BY EUGENE H. METHVIN

READER'S DIGEST Senior Editor Eugene H. Methvin, was a member of the President's Commission on Organized Crime from 1983 to 1986.

A MAFIA-CONNECTED CROOK takes over a waste-disposal company by threatening its president with death. He then illegally deposits toxic chemicals at a Staten Island dump, which eventually explodes, causing a spectacular fire.

FBI agents monitoring an informant's body wire hear two men talk of bribing a New York judge to "fix" a narcotics prosecution. Their investigation ends with the conviction of the judge on four counts of accepting bribes, over more than a dozen years, to help a gangster, two gamblers and a narcotics dealer.

When Tony Scotto, a vice president of the International Longshoremen's Association and a capo in the Gambino Mafia gang, goes on trial for extortion from shipping companies, then Governor Hugh Carey and former New York City mayors Robert Wagner, John Lindsay and Abraham Beame testify as character witnesses. FBI tapes of Scotto's own voice in criminal conversations leave no doubt about his guilt, and he serves three years in prison. When Scotto comes out, top New York politicians flock to a festive "welcome home" dinner in his honor.

METROPOLITAN NEW YORK, home to 18 million people, is also home to a clandestine army of 940 identified La Cosa Nostra gangsters and nearly 10,000 criminal associates. From their New York headquarters they manage illicit enterprises stretching from Massachusetts to Florida to California. To a shocking degree, the Mob "owns" New York.

The modern U.S. Mafia began in New York in 1931 when warring Italian gangsters made peace, dividing themselves into five "families" and creating a "commission" of bosses to arbitrate disputes and enforce rules. They called their confederation La Cosa Nostra, "Our Thing." The commission added representatives from other cities and grew to rule a nationwide crime syndicate.

Consider how La Cosa Nostra reaches deep into the pockets of New Yorkers and of every other American family:

Hidden surcharges. Federal authorities say Mafia gangsters control 104 New York locals, embracing 163,000 members, of four major unions-the Longshoremen, Laborers, Teamsters, and Hotel and Restaurant Employees. Such control, reports the President's Commission on Organized Crime, "has enabled the Mob to determine who will do business, to decide when and where people will work and even to dictate wages and benefits. Millions of consumers unknowingly pay organized crime a surcharge on a wide range of goods and services."

A tenth of the nation's sea cargo moves through the New York-New Jersey ports, and Kennedy International Airport handles most of the air cargo between the United States and Europe. Controlling Teamsters who drive the trucks and Longshoremen who man the docks, La Cosa Nostra levies a heavy tax on the nation's consumers through extortion, hijacking, cargo theft and insurance fraud. The Syndicate has undermined the competitiveness of American goods and has placed a tremendous economic burden on the entire Northeast.

Mob-dominated Teamster locals include some 2500 truck drivers, warehousemen and office workers who staff Kennedy Airport's 200 air-freight companies and handle an estimated $50 billion in cargo yearly. Their boss, according to the President's Commission on Organized Crime, is Harry Davidoff, whom a Senate report labeled "a ruthless thug." Gangsters use the Teamster locals to maintain an intelligence-gathering network for planning heists of rich cargoes- gems, negotiable securities, cash. The Justice Department is prosecuting Davidoff and six others-a company executive and five Syndicate associates-on charges of conspiring to commit extortion.

Criminal cartels. New York's mobsters own major meat, fish and poultry suppliers. During one legendary investigation, New York detectives recorded a conversation between a gangster and a customer. The buyer, who suspected he was being given horse meat, was told: "Well, some of it moos, and some of it don't moo." A recent federal indictment charges Anthony "Fat Tony" Salerno, the Genovese gang boss, with extorting kickbacks on the rolls and hot dogs supplied to many Manhattan fast-food eateries.

In 1982 a Teamster official's testimony and FBI electronic surveillance revealed a cartel involving four major city moving companies.. According to the resulting indictment, Bonanno gang boss Phil Rastelli exacted an extortion fee on all moving contracts and oversaw its distribution to Mob and union officials. To its chagrin, the FBI found it, too, had unknowingly paid tribute of $3500 when it used one of the companies to move into the new Manhattan federal building.

A fifth of the nation's made-in-America clothing comes through New York's Garment District, and virtually every pocket is pre-picked by the Mafia. The industry is supplied by small shops all over the city. To move their clothing to warehouses, the shops must hire Mob-dominated trucking companies that charge double what independent truckers would if they dared compete. Shop owners do not hire cheaper competitors for fear of reprisal. "Our shop doesn't have fire insurance," one owner explained when asked why he did not hire a cheaper trucker. A trucking company executive who dared tell a grand jury about Mob methods of dealing with competitors and honest unions was murdered by a hail of bullets from a passing car.

Syndicate domination of the waste-removal industry goes back several generations. New York's 4oo,ooo industrial and commercial enterprises have to rely on some 400 small carters, mostly of Italian extraction. La Cosa Nostra enforces an illegal customer-allocation cartel among them, collecting a share of the profits. When one carter refused to join the Mob-dominated trade association, his 73-year-old mother-in-law answered a knock on her door and was killed by a shotgun blast in the face. Another carter refused to sell a dump to a mobster; his house was torched with his two children inside.

Over the past 30 years, at least 14 major criminal Investigations and prosecutions, plus repeated Congressional probes, have failed to loosen the Mafia's grip on carting. One result, according to Rand Corporation economist Peter Reuter, is that carting prices are 50 percent higher than they would otherwise be.

Construction shakedowns. A recent investigation by The Wall Street Journal concluded that New York's $2-billion-a-year construction industry is "riddled with extortion, vandalism, bribery, bid-rigging and inefficiency." Building costs are 25- to 35-percent higher than in any other city, with more than half of that going into Mafia coffers. Take just two examples:

Businesswoman Tama Davis budgeted $100,000 to open a small restaurant at the South Street Seaport. Shakedowns, union featherbedding and other problems ballooned her start-up costs to $$350,000. Her operation is now defunct.

As the new headquarters of Dow Jones & Co. neared completion this year, the work was marked by shakedowns and extortion. Vandalism alone cost the company $500,000, and there were thefts of everything from a $$50,000 air conditioner to a 400-pound safe. Says a Dow Jones official, "If it were my decision, I would never build in New York again."

Megafrauds. New York gangs also run a stable of experts adept in stock manipulations, insurance and bankruptcy scams and sophisticated bank frauds. Their swindles repeatedly cause financial disasters. For example, four New Jersey banks closed after corrupt unions

lured them into accepting big deposits of benefit funds and relending the money to gangsters-who failed to repay. One Mob-connected swindler snaked $14.5 million out of another New Jersey bank, much of which went into a loansharking operation and to a drug dealer.

Colombo gang captain Michael Franzese defrauded victims ranging from General Motors and Mobil to the U.S. Small Business Administration. But his biggest scam was bootleg gasoline. Franzese put together a combine of independent distributors, who were seduced or muscled into a complex corporate shell game that siphoned gasoline out of legitimate companies, via a chain of phony companies, avoiding federal, state and local taxes. In two years the combine stole more than $$150 million. After co-conspirators turned government witnesses, Franzese, sentenced to ten years in prison and five years' probation, was ordered to forfeit $4.75 million in property and to repay $10 million to various victims. No one knows where the rest of the money went.

Drugs. New York's Mafia bosses smuggle in a large percentage of the 13,000 pounds of heroin sold yearly in the United States, nearly half of which is consumed by New York addicts. In 1984, federal and New York City Police Department investigators began a two-year probe, tracing dozens of seemingly separate sales organizations to a handful of Mafia gangsters. These mobsters were smuggling in more than $2 billion worth of heroin annually, enough to supply nearly 100,000 addicts. In early-morning raids last April, federal agents and state and city police rounded up 38 gangsters whose top bosses belonged to the Lucchese and Genovese families.

SIX YEARS AGO, top FBI officials realized their assault on the Mob was faltering. "Inadvertently, we were a career-development service for them," one G-man told me. "We'd knock off some older bosses and they'd promote younger, more vigorous men. They kept growing richer and stronger."

So the feds launched a new attack, exploiting a hitherto little used statute Congress had passed in 1970: the Racketeer Influenced and Corrupt Organizations (RICO) law. Under RICO, anyone who has committed, within a decade, two or more of a long list of federal or state crimes while promoting a racketeering enterprise, can be convicted of federal conspiracy, a felony carrying a long prison term. Moreover, RICO provides for seizing racketeers" property and for such civil sanctions as removing them from union office, dissolving their corporations and imposing lifetime bans on their engaging in specified businesses.

Today, counting FBI, IRS, Labor Department and other federal, state and city agencies, almost a thousand investigators are after the Big Apple's gangland chiefs. The New York attorney general's organized-crime task force and U.S. Attorneys in Manhattan and Brooklyn have pooled electronic surveillance evidence from dozens of sprawling investigations, and the Justice Department has sent top experts from 14 cities to screen the thousands of hours of secretly recorded Mafia conversations. The result: the first indictments of the Mafia's top bosses just for operating the Cosa Nostra Commission.

Meanwhile, in other trials, the Justice Department's racket-busters have convicted one gang boss and one underboss; prosecutions have been launched against four other bosses and two underbosses. Of 57 identified active capos commanding La Cosa Nostra groups in New York, IT have been jailed, 22 more indicted, and the rest are under intense investigation.

Still, the racket-busters realize that this is only a beginning. The Justice Department and federal judges must do what Congress long ago ordered: move beyond jailing a few top gangsters and corrupt union bosses, and use civil RICO actions to seize the Mob's companies and property, and remove the hundreds of union officials who betray their members' trust by letting gangsters run their labor rackets. Until then there will be all too much truth in the claim: "The Mob owns New York!"