But George E. Q. Johnson, representing the U.S. government, was also in a powerful position, with potentially unlimited assets at his disposal. If he needed more investigators, he would have them. If he needed to reach judges to obtain warrants, he could. Most important, he had the law on his side, which was obvious but easy enough to overlook in Prohibition era Chicago. Capone himself overlooked that fact, assuming he could ignore or buy his way out of the law, but he had never before encountered federal authorities, and as he was to discover over the next two years, the Feds worked slowly and clumsily, but they never stopped working. And their incessant probing and analyzing eventually permitted the Feds to reach the weak links in the Capone organization, beginning with Ralph Capone.
The most significant finding of the raid on Chicago Heights was not the booze or the stills or even the hundreds of slot machines; it was a set of ledgers the police had confiscated when one of their men picked the lock of a safe in the Ellis estate. A cautious man who valued his life, Ellis himself refused to say anything to the investigators about the ledgers, but his silence did not end the matter. The ledgers were to provide a mother lode of information for Capone’s antagonists. In a rare display of cooperation, the police shared the records with the attorney general’s office in Washington. Reviewing the books, Mabel Walker Willebrandt discovered that “the revenue over a period of three years, according to the records kept, was approximately $725,000 a year from the machines . . . in an area where there reside not more than one hundred thousand people.”
The records also came to the attention of the IRS, whose Intelligence Unit feasted on them. The IRS investigators determined that the organization’s slot machine racket was even more profitable than Willebrandt realized, clearing as much as $1.5 million a year—not bad for an invisible business. By carefully checking every item in the ledgers, no matter how small, the IRS then came up with one of the biggest breaks in the case. The IRS clerks located a list of checks Ellis cashed, and they investigated every transaction until at last they came up with a prize: a check for $2,130, dated June 27, 1928. It seemed a relatively small amount, but the signature gave it special significance. It was signed by Ralph Capone.
The Intelligence Unit had over the past two years come to know Ralph well; their man in Chicago, Eddie Waters, had held several conversations with him concerning the necessity of paying taxes on his entire income. But “Bottles” always maintained he was not a wealthy bootlegger, just a racehorse owner of modest means who made the odd bet now and then. Under pressure he eventually admitted that he owed a total of $4,086.25 in back taxes for 1922 through 1925. In September 1927 Ralph had offered to pay $1,000, claiming his financial situation was so straitened that he would have to borrow even that amount. Sounding as though he had stepped from the pages of a Damon Runyon story, Ralph’s lawyer told the IRS, “My client has sustained considerable loss as the result of the sickness and death of his race horses throughout the past year. He has also lost a great deal gambling. All he has left is a half-interest in two race horses and at the present time he is using up practically all his income trying to get them into shape.” Neither Ralph nor his counsel seemed to realize that they were admitting the racketeer must have made a “great deal” of money in order to gamble it all away. Deeply suspicious of Ralph and convinced he would trip himself up, the IRS refused to settle. Ralph kept offering higher amounts, but even his final offer of $5,000 was refused.
Now, with the telltale $2,130 check in hand, the Intelligence Unit looked more deeply into Ralph’s finances. Two of their investigators, Nels Tessem and Archie Martin, scrutinized the books again, as well as all the other supporting documents the IRS had accumulated, almost 2 million items in all. Tessem, in particular, was one of the unsung heroes of the federal government’s efforts to smash the Capone organization. His background was Scandinavian, like so many of the investigators, and he possessed a genius for detail. He set to work with a will, and after two months of painstaking examination of the documents, he arrived at several startling conclusions. The first was that even as he was pleading poverty to the IRS, Ralph Capone actually had $25,000 on deposit at the Pinkert State Bank in Cicero under an assumed name, James Carter. That discrepancy was merely the start of a long trail of perfidy. In a report summarizing his findings, Tessem noted,
The investigation further disclosed that [Ralph] Capone was doing a thriving business in connection with the sale of beer at Cicero, . . . that he was connected with large scale gambling operations and that he was involved in the operation of disorderly houses [i.e. brothels] and other ventures in violation of the law. He employed various means to conceal his activities, among which were the use of aliases, such as James Carroll, James Costello, Jr., James Carter, James Carson, Harry Roberts and Harry White. Deposits which he made in the Pinkert State Bank, under those names, totaled more than $1,850,000.
As Tessem discovered, when Ralph closed out an account in one name, he simultaneously opened a new one in another name for the same amount. Tessem and the other IRS agents had already come to the conclusion that Ralph was no financial wizard, but they hadn’t realized he was quite that dumb. Tessem also noticed that many of Ralph’s bank deposits happened to be in multiples of 55, and as everyone in Chicago knew, a barrel of beer cost exactly $55. So it wasn’t very difficult to guess the source of Ralph’s income. It was now apparent that Ralph had earned far more income than he ever admitted to the IRS.
The agent’s report included more than financial records; Tessem’s character sketch of Ralph Capone was laced with contempt: “Ralph J. Capone is a brother of the notorious Alphonse Capone, and for some years has been one of the principals in the so-called Capone organization. He is a man of exceedingly bad repute. . . . In none of the investigations has any evidence been produced tending to show that Ralph J. Capone, at any time in recent years, has been engaged in a legitimate business, unless it can be said that horse racing in some states is a legitimate business.”
On the strength of Tessem’s findings, the U.S. attorney’s office in Chicago indicted Ralph Capone for income tax evasion. Despite the mountain of evidence Tessem had gathered, however, not even the U.S. attorney knew if he could make his case stick, especially in Chicago, where impartial judges and juries were scarce. Furthermore, Ralph’s failure to pay taxes seemed a minor sin compared to his bootlegging and other illegal activities, but the obscure and technical nature of the violation actually worked to the Feds’ advantage. Only they understood the seriousness of the charge; Ralph, in contrast, was inclined to dismiss it as a ploy to obtain bribes. So Ralph became a test case for the IRS; once they got him, they would go after another linchpin in the Capone organization, Jack Guzik. And once they nailed Guzik, they would go after the “Big Fellow.” That, at least, was the plan. But plans had a way of going astray.
• • •
In Miami Beach, Al Capone appeared oblivious to the government’s strategy to bring him to justice. He displayed no concern over the Chicago Heights raid, and he refused to trouble himself with Ralph’s tax problems. His sole concern remained the threat posed by rival gangs, especially “Bugs” Moran’s unsophisticated but tenacious little band, to his safety and to his rackets. Determined to maintain the appearance of living in retirement in Florida, Capone himself could not launch a new gang war, but his vicious bodyguard, “Machine Gun” Jack McGurn, yearned to do battle on behalf of his boss.
In the last three years, McGurn had risen from an obscure, $150-a-week bodyguard to a partner in the Capone organization. Though he retained his superficial charm, the dapper, athletic little man had become more violent and self-confident as he rose through the ranks. He was now a feared presence in Chicago, widely known in his own right. He was often seen at his favorite sporting event, the six-day bicycle races. They were a distinctly twenties phenomenon, these bicycle races, all frenzy and flash. Two-man teams competed on a banked indoor track around the clock. Most of the time, the pace was slow, if not lazy, but occasional hea
ts determined the order of the teams. When they were not pedaling, the racers slept in small, coffinlike boxes behind or even in the middle of the track. Disdaining the mingled odors of sweat and cigar smoke, McGurn and other hoodlums usually waited until the final day to put in their appearance, and then they showed up in force, with a retinue of gunmen and girls attired in furs and diamonds. For McGurn, a six-day bicycle race offered the perfect occasion to strut and to place breathtakingly large bets with an air of nonchalance.
Constantly placing himself on display, McGurn eventually attracted the attention of “Bugs” Moran, who had repeatedly failed to assassinate Capone. Moran assigned two brothers, Pete and Frank Gusenberg, the task of killing him off. One night, the brothers followed McGurn to a phone booth in a hotel on Rush Street and opened fire with a revolver and a machine gun. Glass shattered and wood splintered. McGurn collapsed before he could return the Gusenbergs’ fire. The brothers fled, certain that they had eliminated Al Capone’s principal lieutenant. They were wrong, as it turned out. Dead wrong.
An ambulance rushed McGurn to the hospital, where doctors removed the lead from his body. He later returned to his suite at the Lexington Hotel, where he lived with his girlfriend, a platinum blonde named Louise Rolfe. McGurn’s survival amounted to a death sentence for the Gusenberg brothers, whom he had recognized. Retribution was inevitable, and McGurn had previously shown himself capable of murder on a grand scale. He had taken four lives trying to avenge his father’s death, and countless others protecting Capone’s life, and he advised Capone to eliminate not just the Gusenberg brothers but the entire Moran gang.
As even McGurn knew, murder on the scale he imagined required planning. At the beginning of 1929, after he had recovered from Moran’s bungled assassination attempt, McGurn went to Capone to ask his blessing for a counterattack. This Al gave, setting the stage for the most notorious mass murder in the history of Chicago, a bloodbath that would eventually do as much to end Capone’s career as the combined might of the U.S. government. Of course, no one would have predicted that outcome. At the time, Capone, who was still in Florida, saw the retaliation as a private matter among rival gangs. He realized his name might be dragged into it, even if McGurn masterminded the project, yet if Capone could get away with the murder of Moran’s confederate “Hymie” Weiss with only token complaints from the press and police, it was tempting to try again with Moran himself. The man was so widely detested that the press and police would thank Capone for ridding the city of him. Thus he willingly agreed to pay McGurn $10,000 plus expenses to accomplish the mission. For the record, however, Capone wanted no part of the assassination—none whatsoever. He planned to be in Miami Beach when it occurred, and he wanted McGurn to handle the whole bloody business himself.
During the next several weeks, McGurn studied the movements of the Moran gang. They were nothing like the Capone organization, these boys. They did not control luxury hotels or hold press conferences. Their headquarters were located in a garage behind the offices of S.M.C. Cartage Company, located at 2122 North Clark Street, then a dreary, nondescript stretch of storefronts and small businesses. It was in this garage, McGurn discovered, that the Moran gang took delivery of their booze and distributed it to their local outlets. As the only locale where all the important gang members assembled, the garage seemed a promising place to stage the mass execution McGurn craved. He next assembled an assassination squad comprising some of the finest talents in the underworld. The selection of assassins required considerable care and diplomacy. The first rule was to import killers from out of town, killers whom the victims, should they survive, would not be able to recognize. Since murder was not a federal offense and police departments in different cities often had difficulty coordinating their investigations, it was advantageous for the killers to leave town as soon as the deed was done. There was no second rule. Capone’s plan to assassinate Frankie Yale had worked well for just this reason, and it served as McGurn’s inspiration. He imported Capone’s occasional golfing partner, Fred “Killer” Burke, from St. Louis to lead the group. Burke was associated with the Egan’s Rats gang, which was in turn affiliated with the Capone organization’s bootlegging network. Although Burke spent much time in Chicago and in Benton Harbor, the nearby Lake Michigan resort, few associated him with Capone. “Killer” Burke was better known in his own right as a ruthless bank robber wanted in at least four states. Aptly named, Burke was glad to participate in another hit, for which he was paid $5,000, and he enlisted the services of an Egan’s Rat gunman named James Ray.
They were joined by Joseph Lolordo, the brother of the slain leader of the Unione Sicilione, and two veterans of the Yale assassination, John Scalise and Albert Anselmi, each of whom received $1,000 for their services. This inseparable duo played a unique role in the evolution of Chicago’s gangland, for Capone had sent them to kill time and again. They had been notorious in Chicago ever since they had helped to assassinate Moran’s predecessor, Dion O’Banion, in 1924. The following year, they had taken the life of Angelo Genna, who had once employed them, and they had even killed a detective and later a policeman; for that last murder they had served brief jail sentences and were now at large once more.
McGurn decided on a novel twist to the assassination. His gunmen would gain access to the garage in the guise of Chicago policemen conducting a routine Prohibition raid. The plan required a police car and realistic police uniforms, including caps and medals. To carry out the ruse, he turned to another Capone associate, Claude Maddox, who obliged by stealing a police car complete with gong as well as several police uniforms for the gunmen to wear on the appointed day. McGurn also brought in two members of Detroit’s Purple gang, another Capone affiliate, to act as lookouts. They were two brothers named Harry and Phil Keywell, complete unknowns in Chicago. The gunmen then rented an apartment near the garage, at 2119 North Clark, paying a week’s rent in advance to the landlady. They hung their uniforms in the closet, and waited for their moment. Capone, meanwhile, rejoined his family at the Palm Island villa but kept in constant touch with McGurn over the phone until a few days before the event was scheduled to be carried out. Thus he was able to orchestrate events at a distance of a thousand miles.
Timing was everything. To lure the Moran gang to the garage, McGurn carefully set them up. He supplied one of the many booze hijackers working the area with a shipment of Old Log Cabin whiskey; this was a desirable commodity because it was reputedly distilled in Canada, not in a South Side bathtub. McGurn instructed the hijacker to sell the whiskey to Moran at a good price. Moran arranged to purchase another shipment from the hijacker, who called the garage on the night of February 13 to explain that he had just hijacked another load of booze “right off the river” separating Canada from Detroit; not only that, he would sell it for only $57 per case. Moran took the bait. They arranged for the hijacker to deliver the booze to S.M.C. Cartage Company garage, where Moran would pay for it in cash. They set the date for 10:30 A.M. on Thursday, February 14.
St. Valentine’s Day dawned cold and windy. The thermometer stood at eighteen degrees, and few pedestrians ventured forth. McGurn had no intention of being placed at the scene of the crime that morning, and he went to considerable lengths to establish an airtight alibi. He arranged to be in the company of his girlfriend, Louise Rolfe, on Wednesday night and throughout most of Thursday. The couple avoided the Lexington Hotel, which would link him to Capone; rather, they checked in at the Stevens Hotel, McGurn making a point to sign his real name, Vincent Gebaldi, to the register to establish his alibi. These maneuvers were to prove singularly effective when McGurn eventually did face police scrutiny.
At 10:30 on Thursday morning, the Keywells spotted a man they thought was “Bugs” Moran arrive at the S.M.C. Cartage Company; the lookouts notified Burke and the other gunmen, who immediately donned their stolen police uniforms and jumped into a stolen police car. Its gong clanging, the black-and-white pulled up in front of 2122 North Clark Street, and four men rushed out, tw
o wearing overcoats and two police uniforms. They gave every appearance of cops engaged in a routine raid. The four men entered the storefront and walked rapidly through a passageway to the bare, unheated garage at the back, where they came upon seven men. Included were the Gusenberg brothers, who had tried to kill McGurn; a safecracker named John May; Albert R. Weinshank, a saloon keeper; James Clark, a bank robber whose real name was Albert Kashellek and who was Moran’s brother-in-law; and Adam Heyer, a utility racketeer who served as Moran’s “business manager.” The seventh member of the group was Dr. Reinhart H. Schwimmer, twenty-nine, a suspiciously prosperous optometrist. Because he alone had no police record, it has generally been assumed that Schwimmer was nothing more than a dapper young doctor who liked to socialize with gangsters for harmless amusement. However, Schwimmer had known Dion O’Banion and was actively involved in bootlegging; he lived in the same hotel as “Bugs” Moran, and he been known to boast that he could arrange for the murder of whomever he wished. So Schwimmer did, in fact, belong to the Moran gang. They were a well-dressed, prosperous-looking group of second- and third-tier gangsters, their diamond stickpins and rings glinting in the morning light. Dr. Schwimmer wore a carnation in his lapel. Their security consisted of Heyer’s German shepherd, named Highball, who was tied to a pipe. Each man carried several thousand dollars in cash to pay for the shipment of Old Log Cabin, and they expected to be joined by Moran and two other associates, Willie Marks and Ted Newberry.
At that moment, McGurn’s “cops”—actually Burke, Scalise, Anselmi, and Lolordo—entered the garage. They ordered the seven men gathered there to raise their hands and to line up against the wall. Fooled by the disguise, the men, some of whom carried weapons, obeyed. They offered no struggle, no resistance. After disarming their victims, the four executioners suddenly opened fire on them with two machine guns, a sawed-off shotgun, and a .45. The bullets ripped into the bodies; May and Clark received a blast from the shotgun, and within ten seconds the seven men slumped to the floor of the garage, dead. All except for one man, that is: Frank Gusenberg. Made frantic by the noise and the blood, Heyer’s German shepherd sent up a piteous howl heard throughout the neighborhood.
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