Top Hoodlum

by Anthony M. DeStefano

  “Otherwise I can’t hold them back,” Luciano warned Costello, according to Wolf’s account.

  There was also another condition, remembered Wolf. Luciano told Costello to retire as head of the ruling Mafia commission and let Vito Genovese take the seat. When Costello got the money back, he could take over the chair on the commission again.

  “What happens to Bugsy?” asked Costello.

  “Him I can’t help,” Luciano answered.

  Costello survived the Flamingo fiasco. He apparently recouped the lost money, and as Wolf would later say went into hock to do it. The hotel even went on to make a profit after Siegel closed it for three months and then reopened. But by then Siegel’s cause, as Luciano said, couldn’t be helped. The night of June 20, 1947, after a dinner at Jack’s restaurant in Santa Monica, Siegel returned to the mansion he had in Beverly Hills with dinner companion Jack Smiley. Siegel’s gal pal Virginia Hill, for whom he bought the home, was out of town. Both men sat at opposite ends of a sofa and Siegel began to read a copy of The Los Angeles Times.

  Suddenly, shots rang out and glass from a living room window shattered and sprayed around as bullets from a carbine fired by someone from the outside found their mark on Siegel’s face. One round hit him in the left eye while another struck the right cheek and sent the other eye out of his skull and on to the carpet. Siegel paid the price for screwing around with the Mafia’s money. The news photos of the crime scene showed Siegel reclining on the sofa, his face bloodied and his left eye socket empty. In a strange juxtaposition, a small statue of a nude woman, her arms stretched overhead, can be seen in the foreground of one of the photos taken by the press photographer.

  Luciano was sitting pretty in Cuba. He could beckon Costello, Adonis, and anybody else he needed to make the ninety-mile jump from Miami to Havana. Luciano felt free in Cuba and traveled around without a problem. But his freewheeling activity turned out to be his problem. When newspaper columnist Robert Ruark traveled on vacation to Cuba he saw Luciano in a restaurant. The chance discovery led Ruark, who was also a hard drinking, big game hunter who liked a good scoop, to dig around and write stories about Luciano, as well as Sinatra, in Cuba.

  Ruark’s reports, and others it sparked, couldn’t be ignored by the U.S. government. By the end of February 1947, Harry Anslinger, head of the United States Treasury Department Bureau of Narcotics, asked that the U.S. stop the shipment of medicinal narcotic drugs to Cuba until Luciano had left the country. Anslinger suspected that old Luciano cronies were making trips back and forth from Florida to Cuba to traffic in the drugs the U.S. had been sending to the island nation. The Cuban government was told of Anslinger’s suspicion but did nothing, he said, prompting the Americans to take matters into their own hands.

  Luciano was considered so dangerous to narcotics enforcement officials in the U.S. that the American government finally restricted the export of legitimate narcotics to Cuba for as long as Luciano stayed in that country. Officials also thought it was an “interesting coincidence” that in the months Luciano was in Cuba the U.S. witnessed the importation of $250,000 worth of European heroin. Acting quickly, Cuban officials arrested Luciano and two bodyguards at a villa he had been living at in the exclusive Miramar section of Havana and sent the group to a special camp across Havana bay.

  About a week after his arrest, Luciano filed a writ to get his release so that he could leave the country. His Cuban attorney charged that the arrest was a “political persecution” by a faction in the U.S. because Luciano had been “anti-Nazi.” But such protest was merely for show. Luciano was not going to be allowed to stay in Cuba, and after Cuban president Grau San Martin signed an order for Luciano’s deportation as an undesirable alien, the mob boss was placed on the Turkish ship Bakir on March 19 bound for Italy. He paid his own first-class fare of $300 and spent his time on the voyage playing cards with tourist-class passengers. Once back in his ancestral land, Luciano was promptly jailed and held for an investigation into how he had been able to travel so clandestinely. It wouldn’t be the last anyone would hear about Charlie Lucky.

  CHAPTER EIGHTEEN

  TAMMANY TALES

  BACK IN NEW YORK, FRANK COSTELLO was finding out how toxic his name had become. The Aurelio scandal had put him in a nasty spotlight. Mayor La Guardia, NYPD commissioner Lewis Valentine, prosecutors Dewey and Hogan had all dragged up Costello’s name any chance they could. Of course, there was little they could point to in terms of a criminal record because, aside from the 1915 gun case, which sent him to jail for just under a year, Costello had never been convicted of anything. But his reputation as a slot machine king, a major bootlegger back in the day and his role as Luciano’s man had earned him the label of gangster no matter how hard he tried to appear legitimate to his neighbors in Sands Point.

  Every up and coming mobster in New York during the 1920s had something to do with bootlegging. It was an acceptable thing to do since the public, and many in government, saw Prohibition as a half-assed, dumb policy. Those who sold booze and trafficked in it were local heroes. But after Prohibition took a stake to its heart with the passage of the Twenty-first Amendment, the liquor flowed and bootlegging was obsolete. In his biography, Luciano said that the mob stockpiles of liquor were winnowed down by donations to churches and synagogues as a way of building good will in the neighborhoods and creating a source of revenue for the institutions. Yet those who had profited from hooch and dealt with the mob found that their old ways would come back to haunt them. Such was the case of businessman Irving Haim.

  Born Irving Haimowitz, Haim had a long career in the liquor trade. In the 1920s he was involved with Sherwood Distillery Company of Maryland, a firm that in 1923 had its federal alcohol permits revoked because it had violated the Prohibition laws. To survive, Haim did business with Costello and Kastel, and the relationship was mutually beneficial and went beyond the typical bootlegging action. Good whiskey always had a market in the U.S.—be it during Prohibition or after—and Haim came across a very good opportunity in Scotland.

  In the nineteenth century, Edradour distillery was formed as a cooperative venture of some local Scottish farmers. The operation was said to be one of the smallest of its kind and, as writer Charles McLean noted, relied on water from a moor that was “rich in peat and granite.” Economic issues forced the descendants of the original founders to sell the distillery in 1933 to William Whatley & Co., whose owner had previously bought JG Turney & Sons to sell to the export market. As McLean explained in an article about the history of distilleries he wrote a few years ago in The Herald newspaper of Glasgow, Turney used Edradour Scotch in its blends which it sold under the brand names House of Lords and King’s Ransom.

  At some point—it was unclear when—Whatley designated Costello as its American sales representative for the two brands at a rate of just over 3,000 pounds a year, or $25,000 dollars at the estimated exchange rate of the time. (Costello later said the deal was never consummated.) Then in 1937, McLean reported, Haim, who had been teamed up with Costello for years during Prohibition, bought the holding company that owned Whatley and in essence became the owner of the storied distillery. The purchase, it would later be revealed in U.S. Senate testimony, was financed through a New Orleans bank and secured by Haim, Kastel, and Costello, with a few other suretors. (The distillery was sold in 1986, according to McLean.)

  During his days as a bootlegger, Costello had reportedly done business with Joseph P. Kennedy, the father of future President John F. Kennedy. During testimony in 1943 before a state liquor panel, Costello said that not only was Phil Kastel and Haim involved in the Scotland deal but also “Joe Kennedy.” Wolf, who was present at that testimony, asked Costello if he meant the Joseph Kennedy who was the former Ambassador to England. Costello’s response, said Wolf, was “Hell, no . . . Joseph Kennedy, the old bootlegger in Toronto. I known him twenty-five years.”

  While Haim’s ties to the scotch industry through the purchase of an old distillery might have seemed quaint, hi
s connection to Costello hurt his businesses. It was in 1948 that Haim’s International Distributors, one of the nation’s larger wholesale liquor distributors, had its license with New York State up for renewal. It had the exclusive distribution rights to a number of brands of whiskey including House of Lords and King’s Ransom scotch. The license was issued by the State Liquor Authority and the agency found evidence that Haim and his firm had falsely answered questions on its original license application. In particular, SLA attorneys said Haim hid the fact that he had been prosecuted in the Sherwood Distillery matter back in 1923 and didn’t disclose his ownership interest in another distillery.

  In terms of Costello, the SLA attorneys wanted to disapprove the renewal of the license because Haim knew him and his old sidekick Phil Kastel. Taken together with the false statements found in the application, the SLA used the Costello-Kastel connection as icing on the cake and refused to renew the license of International Distributors. A lawsuit was then filed by Haim to overturn the ruling.

  It was up to Manhattan Supreme Court Justice Morris Eder to sort the whole mess out. In one sense, Haim made it easy for Eder because of the various falsehoods in the paperwork. The omissions and lies were so blatantly obvious that Eder said the SLA was in its rights to deny the renewal application. But when it came to Costello and Kastel, the court didn’t hide its concern that the pair’s notoriety wasn’t an important issue. The main thing was that Costello had almost a spotless record as far as the criminal justice system was concerned.

  “Much was said upon the argument concerning Costello, who was referred to as Public Enemy No. 1, but it seems strange that if such has any foundation in fact, that no action has been taken in that regard by the police and public prosecutor, or by any public authority, with all the resources at their command, to protect the public,” said Eder.

  At one point in court Eder said, “Mr. Dewey was the district attorney, Mr. Hogan is the district attorney. Yet nobody seems to indict him for anything. What is wrong with this man? If he has done anything wrong why don’t they do something about it.”

  If Haim’s ties to Costello were the only thing, Eder would have overturned the SLA decision and given International Distributors its license back. But the lies were enough and Eder let the agency decision against Haim stand.

  Despite the fact that the Aurelio affair had exposed Costello’s influence over Tammany Hall, his power did not seem to diminish in the immediate post-World War Two years. The reformists and good-government types would wring their hands and call for merit selection of judges. But Costello somehow seemed to keep his position as a man of influence. No matter what his enemies in government would say about him, Costello seemed to have staying power.

  Nineteen forty-nine was an election year in New York City. It was also a year in which Frank Costello learned first-hand, to his embarrassment, how no good deed goes unpunished. With Wolf’s prodding, Costello had been sending any profits from his Wall Street real estate holdings—minus expenses—to charities. It had been the attorney’s self-professed way of burnishing Costello’s image, making him seem more benevolent and caring. As would later be explained in news articles, Costello had given so much money to the Salvation Army that he was among its 200 biggest contributors. The organization asked them all to serve as vice-chairmen for its upcoming fundraiser, and about 123 accepted, including Costello when he was asked that year by Walter Hoving of the Hoving Corporation to serve as a vice-chairman of the men’s committee of the Salvation Army 1949 fund-raising campaign. It seemed like something that fit right into the game plan of making Costello respectable.

  As a member of the committee, Costello invited people to attend the fund-raising dinner, set for January 24, 1949. The donation was $100 per person. He put together a list of his own guests, which included judges and politicians. But when Wolf saw a few of the other names on the list of invitees, he blanched in horror. They were some of Costello’s mob cronies.

  “I remonstrated with Frank, I pleaded,” Wolf recalled. “Nothing I said could change his mind. Those so-called ‘gangsters’ were his friends. Furthermore, forget the Waldorf. The dinner would be held at the Copacabana.”

  Wolf said he warned Hoving about Costello’s past but the businessman was unfazed, believing that there was simply no way that anybody could be criticized for charitable work. But when it came to somebody like Costello, there was a lot of baggage he carried no matter how good his intentions. The dinner went off as scheduled and, as Wolf later wryly put it, “The Mayor and the politicians mingled with gangsters in their finest outfits; nary a gun in sight.”

  Reporters and photographers got wind of the event and staked out the door, photographing those who attended: city council president and future mayor Vincent Impellitteri, Manhattan Borough President Hugo E. Rogers who headed Tammany Hall, state Supreme Court justices and others from the bench. Also present was Dr. Richard H. Hoffman, a psychiatrist who had treated Costello over his feelings of social inadequacy and recommended that he associate with a better class of people. Wolf later came out and gave the press a short list of some of those attending. Costello turned over about $10,000 in contributions to the Salvation Army, some $3,500 from the dinner proceeds and another $6,500 of his own money.

  The resulting publicity showed how things had backfired. With so much attention on Costello, and little on the amount of money raised for the charity, he and officials of the Salvation Army decided it was best for him to resign as a vice-chairman. Through Wolf, Costello let it be known that he was afraid the adverse publicity would hurt the fund-raising. He bowed out. The Salvation Army said that it would not return any of the donations.

  As embarrassing as the Salvation Army matter might have been, the year promised to have more surprises for Costello, some not of his making. As 1949 progressed, a major election was looming. Mayor O’Dwyer was running for reelection and it was no secret in politics that he had been an associate of Costello through Tammany, having sought his help in 1945 when he ran after La Guardia bowed out. Just the mention of Tammany and Costello made some of O’Dwyer’s enemies see red. Some lambasted the Mayor, saying he was too close to the gangster element and had allegedly been soft on racketeering. Others, like Clendenin J. Ryan, heir to a business fortune and a staunch foe of O’Dwyer, took their hatred to another level.

  Long before Watergate, the strangest and most brazen attempt at political surveillance occurred in those months leading up to the November 1949 election. It is one of those scandals that is all but lost to history but showed how virulent politics could be in New York City. This was a period in which wiretapping was illegal but under the quirks of the law could be performed by private detectives if they secured a legal order by applying to a police official above the rank of sergeant. This could lead to a flurry of surveillance, both legal and illegal.

  Ryan, who had been an aide to La Guardia at City Hall, was convinced that political corruption was rampant in New York and that none other than Frank Costello and Mayor O’Dwyer held the city in a “vicious grip” of crooked machine politics. To find evidence of corruption, Ryan hired John G. Broady, an attorney, former prosecutor, private investigator, and “inveterate wiretapper,” to start an investigation. As Manhattan District Attorney Frank Hogan would later explain after revealing what the two men were up to, Ryan and Broady talked about doing some “legal” wiretapping as part of their private probe. Broady also employed the services of a former NYPD detective named Kenneth Ryan as well as Edward M. Jones, who had at one time worked for the U.S. Treasury Department.

  Ryan and Broady tried to interest others in their investigation, including some state judges and a prominent white-shoe lawyer named Paul Windels who had offices on Wall Street and had been a former top city lawyer under La Guardia. But Windels and the others thought the idea was impractical and sparked by some rehash of old stories from the newspapers. Still, Broady wouldn’t be deterred and, as Hogan later alleged, prepared to place illegal wiretaps all around. Astonishingl
y, taps were discovered on Mayor O’Dwyer’s telephones at City Hall and the home of Manhattan Borough president Hugo Rogers.

  As in the case of the bungling Watergate burglars decades later, the entire bugging operation unraveled when a police officer discovered the tap on Rogers’s telephone. This was uncovered when a police officer whose normal duties were to check telephones of city officials in an effort to guard against unlawful surveillance discovered a tap on the home telephone of Rogers. Hogan got involved in the case and his staff along with O’Dwyer displayed for reporters the bulky bugging equipment allegedly used in the scheme. At one point, O’Dwyer and police commissioner William P. O’Brien questioned Ryan early one morning at City Hall. The Mayor even promised ex-cop Ryan that he would put in a good word for him with Hogan if he came clean. Ryan excused himself to go to the bathroom and then fled City Hall undetected, leaving his tan top coat and hat in O’Dwyer’s office. He also left leaving his new Mercury sedan in the City Hall parking area. He returned a few days later after hiring a lawyer.

  Clendenin Ryan, the millionaire and no relation to the fleeing ex-detective, had been a nettlesome presence at City Hall for months. He formed something called the Clean Government Committee, published a weekly newspaper called the Public Guardian, and badgered O’Dwyer with questions, sometimes about Costello being the “real boss of New York City” but often about mob cases he thought the Mayor had bungled while acting as Brooklyn District Attorney. As far as Costello, Ryan said he was O’Dwyer’s “commissioner in charge of vice and corruption.” Offended by Ryan’s outburst, one detective from the Mayor’s office told the millionaire at the courthouse one day, “It’s too bad your father didn’t leave you brains instead of money.”

  The wiretap scandal made for great newspaper headlines and fed the political gossip mill. Ten Democratic members of Congress even came to City Hall to talk with O’Dwyer behind closed doors about the case. In the end, Ryan wasn’t charged. In June 1949, with Broadly and others under indictment, Ryan decided to bow out of the election fight, believing that anti-Tammany—and thus anti-Costello—forces led by Judge Samuel Seabury could take care of things and attempt to oust O’Dwyer with a fusion candidate in the election.