By Scott Malone
BOSTON (Reuters) - When James "Whitey" Bulger sat down with Boston businessman Michael Solimando in 1982 to demand $400,000 in extortion money, he pointed a gun at Solimando's head and gave him one piece of advice: Don't go to the cops.
"We're going to know the minute you open your mouth," the crime boss said in a meeting held above the Triple O's bar in South Boston, Solimando recalled from the witness stand on Tuesday. It was the sixth week of Bulger's racketeering and murder trial, which has riveted Boston.
Solimando said he had never done business with Bulger or his "Winter Hill" gang. But the mob boss had done business with Solimando's friend and business partner John Callahan, one of 19 people Bulger is charged with murdering or ordering murdered in the 1970s and 1980s.
A few weeks after Callahan's body was found stuffed in the trunk of a Cadillac in Miami, Solimando said he heard from Bulger lieutenant Steven "The Rifleman" Flemmi. Flemmi, who had briefly been Solimando's jogging partner when the two lived near each other, told him he had arranged a meeting with Bulger.
Solimando said he realized he was in trouble when Flemmi walked him up to the dark, cavernous upstairs of the Triple O's bar to find Bulger and his associate Kevin Weeks.
"He pulled a revolver out and stuck it in my face and said how disappointed he was that I hadn't come to him sooner and I said I didn't know what he was talking about," Solimando said of Bulger. Solimando said the gangster eventually pointed a machine gun at him, letting him leave only after he agreed to come up with money.
The next morning, Solimando said, he considered going to the FBI. But he ultimately decided that it would be safer just to pay Bulger's gang what they wanted.
"There's too many people dead in Boston for working with the authorities," Solimando recalled deciding. "There's too many bodies around. We have to take this seriously."
Solimando, who had been working with Callahan's wife to settle his business affairs, paid the demand partly out of Callahan's assets but had to raise about half the money himself, selling stocks, jewelry and anything else that brought in cash.
Bulger, 83, faces life in prison if convicted on charges related to 19 murders. He has pleaded not guilty to all charges but through his lawyer has admitted being an extortionist, drug dealer, loan shark and "organized criminal."
Bulger rose from his youth in a housing project to become the most feared criminal in Boston. After a 1994 tip from a corrupt FBI agent that arrest was imminent, Bulger fled. He evaded arrest for 16 years before authorities arrested him in June 2011.
BLACK MARK ON FBI
Bulger's story has become a black mark on the FBI's history. The gangster met regularly with corrupt agent John Connolly, who shared Bulger's Irish ancestry and South Boston upbringing, and turned a blind eye to crimes in exchange for information the FBI could use against the Italian Mafia, prosecutors charge.
Retired FBI agent Gerald Montanari testified that it had raised worries in the bureau when Bulger and Flemmi, both top informants, emerged as a suspects in the murder of gangster Brian Halloran, who was shot dead in May 1982, a few months before Callahan's death.
The gang had turned on Callahan because they feared Halloran had told authorities about his involvement, and considered him unlikely to hold up under questioning.
"The fact that the two targets were top echelon informants of the Boston office involved in a major investigation, that was a concern," Montanari said.
Halloran had approached the bureau hoping to trade tips on Bulger's gang in exchange for lenient treatment on a murder charge and because he was afraid Bulger meant to kill him.
Montanari said he knew that FBI colleague Connolly, who is now serving a 40-year sentence on murder and racketeering charges, met weekly with Bulger and Flemmi, but trusted him.
"I had heard stories about John Connolly. I knew that the state police didn't trust him," Montanari said. "It was at that stage, in 1982, beyond comprehension for me that an FBI agent would compromise his own."
Connolly built up a 700-page informant file on Bulger. The mobster denies ever serving as an informant, saying that he paid the agent for information but offered none of his own.
Bulger's story inspired the 2006 Academy Award-winning film "The Departed," in which Jack Nicholson played a character loosely based on Bulger.
(Reporting by Scott Malone; Editing by Dina Kyriakidou and David Gregorio)