside the Sasakawa Peace Foundation on L Street in Washington, D.C. There it continues to puzzle or amuse passersby, most of whom haven't a clue as to who is decorating their sidewalk.
Sasakawa was not the only questionable Japanese financial figure to arrive in North America. Since the early 1980s, the United States and Canada have hosted a rogue's gallery of gamblers, racketeers, and money launderers from the Land of the Rising Sun. Among the more curious are the sokaiya, who apparently have wondered if their extortionate ways might take root in America.
On April 21, 1982, the manager of the powerful sokaiya group Rondan Doyukai, a gentleman named Shigeru Kobayashi, attended a stockholders' meeting at the Chase Manhattan bank in New York. Kobayashi sat through Chairman David Rockefeller's opening remarks, and forty minutes of questioning from the floor—undoubtedly fighting the urge to silence the dissenters—and then turned and addressed the crowd. Said Kobayashi: "We represent your stockholders from Japan. I am happy to be here at your general meeting. Now I have the honor of seeing Chairman Rockefeller. . . . He is a great man because he met with His Majesty the Emperor when he visited Japan a couple of years ago, and very few people in Japan can shake hands with the Emperor. I would also like to express my sincere appreciation for your high dividends."
Kobayashi's statement probably amused those stockholders present, but some were also puzzled. Why should Rondan Doyukai send one of its top people to New York merely to flatter the company? Kobayashi later told a Japanese newspaper: "We rode into New York to show them what Japanese sokaiya are. But, just before the meeting, the Wall Street Journal carried a sensational article with banner headline saying, 'The Sokaiya are coming, the Sokaiya are coming,' as if the Japanese gangsters were invading the U.S. This raised a stink. We know that the public peace is bad in New York, so we thought we might be eliminated by the Mafia."
Kobayashi somehow avoided a trip to the bottom of the East River, but he needn't have worried in the first place. Nearly six years earlier, in equally violent Los Angeles, another sokaiya group made its appearance. In 1976, according to police sources, fifty Japanese executives filed into one of the ballrooms of the Biltmore Hotel in downtown L.A. They were the top-ranking officers of the largest Japanese corporations operating on the West Coast, and they had come to pay their respects to a group of visiting sokaiya (who had neglected to announce their presence to the press). Police at the same time observed sokaiya Masato Yoshioka making a tour of Los Angeles to present himself at Japanese-owned banks, conglomerates, and securities investment firms, possibly to hit any companies missed at the Biltmore meeting. Although the businesses were reluctant to talk about the incident, informants revealed to law enforcement agents that, as in Japan, it was cheaper to pay up than to risk the consequences.
Rondan Doyukai also had made earlier trips to America. They had sent representatives to the 1981 annual meeting of the Bank of America in San Francisco. They were, in the words of corporate secretary John Fauvre, "polite but insistent." The group approached the microphone, said Fauvre, with their own photographer and translator, and introduced themselves with lengthy formality. The sokaiya then did little more than wish the bank good luck, much as Kobayashi would do to Chase Manhattan a year later. Rondan Doyukai's interests extended to other Western companies, as well. The group invested $232,000 to gain shareholder status in a strategic handful of American and European companies, according to the Wall Street Journal report that so terrified Kobayashi. Among those targeted besides Chase and Bank of America were General Motors, IBM, and Dow Chemical.
Other sokaiya operations got under way. Los Angeles and New York City police discovered that sokaiya-type scandal sheets were being used to extort money from Japanese corporations, and sokaiya continue to remain a threat to American branches of Japanese companies, particularly the smaller ones. In the early 1990s, at least one sokaiya group formed in the Los Angeles area, calling themselves the Japanese Defense Society. And a report from Japan warned that some gangs are believed to have sent some of their brighter members to pursue advanced business degrees in American universities, to prepare for sokaiya-style rackets in the United States.
As awareness of yakuza spread to the New York Police Department in the early 1980s, the local cops had a hard time keeping track of Japanese mobsters there. Said one Chinese American officer in a heavy New York accent, "There's only one Japanese American on the whole force, and he doesn't speak Japanese."
Nonetheless, Asian cops in the intelligence division had noted reports of yakuza shakedowns of Japanese businesses and individuals. The NYPD was dubious of any large-scale ongoing criminal operations in the area, though. Said one officer at the time: "If there were any rackets, like prostitution, the Five Families would be interested. You can't do anything for very long in New York without the traditional mob becoming aware of it. In the bar business, you have to deal with them. They're in restaurant supply, in liquor, and related activities. I think New York is just geographically inconvenient for the yakuza to get anything going in. That's one reason they have done so much better in L.A.—less structured organized crime."
Less than a year after this pronouncement, the President's Commission on Organized Crime revealed that the New York mob was perfectly willing to play ball with Japanese gangsters in organizing gambling setups. The NYPD was correct up to a point: the mob doesn't want competitors in its territory, but it loves to have more customers. The yakuza didn't then and don't now pose a threat to American organized crime groups anywhere on the mainland, but they certainly can form alliances with gangsters in the United States, alliances that will benefit both parties.
It is, in fact, precisely these alliances that has given American law enforcement the jitters. Ties between American and other mobs have always increased the strength of domestic gangsters. In some ways, U.S. organized crime went international at the turn of the century, when arriving Sicilian gangsters kept in touch with their cousins in the old country, and Jewish and Greek drug smugglers maintained ties to relatives in strategic locations. Over the years, the Americans became more involved in the international drug trade and, during Prohibition, in bootlegging. After World War II, big-time American gangsters took gambling operations to Havana, the Bahamas, and Europe.
The relative decline of the Italian American Mafia has meant that there are more players in the game today. Yakuza gangs have the opportunity to join forces with any number of ethnic and regional gangs on an opportunistic basis.
The power of such alliances has truly worried American officials. Warned former U.S. attorney Michael Sterrett, who first alerted federal law enforcement to the yakuza: "There are now shadow governments in the U.S. and Japan that collect their own taxes, make their own rules, and enforce their own laws. An alliance between the yakuza and U.S. organized crime means that drugs and guns and huge amounts of money will be moving across the world accountable to no one but the mobs themselves. It means an international shadow government."
Perhaps the major difficulty the mobs face in cementing such a union is a large cultural and linguistic barrier, as well as the absence of any long-term, binding ties. Few American gangsters have cousins in the yakuza, and not many speak even pidgin Japanese. Consequently, the element of trust is lacking, and it is impossible to set up a cross-Pacific theft or smuggling scheme without that trust. In organized crime, several million dollars does not change hands on the basis of a written contract.
What the two mobs need, then, is a place to meet and get to know one another—maybe a place to relax, to eat, to drink, maybe to whore and gamble; to exchange, even through an interpreter, the amenities that bring about the aura of trust required before business can be planned. This place ought to be open enough to ensure that these meetings don't raise too much suspicion. Fortunately for the mobs, there is such a place: Las Vegas.
Japanese mobsters and high rollers came to Las Vegas in the 1970s as participants in gambling junkets. Pleasure has clearly led to business. As long ago as 1975, American and Japanese investigators believe they uncovered a link between Caesar's Palace in Las Vegas and organized crime in Japan. In 1973, Caesar's, then suspected of being under the direct control of mob families, appointed an allegedly yakuza-connected movie producer, Kikumaru Okuda, to help find customers and to collect debts owed to the casino. Two years later, according to Japanese press reports, Okuda associates threatened a number of debtors who together owed more than $200,000. The collectors would, they said, have the yakuza kill them if they didn't pay up. Caesar's Palace officials denied that Okuda had any mob connections on either continent, but the case in Japan was strong enough to send Okuda and two others to jail for extortion. More meetings followed between mobbed-up Japanese and Americans. At an early '80s golf tournament in State Line, Nevada, police surveilled known yakuza being hosted by Mafia associate Allen Dorfman, who had lent his financial acumen to raiding the Teamster's pension fund. Dorfman didn't have time to pursue his new contacts. Soon after, he was gunned down with eight bullets to the head in suburban Chicago.
The Japanese, though, found that they could profit from a permanent base of some sort in Las Vegas, and they have made several attempts to secure one. As early as 1971, billionaire Kenji Osano began negotiations to purchase the Sands Hotel and Casino. Like Sasakawa seven years later, Osano knew that a giant casino operation, with its enormous flow of cash, its facilities, and its location in a gambling capital, could only help him and his friends in the gambling business. Osano, however, was forced to withdraw from the deal when his troubles with Lockheed began.
In this case, Japanese were not discriminated against; until 1987, no foreigner had ever owned or operated a Nevada casino. After that date, though, a procession of Japanese buyers strode into Las Vegas—gamblers, real estate speculators, nouveau riches—each hoping to stake a claim in the legendary gaming capital. Nevada gaming authorities found themselves stumped as they investigated their new applicants—stumped by Byzantine records and financial transactions, cultural differences, and a nation where mob ties often seemed just another cost of doing business. Like other foreign investigators, Nevada gaming officials soon learned that Japanese authorities were not overly helpful. "The Japanese police system is such that it's difficult to get information," William A. Bible, chairman of the Nevada Gaming Control Board, told a reporter. In private, Bible's investigators would use far tougher language.
Several Japanese did receive casino or liquor licenses, despite allegations of yakuza ties. But the license generally turned out not to be a license to print money, but to lose it. Few stories were more colorful than that of Ken Mizuno.
A flamboyant gambler and high-stakes grifter, Ken Mizuno was one of the biggest losers of the Bubble Economy. Yet years afterward, people in Las Vegas still spoke of him with awe. A former pro baseball player in Japan, Mizuno gained a reputation for his golfing expertise and his ties to the yakuza. He first surfaced in Las Vegas in 1982, where he attempted to secure a liquor license for a Japanese restaurant in the Tropicana Hotel and Casino. According to the Las Vegas Valley Times, Mizuno entered the United States with $3 million in traveler's checks—an unusual way to transfer money. Police, however, claimed that he had not $3 million, but $100 million at his disposal, and charged furthermore that it was yakuza money. Over the protests of the cops, Mizuno nonetheless received his license and moved on to bigger game.
As the Bubble took off, Mizuno's profile in the city grew larger and larger. Between 1988 and 1991, he would fly in from Tokyo in his private DC-9, often accompanied by dozens of friends, and drop in at the baccarat pits at the Mirage Hotel and Casino. The high-rolling Japanese was capable of gambling away millions of dollars at a time. Soon he'd become a Las Vegas fixture and was put up in a free suite reserved for high-stakes gamblers. But it wasn't only Vegas that drew his attention. Ken Mizuno was one of the Bubble era's yen-crazed Japanese, jetting around the Pacific developing golf courses and resorts. It was a remarkable spending spree. At various times, he owned the Olamona Golf Links in Hawaii and the Royal Kenfield Golf Course in Henderson, Nevada. But his prize was the Indian Wells Golf and Country Club, a famed PGA tour stop near Palm Springs, California. All told, through Ken International, Mizuno owned the Indian Wells Country Club, the Indian Wells Racquet Club, six acres of adjacent land, and the swanky new Hotel Indian Wells, for which he paid an extravagant $24 million—or an average of $160,000 for each of the 150 guest rooms.
It was in Las Vegas, though, where Mizuno's reputation grew fastest. He was a legendary tipper when he won, a favorite among hotel staff. But the hotel made its real money when he lost. And the losses were extraordinary.
According to gambling records obtained by the newspaper Yomiuri, Mizuno visited the Mirage twenty-nine times between December 1989 and October 1991. Posing as Thomas Anderson, Mizuno eventually accrued losses of almost $65 million, mostly by playing baccarat. Records show that Mizuno's largest win was $ 4.3 million; his biggest loss, $11.24 million. That's a lot of money, even in a bubble economy. The problem was, according to U.S. and Japanese law enforcement officials, the money wasn't his to spend.
In one of the Bubble's great frauds, Mizuno and his partners set about developing the Ibaraki Country Club outside of Tokyo. In 1988, promising golf-starved Japanese they could play any time, they began selling memberships to the public for $14,000 each. But with every new offering, they hiked the prices until they had more than tripled the price within three years. The offering was a huge success, with Mizuno and company selling 52,000 memberships. The problem was that the club could only accommodate 1,830 members.
The sales generated some $800 million, over half of which Mizuno used for his buying spree of golf courses, hotels, and gambling, police said. Much of the money ended up in the U.S.—in Nevada, California, and Hawaii. Flush with the cash from the membership scam, between 1989 and 1991, Mizuno sent wire transfer after transfer—forty-seven in all, say prosecutors—to the States. More funds came by courier, until Machii had moved a whopping $260 million to America. Investigators traced the money not only to country clubs, but to vacant lots, luxury homes, a Rolls Royce convertible, a red Mercedes Benz, and that $5 million DC-9 on which he flew into Las Vegas. Plus, an unspecified amount of money was disbursed to nationalist politician Shintaro Ishihara and other sympathetic LDP members. Somehow, in the midst of this spending spree, Mizuno never got around to finishing the Ibaraki Country Club.
So outrageous was the scam that even Japan's normally docile investors complained—and took action. Buyers of the bogus memberships joined together in groups, hired lawyers, and filed suit against Mizuno and his sales agents. A Japanese judge branded the memberships "as valuable as plastic fruit."
But Mizuno was the target of more than civil actions. He was investigated in both the U.S. and Japan, and he was hit hard. Indeed, the Mizuno case became a rare model of cooperation between authorities in Japan and the IRS and Customs in the States. Mizuno's corporation pled guilty and agreed to forfeit its assets, including the Indian Wells resort, to the U.S. government. It was the second-largest non-drug forfeiture case in U.S. history. The resulting sale netted $50 million to the Treasury Forfeiture Fund, which was returned to the victims in Japan.
But the law wasn't finished with him. In March 1997, Mizuno, then sixty-three, was convicted in Japanese court of fraud and tax evasion and sentenced to eleven years in prison.
Ken Mizuno, of course, was not the only questionable Japanese pouring money into American golf courses. Bubble money was fueling Japanese golf course development from Saipan to South Carolina. Japanese investments in U.S. golf courses ballooned from less than $10 million annually before 1988 to over $1 billion in 1990. By 1991, the number of Japanese-owned golf course developments jumped to 120, over half of them in Hawaii and California. Some investors were blatant fronts for the mob, such as West Tsucho, the firm used by the Inagawa-kai's Susumu Ishii, who spent $10 million to develop a course in upstate New York. The alleged ties of others were less clear. The buying of high-profile courses touched a nationalistic nerve, much as did the purchase of Rockefeller Center and Columbia Pictures, and it didn't take much for people to suspect the worst.
Perhaps the best-known case was that of Pebble Beach, near Monterey, California. One of the finest, most beautiful championship courses in the world, Pebble Beach was home to the Bing Crosby Open and a highly desirable vacation spot. In 1990, Minoru Isutani's Cosmo World bought the course for an unheard of $841 million, and immediately controversy arose over plans to make the famous course an exclusive, private club catering to Japanese. Soon, rumors of yakuza involvement were in the air.
A former encyclopedia salesman who had become one of Japan's top developers, Isutani was also investing in a $200 million golf resort on the Kona coast of Hawaii and a $50 million one in L.A. But media reports claimed he had shady connections, and Isutani became the target of several probes and eventually a Senate hearing. His financing for the Pebble Beach purchase was extraordinarily complex. The sale had been guaranteed by Itoman and Company, then being looted by yakuza associates, and investigators were never clear on where the original money came from. Still, no proof ever emerged that the money was in fact dirty. Mired in controversy, Isutani's plans for Pebble Beach stalled until the Bubble's collapse killed any chance of him moving forward. By the time he sold the course, Isutani had lost a mind-numbing $340 million.
The yakuza's spending spree in North America wasn't confined to the United States. There were bargains just north of the border, and the yakuza were eager to shop. By the early 1990s, investigators had tracked yakuza visits to Edmonton, Montreal, Toronto, and Vancouver. Wealthy British Columbia, police found, holds a special attraction for the gangs. Once the cops started checking, they managed to tie Vancouver crime figures to yakuza in Hawaii and Japan going back to the early 1980s. By the time the Bubble Economy peaked, top-ranking mob bosses of Japan were meeting at local sushi restaurants, buying multi-million-dollar homes, and investing in local businesses. Police found other yakuza were involved in narcotics. A former top member of Tokyo's Matsuba-kai was implicated in smuggling some twelve kilos of heroin into Canada. Another case suggested yakuza were trans-shipping cocaine through Vancouver from South America to Japan.
The best-known yakuza on Canada's West Coast was none other than Yamaguchi-gumi financial czar Masaru Takumi—"the man who never sleeps." It was the same Takumi who had invested on Australia's Gold Coast, visited Paris and Guam, and served as the great syndicate's second in command. Takumi, it turned out, was also bullish on Canada.
Takumi funded and was president of T.M. Canada Investment Corporation and owner of E.M. Tours of Canada, a Vancouver travel agency located one floor beneath the cabinet offices for the British Columbia provincial government. By 1993, E.M. boasted 6,000 clients in Japan and was managed by a Bangladeshi immigrant named Mohammed Rahman. The manager claimed he had met Takumi in Edmonton in 1991, on an eleven-day cross-Canada tour that included sightseeing at Niagara Falls, golfing in Banff, and a visit to Victoria. "He just told me one thing," Rahman later said to The Vancouver Sun. "'Canada is a heaven.'"
Because of his business dealings in British Columbia, Takumi purchased a C$400,000 home in Vancouver, not a very expensive house. When news of a yakuza boss's purchase attracted curious visitors to look over his Vancouver home, Takumi grew angry. Rahman recounted that Takumi was worried he would lose face by having bought a relatively modest home. "They will think the Japanese mafia is poor," Rahman heard him say. "He said it would be better to buy one hundred houses, then they can see Japanese mafia is very rich." Canadian authorities were not amused, and let it be known that Takumi was not a particularly welcome investor. Embarrassed Japanese officials soon arrested the underboss in Osaka, charging him with failing to obtain approval before opening a large foreign bank account. Takumi would not pose a threat for much longer, though. After ordering the Nakano-kai, a violent Yamaguchi-gumi faction, to cease a gang war, its members ambushed him in 1997. When the shooting ended, Takumi's dead body lay sprawled on the bloody floor, with seven bullets pumped into the head and chest.
Given the colorful nature of organized crime generally, and the yakuza in particular, it's hard to understand the dreary nature of most U.S.-Japan police conferences. One can at least give them credit for trying, for cops from both ends of the Pacific have been meeting together since the early 1980s. There are parleys between Customs officials, drug agents, prosecutors, the FBI, and the NPA. American police chiefs have flown to Japan to study the success of Japan's koban, or police boxes, and its community-based policing system. Japanese cops come to America to study money-laundering and anti-racketeering laws. Yet despite all this effort, relations between U.S. and Japanese cops have never been good. The Americans complain that the Japanese are less than cooperative, too timid, and too worried about face. The Yanks cannot even get arrest records, let alone detailed financial information. Japanese law enforcement, they say, is a closed system, much like the nation's commercial markets.
The Japanese, in turn, find the Americans boorish, uninformed, and linguistically challenged. Unqualified federal agents are posted to Tokyo, and then removed before trust can be established. Confidential documents are passed along that end up in U.S. courts or in the press. Given Japan's history with an overreaching state, new laws on surveillance and conspiracy must be introduced with care and consensus—a dilemma about which impatient Americans seem clueless.
Such conflicts could fill the pages of a cross-cultural handbook. Given this state of affairs, it seems remarkable that the yakuza are not more entrenched in the United States. Fortunately, there are bright spots. The best Western and Japanese cops have always found ways to cooperate. Informal relationships, long the basis of trust in law enforcement, have taken hold among the more committed and curious cops. The more perceptive officials understand that organized crime has transformed itself since the Cold War, respecting few laws and no borders; for law enforcement to keep pace, it, too, must learn to adapt quickly.
A handful of key cases and watchful eyes at the border may well have averted a major yakuza presence in North America. High-profile prosecutions like those of Ken Mizuno and Masaru Takumi let the Japanese mob and its associates know they would not have an easy time of it. The yakuza have not given up—many simply bypass the efficient airport checkpoints in Honolulu and Los Angeles, flying instead to gateways where inspectors won't know a yakuza from a Hmong tribesman. Nonetheless, the prosecutions have made headlines in Japan and impressed the gangs. Even Kakuji Inagawa, founder of the Inagawa-kai, felt moved to complain. "Please tell the American people we wish them no harm," he told the authors. "All we want to do is go to Hawaii and play golf."
Just play golf? The evidence suggests otherwise. But the yakuza's future in the West is not yet written. The gangs maintain an active presence and now understand how to do business overseas. At the turn of the twenty-first century, they continue to work the tourist trade; shake down Japanese business; smuggle guns, women, and drugs; and above all, launder and invest funds. During flush times—as in the Bubble years—many Americans were all too willing to aid and abet the yakuza with scant regard for the public good.
By virtue of their immense cash resources, the yakuza may make further inroads by buying acceptance. Clearly, the Bubble-era investments proved the potential of this approach. Had more of those investments taken hold, we probably would have seen the gangs become more deeply ingrained in North America. We have seen it before. Certain subtle rulings and policies can, for instance, make it easier for "investors." Police officials might receive quiet advice that there are higher priorities than pinkiless gangsters from across the sea. Friends in and around government will help yakuza front men obtain necessary licenses and permissions to do business. Very little will be overt, and if the yakuza are lucky, next time little will come to the attention of the press or public.
On the other side of the fence, American mobsters will find that those who play ball with the yakuza stand to make a lot of money in one way or another—in gambling, for instance, or perhaps in drugs—and there is no need to view the Japanese with suspicion. Those Americans who can broker deals for the yakuza and their friends will also find that they can make small fortunes.
To succeed in America, the yakuza do not have to take over the place. Indeed, they cannot. But if they proceed with caution and ally themselves with the right people, they can do extremely well. And that is the danger. By the time they succeed, the gangs will have come to be regarded as simply part of the cost of doing business, as they are in Japan.
------ Copyright © 2003 by the Center for Investigative Reporting and David E. Kaplan. Not to be reproduced without written permission of the publisher. | |||||||||||||||||||||||||||||||||||
