Series: Part 1 Of 2

DOPE SALES BUILD SECRET EMPIRES

You can't order a milkshake or a sundae at the "Ice Cream Shop." Only crack
cocaine and heroin are on the menu, and gang members take your order.

On a 20-degree day, a young Gangster Disciple in a black parka stands guard
in front of one of the low buildings of the Ida B. Wells housing
development on the South Side.

While he watches, another teenager strolls up to a slow-cruising Toyota
Corolla, a knit stocking cap pulled low over his eyes.

Holding a roll of cash in his gloveless hand, he calls out, "Rock! Blow!"
The puffs of his breath vanish in the chilly air, and the Corolla rolls on.

Minutes later, another car pulls up. The kid in the stocking cap hands
something to the driver. The driver hands something back. Probably a $10 bill.

This will go on all day.

Thousands of street-corner drug sales, the backbone of powerful gang
empires in Chicago, rake in more than half a billion dollars a year in drug
profits--nearly 1 percent of the city's economy, experts say.

A trickle of this river of cash pays for fancy cars and expensive suburban
houses. The rest--the kind of money that would put legitimate enterprises
into the Fortune 500--seems to disappear. But, in fact, it flows deep
underground, seeping into cell phone stores, nightclubs, beauty shops,
apartment buildings, record companies and even Hollywood.

For five months, the Chicago Sun-Times tracked the huge sums made by drug
sales by interviewing cops, gang members and university experts, and
spending days and nights on neighborhood streets and alleys to see drug
dealers at work.

It starts with a dime bag

The trail begins with $10 for a dime bag of dope sold by a teenage foot
soldier who earns about twice the minimum wage. Multiply that one
transaction by hundreds of sales sold by a crew of gang dealers, and the
numbers quickly swell to an estimated $5,000 a day, $1.8 million a year,
just at that one stop--the Ice Cream Shop at 38th and Vincennes.

Day and night, "slingers" here openly sell crack cocaine in baggies stamped
with ice cream cones--giving the corner its nickname. They also shell out
their "Lucky 7" brand of heroin and pass out yellow business cards stamped
with a logo of pharmacy bottles and the slogan, "Specializing in Medicine."
Their location is boldly printed in blue.

The money is filtered up the gang chain. Dues are paid, SUVs are bought by
lieutenants, and houses are purchased in the names of grandmothers. Some of
the money ends up in tree-lined suburban neighborhoods, where the more
powerful gang members lay their heads at the end of the day, a world away
from the projects.

The money disappears into local riverboats and the noisy, gleaming casinos
of Las Vegas and Atlantic City. There, it becomes traceless, hidden in
casino chips used to pay drug suppliers or laundered as gambling wins.

And sometimes, it's just buried in backyard dirt.

"It's big business," said Willie Lloyd, whom police identify as the leader
of the Vice Lords Nation, although the 51-year-old grandfather insists he
is retired. "You have your accountants, you have your lawyers, everyone you
need to be competitive out there in the streets and survive. You have your
police for protection."

Hip-hop wash cycle

Troy Watts was an aspiring music tycoon. He poured heroin profits into his
Oak Park recording studio to buy a 2-inch reel-to-reel recorder, a
36-channel mixing board--everything necessary to attract a top-notch
hip-hop group.

"Troy Watts lavished money on this studio," Assistant U.S. Attorney David
Bindi said in federal court. "He bought state-of-the-art
equipment--everything was the best."

Watts, 38, who attended Malcolm X College, never shied away from work. He
held a job in a hardware store in the seventh grade and managed a grocery
at age 17. What got him into trouble was trying to take a shortcut to success.

"Unfortunately, like many young men coming of age in the 1980s, he was
seduced, apparently, by the allure of profit in this particular illicit
business," his lawyer, Jeffrey Urdangen, said.

Watts recruited a cadre of smugglers to import about $16 million in heroin
from Thailand from 1990 to 1994.

His best friend was a brutal Chicago gang member who acted as an "enforcer"
to deal with problems, one of Watts' co-defendants told authorities.

In 1992, at the peak of the operation, Watts opened a recording studio,
TCR&R, with three musically inclined pals. He pumped more than $100,000
into the business, court records show.

TCR&R signed a rap group, Crucial Conflict, that wound up abandoning Watts
and joining other companies, including a major recording label. The group
hit the big-time with a top 10 single, "Hay," and gold- selling album, "The
Final Tic." But TCR&R never made any money, prosecutors said.

Watts' career in show business ended in 1998 when he pleaded guilty to drug
conspiracy and money-laundering, landing himself a 24-year federal prison
sentence in Lexington, Ky., far from music-industry types like Paulie
Richmond, a Grammy Award-winning writer who penned the hit song "Shining
Star." Richmond testified as a character witness at the trial of one of
Watts' co-defendants.

Though he is in prison, Watts continues to try to cash in on the success of
the band he claims he founded. He filed a $9 million lawsuit to get a cut
of Crucial Conflict's profits.

'It moves through me'

Another man with one foot in the music business and another in the drug
world was Nathan "Nate" Hill.

Hill, 35, was arrested in 1998 after he fled to Africa to avoid prosecution
for supplying the Gangster Disciples and Vice Lords gangs with more than
6,600 pounds of cocaine from 1987 to 1995.

"His famous phrase was, 'If anything moves through Chicago, it moves
through me,'" said Assistant U.S. Attorney Colleen Coughlin, adding that
Hill was a friend of reputed Gangster Disciples kingpin Larry Hoover.

Hill, who wasn't a gang member, was sentenced to life and fined $8.5
suburban River Forest, where waitresses say he is one of their best customers.

At a 1994 sentencing hearing in federal court, Lloyd's supporters ranged
from a confidant of Hoover to a Roman Catholic priest. The Rev. George
Brooks told the judge that Lloyd "expressed to me that in fact God had
saved him and he had had that experience so that he could have a positive
influence."

At the same hearing, Wallace "Gator" Bradley praised Lloyd for brokering a
gang truce at Cabrini-Green. Bradley described himself to the judge as a
reformed Gangster Disciple and a gang outreach worker for the Boys and
Girls Club of Chicago. Bradley, who also called himself a representative of
Hoover, ran unsuccessfully for alderman in 1994 and met with President Bill
Clinton and the Rev. Jesse Jackson at the White House about crime control.

U.S. District Judge George Marovich wasn't swayed by the flowery words and
sentenced Lloyd to eight years in prison, just shy of the maximum.

"I want to believe that Willie Lloyd is sincere," Marovich said. "I want to
believe that there is rehabilitation potential in even the very worst of
us. ... [But] Willie Lloyd once proclaimed himself king of a nation, and I
ask you, what kind of kingdom is it that sends children out to kill and be
killed?"

Lloyd was released from federal prison last spring. He said he agreed to
lecture to incoming freshmen in DePaul University's Discover Chicago
program and even took them on a field trip last fall to give them an inside
look at gangs in their "natural habitat."

"I am trying to walk a straight line," Lloyd insisted. "Don't throw
barriers into my path. No one knows what's going on in my head or my heart."

But Chicago police and parents of DePaul University students did throw a
barrier in Lloyd's path, flooding the school with angry telephone calls
when they learned the convicted felon was teaching their children.

Gregory Scott, assistant professor of sociology at DePaul, had planned to
pay Lloyd to help craft questions for a federally funded study comparing
the experiences of gang members and nonmembers when they leave prison.

Scott dropped Lloyd as a consultant after the backlash from parents, saying
he was worried Lloyd's notoriety could affect how people responded to
questions. But Scott, who previously worked for the Illinois attorney
general's gang-crime prevention center, said he might still ask Lloyd to
lecture and believes Lloyd's firsthand knowledge of gang life would be
valuable to his project. Lloyd did receive a small payment for his work at
DePaul.

Thomas Needham, former chief of staff to Chicago police Supt. Terry
Hillard, said Lloyd never should have been allowed near DePaul students. He
dismissed Lloyd as nothing more than a "cop killer" for his 1970 conviction
in the slaying of an Iowa state trooper.

"Our narcotics investigators noticed a bus full of college students on the
West Side with Willie Lloyd on a corner that our officers were surveilling
in broad daylight," Needham said. "They found out this was a class of
DePaul students. They couldn't believe it."

Elbert 'Pierre' Mahone

Mahone was a "rare jewel" committed to turning youngsters' lives around,
Kublai Khan Muhammad Toure, Mahone's boss at Amer-I-Can Illinois, told the
Sun-Times two years ago.

Mahone, 38, had worked as a "facilitator" for the organization for about
two years, speaking to kids locked up at the Cook County Juvenile Temporary
Detention Center. The county-funded program paid him more than $12,000 a year.

But then, in October 2000, the flashy high-level member of the Conservative
Vice Lords--he wore full-length fur coats and drove a Rolls-Royce--was
executed on the West Side in a battle over drug sales. And, all of sudden,
the public wanted to know why an active gang leader had been employed by a
community counseling program.

The big question: Why did Amer-I-Can's board members--including former
Mayor Eugene Sawyer, state Sen. Donne Trotter and Cook County Commissioner
Jerry Butler--give Mahone access to children? He had a sordid criminal
record that included convictions for rape, robbery and drug dealing.

At the time, Trotter said he would not have allowed Mahone to work with
youths if he had known Mahone was still actively involved in gang activities.

More than two years later, Amer-I-Can still works with kids in the Juvenile
Temporary Detention Center. But since October 2000, when the Sun-Times
reported Mahone's involvement with the center, several changes have been
made to ensure that active criminals don't come into contact with the teens.

"Background checks have been stepped up and are more extensive," said Jack
Beary, spokesman for Cook County Board President John Stroger. "The
individuals that participate in the program are checked to make sure their
record with police is clean going back at least seven years. And staff of
the Juvenile Temporary Detention Center are present during the program
portions when these individuals work with the population."

Mahone was part of an outreach program, according to the organization, to
show the "problems, difficulties and heartbreak that [juveniles] bring to
their lives when they follow the wrong role models and their consequences."

Flash and cash

For young people, the lure of the gang life is the flashy car, the thick
wad of cash and the designer clothing the leaders flaunt.

Leaders "don't mind showing the young guys how they got the nice car," said
Rogers, the Mafia Insane Vice Lords member. "They'll say, 'Let me show you,
you go out there and get rid of this [drug] and I'll give you a little
something.' Little by little, they get into it."

One 27-year-old resident of Chicago's West Garfield neighborhood, where
Rogers makes between $1,500 and $2,500 a week selling drugs, said he
doesn't approve of the gangs or their leaders, but can see the attraction
of the easy money.

"This is a poor area; a lot of the kids selling drugs are helping their
parents pay some of the bills," said the man, who declined to give his
name. "I don't think they are giving back to the community; [leaders] might
be by giving them jobs drug dealing, but it's kind of a wrong way. You look
at the life of many of these kids, and they don't give a damn about life,
they have nothing to live for."

When a shoot-out claims another life, the gang leaders aren't the ones on
the street trying to quell the violence, said Reggie Murray and Melvin
Taylor, outreach workers with the community organization West Garfield
Ceasefire. They see nothing legitimate about gang leaders' community work.

"There is no positive aspect to it. I don't look at any gang activity as
positive," Taylor, the group's project coordinator, said as he walked down
the 1100 block of North Keystone, where boarded-up buildings sit side by
side with tidy brick homes behind tall, wrought- iron fences. Just weeks
earlier, a man in a car was gunned down on the block.

A resident named Wanda, 40, who met with members of the Ceasefire group as
they distributed anti-gang literature, called the drug dealers
"terrorists." Two years ago, her 19-year-old son Dwayne was shot dead by
drug dealers, and the year before Dwayne's twin brother Dwight was shot in
the face.

"The leaders are putting the young ones' lives on the line," said Wanda,
who declined to give her last name because she fears the gangs. "I wonder
if the young guys have any sense."

(SIDEBAR)

About Crime, Inc.

Today's stories begin a two-day series on the millions of dollars that
gangs make, the businesses they buy and the expensive toys they flash. Day
two will show how police and prosecutors are going after gang profits by
cracking down on money-laundering. Future installments of Crime, Inc. will
follow the money of other criminal enterprises.

GANG NATION

The Gangster Disciples, Vice Lords and Latin Kings are among the largest
and bloodiest street gangs in Chicago, with thousands of members and
factions across the country.

GANGSTER DISCIPLES

Estimated Chicago membership: 30,000.

Racial makeup:Black.

Symbols: Six-pointed star, upward crossed pitchforks, BOS (Brothers of the
Struggle), and a heart with wings.

Slogans: "All is One" and "What Up G?"

Alliance: Folks.

History: Gangs in the Englewood neighborhood on the South Side formed this
"nation" of gangs in the late 1960s and early 1970s. The founder was David
"King David" Barksdale, who was seriously wounded in an ambush in 1969 and
died of kidney failure in 1974. The gang adopted the Jewish Star of David
in his honor. The star and the other symbol, the upward pitchfork, are used
in the gang's graffiti, jewelry and tattoos. Larry Hoover, serving a life
term in prison, is still considered the gang's chairman. When he was
convicted in 1997, prosecutors estimated the gang was netting $100 million
a year.

VICE LORDS NATION

Estimated Chicago membership: 20,000.

Racial makeup: Black.

Symbols: Pyramid with a crescent moon, the letters "VL," a top hat with a
cane and gloves, a pair of dice, champagne glass, Playboy bunny head,
crescent moon with a five-pointed star, a dollar sign and globes.

Alliance: People.

History: The oldest street gang in Chicago, the Vice Lords can be traced to
the 1950s when the gang was formed as a club in the Illinois State Training
Center for Boys at St. Charles. It evolved into a gang when members
returned to their Lawndale neighborhood.

The Vice Lords controlled federal grants to run a teen center and job-
training classes for youths on the West Side, allowing the gang to control
the neighborhood, experts say. The Chicago police say Willie Lloyd is the
leader of the Vice Lords Nation, which comprises eight factions including
the Unknown Vice Lords, which he founded. In an interview with the Chicago
Sun-Times, Lloyd said he called the faction the "Unknown" Vice Lords as a
joke, referring to police reports in which unidentified perpetrators were
listed as "unknown."

LATIN KINGS

Estimated Chicago membership: 18,000

Racial makeup: Predominantly Mexican and Puerto Rican.

Symbols: Three-pointed crown, five-pointed crown, five-pointed star, five
dots, cross, king's head with a crown, lions, lion's head and letters "LK."

Slogans: "King of Love" and "Behold Latin King."

Alliance: People.

History: Founded more than 30 years ago, the Latin Kings are the oldest
Hispanic street gang in Chicago. The gang began in Chicago's Humboldt Park
and Southeast Side neighborhoods. Now the gang is in almost every Hispanic
community in Chicago. The gang is known for eulogizing slain members in the
form of wall murals. Gustavo "Gino" Colon, sentenced to life in May 2000
for running a drug ring while behind bars for murder, is considered the
leader of the gang, police say.

SOURCES: Chicago Police Department, National Gang Crime Research Center