The Last Testament of Lucky Luciano: The Mafia Story in His Own Words (28 page)

“When he come back to New York, Joe Bananas from Brooklyn and Steve Magaddino, who ran things up around Buffalo, come to see me. They said Vito was talkin’ to them private about settin’ up a line of junk right from Italy, through him, that he could put out all over the United States. They was afraid of this and Magaddino even told Vito to his face that he was gonna convene the Unione council and have him knocked off. It was like talkin’ to the wall. Except I didn’t know at the time that Vito wasn’t listenin’ and was gonna keep on gettin’ things set up. It served
him right, the dirty little bastard, when Anna began givin’ it away free a couple years later to any guy who looked at her, and especially when she started playin’ house with other broads. And he really rated it later on when she blew the whistle on him.”

The seeds that were being planted by Genovese in Italy eventually flourished into an industry that would become a national nightmare in the years following World War II. In the mid-thirties, however, narcotics, though extraordinarily profitable for those dealing in them, had not yet made a major impact on the nation. Genovese’s plans for an immediate ripening were delayed by his own greed. He had hardly returned from his honeymoon trip when a small-time hoodlum named Ferdinand “The Shadow” Boccia brought him a sucker, a gullible and wealthy Brooklyn merchant who loved to gamble. Boccia offered to set up a poker game in return for a third of Genovese’s winnings. Together with Mike Miranda, Genovese took the merchant for fifty thousand dollars, then for another hundred thousand sold him a machine they claimed would manufacture real ten-dollar bills. “When Mike told me the story, I couldn’t believe it. I thought the days when you could sell the Brooklyn Bridge to anybody was over. But wouldn’t you know, that son of a bitch Vito was so damn greedy he decided he wasn’t gonna give Boccia his fifty-grand cut.”

What Genovese did instead was hire two minor hoodlums, Willie Gallo and Ernest “The Hawk” Rupolo, to put a bullet in Boccia’s head. This they did. Then Genovese went further; he paid Rupolo $175 to murder Gallo. Rupolo botched the job; on two different occasions he took a crack at Gallo, but the most he was able to do was inflict a minor wound. Gallo retaliated by going to the police and then testifying at Rupolo’s trial, and he had a certain satisfaction in hearing the Hawk sentenced to nine to twenty years in the penitentiary for attempted murder.

For the next few years, Genovese, fearing that prison might turn Rupolo into a canary, walked warily, prepared to flee at the first sign of trouble. But through most of those early post-Prohibition years, the potential sources of trouble for Genovese, Luciano and the rest of the underworld were a lot more important and a lot more powerful than Rupolo. Along with Repeal had come reform, to both the nation and New York. And along with
reform had come a determination to smash the racketeers and their corrupting influence.

“Around Christmas of 1932, just before Hoover’s term was up, Frank Costello and I got word that Dutch Schultz was gonna be the next target for the federal tax guys after they got Waxey Gordon.” After Al Capone, Schultz was at the time perhaps the most infamous American racketeer, a position he blamed more on his name than anything else. He had been born Arthur Flegenheimer in Yorkville on Manhattan’s Upper East Side in 1902 and had grown up in the Bronx, where he early began a career in crime (his first arrest was at seventeen, and his record would eventually list thirteen arrests, ranging from disorderly conduct to murder) and adopted the name Dutch Schultz. “It was short enough to fit the headlines,” he later complained. “If I’d kept the name Flegenheimer, nobody would have heard of me.”

Like his friends, Schultz flourished with Prohibition. By 1930, he was a political power in the Bronx, controlled the beer and much of the liquor that flowed there, and had organized a restaurant service that “protected” the transportation of meat and produce from wholesalers to restaurants. “Charlie,” he once said to Luciano, “you’re doin’ the public a big favor by makin’ sure they have clothes to wear. It’s the same with me. I make sure the customers can walk into a restaurant and have somethin’ to eat. The public oughta be grateful.”

His major racket by the early thirties, though, was policy. After an initial sneer at a penny-ante game, he had seen the potential profits. With the agreement and approval of Luciano, he muscled his way into the private domains of the independent black numbers bankers — Wilfred Brunder, Big Joe Ison, Henry Miro and Alexander Pompez — and became the biggest policy operator in
the country, his banks taking in more than thirty-five thousand dollars a day. Through the manipulations of his financial wizard, Otto “Abbadabba” Berman (named after a candy bar he constantly munched), Schultz’s profits were boosted from the normal two-thirds after payoffs to winners to something closer to three-fourths.

“Schultz was one of the cheapest guys I ever knew, practically a miser. Here was a guy with a couple of million bucks and he dressed like a pig. He used to brag that he never spent more than thirty-five bucks for a suit, and it hadda have two pairs of pants. His big deal was buyin’ a newspaper for two cents so he could read all about himself.

“But I never had no trouble with him when we needed him for somethin’ important. So I hadda look on him as a dependable partner. I didn’t have to love him. Besides, he done me a big favor when he knocked off Coll.”

Vincent “Mad Dog” Coll, the killer hired by Maranzano to murder Luciano, was ambitious and decided to cut himself in on Schultz’s empire. Schultz spurned the demand and Coll declared war. It lasted until February 1932, when Coll was trapped by Schultz gunmen in a drugstore telephone booth on West Twenty-third Street in Manhattan, near a rooming house where he was hiding out. He was riddled by a submachine gun. “The guy was really crazy, tryin’ to shoot his way into Schultz’s territory.”

Coll was neither the only nor the most dangerous enemy of Schultz. For the federal government was now after him for income tax evasion. “That was when Johnny Torrio told every one of us that we better start fixin’ up our income tax returns. A lot of us did that, startin’ with 1928, to show some legitimate business. In my case, I declared an income of sixteen thousand bucks and through the next four, five years, that figure went up to about twenty-five grand a year, from ‘gamblin’ enterprises,’ and I listed myself as a ‘professional gambler.’ Y’ know, I always thought it was funny that the United States government would let anybody declare taxes on any illegal business and then keep the money without prosecutin’ the guy for breakin’ the law.”

Such advice, and such filings, came too late for Schultz, however. In 1933, a federal grand jury in New York indicted him for failure to file returns for 1929, 1930 and 1931, when, it contended,
his taxable income had been $481,637.35 from bootlegging alone, on which he owed the United States Treasury $92,103.34 in back taxes plus interest. If convicted, Schultz would face not merely payment of back taxes plus interest but fines of more than $100,000 and a prison term of up to forty-three years.

The case had been prepared by a young United States Attorney for the Southern District of New York named Thomas E. Dewey. He was already winning a reputation as the nemesis of the underworld, having won convictions of the notorious lone-wolf killer, John T. Nolan, better known as “Legs Diamond” and, for tax evasion, of Waxey Gordon. Dewey had amassed a mountain of evidence to support the indictment of Schultz, and a conviction seemed inevitable. Up to that moment, the government had yet to lose a tax case against a racketeer, and there was little reason to suppose it would fail this time.

But Schultz was not about to give in easily. With the overt and covert help and protection of the police he managed to avoid detection, though there were fifty thousand Wanted posters plastering the city, and he was not exactly invisible. During the first year of hiding, he lived openly at a number of apartments around the city, at addresses known to his friends and associates and to the politicians and police on his payroll. Tammany leader Jimmy Hines, a Schultz partner in the numbers racket, was a frequent visitor wherever the Dutchman was living. And Schultz turned up regularly at the better nightspots, did not even abandon his custom of dropping in at Polly Adler’s a couple of times a week, where he was always welcomed as a good paying customer. With such freedom of movement, Schultz was able to continue unabated his direct supervision of his sprawling operations.

But such a situation could not last. By mid-1934, Secretary of the Treasury Henry Morgenthau decided the charade had gone on long enough, and Morgenthau found some willing allies. J. Edgar Hoover proclaimed Schultz “Public Enemy Number One” and ordered his agents to bring him in without delay. Morgenthau talked, as well, with New York’s new reform mayor, Fiorello La Guardia, who had taken office on January 1, 1934, after defeating Tammany’s candidate on a platform stressing war against corruption and the underworld. La Guardia ordered his police commissioner,
Lewis J. Valentine, to “get your men off their butts” and start looking seriously for Schultz.

As the pressure mounted, Schultz decided to go underground for real. He turned to Luciano for assistance, and Charlie Lucky sent him to Albert Anastasia in Brooklyn, who provided a well-protected hideout.

“While I was takin’ care of Schultz, the Little Flower started to throw some pretty big rocks at me and Frank Costello. The first thing he did when he got to be mayor was to give the cops orders to pick up me and Adonis and Costello and Willie Moretti and everybody else who was in New York. You know what happened? I’m walkin’ down the street and this cop comes up to me and he says, ‘Charlie, the Commissioner wants to see you.’ This was before La Guardia had a chance to name Valentine and the commissioner was still a guy named John O’Ryan. I says, ‘For chrissake, it’s New Year’s. Tell him I’ll see him tomorrow.’ I’m thinkin’ he wants to talk about a deal, now that we got a new mayor and that kind of thing. But the cop tells me, no, I gotta see O’Ryan right then. He says La Guardia’s down on all of ’em and they gotta bring me in to make it look good. He gives me a ride downtown and Commissioner O’Ryan’s waitin’ for me. He says, ‘Charlie, I’m sorry about this. We hadda bring you in. If you want to go home now, we’ll give you a ride.’ I look at him like he’s nuts and I ask him, ‘Ain’t you even gonna ask me one question?’ He says, ‘What do you want me to ask you?’ So I was there about ten minutes, is all.

“And the same thing happened to the rest of the guys. They got a ride to a precinct or someplace, to make it look good, and then a ride home. Even Willie Moretti. They was waitin’ for him when he came over from Jersey. They picked him up, but it wasn’t no different with him. After they let him go, he comes to see me at the Towers and we had a big laugh over it. It made La Guardia look good in all the papers. But what did it mean? Nothin’. Oh, maybe we hadda throw a couple grand more in the bag every week for the neighborhood cops, but that was all.

“But that La Guardia wouldn’t let up. The next thing he does is round up a few hundred of Costello’s slot machines and dump ’em in the East River — makin’ sure the newsreel cameras and
newspapers covered every square inch of what he was doin’. And he starts throwin’ my name around. Maybe Schultz was Public Enemy Number One as far as the FBI was concerned but with La Guardia I was the number one guy. Why the hell did he have to say, ‘Lucky Luciano is nothin’ but a cheap bum’? That little bastard knew there was nothin’ cheap about me; a guy who lives in the Waldorf Towers ain’t no bum.

“I just couldn’t understand that guy. What the hell did he want? He was a wop like the rest of us and he wasn’t goin’ noplace. He’d already been a congressman and he couldn’t expect to be President. If the American people didn’t elect Al Smith, they sure as hell wouldn’t give the right time to a half-Jewish wop like La Guardia. When we offered to make him rich, he wouldn’t even listen. So I figured, what the hell, let him keep City Hall, we got all the rest — the D.A., the cops, everythin’.”

But La Guardia, with his flair for publicity and his alliance with Morgenthau and other federal authorities, could make things uncomfortable, and this he did. As the search for Schultz intensified, a campaign against other underworld leaders was stepped up. But in those events of the moment, Luciano and his friends saw more than menace. They saw promise.

One day, during a meeting with Lansky at the Waldorf to discuss the Cuban gambling operations, the talk turned to the odds against Schultz if and when he surrendered. Lansky’s estimation was that the odds favored conviction, and many of Luciano’s friends, including Zwillman, Adonis and Genovese, were already anticipating that day, for it would mean that the Dutchman’s empire would be parceled out under Luciano’s direction. “I had a lotta different feelin’s about that. What Meyer was sayin’ was true, and it really looked like Schultz was gonna take a bath and there wasn’t a damn thing anybody could do about it — no way to fix it that I could see. But I was worryin’ about the heat La Guardia was puttin’ on me, too. So I said to Lansky, ‘It wouldn’t be a bad idea if we let Dewey know that he got the goods on Waxey with my help. Then maybe he could hold back a little bit. Besides, all La Guardia talks about is how he’s helpin’ them guys put me in the clink.’ ”

The word was passed. Dewey responded: “Tell Luciano that
someday I’ll show him my gratitude in court.” If Luciano thought there was a promise in those words, Albert Marinelli dispelled that dream. They were, Marinelli told him, a threat.

The Schultz matter, though, was still to be handled. From his hideout now, Schultz was having difficulty attempting to run his business with the efficiency that personal attention would insure. His lawyer, J. Richard “Dixie” Davis, an attorney who divided his time between underworld clients and Broadway showgirls, had an idea that at first appalled the penurious Dutchman, who was eventually persuaded that it was his only recourse. The government was offered one hundred thousand dollars as a flat settlement for all back taxes if the indictments would be dismissed. Like his predecessor, Andrew Mellon, who had rejected a similar four-hundred-thousand-dollar settlement offer from Al Capone, Morgenthau flatly rejected the deal. “We don’t do business with criminals,” he said.