The Outfit (27 page)

From June 15 to June 21, 1947, the Wurlitzer Company staged the jukebox version of the mob’s infamous 1957 Apalachin summit. Wurlitzer’s distributors’ confab took place at Crosslake, Minnesota, and was attended by numerous “connected” individuals who were assigned to share cabins like teenagers at summer camp. Among those known to attend were Lansky’s juke partners Alvin Goldberg and Willie Bye. In another cabin were Guzik’s son-in-law Frank Garnett and Sam Taran. Other attendees included Henry Friedman of the mobbed-up Mercury Records Corporation and a partner of Chicago bookies Frank Harmon and Max Hoffman. One cabin was assigned to someone named Siegel, with no further clarification that his first name was Ben. The Chicago Crime Commission concluded: “The underworld was well-represented at the meeting. Several of the most important Wurlitzer distributorships were in the hands of notorious racketeers.”

As with its other takeovers, the Outfit’s brain trust devised numerous ways to squeeze peripheral profits from the jukebox racket. In one variation, the hoods began to cross-promote singers of its own choosing. The gang could literally turn no-talents into national sensations by manipulating the key benchmark of popularity: At the time, jukeboxes were the fastest way to promote a singer’s career, and the Outfit decided whose records were placed in the boxes, which position they occupied on the machine’s index, and the machine’s play counters. Distributors were ordered to place certain records in the coveted number one position on the box. One aspiring twenty-four-year-old vocalist, Tommy Leonetti, was personally handled by the notorious Felix “Milwaukee Phil” Alderisio, a dreaded enforcer-for-hire. A program director for a Chicago TV station reported that “the mob actually owns 150 percent of Tommy Leonetti, and Leonetti, who is actually working on an allowance, is a very, very sorry boy.” Chicago distributor Ted Sipiora recalled how he was paid a visit by a gang underling who demanded Sipiora promote a recording by Leonetti. Sipiora said the hood, John Ambrosia, doubled as Leonetti’s agent and had allegedly once managed Dean Martin and Jerry Lewis. Ambrosia initially stopped in to deliver fifty copies of a Leonetti single. He later returned to express his displeasure with the sales of the record. “We told him it wasn’t good enough to get on the boxes,” Sipiora said. Ambrosia then began tossing a bullet in the air, saying, “These things can be dangerous. They penetrate flesh.”

To this day, Chicagoans are quick to recount the tale of how one of their own became the beneficiary of the Outfit’s jukebox domination to become a nationwide singing sensation. Recent conversations with both the singer’s relatives and associates of Unione Siciliana president Joe Bulger demonstrate how the gang’s support could boost a nascent showbiz career. In the 1930s, Bulger was the trustee and president of suburban Melrose Park, a community largely composed of blue-collar Italian laborers and craftsmen. In 1934, Bulger appointed one Mike Laraia, a distant relative through marriage, to be comptroller of Melrose Park, a powerful position that dispensed public works contracts throughout the town’s labor force.

When not working civil projects, many of the town’s artisans serviced the homes in neighboring upscale enclaves such as River Forest. According to local lore, when River Forest’s most powerful resident, Joe Accardo, undertook the extensive renovations on his palace, Mike Laraia dispatched Melrose Park’s best carpenters, plumbers, etc. Years later, when Laraia’s talented teenaged daughter cut her first record, Bulger told Accardo to put his considerable weight behind the high-schooler, who had not an inkling of the favor about to be bequeathed her.

“It’s time we did something for one of our own,” Bulger told Accardo. Thus when Laraia’s daughter released her first record, it received prime placement in the tens of thousands of the jukes under the gang’s control, an incalculable advantage for a new talent. According to one Laraia cousin, “Everybody got behind the record. She’s a phenomenal singer, and she deserved it.”

Mike Laraia convinced his girl to change her name before going national to something more easily pronounced by non-Italians. Heeding her father’s advice, Carol Laraia became Carol Lawrence, the soon-to-be Broadway sensation of the musical
West Side Story,
and countless other Broadway, recording, and television triumphs. She would marry Robert Goulet, the matinee idol star of Jack Kennedy’s favorite musical,
Camelot.

In addition to the power they wielded at the jukebox, the Outfit’s relationship with Jules Stein’s MCA placed it in the powerful position of starmaker for Stein’s favored musical acts. Once the chosen artist’s records were inserted, a phony measure of popularity was concocted: Soon after jukeboxes became a national fixture, Stein, perhaps with the gang’s involvement, invented the Top Ten List, which later became the Top Forty. The gang solidified its hold on the recording industry by rigging the jukes’ play count. The Outfit thus anointed Top Ten hits and created instant celebrities. They had mastered the art of “spin” in more ways than one.

Lastly, a related enterprise involved the production of counterfeit records. Some of the inferior bootlegs were made at Lormar, others at Apex Music, run by the Outfit’s slot king, Eddie “Dutch” Vogel. As with the boxes themselves, the gang’s bogus discs were marketed well beyond the borders of Illinois. In his book
Brothers in Blood,
Pulitzer Prizewinner David Leon Chandler recounted how the mob in Louisiana, which worked in tandem with the Outfit, used counterfeits to return a political favor.
¹
In the 1940s, then governor of Louisiana Jimmie Davis helped push through legislation that allowed local boss Carlos Marcello to open gambling casinos in New Orleans. At about the same time, Davis, a longtime country-western singer, recorded the umpteenth version of his classic composition “You Are My Sunshine.” Despite the public’s ennui with the overrecorded chestnut, the recording by “The Singing Governor” inexplicably turned up everywhere, especially in countless mob-controlled jukeboxes across the nation. Twenty years later, when New York authorities dredged some hundred thousand of the mob’s counterfeit records from the East River, they discovered that most of them were Davis’ recording of “You Are My Sunshine.” The cache represented a rare failed attempt by the mob to promote a recording. The FBI concluded that Davis “had done a favor for the ’Cosa Nostra,’ and in return, the mob-owned jukebox companies of America had bought the Davis recordings and placed them in tens of thousands of jukeboxes.”

Within ten years there were more than seven thousand jukes in Chicago alone, grossing $36 million annually. Nationwide, the Outfit controlled many of the half million machines, which generated a tidy $300-million cash flow. Rarely mentioned, though, were the enormous ancillary industries that descended from the Outfit-controlled coin-operated jukebox operation. Consider that in 1939 the Mills Novelty Company of Chicago invented the “visual jukebox,” in which, for twenty-five cents a play, a patron could view “soundies,” or filmed performances of a requested song. After World War II, the French improved the design and marketed their version, known as the Scopitone. The American rights to Scopitone were purchased in 1963 by a Chicago firm with rumored Outfit connections, Tel-A-Sign, which succeeded in placing tens of thousands of its machines around the country in the midsixties.

The predecessor to the music video explosion of the end of the twentieth century might have taken hold permanently had it not been for the owners’ flawed strategy of promoting middle-of-the-road talents (Debbie Reynolds, Bobby Vee, Vikki Carr, Donna Theodore, etc.), while downplaying the rock-and-roll juggernaut. Also, in the early sixties, Robert Kennedy’s mob-hunting Justice Department began looking into Tel-A-Sign’s links to organized crime. By 1966, as RFK’s quest seemed about to bear fruit, details of the inquiry were leaked to the
Wall Street Journal.
MOVIE JUKEBOX PROBE: GRAND JURY LOOKS INTO EVERYBODY LINKED WITH SCOPITONE: TEL-A-SIGN ASSAILS INQUIRY ran the April 26, 1966, headline. Combined with dwindling interest in their star roster, and the proliferation of television sets in public places, Kennedy’s probe caused a panic that fueled a sell-off by stockholders and distributors. By 1969, Scopitone was out of business, its machines auctioned off for pennies on the dollar, with many finding their way into the nation’s peepshow industry.

In sum, the Outfit’s championing of David Rockola’s coin-operated jukebox helped pave the way for both the Top Forty and the music video industry. It is widely assumed that many of the gang’s descendants went on to become fully legitimized participants in both of these Wall Street megaliths. Like the lottery’s, the music industry’s lineage is firmly entrenched in the legacy of Mooney Giancana and the Outfit. But the gang had many more worlds to conquer, most of which involved beating the upperworld to other treasures, such as off-track betting, motion picture production, and casino gambling in the Nevada desert.

1
. FBI wiretaps obtained years later verified the links between New Orleans boss Carlos Marcello and the Chicago Outfit. The taps disclose how they worked on numerous crime operations -in consort, and how Outfit bosses cherished their fall hunting trips to Marcello’s Churchill Farms estate and Grand Isle hunting camp, both in Louisiana.

9.

Wire Wars

I
n 1942, while Boris Kostelanetz was still trying to compel Bioff, Browne, and Circella to cooperate, an unrelated but equally substantial Outfit endeavor was finally beginning to bear fruit in Los Angeles. In July of that year, the Outfit’s West Coast representative, Johnny Rosselli, was playing hardball with an Outfit adversary named Russell Brophy. Rosselli, Jack Dragna, and Ben Siegel of New York had recently set up the Commission’s wire operation, the Trans-America News Service, in L.A. They tried to pressure Russell Brophy of the dominant Continental Press into a partnership. He refused. A week later two thugs showed up at his ninth-floor office. “We tore that fucking office apart,” one of the hoods later admitted to a reporter. “In fact, we busted Brophy’s head open pretty good because he got out of line a little bit. But actually, the instructions were to knock him in pretty good anyway.”

The gang’s strong-arm tactics worked in L.A., but for the next four years in Chicago, Brophy’s father-in-law, as well as Continental owner James Ragen, continued to oppose Outfit muscle in that key city. In 1946, when Mooney Giancana and his rackets were being absorbed into the Outfit, and Paul Ricca et al. were cooling their heels in prison, James Ragen was paid a visit by Curly Humphreys and Jake Guzik, who had come to inform him that the Outfit had lost its patience. The confrontation brought to a climax decades of warring over the lucrative race-wire business. The acts of brinkmanship by Joe, Curly, Johnny, and the rest were in direct proportion to the importance of the race-wire business.

The History of the Race Wire

The onset of horse-race betting in ninteenth-century Europe instigated a rivalry between illegal offtrack bet-takers (bookies) and the upperworld racing establishment. After a period in which racing was banished, the tracks resurfaced both abroad and in the United State, with powerful new weapons aimed at driving the bookies out of business: antibookmaking legislation and the parimutuel machine.

Convinced of the allure of race betting, the equine-owning elite first utilized their influence to have bookmaking outlawed. Once the game was centralized on-site at the tracks, the owners, much like their underworld counterparts, sought to rig the system in their favor. They were facilitated in this effort by the recent invention of the parimutuel system. Invented in the 1870s in France by Pierre Oiler, the Paris Mutuels is a ciphering apparatus that constantly recalculates the relative amounts bet on each horse, continually changing the odds, so that the bettors are betting against each other, not the track. Before the odds are reset, however, the parimutuel machine subtracts both the owners’ take and the state’s tax cut off the top, guaranteeing their profit (the upperworld’s precursor of the underworld’s Las Vegas skim). The state-regulated machines also offer a powerful incentive to the bettor, given that there is less chance that the state will fix a race, since their profit is in place regardless of the outcome. (In America, the machines are sold by the American Totalizator Company.)

Just when it seemed that the upperworld had the bookies on the ropes, another invention leveled the playing field once again. This breakthrough was known as the race wire. It allowed the offtrack handbook operators to obtain the same instant results as the state-sanctioned parimutuel machines, while preserving the convenience and accessibility of the numbers runners for the bettor. In addition, the allure of forming a personal relationship with a bookie was more attractive than feeding a machine. It was such an instant and powerful profit-maker that gangs like the Outfit never abandoned their goal of controlling it.

Invented in 1900 by John Payne, a Western Union worker in Cincinnati, Ohio, the race wire utilized fixed telegraph wires to transmit, in coded form, the names of riders, track conditions, scratches, and, most important, results. In many cases an on-site spotter would signal the information, by telephone or semaphore, to a cohort who had leased long-distance lines from either Western Union or AT&T. From there the valuable intelligence was sent to whichever bookies paid for it. As previously noted, the information garnered from the wire was priceless to all concerned (see chapter 4). The instant transmittal of track information was so crucial that no nonsubscribing handbook operator could compete with those that did. Not surprisingly, Chicago was the largest handbook center in America, with so many cops on the take that an underworld joke soon emerged: It was harder to rob a handbook than a bank, since more cops frequented their bookie parlors than their financial institutions.

Soon after Payne announced his breakthrough, Jacob “Mont” Tennes, who had inherited Mike McDonald’s gambling empire, purchased the Chicago franchise from Payne for $9,000 per month. Windy City handbook operators in turn paid 50 percent of their profits to Tennes’ wire service. With thousands of bookies subscribing to the service, and Tennes’ in-pocket politician, alderman Johnny Rogers, keeping the official wolves at bay, the Chicago franchise was soon generating $25,000 a month in profits. Tennes solidified his position by personally bribing officials such as Mayor Fred Busse and Chief of Police George Shippey. In the next mayoral contest, Tennes secured Carter Harrison’s mayoral election.

But Tennes’ greed took hold, giving him dreams of having the national rights to the race-wire nest egg all to himself. In 1910, after bombing John Payne into retirement, Tennes organized the General News Bureau. With this development, Tennes became the acknowledged offtrack gambling czar in the United States and Canada. Tennes was so attuned to the gambling world that he learned before the infamous 1919 World Series that New York gambler Arnold Rothstein had paid eight Chicago players to throw the contest to the Cincinnati Reds.
¹

The Annenberg Years

In 1927, after the gang battles that forced Johnny Torrio to leave Chicago, Tennes announced that he was getting out of a business he could no longer protect in a city under siege. In a watershed event, a newspaper circulation manager and tip-sheet operator named Moses Annenberg bought 48 percent from the retiring Tennes. After enlisting Capone’s sluggers to oust the other major General News shareholder, Jack Lynch, Annenberg set about creating a legend all his own.

Born in Prussia in 1878, Annenberg in 1885 came to Chicago, where his father owned a small grocery store in the Patch. “Moe” earned his first paycheck as a messenger for Western Union, a position that would offer valuable insights for his future ventures. During the early part of the century, young Moe was hired by William Randolph Hearst to be his “general” in the newspaper circulation wars. Pre-World War I Chicago had eight metropolitan newspapers, and circulation not only meant sales, it meant fighting pitched battles to ensure the papers were delivered at all. In the no-holds-barred contest, newsstands were smashed, delivery trucks bombed, carriers beaten, and papers stolen and thrown into Lake Michigan. Interestingly, Moe sided with Hearst’s
American,
while his brother Max Annenberg commanded the troops of Colonel Robert McCormick’s
Chicago Tribune,
where he assumed the post of circulation director. Since Hearst was the new kid on the block, his men had to fight especially hard to gain a toehold. Moe Annenberg himself was not above the fray, often joining barroom brawls in the service of his appreciative employer.

The Annenbergs’ need of circulation-war soldiers first introduced them to the efficiencies offered by the gangsters. In the powerful and heated Annenberg sibling rivalry, the brothers emulated Mont Tennes and utilized the talents of well-connected sluggers to gain the upper hand. In the 1920s, Max turned to the Torrio-Capone Syndicate, while Moe enlisted North Siders such as Bugs Moran and Deanie O’Banion, and future union thugs such as Mossy Enright, who went on to nurture the professional life of motion-picture-union strong-arm Tommy Maloy. In fact, it was the circulation wars that initially divided up the city along the geographical battle lines that would soon prevail in the Beer Wars of 1925. In one instance, Max Annenberg asked for Capone’s help in preventing a strike by the paper’s drivers’ union. Capone later said, “Them circulation fights was murder. They knifed each other like hell. . . And who do you think settled all them strikes and fights? Me, I’m the guy that settled all their strikes and all their circulation raids.” When Capone delivered for the
Tribune,
Colonel McCormick himself met with Al to thank him. “You know you’re famous, like Babe Ruth,” said the Colonel. “We can’t help printing things about you, but I will see that the
Tribune
gives you a square deal.”

For years, Moe Annenberg maintained a sideline operation to his newspaper endeavors, since the corner newsstand operators he controlled doubled as bet-takers. As Jake Guzik told syndicated writer Lester Velie, “Almost every newsboy, bartender, and cigar-stand keeper has become a bookie.” Patrons armed with scratch sheets or the
Racing Form
typically bought their morning paper, then made their wager. When the afternoon-paper delivery truck arrived with the latest edition, the driver, often a gang member, picked up the bets and delivered them to the circulation manager, who split the profits between the winners and Annenberg, who himself rarely placed a bet. Annenberg soon began publishing his own racing newspaper, the
Daily Racing Form,
purchased in 1922 for $400,000. With his profits, Annenberg purchased the
Wisconsin News
and his crown jewel, the
Philadelphia Inquirer.
Hearst also brought him to New York to publish Hearst’s
New York Daily Mirror,
competitor of the
New York Daily News,
which employed Max Annenberg as circulation director. While in New York, Annenberg employed the slugging services of Lucky Luciano, much as he had done in Chicago. Luciano later said, “I used to think of the
Mirror
as my paper. I always thought of Annenberg as my kind of guy.”

In 1926 Annenberg quit Hearst, the hard-copy magnate having come to appreciate the value of selling electronic, high-speed race information, either to gamblers or bookies or both. One year later he purchased 48 percent of the retiring Tennes’ General News Bureau. Having settled his differences with Capone, Annenberg enlisted the services of Al’s Syndicate, in this case to relay results from inside the track to a nearby telegrapher. It was widely reported that Moe Annenberg attended the May 1929 mob convention in Atlantic City, where he was approached on the boardwalk by Al Capone, who tried to form a partnership. Instead, Annenberg established the Nationwide News Service, in collusion with the New York gangsters, choosing again to use Capone’s forces merely as hired hands. After Capone was sent to prison, Annenberg’s alliance with the new Outfit was strengthened. Over the next few years, Annenberg depended on the Outfit’s muscle to harass his competition; in return for their services, the gang’s bookies received the wire service free of charge. For years, the Outfit wras beholden to Annenberg’s wire service, coveting the lucrative operation for themselves, and lying in wait for the opportunity to grab it.

On January 2, 1935, Annenberg paid $750,000 to buy out a Nationwide minority owner who had previously rebuffed such offers. On the same day, according to an affidavit found after his death, Annenberg’s operations manager and longtime buddy James Ragen couriered $100,000 in $100 bills to Frank Nitti for the gang’s help in convincing the shareholder to sell. It has never been determined exactly what methods were employed, but it remains a strong possibility that the master negotiator Curly Humphreys counseled the gang from his “college dorm” at Leavenworth. Despite their symbiotic relationship with Annenberg, the Outfit never abandoned their aspiration of controlling the race wire outright. And while the underworld jockeyed for position, their corporate partners were granted a free ride directly to the bank.

The Upperworld’s Stake in the Wire Service

Much as the upperworld attempted to control horse-race betting by combining restrictive legislation with its parimutuel system, it simultaneously profited from the nascent illegal wire operation. When John Payne devised the race-wire encoding system, of necessity he leased the long-distance wires of Western Union Telegraph Company for $2 million per year to transmit the vital data. In the first decade of the twentieth century, under pressure from reformers, Western Union gave up its lucrative, albeit indirect, arrangement with the nation’s gangster bookies. The fledgling telephone company AT&T was more than happy to fill the void. The breadth of the operation eventually encompassed some sixteen thousand miles of leased wire to three hundred handbook areas around the country. In 1935, the Nationwide service alone paid AT&T $500,000, becoming its fifth-largest client.

Federal investigators had little luck in breaking up the Tennes-AT&T collusion, or the Trust as the operation was called. Tennes could now afford to retain the best legal counsel with which to keep the courts at bay. Thus when Tennes and AT&T were brought before an investigative tribunal in 1916, they were represented by Clarence Darrow. The probe, which resulted from pressure brought by a newspaper probe, was stalled into oblivion by Darrow’s legal machinations. Judge Kenesaw Mountain Landis, the first commissioner of baseball, excoriated Tennes and AT&T, calling them a corrupter of youth, whose profits were “covered with dirt and slime because young men are being made criminals.” But all the fire and brimstone was to no avail, since Judge Landis wras no match for the upperworld gangsters of AT&T and the legal bombast of Clarence Darrow. Alson Smith, in his book
Syndicate City,
described the proceedings: “The investigation finally came to nothing when the Illinois Bell Telephone Company refused to cooperate on the grounds that interstate transmission of sporting news was not a crime and that local gambling was not within the jurisdiction of the Federal court.”