Michael Malone

Born: October 21, 1893, Jersey City, New Jersey
Died: November 10, 1960, Ramsey County, Minnesota
Nicknames: Mysterious Mike, Mike Lepito (undercover alias), Pat O’Rourke (alias used for his protection)
Associations (law enforcement): Elmer Irey, Frank Wilson, Intelligence Unit

Michael Malone was an undercover agent who successfully infiltrated Al Capone’s Chicago gang for nearly two years. Malone, whose parents immigrated to the United States from Ireland, grew up in New Jersey and meshed well with its European immigrants, eventually learning to speak Gaelic, Italian, Yiddish and Greek. His dark hair and skin tone resembled someone from southern Europe, allowing him to blend in with the Italian American community. After finessing his way into Capone’s inner circle in 1929, Malone proved invaluable to the Treasury Department, which pursued a tax evasion case against the Chicago crime boss. Despite the danger, Malone kept an iron will, because blowing his cover would have fatal consequences.

While Malone kept up the charade, he delivered information that proved incriminating not only to the boss, but to the boss’s top enforcer, Frank Nitti. He remained disguised within Capone’s bootlegging band for a time even after the feds filed tax evasion charges against Capone and Nitti in 1931.

When Capone’s jury trial commenced, the Treasury Department’s Intelligence Unit removed Malone from his undercover job. In the Chicago courthouse, Malone gained a bit of respect from the embarrassed Mob chief. He happened to enter an elevator where Capone stood with his defense lawyers. “The only thing that fooled me was your looks,” Capone allegedly remarked regarding Malone’s Italian-looking appearance. “You took your chances, and I took mine. I lost.”

From 1929 to 1931, Malone worked under secrecy to collect intelligence about Capone that would culminate in his historic conviction. After serving in a flying reconnaissance squad during World War I, law enforcement was Malone’s career goal. He joined the Treasury Department’s Intelligence Unit, later known as the “T-Men.” Early in his career, Malone wore disguises to bring him closer to suspects. He often posed in everyman roles, such as a garbage man and a shoe shiner.

Elmer Irey, chief of the Intelligence Unit, worked with Malone during Prohibition, when the Treasury handled federal liquor investigations. Once, Irey enlisted Malone to smash a West Coast version of “Rum Row” — rumrunners selling contraband Canadian liquor from ships off the coast of San Francisco. Malone started a fake real estate office as a front while posing as a Chicago gangster in hiding. He spread the word that he wanted to invest in illegal booze. Once he got in with the criminal group, he devised a nighttime sting operation. Treasury agents posing as rumrunners drove speedboats out to the booze-laden mother ship. After money changed hands, Malone fired off a flare as a signal for the U.S. Coast Guard to board the mother ship.

However, as the agents waited, things hit a snag. San Francisco’s crooked sheriff suspected Malone was a Prohibition agent and put him in jail, ironically, with another T-Man. Malone cajoled him and acted the part of a Chicago hood, which convinced the sheriff to release him. He and his colleagues then proceeded with the undercover operation, ending in the arrests of the rum runners on the mother ship.

In 1927, the U.S. Supreme Court ruled that the federal government could tax income gained from criminal activities. This gave the Treasury the opportunity to investigate Mob bosses getting rich through illicit liquor. These bosses feared detection and would rather not share their proceeds with the feds, so they did not file federal tax returns on their illegally gained incomes.

President Herbert Hoover entered office in March 1929, several weeks after the infamous St. Valentine’s Day Massacre in Chicago. Seven men associated with Capone’s bitter rival, liquor boss George “Bugs” Moran, died in gunfire. Hoover conferred with Irey to compile a team of special agents to “get Capone,” who was being referred to as “Public Enemy No. 1.” Meanwhile, another squad of Prohibition agents in Chicago, headed by Eliot Ness, pursued Capone on separate violations of federal anti-liquor laws under the Volstead Act.

Irey appointed IRS Special Agent Frank Wilson, Malone and several others to the Capone team. By then, Malone had the clandestine experience and courage Irey sought to undermine Capone. After the San Francisco case, the Treasury assigned Malone to Philadelphia. There, Malone donned the persona of a gangster alongside Philly Mob figure Max “Boo Boo” Hoff, whom he later arrested. Malone’s time in San Francisco and Philly earned him the nickname “Mysterious Mike.”

Wilson and his able staff focused on the Herculean task of tracking how Capone financed a lavish lifestyle without any provable assets or bank records. Meanwhile, a group of wealthy business leaders in Chicago, called the “Secret Six,” donated large sums of money to assist the feds in taking down Capone. Malone used their largesse to purchase expensive clothing to look the part of a well-heeled hoodlum. His wardrobe featured a white hat, purple shirts and double-breasted suits from Philadelphia’s famous Wanamaker’s Department Store.

Malone infiltrated Capone’s underworld at its core, the Lexington Hotel in Chicago. Wearing a fancy suit and hat, Malone took a seat in the lobby of Capone’s headquarters, reading newspapers for days on end, noting who came and went, and jotting down the times when his men sent Western Union wires. He spoke in an Italian accent, introduced himself as “Mike Lepito” and shot craps with Capone’s men. Malone checked into Room 724, right next to Capone’s bodyguard, Phil D’Andrea. He mailed letters to friends in Philadelphia, who wrote back. Capone’s henchmen broke into his room and saw his checkered suits from Wanamaker’s and silk underwear with his monogramed initials, “ML.” They opened his mail from Philadelphia, read his letters, written, impressively, in underworld lingo, and informed Capone.

Finally, Capone sent a cohort down to the lobby to ask “Lepito” about his business in town. Malone replied in his Italian inflection that he was “keeping quiet.” In the coming days, over drinks, Malone told Capone’s guys he was on the lam for burglary in Philadelphia. That got Malone invited to play poker and trade gossip with the gang. He also ate dinner at their hangout, the New Florence Restaurant, and attended the birthday party Capone planned for Frank Nitti at the Lexington.

Malone met Capone at Nitti’s party. The secret agent’s new acquaintances included a who’s who of the Chicago Outfit: “Machine Gun” Jack McGurn, Jake “Greasy Thumb” Guzik, Paul “The Waiter” Ricca, Murray “The Camel” Humphreys and Sam “Golf Bag” Hunt. Malone was in.

He discreetly phoned Wilson about what he had overheard within the gang. Wilson and his aides traced signatures on bank checks while pursuing tax evasion cases against Nitti, Guzik and Ralph “Bottles” Capone, Al’s older brother. A federal court in Chicago convicted Guzik, who got a five-year sentence, but Nitti skipped town. Malone, assigned to find him, located Nitti’s wife and followed her for six hours until she drove to an apartment building in Berwyn, Illinois. A few days later, Malone pushed Mrs. Nitti’s car next to a fire hydrant and pulled an alarm. When firefighters arrived, they ran a check on the car, as Malone knew they would. A police raid on the residence followed, and, as Malone watched from his car, the cops arrested Nitti. A judge later sentenced him to 18 months in prison for tax evasion.

Then the police pinched Al Capone himself following his 1931 indictment on tax charges. “Mike Lepito” was there at the Lexington when Capone returned, triumphant about his release on $50,000 bail. Malone listened and reported to Wilson about Capone’s scheme to bribe and fix the jury. The feds reacted quickly, and a judge created a new list of jurors. Malone then eavesdropped on something far worse: Capone’s plot to hire five gunmen from New York to kill four top federal officials in the tax case: Wilson, Special Agent A.P. Madden, U.S. Attorney George Johnson and investigator P.F. Roche. Capone offered a bounty of $25,000 for the hits. The would-be assassins arrived in Chicago in a blue Chevrolet. But with 24-hour safety measures in place protecting the feds and opposition to the plan within Capone’s own ranks, the boss ordered the gunmen to leave town a few days later.

At first, Capone tried to plea bargain for a sentence of two and a half years and truly believed it would happen. He told Malone at his farewell dinner that former boss Johnny Torrio would “look after things while I’m away.”

But federal Judge James H. Wilkerson refused to bargain with the Mob boss and rejected the guilty plea. Capone changed his plea to not guilty, and the trial began on October 6, 1931. Four days later, Malone finally gave up the act. The news spread fast to Capone and his men. Malone had heard that D’Andrea, Capone’s bodyguard, would bring a concealed gun into the courthouse. He did. Malone and another agent frisked and disarmed D’Andrea and had him arrested.

On October 24, the jury, which Capone failed to fix, returned its verdict. They found him guilty on 22 criminal counts related to not paying taxes on more than $1 million. The judge gave Capone 11 years in federal prison.

Months later, in early 1932, the Intelligence Unit assigned Malone, Irey, Wilson and Madden to the probe into the kidnapping of famed aviator Charles Lindbergh’s baby boy. Within two years the team’s persistence paid off with the arrest and conviction of suspect Bruno Hauptman, who still had some of the marked currency that the agents convinced Lindbergh to use as ransom money.

In 1933, Irey assigned Malone to find fugitive New York gangster Waxey Gordon, who was wanted for alleged tax evasion. Malone found Gordon in a remote cottage in the Catskill Mountains. Special Prosecutor Thomas Dewey took the case, and the court put Waxey away for 10 years.

One year later, Malone infiltrated the crew of corrupt Louisiana Governor Huey “Kingfish” Long. After Long’s assassination, the IRS won a tax fraud conviction against Malone’s target and Long’s close aide, Seymour Weiss.

Malone died of natural causes in 1960, and his body was buried at Arlington National Cemetery. Wilson told a reporter that Malone “was the best undercover agent we ever had.”