The Last Testament of Lucky Luciano: The Mafia Story in His Own Words (27 page)

With Roosevelt’s blessings, Seabury hauled one Democratic city politician after another before his investigating committee and grilled them about their dealings with the underworld, about the huge caches of money that were turning up in their possession. Glad-handing Mayor Jimmy Walker spent several uncomfortable hours before Seabury, trying to evade and slide around the questions. Roosevelt, true to his promise, prepared to move against Walker. Before he could, the Mayor sent him a telegram: “
I HEREBY RESIGN AS MAYOR OF NEW YORK CITY. JAMES J. WALKER
.” And before anybody quite knew what had happened, Walker was on a boat for Paris, accompanied by Betty Compton, his showgirl mistress; when he returned years later, the scandals were old memories and he was greeted by a wave of nostalgia for the good old days.

The shock waves from the revelations about Walker and his sudden departure reverberated through city government. Seabury questioned and castigated scores of Walker aides and Tammany bigwigs, spreading out such a portrait of municipal malfeasance that even the most jaded New Yorkers were sickened. At the top, Tammany Hall was shattered, and some of its leaders — including, a few years later, Jimmy Hines — would end up in Sing Sing. The city was ready for reform, and the good old days were over.

Three weeks before Christmas 1933, the Noble Experiment, Prohibition, died. Few mourned. It had been a failure from its
very inception, as attempts to legislate social attitudes and behavior often are. Its fourteen-year history had given rise to social crisis and moral breakdown, to a generation believing there was nothing wrong with breaking an unpopular law.

It had given rise, too, to a new breed of criminals who, without it, might never have been more than pariahs preying on innocent victims. But with Prohibition, Luciano, Lansky, Costello and Schultz became almost more famous than infamous and were often lionized by the “good people” to whom they provided merchandise and services available nowhere else, people who, under other circumstances, would have looked at them with opprobrium — if at all.

Though Luciano and his colleagues did not greet the end of Prohibition with joy, neither were they shattered by it; they were, in fact, fully prepared for it. For years they had been diversifying their empires, and now they stepped up the process. Increasing emphasis was placed on gambling of every kind, from nickel-and-dime policy through slot machines and candy-store punchboards to particularly luxurious high-stakes casinos. Wherever they could buy enough politicians and police to form “open” enclaves, their casinos attracted the rich and boomed — at New Orleans’s Beverly Club, run by Phil Kastel, and the Blue Room at the Roosevelt Hotel, under the supervision of Seymour Weiss; at Bradley’s in Palm Beach; at a score of clubs in Covington and Newport, Kentucky, Hot Springs, Arkansas, and Dade County and Broward County, Florida; at Ben Marden’s Riviera and others along the Hudson in Fort Lee, New Jersey. A new agreement was struck with Nucky Johnson to open the South Jersey coast to gambling, with Johnson cut in for twenty-five per cent of the profits while the organization provided the equipment and all capital outlays.

It was a beginning, and Luciano and his friends were convinced there was a vast untapped area beyond the American borders. In the spring of 1933, Luciano convened a meeting of the Unione Siciliano at his Waldorf Towers suite to discuss a preoccupation of Lansky’s. Just ninety miles from Miami, Lansky said, there was a place where the weather was good all year round, where American tourists were beginning to appear in increasing numbers, and
where he could guarantee the organization would have no problems.

“Meyer and me have been workin’ on this ever since the Roosevelt doublecross,” Luciano said to the gathering. “We gotta expand someplace and we need a place to send our dough where it’ll keep makin’ money and also get them guys from Washington off our backs. Meyer’s been down to Havana and he’s made some good contacts. Within a couple months, by August or September, he’s goin’ back again and he’ll probably make a deal. It could cost us a bundle in front, so everybody better get ready to put up at least half a million each.”

“It was like droppin’ a bomb. Five hundred thousand bucks as an ante for a kitty in 1933 wasn’t peanuts. Chuck Polizzi from Cleveland started screamin’, and that kinda made me laugh. I told him that we was makin’ so much money out of his place in Covington that plenty of guys were gettin’ rich off it, so how could he complain about takin’ a piece of income that taxes could never grab, to make even more. I laid it on him pretty damn hard and from then on there was no complaints.”

In September, Lansky made his trip to Havana, met with the Cuban strongman, Fulgencio Batista, a friend from earlier Prohibition days, and came away with gambling rights on the island, including control of the already established casino at the Hotel Nacional. “We hadda put up three million in cash, in front, for Batista, and Lansky did it by openin’ an account in Zurich, Switzerland, for him. From then on, Batista got a guarantee of three million a year, minimum, but it always went way over that on the percentage.

“That was our first shot at the islands of the Caribbean, and eventually we opened up Nassau and places like that, because they needed us. It was my opinion that eventually our guys would be workin’ in Europe, too. Nobody wanted to start a war with the Corsicans, because those guys was real cannibals compared to us when it came to muscle. But they didn’t know how to run crap games and neither did the legal casinos, and the more Americans that went to Europe, the more they’d be lookin’ for that kind of play.”

Gambling was one aspect of the big push into diversification.
Another was into legitimate enterprises. The burgeoning of loansharking, one of the few sources of ready cash in a devastated economy, was often the wedge. When defaulting borrowers could not pay up to the Lepke-Lucchese collectors, they found themselves with new partners, and the garment district was soon swarming with companies controlled by the underworld.

Trucking, too, was an obvious target. “Durin’ Prohibition we probably ran the biggest truckin’ operation in the United States. We knew more about trucks and tight schedules than any company in the country. So we looked over the market and decided to put a little squeeze on here and there with companies that should be happy to have our experience. For example, milk spoils pretty fast and so does bread and fresh vegetables. In no time at all we had a lock on three or four of the biggest fresh-food businesses in America and we took in as much as half a cent a loaf on bread. We bought into the biggest dairies, and we’re still there.

“Lepke and Schultz was doin’ the same thing with meat and takin’ it from both ends — from the packers to make sure the meat got where it was goin’, and protectin’ the restaurants to make sure they got their deliveries smooth and regular. All the top places, even Jack Dempsey’s restaurant on Broadway, paid us a cut. And Socks Lanza controlled the Fulton Fish Market downtown. After all, nothin’ spoils faster’n fish. That market was the biggest seafood distribution center in the world; the city owned it, but we ran it and even the Little Flower knew better than to get messed up with us down there.”

Some of the inroads into legitimacy were simple. Others, however, met with resistance, and some of this resistance came from inside the underworld. “The toughest fight of all was gettin’ into real estate. In a way, it was crazy that so many guys objected to it. There was no rackets, no shakedowns. It was all out in the open, clean. You had a nice buildin’, which maybe didn’t pay off like a slot machine, but the money come in regular. Some of the guys only knew things like rackets and the big score. When Lansky and I talked about buyin’ into real estate, they looked at us like we was nuts. ‘What’re we gonna do with a buildin’?’ We lost out on a lotta terrific deals which if we owned today would be worth a thousand million dollars. That was always my big objection to
the brainpower in the Unione. Some of them guys could never see beyond a bowl of spaghetti.”

Still, whiskey and beer were not forgotten in the midst of the new expansion. Until the moment of the ratification of the Twenty-first Amendment to the Constitution, repealing Prohibition, Luciano and his friends had been selling booze without pause, and selling it more openly even than during the halcyon days, for at the end there was hardly even a pretense of enforcing the dying law. “We had a whole inventory of booze socked away all over the country, in warehouses, in drops down near Atlantic City, and out in Ohio — all over. We had to get rid of it the minute whiskey became legit. Do you know what we did with it? Most of it we gave away, to churches and synagogues in New York, Chicago, Philadelphia, everywhere. We made ourselves good guys in the neighborhoods. All over the place they was havin’ rummage sales. The churches and synagogues sold the stuff and kept the money. It was kinda like liquid Bingo.

“The Dutchman, who was thinkin’ at the time about becomin’ a Catholic, give all his booze to the Catholic churches around where he was operatin’ in New York and Jersey. He became a big man with ’em, got in real good with the priests. Maybe that helped him up there later on. It didn’t do him no good down here.”

The underworld had already made plans to get into legitimate liquor. The outfit continued, behind the scenes, to maintain interests in the speakeasies after they had turned into legitimate nightclubs, and to supply these clubs with their whiskey. Foreign agents of Luciano and his friends arranged with distillers abroad, with whom they had been dealing for years, for the acquisition of importing and distribution franchises, though the American gangsters were barred by their criminal records and reputations from moving into control of domestic distillers (a business soon dominated by men less notorious, like Lewis Rosenstiel and Jacob Bronfman, who emerged as heads of Schenley and Seagram’s respectively).

Costello and Kastel, for instance, set up Alliance Distributors as the exclusive distributor in the United States for Scotland’s Whiteley Company, maker of King’s Ransom and House of Lords
Scotch. The two went even further; they purchased a controlling interest in J. G. Turney & Sons, Ltd., the British holding company for Whiteley. Lansky, Luciano, Siegel, Adonis and others all had an interest in Capitol Wine and Spirits, a major importer and distributor of French wines, Scotch, Canadian and domestic whiskeys. There was hardly a bootlegger of note who didn’t cut himself in for some of this new business.

Lansky, however, recognized that the bootlegging days were far from over, since untaxed bootleg booze could still be sold much cheaper than heavily taxed legal whiskey. In striking an independent course, Lansky broke his partnership with Benny Siegel in the Bug and Meyer Gang, and at the same time began drawing back from his once-total dependence on Luciano. In November of 1933, using his father-in-law, Moses Citron, as a front, Lansky formed Molaska Corporation. Its charter gave it the right to process dehydrated molasses as a sugar substitute. But the company’s real aim was to use the molasses as the base for vast quantities of illegal alcohol to be turned out in stills in Ohio and New Jersey, alcohol that was for sale to distillers of bootleg whiskey and to legitimate manufacturers for bottling under their own labels as legal whiskey.

“It was a combination of things that started the Mighty Mite to look for independence. No matter how he’d try, he’d still be number two as far as I was concerned, and he knew it. So he hadda make his move. The minute Molaska was put together, I knew Lansky was settin’ out on his own, not entirely, but to make a place for himself in the rackets which didn’t have nothin’ to do with me. But I couldn’t let him get away with that without doin’ somethin’ about it. I called him in one mornin’ about Christmastime and said, ‘Meyer, it’s okay with me about Molaska, I’m not askin’ for a piece of it, because you earned it. But we’re gonna set lots of guys up in the legal whiskey business, and I want you to make an outline of where we’re gonna do it, the guys we’re gonna promote, and what it’s all gonna cost. That’s gonna be mine, and I’ll split it with everybody, like I always did, includin’ you.’

“Meyer done what I asked. Of course, a couple years later, Molaska got busted by the Feds. But after that time, I knew Meyer wouldn’t stop plannin’ stuff of his own on the side. But
when you come down to it, I always thought I could trust Meyer even if he was different from me and most of the other guys. He liked to live in the background, in the shadows. In that way, as I look back on it, he was one up on me. It was my publicity that really cost me the best ten years of my life. So I guess in that way Meyer was smarter.”

If relations with Lansky, basically the relationship of equals, maintained a certain equilibrium through these years, Vito Genovese was something else. As the organization expanded its activities, Genovese was constantly at Luciano’s ear, pressing the case of his favorite trade, narcotics. “The little son of a bitch would never give up. I think his mother may have been a Neapolitan but maybe his father was an English bulldog. In fact, sometimes I think he looked like one. He would never let up on the subject of junk. He just loved junk more than booze or anything — except maybe that broad Anna.”

In 1932, Genovese fell in love with Anna Petillo Vernotico. Unfortunately, she was already married, but that did not stop Genovese. He hired a couple of killers, had Anna’s husband, Gerard Vernotico, garrotted and thrown off the roof of a building, and then within a few weeks took the widow as his bride. For his honeymoon, Genovese took Anna to Italy. “He wanted to take her all around where he was born to let her see what kind of an American big shot he could be around Naples, where everybody knew his name. While he was there, he made some good contacts, even though I warned him against makin’ any connections with narcotics guys in Italy and France. Somehow or other, he must’ve had an idea for the future and he planted a lotta very important seeds there.