by Tim Newark
As Dewey delved deeper, he came across the activities of the erratic and dangerous Dutch Schultz. Schultz was one of the other great criminal associates of Luciano—never one of the Big Six because of the independent character of his business, but certainly in alliance with them as part of a New York syndicate. Another protégé of Rothstein, he took over the numbers racket in Harlem and ran bootleg beer in the Bronx. In 1931, Dewey discovered that Schultz had deposited $856,000 in various bank accounts and doubted very much that he had paid a penny in tax on it. Later in the same year, Dewey took on Jack Diamond and successfully prosecuted him for operating a still, for which he received a fine of $11,000 and a four-year prison sentence. In a subsequent trial, Diamond was acquitted, but by the end of the year he had been shot dead.
Over the next two years, Dewey set his investigators onto Dutch Schultz and Waxey Gordon. By early 1933, they had enough evidence to proceed against both mobsters on the basis of tax evasion. Schultz had already got word of the investigation and disappeared. Gordon tried to escape but was captured and went on trial. Before he confronted the multimillionaire bootlegger in court, Dewey and his team had questioned more than a thousand witnesses and investigated the records of some two hundred bank accounts. It was an indication of the thoroughness with which Dewey prepared his cases and served as a model for his later assaults on gangsters.
“Good law enforcement,” said Dewey, “will be procured when competent and trained investigators work, with modern technique and approach to their task, together with competent, vigorous lawyers who are willing to devote long, quiet effort to the investigation and prosecution of crime.”
It was the paper trail and the accumulation of witness testimony that would prove to be his most potent weapons. Waxey Gordon and two of his associates were indicted for tax evasion on an income of $1,618,690 over two years. Presented with such a tight case built on the statements of witnesses who had worked inside Gordon’s business, it took the jury just fifty-one minutes to find him guilty on all counts. Waxey Gordon was fined $80,000 and given a sentence of ten years incarceration. In retrospect it probably saved him from being rubbed out by his fellow gangsters.
Luciano had already been moving in on Gordon’s business earlier that year. A newspaper report described a gun battle in May in which three passersby were hit in the crossfire at Broadway and Eighty-first Street. “According to the police,” said the report, “the machine-gun battle was between rival gangs headed by Waxey Gordon on one side and by Charles (Lucky) Luciano and Louis Buckhalter, alias Lipke [sic], on the other.” In all, the police said more than a dozen men had been killed in the gang warfare. It has even been suggested that it was Meyer Lansky who fed information about Gordon’s tax affairs to the Internal Revenue Service in the first place.
By the end of 1933, Dewey’s boss, Medalie, decide to retire and recommended Dewey for his post. Despite the newly empowered Democrats eyeing the position, the Republican Dewey was unanimously elected—at thirty-one years old, the youngest ever U.S. attorney of New York. One headline called him the “Baby Prosecutor.” It was bad news for New York mobsters and everyone knew it—including Luciano. But the Democrats persisted and Dewey was replaced after just a month in the role. As Dewey prepared to make some money in private practice, the Mob dared to hope that their operations would be safer with a more malleable Democrat in the job. But public uproar at the corrupt nature of the Democratic legal regime encouraged the governor of New York to intervene and appoint Dewey as special prosecutor. He was subsequently given free hand as deputy assistant district attorney to pursue his own campaign against organized crime. The heat was back on the Mob.
Dewey moved his operation into the fourteenth floor of the Woolworth Building. A twenty-four-hour police guard was put on the Gothic skyscraper. Special measures were taken to protect witnesses giving testimony: frosted glass installed in partitions in interview rooms; venetian blinds placed on exterior windows; a separate telephone cable led directly to the telephone company to avoid tapping; filing cabinets given special locks. To get the public behind him, Dewey gave a series of radio lectures in which he outlined the impact of crime on the citizens of New York. It was these talks that built up the legend of organized crime in the city and led eventually to Luciano being branded a master criminal.
“There is today scarcely a business in New York which does not somehow pay its tribute to the underworld,” declared Dewey, “a tribute levied by force and collected by fear. There is certainly not a family in the City of New York which does not pay its share of tribute to the underworld every day it lives and with every meal it eats. This huge unofficial sales tax is collected from the ultimate consumer in the price he pays for everything he buys. Every barrel of flour consumed in New York City pays its toll to racketeers, which goes right into the price of every loaf of bread. Every chicken shipped into the City of New York pays its tribute to the poultry racket, out of the pockets of the public. There are few vegetable or fish markets in the City of New York where merchants are not forced by sluggings, destruction of goods, threats, and stink bombs to pay heavy toll.”
Dewey was talking about the protection racket, but there was another lucrative aspect of gang rule that also came to his attention—the “Shylock” business. Taking its name from Shakespeare’s Venetian Jew, it was simply money-lending with menaces. The rate of interest was $1 for every $5 borrowed. The gang lenders kept books and sent their collectors to pick up their money every week, many of them walking straight into the officers of borrowers and telling them to pay up. If they refused, a couple of enforcers were sent to beat it out of them.
Dutch Schultz had a considerable interest in the Shylock racket in Manhattan and every day he was in hiding from Dewey he was losing control over his business empire to Luciano and other rapacious gangsters. When he eventually reemerged into the public eye, his clever lawyers managed to get his trial shifted upstate and he avoided conviction, but he still had a score to settle with the attorney.
“Dewey’s gotta go,” he told a gathering of senior mobsters. “He has gotta be hit in the head.”
Luciano and Lansky sympathized with Schultz. The Dewey justice machine was threatening them all, but instinctively they knew that such a high-level hit would bring down on them just the kind of attention they were trying so hard to avoid. Nevertheless, Albert Anastasia of Murder, Inc., was charged with exploring the possibility of assassinating Dewey. The lawyer’s daily routine was observed and one criminal observer staked out his home, borrowing a child from a friend so he could pretend to be playing with his son each morning when Dewey emerged from his house. The attorney was accompanied by two bodyguards, but it soon became clear that he always visited a drugstore to make his first untapped phone call of the day while the bodyguards waited outside. All Murder, Inc., would have to do is place a gunman in the drugstore.
When the proposition was placed before Luciano and his allies, they voted it down. It wasn’t worth the tremendous grief that would explode over them with Dewey’s killing. Dutch Schultz wasn’t happy with the decision and vowed to kill Dewey by himself. Schultz had always been a hothead and his defiance of the Mob sealed his own fate. It was the first real test of his authority and Luciano wouldn’t be found wanting.
On the evening of October 23, 1935, a black sedan carried three hit men into Newark, New Jersey. They had a deadline to beat. They heard that Dutch Schultz was just thirty-six hours away from blasting Dewey. At just after 10:00 P.M., the three gunmen entered the Palace Chophouse. One of them, Charlie “the Bug” Workman, checked out the restroom. Seeing the back of a man he figured was one of Schultz’s bodyguards, he shot him, then strode back into the bar and executed three of Schultz’s close associates as they sat around going over the mobster’s accounts. But none of them was Schultz. Workman suddenly realized it was the guy in the toilet that was his target. He went back and checked he was dead. But Schultz wasn’t dead. He lingered on for another twenty-four hours in hospital before he pass
ed away.
Years later, the assassination plot was revealed to Dewey. He listened stone-faced to the details, reacting only when it was mentioned that his potential killer used a child to cover his stakeout. It was the closest he would ever come to being a victim of the Mob, and the person he had to thank above all for his survival was Charlie Luciano—the man against whom he would now turn all his prosecuting skills.
Dewey wasn’t the only new brush to start cleaning up New York. As Roosevelt and his Democrats swept into power in 1933, Fiorello La Guardia stood as mayor of New York City. A Jewish-Italian Republican, La Guardia was not trusted by Luciano and his Tammany Hall cronies and they did everything to halt his rise to office. When they put thugs out onto the street to rig the election, La Guardia, a streetwise man with little physical fear, waded into the action and even took a slug at Luciano when he appeared on the streets to back up his men. La Guardia won the election and wasted no time in condemning Luciano as “Public Enemy No. 1.” Journalists accompanied the stocky mayor as he went on regular forays with a fire ax to personally smash up slot machines run by the racket as the most visible way of showing he meant business. The public mood was turning against the Mob.
7
LUCKY IN HOLLYWOOD
Dewey wasn’t the only problem facing Lucky Luciano in 1934. His criminal empire spread all the way across America to the West Coast, but his rule there was coming under pressure from the Mob in Chicago, and they would cause to him to make an almost fatal error.
The appeal of Hollywood to Luciano was obvious—it was a huge narcotics market. Back in 1926, Los Angelinos were already becoming nervous about its impact on their sun-drenched land when newspaper reports declared they had the second largest number of illegal drug convictions in the United States. Morphine and its derivative, heroin, were the drugs of choice in the north and center of the state, accounting for 50 percent of arrests in and around Los Angeles. Marijuana was more popular in the south with mainly Latino users.
“It is plain that society must organize to combat this evil,” blared the Los Angeles Times. “Like war, its ravages must be checked or it will end by wrecking the present civilization. So great is the profit in peddling the dope that unscrupulous makers and vendors defy the written law. They have found that each recruit to the army of addicts brings others in his train and the secret nature of the traffic makes apprehension of the smugglers extremely difficult.”
The other attraction for Luciano, of course, was the glamour. The year after the Los Angeles Times warned against the terrors of heroin addiction, a pretty young woman called Thelma Todd arrived in New York. As a teenager, she had won her state beauty pageant and been crowned Miss Massachusetts. Her first job was as a fashion model and then a friend put her in contact with pioneering film producer Jesse Lasky, one of the original founders of Paramount Pictures, as well as the Academy of Motion Picture Arts and Sciences. In New York, he was talent spotting and set up the Paramount School of Acting.
The fun-loving blonde joined the school and within months appeared in her first movie role in Vamping Venus. More parts followed, and in 1927 Todd took the railroad to Hollywood where she signed up with comedy filmmaker Hal Roach. She played in comedies opposite Laurel and Hardy and Harry Langdon. The following year, she graduated from comedienne to straight actor, taking leading roles in feature films Corsair and The Maltese Falcon. By 1933, the twenty-eight-year-old Thelma Todd was a film star—and that was the year she started dating Charlie Luciano.
As always, Luciano had been quick to spot the potential for selling narcotics to Hollywood and had a firm grip on that market by the late 1920s, alongside vice and gambling. Narcotics imported from Europe came through New York and ended up in L.A. His “snow” dealers hung around movie sets and supplied actors with little packets of morphine, heroin, and cocaine. It was fashionable and starlets scooped up the powder with little silver spoons dangling from necklaces or injected heroin with hypodermic needles kept in vanity cases. A few stars became high-profile drug victims, such as silent movie actress Barbara La Marr, who died from heroin abuse. To take care of business on the West Coast, Luciano appointed Pasquale “Pat” Di Cicco, a theatrical agent very well connected with the movie world. His cousin Albert “Cubby” Broccoli would later go on to produce the James Bond movies, and Di Cicco ended up as a vice president of United Artists Theatres.
By 1933, however, Luciano’s West Coast operation had a strong rival in the form of Chicago gangsters who had muscled in on the film business. When Depression-hit Hollywood moguls slashed by half the fees they paid their actors, writers, and film technicians, it caused mayhem, and strikes threatened to bring moviemaking to a halt. Johnny Roselli, a soldier for the Chicago Outfit, came to the rescue of the moguls and, within a week, his hired thugs had crushed the threat of strikes. That favor came with strings attached, and soon Roselli was closely involved with top Hollywood producers, functioning as their Mob fixer and bookmaker. His greatest pal was studio head Harry Cohn and they both wore identical ruby rings as a sign they were blood brothers. This special access encouraged the Chicago Mob to look for richer pickings in Hollywood. By controlling the filmmaking unions and threatening strikes, they planned to extort vast sums of money from the movie moguls.
So far so good, but the film business was not solely located on the West Coast, and several production companies, including MGM, were actually owned by New York–based theater groups. If the Chicago Mob was going to extort money from these businesses they had to ask permission from Luciano and his associates before moving in. To square this, prominent mobster Frank Nitti, who now fronted the Chicago Outfit after taking over from the recently imprisoned Al Capone, invited Luciano for a chat.
In a tense meeting, Nitti outlined his proposal and Luciano listened. The cards were stacked against the New Yorker, as he didn’t have the presence in Hollywood that they had in the form of Johnny Roselli, but he bluffed it out and said he would agree to them putting the squeeze on New York–based movie companies, so long as they cleared out of his West Coast drugdealing business. He also wanted a share of the income from Chicago-controlled nightclubs and restaurants in Los Angeles.
Nitti accepted the share of income, but pontificated over the drugs—it was too big a market to give up. Luciano had little choice but to agree to the overall deal—it was his punishment for taking his eye off the ball. He had let the Chicago mobsters elbow their way into his drug business and now he was paying the price for it. Compared to Roselli, Luciano’s representative, Di Cicco, was a bit player. That was why, from 1933 onward, Luciano became a regular visitor to Hollywood—keeping a closer eye on his operation.
In July 1932, Pat Di Cicco had married Thelma Todd in Arizona. She was then at the height of her career, having recently starred in two Marx Brothers’ comedies, Monkey Business and Horse Feathers. But Todd desperately wanted to be taken more seriously and wanted a break from her comedy contract with Hal Roach so she could star in more dramas. When she started talking to United Artists about appearing in the projected war epic Hell’s Angels, Roach refused to let her go. This was a blow to Todd and she started drinking heavily. It didn’t help that her marriage to Di Cicco broke down almost immediately, as he frequently disappeared on business trips for Luciano.
Alone and in need of company, Todd resumed her friendship with a United Artists executive called Roland West. He and his ex-wife, Jewel Carmen, wanted to open a restaurant and tried to interest Todd in their plans over dinner at the Brown Derby. That same night, Di Cicco reappeared in the company of Luciano and joined them for drinks. Todd didn’t recognize the gangster but was charmed by him. As her relationship with Di Cicco deteriorated further, Todd started seeing more of Luciano, who journeyed to Hollywood ever more frequently. Soon it was known among her friends that they were sleeping together—she confessed it to her onscreen comedy partner Patsy Kelly. She liked a good time—she dubbed herself “Hot Toddy”—and Luciano kept her supplied with any drug she fancied.
/> When Todd divorced Di Cicco in March 1934, citing mental cruelty, she was in the mood for creating her own nightspot and joined with West and Carmen in setting up a restaurant on Roosevelt Highway on the way to Malibu Beach. It was to be called Thelma Todd’s Sidewalk Café. She didn’t invest a penny in the project, but used her Hollywood network to make sure movie stars attended the place and created a buzz around it. It helped that she opened up the second floor of the building for afterhours gambling, which attracted Clark Gable and Spencer Tracy, among others. Luciano gave his blessing to the project. He could see its potential.
Any high-profile activity in Hollywood suited Luciano, as he was finding it hard to compete with the action of the Chicago Outfit. In June 1934, Luciano, Lansky, Siegel, and Lepke joined Nitti and the Chicago mobsters at the biennial convention of the International Alliance of Theatrical Stage Employees (IATSE), the leading Hollywood union. The gangsters sat in the conference hall and applauded as George Browne, a veteran Chicago union extortionist, was appointed president of IATSE—there were no other nominations. It symbolized Nitti’s takeover of the movie extortion business, and Luciano was there as a bystander. Luciano was struggling to keep hold of his drug business as Chicago gangsters assaulted his dealers in the fight to control the supply of narcotics on the streets of L.A.
Luciano didn’t like gang warfare—he’d brought a definitive end to the Castellammarese conflict so business could carry on—but Nitti was pushing him too far. Bugsy Siegel was keen to start shooting and Luciano considered killing Browne, as a warning to Nitti, but Lepke argued that murdering a trade union leader was too high profile. Instead, they settled on snuffing out the source of their problems. In September 1935, Luciano met Nitti at the Sherman Hotel in Chicago. The two gangster chiefs reviewed the main concerns of their competing financial interests. Nitti could carry on with his Hollywood shakedown, just so long as he kept out of Luciano’s California drug market. Luciano told Nitti this was not a discussion but his terms for a settlement. Nitti had twenty-four hours to think it over—if he didn’t agree, it would be a declaration of war.
