Bootlegging soon also became a spur for the economy of some Long Island towns, notably seafaring places like Greenport, Sterling Cove, Gardiner’s Bay, and other locales situated around inlets and small bays westward of Rum Row. The Jersey skiffs and other fast-moving boats could bring the liquor ashore for transfer to Costello’s trucks. Robert Carse, author of Rum Row: The Liquor Fleet That Kept America Wet and Fueled the Roaring Twenties, described how a place like Greenport thrived in the bootlegging days with the crush of smuggling business Costello and the other bootleg entrepreneurs brought.
“Unemployment was practically nonexistent. Men strong enough to carry a case of liquor were hired and paid an average of twenty dollars a night from the contact boats to the waiting trucks,” said Carse. “The boatyards were busy at work on craft for which no contract had been drawn but none were needed: everything the rum runners ordered was on a cash-on-advance basis. Gasoline was sold in five-hundred-gallon quantities.”
Despite Prohibition, there was such a market for liquor in Manhattan that the Italian mobs set up a curbside exchange near the intersection of Elizabeth and Kenmare Streets, which so happened to be around the corner from police headquarters. The brokers didn’t handle liquor themselves or pass any money, so it was difficult for agents to make arrests. Rather, the brokers there quoted prices to buyers by the case: $110 for Scotch whiskey imported from England, $90 for Canadian rye, $45 for Italian vermouth. Territories were also carved out by those selling the product.
“The exchange became a melting pot for the gangs involved in the bootleg trade,” said Leonard Katz in his biography of Costello titled Uncle Frank. “Italian, Jewish and Irish mobsters mingled together and did business with each other for the first time.”
One up-and-coming gangster in the bootlegging operations was Frankie Yale of Brooklyn. Yale ran the Harvard Inn in Coney Island and was a rival bootlegger to Costello and close for a time with Capone. In fact, Yale had hired Capone as a waiter for his club in Coney Island. It was at the Harvard Inn that Capone got slashed in the face after he made a crude remark about the backside of Yale’s sister. Yale had been a frequent object of assassination attempts and managed to survive. But in 1928, after Capone learned that Yale was hijacking loads of liquor meant for Chicago, he had Yale machine-gunned to death as he drove on a Brooklyn street.
Although Prohibition was the law of the land, it was held in much disfavor by the public and the politicians. By 1924, there was a growing clamor for changes, at least to moderate the Volstead Act so that people had some options for drinking. Appearing before Congress, labor leader Samuel Gompers, head of the American Federation of Labor, joined with scores of other officials and lobbyists to push for changes. Gompers urged Congress to approve beer that was 2.75 percent alcohol by volume, a boost from the “near beer” then allowed. Workers wanted beer, were entitled to it, and felt they needed “the stimulation that is contained in a good glass of wholesome malt.” Besides, said Gompers, beer was nutritious and could be part of a meal. Gompers and his allies also thought it was a good thing to legalize light wine and cider.
The other problem with Prohibition, according to Gompers and other “wet” forces, was that it wasn’t having the intended impact on crime and lawlessness. In cities around the country speakeasies were all around. The Volstead Act, as the New York City and Chicago experiences had shown, was impossible to enforce. The bootleggers were just too resourceful, too well financed, and garnering too much support from the public. Bring on legal beer and the workingman would take to it with ease, leading to more observance of the law generally and reduce the activity of bootleggers who trafficked in harder liquor—or so the argument went.
But the federal government was not going to give up easily on Prohibition no matter how public opinion was shifting against it. Stung by the ineffectiveness of the Coast Guard to stop bootleggers off Rum Row, Washington finally woke up and authorized the use of surplus Navy destroyers and the purchase of other vessels after World War One to supplement the existing, outgunned fleet, which had been run circles around by Costello and the other smugglers. The destroyers, known as “four-pipers” because of their smoke stacks, sometimes had large search lights, which could throw a bright light across the water. Still, the bootleggers persisted in their cat-and-mouse games with the Coast Guard and used decoy vessels or moved farther out to sea to try and frustrate the federal vessels. The destroyers, although large and well-armed, couldn’t hide their presence very well.
“They burned coal in an age of oil and spread wide banners of smoke astern . . . and at night belched sparks that a sharp-eyed observer on Rum Row could see for miles,” said Carse.
By 1922, the notorious curbside liquor exchange and the brokers on Kenmare Street had moved uptown to be on West Fortieth Street, near Broadway. The location was not far from Costello’s offices at 405 Lexington Avenue, a site now occupied by the Chrysler Building. Katz claimed that Costello “was a daily visitor to the exchange.” But being a careful operator, it was unlikely that Costello frequented the curbside operators since their exchange was under constant surveillance by the Prohibition police and the NYPD, the latter having a number of homicides to investigate that stemmed from the fighting among the Italian mob brokers. Costello did most things out of Lexington Avenue: communicating with his overseas contacts, making deals and receiving his intelligence reports from his well-placed sources in the police department and the federal government.
It was Costello’s network of official spies that gave him a leg up on other bootleggers. This became particularly useful when the Coast Guard, beefed up with surplus Navy destroyers and faster boats and cutters in 1924, decided to become more aggressive. Costello was tipped to those changes when one of his men, Mike Terranova whose job was described by Wolf as plying Coast Guardsmen with beer to sniff out their plans, was handed an official memo describing the plans to send out patrols of longer duration and to the inlets scattered around Long Island and Connecticut.
Costello greased the wheels for such intelligence by throwing around hundred-dollar bills to be paid to the “Coasties,” as the sailors were known. Costello needed timely intelligence and also had to compromise enough of the Coast Guard fleet so that the officials’ boats, particularly those smaller craft patrolling the inlets, would look the other way when bootlegged cargo was ready to come ashore. Because of the increased Coast Guard presence and U.S. government policy, which extended the old three-mile territorial waters to twelve miles, the freighters bearing liquor from the French and British colonies had to be met farther out at sea and off-loaded quickly.
Sometimes the freighters would get lost, and to find them Costello had seaplanes at his disposal. When one schooner from Canada got lost on the way to Rum Row, Costello had his operative, a Long Island man named William Newman, go to Curtiss Field near Mineola and fly out to find the errant vessel. Once it was spotted, Newman landed with the seaplane and got aboard to help guide it. The seaplane companies didn’t care what Newman’s business was when they went aloft. Besides, their pilots got cases of liquor as tips for their service.
“Our planes are like taxicabs in that it is none of the driver’s business what his passenger is about,” one seaplane company manager later told reporters. “The hiring of the seaplane in that case was merely a matter of business.”
As smart as Costello was with aircraft and clandestine radio stations in his bootlegging, he used a decidedly low-tech way of assuring that his cargoes weren’t ripped off. When the contact vessel such as a Jersey skiff came to the schooner to pick up the liquor load, the skiff captain presented a dollar bill to the crew of the larger ship. If the serial number on the bill matched that on a list Newman had been given from Costello’s office, then the cargo could be off-loaded safely. It was a simple way of keeping the transaction safe and secure.
CHAPTER FOUR
WHISKEY ROYALTY
THE TITLE “KING OF THE BOOTLEGGERS” was an honorific that was claimed by a number of people
in the Prohibition Era. Those who laid claim to the title were constantly being arrested and then replaced in the anointed position by a seemingly never-ending parade of others. It is a testament to his low profile, craftiness, careful dealings, and payoffs that Frank Costello wasn’t given the “King” sobriquet, even when his activities became more widely known among the police. But those who were part of bootlegging royalty were the very people Costello dealt with and partnered with in significant ways, particularly in the early days when Prohibition was just getting underway and federal officials were stumbling around trying to deal with the bootleggers. He just turned out to have better luck than most.
George Remus, the Chicago lawyer who was first anointed “King of the Bootleggers” around 1921, was the one who came up with ingenious schemes of buying liquor wholesalers and drugstore businesses as a way of exploiting the medicinal use exemption on the sale of booze. As described earlier, Remus claimed to have paid handsome bribes to a confidante of the U.S. Attorney General Harry Daugherty to get illegal permits which allowed liquor, ostensibly for medicinal use, to come out of the special government warehouses. Gangsters in New York and elsewhere had taken to breaking in to the warehouses but Remus’s scheme refined the theft, and some say he was the inspiration for Jay Gatsby’s character in The Great Gatsby. Remus got caught fairly early in Prohibition, and with his constant recantation of his claims of payoffs in high places and his murder of his wife Imogene, there were questions about his sanity. He spent time in prison for violating the Volstead Act as well as the murder of his wife. He died in 1952.
Remus said that the liquor he finagled out of the warehouses wound up in New York City. He never mentioned Costello by name as a business contact. But one man Remus did say he did business with, Emanuel “Manny” Kessler, had significant ties to Costello in getting liquor to market. The relationship between Kessler and Costello—examined for the first time here in depth—was responsible for the handling of large quantities of booze that kept Broadway speakeasies well stocked. Kessler’s operation involved millions of dollars’ worth of product and the corruption of public officials at all levels: federal, state, and the NYPD.
“For enforcement during Prohibition in New York, there was a federal agency that, in all but a couple of cases, operated on the principles of a collection firm: if you paid, they went away,” said the late Jimmy Breslin, in his biography of Damon Runyon.
Clearly, Kessler had learned a trick or two from Remus. Described as a real estate agent and wine salesman, Kessler knew that the stock of liquor in the government bonded warehouses was a potential gold mine. To get his hands on the product, Kessler paid off government Prohibition agents who helped him get forged permits for removal of whiskey and gin. Once the booze was out of the warehouses, it was shipped to a number of holding areas around New York City where it could then be sold off.
Conventional wisdom holds that Frank Costello received his early start in bootlegging with money from Arnold Rothstein, and to some extent Rothstein did provide him with cash. But years later in court testimony Kessler said that in 1920 Costello told him that if he bought some trucks for Kessler and his brother Edward that they would haul the booze for him coming in from Long Island.
“I advanced him the money or I bought the trucks,” said Kessler. “I think I advanced him the money and they bought the trucks.”
The system they used was fairly straightforward, remembered Kessler. The Costellos would truck the liquor to their house at 114 Halsey Street in Astoria, which had an adjacent garage. After the booze was stored in the garage, Kessler had smaller trucks go out to Queens to bring the product to his other warehouses around town. Court records would later show that Kessler gave Edward Costello a $5,800 check for the purchase of two trucks. As it turned out, Kessler was actually financing Frank Costello’s scheme for trucking the liquor which landed on Long Island from Rum Row.
Kessler was moving a great deal of liquor. His bank accounts showed that he moved at least $4 million worth in the course of a few months. By telephone, Kessler talked frequently with Frank Costello at his office on Lexington Avenue about the large-scale movement by truck—about 3,000 cases a week. Being so busy, Kessler attracted the attention of federal officials who developed evidence that he played a major role in 1921 in the fraudulent removal of whiskey from a government warehouse in Brooklyn to other locations until he could unload the product. Charged with Kessler in January 1921 was a former Prohibition inspector who had resigned his job to work for the bootlegger. Also charged were four state inspectors whose job was to enforce New York state prohibition laws. Those arrests of officials was just the tip of the iceberg in terms of the morass of corruption in the years of Prohibition.
Kessler made bail in the case, and despite the arrest didn’t stop his bootlegging activities. In September 1922 he was arrested, along with his partner Morris Sweetwood on charges they again used forged and fraudulent permits to remove during the previous May and June over $1 million in whiskey and champagne from the Republic Storage facility in Manhattan. From evidence and documents found during the arrests, federal agents in November 1922 showed up at the home of Edward Costello, identified in news reports by the surname “Costella” and found in his possession twenty-seven cases of stolen Auld Scottie whiskey taken from the Republic Storage warehouse. The liquor was found in a garage around the corner from Costello’s house on Halsey Street in Astoria after he gave agents permission to search the location. The cases were found in a walled-up compartment in the garage.
Halsey street (later renamed Third Street) is also where Frank Costello was listed as having a home at No. 124, a frame dwelling where his father also was said to have lived before he died in 1921. The area was in one of those out-of-the-way pockets of New York City. The neighborhood was a mix of stone masonry businesses and residential buildings and in the era before construction of the Triborough Bridge wasn’t the easiest place to visit except by boat or a circuitous route by auto. Known as Astoria, the community surrounding Halsey Street abutted the East River and had numerous piers and docks, making it an easy place to bring in bootlegging speedboats or larger vessels. Costello family stories held that a secret passageway existed between Edward’s house and the East River.
Halsey Street saw a lot of bootlegging activity for the Costello clan. The volume of alcoholic beverages they handled for Kessler was large, about 3,000 cases a week from boats that came in every night. For that, Kessler paid the Costello brothers $3,000 a week for shipping, plus a dollar for each case for storage for a weekly total of $6,000.
“Either cash or check, or in merchandise once in a while,” was how Kessler remembered making the payments.
At one point, Kessler built a storage vault underneath a garage adjacent to the Costello home on Halsey Street to hide the liquor. The entrance to the underground space was concealed by a large floor slab, which when moved led down into the vault.
Secrecy with the Costello family was important in the bootlegging operation. While Frank and Edward were in on the smuggling in a big way, it appeared that other relatives, including Frank’s own mother, well knew what was going on and were part of the conspiracy. This was made apparent when Albert Feldman, one of Kessler’s customers, visited the home at 114 Harley Street to inspect a shipment in the garage at the back of the dwelling. Arriving at the house, Feldman said he met two women who played dumb when he asked to see Edward.
“They pretended that they didn’t know who he was and that he did not live there. They asked me to identify myself,” Feldman would later remember. “When I told them who I was, there was a young man who came down from upstairs that I had known, having seen him around, and he knew me, and he called me by my first name.
“He told the women in Italian language that I was O.K., then right after that, he took me out through the back of that house and in through a small door of a brick building and he showed me the pile of liquor that had been piled up in the garage and told me ‘That’s the 1,000 cases
of Scotch that came in from Long Island,’” remembered Feldman.
Costello’s mother Maria was also shown to be in the know about the bootlegging when she told her son to give a seemingly naïve new immigrant from Lauropoli named Frank Rizzo a job in his booze operation. The whole incident was recounted in Wolf’s book, which quotes Costello reminiscing how Rizzo was foisted upon him by Maria to work as a bookkeeper.
“A bookkeeper! They’re a dime a dozen,” Costello complained.
“Now listen to me,” Maria said sternly to her son. “This boy [was] the youngest teacher in college. He’s a genius. He keep the books for you.”
Despite his misgiving, Costello kept Rizzo on, paying him $500 a week to make a notation whenever a case of liquor arrived. It was a sum that was astronomical for the young man from the Calabrian countryside, whose boss demanded that he buy a new suit. Over time, Costello and Rizzo, dubbed “the Professor,” became close friends and confidants.
The Halsey Street neighborhood wasn’t the only Queens place where Frank and Edward Costello stashed their smuggled liquor. One of the strangest—and all but forgotten—episodes the Costello clan was involved in during Prohibition involved an old mansion in Astoria once owned by the famous Blackwell family, which traced its heritage to England. The family at one point owned the sliver of land in the East River between the borough of Queens and Manhattan.
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