why do mafia guys set up restraunts?

Question

if their main business is crime, why bother setting up a legit restraunt or business?

Answer 1

These mobsters need to have a visible means of support. Otherwise, they cannot justify to the IRS how they are paying for the all of the wonderful things that they purchase. They don't want to risk being indicted for income tax evasion.

If you have own a luxury home, two luxury cars, a speedboat, and some very expensive paintings, but have seemingly no visible means of supporting such an extravagant lifestyle then, the IRS is going to wonder just how you can afford it.

There are two types of situations where the Feds can't easily bust you:

1. You are able to prove legimately acquired such funds, i.e., that you own a business that business generates enough profit to enable you to afford such a lifestyle. This is especially acceptable when you are able to provide appropriate business records, i.e., invoices and sales receipts.

or

2. The Feds cannot prove that you did not earn the amount income that you claim.

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Another reason why some mobsters have some sort of "front" business is to enable them to enage in money-laundering activities. There are several types of businesses that are ideal for money laundering purposes: tanning salons, laundrymats, bars, video rental stores, pool halls, video arcades etc.

Pick a business where you don't have any inventory tracking. For example a clothing store purchases pants and shirts from the supplier and then re-sells them to the customer. In that case, the Feds can easily approximate the maximum amount of money that you can reasonably claim as being your yearlythat you make checking the amount of stock that you order on a regular basis from your wholesale suppliers by looking at your purchase invoices. So you can't easily use a clothing store to launder money.

It is even better if you own a business where your customers always pay cash, i.e. a laundrymat. In this case, it's not so easy for the Feds to determine how much income the business generates. And best of all, they can't ask you for sales receipts to verify your income, because laundrymats don't give customers sale receipts! In addition, with cash-only businesses, you can easily—not claim—a portion of your income on your tax statements, without getting caught.

Answer 2

Mafia bosses need a legitimate business to use as a cover to keep the IRS at bay. It's a way of justifying their huge bank accounts and expensive houses. Someone who owns a mansion and does not have a legit "job" on paper would surely catch the eyes of the feds.

My guess about the restaurants is that they are the easiest to set up and traditionally, eating out has been used as a way of socializing and conducting business not just in the Mafia, but in Italian culture in general.

Answer 3

Restaurants do a lot of cash business, so it's easy to launder illegal money, They also provide a good "legitimate" occupation for the owner, as well as a place for their associates to work.
It's not just restaurants, any business with a high cash flow is good.

Answer 4

I would say to help disguise how the money is coming in. If you have a popular legitimate business it may be harder to try to catch them for kingpin.

Answer 5

Cash sales are a great way to hide and launder illegal income

Answer 6

Because Italians like to eat.

Answer 7

its a tax shield so they can show legitimate income to the IRS and not get drilled with tax evasion (most the money they make is illegal so they can't tell the government about it).

Answer 8

To launder money from their criminal activities.

Answer 9

All the great mobsters are chefs?

Answer 10

it's a great way to launder money