Smart mobs? Fuhgeddaboutit. Not till they hired me. Now they're getting a secure P2P bet-processing system. A mafia hacker tells his story to Wired.
As told to Simson Garfinkel
On a traffic-clogged street in midtown Manhattan - sandwiched among the bars, massage parlors, and cheap diners - there's a small glass door that leads to my office. The building has no doorman, no front desk, and no video surveillance cameras. We don't go in for that type of security. I walk through the door, down a long corridor to an elevator. When I press the button, the elevator starts with a jump, and a bell on the third floor rings. Now the boys upstairs know that someone's coming.
The bell is a warning: It could be the police, so get ready to run. But even if the cops come, they'll be waylaid by an imposing lock - giving my friends time to scramble down the fire escape to the street below.
Of course, I've got a key. I unlock the door and enter another world. Inside is a small-scale gambling operation the likes of which you'll find scattered all over the city - if you know where to look. I scan the room to see who's there. Most days, there are three middle-aged men sitting at desks, talking on phones so old that they could have been used on the set of Lou Grant. We're talking first-generation touchtone sets with big square buttons that light up when a line is in use.
Today there's just Tony. He glances over his shoulder and nods at me. "Let me check," he mutters into the phone. He peers intently at the screen of a rather beat-up PC and eyeballs the odds for one of today's baseball games. We track four casinos in Las Vegas and set our odds by averaging theirs. The casinos might be offering a $150 return on a $100 wager if, say, the Red Sox beat the Yankees. Tony scrolls down and gives him the line. There's a pause. Then he smiles. The caller likes the odds. "OK, how much?" Tony scribbles a few numbers on an index card and hangs up. The tape recorder shuts off. Like a brokerage house, we record every conversation - just in case there's a dispute with one of our customers. Of course, you never hear about those disputes: The entire transaction between Tony and the caller is illegal. If he accepts four more bets today, he's in felony territory, an offense punishable by up to three years in prison.
Tony looks up. "That's the first call I had all morning," he says. A few more mouseclicks and he's back to solitaire.
Everyone thinks they know what the mob is like. It's something you learn from watching The Sopranos and GoodFellas, something that involves Joe Pesci, baked manicotti, and a dead guy in the trunk. But that's not what I've seen during my two years working for organized crime. My sense is that the mob works a lot like GE or Time Warner. It's more Jack Welch than John Gotti.
When a so-called mobster gets caught, the cops always lie, and the journalists believe what they're told. The cops will say that millions of dollars move through offices like mine, and that all of the money goes to some big crime family. It makes great headlines, but it's laughably untrue. Perhaps we move millions of dollars over the course of a year, but we keep only a small percentage of that - "the juice." The rest gets paid out as winnings, at better odds than you'll find in any legitimate game of chance.
Then there's the misconception that if you don't pay your debts, the mob will break your legs. I've seen that on TV but never in real life. Sure, some agents make their collection runs with a bodyguard, but wouldn't you want some muscle around if you were carrying tens of thousands of dollars in cash? Breaking people's legs is bad business. If somebody doesn't pay their debts because they're broke, maiming them isn't going to put cash in your bank account. Still, the threat of pain remains a valuable deterrent. Tell your customers that you're breaking people's legs and there's no reason to actually do it. Truth is, when people don't cover their debts, we put them on a payment plan. If that doesn't work, we spread the word that they're a bad risk. Basically, we fuck up their underground credit rating.
The whole business of taking bets and paying out is based entirely on trust. The wagers are a form of credit, advanced on trust between the agent and the players. The people placing the bets trust that they'll get paid if they win. Everyone trusts that nobody is going to call the cops. It works because everything is compartmentalized - people keep to themselves, just like stock traders don't socialize much with construction workers.
My job is a lot like managing any other venture. I make sure that people show up on time, that bills get paid, and that the customers and employees are reasonably happy.
But that's not all I do. I'm tech support for the mob. From the moment I started this gig, I realized just how behind this gang is when it comes to technology. Forget about the paperless office. These guys are buried in pulp. But when they want to revamp their systems, it's not like they can call McKinsey for advice. That's where I come in.
I'm building a secure, online, peer-to-peer, encrypted, redundant bet-processing system with an offshore data warehouse. Ordinary companies would hire a team to put this together; I'm working with one guy. Getting the system up and running is a three-step process. First, eliminate all those incriminating little pieces of paper. Instead of writing down a wager, the operator will enter the bet onto an online form. The whole transaction will be encrypted by a browser and sent over the Net to a server running in an undisclosed country where the laws are more liberal than they are in the US. Essentially, the system acts as a market maker, matching up people who want to take different sides of a sports bet.
You think IBM needs encryption to protect its assets? Our backend servers will all be based on Mandrake Linux, one of the few versions of Linux that offers encryption for both user data and the swap partition. When you reboot, you'll have to log in and type a password to bring up the database and applications. The final system will have not one but three servers, all located in different jurisdictions. Each transaction will be recorded at two servers for redundancy. The entire system will be backed up by S/MIME-encrypted email sent from each system to dead-drop mailboxes located somewhere else on the planet - a place where sports betting is legal.
The second step is to move beyond matching up two bettors and program the computer to take a side when no one is willing to take theirs.
Finally, we'll be moving to voice over IP. With our operators working out of their homes using cable modem or DSL - as a modern employer, we have to offer a flexible work environment - it's a simple matter to run voice over the same high-speed line. This has the advantage of eliminating all those traceable phone calls while simultaneously letting us encrypt our voice communications.
A few years ago, then FBI director Louis Freeh warned Congress that if encryption technology wasn't controlled, drug dealers, organized criminals, terrorists, and child pornographers would soon be using it to protect their records. Freeh was half right. We are using encryption, but we'd be using it even if it was illegal. The fact that it's built into the operating system just makes my job easier.
So what's a nice techie like me doing in a place like this? I gotta be honest. For starters, I don't think there's anything wrong with gambling - it's a private, symmetrical transaction between consenting adults. By another name - lottery, casino, offtrack betting - this sort of operation is completely legal. And it's not like I'm shaking people down for protection money. Besides, I tried the dotcom thing and failed. Plus, here I'm appreciated: Organized crime is smart enough to know that it doesn't know tech.
I was always good at math. Arithmetic, algebra, and especially probability came easy. I learned to program computers when I was 9 and cotaught a programming course in C to fellow high school students because none of the teachers knew the language. My mother was a champion bridge player. When I was a kid she never let me win. I had to beat her by my own wits.
In college, I took all the physics and math courses I could handle. I also played a lot of cards. At the end of four years, I had completed the course work for a math major and most of what was required for a chemistry major. But in the fog of all those poker games, I had neglected to take the humanities classes required for graduation. So I left without a degree and moved to New York City. My plan was to become a professional card player.
Card clubs are all over the city. They're not hard to find, and they're tolerated, more or less, by the cops. A friend of mine played poker at one of these clubs. I sat in once or twice. Then he asked me to join a gin rummy team. When my luck ran out, I played with other people's money. That was it. The moment I played for hire was the moment I joined the mob. It didn't seem like a big decision. To me, these people weren't crooks, they were card players.
But I was more than that. I was a hardcore tech geek. Before long, I was installing phones for a friend who was setting up a series of sports-betting operations. I was the only one he knew who understood how his '70s-era systems worked. I could make calls hunt from one desk set to the next and could hook up the voice-activated cassette recorders that taped incoming calls. Not tough stuff, but as I said, there's not a lot of technical expertise in New York's crime community. After I set up a few offices, I started running one of them. Bang. I was in. Seriously in.
The fact remains that I could be pulling in $150,000 as a programmer on the open market. But I make a third of that. So why am I risking a prison sentence or the potential of a lifetime in witness protection for a job that doesn't make me all that rich? Simple: When you start making a lot of money, you get noticed by the biggest bullies on the block - the cops and the IRS - and I don't want that. I like living below the radar. I sublet a friend's apartment and pay his utility bills with money orders that I purchase at the post office or at one of those check-cashing storefronts. Because I get paid entirely in cash, I don't fork over any taxes. When you get right down to it, I'm an idealist. I don't condone the actions of the US government. By refusing to pay taxes, I withhold my financial support. And, truth be told, I like mobsters. They're more willing to accept you at face value. They aren't hung up on college degrees, or where you live, or how many criminal convictions you have.
Yes, I am a hacker for the mob. And damn proud of it.
