06/14/2013 06:07 pm ET

Whitey Bulger Threatened To Kill Over Unpaid Debt, Bookie Testifies

BOSTON -- Two elderly ex-bookies testified Friday that they paid tribute money to James "Whitey" Bulger's gang which they said had a reputation for hurting people who didn't pay up.

Richard O'Brien took the stand in Bulger's racketeering trial and described how his father taught him the business of bookmaking in the 1950s. For years, O'Brien said Friday, he paid "rent" to the Italian mafia in Boston's North End, which allowed him to run numbers and take bets.

But in the early 1970s, he told jurors he was summoned to meet with Bulger and some of Bulger's associated from the Winter Hill gang, which had become the most powerful gang in town. Bulger made it clear to O'Brien that from then on, O'Brien would pay him. There was no choice but to obey because Bulger's "reputation preceded him," O'Brien said.

"You should be with us," Bulger allegedly told O'Brien. "Forget the North End. If you want to be in business, you're with us."

Prosecutors allege that Bulger killed or arranged the murder of 19 people. The 83-year-old has pleaded not guilty. He spent 16 years as a fugitive before being caught in Santa Monica, Calif., in 2011.

Under Bulger's protection, O'Brien testified that he thrived for about 14 years. At times, he had 30 agents taking bets on sporting events. On a typical month, he said kicked up roughly $2,000 to Bulger, though he didn't pay him directly.

Only when an agent owed him a large sum of money, O'Brien said, did Bulger intervene. "We have a business besides bookmaking," Bulger allegedly warned the agent. "Killing assholes like you."

Bulger snickered when O'Brien retold the story, ABC News reported.

In the early 1990s, after O'Brien relocated to Florida, he heard rumblings that informants were helping the government take down Bulger, his right-hand man Stephen "The Rifleman" Flemmi and the rest of the gang.

When O'Brien was summoned for an unexpected meeting with Flemmi and hit man John Martorano, he feared that he might be under suspicion. "If I'm not home in 12 hours or so, go to the FBI in Miami," he testified that he warned his daughter before the meeting. "And don't go home."

Eventually, Bulger was alerted to a looming indictment and fled. Flemmi is serving life in prison for murder. O'Brien supplied his testimony to the government in exchange for leniency when he pleaded guilty to perjury and obstruction of justice in 1999. He will return to the witness stand Monday.

Patricia Donahue, whose husband, Michael, was allegedly killed by Bulger in 1982 during a hit on another man, was glad to hear a witness talk about Bulger's ruthless temper.

Since testimony started on Wednesday, O'Brien was the first to claim to have a working relationship with him. "Anytime you can get Bulger's name out there, that's good," said Donahue.

James Katz, another Boston-area bookie who said he paid rent to Bulger's associates, testified Friday that although he had almost no direct interaction with Bulger, he knew anyone who didn't pay could get hurt.

"You could wind up in the hospital, let's put it that way," said Katz, 72, a lifelong bookie with numerous gaming-related convictions who eventually entered the witness protection program.

"In those days, it was murder and a lot of beatings," he testified, when asked what punishment the Winter Hill gang meted out.

The rate Katz paid fluctuated from $500 to $1,000 monthly during football season from the 1970s through early 1990s, he said. He delivered the money to Flemmi, or to Flemmi's underlings.

During cross-examination, defense attorney J.W. Carney focused on Katz's lack of direct interaction with Bulger, who he met just once.

Carney also questioned Katz about the deal he got from federal prosecutors that freed him from prison after pleading guilty to money-laundering and wire fraud in the 1990s. In exchange for testimony against numerous mobsters and underworld figures, the deal also erased the more than $1 million in fees he owed the government.