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An Unlikely Informant

A criminal himself, he was no James Bond, but undercover informant Michael Blutrich was nevertheless one of the most effective civilian informants ever, according to authorities
An Unlikely Informant 14:04

The following script is from "An Unlikely Informant" which aired on May 10, 2015. Anderson Cooper is the correspondent. Deirdre Cohen and Sarah Koch, producers.

Michael Blutrich is not a name you'll recognize but the feds consider him to be one of the best civilian informants they ever had against the mob, as well as one of the unlikeliest.

Blutrich's undercover work helped send dozens of Mafia members and associates to prison, including John Gotti Jr., whom the government considered acting boss of the Gambino crime family.

Michael Blutrich CBS News

Risking his life by wearing an FBI wire, Michael Blutrich recorded about 1,000 hours of conversations with mobsters. But what happened to him after he cooperated with the FBI is as surprising as how his story began, which you'll hear him tell in full for the first time.

The secret to Michael Blutrich's success, aside from his brains, may very well have been his appearance and personality. Street tough? Nerves of steel? Not...exactly.

It would be hard to find someone who looks less suited for the job of Mafia informant than Michael Blutrich.

Anderson Cooper: When I first saw you walking down the street, I literally said, "That's the guy?"

Michael Blutrich: Thank you very much.

Anderson Cooper: No, I mean you were probably the unlikeliest informer.

Michael Blutrich: And I think that's what worked in my favor. I didn't think I had the courage. I don't think they thought I had the courage.

"Lotta lying because, you know, most of the stuff that we were telling the Mafia were just invented stories to get them to talk."

Unlike most informants, Blutrich wasn't a member of any organized crime family; he was a well-off, Park Avenue lawyer.

Michael Blutrich: I was being-- running a law firm during the day. I was going out at night with the FBI. I'm dealing with Mafia people. I'm making up stories about where I'm going and why am I going.

Anderson Cooper: How'd you keep all the lies straight?

Michael Blutrich: Lotta lying because, you know, most of the stuff that we were telling the Mafia were just invented stories to get them to talk.

A mobbed-up city 01:59

Michael Blutrich was in a unique position to inform on the mob because he was being extorted by them for money. Back in the 1990s, he owned a blockbuster strip club, Scores, a playground for bankers and businessmen with fat expense accounts. The mob demanded a share of the profits.

Anderson Cooper: How much money was the club making?

Michael Blutrich: At its zenith, maybe, you know, 400,000 a week.

Anderson Cooper: Almost half a million dollars?

Michael Blutrich: Right.

Anderson Cooper: That's a lotta money.

Michael Blutrich: Yes, sir.

At Scores, there were lines outside the door, and celebrities and professional athletes partying inside.

Michael Blutrich: The New York Rangers came to Scores on the night they won the Stanley Cup, filled the Stanley Cup with champagne and shared it with everybody, and then left the Cup.

Anderson Cooper: They left the Stanley Cup there.

Michael Blutrich: They got drunk, they left the Cup.

Michael Blutrich says the Mafia showed up as he was opening Scores on this block in New York's Upper East Side neighborhood.

Michael Blutrich: And it's not one of these tough guy, thuggy approaches. It's more like a friendly approach. You know, I wanna save you from having a problem. You know you gotta be protected.

To catch a thief: a camera on a camera on a camera 02:42

Anderson Cooper: So they're doin' you a favor?

Michael Blutrich: That's exactly right.

Michael Blutrich: So I went along not realizing that when you let the door open and the lion comes in, he doesn't settle for what he asks for.

Anderson Cooper: You gave 'em a finger and they'd take an arm.

Michael Blutrich: No, they wouldn't have been happy with an arm, maybe an upper torso.

This is Stephen Sergio who, according to the FBI, was an associate of the Gambino crime family. He was the first extortionist to push his way into Scores.

Anderson Cooper: What was your job at the club?

Stephen Sergio: I didn't do any accounting work. I didn't do any scheduling. I didn't do anything. But I was there to make sure everything went smoothly.

Anderson Cooper: You are an imposing guy, though.

Informing on the mob: a dangerous game 00:51

Sergio considered himself an entrepreneur. He didn't just take money from Michael Blutrich, he took a cut from almost everybody who worked at the club -- the dancers, the DJ, the busboys. The janitor. His take added up.

Stephen Sergio: After it was $1,000 a week, it became $20,000 a week.

Anderson Cooper: So how did it work? You go to the liquor salesman and say, "You wanna keep selling liquor to this club?"

Stephen Sergio: Very, very, very friendly.

Anderson Cooper: "You gimme a cut?"

Stephen Sergio: Yes.

Stephen Sergio was such a strong presence at Scores, he could hire and fire people at will... take the case of the club's accountant who got in Sergio's way.

Stephen Sergio: He was trying to keep an accounting of me instead of keeping the account of the club.

So Sergio simply replaced him with someone he could control.

Stephen Sergio: So, a certain person applied for a busboy job, and I doctored it into making him the in-house accountant.

Anderson Cooper: Did he have any bookkeeping experience--?

Stephen Sergio: Absolutely none. He was-- he was totally incompetent.

In 1996, the FBI got a tip about the extortion and conducted a raid on Scores and that's when they made Michael Blutrich an offer he couldn't refuse.

Michael Blutrich: I remember my reaction was "are you mistaking me for - for someone with courage? I mean what are you talking about? You want me to wear a wire?"

But Michael Blutrich didn't have much choice. He wasn't just a club-owning lawyer being extorted by the Mafia, he was also a crook, and the FBI knew it. He opened Scores with money he'd stolen from the National Heritage Life Insurance Company in Florida.

Blutrich and a few partners bought the insurance company in 1990 by writing a bad check and went on to bilk nearly 26,000 mostly elderly policyholders out of their life savings. Ultimately, it was a theft of $440 million - one of the biggest white collar crimes in U.S. history.

Michael Blutrich: It was easy money, and I can never have a greater regret than going down that road. I mean, how stupid could I be?

Joe Judge: They got control of the insurance company. And they looted it.

Former FBI investigator Joe Judge and former Assistant U.S. Attorney Judy Hunt had discovered the scam and were building a case against Blutrich and his partners in Florida.

Judy Hunt: I mean, they truly were New Yorkers who believed that us people down in Florida were just too dumb to figure out the convoluted schemes they had put in place.

Michael Blutrich: I'm not making excuses. I'm not defending myself. I sometimes tell people I went to the dark side. I just--

Anderson Cooper: You got greedy.

Michael Blutrich: I got greedy.

Michael Blutrich figured if he cooperated with the FBI against the Mafia in New York, Florida authorities would have to give him a break on his crimes there.

Michael Blutrich: The whole inducement was "Come on board. Become part of the government's team. And you will be redeemed."

Bill Ready: You basically explain to Michael, "You have no choice. There's no way out."

New York FBI agent Bill Ready, who knew all about Blutrich's problems in Florida, had him under surveillance for months before developing him as an informant against the mob.

Bill Ready: He was nervous a lot. He always needed constant reassurance.

Anderson Cooper: Would he call you a lot?

Bill Ready: Yeah (laugh).

Anderson Cooper: All day long he'd be calling you?

Bill Ready: Oh yeah, yeah. And it would start in the morning and would continue throughout the day right until my head hit the pillow at night.

In 1997, Ready and the FBI used hidden cameras in Blutrich's offices to record meetings with all manner of suspected mobsters.

The cameras captured Blutrich handing over envelopes of cash and alleged mob associates bragging about crimes.

"I f------ beat him so bad. Bang, bang, in his head, everywhere. There was blood everywhere."

Michael Sergio: "I don't wanna win."

They also recorded some not so subtle to Blutrich's partner by alleged Gambino associate Michael Sergio.

Michael Sergio: "Take care of yourself, alright? And don't worry about your health, you'll be fine."

Anderson Cooper: You look at the tapes, and some of the guys you're dealing with, I mean, it-- they're out of Central Casting.

Michael Blutrich: You're absolutely correct.

Anderson Cooper: I mean--

Michael Blutrich: And sometimes I would just laugh inside, you know, to say what-- what-- well look what my life has become. They would come in with the jewelry, and the sweat suits and-- they'd sit down, "Hey, (unintel), you know, it's so good to see ya, you know, what's goin' on, man."

But the office wasn't the only thing the FBI bugged for sound. Michael Blutrich wore a wire for 11 months. It was a clunky audio recorder strapped to his inner thigh.

Bill Ready: Back in those days, our equipment was archaic compared to what, what's out there now. What we would use is-- we'd call it an F-BIRD, which stands for, you know, F.B.I. recording device.

Anderson Cooper: F-BIRD.

Bill Ready: F-BIRD, yeah.

Michael Blutrich: And they duct-taped the F-BIRD to my leg and--

Anderson Cooper: This is not exactly high tech.

Michael Blutrich: Well, no, I'm-- I'm saying, "What-- what-- what's go-- what's goin' on here?" This is how they do this? They don't do it in the movies this way. You don't see James Bond, I mean, duct tape wrapped around his leg. So this is how we do it. And the other problem is, the F-BIRD gets really hot, so as I'm doing the first night which was hours and hours and hours, my leg is like a skillet. I mean it's burning. You know I'm trying to be pleasant and nice and natural and it's killing me.

The first night he wore the wire, he went to dinner with alleged Gambino family associate Michael Sergio. Blutrich successfully prompted him to boast about his mob connections, describe crimes and name names.

Michael Blutrich: And he's talking about all these different people, and at the end of it, we go back to the office for the debriefing and the first words out of their mouth was, "That was great, except we gotta do it again because the recording device failed." My initial impression's, "Again? You want us to do the same thing again? Don't you think he's gonna find that a little odd?" "Nah, it'll be fine. It'll be fine."

Blutrich did go out again and again. In total, he recorded about 1,000 hours of conversations mostly in restaurants over long dinners.

Michael Blutrich: The FBI had given us a password, that if we uttered and they heard they would come crashing through the windows to save our lives.

Anderson Cooper: What was the password?

Michael Blutrich: The password was, "I think I'm gonna puke," to which I said, "What?"

Anderson Cooper: That was the password the FBI decided to give you.

Michael Blutrich: That-- was their pa-- I said, "Listen--"

Anderson Cooper: So-- so if you said, "I think I'm gonna puke--"

Michael Blutrich: They're comin' in.

It was dangerous work. There were several times mobsters surprised him and patted him down, nearly discovering his recording equipment.

Michael Blutrich: I mean, I had guns taken out, brandished in front of me, put to my head-- threatened all-- you know, in every which way you could be threatened.

Anderson Cooper: What kept you motivated?

Michael Blutrich: If I did all this for the government, the reward was, was plain. I would not see the inside of a jail cell.

With Michael Blutrich's help, in 1998, the Department of Justice was able to indict dozens of alleged members and associates of the Mafia, including John Gotti Jr., who the FBI considered the acting boss of the Gambino crime family. It was a huge success and former prosecutor Art Leach says much of the credit goes to Michael Blutrich.

Anderson Cooper: In the pantheon of informants, where was Michael Blutrich?

Art Leach: He would be in the scale of extraordinary.

Anderson Cooper: No one like Michael Blutrich.

Art Leach: Ten times better than the best.

Art Leach investigated organized crime for the U.S. Attorney's office in Atlanta. Blutrich was his star witness against the Mafia in a related case there.

Art Leach: He is a trained lawyer and a good lawyer. He understood what kind of evidence was necessary in order to make these cases, and he just worked his way towards it.

Anderson Cooper: It's easy to underestimate him but --

Art Leach: Exactly.

Anderson Cooper: But he shouldn't be underestimated.

Art Leach: And they did underestimate him and they paid mightily for it.

But Blutrich's hands were not completely clean either. Before he began cooperating with the FBI, he also had committed crimes in New York. At the end of the investigation, federal authorities brought seven counts against him including racketeering, tax evasion and receipt of obscene materials.

Michael Blutrich pleaded guilty but did no prison time because of his cooperation.

But in Florida when Blutrich had to face the court in the insurance fraud case, it didn't go as he expected, despite efforts by federal authorities to help him. FBI agent Bill Ready and former prosecutor Art Leach made statements to the Florida judge on bBlutrich's behalf. And then-assistant attorney general Michael Chertoff, wrote a letter praising his quote "extremely valuable cooperation."

But in the end, Michael Blutrich was sentenced to 16 years in prison, far more time than any of the mobsters he helped put away.

Anderson Cooper: When you heard the sentence...

Michael Blutrich: I almost passed out. I almost passed out.

Anderson Cooper: You know, you helped steal millions of dollars from an awful lotta people, from innocent people-- 16 years in jail doesn't sound like a huge amount for the crime."

Michael Blutrich: I couldn't disagree more.

Anderson Cooper: Do you think you shoulda done any prison time?

Michael Blutrich: I would have lived comfortably with zero to a year.

Judy Hunt: Arrogance. Arrogance. I think he thought that the cooperation against the mob was so significant and so powerful that it would essentially dispense him from any culpability or punishment in Florida.

Former prosecutor Judy Hunt says Blutrich could have fared as badly as his co-conspirator Sholam Weiss who was sentenced to prison for a record 845 years. But former prosecutor Art Leach sees it differently.

Anderson Cooper: You think he got a raw deal?

Art Leach: I don't think that the judge properly considered how important his cooperation was to the Department of Justice and how horrible-- his sentence was, in terms of developing cooperators like Michael Blutrich in the future.

Blutrich ended up serving 13 years in prison and was released two years ago. Despite betraying the mob and helping send a lot of wiseguys to prison, Michael Blutrich is not in a witness protection program. He's out on the streets, hiding in plain sight.

Anderson Cooper: Are you scared?

Michael Blutrich: I'm fatalistic. If I'm gonna sit and shiver, I'm not gonna have a life. So, I forfeited my life 13 years in jail, I'm not gonna forfeit the rest of it by being scared.

Anderson Cooper: Do you believe his life is still in danger?

Art Leach: His life is absolutely in danger. He will be in danger for the rest of his life.

Anderson Cooper: From the Mafia?

Art Leach: The Mob takes retribution seriously. And it has a long memory and they will find an opportunity, if possible, and they will kill Michael Blutrich.

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