Where's Whitey? Feds Can't Find Mobster On Lam -- Even His Lottery `Winnings' Have Been Frozen

BOSTON - Christmas marks a year since James "Whitey" Bulger, Boston's most elusive gangster, skipped town to avoid charges he extorted millions from a network of bookies, loan sharks and drug dealers.

When Bulger vanished just days before a massive federal indictment, "Whitey watchers" throughout New England cracked wise about his future stake in lottery winnings that he had been paid: $119,408 a year. His "Mass Millions" prize, won in 1991, was slated to last through 2010.

Now, Scroogelike in this holiday season, comes the U.S. attorney, who late last month won a decisive round in a legal battle to reroute Bulger's bounty into government hands.

Four years after Massachusetts began paying Bulger's winnings on a $14-million ticket he says he shared in with three friends, investigators now say his "stake" was just another Bulger scam, an after-the-win ruse cooked up to launder racketeering proceeds.

A legal end run?

They maintained that line in defeating a petition by Bulger's sister, who sought to collect the money as protector of her brother's estate. Prosecutors called her receivership petition an attempted end run around the law.

Why so much suspicion?

Whitey Bulger, investigators say, has earned it.

Bulger, 65, who also happens to be the eldest brother of legendary Massachusetts Senate President William Bulger, began his career with a string of bank robberies in the 1950s. He served time and took LSD in a government experiment that helped him win an early release. Freed, he rose to a top spot in Boston's Irish mob.

For officials who put together the 37-count case against Bulger and six co-defendants with extortion and other crimes, the chance to wallop Whitey and knock out such underworld figures as Stephen "The Rifleman" Flemmi and Francis "Cadillac Frank" Salemme was a golden opportunity.

Flemmi, 60, was accused of being Bulger's bagman. Salemme, 61, reputedly a boss of the New England mafia, served 15 years for a 1968 car bombing that tore a leg off the lawyer who was representing a mob snitch. Published reports quoted FBI wiretaps that reportedly picked up Salemme bragging to a Las Vegas mafioso of his underworld links to Flemmi and Bulger.

The other defendants are in custody; only Bulger is still at large.

As the search continues, a picture of his dealings has emerged.

An FBI affidavit used at Flemmi's bail hearing lays out the case against Bulger in describing how he extorted $50,000 from South Boston bar owner Timothy Connolly III in 1989. Connolly, then also a mortgage broker, told authorities that Bulger was mad at him because he had failed to expedite a $40,000 loan to an underworld figure who owed Bulger money. As a gun-toting Flemmi stood menacingly in the back room of a South Boston variety store where Connolly and Bulger arranged to meet, Bulger drew a long knife from a sheath on his leg.

A chance to buy his life

Cursing wildly, Bulger repeatedly stabbed the blade into a stack of corrugated boxes. Then he placed its tip against Connolly's shirt and told him he would have one last chance to buy back his life.

Connolly, according to the affidavit, said he agreed to pay $50,000 in two installments, which were to be split between Bulger and a confidant. Connolly made the first payment of $25,000 in cash. Then, in 1991, broke and afraid, he turned to the U.S. attorney. He reportedly wore a body wire around town and is expected to testify if the cases go to trial.

Police charged with investigating organized crime say the case against Bulger is both a law-enforcement dream and a public-relations nightmare.

The headache arises because Bulger is also widely rumored to be a top-echelon FBI informant who has eluded arrest over the years by trading information. If he is captured and brought to trial, law enforcement sources say, one likely defense is that his criminal activity was all just part of doing his job for the FBI. The FBI has made no statement about those reports.

Sister, lawyer silent

With Bulger out of sight, the only action on his case has been the attachment of his lottery winnings and the attempt by his sister, Jean Holland, to collect the winnings for his estate. From her home in suburban Boston, she declined to comment. Her attorney, Martin Cosgrove, did not return calls.

But the government has been outspoken.

"Whitey Bulger never hit the lottery in the first place," said U.S. Attorney Donald Stern.

The government alleges that Bulger and two men, one of them associate Patrick Linskey, paid a total of $2 million in cash to purchase half the winnings of a ticket bought by Linskey's brother, Michael. According to court documents, they claim Bulger kicked in $700,000 for his one-sixth share.

Although the Linskeys and Bulger say they agreed in advance to split the winnings, the government calls the arrangement a smokescreen.

"We allege that (Bulger) paid $700,000 in dirty money in return for a legitimate income stream of $119,408 a year for 20 years," Stern said.

Law enforcement sources say they know that holding onto Bulger's money might annoy him, but they do not expect it to bring him out of hiding.

And with more than half a million dollars in lottery proceeds already paid out before his account was frozen, Bulger has reportedly indulged his passions: sailing in the Caribbean, buying a condo in Florida, traveling through Europe on an Irish passport.

As the anniversary of his disappearance approaches, and they grumble to one another "Where's Whitey?" authorities know he could be anywhere.