Friday, June 28, 2002 | 4:57 a.m.
WEEKEND EDITION: June 30, 2002
Editor's note: This is the first of a three-part series on the FBI's last major assault on organized crime in Las Vegas.
It is the inside story of how longtime underworld figure John Branco became the government's most significant witness against the mob locally in two decades.
Branco and FBI agents tell the Sun exclusively about the inner workings of "Operation Thin Crust," the undercover investigation that led to prison terms for ranking crime figures while costing mobster Herbie Blitzstein his life.
In this part FBI agents secretly set up a social club to keep track of local organized crime associates, and Branco explains how he left his life of crime to assist agents.
Anthony Spilotro, a dominant force in Las Vegas rackets for nearly two decades, had been dead for eight years when FBI agents decided in October 1994 to take a fresh look at organized crime's influence on the streets.
Until his 1986 slaying, Spilotro ran an extensive rackets empire for the Chicago mob and oversaw the looting of millions from casinos in fast-growing Las Vegas, long regarded as an "open city" for the nation's 26 La Cosa Nostra families.
Following his death, however, the Chicago mob abandoned its Las Vegas interests.
But agents noticed that Las Vegas continued to remain fertile territory for underworld associates linked to other crime families, such as those in Los Angeles and New York.
To gain a handle on the local activities of those families, agents launched "Operation Thin Crust," which ultimately would become the most extensive investigation of organized crime since Spilotro's reign on the streets.
Bobby Siller, special agent in charge of the FBI's Las Vegas office in 1994, issued orders to use every available investigative weapon at the agency's disposal: undercover agents, informants, court-approved electronic surveillance and plain hard pounding of the pavement.
Not long into the undercover probe FBI agents began hitting pay dirt.
"We were able to identify a number of mob members who had established a foothold here," Siller said.
Anthony Angioletti, a loud, overweight convicted felon, was instrumental in steering FBI agents to the underworld figures. The 37-year-old Angioletti, who had ties to New York's Genovese crime family, was an informant at the time for the FBI in Los Angeles.
He set up shop in Las Vegas running the kitchen at the Off Ramp Lounge near Charleston Boulevard and Fremont Street. The bar was managed by Ronald Marrazzo, an ex-felon who had attracted the FBI's interest because of his connections to the Gambino crime family in New York.
Although Marrazzo was the initial focus of the investigation, agents quickly were led to others within the underworld.
One target was the late Peter Caruso, a 55-year-old mob associate with a bad heart and a long list of robbery and burglary arrests.
Caruso, a heavy-set New York native, was described by agents as a "one-man crime wave" who would wake up every morning trying to figure out whom he was going to rip off.
"He once bragged about having a heart attack while carrying out a safe from somebody's house," former FBI agent Michael Howey recalled. "He said he successfully committed the crime in the middle of the heart attack."
Agents also found their way to Carmen Milano, a 66-year-old disbarred attorney who had partnered with Caruso to steal goods from Las Vegas conventions. Milano, regarded as the Los Angeles mob's underboss, was the brother of Peter Milano, the crime syndicate's boss.
Howey, the Operation Thin Crust case agent, said he was amazed at how quickly the investigation reached the Los Angeles mob's hierarchy.
"An undercover operation is kind of like making a movie without a script," Howey said. "You never know where it will lead."
The probe took off in October 1995 after Angioletti leased office space with FBI money at an industrial complex at 3855 S. Valley View Blvd. and turned it into a social club for local underworld associates.
Carmen Milano was one of the first to start hanging out at the club, which ended up being named after his Sea Breeze Distribution company.
The Sea Breeze was modestly furnished with a metal desk, television set, sofa and coffee table and a dining room table with folding chairs. The 24-by-21-foot room also had a kitchen with a refrigerator and an old stove for Angioletti to cook pasta and other Italian dishes.
"It was a place where people could come in, sit down and talk," said John Plunkett, who ran Thin Crust as the FBI's Organized Crime Squad supervisor in Las Vegas. "Angioletti was a loud guy. People didn't like him, but he was a great cook and it was a free meal to most of those guys."
The club gave FBI agents a rare opportunity to watch the bad guys come to them, as they determined the extent of organized crime's involvement on the streets.
"It was an intelligence-gathering place for us," Plunkett said. "It was exactly what we wanted."
Howey said it didn't take long for word of the club to catch on with local underworld associates.
"I was thinking this was kind of like a pipe dream," he said. "But lo and behold, two days after it opened the who's who of LCN (La Cosa Nostra) guys in Las Vegas were there."
FBI agent Charles Maurer, brought in from the Pittsburgh area to work undercover in Thin Crust, said the Sea Breeze was a perfect setting for the FBI to keep an eye on its targets.
"This is how LCN people spend their day," he said. "Their lifestyles are a lot different from ours. They get up in the morning. They don't go to work. They go to the club, and they talk about old stories."
At the Sea Breeze they also brainstormed ideas for crimes -- all under the watchful eye of the FBI.
Agents planted microphones inside the club and cameras across the street to keep track of visitors.
"Constant scams would come up in their conversations," Plunkett said.
"There were schemes to take over outcall services, bait-and-switch diamonds, burglarize the homes of the rich and famous and float counterfeit traveler's checks. Once in a while, club members would talk about 'whacking' (killing) people."
Caruso, it turned out, couldn't let a day pass without committing a crime, Plunkett said.
One day, as Caruso and others were hanging around the club, Plunkett said, a drunken driver crashed into a parked car outside.
"Here's how bad this guy was," Plunkett said. "Caruso and another guy ran outside and sat in the damaged car. They got $10,000 later from the insurance company by saying they were inside the car when it got hit."
Among the club's frequent guests were Herbie Blitzstein and John Branco, two longtime underworld figures who had met each other in the late 1980s while serving time together at the federal prison camp in Boron, Calif.
The 61-year-old Blitzstein -- tall, burly and plagued by physical ailments, including diabetes and a bad heart -- was a former top Spilotro associate.
After serving time for fraud and tax evasion, Blitzstein returned to a life of crime in Las Vegas, often relying on Spilotro's name to enhance his reputation on the streets. He ran a loan-sharking operation out of Any Auto Repair, 3055 E. Fremont St., a business he co-owned with his friend Joe De-Luca, an auto mechanic with an eye for pulling off small-time scams.
Branco, who had felony convictions for possessing counterfeit currency, was a 60-year-old tough-talking wise guy who enjoyed respect as an enforcer for the Los Angeles mob.
Much of his time in Las Vegas was spent running a lawn service with his wife, Carolyn, but he also provided muscle for Blitzstein's lucrative loan-sharking operation.
And he never passed up an opportunity to make a quick buck at the club.
"There was a lot of action coming in," Branco recalled. "Herbie was there a lot, and our name got around. Before you know it, we were getting calls from people asking, 'Can you do this? And can you do that?' "
By the spring of 1996, Branco began to assert himself as a leader at the Sea Breeze.
He kept the group busy plotting several burglaries, among them the home of Becky Beh-nen, sister of then-suspended Horseshoe Club executive Ted Binion, who had befriended Blitzstein. The group believed that Behnen kept $1 million in diamonds in a flower pot at her home.
Binion, who agents learned had promised to give Blitzstein $2 million in his will, wanted to go along on the burglary, but the group ultimately decided the heist was too risky.
Branco and company also considered forcing their way into the Beverly Hills, Calif., home of Mario Maglieri, the wealthy founder of Whiskey A Go Go nightclub, and robbing the businessman at gunpoint. The plan was to pull out Maglieri's teeth until he revealed the combination to his safe. But again the idea was dropped.
Club members, however, were not afraid to shake down local outcall service operators. One, Robert Hartman, was frightened into paying Branco and Caruso $5,000 in protection money every six months.
FBI agents later became amused when they overheard Branco complaining that another Sea Breeze patron, Dominick Spinale, wouldn't stop laughing during the attempt to extort money from Hartman.
Branco told Caruso that Spinale needed to stop "giggling" during the next shakedown to make their threats of intimidation more effective.
By the end of April 1996, agents learned through court-approved wiretaps that the Los Angeles mob was planning to take a piece of the action at the Sea Breeze.
Louis Caruso, a dynamic reputed "capo" (captain) in the Los Angeles mob, was coming to town in search of illicit business opportunities for his crime family.
Caruso, who was not related to club thug Peter Caruso, was a new breed within the underworld. He was handsome and well-dressed and always carried a cellular phone with him. He even owned legitimate dry-cleaning and air-conditioning companies.
But he also was fiercely loyal to family boss Peter Milano and a true believer in La Cosa Nostra tradition.
Blitzstein learned that the hard way shortly after Caruso arrived in Las Vegas.
One evening in May, Blitzstein showed up at Club Paradise, his favorite topless joint, to find Caruso and several associates from Los Angeles sitting in his regular booth.
Branco recalled running into an agitated Blitzstein at the club that night.
"Herbie was all upset," he explained. "He says, 'These ass-holes over there -- we had the bouncers move them, and now they're giving me dirty looks.' "
Blitzstein didn't recognize Caruso, but Branco knew immediately that he was an important person in the Los Angeles mob.
Branco tried to smooth things out with Caruso, who was complaining that Blitzstein had disrespected his standing within the underworld. Caruso, however, refused to calm down and later reported the incident to Milano in Los Angeles.
A couple of weeks later Branco was summoned to Southern California for a traditional La Cosa Nostra "sit-down" to resolve the Club Paradise incident.
The meeting took place June 2, 1996, in the back room of the Sportsmen's Lodge, a popular Los Angeles area hangout. At Branco's side was Vincent "Jimmy" Cacci, a longtime friend and reputed Los Angeles capo who had agreed to mediate the dispute.
"He was looking for an apology from Herbie, but I told him right up front before we got started that Herbie wasn't going to apologize," Branco said.
Before Caruso could get a word in, Cacci became furious when he saw two Hells Angels that Caruso had brought with him guarding the entrance.
"Jimmy went crazy," Branco said. "He got up and said, 'Get those assholes out of here. They have nothing to do with this family.' "
The incident cost Caruso ground at the meeting, and he was forced to back off his push for an apology from Blitzstein.
"That's against the rules to bring in an outsider," Maurer said. "Johnny (Branco) won the sit-down because he followed the rules."
Caruso, however, remained bitter toward Blitzstein.
"From that point on, I think he wanted to get rid of Blitzstein," Maurer said. "I think it was the beginning of Blitzstein becoming the target of a takeover."
Maurer, who joined Thin Crust after the sit-down, had been asked to pose as a mob money man to help fellow FBI agents get closer to the Los Angeles crime family.
Shortly after his arrival, Maurer befriended Branco, who didn't know Maurer was an FBI agent. In his undercover role, he began making regular visits to the Sea Breeze, giving the FBI the trusted eyes and ears it needed to corroborate wiretaps at the club.
"Once Charlie started hanging around with Branco, the right things started happening," Plunkett said.
At the end of July, agents got a major break in the case. Metro Police arrested Branco on kidnapping and robbery charges following a scuffle with outcall service operator Vince Bartello, who claimed he was being shaken down for protection money.
Branco, worried the arrest would land him back in federal prison, offered his services to FBI agents looking to strike deeper into the heart of the Los Angeles mob.
"I'd seen the handwriting on the wall," Branco said. "I liked my life, but when I saw all of the crap that happened to me ... I said, 'I don't want this. I don't want to go back to that damn pen. I don't want my wife to go through what she had to do, starving to death, while I'm pulling time.' "
Plunkett and Howey spent hours debriefing Branco, who later agreed to work undercover.
"When we initially talked to Branco, it was kind of touchy," Howey said. "We couldn't disclose the identity of Angioletti, and we couldn't disclose Charlie (Maurer). We were using Charlie as a stopgap to make sure both of them (Angioletti and Branco) were telling us the truth."
Neither Angioletti nor Branco knew Maurer was an undercover agent, and neither knew the other was an informant.
Eventually Angioletti's credibility came under fire.
"There was a point when we found out that some of the information he passed on to us was exaggerated," Plunkett said. "He outright lied. And the first time we found that out, he became absolutely of no use to us."
But Branco turned out to be just what the FBI needed to take the racketeering investigation to a higher level.
"We wanted somebody we could trust and who could take me into places Angioletti couldn't," Maurer said. "We knew John had connections in Los Angeles, which is where we wanted to go."
By October 1996 Branco learned that Los Angeles and Buffalo mobsters, jealous of the money Blitzstein was making, were conspiring to take over his loan-sharking operation, which had as much as $200,000 on the street.
Agents decided it was time to tell Branco that Maurer was working undercover.
"That felt good," Branco recalled. "I realized (Maurer) knows what I'm doing now. He's going to tell the FBI I'm doing the right thing."
archive
