While ‘The Sopranos’ captivated audiences with its gritty portrayal of mob life, its depiction of criminal enterprises wasn’t far from reality. Lessons from fictional gangsters can help real businesses safeguard against fraud.

The Mafia in Pop Culture

Today, the American Mafia is hardly a secret society, with former members like Sammy ‘The Bull’ Gravano and Michael Franzese relating stories from their past lives on YouTube channels, stories they’d previously related in popular books. The American mob has fascinated the world since the earliest Hollywood portrayals of it appeared in the 1930s in films like ‘Little Caesar’ (1931).

The American Mafia has for years captivated audiences: a collage of famous gangster movies from Scarface, Goodfellas through to The Godfather.

The Sopranos: A Case Study in Criminal Enterprise

One of the most popular American Mafia narratives in recent history was the HBO production ‘The Sopranos’. A 6 season show, it ended in 2007. The focus of the show was its main character, Tony Soprano. The early storylines focused on Tony’s mental health and the effect his blood family members, and his Mafia family members had on it. The later seasons expanded the setting and introduced new characters. Critics commended The Sopranos for its writing. The show paved the way for complex storytelling on television shows, in programmes like ‘The Wire’ and ‘Breaking Bad’.

The ‘Bust Out’: A Lesson in Fraudulent Tactics

While The Sopranos was not a documentary, the way the criminal characters made money was mostly accurate. During the 2nd season, the writers introduced the character David Scatino, a former school friend of Tony’s. A sporting goods store owner, Scatino is also a gambling addict. After borrowing money from Tony and some other characters, he cannot repay these high-interest loans. (Loansharking, the practice of offering money for loan at higher than legal interest rates is a common form of income for American Mafia members.) Scatino takes back the car he had given his son as a birthday gift, using the excuse that there’s mud on it, despite having previously told his son not to drive through mud. He then gives the car to Tony Soprano, who passes it on to his daughter. But the car is insufficient for the tens of thousands of dollars Scatino owes. To extricate himself from the loan, Scatino allows Tony to become involved in the sporting goods store. Tony and his underlings begin ‘busting out’ the shop: they use Scatino’s credit to buy everything from drink coolers to airline tickets, which they sell or give away.

From Fiction to Reality: Real-Life ‘Bust Outs’

This is a type of fraud the real-life Mafia engages in, and is depicted in the movie ‘Goodfellas’ (1990) as well. The 1985 book ‘Wiseguy’, by Nicolas Pileggi, inspired the Scorsese film. Wiseguy is about Henry Hill and his life as a low-level Mafia associate. In one section of the book, Hill describes how he and his fellow mobsters’ busted out’ a bar. Night after night, they would go to the bar and become drunk and disorderly. They would smash glasses, destroy property, abuse and assault the staff, disturb the other customers, buy food and drinks on credit and humiliate the owner. Their raucous behaviour causes the owner to speak with the local Mafia chieftain, Paulie Vario. Unaware that Vario had ordered Hill and the other mobsters to disrupt the bar’s normal operations, the owner asks Vario’s help. To the bar owner, Vario denies he has influence on the mobsters and acts as if he is uninclined to assist. The desperate owner negotiates with Vario, who, in exchange for part-ownership of the bar, says he’ll try to stop the mobsters from engaging in their nightly ritual. At this point, Hill and his associates do to the bar what Tony Soprano does to Scatino’s sporting goods store: they begin buying food and other items on credit, with no intention of paying for them. They buy so much that the owner can’t pay for the items. When the lines of credit run out and the restaurant is close to insolvency, they set fire to it and claim the insurance money for themselves.

A still from the movie ‘Goodfellas’ (1990): the mob buys cases of whisky using the bar’s credit. “As soon as the deliveries are made in the front door, you move the stuff out the back and sell it at a discount.”

The UK Perspective: Fraud in Modern Business

As a business owner, the lielihood of your customers being involved in criminal life may be low. But just as Scatino, in The Sopranos, conceals his gambling and credit problems from his family, he also conceals them from his suppliers. If Scatino’s wife and son aren’t aware that he has gambling problems, only finding out once he is near bankruptcy and has conceded even his son’s college fund to the mobsters, then his suppliers could not possibly have known either. Like most fraud, ‘bust-out’ fraud is based on concealment. Nor is it unknown in the UK. Fraud represents nearly half of all crime against UK businesses. Criminal groups may initiate bust-out fraud. Such groups are constantly looking for ways they can become involved in businesses. But for many reasons, business owners themselves may decide to engage in fraud. They may be victims, they may be victimisers or they may be totally unaware that their businesses are being used to steal money from other firms. Fraud can even stem, as the Home Office has written, from accidents or problems within a business, which business owners or other staff then attempt to obscure.

The Evolving Landscape of Fraud

The number and types of fraudulent activity impacting businesses in the UK are varied and numerous. Every year, they become more frequent and harder to detect. According to the Home Office, fraud-related commercial victimisation affected a quarter of every UK business in 2023. Last year, criminals attempted to steal close to a billion pounds using identity theft and, increasingly, payment fraud. Staff, customers and outside organisations were among the perpetrators. Most bust-out fraud today occurs online. Businesses have used accounting practices to conceal bust-out debt. Without your knowledge, your firm might have such debt or other fraud debt on your balance sheets.

Which is entirely the point. Just as you cannot know whether a fire will occur at a facility and so purchase fire insurance to protect against it, bad debt arising from fraudulent activity can be more insidious, harder to discover and more destructive than a fire. The consequences of bad debts can be – and in fact often are – much worse than fire damage.

Protecting Your Business: The Importance of Vigilance and Insurance

The tactics of fraudsters have evolved far beyond mobster shakedowns. From complex online schemes to insider threats, businesses face a myriad of risks that can be as devastating as any Hollywood mob plot. Fraud can come from unexpected sources and often goes undetected until it’s too late. Bad debt protection is one of many robust financial controls that every business should use. If you’re dealing with firms on a trade credit basis, it is essential that you use trade credit insurance to mitigate those risks. Being fully aware of the damage that fraud (and other risks) can pose is vital to the strength and continuation of your business. Insurance brokers and consultants can work for you to provide safeguards. They can offer you insights into commercial risk and will guide you toward the best way to protect yourself against them.