Five Families: The Rise, Decline, and Resurgence of America's Most Powerful Mafia Empires (9 page)

A Jewish racketeer, Michael Hellerman, warned of the danger in challenging Mafia authority in matters of money. “Jews, outsiders, wind up on the short end of any sit-down chaired and run by the Mafia,” he grumbled. “Somehow, we always wound up paying, even when we were right.”

During Prohibition, Irish gangsters dominated many sections of New York. Their most powerful and ruthless icon was Owney Madden. Madden began his career as a predatory gunman-hijacker in the Hell’s Kitchen neighborhood on Manhattan’s rough West Side. His Prohibition-era escapades glamorized him as a celebrity millionaire with stakes in two-dozen night clubs, including the acclaimed Cotton Club in Harlem. Madden’s reputation for revenge and craftiness and his political influence at City Hall were so potent that even the Italian gangs stayed out of his territory.

But the death of Prohibition and the rise of the Mafia persuaded Madden that he could no longer survive or compete in any sphere with the Italian gangs. In 1933 the forty-year-old Madden announced that he was retiring from New York, relocating south to Hot Springs, Arkansas. At that time, Hot Springs, a city famed for its compliant and corrupt police and public officials, was a refuge for nonviolent criminals. After his fierce battles in New York, Madden found the ambiance in Hot Springs easy pickings; he became that city’s illegal gambling monarch.

The Mafia had similar post-Prohibition successes against their former Irish and Jewish rivals in other cities. Sizable Irish crews in Chicago and Boston and Jewish contingents in Detroit (the Purple Gang) and Philadelphia faced two choices. They were either whacked or induced to become hired hands for specific crimes, or allowed to work as compliant bookies paying the Mafia protection money.

While the New York families were solidifying their organizations in the early 1930s, law-enforcement efforts against them were at best haphazard. The insulated bosses, however, took careful note of the legal trap that ensnared Alphonse Capone—a tax-evasion case.

Al Capone’s birthplace and date of birth are uncertain; various records indicate that he was born in the late 1890s, either in southern Italy or, more likely, in Brooklyn, where he grew up. Like many of his era’s gangsters, Capone was an early school dropout and got his basic training as a battler in street gangs. Working as a bouncer in a combination bar and brothel, Capone was slashed on the left side of his face, providing him with the sinister nickname “Scarface.”

He arrived in Chicago as an enforcer and gun-toting bodyguard just as Prohibition and the beer wars were raging. By the mid-1920s, Capone had shot his way to the top of Chicago’s gangland and was running multimillion-dollar bootlegging, prostitution, and gambling enterprises. The raucous climate generated by Prohibition turned gangsters into press celebrities and rogue heroes. Capone basked in the limelight. His favorite interview statements were: “I am just a businessman, giving the people what they want,” and, “All I do is satisfy a public demand.”

The stout, balding Capone made no attempt to avoid cameras and attention. He relished front-row box seats at baseball games, where players queued to sign autographs for him, and he hosted lavish parties at Chicago hotels and in his fourteen-room mansion on exclusive Palm Island in Florida.

His conspicuousness and violence finally backfired. On St. Valentine’s Day in 1929, six members of the gang of his archenemy, George “Bugs” Moran, and an innocent optometrist who had stopped by to visit, were lined up against a garage wall and machine-gunned to death. Chicago’s law-enforcement authorities were in Capone’s pocket and made no serious effort to investigate the slaughter or any of Capone’s activities. But the horrendous St. Valentine’s Day Massacre provoked the administration of President Herbert Hoover to pin something on the haughty Capone. Furthermore, the administration was committed to enforcing Prohibition, and Capone’s open defiance and his striking visibility were embarrassing and mocking.

An extensive paper chase by a special Treasury Department unit barely scratched the surface of Capone’s actual illicit spoils. But the squad of auditors and investigators unearthed records linking payments to him from 1924 to 1929 totaling $1,038,654, income never declared for tax purposes. (Capone was defeated by diligent accountants, not by the Federal Bureau of Investigation, nor by the intrepid G-Man Eliot Ness, and his band of incorruptible sleuths featured in popular Hollywood and television versions of the story.)

Found guilty of tax evasion, Capone began serving his sentence in 1932. Suffering from advanced syphilis, he was imprisoned for seven years in the
dreaded Alcatraz Penitentiary and other stringent federal prisons. Released in 1939, the once invincible Capone was a broken, pitiful invalid. He never returned to Chicago, dying in 1947 at his Florida mansion.

His downfall had no impact on the New York bosses except as a warning about tax-evasion investigations. Capone’s authority had been confined to the Chicago area, and his Commission seat could easily be filled by one of his lieutenants. The New Yorkers also viewed Capone as a questionable believer in the Mafia’s culture and its structure. They had doubts about him because he declined to comply with the ritual induction of made men into his gang, and failed to appoint capos or a consigliere. In essence, they were uncertain that he even considered himself a mafioso. To Cosa Nostra purists, Capone’s Outfit functioned more like a partnership than a traditional borgata, and he violated a cardinal tradition by delegating responsibilities to non-Italians.

Capone made a fortune from his rackets, but his reputation among the shadowy New York godfathers was diminished by his penchant for publicity. His fame was greater than his actual influence and power. At the end, Capone’s exaggerated underworld importance became a fatal liability for him.

Runaway Jury

A
l Capone’s misfortunes in the early 1930s had no immediate counterpart in New York, where local and federal law-enforcement authorities were either too corrupt, too indifferent, or too ignorant to disturb Mafia families.

The city’s newspapers, then the principal source of news and information, were equally passive about investigating and reporting the emergence of the new organized-crime phenomenon. Gangsters, murders, and kidnappings made good copy during Prohibition, almost a welcome relief from the grim economic news of the Depression. For the most part, reporters and editors portrayed individual racketeers sympathetically, and Damon Runyon’s colorful
Guys and Dolls
yarns about lovable rogues became the accepted universal myth about mobsters and criminals. Instead of exposing the Mob’s almost wide-open gambling, labor-industrial racketeering, extortion-protection, and prostitution activities, some influential editors and columnists hobnobbed, gambled, and drank with the underworld characters. Herbert Bayard Swope, the editor of the prestigious
New York World
, at one point owed his Mob bookies $700,000. Walter Winchell and other nationally syndicated Broadway columnists cultivated relationships with gangsters for gossipy tips and scoops.

Law-enforcement authorities were even more negligent than the sycophantic press. A string of elected district attorneys in Manhattan (New York County),
the center of the city’s vice industry, never probed any of the blatant rackets. The district attorneys were usually hand-picked incompetents designated by the Democratic Party’s Tammany Hall Club, a group of party leaders who controlled nominations and elections in Manhattan, a Democratic stronghold. Since the early days of Prohibition, Tammany’s leaders were on the slush-fund payrolls of Italian and Jewish gang leaders to protect them from potential reform crusaders and police interference.

The routine impaneling of a Manhattan grand jury in March 1935 unexpectedly provoked a law-enforcement earthquake. Following his customary interest in easily solved crimes, the ineffectual Manhattan district attorney, William Copeland Dodge, instructed the jurors to concentrate on indicting his regular agenda of suspects arrested for minor felonies. Dodge’s only other priority target was the absurd threat of the “Red Menace,” and he suggested that the jurors focus on the Communist Party newspaper,
The Worker
, which he felt was using the Depression to foment insurrection.

A grand jury’s task is to weigh evidence and to vote whether or not there is sufficient evidence to hold a defendant for trial. Normally, grand juries are easily manipulated by prosecutors, and after hearing only the prosecution’s version, churn out felony indictments in assembly-line fashion. But the twenty-three Manhattan grand jurors, led by a strong-minded member, revolted, demanding an independent investigation into the spreading rackets in the city. Their outcry was endorsed by the city’s bar association, and by several ministers and civic associations. The runaway jury was a hot newspaper story, and its pressure forced Governor Herbert Lehman to appoint a special prosecutor to examine the reformers’ allegations.

Lehman, a Democrat, selected a thirty-three-year-old former federal prosecutor, the Republican Thomas E. Dewey. Raised in the small town of Owosso, Michigan, Dewey stayed in New York after getting a law degree at Columbia University. A three-year stint in the U.S. Attorney’s Office in Manhattan turned him into a formidable prosecutor. Most of his federal cases involved bootlegging and income-tax charges, and Dewey quickly exhibited a trademark courtroom talent: an uncanny memory for the tiniest detail of a crime that would trip up a hostile witness in cross-examination. Giving up a successful Wall Street practice, Dewey leaped at the prosecutorial opportunity offered by Lehman, even though it meant a huge salary cut.

Unlike the apathetic Tammany Hall DAs, the aggressive Dewey didn’t sit back waiting for cases to come to him. He understood how to gather evidence
and had the foresight to make his objective the destruction of criminal organizations, rather than convicting low-level hoodlums. At the time of his appointment, there were virtually no restrictions on the use of telephone taps by state prosecutors in New York, and Dewey made maximum use of that tool to dig up evidence and leads.

Dewey lacked precise insight into the existence of the Mafia borgatas or their organizational structures, but he instinctively understood that he was being challenged by a new kind of criminal, the racketeer who never personally committed a murder or a hijacking or extorted a penny from a victim. The dirty work was left to henchmen who were the ones risking arrest.

To prosecute Mob bosses effectively, Dewey had to overhaul a cumbersome criminal-procedure law. Under an existing New York rule, a defendant could be tried only on each specific count. That meant multiple trials, even if the culprit had been indicted for one hundred separate acts. With the help of lobbying by reform politicians and organizations, Dewey persuaded the legislature to authorize “joinder” indictments, a procedure used in federal courts that permitted a single trial on combined charges. It was a legal weapon that Dewey could employ in court to try leading gangsters on multiple counts and link them to the crimes actually committed by their flunkies.

The first prominent racketeer targeted by Dewey was Dutch Schultz. Born Arthur Flegenheimer, Schultz was another ragtag criminal who cashed in on the floodgates opened by Prohibition. He formed a bootlegging gang, mainly of Jewish strongmen, and took over distribution of beer in the Bronx. Through terror tactics, murders, kidnappings, and torture, Schultz rivaled the Mafia in the scope of his operations and in the enmity he aroused. When Dewey became the Special State Prosecutor, Schultz’s gang was the only non-Italian organization left in New York that was not subservient to the Mafia. Underworld cognoscenti referred to the five Cosa Nostra families and Schultz’s outfit as “the Big Six.”

Schultz also had sound business sense. As bootlegging waned, he acquired control of a restaurant workers’ union and used it to extort labor-peace bribes from restaurants. Renowned spots, including Broadway’s Lindy’s and the Brass Rail, were compelled to bribe him in order to remain open. In his search for easy money to replace the lost bootlegging revenue, Schultz and his ferocious leg breakers took over the numbers or policy racket in Harlem from African-American and Hispanic “bankers.”