(FORTUNE Magazine) – THE SEAT BELT SIGNS flash on. Over the intercom comes the pilot's voice: ''We have started our descent into John F. Kennedy International Airport.'' Descent indeed. Few passengers landing here realize that America's gateway to the world is a hotbed of larceny, and prime turf for the Mafia. More bags checked by travelers and more goods shipped by businesses disappear at JFK than at any other airport in the world. The Kennedy catalogue of crimes starts with little stuff -- suitcases swiped from cargo holds, radios wrenched from cars in long-term parking lots -- and runs to hijacking, dope smuggling, and labor racketeering that embroils corporate executives in ugly confrontations with gangsters. Recently the good guys on the law enforcement side won some important convictions. But their sleuthing continues and more arrests must still be made. The airport's sheer size explains in part why it is such a bull's-eye for stealing, smuggling, and extortion. Kennedy is a 5,000-acre complex of runways, terminal buildings, hangars, warehouses, high-security storage vaults, container stations, and truck depots. Last year 27.2 million passengers arrived or departed, many easy prey for pickpockets, baggage thieves, or drug dealers seeking a stream of couriers. According to police, some 1,500 reported that their luggage had been stolen, representing a loss of about $3 million. The unreported losses could amount to as much again. Says William Ferrante, who heads the Port Authority police force at Kennedy: ''These are crimes of opportunity, and they are getting worse.'' Among JFK's 41,000 workers are many low-paid baggage handlers and freight jockeys who need little urging to toss a Gucci suitcase or a container of Japanese TV sets onto a passing truck heading off the field. ''The people assisting in thefts around here are often just squaring a $2,000 or $3,000 debt to a loan shark,'' says Arthur Stiffel, special agent in charge of U.S. Customs at the airport. Most enticing to the underworld bosses are the 1.1 million tons of air freight that pile up in the place every year. The total value last year: more than $59 billion, including such rich pickings as electronic equipment, gold, jewels, watches, furs, and currency. The Mafia first drew a bead on these goodies 25 years ago. As JFK became the foremost funnel in the U.S. for imported valuables, a rash of armed robberies occurred right on the airport premises, culminating in the celebrated $8-million heist at the Lufthansa freight terminal in 1978. SECURITY soon stiffened and cargo theft receded, or shifted to storage facilities on the Rockaway Boulevard perimeter outside the airport fence, where no comprehensive pilferage records are kept. But the organized crime leaders had already found a way of increasing their JFK profits, and with a lot less risk. Through control of two corrupt Teamster locals, they offered labor peace in return for a Mafia surtax on air freight companies and the brokers that earn high profits expediting shipments to and from the field. In 1983 the FBI overheard Frank Manzo, the Mafia overseer at JFK, boast to his cronies, ''We rule the airport. The field is mine.'' & By then the shakedowns of air freight companies had become so bad that big shippers like IBM began diverting cargo to other airports. That same year, the Brooklyn-based Federal Organized Crime Strike Force launched an investigation code-named Kenrac (Kennedy Racketeering). ''JFK had a worldwide reputation for being controlled by gangsters,'' said strike force chief Edward McDonald. Just this spring the prosecutors sent Manzo and two other mob leaders at JFK off to prison -- but not before the airport's share of all air freight entering the U.S. fell to 33% from the peak of 41% ten years ago. At least part of the decline is attributable to the Mafia-imposed costs. Although the extortion demands seem to be abating while the henchmen of the imprisoned bosses lie low, rival Mafiosi already show signs of moving in. Even after the convictions, says McDonald, ''air freight executives willing to disclose racketeering at JFK are few and far between.'' New York FBI chief Thomas Sheer agrees, adding, ''Some of them make so much money they don't care about racketeering.'' Meantime the other airport scams continue in full bloom. An airline executive reports that light-fingered baggage loaders use the security- screening X-ray machines intended to detect bombs in checked luggage to locate cameras, binoculars, and other pilferables. Security officers claim that suspects they pick up usually have pocketfuls of 50 or 60 keys for different types of suitcases, and that most thefts occur inside the belly of the plane while the baggage is being stowed. Says the frustrated executive: ''The poor passengers are 3,000 miles away by the time they discover their loss. Half of them never bother to file a complaint.'' To try to nail the culprits, detectives recently started implanting tiny transmitters in decoy suitcases that broadcast an alarm if someone tampers with them.

EVEN MAIL THEFT is worse at JFK then anywhere else in the U.S. postal system. Airmail packages landing at the airport often contain gold coins, cash, or precious stones (the Hope Diamond passed through the JFK post office). One airport employee arrested last year made off with $455,000 in cash and gold. As a result, 95 postal police officers stand guard over the 995 million pieces of mail processed each year. ''I thought I was coming to a penal colony when I was assigned here,'' says A. J. O'Neill, the chief postal inspector at Kennedy. Arthur Stiffel, the beleaguered special agent in charge of Customs, finds himself in a constant duel of wits with crooks. Stiffel carries a snub-nosed .38 concealed in an ankle holster and jokes that the job of his covert inspectors, who try to trace smugglers back to their suppliers, consists of ''seven months of boredom capped by 15 seconds of terror.'' And then? Says Stiffel: ''As soon as we get one guy locked up, another surfaces to take his place.'' Armed with electric drills and X-ray machines as well as pistols, Stiffel's special agents uncover all types of contraband: munitions or high-tech equipment not licensed for export, masquerading as helicopter spare parts; counterfeit Cabbage Patch dolls; phony Rolexes complete with bogus Swiss guarantees; fake Louis Vuitton handbags fine enough to fool a French fashion expert. The cascade of drugs flowing through the airport concerns Customs the most. Judging from a few recent intercepts, almost any type of container is now considered suspect. This spring cocaine was discovered secreted in a hollowed- out truck axle, hidden in bird feeders, and submerged among tropical fish in plastic bags. One shipment was found buried in a footlocker full of dog biscuits -- an apparent attempt to lull Customs agents into believing that their drug-detector dogs were barking up the wrong trunk. ''Most of our seizures come from cold hits, not from tips,'' says Edwin Hotchkiss, chief of the 66-person special Contraband Enforcement Team at JFK. In the past half year his agents seized 156 pounds of cocaine, 121 pounds of heroin, 15 pounds of hashish, and 4,429 pounds of marijuana. But the Federal Drug Enforcement Administration estimates that is only 5% to 10% of the incoming dope.

Stand in the gangway of Avianca Airlines flight 059 bound for Barranquilla and Bogota on any morning and you'll see some of the drug money streaming back to its Colombian suppliers. On orders of a covey of Customs inspectors, passengers pull wads of hundred-dollar bills from pockets, shoes, bras, money belts, purses, toilet kits, shopping bags, and even hatbands and dump them on the carpet to be counted. It's legal to carry out unlimited sums of U.S. currency, but amounts over $10,000 must be declared. Almost routinely, it seems, one or two passengers boarding this flight are found to have hidden $30,000 or $40,000 or far bigger undeclared sums. Then in full view of other waiting passengers, they are frisked, handcuffed, and hauled away. Recently the inspectors reported finding $41,900 stashed in a little boy's teddy bear, part of a $226,256 haul one Colombian family was allegedly trying to sneak out of the country. LATELY federal agents have been zeroing in on airline personnel. ''Usually we're after people who are trying to beat the system,'' says Robert Stutman, special agent in charge of the Drug Enforcement Administration in New York. ''But these people are the system, and they became corrupt.'' In March agents arrested 40 Pan American, Eastern, and Delta employees at JFK and charged them with conspiring to smuggle seven tons of cocaine worth $1.5 billion from Brazil since 1981. The workers allegedly circumvented Customs by shunting cocaine-filled suitcases through the sealed-off, so-called ''sterile'' corridors from arriving international flights, and placing the bags directly onto domestic carrousels. Feds say the ring included several airport ticket agents who erased the names of the couriers from the passenger lists. In other recent busts, agents report picking up a Nigeria Airways pilot with $2 million of heroin stuffed into his trench coat pockets and hand luggage, and breaking a currency-smuggling ring of 17 Avianca flight engineers and flight attendants who transported at least $10 million in cash back to Colombia. Cracking the Pan Am-Eastern-Delta case took more than a year of spadework. Charged with heading the ring was Art Vanwort, 39, a former Pan Am passenger service representative in New York, who had quit the airline in 1984 to return to his native Netherlands. A U.S. undercover agent and a police officer from JFK, posing as drug dealers, befriended Art's 38-year-old brother, Christianus Vanwort, in Brazil. During two weeks spent frolicking together at the beaches and bars of Rio, they say, Christianus bragged to them about how the smuggling system worked. The bust was carried out jointly by the airport police, Customs, and the DEA. ''This was the first time a JFK police officer teamed up with a federal agent on an overseas assignment,'' says Charles E. Rose, chief prosecutor in the case, who has been flying down to Rio collecting witnesses. Law enforcement staffs at JFK include the 255 uniformed police officers and 28 detectives of the Port Authority of New York and New Jersey, which runs JFK; 400 Customs officers; and squads from the federally administered DEA, the Immigration and Naturalization Service, the Secret Service, and the FBI. Finally, each airline has its own security staff. ''Up till now, interagency rivalries at JFK have taken precedent,'' says Rose. Another sign that the jurisdictional battles may be waning: In April Customs and the DEA inaugurated the JFK Narcotic Smuggling Unit, or JNSU, a combined force of a few dozen agents that is the first of its kind at an American airport. So far nothing has hit organized crime at Kennedy as hard as Kenrac, the Federal Organized Crime Strike Force's assault on extortion and labor racketeering. The tale of corruption, drawn from transcripts of bugged conversations and interviews with FBI agents, strike-force prosecutors, and one of the shakedown victims, reveals how vulnerable legitimate business is to the mob's embrace. Even after the investigation began in 1983, most of the 200 or so air cargo companies figured it was more prudent to pay off the Mafia bosses than to fight them. As one of the few air freight executives who helped the strike force told FORTUNE: ''For 25 years I feared for my life. I finally decided it was my patriotic duty to act.'' He showed investigators how to find the shakedown money buried in the bills of lading and persuaded a few other company heads to cooperate.

The airport Godfather for the past ten years has been Anthony ''Tony Ducks'' Corallo, 74, boss of the Lucchese crime family. Corallo's man at JFK was Frank Manzo, 62, a vile-tempered, 305-pound hulk. Manzo wasn't idly boasting when the FBI overheard him claim ''the field is mine.'' It was his by virtue of the Luccheses' 30-year hold on Teamster Local 295, which includes all the truck drivers hauling loads in and out of JFK, and Local 851, comprising the clerical employees. Muscleman Manzo couldn't cope with the technicalities of Teamster contracts. For those details he relied on Harry Davidoff, 69, a vice president of Local 851, whom a Senate committee called ''a ruthless thug who gravitated to the labor movement for no other reason than to steal from it.'' Davidoff's principal ally was Frank Calise, 47, a former truck driver who served as president of Local 295. The Manzo-Davidoff-Calise combine held the air freight firms at their mercy. The average weekly wages of workers represented by their two Teamster locals rose from $600 to $850 between 1979 and 1985, an expense that drove the small operators into the arms of the racketeers. Non-union truckers faced with the threat to organize their shops had two choices: Pay off to keep the Teamsters away or shut down, in which case the mobsters took over their businesses. THE SHAKEDOWNS extended to other so-called services, such as recruiting the customers of a competitor, granting immunity from cargo thefts, and providing protection against labor problems. A Mafia hotline number was offered in case of such emergencies as labor disputes or thievery. Strike Force prosecutors established that Manzo's men collected at least $1.25 million between 1979 and 1986. The amount was probably much greater because the extortion money rolled in too fast to tally. A lot of the money was funneled to Manzo and Calise by Heino Benthin, an entrepreneurial West German immigrant who had built a thriving pickup and delivery service. Benthin, it seemed, first got involved with the mob because he didn't consider a little bribery so bad as long as it was between friends. In 1980 when he discovered that Schenkers International Forwarders was seeking a new trucker, he looked up an old buddy there, slipped him $1,000, and got the business. A few days later, however, Frank Calise appeared, warned the German that he had ''stepped on somebody's feet,'' and summoned him to a Sunday meeting with Frank Manzo at the Sherwood Diner, a Mafia hangout near the airport. Benthin explained that he wanted to hire more non-union workers. ''You pay me and you got what you want,'' said Manzo, adding that he was now Benthin's ''friend'' -- though Benthin should never mention his name. The German agreed -- ''as long as nobody is going to get hurt,'' he said. Replied Manzo: ''Nobody's going to get hurt as long as everybody does the right thing.'' Benthin assumed that doing the right thing just meant keeping his mouth shut. He found out otherwise when Union Air Transport, a West German firm operating at JFK, was struck by Calise's Teamster Local 295 a few months later. The company offered Benthin a $4,000-a-week trucking contract if he could find a way to get rid of the pickets. He called Calise, who set up another meeting with Manzo at the Sherwood Diner. This time Benthin brought along a crony, Anthony DeSimone, who knew how business was conducted at Kennedy. An argument flared when DeSimone wanted to get in on the shakedown and pointed a finger at Manzo. Lunging across the table, Manzo impaled DeSimone's hand with a fork. ''Don't ever do that again,'' roared the Mafia boss. ''I'll kill you.'' After the incident a shaken Benthin told Calise, ''It doesn't look like nobody gets hurt. If this keeps up I want to get out.'' ''You're in for life,'' snapped Calise. ''If you get out, it's the end of your company.'' A few days later at the diner, Manzo set the price for labor peace at Union Air Transport: $50,000 for each year of the three-year contract, plus weekly payments of $500. The Union Air Transport manager flew to the company headquarters in Dusseldorf, collected $50,000 in cash, and brought it back to Benthin, who passed it to Manzo rolled in a newspaper at another meeting in the diner. Now a Mafia bagman, Benthin was getting in deeper and deeper. He delivered to Manzo a total of $250,000 from Union Air Transport, $132,000 from Schenkers International Forwarders, and up to $40,000 each from half a dozen other freight companies serving JFK. The payoffs were no secret. ''Everybody out here knew about them,'' says FBI agent William Cardin, who was assigned to the airport. ''But we didn't have what was important: the connection between the mob and the union.'' FINALLY THE FBI developed enough information to put bugs in Manzo's home, tap his phone, and photograph the comings and goings of his Mafia friends. The scope of the racketeering was quickly confirmed. Several discussions overheard revolved around the proposed 1983 merger of CF Air Freight, a subsidiary of Consolidated Freightways, and Air Express International, the biggest cargo forwarder at JFK. If the merger succeeded, the two Lucchese unions, Locals 295 and 851, would lose their contracts with Air Express International and be replaced by two unions representing the workers at CF Air Freight -- Local 707, linked by the FBI to the Colombo clan, and Local 814, controlled by the Bonannos. The stakes were high, since AEI was a company with 2,250 employees and revenues exceeding $250 million. But Lucchese henchman Manzo had a secret weapon. The Luccheses had an ''inside man'' at AEI, Vice President John Russo, who handled the company's labor relations at JFK. In recorded conversations Manzo instructed Calise, the local Teamster boss, to strike AEI. That, Manzo predicted, would force AEI to rely on Russo to settle the strike. ''I love it,'' Calise told Manzo. ''Then let John come in and be the hero.'' Calise also knew that AEI's executives were afraid of Russo, because they realized he had the hulking mobster, Manzo, behind him. ''You got them by the balls,'' crowed Calise. Soon after, Local 295 struck AEI on the grounds that its contract gave it veto power over any merger that failed to keep it as the bargaining agent. The mobsters then set in motion a scheme to force the two companies to pay them $500,000 for withdrawing the union's objections. Russo advised AEI's chairman, Joseph Mailman, that the merger could be attained only by working through Russo's ''contact.'' The scene in the distraught 82-year-old chairman's office, as Russo described it to Manzo in one conversation picked up by the FBI bugs, was reminiscent of Hamlet's soliloquy. Russo reported that Mailman was lying on a sofa when he walked in. ''I says five (($500,000)),'' explained Russo. ''That's when, oh, he got bent all out of shape. He started mumbling, 'Ah, I never did this type of thing before,' and blah, blah, blah. He's talking out loud, but he's really talking to himself. Then he said, 'How do I get the money, John?' 'Mr. Mailman,' I said, 'I don't know.' '' Russo further related to Manzo how the chairman continued to agonize, saying things like: '' 'I don't know how I got into this mess. This thing is so screwed up. I don't know what I'm going to do. I want to say no, but I don't want to say no.' '' A few days later Mailman made up his mind. He refused to pay the $500,000 and the merger collapsed. On Manzo's orders Local 295 immediately demanded that AEI hire more union workers. Then switching to the role of peacemaker, Manzo intervened. AEI paid him $50,000 to avoid taking on extra men. Armed with 500 reels of taped conversations, the FBI arrested Manzo, Calise, Russo, Davidoff, and Benthin in February 1985. Benthin had never considered himself one of these thugs and was appalled to find himself behind bars with them. He called for the FBI, spilled the story of the payoffs, and vanished into the federal witness protection program. Before the case went to trial last October, Russo pleaded guilty and testified for the government. Then Calise pleaded guilty and was sentenced to nine years. Benthin was on the witness stand for three days, after which Manzo also threw in the towel. He is due to start a 12-year sentence this month. Harry Davidoff, the only defendant to be tried and convicted, entered federal prison at Sandstone, Minnesota, in April to begin serving a 12-year term. But the Kenrac case is not closed. The strike force now suspects that the Gambino crime family may be taking over the turf vacated by the jailed Lucchese mobsters. In April Salvatore Reale, a reputed associate of self- proclaimed Gambino boss John Gotti, pleaded guilty to extorting $50,000 from . a freight forwarder at JFK named Air-Ride America. At the same time the FBI raided Local 295 headquarters. Hidden in the space above the ceiling in Calise's former office, agents found a loaded .22-caliber pistol and a black book with the word ''cash'' inscribed on the cover. It was a ledger in which Calise had faithfully recorded all the payoffs extorted from the air freight companies. The strike force is sifting through the hundreds of names and entries on its pages. ''We are making significant progress,'' is all that prosecutor Norman Bloch will say. But a lot more is likely to be heard about organized crime at John F. Kennedy Airport, judging by the words of Frank Manzo. Four years ago he was overheard warning Calise, ''God forbid somebody get the book.''