Write first homework with quailty work

 This first homework assignment is about arson for profit, and its relationship to rent control and condominium conversion moratoria in many large cities in the United States.  The assignment and the background reading are in the files tab.  Here is the assignment itself. It is 2-3 pages essay, due 2018/01/29 18:00

Issues of the Underground Economy

First Homework Assignment

I have uploaded several articles dealing with the related topics of big city rent control, condo conversion moratoria, and arson fires. They are in a labeled folder within the Files tab on Carmen/Canvas. As you read the articles, you should be able to figure out how these topics are related and what they have to do with the underground economy.

Once you have developed a sufficient understanding of the background, I would like you to write a 2-3 page description of the public policy issues involved. Please use the structure presented at the end of the last lecture – the one that I am recommending you use to guide your group presentations. Here is a summary of the structure introduced in class:

What? Describe the basic issue to be discussed; if the underground activity arose because of a governmental restriction, mention that here;

When? Present a brief background and some history – describe the evolution of the problem and the emergence of the UG business;

Who? Introduce the suppliers (firms or organizations providing the good or service) and the customers (purchasers of the good of service); mention any other stakeholders involved – government, non-profits, churches, the education establishment, etc;

How? Discuss the mechanics of operation of this UG activity, as well as the ways in which payments are made;

Where? Is this an activity that operates locally, nationally, globally? Are there features that restrict it to certain places?

Why? Offer a judgment about why this is an important issue to be understood, worked on, and hopefully solved; if possible, make recommendations about approaches to ameliorating or eliminating the issue.

Friday, May 25, 2012 NEREJ.COM Reprint

The Massachusetts Condominium Conversion
Statute, Chapter 527 of the Acts of 1983

Saul Feldman, Feldman & Feldman, P.C.

In this article I want to cover three (3) topics. First, I will describe the Massachusetts
Condominium Conversion Statute, Chapter 527 of the Acts of 1983; second, the by-laws or
ordinances regulating Condominium Conversions by local Massachusetts cities or towns;
and third, the regulation of condominium conversions by a city or town that does not have a
special condominium ordinance or by-law but has been granted special enabling authority
in a narrow context as to conversions.

There are a large number of rental apartment buildings under construction. Developers
of these buildings should be aware of the Massachusetts Condominium Conversion Law
(Chapter 527 of the Acts of 1983) as, at some point after the condominium market revives,
many of these buildings will be converted to condominiums.

Here is a summary of the Massachusetts Condominium Conversion Law which applies
to every city or town in Massachusetts unless a city of town has adopted its own ordinance
or by-law covering condominium conversions (e.g., Boston).

1. A moratorium against evictions: The converter must notify tenants by delivery,
certified or registered mail, of the filing of a Master Deed and of the owner’s intent to
terminate their tenancy and their rights under Chapter 527. Most tenants have one (1) year
before they must leave. Three (3) categories have longer:

a) Handicapped tenants;
b) Elderly tenants (over 62); and
c) Low or moderate income tenants.
These protected classes have two (2) years or longer (up to two (2) more years) if they

cannot find comparable rental housing in the same City or Town.
A tenant is protected if there is merely an intent to convert. For example: a Master

Deed is prepared, Purchase and Sale Agreements are prepared, there are inspections,
measurements, surveys, showings, advertising, etc.

Buildings of less than four (4) residential units are exempt. In determining whether the four (4) units minimum is met, units in two (2)
adjacent buildings with common ownership will be added together.

2. A limit on rent increases: CPI or ten percent (10%), whichever is greater.

3. Tenant’s right to purchase: a tenant has a ninety (90) day period to purchase on the same terms as or more favorable terms as those

which will be extended to the general public. I have had tenants execute a waiver of the tenant’s right to purchase a rental unit. The tenant, in
the waiver, acknowledges that he received a purchase and sale agreement executed by the owner of the apartment building and that he was
notified that the terms and conditions of the agreement were substantially the same as or more favorable than the terms and conditions which
will be offered to the general public during the ninety (90) day purchase period.

4. Relocation payments: Seven hundred fifty dollars ($750) for the tenant, unless tenant is a “protected tenant,” in which case it is one

thousand dollars ($1,000). This is a mandatory payment.

5. Penalties: Fine of not less than one thousand dollars $1,000) or imprisonment of not less than sixty (60) days.
Chapter 527 prohibits evictions for the purpose of converting a building to condominiums. However, a tenant may be evicted for any

violation of the lease, including non-payment of rent, provided that this is not merely a pretext for a condominium conversion eviction.

Local Ordinances or By-Laws
Chapter 527 applies to every city or town in Massachusetts, unless a city or town has adopted its own ordinance or by-law covering

condominium conversions, e.g. Boston. In addition to Boston, the following cities and towns have adopted by-laws or ordinances: Abington,
Acton, Amherst, Brookline, Haverhill, Lexington, Malden, Marlborough, New Bedford, Newburyport and Somerville. Just to complicate
things, a few of these municipalities have statements in the ordinances or by-laws that specifically state that Chapter 527 and the local
ordinance or by-law both apply to condominium conversions. A city or town may adopt a law which is more stringent or less stringent than
Chapter 527. An example is the Boston ordinance which gives tenants more protections.

The Boston ordinance gives elderly, handicapped and low income tenants five (5) years but says that the notice period may be extended
by future legislation. This could mean that a tenant in a protected class in Boston could conceivably be protected indefinitely.

While there is certainly merit in giving people in a protected class more time, the Boston ordinance may lead owners to try not to rent to
such people if the owner intends at some point in the future to convert the building.

Page 1 of 2

Tel: 781-878-4540 / Fax: 781-871-1853 / 800-654-4993 / info@nerej.com / www.nerej.com

Municipalities May Regulate Conversions Even Without a Condominium Conversion Ordinance or By-Law
A municipality may not have a separate ordinance or by-law covering condominium conversions. However, such a municipality, under

enabling legislation, may provide that, if a special permit has to be obtained from the special permit granting authority to build more than a
certain minimum number of units, conversion to condominiums may not occur without obtaining an additional special permit from the special
permit granting authority. Therefore, conversions in such a municipality clearly are governed by Chapter 527 and would also be governed by
the requirement of an additional special permit!

The Future
With the weak condominium market, some developers have deliberately reserved a part of a building to rentals while selling the balance

of the building as condominiums. Chapter 527 will apply to this type of building when the market turns around and the developer wants to
sell off the rental part of the building. It is important that developers be mindful of Chapter 527. Developers anticipating that they may want
to start selling Units again may want to allow more vacancies in order to be able to sell Units free of tenant interference.

The main point of this article is to alert readers to the entire topic of condominium conversions and the various regulations and
complexities that are applicable to condominium conversions in Massachusetts.

Saul Feldman is a real estate attorney with Feldman & Feldman, P.C., Boston.

Page 2 of 2

Tel: 781-878-4540 / Fax: 781-871-1853 / 800-654-4993 / info@nerej.com / www.nerej.com

How Rent Control Subsidizes San Francisco’s Super-Rich

 

A law meant to help the poor and working class will benefit the latest tech boom’s new millionaires

by

Scott James

 — February 16, 2012, 6:01 p.m.

222

Thousands of people are expected to become rich in the latest Bay Area tech boom, and in San Francisco these newly minted millionaires will receive a benefit originally meant to help the poor and working class: rent control.

Not that they have a choice. The law applies to rental apartments built before June 1979, regardless of the tenant’s income. Rent increases are limited to less than inflation — last year the increase was 0.1 percent, an all-time low.

But with an estimated 30 percent of the city’s rental properties owned by mom-and-pop investors with four units or less, an unintended consequence of rent control is becoming more prevalent: people of relatively modest means subsidizing the housing of the extraordinarily wealthy.

Critics say it is just the latest failure of the city’s housing policies.

Noni Richen, a former school cafeteria cook, and her husband, who once worked on the Alaskan pipeline, put their life savings into buying a four-unit Western Addition apartment building in the 1980s. “We had $20,000,” Richen said. “That was a lot of money to us, and we put that down.”

The rents the Richens collect have changed little since then because of rent control: $1,000 for each two-bedroom apartment. “It’s a deal,” she said, noting that her tenants aren’t wealthy but that her expenses (insurance, repairs, utilities) have risen faster than the rents. “I don’t begrudge them. I’d do the same thing if I was them.”

But what Richen sees as a basic question of fairness has prompted her to become an outspoken critic of rent control, serving on the board of the

Small Property Owners of San Francisco Institute

, a volunteer organization that advocates for small-time landlords.

Henry Karnilowicz, the group’s president, said rent control should be abolished, or at least reformed so that the wealthy do not receive subsidized rent. “There should be means testing,” he said.

Karnilowicz estimated that 5 percent of the city’s 212,000 rental units (about 10,600) are kept vacant by landlords who would rather not deal with rent control (others estimate the number is higher, about 25,000 units). He said that many owners would rent those homes if there were reforms, like requiring the rich to pay full market value.

Such a move is highly unlikely, however. In a city where 64 percent of residents rent, tenants have enormous political clout and it is unpopular to even discuss reforming rent control.

The cone of silence was evident Monday when a parade of economists and housing experts testified at a board of supervisors committee meeting about the city’s housing situation. Each presentation showed that housing had become increasingly unaffordable in recent years, pricing out people at every income level — except the wealthy.

Yet not one expert mentioned rent control’s impact on the market.

Voters approved rent control in 1979 to help preserve communities by limiting rent increases, a threat to working class and lower-income tenants. However, a new city analysis shows that for the first time upper-income households (annual incomes over $107,000) outnumber the poor (incomes under $35,000), 29 percent to 27 percent. And rents for vacancies average $2,600 a month, a record high.

According to Ted Gullicksen, executive director of the San Francisco Tenants Union, the market is much like it was during the 1990s dot-com boom that pushed rents and displacements to extremes.

Additionally, the number of existing rent-controlled apartments has been reduced by demolition or conversion to sale as private homes, like condominiums. “There’s a serious and steady depletion of housing rental stock,” Gullicksen said, perhaps 1,000 or more units annually.

Protecting that dwindling supply from further erosion has become a “ferocious” battle, said Sara Shortt, executive director of the Housing Rights Committee of San Francisco, a tenants’ advocacy group.

But just trying to determine the exact number of rent-controlled units — and their tenants’ finances — is difficult. The city’s last comprehensive research, undertaken in 2000, found that one-fourth of households in rent-controlled apartments earned more than $100,000 a year — a revelation that prompted I-told-you-so rhetoric from some landlords.

Since then, similar comprehensive research has been blocked, in part by tenants’ advocates who believe the findings would be “politicized” and become a referendum on rent control, Shortt said.

Both she and Gullicksen oppose means testing to exclude the rich from rent control. There are privacy concerns, they said, and it would create a situation in which landlords would then rent only to the wealthy.

And with so many tech nouveau riche around, that could make matters even worse for those of ordinary means.

This article also appears in the Bay Area edition of The New York Times.

From https://www.baycitizen.org/columns/scott-james/how-rent-control-subsidizes-super-rich/

as accessed on 9/8/2014

March/April 1995

25 years ago tenants organized, formed coalitions, took to the streets, and won rent control in Massachusetts.

But, after two and half decades of constant battles against powerful and wealthy opponents, the tenants lost the war to save rent control.

How did it happen?
By Patricia Cantor

In late December 1971, tenants in Cambridge, Massachusetts, demonstrated in freezing sleet on City Hall steps to demand rent control. They succeeded, and rent control became the centerpiece of the city’s affordable housing policy. In November 1994, Cambridge landlords accomplished what hundreds of lawsuits, years of lobbying, and nearly twenty-five years of lost bi-annual local elections had failed to accomplish – they abolished rent control. Under the guise of democracy – the state-wide ballot process – they achieved the undemocratic result of dumping the policy long endorsed by the majority of those effected by it.

Beginnings in Organizing

Cambridge, like many other cities in the 1960s, saw rising rents displace long-term lower income residents. Pressures from university expansion, urban “renewal” land clearance, and manufacturing job loss eroded Cambridge’s traditional industrial base and generated a severe housing crisis. Radicals, both those from the student movement and those from the “grassroots,” began organizing. They identified rent control as a way to increase stability and counter the “master plan” to transform working class Cambridge into “the brain center of the military-industrial complex.” In 1969, a referendum campaign began for a local rent control law, and although the effort failed because city officials ruled it unlawful, rent control was on the agenda.

By 1970, statewide tenant power passed a law authorizing cities and towns with populations over 50,000 to enact rent control. Boston, Lynn, Somerville, and Brookline, in addition to Cambridge, quickly adopted it. Lynn repealed it in 1974, as did Somerville in 1979. Boston approved vacancy decontrol in 1974, and Brookline decontrolled most of its units in 1991. Only Cambridge retained a strong system.

Throughout the 1970s, Cambridge Tenants Organizing Committee (CTOC), which grew out of the 1969 referendum campaign and several successful eviction blockings, ensured that rent control worked in Cambridge. For nearly a decade, CTOC was a model class-conscious local organization. Militantly self-reliant, CTOC raised revenue from members’ contributions, from tenants who participated in its activities, and from other independent sources. The organization published a tabloid-style monthly newspaper and numerous informational guides. A tenant union committee organized tenants. A legal committee provided legal support. CTOC led rallies to protest city-wide rent increases approved by the rent board and held at least one semi-successful, city-wide rent strike.

In 1975 the state-wide enabling law was due to expire. Responding to heavy real estate industry lobbying, the legislature refused to extend it. But CTOC led the Cambridge fight to enact a home-rule version that was passed by the City Council and approved by the State Legislature and then-Governor Michael Dukakis.

By the late 1970s, however, CTOC began to unravel. Internal issues, as well as the changing political climate, contributed to the organization’s formal dissolution in 1978. When CTOC disbanded, it left a strong rent control system and history of tenant advocacy and activism.

Loss of Units Brings Stricter Regulation

During the 1970s, landlords sought ways to remove units from control. Since owner-occupied condominium units were not rent-controlled, widespread condo conversion began in older buildings. Masterminded by Cambridge anti-rent control attorney William Walsh, this strategy resulted in the removal of thousands of units from the rental market.

In response, tenants demanded that removals be restricted and elected David Sullivan, an activist tenant lawyer, to the City Council in 1978. By the summer of 1979, Sullivan and other pro-rent control councilors passed the Removal Permit Ordinance, which strictly regulated removals of controlled units by requiring proof that a removal would not aggravate the housing shortage and would benefit “the persons sought to be protected” by the rent control statute.

By the early 1980s, although the mass movement had faded to a few dedicated individuals called the Cambridge Tenants Union (CTU), the institutional structure that years of tenant activity had produced protected thousands of people. Every two years, Cambridge voters (80% tenants) returned a five-to-four pro-rent control majority to the nine-member city council. At each election, rent control was the hottest issue, and reasonable effort and positive inertia kept it intact.

Landlord Backlash

Although the remaining activists continued to press for pro-tenant positions, real organizing ceased. Into this vacuum stepped the Small Property Owners Association (SPOA). Responding to what they claimed was the rent board’s pro-tenant bias and vowing to do away with Cambridge’s “inherently onerous and unfair” rent control laws, a group of property owners, mostly owner-occupants of small buildings, formed SPOA in 1987.

SPOA began picketing city council meetings, regularly speaking up at rent board hearings, and organizing other property owners. SPOA representatives visited radio talk shows and interested reporters and columnists in publicizing their personal tales of the “horrors” of Cambridge rent control. They displayed signs at university graduations, wrote letters to local and national newspapers, and were able to portray themselves as a grassroots organization fighting for justice and the American way against the “People’s Republic of Cambridge.”

SPOA also presented a more diverse and superficially appealing picture than the corresponding tenant activists. They included young and old, black and white, and women and men in their leadership. Although larger landlords jumped on the bandwagon and over the years contributed large sums to finance the organization, SPOA only showcased people who looked sympathetic.

Its first big test came in the 1989 local elections. Sullivan and two other long-time pro-rent control councilors declined to run, and landlords succeeded in getting a local ballot question, Proposition 1-2-3, before the voters. Proposition 1-2-3 would have allowed landlords to sell condo units to tenants who had lived in their units for two years, thereby converting the units from rental to owner-occupancy and doing away with a large piece of the removal ordinance. Proposition 1-2-3’s supporters declared that it gave tenants a “choice” whether to own or rent. But tenants were not fooled, and Proposition 1-2-3 was defeated two-to-one. Also, for the first time, voters elected a six-to-three pro-rent control City Council.

SPOA then turned to a legal challenge, filing a many count constitutional attack on Cambridge’s rent control laws. In March 1993, when most of their claims were dismissed, they began to look for other alternatives.

Meanwhile, from 1989 to 1994, SPOA’s media blitz continued. Condo owners lamented that they were not allowed to live in their units. Reports on local news programs featured crying elderly widows and immigrant families contrasted with a few high profile “undeserving tenants,” such as a state supreme court judge and a state legislator with a Cambridge pied-a-terre. SPOA targeted Cambridge’s mayor, a lawyer who stayed on in his rent controlled apartment after his mother died. Articles in legal and business trade journals told SPOA’s version of cases. By 1994, many people outside of Cambridge believed that rent control didn’t work and that it unfairly harmed landlords.

Few, if any, stories reported that rent control allowed thousands of people to live in Cambridge by keeping rents at reasonable levels, or that the rent board’s rent adjustment formulas strongly favored landlords, or that, because the removal permit ordinance eliminated the speculative drive from the rental market, Cambridge was saved from the 1980s real estate boom and subsequent bust. No one read about how many SPOA landlords were able to buy their buildings because rent control kept property prices down. Although the mayor was portrayed as getting a free ride, the fact that he was not a wealthy man and had lived in his apartment for years with his elderly mother was ignored.

The Beginning of the End

In the summer of 1993, SPOA came up with what would turn out to be its trump: a state-wide initiative campaign to ban rent control. The first step was to get the state attorney general to certify the ballot question. Over the objection that the question was unconstitutional under state law because it only applied to “particular localities” (i.e. those with rent control), the attorney general approved the question in September 1993. This paved the way for SPOA – now operating under the name of the Massachusetts Homeowners Coalition (MHC) for campaign finance purposes – to obtain sufficient signatures to place the matter on the November 1994 state-wide ballot. Using local Realtors, paid canvassers, and themselves, MHC barely mustered the necessary signatures.

The way to a statewide vote, however, was not yet clear. After receiving permission from the state campaign finance agency, Cambridge and several individuals filed suit, contending that since the ban only effected localities that had rent control, the localities exclusion barred it from the initiative process. The state supreme court (SJC) heard the case in May 1994 and rejected the argument in July.

“Question 9” would thus appear on the ballot in over three hundred cities and towns in Massachusetts, although it would affect only Boston, Brookline, and Cambridge.

The 1994 Campaign

To combat MHC, tenants formed a political action group called the Save Our Communities Coalition (SOCC). After conducting focus group research, SOCC chose a strategy that emphasized how the loss of rent control would impact the elderly, particularly in Boston. The slogan “Bad for Elderly – Bad for You” appeared on SOCC’s bumper stickers and posters. SOCC also organized several demonstrations and meetings, mostly in Cambridge and Boston, but received little media coverage. A letter signed by over 60 Cambridge property owners (homeowners and some owners of rent controlled buildings) supporting rent control ran as an ad in over 50 newspapers throughout the state.

The American Association of Retired Persons, unions, and a large array of progressive groups endorsed the “Vote No on 9” campaign. The Boston Globe editorialized against Question 9, because it would unfairly interfere with home rule – the rights of cities and towns to fashion local solutions to local problems – and because it was fundamentally undemocratic to allow the rest of the state to decide policy for Boston, Brookline and Cambridge.

These efforts, however, lost the contest for monetary support and visibility to MHC. In an election year where government regulation was portrayed as the enemy, what better strategy than to use rent control as the prime example of governmental excess? MHC’s logo showed a house with the words “Get Gov’t Out” emblazoned across it. Radio and TV ads focused on a few of SPOA’s prime examples of the “unfairness” of rent control, particularly in Cambridge. Through its far greater financial resources, its access to radio talk shows, and its ready-made network of Realtors, MHC was far more able than SOCC to communicate its message to voters.

On a long election night, the results in eight other ballot questions came in by midnight, but Question 9 was still too close to call. By dawn, the news became painfully clear. Although Question 9 failed in Boston, Brookline, and Cambridge, it won the state by 51 percent, mostly from the wealthier suburbs and those communities within reach of the Boston media. As of January 1, 1995, rent control would be banned in Massachusetts.

The Endgame

Perhaps realizing the seriousness of the situation for the first time, Cambridge tenants stormed the next few City Council meetings and demanded that a new home rule petition be sent to the state legislature. Tenants packed City Hall in numbers and diversity unseen since the days of CTOC. Led by activists still around from then, the relatively new low-income neighborhood group Eviction Free Zone (EFZ), and the few CTU regulars, tenants testified to the hardships that the loss of rent control would bring. Nurses and fire-fighters, parents and children, elders who had lived in their apartments for over fifty years – all told moving and compelling stories. And finally, the print and broadcast media began reporting them.

SPOA responded by saying that “the voters had spoken,” that SPOA had won, and that the tenants should accept the results and give up.

Pleased that the vote was so close, reacting to tenant outcries, and relying on the majority no votes in their communities, officials from Cambridge, Boston, and Brookline quickly readied home rule petitions. But these officials also assessed the chances of strong legislation passing and being signed by Republican Governor William Weld, fresh from a 70 percent election victory. Although the legislative leadership was supportive, Weld declared he would veto any new rent control laws.

Given Question 9’s January 1, 1995, implementation date and the need to move a bill through the lame-duck legislature before the session’s end on January 3, the Cambridge City Council met almost daily to craft a plan that would meet the concerns of tenants, landlords, the legislature, and the governor. The word from the State House was that if at least six of the nine council members, including those traditionally opposed to rent control, could agree on a compromise, it might be approved.

The debate was emotional and intense. The City Council passed a compromise bill at the eleventh hour before petition needed to be filed at the legislature the next day. One pro-rent control councilor voted against it and one voted “present;” three pro-rent control and three anti-rent control councilors voted for it; and one member, William Walsh, the staunchest anti-rent control councilor, was not there. On November 15, he had been sentenced for federal bank fraud, and under state law, deprived of his council seat. The pro-rent control councilors who supported the compromise agreed that it was a terrible bill, but the only choice, given that Question 9 would ban rent control altogether on January 1. As Frank Duehay, the sole remaining councilor who had voted for rent control in 1970, said in justifying his vote: “This is one of the saddest days of my life… I have to ask, is it better to have something or is it better to have absolutely nothing?”

The new law would have provided for decontrol of most units by July 31, 1995, and would have eliminated restrictions on owner-occupancy of condominiums. It would have kept rent control for five years in buildings with seven units or more for tenants who were 62 or over, physically handicapped, or whose incomes were less than 90 percent of the median for Boston. The petition passed the Massachusetts House of Representatives by enough votes to override a veto. It passed the state Senate by two votes. SPOA continued to lobby against it. Governor Weld repeated his intention to veto it.

Meanwhile another challenge, to the legality of the election itself, was brewing. The nine questions on the 1994 ballot had been the most in Massachusetts in a long time. Although law requires a summary of each question to be printed on the ballot, the secretary of state had ruled that the ballots did not have enough room and that separate summaries could be distributed at the polls. On election day, except in a handful of towns that still used paper ballots, voters found ballots listing only question numbers with a choice of “yes” or “no.” No title or description of the subject matter, much less the actual summary, appeared. Confusion was compounded because on some ballots a “yes” vote was a vote to change the current law (such as Question 9), while on others it was a vote to keep the status quo.

Disturbed by a seemingly flagrant legal violation and responding to widespread reports of voters not receiving any summaries, supporters of rent control and another ballot question sued to invalidate the election. On November 29, 1994, in the first positive legal development for rent-control supporters in over a year since the ballot question fight began, a Superior Court judge enjoined the election results from becoming law.

The fate of all the questions was in doubt. Since this obviously had widespread consequences, the SJC pushed for a full court hearing as soon as possible. This occurred on December 22.

While the ballot question scenario was unfolding, the home rule petitions were stalled at the governor’s office. Tenant advocates knew they didn’t have enough votes to override a veto. Even if the court ruled that the summaries did not have to be on the ballot, it could be too late to prevent rent control from being repealed. Rent control supporters would then have to start over with a new legislature and a hostile governor.

On December 27, the SJC issued an order approving the omission of the summaries from the ballot. The injunction against Question 9 remained in force through the end of the legislative session.

The action shifted back to the State House. The governor repeated that he would not sign any law that kept rent control. SPOA, along with the Greater Boston Real Estate Board, kept lobbying against anything other than the outright ban contained in Question 9. On the afternoon of January 3, Weld announced that he and the real estate industry had reached an agreement on a transitional law, which, in the words of one legislator, would allow rent control “to die with dignity.” The law technically would apply throughout the state, because it was not a home rule petition and would not need local approval; it would also supersede Question 9.

The law immediately decontrolled all units not occupied on November 8, 1994 (election day), by a tenant with an income of 60% or less than the median for Boston ($21,500 for a single person). For tenants who were 62 or over or disabled, the limit was 80% of the median income ($ 27,950). The incomes of all persons residing in a unit were counted, and full-time students were not protected. Rent control for “protected tenants” in buildings with up to twelve units would end on December 31, 1995; those in buildings of over twelve units had until December 31, 1996. The rent board lost jurisdiction over evictions, and removal regulation was eliminated.

Just before midnight on January 3, the legislature enacted the real estate industry law that killed rent control in Cambridge, Boston, and Brookline. Governor Weld signed it the next morning.

What Went Wrong?

Some believe that rent control advocates were too rigid, that Cambridge’s failure to “reform” rent control by responding to legitimate landlord complaints brought the whole system down, that if some provisions had been relaxed, for example, letting owners live in condos, SPOA would not have been pushed to the extreme. Others pointed to the inequity of a system that allowed the mayor and an SJC judge to live in rent controlled apartments while failing to assure that low-rent units went to those who needed them most.

Of course, mistakes were made. CTU and SOCC had failed to recognize and adequately respond to the highly visible examples of wealthy/well-placed tenants living in rent controlled units. This serious underestimation of public perception deprived tenants of a counter to landlord propaganda. Additionally, by focusing on the effect of rent control’s loss on the elderly, instead of also making the home rule and basic democracy arguments, SOCC may have miscalculated. Finally, although CTU purported to speak for Cambridge tenants, their activists were not organizers, and Cambridge tenants did not through the years maintain the type of organization that could have countered SPOA. Even accounting for obvious differences in money and power, Cambridge tenants lost the initiative before they lost the ’94 election.

But it also seems clear that SPOA would not have been satisfied with reforms that made rent control more favorable to landlords. From the outset, the group’s aim was to defeat rent control in Cambridge, which was evident from its repeated statements that rent control was both fundamentally unfair and illegal. Easing various provisions would have only encouraged SPOA to push for more until the goal was achieved: a free market economy in Cambridge’s rent controlled housing – the same system that laid the groundwork in the late ’60s for tenant organizing that led to rent control.

Renewal

The seeds for rebuilding are now being sown. EFZ has mobilized activists, including veterans from CTOC, labor struggles and neighborhood issues, to begin organizing tenant unions. EFZ is training tenants, providing written materials, offering access to legal advice – in short, re-building a tenants’ movement. It has announced an ambitious “Housing Justice Program” that seeks to negotiate leases with rent increases tied to tenant incomes and just cause eviction protection. The Housing Justice Program also calls for tax abatements for landlords who keep rents at reasonable levels and a real estate transfer tax to capture some of the profit that will be made from sales of newly decontrolled properties.

It is too soon to assess the impact of EFZ’s efforts, but its leadership is comprised of respected and experienced tenant advocates. If Cambridge tenants are to reclaim some of the power they lost when they lost rent control, only well-organized and broad-based organizations like EFZ can make that happen.

In the end, Cambridge held off the tide of deregulation longer than anywhere else, until finally the “get gov’t out” fever swept over the city as well as the rest of the country. But Cambridge activists who fought to protect tenants for years can be proud that so many people were protected for so long. And they know from experience that “the struggle continues.”

Copyright 1995

Patricia Cantor, who served as counsel to the Cambridge rent board and was an active member of the Cambridge Tenants Organizing Committee, is now an attorney in private practice.

For updates on what happened to affordable housing in Cambridge and the work of EFZ, see Shelterforce

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Arson for Hire

Tuesday, October 18, 2005 at 4 a.m.

By

Joe Conason & Jack Newfield

1

Burned out in the South Bronx, 1978 photo: Sylvia Plachy

June 2, 1980

There are two crimes that are more than just felonies—they are treason. One is the importation, distribution, and sale of heroin. The other is arson for profit.

There are not crimes of passion or desperation. They are crimes of organized greed. They cause the deaths of innocent citizens and brave firefighters. They kill blocks, ruin neighborhoods, and destroy cities. Ultimately, these are crimes that annul hope and diminish humanity.

Arson breaks up families, frightens away investment and jobs, and deprives the poor of housing. Every arsonist is potentially a mass murderer. Those subversives who hire others to torch occupied buildings—like those who move the envelopes of fine white powder—are the first vultures of late capitalism.

It was more than two years ago that we first stumbled upon this city’s biggest arson ring of landlords, lawyers, brokers, and insurance adjusters.

In the winter of 1978, the South Bronx was already a moonscape with abandoned, charcoaled shards. The cops who worked in the 41st Precinct no longer called their station “Fort Apache.” They called it “The Little House on the Prairie,” because there were so few surviving buildings or families in the area.

In the winter of 1978 the burning of the Bronx had moved north into neighborhoods called Morris Heights, Morrisania, Tremont, Highbridge, Kingsbridge, and Fordham. Whenever there was a suspicious fire and the homeless tenants were Hispanic or black, the media would call the area the South Bronx. But it was really other communities, and other police precincts.

For several days that winter we walked around these dying blocks with a cop named Joe Dean, who was then assigned to the Bronx arson task force in the 48th Precinct. We met not only the most recent victims of arson, but those who feared they would become tomorrow’s refugees.

We saw tenants and small shopkeepers plead for protection, saying the building next to them had burned the night before, and that their house would be next. But because of budget cuts, neither the police or the fire marshals or the district attorney’s office had the manpower to watch a building through the night.

Each day Joe Dean had to explain this to poor people who sensed they would soon be burned out for the second or third time in their lives. And Joe Dean felt powerless to do anything about it.

Within a week we saw the tenants of 201 Marcy Place, 1126 Kelly Street, and 1403 Grand Concourse turned into urban boat people by arson. And soon Dean was so frustrated by the suffering he saw—and could not stop—that he asked to be transferred to more risky plain-clothes work in Times Square.

Eventually, we discovered a pattern to the burning of the Bronx, and later of Brooklyn, Manhattan, and Queens. Over the last five years, 250 buildings, all owned by one interlocking network of landlords—and all insured for large amounts—have had fires.

The maypole of this circle of landlords appears to be 50-year-old Joe Bald, a convicted felon with ties to the mafia. In 1978 we named Bald as one of the 10 worst landlords in New York. Now he is about to go on trial in Queens for burning one rent-controlled building that he did not own. Other landlords affiliated with Bald in carious realty companies, mortgages, transactions, deeds, partnerships, or fire insurance policies include Harry Rosen, Henry Katkin, Kenneth Passifiume, Marvin Siegel, Abe Sloan, Kenneth Aska, James Blackwell and Benjamin Tabak.

Sometimes Bald’s own name appears on the deed to a property. Sometimes the property is registered in the name of a front, frequently a superintendent or managing agent. Sometimes Bald only buys an interest in the mortgage. Sometimes the property is in the name of another landlord who has shared a dummy company with Bald in the past. Sometimes the property is never registered at all with the city.

Sometimes the building is in the name of one of 50 different shell companies that Bald uses with names like Kajo Realty, 820 Suburban Realty Company, 952 Rehab Corporation, 748 St. Marks Development Corporation, or M.B. Management. Sometimes Bald’s interest in a property is completely hidden and is not on paper anywhere.

According to law enforcement agents, Bald even acts as a “fire broker” for other landlords. He will supply a torch for a building gin which he has no financial interest—for a free or a future consideration.

But there is always the extraordinary coincidence of fire and money, or arson and insurance. There is the pattern of the building bought, the swift withdrawal of heat and hot water from the tenants, and then the fire set in the middle of the night in a top rear apartment.

Over the last five years, Bald and a variety of his associates have collected an estimated $5 million in fire insurance claims. Bald’s properties have been insured by Lloyds of London, by the FAIR plan, and by other private companies.  

Despite Bald’s indictment for arson last September in Queens, he seems to be as active as ever. Three buildings purchased by Bald this year around the Grand Concourse have already had a series of fires, and are now abandoned. One of these buildings is 55 East 175 th Street—a six-floor, brick apartment house acquired in January of 1980 by 446 Management Corporation, in which Bald holds a financial interest. This large, decent building had two suspicious fires on March 3, another on March 4, another one April 27, and a fifth fire on May 11. It now stands empty, the roof gone, the windows broken, mounds of burnt garbage in the courtyard.

We have spent 30 months trying to piece this story together, not merely to name these urban traitors but also to explore and explain why whole neighborhoods of this city have been put to the torch. The idea that tenants set most of the fires themselves in order to quality for public housing—or that vandals or street gangs set them—is a myth. The fact is that landlords set the fires in order to collect insurance money.

And, for years, the insurance industry has not cared. The fire insurance underwriters have simply passed the costs of arson along to the public in the form of higher and higher rates.

Joe Bald’s operations span the city, from Harlem to the Grand Concourse, from Bed-Stuy to Far Rockaway, but his chief place of business is Room 703, 16 Court Street, Brooklyn. His name is on the door, beneath the heading Real Estate, along with the names of two other companies and three individuals.

Inside Bald’s suite is a tiny waiting area, shut off by a locked door from the actual offices. A secretary peers out from behind a window, making the operation look more like a ghetto check-chasing service than a real-estate firm. But Bald hasn’t been spending much time in the office lately; believing, perhaps, that his phone is tapped, Joe Bald has been making a lot of calls from the pay phones downstairs on Court Street.

Bald’s career is somewhat opaque. Over the past 10 years he has been identified as a rabbi, a furniture dealer, an interior decorator, a landlord and a management agent. What’s known for certain is that arson for profit was not his first criminal business.

According to Michael Hellerman’s autobiographical Wall Street Swindler, Bald was instrumental in several Hellerman-masterminded stock fraud schemes involving top organized crime figures. Bald is portrayed as a mere tool in these transactions, most of which took place in 1970 and 1971.

When Hellerman decided to handle a stock swindle involving a mob-connected New Jersey car-leasing firm, he used Bald as a front and go-between. Among the “investors” in this ripoff were mobsters Vinnie Aloi, John “Dio” Dioguardi, and Vincent Lombardo, son-in-law of crime genius Meyer Lansky.

Some time later, when Hellerman needed a place to cash checks he was collecting in a bigger stock manipulation, he went to Bald again. “Bald was a man of many contacts,” wrote Hellerman, “and the check cahiers he came up with were a couple of rabbis who worked in the New York Jewelry Exchange. Bald assured me that the rabbis were reliable men, willing to cash the checks for us, no questions asked . . . ” Hellerman decided to swindle the rabbis too, but Bald apparently betrayed him out of fear. The rabbis retaliated by kidnapping one of Hellerman’s associates and holding him prisoner for three days, until Bald produced enough second mortgages and cash to secure his release.

None of this made the papers, and it’s entirely possible that Bald’s Queens neighbors thought of him simply as a good family man with mysterious business activities. But in November 1970 Bald was implicated in the Imperial Investment Corporation fraud case along with Hellerman, New York mob boss Carmine Tramunti, Aloi, Dioguardi, and Lombardo. Shortly before the indictments came down, Bald, his brother-in-law Harold Blond, a Democratic fund-raiser named Edward Adams, and an aide to Republican senator Hiram Fong of Hawaii began seeking ways to fix the Imperial case. But neither Bald nor his associates realized that Hellerman had long since become an FBI informant. Before an undercover agent blew it open, the bribery attempt had been carried to the point where Fong aide Robert Carson offered $100,000 to Deputy Attorney General Richard Kleindienst. Bald pleaded not guilty when the bribery arrests were first made. But by November 1971, when the case when to trial, he had changed his plea to guilty. Though he never directly fingered the organized crime investors, Bald testified that “we offered a million dollars if the Imperial Investment Corporation matter could be taken care of.”  

Thanks to his somewhat cooperative testimony, Bald got only a few months in jail. Not counting a brief furlough to attend his son’s bar mitzvah, Bald spent three months in Danbury federal prison and entered the world of real estate upon his release in May 1972.

Joe Bald is at the center of a group of fire-prone landlords, some of whom have been h is partners in front corporations, others who have merely sold Bald buildings to dispose of as best he could.

Kenneth Passafiume, Bald’s partner in Nony Realty and Kajo Realty, was perhaps his closest associate. Kajo-owned buildings had at least 21 fires deemed suspicious, incendiary, or unknown, between April 1976 and August 1977. The modus operandi was simple. In the case of a 28-unit building at 161 Clarkson Avenue in Flatbush, bought by Bald and Passafiume in April 1976, they cut off services to the tenants, repairs went undone, and homes went unheated until, in late summer, the suspicious fires began. Finally, over a two-week period in December, two larger fires broke out. Bald and Passafiume collected $15,200 from the FAIR plan, a state-run insurance pool, and a few months later the building was sealed. By March 1977, Bald and Passafiume were applying for a low-cast city loan to “rehabilitate” 161 Clarkson.

Passafiume, who lived in New Jersey while his Brooklyn properties burned, ignored at least one court order directing him to make repairs at 161 Clarkson. His previous record shows two arrests: one in 1975 for possession of a gun and “menacing,” and another in 1977 for drunk driving.

A second Bald associate, more respectable at first glance, is Henry Katkin, a Brooklyn landlord whose city tax arrears once reached $170,00. Katkin and Bald own at least two buildings together, one recorded under the bizarre name of Terrain Renewal. Located at 280 East 91st Street in Brooklyn, the building had two fires of unknown origin a month earlier. The insurable loss on both buildings totaled $37,000.

One of the most active of Bald’s associates is Marvin Siegel, with whom he has done business under the corporate name of Sagamore Realty. Over a period of eight months in 1977, Siegel bought up at least a dozen properties in the South Bronx for nominal cash. Then, on February 22, 1978, he turned them over to Bald, again for a nominal consideration. On paper, these properties were worth about $350,000 in all. Each one has since had a serious fire of suspicious origin, and three—at 1173 West Farms Road, 1126 Kelly Street, and 559 Southern Boulevard—were burned to the ground. According to law enforcement authorities, all of these buildings were insured for amounts far in excess of their assessed valuation or the amount Bald’s companies paid for them. Nearly all were in tax arrears.

Landlords don’t burn buildings themselves in most cases, although sometimes the “torch” will also be used as a front man to disguise a building’s ownership.

Joe Bald’s favorite torches appear to be Kenneth Aska, Richard Payne, James Blackwell, and Ralph Turane. These four men, all considerably younger than Bald, will soon go on trial with him for the incendiary fires at 750 Empire Avenue in Queens.

Aska, who has also gone under the aliases of Kenneth Brooks and Alvin Donelly, was born in New York 31 years ago and now lives in the pleasant suburb of Central Islip. He drives a while 1978 Lincoln Mark V, and reportedly owns three other cars. He lists his occupation as “investment consultant” and his business address as “820 Realty, 1727 Townsend Avenue, Bronx.” Seventeen twenty-seven Townsend is owned by one Joseph Benedicke, who shares Bald’s business address at 16 Court Street, and shares a business phone with Joseph Mayer, Bald’s partner in a front office called M.B. Management Corporation. The building at nearby 820 Suburban Place, which was taken by the city for nonpayment of taxes in 1978 (and to which the name 820 Realty refers), was owned by M.B. management.

Aska’s offices were raided by the police on September 20, 1979, the same day he was arrested for arson and conspiracy in the burning of 750 Empire Avenue. Among the papers taken from his office was a long list of buildings located in the Bronx, Brooklyn, and Manhattan, some of which have suffered serious fires. Also collated from materials found at the office was a list of property owners or managers who have done business with 820 Realty, and whose properties have been investigated by the Fire Department for suspected arson.  

Among these landlords are Benjamin Tabak and Harry Rosen, who have been sued many times for violations of tenant rights and humane behavior. Tabak, who owns properties in Williamsburg, was almost arrested in 1977 for failing to appear in court to answer tenant charges against him. He was also one of the Voice’s “10 worst landlords” of 1978. Those tenants told the Voice that, along with no heat or hot water and no effort to correct 200 violations of the building code, there were four suspicious fires during Tabak’s effort to drive them out of their homes at 184 Grand Street. (While collecting rents from these tenants, Tabak didn’t bother to pay any property taxes to the city.) The religious organization used by Tabak as a front for his ownership of 184 Grand Street also appears in the group of names found at Aska’s office.

Harry Rosen is an old-timer; we have been told that one of the first court cases ever filed by the city for housing code violations was against Rosen. But such efforts by the city don’t seem to have affected him much: in November 1978, after a two-year court battle with city authorities over hazardous conditions in two of his Brooklyn buildings, Rosen and his partner Sam Biller were fined $4000 for contempt by a civil court judge.

Law enforcement sources believe Aska and his associates were running a sort of arson service business out of their offices at 1727 Townsend. Aska himself has been arrested on two previous occasions. In 1971 he and his brother-in-law Richard Payne were charged with grand larceny and coercion, or causing fear of injury to a person/property. The following year he was arrested on a misdemeanor charge of “obstructing governmental administration.” Both of these cases arose out of Aska’s involvement with Black Economic Survival, a group of black Bronx construction workers whose leader, James Sims, was convicted of extortion in 1975. The charges against Aska and Payne were ultimately dropped.

Aska—a touch guy who tried to kick a Voice photographer last week and later threatened violence against him—appears to be the most senior of Bald’s helpers. He knew enough about arson mythology to accuse an elderly Jewish tenant leader of setting the fires at 750 Empire Avenue when he was arrested for that crime last September.

Last week in Queens Supreme Court we saw the defendants in the 750 Empire case for the first time. They were brought to Judge John Leahy’s courtroom in handcuffs, having spent the previous evening in jail. Though the five of them were originally released on $50,000 bail each, they’d spend the night behind bars because of an incident in the courthouse hallway the day before. After a pretrial hearing, Bald, the attorney representing him, and the other defendants were waiting for an elevator. Standing next to them was Queens assistant district attorney Joseph Maddalone, who says that Bald began making “smart remarks” in his direction about “letters being sent to the judge.’ Maddalone says he asked Bald’s Attorney, Arnold, Weiss—who happens to be a former Democratic from leader from Manhattan—to “control his client.” Weiss’ response was: “Tell it to the judge.”

That’s what Maddalone did, and the five defendants’ bail was temporarily revoked. We watched them apologize humbly to Maddalone and the judge in the courtroom the next day. The judge reinstated their bail, and they left.

The tension in that courtroom reflects just how “hot” this particular arson case has become. The building which burned was a site of community controversy for more than a year before it was set on fire with flammable liquids and a road flare. Far Rockaway is undergoing convulsions much feared by its middle-class residents, who focused on 750 Empire Avenue as a symbol of local deterioration. According to documents in possession of the former tenants, a nonprofit corporation was formed by members of a local temple, Kneseth Israel, to buy the building and demolish it so that one and two family homes could be built on the site.

The dummy corporation which took over the building in November 1978 was called Golem—Yiddish for “monster”—Realty Corporation. According to law enforcement sources, the real owner was Dorn Management, whose president Mordechai Sohn is also the president of Temple Kneseth Israel. Because the new owners refused to provide heat or services, the 20 tenants remaining in the 48-unit structure often withheld their rent. Between January and March of 1979, the complex suffered four incendiary blazes, the firs for which Bald and company were indicted on courts of arson and conspiracy.

Bald’s relationship to this particular set of fires is exceptional, and in a way it’s ironic that he is finally being prosecuted for this case. From the doorway of 739 Elvira Avenue in Far Rockaway, where Bald has lived for many years with his wife and children, he could see 750 Empire Avenue. The irony of the case is that Bald and his cronies are about to be tried for a crime that may have been a favor to friends in the neighborhood, friends who have accomplished their goal without being caught. Bald may find time to ponder this in prison.  

It is also possible that he may not go to prison again. Few arsonists are convicted, particularly when they have lawyers as skilled as those representing Bald and Aska.

Aside from Bald’s deep involvement with mob-linked stock swindles 10 years ago, the clearest signals of organized-crime involvement in the arson plague are Bald and Aska’s lawyers. Thought ex-reformer Arnold Weiss appeared for Bald in court last week, he did it only as a favor to Bald’s busy attorney of record, Jay Goldberg.

Goldberg is a Harvard Law graduate, who once worked for Attorney General Robert Kennedy on racketeering cases in Indiana. He is now a prosperous mob lawyer. For a brief period in the mid ’60s, Goldberg used his gangbuster reputation to seek reform Democratic support for assembly and district attorney races in the Bronx. Now, having represented several top mob figures as a criminal defender since those days, Goldberg is defending a landlord who has helped to destroy the Bronx. Among Goldberg’s organized crime clients are Vinnie Aloi, Johnny Dio, Carmine Galante, Matty “the Horse” Ianiello, the brothers Anthony “Tony Pro” and Salvatore Provenzano, the late porn boss Michael Zaffarno, and porno lawyer Seymour Detsky.

Aska’s attorney is Herbert Lyons, another high-priced criminal lawyer. Lyons’s most celebrated client was former Brooklyn congressman Frank Brasco, who despite Lyons’s talents, was convicted of taking a bribe from a mobster.

People who study arson disagree about motive. Some believe most arsons are motivated by revenge, insanity, or thrill seeking. Another popular notion is that poor people burn their own homes so that welfare agencies will help them move to better housing. But we’ve never heard a professional fire investigator say that less than 25 per cent of all arsons were set for profit.

Our knowledge of arson is limited in substantial part, because the biggest insurance companies have done so little about the problem. Though arsonists make millions by defrauding insurance companies, the corporate response has been less than overwhelming. They are naturally concerned with covering their own asses first, which means worrying more about lawsuits for disclosure of insurance data to law enforcement agencies or for withholding fire claims in suspicious circumstances, than about the social problem of arson. The insurance industry is very big on recommendations, advisory committees, generalized research, and conference discussions; it’s short on action. The industry’s lethargy may have something to do with its ability to redline threatened neighborhoods and, when too many losses threaten profits, to raise fire insurance rates on all residential buildings. This approach leaves much to be desired, since the solutions penalize honest homeowners and tenants much more than they hamper crooks.

The exceptions to this rule have been among the state-chartered FAIR plans, for one excellent reason: FAIR plan insurance is mandated for poor neighborhoods, and profit is not its goal. FAIR plans are supported by funds from all insurance companies, as a sort of high-risk pool; they nearly always lose money. As a result, they have become a prime target of arsonists for profit. Even so, the FAIR plans didn’t fight back until fairly recently. The most encouraging sign of change has been in Massachusetts, where Boston-area arson ring of 33 people were indicted by the state attorney general. According to Mark Zanger, an investigative reporter who uncovered much of the information leading to those arrests, the Massachusetts FAIR plan spent between $700,000 and $2 million to finance that probe.

One problem is that most insurance companies do little investigations of properties on their won before insuring them. Lloyd’s of London, which has reportedly been victimized by arson fraud in New York and elsewhere, has just begun to probe some of its fire claims but only after enormous losses.

And there seems to be clear evidence that at least some insurance claims adjusters are in league with the arsonists. Others may simply turn a blind eye to suspicious evidence. The Village Voice has learned, for example, that Bald’s insurance adjuster has continued to settle claims on his properties long after he was indicted for arson.

Without some cooperation or willful ignorance on the part of insurers, how could landlords insure properties for hundreds of thousands of dollars more than the purchase price or assessed value? One law enforcement agent told us privately that he believes insurance agents are actually running the Bronx and Brooklyn arson rackets. But because it is so difficult to convict a torch, let alone a landlord, it’s hard to “flip” a witness who will testify against insurance adjusters—or mob figures—in court.  

Arson is the cremation ritual of a diseased housing system. A striking fact for anyone who tours a New York neighborhood ravaged by arson and abandonment is that there are still many people living there—in public housing. The private sector has been unable to create an attractive level of profit from low-income housing (without subsidies or tax shelters) for decades. In part, this has been caused by rising costs, including interest rates, fuel, and labor. In part it has been caused by the continuing lack of sufficient income for the poor and working poor to pay higher rents. (Contrary to neo-conservative mythology, these problems have not been caused by rent controls: they exist in cities without rent controls, and the situation is worst in neighborhoods where rent-control prices would be well above market levels.)

There is simply no incentive for banks, landlords, insurance companies, or anyone else with money to invest in building or rebuilding dwellings at reasonable rents. So landlords are encouraged to let their low-income housing fall apart until they’ve milked the last dollar of rent, and evaded every dollar of taxes. Ultimately, the easiest and most lucrative step is to burn it, or sell it to someone else who will burn it. In housing, the final stage of capitalism is arson.Top of Form

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Are Mission Landlords Really Burning Their Own Buildings?: An Analysis

by

Joe Kukura

in

News

on Nov 25, 2015 10:00 am

Photo: drew7862/Instagram

This month’s

fire at 16th and Shotwell

again revved up suspicions that the Mission District residential fires, now at least eight and counting so far this year, are suspicious malfeasance by profiteers in the stratospheric SF real estate market. A full

67 percent of the comments on SFist’s breaking news article about that fire

were devoted to debating the conspiracy theory that landlords might be burning their own buildings to vacate rent-controlled tenants or to try and sell the properties for, say,

a cool $20 million

.

“It’s a question that I get asked repeatedly,” Mission District supervisor David Campos (D-D9) told SFist. “Given what’s happening in the neighborhood, given the fact that there is a

history of arson in the Mission going back to the 70’s

where there was actually evidence of arson, I think that we have to do a better job of providing information to the public because this question keeps coming up.”

So we decided the chart out the San Francisco fires of recent years to see if there are patterns in certain neighborhoods related to those neighborhoods’ real estate value. This article has no inside information or new evidence on any specific fire. Instead, we take a broader approach and analyze data on the frequency of San Francisco fires, their locations, and any possible correlations between property value increases and fire incidence.

Does The Mission Have More Fires Than Other SF Neighborhoods? No

Image: SF Public Safety and Neighborhood Services Committee

Here we see SFFD call distribution by supervisor district from 2012-14. (Clarification added: This chart includes all SFFD calls, including those for fires, heart attacks, drug overdoses, kittens in a tree, etc. For ‘fire only’ data, see the chart below “Working Fires and Greater Alarm Fires”.) That big spike in the middle is not the Mission District!

That big spike in the middle is

District 6

— SoMa, the Tenderloin and Mission Bay. The Mission is

District 9

, third one from the right, with far fewer SFFD calls than District 3 (Financial District, North Beach, Chinatown) and District 5 (Hayes Valley and the Haight).

There is significant statistical noise in that chart, since as previously noted not all calls to SFPD are for fires. But the statistical noise would apply equally to all districts, so the overall trends appear valid.

And the Mission does have old buildings. “The Mission District is comprised in large part of older, wood-framed buildings,” Fire Department spokeswoman Lt. Mindy Talmadge told SFist. “Many have not had the electrical work updated, let alone any structural updating.”

Conspiracy theorists can still point out that

SoMa and Mission Bay are also seeing a lot of luxury condo development

, hence District 6’s frequency of fires, and that the fire locations do loosely correlate with

the sub-areas seeing the steepest rent increases

. They can also note correctly that a higher percentage of San Francisco’s fires are occurring in the Mission these days, as you’ll notice below.

Have Fires Become More Frequent in the Mission During This Boom? Yes

Image: SF Public Safety and Neighborhood Services Committee

Since the start of this current tech and property-value boom, the Mission has seen a larger percentage of San Francisco’s fires than before the boom. Above we see fires by district by year, going back to 2004 (the data only goes up to March 2015). Notice how the uptick in the percentage fires in District 9 coincides with the beginning of the tech boom in 2011.

Sure, that percentage is a return to 2006-era levels. And maybe 3 or 4 percentage points is just standard deviation. But certainly SFFD trucks are leaving fire stations for Mission District fires at a higher rate than they were back in 2009

when unemployment was at 9%

.

But Do Fires Increase When SF Property Values Rise? No

Again referencing the above Arson Task Force chart, notice how the grand total of all San Francisco fires has decreased most years since 2004. That period covers a crash (2008) and a boom (2011-2015). San Francisco fires have decreased consistently over the last ten-plus years, regardless of property values or economic conditions.

Arson is serious and scary business. What these charts do not show you is the 70 people who died in those fires between 2004 and 2014, plus however many we will end up losing this year.

These numbers could still either support or debunk the landlord arson conspiracy theory, depending on your perspective. Debunkers can note that fires have historically decreased and that Mission District fires are less common than SoMa/Mission Bay fires or Financial District/North Beach fires. Conspiracy theorists can point out that Mission District fires are indeed on the rise in the current real estate environment. So both sides have legitimate points to argue over our Thanksgiving get-togethers. But when having these arguments, please don’t leave stove burners unattended or allow grease to drip on open flames.

Arson, Urban Economy, and Organized Crime: The Case of Boston
Author(s): James Brady
Source: Social Problems, Vol. 31, No. 1 (Oct., 1983), pp. 1-27
Published by: Oxford University Press on behalf of the Society for the Study of Social
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SOCIAL PROBLEMS, Vol. 31, No. 1, October 1983

ARSON, URBAN ECONOMY, AND ORGANIZED CRIME: THE CASE OF BOSTON*

JAMES BRADY

Director, City of Boston Arson Strike Force;
University of Massachusetts, Boston

The deadly crime of arson is spreading at an alarming rate in the United States, leav-
ing whole city neighborhoods devastated in its wake. Traditional methods of dealing
with the problem are based on a view of arsonists as pyromaniacs or vandals. This
paper shows a clear link between the policies of banks and insurance companies,
on the one hand, and the arson-for-profit schemes of organized crime, professional
arsonists, shady landlords, and corrupt public officials. I develop a sociology of
arson, in the process analyzing several kinds of arson and describing specific bank
investment practices and insurance industry underwriting policies which directly
contribute to the problem. I conclude by assessing proposed new remedies for arson
in the light of the conflicting interests of corporate institutions, on the one hand, and
tenants and homeowners on the other.

We are accustomed to think of fires, like automobile crashes, as tragic accidents caused by
carelessness or bad luck. While it is recognized that some blazes are deliberately set, the public
has long been assured by fire officials, psychiatrists, and criminologists that such fires are the

isolated acts of pathological “pyromaniacs” or juvenile “vandals” and pose no serious threat to
cities guarded by modern fire-fighting companies. Unfortunately, the dramatic upsurge of arson
fires in the United States since 1960 has made a shambles of these assurances. Arson now out-

strips all other “index” crimes in terms of injuries, deaths, and property losses, forcing us to re-
think both our current control measures and our notions about the causes of this menace.

INTRODUCTION: THEMES AND METHODS

This study breaks new ground in developing a sociology of arson, using demography and
urban economics. It demonstrates that arson is essentially a consequence of economic decisions
undertaken by the banking, real estate, and insurance industries, as well as the racketeering op-
erations of organized crime syndicates. This is not to say that “pyromaniacs” and especially “van-

dals” do not set a substantial number of fires in addition to those set by more sophisticated pro-

fessional “torches”- the preferred employees in arson-for-profit schemes. Nor do I mean to
imply that bankers, realtors, and insurance agents are necessarily joined in conscious conspiracy

with gangster syndicates, though this is clearly the case in some instances.1
I argue that routine profit-making practices of banks, realtors, and insurance companies lead

to the processes of abandonment, gentrification, and neighborhood decline which destabilize
urban communities and provide the context and motivation for several varieties of arson. Or-
ganized crime syndicates, professional firesetters, and corrupt officials all figure prominently in
arson-for-profit schemes, but the urban economic context also lies behind the fires of vandals
and small property owners desperate to escape losing investments by means of convenient fires.

* An earlier version of this paper was presented at the national meetings of the American Society of Crimi-
nology, Toronto, November, 1982. The author thanks his police and civilian colleagues of the Boston Arson
Strike Force, particularly Michael N. Moore. Correspondence to: Department of Sociology, University of
Massachusetts, Boston, MA 02125.
1. The symbiotic and sometimes consciously conspiratorial ties between legitimate corporations and
gangster syndicates is hardly peculiar to arson. Scholars probing such criminal activities as narcotics traffick-
ing, gambling, labor union corruption, loan sharking, and selling stolen goods have discovered the same
kinds of links between racketeering, official corruption, and corporate profiteering. See Block and Cham-
bliss (1981), Chambliss (1978), and Grutzner (1973).

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2 BRADY

In advancing this social economy of arson I rely mainly on original materials drawn from my
study of arson, neighborhood development, and organized crime in the city of Boston.2
The Boston data is drawn from several years of personal experience as a researcher and activist
with anti-arson community organizations in the fire-ravaged Dorchester ghetto where I live and

work. I am also director of the City of Boston Arson Strike Force, a special team of civilian
experts and police detectives appointed by the mayor and charged with the investigation of local
arson-for-profit syndicates. Our collected evidence was presented to the Suffolk County Grand
Jury in April, 1983, preliminary to indictments and prosecution by the District Attorney. For

obvious reasons, neither the targets of the Strike Force nor any of the confidential evidence col-
lected in our work will be disclosed in this article.

The materials presented in this paper are derived entirely from publicly available sources, in-
cluding the local press, television documentaries, and especially the scattered records of property
transactions. These transactions include sales and resales of buildings and land, insurance pol-
icies and brokerage arrangements, mortgage lending, papers of incorporation for trusts and
holding companies, taxes, housing and land court decisions, housing inspections, fire code in-
spections, and fire histories of individual buildings and landlords. These records are drawn espe-
cially from the Suffolk County Registry of Deeds, the Boston Rent Control Administration, the
Boston Buildings Department, the Boston Housing Authority, the Boston Office of Community
Development, the Metropolitan Area Planning Commission, the Boston and Lowell, Mass., Fire
Departments, the Massachusetts State Commissions for Banking and Insurance, and the Massa-
chusetts Secretary of State. I share with my police and civilian Strike Force colleagues the hope
that we shall soon obtain criminal convictions of at least one major organized crime arson ring
operating in Boston. Afterwards, it will perhaps be appropriate to divulge some of the investiga-
tive methods and findings of this effort, which combines police work and sociological research.

It might be helpful to define several terms here. Arson refers to the intentional destruction

of property by fire. Redlining refers to the mortgage-lending practices of banks, and particularly

to the illegal practice of denying mortgage loans for properties located in districts inhabited by
poor and minority populations. Gentrification refers to the migration of more affluent profes-
sionals and middle-class families from the suburbs back to selected districts in the central city.

Both of these phenomena are characteristic of Boston’s contemporary social dynamic and central
to an understanding of arson.

Jurisdiction over arson investigation has been traditionally the almost exclusive domain of
local fire departments and their semi-specialized arson squads (though the latter often include
a few local police detectives, since firefighters do not usually have the power to arrest). However,

since 1972 the Federal Bureau of Alcohol, Tobacco, and Firearms (ATF) has been authorized
to investigate fires in commercial buildings if an “explosive device” is suspected as the cause of
the fire; since 1982 the ATF’s jurisdiction has been broadened to include any commercial build-
ing destroyed “by explosion or by fire” (Murphy, 1983). The ATF has established teams of arson
investigators in major cities across the United States who are supported by sophisticated, mobile,

arson-detection laboratories; nevertheless, the organization still responds only to a small percent-
age of the total arson incidents in commercial buildings.

The United States Fire Administration (USFA) supports some limited research on fire scene
investigation, insurance fraud techniques, and related arson topics, and provides standards for
the modernization of local fire departments. The National Fire Protection Association (NFPA),
largely supported by the insurance industry, also engages in periodic evaluations of the local fire
departments, publishes some of the more important arson statistics and research findings, and

2. A parallel view of arson-for-profit racketeering in Tampa, Minneapolis, and Rochester, New York, is
provided in U.S. Congress: Senate (1979).

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Arson in Boston 3

is largely responsible for the drafting of fire codes used in building construction throughout the
United States.

The discussion which follows is divided into four main sections. First, I survey the growth and
impact of arson in the United States, the failure of law enforcement, and the contribution of
deviance theory to our misunderstanding of the problem. Second, I develop a case study of arson

patterns in Boston and link this to a discussion of urban speculation, bank mortgage lending pol-
icies, insurance industry underwriting practices, and demographic shifts as predictors and moti-

vators for arson. Third, I discuss major varieties of arson for profit in Boston and present the
property transactions of several arson-prone speculators and one local bank whose “problem
properties” have a tendency to burn. Fourth, I describe contemporary arson control reforms and

assess their prospects for success against the competing interests of the banking, real estate, and
insurance industries. I also describe emerging movements of tenants and homeowners in threat-
ened neighborhoods.

OVERVIEW: ARSON IN U.S. CITIES

From 1951 to 1977 the number of arson incidents reported by local fire departments across
the United States to the National Fire Protection Association (NFPA) increased by over 3,100
percent, from 5,600 cases to over 177,000 cases (Carter, 1980:41). In 1964 arson was reported
to have caused less than 3 percent of all fire losses (Carter, 1980:40); by 1981 it had risen to 30
percent (Karter, 1982:68). The federal Law Enforcement Assistance Administration (LEAA) esti-
mated arson losses at closer to 40 percent of total fire damages in 1977 (Boudreau et al., 1977:5;
Economist, 1977:11); this higher estimate is corroborated by the Aerospace Corporation report
to the Senate (U.S. Congress: Senate, 1979). In 1981 local fire departments estimated that “large
loss” arson fires (those causing over a million dollars in damages each) resulted in over $1.5
billion in structural damage (LeBlanc and Redding, 1982:32). The National Insurance Service
estimated that the industry paid approximately $5 billion in claims submitted in 1979-80 for
arson-related fire losses (Karter, 1982; Lima, 1977b).

In 1981, 6,700 civilians died in burning buildings in the United States (Karter, 1982:68), three
times more than the number killed by handguns (LeBlanc and Redding, 1982:50). Arson ac-
counts for an increasing proportion of these fire deaths. During each year between 1977 and
1980, about one thousand civilians and another 120 firefighters were killed in deliberately set
fires; an additional 30,000 civilians and 4,000 firefighters were injured (Carter, 1982; Fire and
Arson Investigator, 1981:14).

These statistics understate the seriousness of the situation. Local fire departments count as
“arson9” only those fires whose origins are initially regarded as suspicious by firefighters on the
scene and which are subsequently `–vestigated by the local arson squad and judged to be “in-
cendiary” or “suspicious.” The standards of evidence required for these classifications are high,
and a number of questionable fires are simply classified as “undetermined.”3 Still others are
wrongly described as accidents. There is wide agreement among independent investigators that
most of these fires are also arson.4 Studies prepared by the LEAA count half of all “undeter-
mined” fires as arson (Boudreau et al., 1977:1). Such prominent pyrotechnic experts as former
chief James Scollins of the Lynn Fire Department, Harvey Schmidt of First Security Investiga-

tors, Inc., Robert Carter of the National Fire Protection Association, and William Murphy of

3. Based on an interview (Nov. 17, 1982) with Robert Carter, former Chief Arson Investigator, Common-
wealth of Virginia and presently Research Analyst at the National Fire Protection Association, Quincy,
Massachusetts. His assessment is corroborated by my own professional experience in the field, and by that
of every other investigator I have encountered.
4. My views on this are shared by John White, Fire Marshall and commander of the Boston Fire Depart-
ment’s arson squad. White is the liaison between the Strike Force and the fire department.

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4 BRADY

the ATF arson team all concur that an enormous number of deliberately set fires are wrongly
classified as “electrical,” “children playing with matches,” or “careless disposal” (as in trash set
afire). They also concur that damages are greatly under-reported even when arson is acknowl-
edged as the cause, since fire departments only consider fire damage to structures and do not
consider either smoke and water damages, or the destruction of building contents. Actual insur-
ance payments (usually based on replacement costs for all damaged items) typically amount to
between three and five times the loss estimates reported by fire departments, as attested to by
the above experts and substantiated in my own investigative experience.’
The under-reporting of arson and fire damages is partly due to the shortages of staff and
equipment which plague many arson squads and make it impossible to seriously investigate more
than a fraction of the fires which are initially called to their attention (U.S. General Accounting
Office, 1978). Fire chiefs are under pressure from mayors to show that fire protection has not
declined despite cut-backs in city fire department budgets, as exemplified by department claims

during the recent “proposition 2V2” fiscal crisis in Boston (Harvey, 1981:6; Radin, 1981:3). The
reputation of a city’s fire protection services and the local department’s evaluation by the NFPA
affects both insurance premium rates and the bond ratings from municipal securities, which must

be sold to balance mounting budget deficits (National Fire Prevention Administration, 1976).
Like other social problems, the cost of arson is not shared evenly. While national statistics
are not available, the common impression of investigators and journalists alike is that most of
those killed are poor people and minorities living in slum districts of urban centers (Lima, 1977b;
Schall, 1977). The victims are often children or elderly people who are not quick enough to
escape the flames. Typically, they die choking in their beds or trapped on staircases, the latter
a favorite spot for arsonists to do their work because they provide an easy escape route and good
updrafts for spreading the flames (ABC, 1978; Fraker, 1977).
Declining urban neighborhoods, particularly in the older cities of the Northeast and Midwest,
are the most common arson sites (Karter, 1982). New York City recorded more than 40,000
arson fires resulting in over 180 civilian deaths from 1975 to 1978 (Catalina, 1979). The city’s
fires have been concentrated in the heavily black and Hispanic South Bronx district, which was
gutted by more than 30,000 arson fires from 1970 to 1979 (Hanson, 1980). In New Jersey, arson
caused 168 deaths and over $96 million in damages in 1978, mainly in the ghettoes of Hoboken
and Patterson (U.S. Congress: Senate, 1979). Denver’s central district was scarred by more than
3,000 arson fires in 1971-76, which destroyed 544 buildings and caused over a million dollars
in structural damages (MacDonald, 1977).
The response of law enforcement agencies to the arson problem does not inspire confidence.
Throughout the mounting arson wave of the 1970s, the Federal Bureau of Investigation (FBI)
continued to list arson as a low priority offense, along with drunk driving and gambling; it final-

ly added arson to the list of “index crimes” in 1981 on a provisional basis (Campbell, 1981). Local

police departments reported in 1977 that less than 9 percent of all reported arson incidents re-
sulted in an arrest, while less than 2 percent ended with a conviction (Boudreau, 1977:30). Fed-
eral budget allocations show that in 1977, only $1.7 million of the Law Enforcement Assistance
Administration’s budget of $2 billion was set aside for anti-arson programs, or less than 0.1 per-
cent (ABC, 1978; U.S. Congress: Senate, 1979). This was increased to $17 million by 1980, but
was cut back to $5 million by President Ronald Reagan’s administration in 1982 (Gest, 1983).

5. Based on presentations made by Scollins, Murphy, and Schmidt at the Massachusetts Attorney General’s
Conference on Arson held at Worcester, Massachusetts, February 23, 1983. In addition I interviewed three
of these experts during January and February, 1983, in the course of liaison responsibilities for the Boston
Arson Strike Force. I interviewed Carter extensively at the National Fire Protection Association at Quincy,
Massachusetts, on November 17, 1982.

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Arson in Boston 5

MISUNDERSTANDING ARSON: THE LEGACY OF DEVIANCE THEORY

Solving arson, like any other crime, requires both sufficient resources and a logical theory
which can link the available evidence and point to a particular suspect or a correct enforcement

policy. It is not enough for investigators to uncover the right clues; they must also set aside the
wrong ones. A “cold trail” can be particularly deceptive when it is well worn by long investigative
tradition and well marked by orthodox criminological theory. Unfortunately, the trail followed

in most analysis and investigation of arson is both “cold” and circular.
In the United States, arson has long been the almost exclusive concern of local fire depart-

ments; and arson squads in those departments have typically served as a sort of bureaucratic
“pasture” for older firefighters and those no longer fit for active fire duty. Training for these
squads has been limited and largely confined to forensics and pyrotechnics. In essence, arson
squad investigators are taught to approach each fire as an individual technical problem whose
solution lies in identifying the means and method of “ignition” found in the rubble the morning

after. Once this evidence has been collected and any available eyewitnesses have been questioned,

the arson squads consider their job done. If they suspect a particular person set the fire, squad
members may later spend long hours in clandestine surveillance of that individual (Associated
Press, 1981).

But there is a great deal of difference between locating the origin or even the “torch” for a
particular fire and understanding the source of the arson problem. Fire department officials have

little grasp of organized crime and even less appreciation of the complex socio-economic pro-
cesses which lead to abandoned property, dramatic demographic changes, and ultimately arson.
None of these larger issues seem relevant so long as arson is viewed as a crime without rational
motive. Criminal investigation aims simply at linking physical evidence to particular arsonists
whose impulsive, disturbed behavior makes them all the more elusive and unpredictable.

The dominant popular image of the arsonist is the classic “pyromaniac” who masturbates
while watching the soaring flames from the shadows. While this portrayal has been slightly ex-
panded to include the “juvenile vandal,” arson is still widely regarded as a crime of rage, jeal-
ousy, mental disorder, and especially sexual perversity (Battle and Weston, 1975:91; Witkin,
1979). This image owes a great deal to the rather dubious contributions of Sigmund Freud.
Though Freud actually examined few pyromaniacs, he wrote extensively on the subject, describ-

ing them as sexually immature or homosexually inclined psychotics or adolescents. His conclu-
sions, based largely on speculation and a reading of mythology (Freud, 1932:405), formed the
basis of most later psychiatric and criminological work on pyromania (Macht and Mack, 1968;
Yarnell, 1940).

Contemporary clinical research, invariably based on examinations of only a few maladjusted
adolescents or adult psychotics, continues to reinforce the Freudian image. Hurley (1969:4)
claims “arson is often a manifestation of mental abnormality … the result of unconscious sexual
conflict or as obsessive-compulsive or passive-aggressive behavior.” Scott (1974) discusses arson
as a crime of revenge or perversion committed by psychotics, alcoholics, homosexuals, and mal-

adjusted children, though he concedes that “arson for profit” might be the motive for a few of-
fenders. Inciardi (1970) concludes that most of the 138 imprisoned arsonists he studied were pri-
marily motivated by sexual excitement or the desire for revenge, while only 7 percent burned
buildings for profit. The latter he regards as an anachronism harking back to the 1930s “when
arson was associated with organized crime” (1970:145). MacDonald (1977) also depicts arsonists

as compulsive pyromaniacs, sexually excited by fire, but otherwise impotent, prone to bedwet-
ting, transvestite behavior, and collecting obscene magazines.

The violent subculture theory is essentially an extension of the traditional explanations of
arson as the product of individual deviance. However, the subculture theories regard whole com-
munities – particularly urban ghetto dwellers – as prone to a variety of deviant behavior, includ-

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6 BRADY

ing arson (Banfield, 1970; Miller, 1968; Moynihan, 1970). Both sorts of deviance theory regard
arson as an irrational act, undertaken by pathological actors, for a variety of perverse individual
or collective impulses. Both explanations find wide acceptance among officials responsible for
combatting arson and are clearly reflected in unsuccessful anti-arson programs (Battle and
Weston, 1975; Witkin, 1979).
There is a disturbing circularity in the deviance theories and the anti-arson programs which
are based upon them. Researchers draw an image of the arsonist from the composite characteris-
tics of those few wh6 were captured and imprisoned. Enforcement agencies aim their investiga-

tions at the “sort of people” identified by researchers as arson prone (Fire and Arson Investiga-
tor, 1981). Orthodox assumptions about the motives and actors involved with arson remain
largely unquestioned.

THE DEMOGRAPHY OF ARSON IN BOSTON

Boston burns almost nightly in deliberately set fires. From 1978 until the end of 1982 the city

was scarred by more than 3,000 “incendiary” and “suspicious” fires. In 1981 and 1982 alone they

caused more than $4.5 million in property losses and killed about 60 people (Gest, 1983; Schar-
fenberg, 1980; Slade, 1978; Vennochi, 1982). Local fire officials view these incidents as the work

of “bored juveniles” and “firebugs” (Jahnke, 1982). They rely on expanded forensic laboratories,

neighborhood arson watch programs, and rewards to control the mounting fire problem (Ma-
honey, 1982; Osgood, 1982). Not surprisingly, this approach has utterly failed. George Paul, the
Boston Fire Commissioner, said, “There’s no rhyme or reason to this, no pattern. We’ve plotted
space, time patterns, nothing shows up” (McMillan, 1982:23).

There is, nevertheless, a pattern in Boston’s fire history. Maps 1 and 2 show that arson is
tightly concentrated within certain poor Boston neighborhoods, particularly Roxbury, North
Dorchester, East Boston, and Jamaica Plain. These districts are largely populated by blacks,
Hispanics, and poor Irish and Italians. If pyromaniacs or juvenile vandals set these blazes in
random irrational acts, as local officials insist, why do the arsonists so carefully respect neigh-

borhood boundaries? If “bored youths idled by school vacation” (Dillon, 1982:4) were respon-
sible for the wave of 300 arson fires in the summer of 1982, then must we assume that juveniles
are bored only in certain districts?

Arson is more common in buildings owned by absentee landlords than in owner-occupied tene-
ments in the same neighborhoods (National Urban League, 1971). Arson is rare in public hous-
ing projects, which are located in the heart of Boston’s fire-ravaged districts and which house
the poorest, most disproportionately non-white, single-parent families. These are, presumably,
the angriest, most potentially “socio-pathic” people in the city. Rates of street crime in the hous-

ing projects are the highest in the city, so serious indeed that the buildings were placed in re-
ceivership by the federal courts during 1982-83 while security arrangements for tenants were im-

proved.6 Yet the Boston Housing Authority does not have a significant arson problem, with only
four arson fires reported for 1981 in buildings which housed over 13,000 people (Fox, 1983).

Finally, incendiary techniques employed by arsonists have become increasingly sophisticated
(Horn, 1976). Pyrotechnic experts draw particular attention to the 1982-83 blazes set in Rox-
bury’s Highland Park, along the South Boston waterfront, and those straddling the new South-

west Corridor mass transit construction zone.7 Robert Carter8 of the NFPA described these fires
as follows:

6. Based on an interview with Jonathan Fox, Fire Safety Coordinator, Department of Public Safety, Boston
Housing Authority, October 26, 1982. Fox also provided extensive notes on these matters.
7. Based on an interview with William Murphy, Federal Bureau of Alcohol, Tobacco and Firearms,
November 11, 1982, and an interview with Robert Carter, November 17, 1982.
8. Based on an interview with Robert Carter, November 17, 1982.

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Arson in Boston 7

MAP 1

Arson and Abandonment in Boston

Legend

Each dot represents the location
of one suspicious fire in 1979.

Shadings represent the total
number of buildings razed or
boarded up by city authority from
1975 to 1982.

0-49 buildings abandoned

50-99 buildings abandoned

100-199 buildings abandoned

200-550 buildings abandoned

Eac do rereens heoato
of:;-:?. one suspiciousfren199
Shadngs eprsentthe ota
number of bildnsrzdo

borddupb ct atort fo
975 to192

0-49 bulig bnoe
50-9 bulinsaanoe

100?:-?-.:-199 bu\::: i ldng ba do e

200-550ii: bu::~ ild i ngs abandoned:

Sources

City divided according to ward boundaries used by the city’s buildings department.

Arson fire locations plotted by Michael Moore, Boston Arson Strike Force.

Abandonment data from monthly and annual reports of the city’s buildings and community development depart-
ments, available from Boston City Hall.

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8 BRADY

MAP 2

Arson and Redlining in Boston

East Boston

Charlestown …….

Boston Proper

Aliston/BrightonASort Back BaySouth Boston
Jamaica Plain

R n eNorth Dorchester

l ee.f.i i v s t et.n.o v n

West Roxbury –tional mortgages per dollar

.. M . L eg en

Hyde Park deposited, of the 10 largest banks
reporting to the state’s Commis-
sioner of Banks from 1975 to

1978.

$0.20-0.35

$0.15-0.19

$0.10-0.14

$0.05-0.09

……. J. ………
…… ….; ??::: ~?:??:. ???:x.:::??::::

Roxbury: ~~~~ ~
…… …………… W ,1 ~?

…………… .. …..?~i?: Jamaica Plain~,~
~.i~ :j ~ :~,?.?. ………….;;

sinro aksfo 95t

:r-::: : : : :::::: II–1978.-

$0.0-.3

-$0.15-0.19

– r\ ~-~ S$0.10-0.14te
$00-00

Sources

City neighborhood divisions from the Boston Redevelopment Authority.

Arson fire locations plotted by Michael Moore, Boston Arson Strike Force.

Bank reinvestment patterns from Greenwald (1978).

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Arson in Boston 9

These have been some of the most professional jobs we’ve seen in the city. Extensive quantities of hard-to-
detect accelerants, such as paint thinner, have been used, typically placed in several waxed-paper con-
tainers positioned at key structural members of the buildings and linked together with trailers (streams)
of accelerant, leading to a single ignition point, sometimes using photographic paper as a fuse device which
leaves little residue.

Are we to believe that psychotic “pyromaniacs” or malicious juvenile vandals would employ such
systematic and complex means of setting fires?

The answer, of course, is that arson is not primarily a result of deviant perversion, juvenile
rage, or boredom. More complex economic motives are involved, which have to do with where
buildings are situated and who owns them. I have discovered several discernable varieties of

arson in Boston, all of these directly or indirectly linked to patterns of real estate speculation
and to decisions aimed at profit-making in what are essentially business transactions.

THE ROLE OF BANKS: ARSON AND ABANDONMENT

Arson is both a barometer of changing values and a mechanism for accelerating changes in
property values and in the social economy of the city. More than half of Boston’s 3,000 arson
fires from 1978 to 1982 occurred in abandoned buildings.9 The relative frequency of abandon-
ment in the city’s neighborhoods can be ascertained by analyzing the monthly reports of city de-

partments charged with boarding up or razing derelict buildings. The abandonment pattern cor-

responds closely to the arson distribution pattern as represented in Map 1. Across the city’s 22
wards, an average of 41 buildings per ward were razed or boarded up from 1975 to 1982; in the

depressed North Dorchester and Roxbury districts, there were between 220 and 540 buildings
razed per ward.10

Abandoned buildings have long been recognized as a problem in urban neighborhoods, where
the phenomenon is closely associated with declining local opportunities and mounting crime. An
earlier generation of urban planners at the Federal Housing Administration (FHA) described
abandonment as part of the “natural” process of “neighborhood evolution” wherein “high-rent
neighborhoods move slowly but predictably across the urban landscape, creating a gravitational

pull on the middle class, leaving behind the structure by which slums are made” (Hoyt, 1939:26).
More recently, U.S. Housing and Urban Development analysts have attributed abandonment to
the problem of “urban blight” brought on by the “influx of minority populations” (Real Estate
Research Corp., 1975:22). Such prominent urban planners as Sternleib et al. (1974:33) also em-
phasize that “abandonment is a contagion problem” which is “most frequent in structures inhab-
ited by blacks and Puerto Ricans.”

These attempts to explain abandonment clearly echo the deviant subculture theory and, in
their persistent use of language borrowed from physics or biology, give the impression that
neighborhood decline is somehow natural or inevitable, or that poor and ethnic people are in-
fected with the problem and are therefore responsible for it. The simple correlation of abandon-

ment rates and minority census figures in fact proves nothing about why housing deteriorates;
but such “explanations” again draw strength from implicit racist sentiments. Any further analysis
of the problem is precluded by this orthodoxy, which is little more than a tautology.

There is a great deal more to be said about abandonment. National studies show that it is not

minority landlords who most frequently abandon their buildings, but rather white landlords – in

9. Joseph O’Keefe, Massachusetts State Fire Marshall, on “People are Talking,” WNEV-TV, Boston,
November 11, 1982.
10. Statistics on razed and boarded-up properties drawn from tabulated monthly reports filed by Boston
Buildings Department and Boston Office of Community Development at Boston City Hall. Note that these
statistics are compiled by ward divisions, while the bank reinvestment statistics computed by Greenwald
(1978) and presented in Map 2 are compiled with “neighborhood” districts drawn by the Boston Redevelop-
ment Authority.

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10 BRADY

particular absentee landlords with high incomes who own a number of buildings and who hold
property titles indirectly through holding companies and real estate trusts (Sternleib et al., 1974).
Studies of abandonment in New York City, Cleveland, Chicago, Detroit, and Los Angeles con-
sistently demonstrate that abandonment patterns follow closely the discriminatory mortgage-
lending policies of banks which deny credit to certain districts of the inner city in order to invest

in more profitable suburban real estate (Linton et al., 1971; Loyola Law Journal, 1975; National
Urban League, 1971). This disinvestment process is known as redlining. Devine (1973) docu-
mented the scale of this destructive redlining pattern in New York’s South Bronx district, where

the largest local banks systematically drained the district of capital by exporting local deposits
and assets to investments in the suburbs. Berwyn (1974) showed that for every dollar deposited

in major banks located in Chicago’s predominantly black districts, less than eight cents was rein-

vested by those same banks in conventional mortgages loaned in those areas-though 31 cents
was used by those banks to provide mortgage supports for the suburbs.
In Boston, the same pattern is evident. The State Commissioner of Banking, Carol Greenwald
(1978:7), using statistics provided by the banks, found that for every dollar deposited in the city
branches of the 10 largest banks from 1975 to 1978, the banks reinvested only 10 to 17 cents
in conventional mortgages within the city. Some urban districts fared far worse than others: East
Boston received between three and 11 cents, North Dorchester between five and 11 cents, Rox-

bury between four and 11 cents.
Redlining is a clear violation of both a bank’s obligations, contained in state and federal chart-
ers, and the provisions of the Community Reinvestment Act adopted by the U.S. Congress in
1978 (Taggert, 1977). Yet no bank officers to my knowledge have ever been prosecuted for viola-

tion of the law or their local charters (Greenwald, 1980). Not all banks are equally involved with

redlining. Greenwald (1978) found that the largest banks were the ones most systematically en-
gaged in redlining. It should be noted that banks use redlining not so much to avoid losses as
to maximize profits. In Boston the banks have consistently made profits from their investments
in every section of the city, but suburban investments are more profitable (Metropolitan Area
Planning Council, 1980).
Redlining is devastating to a neighborhood. Many small businesses are forced to close when
they are unable to get bank loans (Bradford and Rubinowitz, 1975). As property values decline,
landlords stop repairing their buildings and eventually abandon them when they become unin-
habitable (Newfield and DuBrul, 1977; Stone, 1978). A severe housing shortage develops. In
Boston, where housing for low- and moderate-income tenants is extremely scarce, the city
authorities estimate that there were approximately 3,000 abandoned buildings in 1974 and nearly
5,000 in 1982 (Boston Redevelopment Authority, 1974; Flynn, 1982).
Arson has been concentrated in those Boston neighborhoods which have been most drained
of capital and mortgage loans. The Boston Fire Department reports that there were an average
of 12 arsons per ward across the city in 1980; but wards 14 and 15 in North Dorchester and Rox-

bury had a combined total of 82 arson fires, while ward 1 in East Boston had 21 arson fires.
Two sorts of arson fires can be seen as a direct result of redlining, and these might be described

as escape fires and vandal fires. Escape fires are arranged by landlords and small business owners
to collect insurance premiums on unprofitable properties and real estate investments. Vandal
fires occur after owners abandon their properties and take a tax write-off on their losses. Their
buildings become a hangout for juvenile gangs and, ultimately, a target for vandalism. Of
course, redlining is not the only reason for neighborhood decline, which leads to vandal and
escape fires; but redlining accelerates the downward spiral and makes recovery almost impossible
(Duncan, 1975; Greenwald, 1980; Public Interest Research Group-District of Columbia, 1975).
While redlining has been found to be a common practice among the larger banks and an indi-
rect contributor to arson, some individual banks and bank officers play a direct role in arson

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Arson in Boston 11

through their involvement with organized crime’s arson-for-profit syndicates. Before discussing

specific examples of collaboration between bankers and gangsters, I consider the general model
that links criminal syndicates to redlining and abandonment.

BANKERS, GANGSTERS, AND PROBLEM PROPERTIES

Foreclosures on unpaid mortgages are one of the side effects of redlining. Many property own-

ers in redlined areas cease making mortgage payments on losing investments. By the time foreclo-

sure procedures have been completed and the bank seizes the buildings, the property has fre-
quently been neglected and even abandoned for months or years. Such derelict buildings, hardly

an attractive item on the real estate market, represent a potential loss for the banks.
Enter the organized crime racketeers. They offer to buy the “problem buildings,” often at a

price far greater than true market value, on condition that the bank write out a new mortgage
for close to the full purchase price, and sometimes more, to cover the cost of “renovation.” Thus,

the racketeers acquire large numbers of properties with little investment of their own capital. In
some cases they can further increase their “leverage” by arranging second, third, or fourth mort-

gages whose total value far exceeds the original inflated purchase price. Backed by mortgages
from a major bank, it is fairly simple to arrange insurance coverage for the buildings at a level
well above the total value of the mortgages.

The racketeers then hire professional “torches” to set fire to the over-mortgaged and over-
insured buildings. Often a series of fires of escalating scale are set to net the owner several partial

insurance payments before the building is totally destroyed in one final blaze. Racketeers’ profits
are further increased by hiring phony contractors to “repair” the fire damage. Corrupt building
inspectors file false reports, concealing the fact that repairs were never made, then another fire

is set to burn the “repaired” portion of the building.
The banks often profit more than the racketeers from this ruse, even without consciously

joining in the conspiracy and without violating the law. Since state laws stipulate that the insur-
ance company must pay the holder of the mortgage first in the event of a fire which destroys
the building, arson represents the “final solution” to problem properties. Fire-prone speculators
are the best possible risks for banks, since their mortgages are paid off in full and in short order.

The potential losses represented by foreclosed properties are converted into a substantial profit
for the bank because the new mortgage paid by the insurance company greatly exceeds the old
bad debt assumed under foreclosure.

The relationship between bankers and racketeers can become quite cozy as the racketeers
return again and again to the same bank and often the same loan officer. Unless bank officers

engage in conscious conspiracy to burn for profit (and there is reason for them to do so), these
transactions are perfectly legal-even if the buyer has recently been convicted for arson or has
a long history of incendiary fires. Indeed, one might argue convincingly that a bank officer who
failed to unload problem properties in such a profitable arrangement would be derelict in his
obligation to protect the interests of the bank’s shareholders.

The case of the South Boston Savings Bank, one of the largest financial institutions in Massa-

chusetts, illustrates this point. From 1970 to 1977 the bank foreclosed on 76 properties, many
of them in depressed neighborhoods. These parcels were covered by conventional mortgages
written by the bank. In the same period 39 of these properties suffered a total of 79 fires, averag-
ing about two fires per parcel. This may be compared with 69 parcels foreclosed by the same
bank in the same period for mortgages written by the bank but guaranteed by the Veterans’
Administration (VA) and the U.S. Department of Housing and Urban Development (HUD).
These latter properties were in the same neighborhoods as the first group, and their original
owners were actually poorer risks, since the VA and HUD required of them smaller initial down-
payments than the bank demanded from holders of conventional mortgages. Still, the 69 govern-

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12 BRADY

ment-guaranteed foreclosed properties suffered only 36 fires at 26 addresses, or approximately
half the rate of loss at the foreclosed properties in which the bank’s own money was at risk in
a conventional mortgage (Zanger, 1978a,b).
The timing of these fires in the South Boston Savings Bank properties is also curious. One
would expect more fires to occur in the year before foreclosure, when owners might turn to
desperate means (such as an escape fire) to recoup their losses. This is precisely the pattern in
the buildings foreclosed by the bank in which the mortgages were guaranteed by the U.S. govern-

ment. However, the reverse is the case for properties foreclosed under conventional mortgages
written by the bank. It was the new owners with properties acquired from the bank after fore-
closure who had the “bad luck” with fires – most of which occurred in the first year after resale.

Insurance payments for fires have brought millions of dollars in income to the South Boston

Savings Bank, for properties which might otherwise have represented a serious loss (Zanger,
1978b).

In 1978 the South Boston Savings Bank’s mortgage clients included many of Boston’s most
arson-prone property owners, of whom a mere dozen experienced more than a hundred sus-
picious fires from 1970 to 1977 (Zanger, 1978). The bank’s clients during this period included:
Caroll St. Germaine, convicted arsonist and murderer (over $500,000 to 1978); Russell Tar-
danico, convicted arsonist (over $730,000 in 16 mortgages to 1982); George Lincoln, confessed
“torch” and arsonist who turned “state’s witness” in exchange for immunity in a 1978-79 Boston
arson conspiracy trial (over $150,000 in five mortgages to 1978); Nicholas Shaheen, convicted
arsonist (over $100,000 in five mortgages to 1978). The bank’s president, Alfred Archibald, has
denied any knowledge that these and other fire-prone clients were “that sort of person” (WBZ,
1981), or that they had any “sort of fire problem” (Zanger, 1978a:1).

INSURANCE INDUSTRY POLICIES AND ARSON

Insurance companies in the United States paid an estimated $5 billion in arson-related losses
in 1979-80 (Karter, 1982). Yet they have not been aggressive in pressing local, state, or federal
governments to undertake vigorous anti-arson measures, such as the restriction of bank
redlining; and their internal studies of arson are generally circulated quietly within the industry.

With some important exceptions, which I discuss below, the insurance industry has not re-
sponded publicly to the arson problem.

There are three reasons for this attitude. First, the insurance companies themselves practice
redlining (McDonough, 1980). In 1968, following ghetto riots in a number of U.S. cities, the
insurance industry persuaded Congress to establish a network of FAIR Plan insurance consor-
tiums to cover high-risk districts in urban centers (Massachusetts Property Insurance Under-
writers Association, 1970; U.S. Housing and Urban Development, 1968). Under the FAIR Plans
sponsored by 26 states with large urban centers, insurance losses in the high-risk areas are shared

among all companies doing business in each state. A company’s contribution to the state’s FAIR
Plan pool is based on that company’s percentage of the total premium value of policies written
in the state (U.S. Housing and Urban Development, 1968). The creation of the FAIR Plans
accelerated the wholesale exodus of conventional insurance companies from the high-risk dis-
tricts, and the FAIR Plans were obligated to provide insurance for virtually everyone and virtu-
ally all categories of real property. FAIR Plan losses to arson grew rapidly, amounting to an
estimated $275 million for New York FAIR Plan and over $30 million for New Jersey FAIR Plan
from 1968 to 1977 (Economist, 1977:11; Higgins, 1979:18). These are substantial losses for the
FAIR Plans and their member insurance companies, but they can be simply passed along, in the
form of higher premiums charged to all of those living in FAIR Plan districts where inhabitants
cannot shop elsewhere for conventional coverage (U.S. Congress: Senate, 1979).

Second, insurance claims adjustors seldom recommend civil litigation against property owners

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Arson in Boston 13

making fire claims, even when arson for profit is suspected. The companies are reluctant to chal-

lenge claims, because they don’t want to acquire a reputation for “being tough” and risk losing
potential clients in the increasingly competitive scramble for policy underwriting. If a company
challenges a claim, refuses prompt payment, and then loses the case in civil litigation, the judge
will usually require the company to pay the claimant damages equal to three times the original
claim (U.S. Congress: Senate, 1979). The poor record of the criminal justice system in investigat-

ing and prosecuting arson, and the inadequacy of often vague and sketchy arson squad reports,
also leaves the insurance companies vulnerable to counter-suit when they are unsuccessful in
challenging a client’s claims. All of these considerations discourage serious arson control within
the industry. George Clark, vice president for Cravens, Dargen Insurance Co., told a Congres-
sional hearing on arson for profit:

If we instruct our cause-of-loss investigators to send copies of their reports to District Attorneys, it looks
as if the big insurance companies are trying to put the policy-holder in jail. If we voluntarily share the
material and the District Attorney dismisses the case, we are wide open for a civil lawsuit. Punitive
damages in some states will be the price we pay for sharing this valuable information with law enforcement
authorities. There seems to be a lack of interest as far as law enforcement is concerned (U.S. Congress:
Senate, 1979:22).

Third, the insurance industry is privileged: it is the only U.S. industry not restricted by federal

anti-trust laws. Restrictions enacted by the individual state insurance commissions leave the
companies tremendous flexibility in investing their premiums. Insurance companies are reluctant
to admit the extent of the arson problem because they don’t want closer regulation of the industry

(Lima, 1980; Weese, 1971). The worst industry nightmare would be the repeal of the McCarran-
Ferguson Act of 1945, which grants the industry exemption from federal regulation. This is
precisely what has been demanded by some anti-arson activists and by some government-
sponsored investigations of insurance fraud (U.S. Comptroller General, 1979; U.S. General
Accounting Office, 1978; U.S. Congress: Senate, 1963).
The main impetus for insurance reform has come from community groups in fire-ravaged

districts, such as Massachusetts Fair Share and the Symphony Tenants Organizing Project who
made arson and insurance fraud a public issue in Massachusetts from 1977 to 1980 (Brady,
1981a, 1982a, b). They roundly criticized the local FAIR Plan for its inadequate attention to
arson in the early 1970s, when Massachusetts FAIR Plan admitted that fully 60 percent of its
total losses were due to arson-related claims (Golembeski, 1980, 1982). The state insurance
commissioner, Michael Sabbagh, recognizing the mounting problem, granted enlightened FAIR
Plan officials the authority to refuse certain coverage to clients with serious histories of sus-
picious fires. The Massachusetts FAIR Plan since 1979 has required all prospective clients to
submit an “arson application” detailing all fires in every building in which they have held any
financial interest (Golembeski, 1980). In 1976 the FAIR Plan also began to devote far greater
resources to the investigation of suspicious fire claims, and has refused to write policies for a
number of arson-prone landlords. The FAIR Plan’s arson losses have declined from an estimated
60 percent of all fire claims in 1975 to less than 30 percent in 1981 (Golembeski, 1982).
Unfortunately, there is another form of insurance coverage still available to arson racketeers:

the so-called surplus line insurance companies, which are based outside the state and often in
another country. Though their premiums are often substantially higher than those of the conven-
tional companies or the FAIR Plans, the surplus line companies insure almost anyone at levels
of coverage not possible elsewhere (U.S. Congress: Senate, 1963). These companies operate
without local licenses or regulation, except that their local brokers must be registered with state
insurance commissions and must swear that their clients have been turned down by several con-
ventional companies, making them eligible for “surplus” coverage (Bawcutt, 1978; Kwitney,
1973:158). These local brokers are largely unsupervised by their company’s “home office,” which

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14 BRADY

is sometimes no more than a post office box in Bermuda, the Bahamas, or Delaware- a state
notorious for its lack of corporate regulations. The brokers typically receive more than double
the commissions allowed by conventional companies and often the same brokers are later
responsible for claims adjustment (Lima, 1980; Weese, 1971).
The surplus line companies usually sell their premiums, and 98 to 99 percent of their policy
liabilities, to foreign investors who are eager to break into the U.S. insurance market and are
unaware of the scale of arson fraud in the United States. Thus, the broker and the surplus line
company are not vulnerable to the losses sustained under the policies which they write, and
policies of arson racketeers are buried within large investment bundles containing many more
policies with legitimate insurance clients (Brenner, 1980; Daenzer, 1980). The surplus line market
grew dramatically during the 1970s. From 1971 to 1977, the volume of surplus lines increased
533 percent, from $298 million to $1.6 billion dollars (National Association of Insurance Com-
missioners, 1980a). Since experts estimate that only about one-fourth of the actual premium
volume is reported to the various states’ insurance commissioners (Weese, 1971:81), the real
premium volume was probably about $8 billion in 1980 (Chaput and Faxon, 1981; Daenzer,
1980; Lima, 1980:2).
The situation, in short, is ideal for arson racketeers driven out of their once lucrative FAIR

Plan hunting grounds (U.S. Fire Administration, 1979). In 1978, the SASSE syndicate of surplus
line brokers, operating in league with real estate speculators and gangsters in New York City,
collected over $32 million in fraudulent insurance claims on grossly over-insured properties in
the South Bronx (Brenner, 1980; Coppack, 1980). Some of these policies were backdated to
cover previous fires, and “torches” were hired to set other buildings afire (Brenner, 1978; Lima,

1980). The SASSE syndicate consisted of New York City brokers representing a number of
surplus line companies which were in turn investment conduits for Lloyds of London. The scale
of this loss staggered even Lloyds and prompted New York State’s insurance commissioner to
implement the nation’s most stringent underwriting procedures for surplus line companies
(Chaput and Faxon, 1981).
In Massachusetts the implementation of effective anti-arson measures adopted by the FAIR
Plan from 1976 to 1979 coincided with the dramatic expansion of the surplus line market. The
total value of surplus line premiums reported to the state insurance commission increased by
nearly 600 percent in 1976-77 alone, when it grew from $5.6 million to $32.8 million (Chaput
and Faxon, 1981:4). The number of reported fire insurance policies written with surplus line
companies doubled in 1981-82. Of course, there are many reasons for using surplus line coverage

which are entirely legitimate, as are most brokers and surplus line clients. For example, an
individual wishing to insure a vacant apartment building or an empty warehouse in a high-risk

district would probably not be eligible (after 1978) for FAIR Plan or conventional insurance
coverage (Golembeski, 1980). Nevertheless, the Boston Arson Strike Force discovered that 31
individuals and holding companies with serious arson histories on their properties contracted for

new surplus line policies in 1980 and 1981. These policies totaled over $38 million in fire
insurance coverage in these two years. Properties belonging to these 31 individuals and trust
companies burned in 153 “incendiary,” “suspicious,” or “undetermined” fires from 1978 to 1982,
with total structural damage estimated by the Boston Fire Department in excess of $2 million.”

A handful of brokers represent nearly all of these suspicious property owners (Brady, 1982b;
Moore, 1983).

11. Surplus line insurance affadavits are public records, on file at the Massachusetts Insurance Commission
Office in Boston. Fire incidence and cause records are also public documents (though follow-up investigation
reports of the Arson Squad are not). The public fire records may be obtained from the Central Headquarters,
Boston Fire Department. Copies of insurance affadavits are available on request from the author.

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Arson in Boston 15

“DOWNSCALE” ARSON AND THE TARDANICO SYNDICATE

The case of the Russell Tardanico/Robert Sherman syndicate in Dorchester illustrates one
variety of arson racketeering in Boston. In 1970 Russell Tardanico was convicted of arson and
“interfering with the duties of the Fire Department” while it was engaged in putting out another
arson fire (Pappas, 1981). Tardanico and Sherman have, since the 1960s, owned whole blocks
of commercial buildings and dozens of apartment units in Dorchester (Anner, 1982; Axelrod,
1982; Pappas, 1981). Following his arson conviction, Tardanico transferred title for most of his
properties from his own name to those of his wife and children, and to Sherman, who are
trustees of some dozen holding companies (Brady, 1982b). From 1973 to 1982, Tardanico/
Sherman properties have burned more than 35 times, with losses estimated at more than
$600,000. The state FAIR Plan alone admits paying him more than $110,000 (Pappas, 1981).

Table 1 summarizes the Tardanico syndicate’s transactions and a few of the more important
fires to strike their properties, most of which were classified by the Boston Fire Department as
“incendiary,” “suspicious,” “undetermined,” or “burning trash.” Most of these properties
burned very shortly after they were purchased and insurance policies were arranged. Many of
these properties were purchased from Arthur Pitnoff, a respected local entrepreneur with ex-
tensive holdings in Dorchester. Tardanico was until 1979 president of the Fields Corner
(Dorchester) Merchants’ Association (Zanger, 1978a).

The South Boston Savings Bank has consistently provided mortgages to the Tardanico
syndicate, including six written while Tardanico was under a suspended prison sentence for arson,

from 1971 to 1974. Between 1971 and 1979 the bank wrote 15 mortgages worth $730,000 for 13

different Tardanico properties.”2 Eleven of these buildings burned a total of 27 times, usually
in “suspicious” or “incendiary” fires and usually a few months after purchase in suspicious fires.
Backed by this powerful bank, Tardanico easily arranged large insurance policies for his proper-
ties. Along with the policies of several conventional companies, he arranged over $600,000 in
coverage with the state’s FAIR Plan from 1972 to 1979 (Brady, 1982b; Pappas, 1981).

Since 1979 the FAIR Plan has denied coverage to Tardanico (Pappas, 1981). He has become
the object of considerable media attention (WBZ, 1981; WNEV, 1982) following four arson fires
at Tardanico/syndicate-owned buildings at 318 Adams Street (August, 1981) and 1352 Dor-
chester Avenue (November, 1982) (Anner, 1982; Pappas, 1981). Despite his claims to the con-
trary (Pappas, 1981), Tardanico has not left the real estate business. Rather, Russell Tardanico
has shifted property titles to a new set of trust companies now headed by his wife, Kathleen, and

has drawn up a new series of comprehensive insurance policies (worth a total of over $1 million)
with several surplus line insurance companies. The largest of these carries a value of $705,000
coverage for unspecified “buildings.” The unnamed insurer, as a surplus line company, is not
subject to state regulations, except that the broker was obligated to swear that Tardanico had
been previously turned down by at least three conventional companies, making him eligible for
surplus coverage.

“UPSCALE” ARSON AND THE CASE OF FREDERICK RUST

Another sort of arson has developed in Boston neighborhoods where property values are rising
rapidly and landlords are trying to attract more affluent renters or buyers for condominiums
created from former rental apartments (Jahnke, 1981b). Boston arson expert Michael Moore
(1981) refers to this pattern as “upscale” arson in his seminal writings on the economics of arson.
The “vacancy de-control” clause of Boston’s rent control law and the eviction restrictions of the

12. South Boston Savings Bank mortgage contracts are public records, available from the Suffolk County
Register of Deeds, Old County Courthouse, Government Center, Boston. Copies are available on request
from the author.

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TABLE 1

Real Estate Transactions and Fire History of the Tardanico Syndicate

Date Date Estimated
Property of Sale Previous Owner Buyer Sale Price Mortgage of Fire Fire Origin Structural Damage
1350-8 Dor- 11/17/76 South Boston Russell Tardanico $ 65,000 South Boston 11/16/82 suspicious $ 10,000
chester Avenue Savings Bank Savings Bank 11/20/82 suspicious $ 1,000
1374-78 Dor- 5/13/75 City of Boston Russell Tardanico $ 4,500 Arthur Pitnoff 7/6/79 suspicious $ 2,000
chester Avenue 1/2/80 Russell Tardanico Mass. Tex $ 70,000

Corporation

1377-79 Dor- 2/24/74 Robert Pitnoff Russell Tardanico $ 45,000 Meeting House 2/25/76 trash $ 20,000
chester Avenue (Arthur’s brother) Hill Bank

7/23/76 Russell Tardanico RKPSR Realty Trust $1 South Boston 5/1/77 suspicious $ 2,500
(Russell Tardanico) Savings Bank

1452-58 Dor- 8/11/76 Mary Remy RAB Realty Trust $ 32,000 South Boston 10/9/76 trash $ 2,000
chester Avenue (Russell Tardanico) Savings Bank 1/20/79 incendiary $ 1,500
1460-70 Dor- 3/18/77 New England 1460 Trust $ 38,500 Mass. Cooperative 4/27/77 suspicious $151,000
chester Avenue Mutual Life (Russell Tardanico) Bank 2/16/78 incendiary $ 1,000

Insurance Co.

1502-08 Dor- 8/19/75 Simon Drasner RAB Realty Trust $ 45,000 South Boston 9/3/75 undetermined $ 83,000
chester Avenue (Russell Tardanico) Savings Bank 10/3/75 undetermined $ 25,000
1510-14 Dor- 7/22/76 Arthur Pitnoff RRR Realty Trust $ 75,000 South Boston 11/6/76 undetermined $ 6,500
chester Avenue (Russell Tardanico) Savings Bank 1/2/77 undetermined $ 20,000

158 Adams 10/11/72 Arthur Pitnoff Russell Tardanico $ 25,000 South Boston 11/30/72 undetermined $ 2,500
Street Savings Bank 4/11/73 suspicious $ 3,000

7/12/73 Russell Tardanico Arthur Pitnoff $ 12,000 3/15/77 undetermined $ 40,000
3/20/80 Arthur Pitnoff Ronald Tardanico $1 6/18/78 undetermined $ 4,500

(Russell’s brother)

318-22 Adams 4/24/81 BayBank RKPSR Realty Trust $105,000 BayBank 4/26/81 suspicious $ 1,000
Street (Russell Tardanico) 3/25/81 suspicious $ 75,000
115 Hollings- 4/19/74 John Gornstein Russell Tardanico $ 48,000 South Boston 11/6/74 suspicious $ 8,000
worth Road Savings Bank 1/1/75 suspicious $ 37,400
Source:

Property sales and mortgages from documents at Suffolk County Registry of Deeds. Fire data and structural loss estimates from Boston Fire Department Arson Squad.

0)

CI

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Arson in Boston 17

city’s 1979 “condominium conversion” statute were specifically designed to protect long-term and

elderly tenants from unwarranted rent increases or sudden displacement. Local tenants unions
have won small but important victories in the courts and legislatures which restrict “free” specu-

lation. As a consequence, arson has become increasingly popular among landlord-speculators as
the final solution to “problem tenants,” just as it has become popular among banks faced with
“problem properties.”
Boston’s prime “condominium conversion” districts have been hard hit by arson. In 1980, arson

rates increased by 400 percent in the Back Bay area, where property values have been soaring
(Malaspina, 1981). This closely followed the 1979 passage of a city ordinance restricting the right

of landlords to evict tenants for purposes of condominium conversion. Harvey Schmidt, an
arson investigator for the Massachusetts FAIR Plan, noted:

There are three basic upfront advantages that even a relatively unsophisticated owner might recognize in
having a friendly fire on the premises: rendering the property uninhabitable, facilitating renovation by
gutting the interior, and generating insurance money to finance conversion (McNamara and Kilbanoff,
1981:7).

City Councilman Ray Flynn, looking at the 1980 arson pattern in Brighton, a district under-
going extensive condominium conversion, stated:

I am convinced that there is a correlation between building conversion and arson. There is nothing so ef-
fective as fire for circumventing eviction procedures. Just look at the money being made by conversions.
It is second only to the lottery in the amount of money you can make in one shot (McNamara and Kil-
banoff, 1981:7).

The upscale arson pattern is evident in the history of buildings owned by real estate magnate

Frederick Rust. Since 1977, Rust has been engaged in a massive condominium conversion effort
in the Brighton district (Jahnke, 1981b). His properties are extraordinarily “leveraged,” in other

words, with only small cash outlays he has obtained heavy second, third, and fourth mortgages
whose total value often triples the original price within a few months of purchase. Rust is thus
in a position to draw enormous fire insurance policies (Goodstine, 1982). For example, in 1977-
78 Rust purchased four large Brighton buildings and, within four months, arranged second and
third mortgages worth $1.7 million, more than double the purchase price. More than $1.3 million

of the second mortgages for these four properties were provided by the Suffolk Franklin Savings

Bank, where Rust was a member of the board of directors until 1981 (Goodstine, 1982; Jahnke,
1981b).

Rust’s buildings are frequent targets for arson. Fires of “suspicious” or “undetermined” origin

caused over $300,000 in estimated damages to his properties between 1978 and 1980. His building

at 1673 Commonwealth Avenue burned in a “suspicious” fire in 1980; and one person burned
to death in the August, 1980, “undetermined” fire at 1677 Commonwealth Avenue. Another
“suspicious” fire occurred in 1980 at 232 Kelton Street, which Rust purchased for $96,000 in 1978
but which was mortgaged for a total of $950,000 in 1979. Rust purchased 248 Kelton Street (next
door to 232) in 1980 from Joseph Mazzapica, who was convicted of arson and insurance fraud
in the 1978 “Symphony Road” arson case (Zanger, 1980), and who, by virtue of his $100,000
second mortgage, remains an insurance beneficiary in the event of fire at 248 Kelton Street.
Another of Rust’s buildings, 362-6 Commonwealth Avenue, carried over $2 million in mortgages
by 1980, three times its 1977 purchase price. Boston’s largest financial institution, the First
National Bank of Boston, provided third, fourth, and fifth mortgages worth $700,000 for that
building (Goodstine, 1982) which burned in two arson fires during 1978 and 1980; total struc-
tural damages were estimated at $175,000 by the Boston Fire Department. The 1980 fire effec-
tively evicted the tenants at 362-6 Commonwealth Avenue (Moore, 1980). When newspaper

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18 BRADY

reports asked Rust about his plans to convert the building to condominiums after the fire, he
replied:

The building has a substantial amount of fire damage, and I had to make an economic decision. Not that
you aren’t sympathetic to the tenants involved, but it is an economic decision. … If you have a situation
like that, it isn’t absolutely strange for someone to decide to convert to condominiums under these cir-
cumstances (McNamara and Kilbanoff, 1981:7).

Rust’s tenants have formed unions; they claimed Rust violated fire and building codes, clashed
with his lawyers in housing courts, and pressed the Massachusetts Attorney General for a serious
arson investigation (Jahnke, 1981a, b).

There are more than a dozen identifiable syndicates in Boston which have a history of sus-
picious fires and massive speculation. Elsewhere I have discussed the Sarah Cutler Trust opera-
tion in which John Kerrigan, a leading local politician and former member of the Boston City
Council, was the silent beneficiary of this trust, which experienced dozens of arson fires from
1972 to 1980 (Brady, 1982a). Few residents of Boston are surprised by these kinds of revelations.
Yet, local fire department officials and the state’s fire marshall hold fast to their image of
arsonists as vandals or pyromaniacs (Vennochi, 1982). In 1982 Boston Fire Commissioner
George Paul said that the city did not have a serious arson problem and that the media was
exaggerating the issue (WNEV, 1982). Such official denials, like the misunderstandings that
spring from racism and social bias, not only preclude effective arson control, but can lead to
the arrest of the innocent and the tolerance of those most culpable. The following two instances
are cases in point.

THE SYMPHONY ROAD CONSPIRACY

In 1973-74 the Symphony Road district of Boston suffered more than 20 fires which left
hundreds of people homeless and five dead (Blank, 1978; Brostoff, 1977; Lima, 1977a). The dis-
trict was then inhabited by a mixture of the elderly, the poor, students, and newly arrived ethnic

minorities. Local tenants groups repeatedly asked the state and local fire officials for an arson
investigation, but Joseph Dolan, the Boston Fire Marshall, insisted, “I don’t see any pattern of
arson of any kind. Most of the fires in that area started in quarters where tenants were living.
Most of them were caused by human error, human negligence” (Kenney and Richard, 1977:8).

Following the fifth arson death, a group of residents organized and began to systematically
collect evidence of housing and fire code violations in local buildings and traced the pattern of
sale, resale, and escalating insurance coverage on buildings which had burned (Schmidt, 1980).
Presented with this information, State Police Lieutenant James De Furia, commanding the arson

squad at the state fire marshall’s office, continued to discourage the residents, saying, “Maybe an
owner does hire a torch to do a job. But you can’t prove it. It’s a waste of time to try” (Blank,
1978:133). One of the leading neighborhood activists, David Scondras, recalled:

Initially most people refused to believe that these were arson fires at all. They assumed that the kind of
riff-raff that lives around here would naturally set fire to their buildings. There’s some obscure notion in
the minds of people that low-income people have a natural proclivity toward a variety of strange behavior,
one of them being they burn down their homes (ABC, 1978).

The Symphony Road residents persisted in their research, and the publication of their findings

prompted the state attorney general to investigate (Canavan, 1978). This year-long probe which
followed was financially supported by the Massachusetts FAIR Plan, which provided funds for
a staff of talented sleuths employed by the First Security Corporation (Schmidt, 1980). The case
led ultimately to the indictment and conviction of 32 members of the largest arson ring in the
United States: its profits surpassed $6 million from 1972 to 1977 (Harvey and Connolly, 1977;
Zanger, 1977). Those convicted of charges varying from conspiracy and insurance fraud to arson

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Arson in Boston 19

and murder included six lawyers, four real estate agents, four insurance adjustors, six landlords,
two finance company officers, two bookkeepers, two housing contractors, three small business-

men, a city of Boston housing inspector, and two police officers (Cullen, 1977; Jones, 1978).
The latter included the captain of the Boston arson squad and De Furia, the commander of the
state fire marshall’s arson squad, quoted above. None of the lawyers, insurance adjustors,
finance executives, accountants, or the Boston arson squad captain served more than four
months in jail; 10 of these 22 white-collar criminals received only probation or a suspended sen-
tence, though all 22 were convicted of criminal conspiracy and many were also found guilty of
insurance fraud (Zanger, 1980). The lenient sentences for fraud and conspiracy in this case are
not unusual in the United States (Fire and Arson Investigator, 1980); in Massachusetts less than
4 percent of those convicted of arson from 1971 to 1979 were sent to prison (Roy et al., 1980).

THE 1982 LOWELL FIRE: LAW ENFORCEMENT RESPONSE

It was a typical arson incident. A sudden 3 a.m. blaze roared through the decrepit wooden
tenement at 32-36 Decatur Street in the Lowell, Massachusetts, Hispanic ghetto outside Boston.
The eight bodies pulled from the rubble that March 1982 morning were typical victims: most were

small children and none were white. The police response was also typical: they arrested a young
man recently released from a mental hospital and two other young Hispanic men which the first
named during interrogation. The motive ascribed to their crime was rage and drug-crazed irra-
tionality (Thomases, 1982a).

When the three suspects were brought to trial, the ex-mental patient told the court that his
confession had been obtained by torture and intimidation in the Lowell police station. The police

department’s own record showed, moreover, that all three defendants had remained at the scene

of the fire throughout the night, trying with their neighbors to save those trapped in the flames
(Lasalandra, 1982a). The judge dismissed the case against the two defendants implicated by the
ex-patient, though, at the time of writing, the latter had spent nearly a year in jail still awaiting

trial without bail (Thomases, 1982b). Meanwhile, leading figures in the Lowell community have
mobilized the public to protest against this defendant’s continued confinement and to demand
a further investigation of the fire (Jordon, 1982b; Lasalandra, 1982b).

The police have apparently never questioned the owners of the building-the Spanos family.
Fire department records show that there have been six previous “incendiary” fires at the same
address since 1979, and that several of these started inside locked, vacant apartments. The title
to this and other Spanos properties, which have been cited for numerous fire code violations,
has been juggled among family members. Since legally a new owner is allowed an additional six
months grace on fire code violations, continuous “resale” within the family precludes enforce-
ment. The Spanos family owns over 20 tenements in Lowell’s Hispanic ghetto (Lasalandra,
1982b; Thomases, 1982b).

Between 1974 and 1982 there were 86 “suspicious” fires at Spanos properties in Lowell
(Jordon, 1982b). The insurance settlements for these fires remain confidential, protected from
public scrutiny by state law. Massachusetts Insurance Commission records do show, however,

that “William Spanos et ar’ contracted with a local broker for special package coverage by an
unnamed, unlicensed surplus line company in 1981. That broker was the same one who arranged

surplus line coverage for Russell Tardanico.

INNOVATIONS: LAW ENFORCEMENT

The public and policy makers alike have grown increasingly aware of the seriousness of the
arson problem in Boston and the United States as a whole (Levey, 1982). Though some local fire
officials continue to minimize this threat or cling to the traditional deviance explanations, there
are signs of progress in the development of new arson control measures in Boston and elsewhere.

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20 BRADY

These fall into two main types: innovations in law enforcement aimed at strengthening prosecu-
tion or deterring arson-for-profit conspiracy, and regulatory reforms. A number of these deserve

mention, but it is important to understand that powerful institutions with entrenched interests

oppose any structural changes which might erode their autonomy or restrict their profitmaking.
The most promising criminal justice innovations established by local authorities include the
police “strike force” approach and the computer-assisted arson prevention and prediction

program’s. The Boston Arson Strike Force, for example, combines the expertise of civilian
criminologists and research analysts who are skilled in the analysis of urban demography,
political economy, real estate mortgage, and insurance transactions, with police detectives skilled
in discreet surveillance and the collection of testimony and physical evidence. The Boston Strike
Force reports directly to the mayor and the district attorney. The fire department and its arson
squad are excluded from the Strike Force, though fire department records are available for its
use.

The identities of the syndicates which the Strike Force is watching are a closely guarded secret,
as are the locations of buildings which are under surveillance as likely arson targets. Police ex-
perience with investigation of other types of racketeering is valuable, particularly in combination
with civilian arson specialists; but the Strike Force is weak in the area of pyrotechnic expertise.
The fire department’s arson squad retains exclusive jurisdiction over investigations on the scene

of fires, and the Strike Force is hampered by the vagueness and generally poor quality of arson

squad reports. Other cities have also established similar strike forces (Fire and Arson Investiga-
tor, 1980).

Computers have been brought into action in programs designed to predict and prevent arson.
Boston’s Urban Educational Systems (UES) pioneered this approach (Rezendes, 1982). Unfor-
tunately, that civilian-led program is a casualty of bitter infighting with the state’s fire fighting

establishment, particularly State Fire Marshall Joseph O’Keefe who, at the time of writing, was
embroiled in a lawsuit with UES over the disbursement of funds appropriated for arson preven-
tion by the legislature (Jordan, 1982a; Rezendes, 1982; Scharfenberg, 1980, 1981).

New Haven, Connecticut, has been more successful in institutionalizing its nationally
renowned Arson Warning and Prevention System (AWAPS). Essentially, such computer-
assisted programs try to predict buildings which are likely arson targets. The computers search
through city records of fires, tax collections, and building inspections to locate properties whose
individual histories fit a profile associated with arson (Miller, 1978). These characteristics in-
clude: previous structural fires, unpaid property taxes, building code violations, and outstanding

liens for debt (Sauerteig and O’Connor, 1980). When the computer identifies a building with all
of these characteristics, both the property owner and the insurance company are officially noti-
fied that the building is under the attention of law enforcement authorities (New Haven Fire
Department, 1981).’3

In 1980, a year after the AWAPS program was initiated, New Haven reported a 40 percent de-

cline in total fire losses and arson losses, and a 20 percent decline in civilian death injuries and
the total incidence of arson fires (Security World, 1981). These statistics have only limited
meaning, however, since so many factors influence arson rates. The AWAPS program itself
could have had only a tiny direct impact, since only 11 buildings were targeted as “arson prone”
in 1980 (Sauerteig and O’Connor, 1980).

Deterrence is the central strategy for both the computer prediction/prevention programs and
the strike force approach. These law enforcement innovations can make the arson problem more

13. It should be noted that the insurance industry, particularly Aetna Insurance Company and Factory
Mutual Insurance Company, have contributed most substantially to the funding for the AWAPS program,
along with the U.S. Fire Administration (Security World, 1981; Sauerteig and O’Connor, 1980).

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Arson in Boston 21

visible and can raise the risks of what is still one of the safest and most lucrative crimes.

Obviously, the very existence of such programs helps undermine the “deviant” image of the
arsonist by concentrating on the arson-for-profit motive. Of course, neither the New Haven
computer nor the Boston Arson Strike Force can hope to control arson, as long as its institu-
tional sources remain intact.

STRUCTURAL REFORMS AND POLICY RECOMMENDATIONS

Efforts to address the structural economic causes of arson must begin with closer restriction

of bank redlining. The federal Community Reinvestment Act of 1978 must be given greater in-

vestigatory powers and punitive sanctions. Federal anti-trust laws must be more energetically
applied against bank mergers, because documented studies such as Greenwald (1978) show
clearly that the larger banks are less sensitive to local community needs and are more systematic-

ally engaged in redlining than the smaller financial institutions.
The banks deny that they have ever engaged in redlining and bristle at the accusation from

community groups, who have turned neighborhood disinvestment into a major urban political
issue. In Massachusetts, the banks bitterly resented the regulatory activities of the former state
bank commissioner, Carol Greenwald, who from 1974 to 1978 initiated the most aggressive anti-
redlining enforcement in Massachusetts history. Indeed, the financial institutions were so
angered that they refused, in 1976-77, to purchase state bonds unless the governor fired Green-

wald. Governor Michael Dukakis refused to bow to this pressure, and was obliged to sell Massa-
chusetts bonds to buyers in New York and the Midwest (Greenwald, 1980). Banking industry
opposition was regarded by political analysts as one of the reasons for Dukakis’ defeat in 1978;
and since his re-election in 1982 he has pointedly assured the banking community that he will
not appoint “another Greenwald” (Ball, 1983:23).

The Community Reinvestment Act requires banks to disclose their mortgage lending practices
and aims especially at preventing and punishing redlining. Massachusetts regulatory statutes and
the credit lending obligations imposed on banks by their state and federal charters, grant con-
siderable powers to the banking commissioner (Greenwald, 1980). It remains to be seen whether
the next commissioner will possess the will and the political mandate to press regulation on behalf

of neighborhood preservation. Certainly the current pace of bank merger and agglomeration,
together with the withdrawal of thrift institutions from the mortgage lending market, (Flad and
Jones, 1982) will, if left unchecked, undermine hopes of recovery from arson and abandonment
in urban neighborhoods (Stone, 1978).

Boston’s city government, like that of most U.S. cities, has yet to formulate a coherent policy

for dealing with the problem of abandoned buildings and unpaid property taxes. Long delays
between notice of foreclosure and actual seizure and sale of properties for delinquent taxes are
typical, and both vandal and escape fires occur most frequently in the interval. If a building sur-

vives this period of vulnerability, the city usually elects to sell it at a public auction to the highest
bidder. This policy gives the illusion of securing maximum income for a city at a time of lean
budgets; but the immediate gains on the auction block may be more than offset by later losses
to arson fires, or speculators may choose to sit on newly acquired properties or convert them
to uses which further destabilize property values in the neighborhood (Axelrod, 1982). A more
rational approach would be to give or sell cheaply a substantial number of seized buildings for
local homesteading families who would be obliged to rehabilitate and inhabit them (Flynn, 1982).

The insurance industry has failed abysmally to control arson fraud and it is therefore impera-
tive that it be more tightly regulated. Local urban FAIR Plans should be given a longer grace
period before payment of suspicious claims and they should be charged to devote more energies
to investigation of prospective clients and especially fire losses. The growing surplus line sector
of the insurance industry must be brought under immediate control, if not abolished outright.

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22 BRADY

The National Association of Insurance Commissioners (NAIC, 1980a) study of the surplus line
companies found extensive malpractice, swindling, and abuse. The NAIC formed a national in-
formation office in 1977 to keep track of these agencies (NAIC, 1979) and drafted a model law
(NAIC, 1980b) to monitor the surplus line companies (Chaput and Faxon, 1981; Lima, 1980).
Criminal penalties for fraud and malpractice by surplus line brokers carry maximum penalties
of one year in prison and $500 fines. The NAIC model regulatory law should be adopted without
delay as a minimum step, and criminal penalties for broker fraud should be substantially in-
creased. Beyond this, the U.S. Comptroller General’s (1979) report to Congress raised funda-
mental questions about the effectiveness of the present fragmented system in which 50 state
insurance commissioners try to counter mounting fraud and corporate abuses of public trust.
The privileged status of the insurance industry must be ended with the repeal of the McCarran-
Ferguson Act and the imposition of stiff federal regulations on all aspects of the industry.
The insurance industry has fought with single-minded determination against all of these
regulatory initiatives. The insurance lobbies have successfully blocked enactment of even the
mild NAIC model law for surplus line insurance. The conventional companies do not regard the

surplus line companies as mavericks, but rather as pathbreakers: if surplus line ventures are
profitable in new sorts of risks, the conventional companies may later follow their lead (Chaput
and Faxon, 1981; Lima, 1980). The conventional companies and their local FAIR Plans are not
unduly disturbed about the surplus lines’ vulnerability to arson racketeers. As John Golem-
beski,14 general manager of the Massachusetts Property Insurance Underwriters Association,
said:

We realize that organized crime is moving to surplus line insurance; but our member [conventional] com-
panies would resist any effort to abolish the surplus lines. We don’t want to eat the losses if the arson rings
are forced to come back to us.

The role of community activists in combatting arson and cutbacks in fire protection is crucial

(Brady, 1981a; 1982a). Tenants’ unions, taxpayers’ and homeowners’ associations, and fire-
fighters’ unions have played a leading role, particularly in Boston and New York where they have
forced legislative reforms, prompted changes in insurance underwriting policies (Andrews, 1978;
Stone and Zanger, 1979; Waterflow, 1977), and contributed decisively to the investigation of
organized crime operations (Barry, 1979; Blank, 1978; Canavan, 1978; Johnson, 1981; Wyrough,
1981). At the same time, it is unfortunately true that the tensions of racial and social divisions

and profound ideological differences among community groups have seriously undermined
efforts to form broad coalitions able to challenge the banking and insurance industry or
vigorously press for more effective law enforcement (Brady, 1982a). The community-based
efforts are powerfully motivated and hold great potential, but have been fragmented thus far
(Brady, 1981a, b).

CONCLUSION

Those critical of the existing order in the United States have long argued that crime is the product

of socio-economic conditions engendered by capitalism; but they have been hard-pressed to show

the operating linkage between the gross statistics of misery and the behavior patterns of the
miserable- who may or may not commit street crimes. Radical critics have also argued that the

corporations commit the most socially destructive crimes, but that their offenses are less visible
and less personally threatening to the public. Arson, on the other hand, is the most visible and
broadly threatening of crimes, and it cannot be explained without directly implicating the most
central of capitalist institutions: the banking, insurance, and real estate industries. Moreover,

14. Based on interviews with Jack Golembeski, February 11, 1983.

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Arson in Boston 23

the involvement of these institutions in the arson process cannot be ascribed to a few corrupt
or irresponsible executives. The sociology of arson takes us right into the heart of the city, where

corporate profiteering, gangster racketeering, and government corruption or ineptitude overlap

with devastating impact on working-class communities. One needs no conspiratorial model or
bogeyman visions here, for the processes that lead to neighborhood collapse, deteriorating
housing, and arson are all logical consequences of good business practices.

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• Contents

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• Issue Table of Contents

Social Problems, Vol. 31, No. 1 (Oct., 1983), pp. 1-124
Front Matter
Three Papers on Crime and Criminal Justice
Arson, Urban Economy, and Organized Crime: The Case of Boston [pp. 1-27]
Jury Nullification in Political Trials [pp. 28-44]
Judicial Decisions and Prison Reform: The Impact of Litigation on Women Prisoners [pp. 45-58]
Two Papers on Migration
Market Characteristics and Hispanic Earnings: A Comparison of Natives and Immigrants [pp. 59-72]
Lines of Communication, Recruitment Mechanisms, and the Great Migration of 1916-1918 [pp. 73-83]
Changing Doctor-Patient Relationships and the Rise in Concern for Accountability [pp. 84-95]
The Human Effects of Underemployment [pp. 96-110]
The Politics of Menopause: The “Discovery” of a Deficiency Disease [pp. 111-123]
Back Matter [pp. 124-124]