Five Families: The Rise, Decline, and Resurgence of America's Most Powerful Mafia Empires (10 page)

During Prohibition, bootlegging was so extraordinarily profitable that the
various gangs looked askance at the income from numbers as chump change and had little interest in operating in primarily black neighborhoods. The racist gangsters derisively regarded numbers as “the nigger pool.” But tens of thousands of New Yorkers played the numbers games that paid 600-to-l for picking three digits chosen daily from the wagering “handle,” the last three numbers of the total pari-mutuel betting at a horse-racing track. For a Depression-racked population, winning the numbers was a popular fantasy, even if the wager was justa few pennies.

Dutch envisioned the numbers game as an essential substitute for his vanished income from bootlegging. He consolidated scores of small-time independent numbers operators in Harlem and the Bronx. The old-timers had the choice of working and paying a generous percentage of their take to Schultz or winding up in the morgue. Schultz quickly found that his plunge into numbers was the right move. The games grossed an estimated $20 million a year in bets, and there were few lucky winners to cut into Schultz’s profits.

Schultz’s incendiary temperament probably helped eliminate opposition to his new acquisitions. If enraged, Schultz, dubbed “the Dutchman” in the New York underworld, would kill, even in front of witnesses. J. Richard “Dixie” Davis, Schultz’s lawyer, once remarked that the Dutchman murdered friends and enemies “just as casually as if he were picking his teeth.” He once ended an argument over money with one of his underlings by shoving a gun into the man’s mouth and blasting his head off. When he suspected that one of his longtime trusted lieutenants, Bo Weinberg, was plotting against him with Italian mobsters, Schultz personally encased Weinberg’s legs in cement and dumped him into the Hudson River while still alive. (Half a century later, the barbaric slaying of Weinberg became a riveting scene in E.L. Doctorow’s novel,
Billy Bathgate
, and in the film version.)

Tax indictments were seemingly the government’s only strategy for convicting high-profile gangsters like Schultz, but he beat two attempts by federal prosecutors to snare him on tax-evasion charges. For one trial, Schultz obtained a change of venue to the rural town of Malone, New York, where he endeared himself to the jury by bribing almost the entire community with personal gifts and charitable contributions.

Once the tax problems were resolved, Schultz became aware that Dewey’s first major move as special prosecutor was to cast a spotlight on him through the impaneling of a special grand jury. The investigation further unhinged him and made him more bloodthirsty. Seeking to ingratiate himself with Lucky
Luciano and gain the support of the most respected Mafia leader, Schultz converted to Roman Catholicism. He apparently believed that religion would bond him with Italian bosses and make him more acceptable to them as a coequal. One of the underworld dignitaries invited to the convert’s baptism was Charlie Lucky himself.

More ominously, Schultz began scheming to assassinate Dewey. His men shadowed Dewey and discovered that every morning, after leaving his Manhattan East Side apartment, the prosecutor stopped to make telephone calls from a nearby pharmacy before heading to his downtown office. To avoid disturbing his sleeping wife, Dewey used the pharmacy’s public pay phone to confer with his staff on overnight developments. One or two bodyguards accompanying Dewey remained outside the drugstore. Schultz decided that the store was an ideal trap. A lone hit man, using a gun equipped with a silencer, could drill Dewey while he was seated in the booth, and then knock off the pharmacist. The early-morning sidewalk and traffic noise, Schultz reckoned, would drown out the gunfire and cover the hit man’s escape.

With his plan worked out, Schultz offered the job to Albert Anastasia, one of the Mafia’s most efficient triggermen, who had Lucky Luciano’s ear. Schultz rationalized that Dewey was a menace to all the bosses, not just him, and his elimination was a priority. Anastasia lost no time in
relaying
the news to Luciano, who summoned an emergency meeting of the Commission.

The Mafia’s supreme council unanimously vetoed Schultz’s scheme. According to Joe Bonanno, the bosses considered the plot insane. They feared that slaying a prosecutor with Dewey’s prestige would spark enormous public outcry against the rackets. Among the American Mafia’s original leaders, there was unanimous accord that incorruptible law-enforcement officials and investigators—straight arrows—were immune from underworld revenge and violence. Murdering Dewey, the bosses reasoned, would only unleash more Thomas E. Deweys and law-enforcement fury against all of them.

The Commission session did end with approval of a hit—but the target would be the Dutchman. Schultz had become a serious liability to the Mafia godfathers; his irrational ravings about Dewey and his unquenchable thirst for violence attracted too much attention to their own rackets. The Mafia preferred a quiet style of business.

Trying to evade Dewey’s scrutiny, Schultz holed up in a three-room suite at the best hotel in Newark, New Jersey. To eradicate Schultz, the Commission selected the Mob’s star executioner, Albert Anastasia, whom Schultz had wanted
to hire for the hit on Dewey. Anastasia is believed to have assigned the Commission’s contract to Jewish professional executioners working for the Mafia. Three armed men cornered Schultz as he was having dinner on October 23, 1935, at the Palace Chop House and Tavern in downtown Newark. In the men’s room, one gunman mortally wounded Schultz. A fusillade by the trio finished off two of his bodyguards and Otto Berman, better known along Broadway as “Abbadabba,” the mathematical genius and accountant in charge of Dutch’s financial ledgers.

Schultz’s death eliminated the last big-time non-Mafia gang and automatically expanded Lucky Luciano’s empire. Without opposition, Lucky appropriated Schultz’s numbers banks and took charge of the Dutchman’s restaurant shake-downs. Schultz’s warnings, however, about the danger of Dewey’s long reach were prescient.

Unlucky Lucky

T
he Mob’s murder of Dutch Schultz cleared the way for Dewey’s vigorous team of prosecutors and investigators to home in on another inviting quarry: Charles “Lucky” Luciano.

Charlie Lucky, although the strongest Mob dictator in 1936, was relatively unknown to the public. His last arrest and prison stretch occurred when he was a teenager and, like other New York Mafia notables, he preferred operating behind the scenes and keeping his name out of headlines. He was less discreet about his alliances with Tammany Hall leaders and socialized openly with them at major political gatherings.

At the 1932 Democratic Party convention in Chicago, which nominated Franklin D. Roosevelt for the presidency, Luciano and his politically farsighted adjutant, Frank Costello, accompanied the Tammany delegation. Of course, the mafiosi could not cast votes at the convention, but they were treated like royalty by the powerful Tammany leaders. Lucky shared a suite with James J. Hines, a West Side district leader who would later be convicted of taking underworld bribes to fix police and judges in gambling cases. Costello’s roommate was one of their close friends and a high-powered political connection, Albert Marinelli. Affectionately nicknamed “Uncle AT by mobsters, Marinelli was the first Italian Democratic district leader in New York and held the pivotal
post of city clerk. His job included supervising inspectors who tabulated votes in city elections. Besides having the ability to stuff ballot boxes, Marinelli was of particular help to the Mafia and other criminals because he oversaw the selection of grand jurors.

Despite Luciano’s attempts to keep a low profile, Dewey’s squad was aware of his high underworld rank and his political ties to the Democratic machine. The investigators were not deceived by his pretense that he made a substantial living from shooting craps, sports gambling, and bookmaking. Dewey’s examiners discovered that Luciano’s luxurious lifestyle could never be financed solely through bookmaking and gambling. For starters, Luciano maintained his own private plane for jaunts to Saratoga Springs, Miami, and other resorts. Dewey’s detectives theorized that Luciano also kept the plane as an emergency getaway vehicle in the event of trouble. A stylish dresser, bachelor, and party animal, Lucky registered under the assumed name Charles Ross at the elegant Waldorf-Astoria Hotel, where he lived year-round in 36C, a posh three-room suite. The apartment rented for $7,600 a year, the equivalent of more than $100,000 in today’s money.

The governor’s executive order establishing Dewey’s temporary office as special prosecutor specified that his main mandate was the eradication of the numbers rackets in the city. Dewey, whose stern visage and bristling black mustache were frequently pictured in newspaper stories, wasted no time in broadening his prosecutorial horizons. Trying to rally support for his gang-busting campaign, he announced through newspapers and radio broadcasts that his objectives went far beyond wiping out numbers banks. His goal, he declared, was to rid the city of what he termed “industrial rackets,” the Mob’s violent exploitation of businesses and unions that inflated prices for a hard-pressed Depression-era population. On the radio, in his mellow baritone, he appealed to the public to supply him with leads and tips.

Dewey’s first stabs at surveillance and background investigations of Luciano failed to turn up damaging racketeering evidence against him. Detectives and lawyers discovered that Luciano, obviously wary of wiretaps, was circumspect in his telephone conversations. Moreover, he apparently kept no records on paper; all incriminating financial details were in his head.

But Dewey’s agents unexpectedly came upon a lead that entangled Luciano in a vice crime. The path to Luciano began when Dewey’s only woman staff member, Eunice Carter, badgered him into examining corruption inside the city’s Women’s Court. Carter suspected that there was unrestrained fixing of
cases and flouting of the law among judges, lawyers, and bondsmen when prostitutes were brought before that special court. Dewey reluctantly gave tentative approval for a limited inquiry, insisting that he was more interested in industrial rackets and did not want to be portrayed as a puritanical prosecutor of fallen women and madams.

To Dewey’s amazement, the Women’s Court investigation went far beyond corrupt court personnel. It led directly to Lucky’s gangsters. Unlike federal statutes and court rulings that, in the 1930s, virtually prohibited government agents from installing wiretaps and bugs, New York State law permitted court-approved telephone interceptions. Mainly through wiretaps of brothels, investigators uncovered clues that an organization referred to in the wiretapped conversations as “the Combine” and “the Combination” was in control of about three hundred whorehouses in Manhattan and Brooklyn, which employed two thousand working girls. More crucial to Dewey was the discovery that a top Luciano henchman, often seen with him, David “Little Davie” Betillo, was overseeing bordello operations and siphoning a huge hunk of the $12 million-a-year gross from organized prostitution. The investigation revealed that Italians had largely replaced Jewish gangsters as the dominant force in the brothel business, a pattern similar to the Mafia’s takeover of other rackets in the city from Jewish and Irish hoodlums.

In January 1936, Dewey’s men simultaneously raided eighty bordellos, arresting hundreds of prostitutes, madams, and “bookers,” men who helped manage the houses, recruit women, and assign them to different locations as needed. Using threats of high bail and long pretrial imprisonment unless the suspects cooperated, Dewey’s staff convinced a good number of prostitutes, madams, bookers, and pimps caught in the sweeps to testify and dramatize the magnitude of the huge network. In addition to witnesses who implicated Luciano’s lieutenants, three prostitutes claimed that they had direct knowledge of Charlie Lucky’s involvement in the ring.

Aware that Dewey was closing in, Luciano fled to Hot Springs, the Arkansas refuge for Owney Madden and other privileged gangsters. Dewey obtained an extradition order to bring him back on ninety counts of “aiding and abetting compulsory prostitution.” An Arkansas state judge complied by jailing Luciano for a hearing. Luciano, however, had well-placed friends in the easily corrupted Hot Springs government and, after barely four hours in the lockup, he was released. His $5,000 bail had been provided by no less an official than the chief detective of Hot Springs.

“I may not be the most moral and upright man that lives,” an indignant Luciano told reporters after learning of the charges. “But I have not at any time stooped so low as to become involved in aiding prostitution.”

Luciano’s lawyers were busy finding reasons to rescind the extradition order when Dewey’s men swooped down on Hot Springs and, with the help of state troopers, rearrested the celebrity fugitive. Before Luciano’s attorneys and Hot Springs officials could react, Dewey’s detectives kidnapped Luciano and spirited him out of the Razorback State.

The trial of Luciano and twelve codefendants in May and June 1936 marked the first time that Dewey used his new legal weapon, joinder indictments, to link a group of defendants in a single case. Luciano, of course, was the central target. In his opening statement Dewey gave him star billing as New York’s “czar of organized crime” and the headman of “the Combine,” the prostitution racket.