A Bright and Guilty Place: Murder, Corruption, and L.A.'s Scandalous Coming of Age (6 page)

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Oil, Law, and Scandal

A
lbert Marco had worked with, and for, Charlie Crawford, the “kingpin politician” of whose murder Dave Clark would be accused in 1931. Yet, throughout the entire course of the Marco trials, and in all the reporting of those trials, Crawford’s name was never mentioned. He occupied a higher rung than Marco on the ladder of the L.A. System, but for the moment remained where he wanted to be—in the background, in the shadows, known only to those by whom he wished to be known, or those who wouldn’t or didn’t dare to mention his name. Crawford’s power lay behind the scenes, and relied on secrecy. This would change, much to Crawford’s dismay. The brazen corruption of which he was a part would soon be flushed out into the open. Leslie White had arrived in L.A. at the time when crime and the integrity of those who should have been enforcing the law had become a major issue. Forces of reform were fighting back. “Albert Marco has finally discovered that his money, his power, his more or less respectable political contacts, his threats, his promises and his pleas are unavailing in the face of simple honesty and unassuming integrity and courage. The lesson he has learned will not be confined to himself; it will permeate the entire realm of criminal thought and activity here,” claimed the L.A. Times, sounding a hopeful if pompous note. “Had he been able through the unlimited fund at his command to set aside the just disposition of his case he would have afforded to those of his kind a shining example of what can be achieved by the unscrupulous use of wealth and influence.”

The Women’s Republican League of Van Nuys, in supporting Judge William Doran for reelection, spoke more forcefully of “a terrific struggle by all the influences of evil, subtle and bold, from the lowest depths of society to the high circles, to flaunt the law. Los Angeles is facing a crisis in the battle between civic righteousness and the underworld.”

In November 1928 the city elected a new District Attorney, Buron Fitts, who would keep the job until 1940. Controversial and tenacious, Fitts would see out the death throes of L.A.’s adolescence and survive the depressed years of the city’s early maturity. He would be a key and ultimately compromised figure both in that transition and in the struggle for reform. He was big-nosed, big-talking, anti-labor, anti-radical, anti-liquor, still—at age thirty-three—young, and a favorite of Harry Chandler, publisher of the Times. Photographs show a shaven-headed, bright-eyed, mean-faced man gazing at the camera, unsure whether to snarl or smile. Soon after his election, he struck out a city ordinance that had legalized slot machines and staged raids on downtown nightclubs and gambling ships off Long Beach, making sure that the press tagged along. Throughout his career, Fitts knew the value of a photo op. He was more a politician than a lawyer.

Fitts reshaped the D.A.’s office, getting rid of the previous regime’s deadwood and retaining a staff nucleus of only thirteen assistant D.A.s, a number to which he would quickly add new recruits. Dave Clark—fresh from the Marco triumph—was among those kept on, and Fitts handed Clark both a salary increase and greater responsibilities within the trials department. Clark celebrated by buying a couple of new suits, and driving with Nancy to Agua Caliente for dinner; they danced in the ballroom and toasted with champagne.

Fitts also restructured the D.A.’s investigative unit. He brought in a friend, Lucien Wheeler, a onetime presidential bodyguard and former Los Angeles bureau chief of the Federal Bureau of Investigation (BOI, the predecessor of the FBI), to head up the show. Wheeler let go many of the incumbent staff and started to recruit a new team. Within weeks he had more than 3,100 applications on file for some thirty jobs.

Meanwhile, Leslie White had been wondering what to do with his life. One day at his aunt’s house in Hollywood, he was delighted to be visited by friends from Ventura County. They came in with long faces because the word back in Ventura had been that Leslie White was at death’s door. They were amazed to find him on his feet and hear him say he was itching to get back to work. One had heard about Buron Fitts’s new investigative unit and suggested, “Why not apply?”

Armed with letters of recommendation, White went again to the Hall of Justice, this time riding the elevator to the seventh floor and the D.A.’s office. He was young and green, but his experiences as a deputy in Ventura and during the St. Francis Dam disaster worked in his favor. He’d photographed and identified hundreds of corpses so was at least unfazed by the sight of death. He landed a job specializing in the gathering of material evidence. Police forensics was then in its infancy. Fingerprint classification, corpse temperature graphs to determine the time of death, and the comparison microscope for bullets were still relatively new techniques. In 1923 the forward-looking August Vollmer, then briefly head of the LAPD, had created America’s first crime lab. Now Fitts’s office would have one too. Leslie White would become, in his way, a pioneer and a crusader. “Politically Los Angeles was in a panic. The reformers were sweeping into every office, looting and pillaging the old system. Having reached the saturation point of corruption, the old regime had been driven from power and the ‘revolution’ was on,” as he later wrote. “I was for the ‘cause’ and loved a fight.”

Buron Fitts’s first big objective was the prosecution, not of some racketeer or notorious murderer, but the previous District Attorney, Asa “Ace” Keyes, the man who until recently had been Fitts’s boss. Behind this unlikely turn of events lay the most spectacular fraud in L.A.’s history. “The Julian Petroleum debacle, in which thirty thousand investors were milked out of untold millions of dollars, touched off the fuse which blew the politicians out of the limelight,” wrote Leslie White. “The grafters had been in power a long time and Los Angeles was in a bad state of affairs. The Julian Pete symbolized it all.”

The story began years earlier, in 1885, when Chauncey C. Julian, later to be known as “C.C.,” was born in Manitoba, Canada, the son of an impoverished farmer. As a boy he sold newspapers. As a young man he drove a milk wagon, clerked in a clothing store, sold jewelry and building supplies, worked in real estate, and in the oil fields of Texas worked as a rigger. In 1921 he arrived, penniless, in L.A. and started peddling stock in oil leases. His first promotion fizzled. Then he had a massive stroke of luck: on a four-acre lease he drilled five wells and all five came in, producing gushers. His first investors earned money, and he gained a following. Soon he was acquiring more leases, opening gas stations, and selling millions of dollars in stock. He had his own radio station and pilloried the big oil companies. He called his own gas “Defiance”—a nice touch.

Breezy as a door-to-door salesman, brandishing his fist or pointing his thumb and forefinger in the shape of a pistol, Julian had shrewd insight into the mind-set of the small American investor, confronting head-on the accusation that he was a con man. His daily press advertisements became a feature of city life. He told those who couldn’t afford to take a chance not to bother while urging the adventurous of spirit to plunge. “Come on, folks, you’ll never make a thin dime just lookin’ on. I’ve got a surefire winner this time, a thousand to one shot. We just can’t lose. We’re all out here in California where the gushers are and we just ought to clean up. Come on, folks, get aboard for the big ride,” he said. Or: “I’ve got a wonder coming up, folks. She’s not only warm, she’s ‘red hot’—right off the coals. How big? Oh, I don’t know—she looks like a hundred million dollars.”

Julian became for a couple of years as grand a celebrity as any in L.A. Reporters tracked his every step, gleeful when Chaplin decked him after a spat in the nightclub Café Petroushka or when he gave a Cadillac to a hatcheck girl. To continue doling out dividends, and to pay for his four homes and the gold-lined bathtub into which he plunged each morning, he kept issuing more and more stock, turning his original operation into a scheme of the sort recently made famous by Charles Ponzi. Ponzi, a smiling, skimmer-wearing, cane-wielding con man who ran a get-rich-quick scheme in Chicago, had promised that investors would double their money within three months. To fulfill this pledge, he only needed ever larger numbers of investors, and for a while they flocked forward. It was a classic pyramid scheme, earning Ponzi $2 million a week at one point, typical of the money-mania that swept America in the 1920s and seen more recently in the Bernard Madoff affair. But taking from Peter to pay Paul can’t last forever: Ponzi’s scheme collapsed and he was sent to jail.

Likewise, by 1925 C. C. Julian was in trouble. He bowed out, or was pushed out, handing over control of his companies to a group of businessmen, “nimble-witted magicians” according to the Times. They were led by S. C. Lewis, a lawyer from Texas, and his sidekick Jake Berman, alias Jack Bennett, “the boy Ponzi of the Pacific Coast,” “a two-name man as dangerous to a community’s state of mind as a two-gun man.”

Lewis and Berman kicked the Julian Pete into another gear, intent on fraud from the start. The swindlers stepped in, bought brokerage houses, and invited celebrities and rich investors (shakers and movers like Charlie Crawford) to form privileged “rings,” boosting the stock they then watered. Over four million shares were sold at a par value of $200 million. Punters were gullible, and besides, this was one of those times in American economic life when it was possible to buy into a scam and still make money—so long as you got out in time, or were on the inside.

Some 40,000 Angelenos—high and low, and almost everybody in between—invested in the Julian Pete. Local reporter Guy Finney wrote: “They knew their city was galloping along at dizzying speed. The easy money carnival spirit gripped them. They sang it from every real estate and stock peddling platform, in every glittering club and café, in banks and at newsstands … The dollar sign was on parade. Why marvel then that like epidemic measles among the young it spread from banker to broker to merchant to clerk to stenographer to scrubwoman to office boy, to the man who carried his dinner pail … The mass craving wanted its honey on the table while the banquet was on. It simply couldn’t await a soberer day.”

A single word explains this story of a city gone nuts: oil. In the 1920s L.A. was primarily an oil town. Oil derricks rose high in the middle of major boulevards while nodding donkeys dotted the hillsides. Thirteen hundred or so oil wells operated throughout the Los Angeles Basin, in places “as thick as holes in a pepper box,” producing scores of thousands of barrels a day, one-fifth of the world’s oil output at that time. Amazing.

A 1923 photo of Signal Hill in Long Beach shows hundreds of oil derricks bristling above a few blocks of California bungalows. Water, and the theft of water, allowed L.A. to grow, but oil was the bonanza. Oil promised swift and transforming wealth. Oil created Los Angeles as a plausible business hub and prompted the development of an industrial base that would later manufacture much of the world’s aircraft and automobile tires. Promoters ran bus trips to the oil fields where salesmen bore down bearing “sandwiches, cookies, and huge cups of coffee,” according to the Saturday Evening Post (in the central part of a 1923 series about the L.A. boom titled “Mad from Oil!”). It was the free chicken dinner school of finance. People bought oil stock because they saw derricks and wells and blowouts right there in their backyards. “It was like drilling for oil at Fifth Avenue and Forty-second Street in Manhattan,” said one Texas oil man. Lawns and parks and houses were constantly plowed up so new wells could go down. Homeowners banded together to sell their properties to big developers. When Upton Sinclair wrote his 1927 muckraking novel set in the city, he didn’t call it Movies!; he called it Oil! Nobody wanted to be bothered with memories of struggling, frugal days. “Little people were suddenly seized with the vision of becoming big people and were driven half-crazy with a mixture of greed and fear,” said Sinclair’s wife, May Craig, observing the madness. “We were right in the center of an oil cyclone.”

The Julian Pete grew and grew until on Friday, May 6, 1927, the inevitable happened. “This hapless May day … expressed by the nature of things in Los Angeles in the serenity of sunlit skies and outward peace … saw the Julian Petroleum stock mirage crumble to earth … saw one of the most spectacular and unreal promotional dreams ever fostered in the great, upclimbing Pacific Coast go into swift eclipse … saw frenzied stock gamblers, conscience-heavy bankers, wide-eyed, anxiety-driven business and professional men running around in fear … saw an explosion blast more than 40,000 stockholders who unwittingly had dumped their savings on the swindling bonfire,” wrote Guy Finney.

The great Los Angeles bubble had burst and trade in Julian Pete stock was suspended. Those 40,000 investors awoke to the realization that they’d been fleeced of $150 million; many of them had been ruined, and almost at once they raised angry cries for justice and revenge. What had happened? Who had done this? To District Attorney Asa Keyes fell the task of rounding up the fraudulent malefactors. Indictments against Lewis, Berman, and a host of others were issued by a grand jury in the summer of 1927. But when, after a succession of delays, judicial proceedings finally began in January 1928, Asa Keyes—shuffling, uncertain, apparently indifferent—recommended to the jury sitting in a courtroom in L.A.’s fancy new marbled Hall of Justice that charges against the accused be dropped. And so, amid chaotic scenes, the case of the People of California v. Lewis, Bennett,
et al.
collapsed.