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
million, and forfeited cash and property valued at $5 million. He was
convicted of drug conspiracy, tax fraud, money laundering, operating
an ongoing criminal enterprise and ordering the killings of three
enemies, two of whom were, in fact, killed.

With his drug money, Hill moved into the recording business, founding
New York-based Pocketown, named after his South Side neighborhood at
78th and Stony Island. Pocketown scored a top 10 music video with
"Froggy Style" by Nuttin' Nyce in 1995 and published "Wandering
Eyes," which was on the soundtrack of Whoopi Goldberg's film "Sister Act 2."

He also plowed his cash into a bus company, American Tour and Travel,
which offered a Heritage Tour of 20 Chicago sites of significance to
black history. He even spent $700,000 in drug profits on a movie,
"Reasons," which was based on his life.

A witness at Hill's trial described how he bragged about his toys: a
$600,000, eight-passenger Lockheed jet; a $900,000, 73-foot yacht
dubbed Magic Challenger, and five homes, including a four-bedroom
A-frame on 11 acres complete with indoor pool on Boy Scout Road near Kankakee.

Hill was one of the top 15 most-wanted fugitives in America when he
was nabbed in the west African country of Guinea, where he had become
a coffee magnate, prosecutors said.

At Hill's 1998 sentencing, U.S. District Judge Charles P. Kocoras
called Hill a smart, charming and organized businessman.

"It is just a tragic thing that you chose to commit all of those
skills and your abilities to a life of crime," Kocoras said.

Phones, CDs And Haircuts

A third drug dealer who made a foray into the music world was
Lawrence Nathan, now 68. The reputed Gangster Disciple was convicted
in 1997 of narcotics racketeering and selling drug paraphernalia from
his South Side record shop. He was sentenced to four years in prison.

Nathan's guilty plea cost him the store, Mary's Records at 361 E.
69th, plus about $97,000 in cash and money orders, a Jeep and dozens
of pieces of jewelry, all of which he was forced to hand over to the
government.

Music stores, currency exchanges, car washes, beauty shops and
apartment buildings are among the traditional fronts drug dealers use
to launder money.

Unless police count every customer walking into a barbershop, they
don't know how much business the store does. A drug dealer can
overstate the barbershop's business to hide his drug profits.

Dope dealers with seemingly legitimate businesses will undercut
competitors' prices on phones, CDs or haircuts to keep a steady
stream of customers coming through the door.

"They're a scourge on the community," police Sgt. John Lucki said.

No Cub Scouts Or Boys Club

Chicago's major gangs are 40 to 50 years old. They're as much a part
of some neighborhoods as churches and schools.

Sitting at a back table in Grandma Sally's Family Restaurant in
affluent west suburban River Forest, Willie Lloyd sips a glass of
orange juice while explaining how the Vice Lords provided a social
outlet for kids growing up in his poor neighborhood in Lawndale.

Lloyd, who became the chief of the Vice Lord Nation in the 1970s,
said he began his own faction, the Unknown Vice Lords, in the
mid-1960s when he was about 15 years old.

"There was no Cub Scouts or Boys Club for us," said Lloyd, who has a
thin scar running from his forehead to his neck, which he explains
came from a box cutter in a fight when he was a teenager. "The YMCA
was not really available to me. I just felt brotherhood and pride in the gang."

The Vice Lords were among the most violent street gangs in the 1960s,
but they also became a nonprofit corporation and set up a
neighborhood ice cream parlor called Teen Town, two Tastee-Freez
franchises and the House of Lords, a hangout with pinball machines
and a jukebox.

The enterprise even sent a letter on Vice Lords stationery to Mayor
Richard J. Daley after the West Side riots of 1968. Conservative Vice
Lords Inc. President Alfonso Alford offered to launch a
beautification program with the city's help, writing, "In the past
few days, we were on the street urging young people to end the
burning and looting."

He never heard back from the mayor.

The budding social activism of the Vice Lords and other gangs was
discarded in a brutal scramble for big money in the 1970s, Lloyd said.

Sitting next to Lloyd was a beefy man whom Lloyd introduced as a
Gangster Disciples friend. The man remained stone-faced during the
two-hour interview, breaking his silence once--to say grace over his spaghetti.

"With the drugs came the violence," Lloyd loudly exclaimed, sitting
at Grandma Sally's, causing customers to stop eating and look over at
him. "Greed became the motivating factor of these organizations. It
became almost military in operation because we had to bring in
weapons to guard the money, drugs and turf."

Lloyd--who claims he is now trying to stop the violence over money,
drugs and turf--spent much of his life behind bars because of it.

He served 15 years in prison for his part in the killing of a state
trooper in Iowa in 1970. He has been arrested more than 30 times, and
survived two assassination attempts by other gang members. He was
released from federal prison last year after serving an eight-year
sentence on a federal gun conviction.

Though he was in prison for much of the 1980s and 1990s, his gang,
the Vice Lords, dominated the city's drug sales--and murder
statistics--along with the Gangster Disciples and the Latin Kings.

Gangs have become a major economic force in the city, said Steven
Levitt, a University of Chicago economist. He estimated their annual
profit from drugs at about $500 million, about two-thirds of 1
percent of Chicago's gross domestic product, a measure of goods and
services moving through the economy.

Tom Donahue, a federal drug enforcement coordinator here, called that
figure "conservative" and said the total is closer to $1 billion.

Gangs also are more violent than their colleagues in crime--the
mob--ever were. In the Al Capone era of the mob, according to the
1929 Illinois Crime Survey, 215 gangsters were gunned down in four
years in Chicago. Last year alone, 249 slayings were linked to gang
activity, police said.

Ledgers, Dues And Guns

As gangs grew more corporate in the 1980s and 1990s, they stepped up
their collection of dues and "street taxes," solidifying their
control of neighborhood drug operations much like restaurant chains
exert control over franchisees.

The Sun-Times has obtained the ledger of one street-corner "set" of
the Latin Kings that shows how dues were allocated from 1996 to 1997.

The faction's leader told his foot soldiers their dues would pay for
guns for the gang, the handwritten ledger says. The North Side group
included 20 members who met 42 times over a year, each paying an
average of $15 in dues at each meeting. Over the course of the year,
they wound up giving about $12,600 to gang leaders for a gun shopping spree.

The Latin Kings operate dozens of such crews--each funneling dues to
the top, said Andrew Papachristos, director of field research for the
National Gang Crime Research Center. He estimated the gang collected
hundreds of thousands of dollars in dues throughout the city in that
one year alone.

In addition to dues, Latin King foot soldiers, whom Papachristos
studied, were required to pay a "street tax" of more than half of
their drug profits to higher-level gang members.

The teenage foot soldiers wound up making an average of $10 an hour.
Their job description: hang out on street corners and watch for
police; keep track of the money, drugs and weapons, which lay hidden
in separate places, and peddle the narcotics to customers, many of
whom drive in from the suburbs.

"It's mostly boring work," Papachristos said.

Foot soldiers, most of them under 18, "basically have a job at
Target, but their risk is enormous," said Gregory Scott, an assistant
professor of sociology at DePaul University.

Just ask Ranell Rogers, a 23-year-old member of the Mafia Insane Vice
Lords. He wears a tattoo of a tombstone on his chest, a homage to his
older brother Amin, killed in 1997. Like most gang members
interviewed by the Sun-Times, Rogers knows of dozens of fellow gang
members, friends, who have been killed.

"I graduated from a school not far from here, and there were maybe 47
boys in two eighth-grade classes. There are maybe eight of us left
alive," said Rogers, who lives on the West Side. "To get by, you have
to kill your conscience."

WHO Needs Colors

The honchos of Chicago's biggest gangs--from Gangster Disciples
chairman Hoover to Latin Kings chief Gustavo "Gino" Colon--have been
taken down by federal prosecutions since the mid-1990s.

As a result, the discipline and corporate hierarchies of gangs such
as the Gangster Disciples are breaking down.

"Don't nobody care what you are anymore, you fake like you're best
buddies, but behind closed doors you're calling the cops on the other
guys," said Rogers, a Mafia Insane Vice Lords member for about 10 years.

On the streets, many young gang members no longer know the laws for
their gangs--the law, for example, that they are not to use addictive
drugs. They also may not know anything about their gang leaders--who
may have been imprisoned for as long as the younger members have been alive.

Prison, and not the streets, is considered the "gang university"
where they are expected to learn the rules and history of their
organizations if they are to survive.

Gone from the streets are the outward trappings of gang membership
proudly displayed in the 1980s and 1990s.

Gang members have stopped wearing gang colors to "reduce rivalry and
violence, decrease pressure from law enforcement and communities, and
increase profits," according to the 2002 National Drug Threat
Assessment, an analysis the federal government released.

And on the streets, these young foot soldiers--who dutifully paid
their dues and street taxes in the 1980s and 1990s--are now
increasingly snubbing the gang leadership.

"You have pockets of GDs all by themselves," said Chicago police Sgt.
Marc Moore, as he drove past a Gangster Disciple guarding one of the
high-rises in the Robert Taylor Homes--where a Chicago police rookie
was gunned down in 1998 during an undercover drug stakeout.

"The allegiance is not as strong to the gang as it used to be. The
allegiance now is to making money."

Greed has prompted strange and uncomfortable alliances--anything to
get the dope sold and the money collected. Gangs now rent out
corners--and entire public housing high-rises--to rival gangs to keep
the money flowing. The Gangster Disciples, for instance, "rented" an
apartment building they controlled in the Robert Taylor Homes to the
Mickey Cobras for $10,000 a month, police say.

The lack of a strong hierarchy in many Chicago gangs is leading to
shoot-outs as young members vie for power.

"There is a struggle from above to decide who is going to claim the
lower levels," Columbia University Professor Sudhir Venkatesh said.
"It's as though you had all of the McDonald's franchises now removing
their signs and only putting up 'Burgers for Sale.' And all of the
corporate leaders of Wendy's, McDonald's and Burger King are fighting
to win over the allegiance of those franchises and put their name on
the signs."

Police and state prosecutors see these power struggles as weakness.
And they think the time is ripe to attack gangs with a new weapon.

Tax returns--not tommy guns--brought down Al Capone.

Going After The Money

Taking a lead from the feds, state prosecutors will comb through
state tax returns and other financial records of suspected drug
dealers in what they think could become a model for the rest of the nation.