Supermob

by Gus Russo

  Before making the move West, Korshak partnered with a number of local attorneys, including Jack Oppenheim, who later became a partner in Ar­vey's firm. Their offices were at 100 N. LaSalle, another favorite spot of the Outfit's political connection guys such as Guzik, Humphreys, and Gussie Alex.93 In December of 1939, Korshak became partners with Harry A. Ash, a former Cook County inheritance-tax attorney general of Illinois. That same year, Korshak briefly flirted with political office, running, with Tom Courtney as his endorser, unsuccessfully against Robert C. Quirk for the nomination of alderman on the Democratic ticket for the Forty-eighth Ward. Interestingly, Korshak admitted to the FBI that Charlie Gioe, Outfit bookie and co-owner of the Seneca, donated $100 to the cause.94

  *The population of Lawndale dropped from 112,000 to approximately 100,000 between 1930 and 1950. This was due to the Jewish migration northward to communities like Albany Park and Rogers Park. During the decade that followed, European whites fled Lawndale in droves, many succumbing to racial fears, which were easily manipulated by unscrupulous Realtors. In 1960, 91 percent of the population was black. The newest residents of Lawndale encountered a series of community catastrophes after 1960, which resulted in a stagnated economy and a deteriorating social fabric. The riots after the King assassination in 1968 destroyed many parts of the Roosevelt Road shopping center, making store owners relocate. The closing in 1969 of the International Harvester Company's tractor works led to an estimated loss of thirty-four hundred jobs. The riots and the racial turnover resulted in a loss of 75 percent of business establishments and 25 percent of the jobs in Lawndale. During the 1970s, 80 percent of the area's manufacturing disappeared, as Zenith and Sunbeam electronics factories closed. The deteriorated conditions are the legacy of structural aging, real estate speculation during the years of racial transition, inadequate building inspection, lax enforcement of building codes, and the disregard of property by the tenants. In 1990, 55 percent of all housing units were located in structures more than fifty years old. In 1987, the Chicago Economic Development Corporation's efforts to build a small-business "incubator" building collapsed, amid charges of mismanagement, misappropriation of $1.7 million in grants and loans, and fraudulent collusion between a local construction company and the area alderman.

  Health care is still provided by Mount Sinai Hospital, which has modernized and expanded Saint Anthony's on Nineteenth Street.

  *Arvey promoted Marovitz to ward supervisor, then state senator, superior court judge, and federal district-court judge, appointed by JFK. "I think that was largely due to my friend Jack Arvey," Marovitz said in 1997. (Transcript of interview by ABC News for 1997's program "Dangerous World: The Kennedy Years")

  *Reddi-Whip, the first aerosol food product in the United States, was owned by Capone associate Marcus Lipsky, who was, in turn, fronting for Capone boss Ross Prio. In the 1930s, they formed L&P Milk Co. (Lipsky and Prio). According to federal and Texas authorities, Lipsky masterminded the Chicago Outfit's takeover of the Dallas rackets, after planning the murders of four established top Dallas gamblers as a Machiavellian show of strength. Like so many others, Lipsky ended up in Beverly Hills after selling Reddi-Whip to Hunt & Wesson for $6 million in 1970. He died in 1980.

  †See second footnote on p. 128 for details of the operation.

  *V7g, or vigorish, is street slang for the compound interest that accrues to a gambling debt or loan—a principle later adopted by credit card companies.

  * According to Ruth Jones (pseudonym), "Machine Gun" Jack McGurn's golfing partner, McGurn told her how Crosby asked Stein to help with two particularly worrisome Black Handers. Stein enlisted the Outfit's McGurn, who beat the two to within an inch of their lives.

  † It was Stein who encouraged fellow Lawndale entrepreneur William Paley to boost his new network, the Columbia Broadcasting System (CBS), by putting Stein's music acts on the air live, turning the rigged Top Forty into a national phenomenon. The success of CBS would lead Stein to open an MCA office in New York.

  *Touhy had further alienated the Capones by protecting union leaders threatened when the Capones muscled in on the Building Services Employees Union (see next chapter).

  * Actors such as George Raft, Chico Marx, Jimmy Durante, Jean Harlow, Cary Grant, Clark Gahle, and Marilyn Monroe were among the most often rumored to have benefited from hoodlum associations.

  Tor a detailed description of the Outfit's takeover of IATSE, see my earlier book TheOutfit, pp. 121-55.

  * Appleby went on to appear in over fifty-six B movies and seven Three Stooges shorts, and had a bit part in one class movie, 1939's Stagecoach. She eventually married big-band leader Paul Drake in 1944—they divorced in 1980. She died on Long Island, New York, in 1990.

  CHAPTER 3

  Birds of a Feather

  A prudent ruler can not and should not observe faith when such observance is to his disadvantage.

  MACHIAVELLI

  THE YEAR 1940 GOT off to a bad start and only seemed to get worse, as Sidney Korshak became embroiled in two major scandals involving his Outfit-controlled union clients. Thanks to the efforts of crusading 132paper syndicated columnist (and future Pulitzer Prize winner) Westbrook Pegler, the true agendas of Willie Bioff and George Scalise, president of the seventy-thousand-member Building Services Employees Union, would be revealed.

  By sheer coincidence, Pegler, who had once worked the crime beat in Chicago, attended a 1939 party in Los Angeles where he was introduced to "Willie Bioff of IATSE." But Pegler knew better—he remembered Bioff as the whore-beater of Maxwell Street, on the lam for an outstanding pandering indictment. In November 1939, Pegler outed Bioff, and in early 1940, Peg­ler gave his information to the Screen Actors Guild, which had an open investigation of Bioff and IATSE, the result of Bioff 's terrorizing of guild members with tire slashings—he also sought to control their union. SAG notified Chicago authorities, and Bioff was remanded to Chicago in April 1940 to answer the pandering charge. In the current vernacular, Bioff had been "Peglerized."

  It came out in later testimony that while Bioff was in Chicago waiting to be jailed for the pandering charge, he attended a series of conferences with Nitti, Ricca, Korshak, and Alex Greenberg, held at their various homes and at the Bismarck and Seneca hotels. At a Bismarck Hotel meet, Bioff was first introduced (or so he testified) to the Supermob's Sid Korshak. Prosecutors doubted this was the first time the two had met, since Bioff admitted under oath that he was involved in the Scalise affair, which also involved Korshak.

  In any event, at the Bismarck powwow, Charles "Cherry Nose" Gioe introduced his Seneca Hotel-mate Korshak to Willie Bioff.

  "Willie, meet Sidney Korshak. He is our man," Gioe declared. "I want you to do what he tells you. He is not just another lawyer. He knows our gang and figures our best interest. Pay attention to him, and remember, any message you get from him is a message from us."

  Over the next few weeks, Bioff said, he met with Korshak about a dozen times at cafes and hotels. Years later, when a California friend asked if he had defended Bioff in court, Korshak exploded, "Are you nuts? Of course not! I only counseled the bastard!"1 In early April, Bioff began serving out his five months in Bridewell Prison, after which he returned to L.A. to continue IATSE thuggery.

  But Westbrook Pegler had not yet finished his haunting of the Outfit and Sid Korshak. In his January 19, 1940, column, Pegler exposed George Scalise as another ex-convict and panderer. Pegler's article revealed that Scalise was a convicted white slaver who had served four and a half years in prison on that charge and had long been associated with gangsters such as Lepke Buchalter and Jacob Shapiro of New York's Murder, Inc.*

  One week after Bioff's imprisonment, George Scalise was arrested in New York and indicted on fifty-two counts of embezzlement. The new Scalise charges were based on the discovery of phony accounts set up to siphon union money to Scalise, and by implication, to the New York mob and its partner in the scheme, the Chicago Outfit (the union was headquartered in Chicago and taking ord
ers from Murray Humphreys). Another part of the scheme involved the establishment of new bylaws that permitted Scalise to gerrymander the union locals in ways that would consolidate his power. It was learned that in the previous three years, over $1.5 million had found its way from the union treasury into Scalise's private account. Not only was Sidney Korshak the union's counsel, but, what was more telling, authorities found evidence that he had helped set up the phony accounts.

  Grand juries were convened in both New York and Chicago on the Scalise matter, and in Chicago, Sidney Korshak caught a break, simultaneously experiencing firsthand the importance of political connections. Korshak must have had to stifle a grin as he took the witness stand before the Chicago grand jury, waiting to be grilled by none other than his great friend, and the man who had just sponsored him for alderman, State's Attorney Tom Courtney.

  Under less-than-hostile questioning, Sidney explained that the fees he had received—$5,000 as retainer and $3,750 for drawing up the bylaws that established the phony accounts—were not, to his knowledge, for the furtherance of Scalise's scheme. Thanks to Courtney's "grilling," Korshak emerged from the incident unscathed, whereas Scalise was ousted from the union, convicted on five counts, and sentenced to ten to twenty years in the federal penitentiary.2

  But Korshak's problems had just begun. In the fall of that year, one Louise Morris, a tenant of the Seneca, informed Chicago police captain John Howe that a group of men had been seducing underage girls in one of the building's apartments, coercing them into "immoral and perverse sexual acts." Upon further investigation, Howe learned that five men in the building had previously been arrested for sex offenses against two underage girls.

  The men were Lou Pelton, a Capone associate connected with the Bartenders Union, a restaurateur named Gibby Kaplan, Joel Goldblatt, owner of the sixteen-location Goldblatt Brothers Department Store chain, and lastly, law partners Harry Ash and Sidney Korshak.

  The Domestic Relations and Delinquency Court scheduled the case to be heard before Judge Victor A. Kula on December 16, 1940. However, when the Chicago Crime Commission checked the court records over the next few weeks, the case had simply disappeared. Although the names of the alleged female victims were located, the five men's names had vanished along with any record of how the case was resolved. It seemed apparent that, in this so-called most corrupt city in the world, money had changed hands in an amount that satisfied all concerned.3 (Ironically, Sidney's brother Marshall would become chairman of the Illinois Sex Offenders Commission, which sought to determine—with input from consultant Dr. Alfred Kinsey—the best treatment for sex offenders and the prevention of sex crimes.)

  No sooner had the vice charges been dealt with than it was back to the Bioff business, which was about to explode again, forcing Korshak to deliver another "message from us" to Willie Bioff. In 1940, as the result of an ongoing IRS probe, MGM's Joe Schenck was indicted for tax evasion to the tune of $400,000. Facing 167 aggregate years for conspiracy and tax fraud, the movie honcho cut a deal and informed the authorities of the payoffs to Bioff and Browne.4 Schenck's disclosures led to the May 23, 1941, indictments of Bioff, Browne, and Nick Circella, at whose Colony Club the plot was hatched; Circella also functioned as the Outfit's watchdog over Bioff. While Bioff and Browne utilized legal stalling maneuvers, Circella went on the lam, only to be caught six months later hiding out with his girlfriend and Colony hostess, Estelle Carey. In late May, Sid Korshak, who was in Los Angeles pursuing his latest flame, a beautiful twenty-two-year-old Ice Ca-pades skater named Bernice "Bee" Stewart, met with Bioff at the Ambassador Hotel to make certain he didn't "give up" his Chicago bosses.

  At the meeting, Korshak was accompanied by two young women, one of whom was believed to have been Bee Stewart. Excusing themselves, the men spoke in private. "You will admit to being Schenck's bagman and do your time like a man," Korshak explained to Bioff—there would be no mention of Nitti or the others. "He advised me to lie," Bioff later testified.

  Bioff knew that defying Korshak meant defying the Outfit. He accepted his fate and prepared for the trip back to New York to plead guilty. Korshak obtained $15,000 from Gioe, which he delivered to Bioff to defray his attorney fees.

  Bioff did exactly as Korshak had advised him when the trial convened later that year: yes, he took some money, but it wasn't extortion, and it went no further than himself. Browne and Bioff were both found guilty of all charges and sentenced to ten years in federal prison, while Circella received eight. Prosecutors, however, knew the culpability went far beyond Bioff and Browne, since during the trial, studio head Harry Warner blurted out that Bioff had told him the money was "for the boys back in Chicago." However, without a cooperating witness, prosecutors were unable to vet the lead.

  On December 7, 1941, two months after the trial, the Japanese attacked Pearl Harbor, forcing the United States into World War II. Although it couldn't be known at the time, the effect of the conflict on Japanese Americans would prove fortuitous for the Supermob. In the meantime, prosecutors in New York spent all of 1942 prodding at Bioff, Browne, and Circella to try to learn more about "the boys in Chicago." If their intuitions were correct, the truth about "the boys" could be a career-maker for all the young feds. After months of fruitless questioning, their luck changed, albeit in a most tragic way.

  At 3:09 in the afternoon on February 2, 1943, Chicago firemen were called to an apartment at 512 Addison Street on the North Side near Lake Michigan, where neighbors had smelled smoke. Racing up the stairs to the third-floor apartment, they found on the dining room floor the still-smoldering corpse of a redheaded young woman. Her remains were in a horrid state: she had been stabbed with an ice pick, beaten, and set afire after being doused with a flammable liquid. The "flash fire" had burned the flesh off her legs up to her knees. The apartment's condition bespoke a fierce struggle. The woman's blood and hair covered the walls and floors in the kitchen and dining room. In the kitchen, investigators found the bloody objects used to assault the woman before she was set ablaze: a blackjack, ice pick, knife, electric iron, and broken whiskey bottle.

  The police concluded that the crime had occurred just hours before their arrival. The victim, it was later learned, was known to have been alive just two hours earlier, as she had been on the phone with her cousin when she had to answer the door. "I'm expecting someone" were her last words as she hung up. Although two fur coats were missing, the victim's much more valuable jewelry was untouched. Police wondered if the coats were taken to give the appearance of a robbery. Also, it was determined that the bottle of flammable liquid found in the ashes did not belong to the deceased or her roommate, and burglars are not typically known to carry combustibles with them to a heist.5 The last thing learned was the victim's identity—Estelle Carey, Circella's girlfriend.

  Although it was far from certain that Carey's murder had anything to do with Circella's involvement with the extortion scheme—she maintained a slew of dangerous liaisons with jealous lovers—the three men held in stir were convinced of the connection.

  "As soon as [Carey] was killed, that was the end of it," prosecutor Boris Kostelanetz recalled. "[Circella] turned off, boom, just like an electric light."6 When Murray Humphreys's aide Ralph Pierce was questioned in connection with the Carey murder, Sid Korshak represented him7 Unlike Circella, Willie Bioff, fearing for his beloved wife, Laurie, and their children, reacted with rage, saying, "While we do time for them, they are murdering our families." Bioff proceeded directly to the prosecutor's office, asking, "What do you want to know?" For his part, George Browne took the middle ground, cooperating only minimally with the investigators.

  Within days, on March 18, 1943, conspiracy and extortion indictments were returned against Johnny Rosselli, Frank Nitti, Louis Campagna, Paul Ricca (De Lucia), and Charlie Gioe, as well as Phil D'Andrea, Frankie Diamond (Maritote), and a New Jersey union boss named Louis Kauf­man, who'd helped engineer Browne's takeover of the Kentucky IATSE convention.

  Six hours after the in
dictments were delivered, Frank Nitti, who was ultimately responsible for the scheme, put a gun to his head rather than face prison time or the wrath of Outfit bosses Tony Accardo and Murray Humphreys. At the time of Nitti's death, Alex Greenberg was in possession of $100,000 of Nitti's money, which he eventually returned to Nitti's estate.

  Indictments, brutal murders, sex scandals, suicides—Sid Korshak probably thought it was a good time to "get outta Dodge." On April 4, luck appeared in the unlikely form of a draft notice. Five days later, Korshak showed up at seven thirty A.M. and took his physical for induction into the U.S. army, in advance of being stationed at Camp Lee, Virginia, where he served throughout the war as a military instructor and a "paper-pushing" desk sergeant. One of his duties included vetting prospective candidates for officer candidate school (OCS), where he promoted one recruit by the name of Morris Dalitz, who would play a large role in the future success of Korshak.

  Sergeant Korshak took a leave on August 17,1943, to marry Bee Stewart at the Ambassador Hotel in New York City, before returning to active duty.

  While Sidney was off learning how to break down an M l rifle (and likely shopping in Arvey's PXes), the trial of the original "Chicago Seven" commenced on October 5, 1943. During the New York trial Bioff told the court that Sid Korshak was "our man in Hollywood." In Chicago, the headlines hit: CHICAGO LAWYER "OUR MAN" SAYS BIOFF AT MOVIE TRIAL, declared the Sun. BIOFF NAMES SID KORSHAK AS MOB AIDE, echoed the Herald-American. The reportage would nag at Korshak for the rest of his life.

  Eventually, Ricca, Campagna, Rosselli, D'Andrea, Maritote, and Gioe were sentenced to ten years in prison plus $10,000 fines. Louis Kaufman, the New Jersey union strong-arm, was given seven years.