The question from Emmet was, (edited down for relevant bits)
What enabled the Mob to continue operating in Chicago in the 20s when everyone knew they were there? Now the answer would seem obvious, they had a strong policy of secrecy. But why specifically Chicago? Obviously the Mob operated in other locations and continues to but why was Chicago so dominant?
My short answer would be there there are hiding places for them in all situations. Gangs have a buffer of a society that protects them, Mobs were able to hide in plain sight because of loopholes or weaknesses in the law and Pirates were able to hide at sea. So how do you create convincing hiding places?
.... btw is an elipsis and means that part of the quote was cut. For the full question go here and read what he had to say.
First, I don't know all that much about the 1920's mob, but the answer to that question is still very easily covered by my current theory on how it works, and how it is shown to work every now and then in the papers today. It works by starting with something that a lot of people forget about when they look at the mafia and other forms of organized crime. Namely, that they are a business, and like all businesses they are in the business of making money. They just happen to be ok with more blatantly breaking the law on occasion to do so.
So what does that mean? Essentially, it means that aside from all the illegal operations that the mafia can be involved in (prostitution, drugs, racketeering, heists, blackmail, etc) they also have a large number of legitimate businesses. These legitimate businesses give them a lot of cover, and a lot of ways to hide the money from their illegitimate enterprises. Businesses that run on a heavy cash basis after all can do wonders to obfuscate illegal money that is coming in from all those scams.
However, some legitimate businesses doesn't cover all of the bad now does it? Especially when you consider that police, and other organized crime fighters, not only know that the mafia is working in their city, but who is in the mafia, and at what level they're at. Especially when they've been working on the case for a long period of time. So, why don't they just move in then? I mean, they know who, they know what, and they know of at least some of the legal assets.so why not grab them, seize some property, and stop the mob from plying their trade?
Well, that brings us back to the legitimate businesses. See, the legitimate businesses give a way to clean the money, which means that the money can't really be used against the mafia in a crime. The mob is then structured so that the people in power are not the people who are put out on a limb. You never see anyone higher than the bottom end of mid-level doing any of the actual illegal stuff. Those people then know that they're protected, and that taking heat can actually be good for them (their family gets taken care of, and when they come out if they were good they are instantly elevated. People who carry weight are seldom dropped, it is bad for business). So, even when the cops grab some members of the mob red handed, they don't have anyone particularly high up, and the incentives for staying quiet are a lot bigger than the incentives for speaking. Especially when the penalty for speaking is the inverse of all that protection.
Next, you have the lack of a paper trail to those high level members of the mob. See, not only are they not tied to the illegal operations, but they are not tied to the legitimate businesses as well. The paperwork for those show they are owned by other, clean, people who operate the business for them. The mafia gets the money, the front gets the business, and the cops don't have any links from either the illegal or legal operations to the people they really want, those at the top.
Finally, and here is the part that also bothers most people. There are people on the inside of the legal apparatus, the cops themselves, senators, politicians, and others at all levels who are essentially on the mob's payroll. Sometimes it is money, making the person who is on the take corrupt, and sometimes it is information. The mafia gives information to the feds on other crimes in the area, and the feds in return give some protection. The bottom line is, by being paid up with the right people those people then interfere with investigations into the mafia's operations. It gets rather hard to make a case with your superiors shutting it down every time you make a big move, y'know?
I'm not sure if that answers the question (let me know Emmet), but that is basically how the mafia hides despite people know what is going on. You cover your money trail with legitimate businesses, you keep anyone of any importance distanced from the actual operations, you make sure there is no paper trail to those important people, and you get legitimate people who can protect you on your side. If you have those 4 things, you have an operation that is secure, and can operate even if people know what you are doing, because they can't prove a damn thing, and ultimately, the burden of proof is what they need to take down the mob.
Try to keep this in mind if you ever happen to be running an organized criminal organization in your game. It can make them a bigger challenge, and show just how much of a real threat that they may be to the PCs. Just be careful, sometimes the players may want to join up. Which can be a fun game all itself.