Last of two parts.

On October 10, 1931, a Saturday, the prosecution read into the record Al Capone’s admissions to spending $200 to $250 a week in Miami on meat, $3 to $4 a day on bread and cake, $21,550 on furniture and $6,180 on suits in 1925, as well as $3,160 on a Columbus Day party and $4,925 on a Kentucky Derby shindig, both in 1926. His phone bill in Miami totaled $3,141 for 1929 (about $56,500 today). Meanwhile, he sent $15,600 to his church in 1926 and $58,000 to a police and widow’s fund in 1925. Capone also paid $40,000 for his estate at Palm Island, Florida (put in his name of his wife, Mae), and made $100,000 worth of improvements, including a $4,000 swimming pool. He also forked over $12,500 for a specially built automobile.

As the prosecution ended the half-day Saturday hearing, a sudden incident drew everyone’s attention. Federal tax agents grabbed and detained Phil D’Andrea, Capone’s intimidating bodyguard, who attended each hearing. D’Andrea was detained inside a back room after Treasury agent Mike Malone noticed the outline of a gun in his coat. Officers removed a loaded .38-caliber pistol and loose ammo from his person. D’Angelo argued that he held a court bailiff permit for the weapon. However, it had recently expired. Judge Wilkerson ordered D’Angelo jailed without bail, and he remained jailed throughout the trial.

On October 12, as Capone sat chuckling nervously with others in the courtroom, the jury heard testimony that the crime boss paid $12 each for pairs of glove-silk underwear (around $215 apiece today), favored $18 to $27 monogramed shirts, sterling silver dinner sets, and that his favorite colors for furniture included canary and green. In 1927, he spent $401 (more than $7,200 in 2021) on neckties and handkerchiefs. For Christmas one year, he bought 30 diamond-encrusted gold belt buckles for his friends. Witnesses from Chicago’s Marshall Field & Company department store said that from 1927 to 1928, Capone went on shopping sprees, laying out $3,715 for 23 suits, three topcoats and an overcoat, and spent more than $1,300 on 35 tailored and monogramed shirts.

One journalist covering the trial, Meyer Berger, wrote that information on Capone’s lavish tastes “was too much for [the] rural gentlemen” of the jury who were “of simple and rather careless habits of dress” and “look like men who would have no use for Chinese rugs and wouldn’t feel right in canary chairs and green rockers. One of them spanned his forehead with a tired hand, as if dazed by it all.”

The so-called “star” witness for the prosecution was Fred Ries, ex-cash handler for Capone’s Subway, Hawthorne and Radio gambling houses. The government had Ries hide out in South America before his appearance for security reasons. He testified about writing cashier’s checks to “J.C. Dunbar,” a fake name he used to cash them to himself at a bank. In 1927, the checks totaled about $150,000, equal to profits at Capone’s Cicero gambling joints. Capone henchman Jake Guzik had received the checks. Prosecutors entered the canceled checks into evidence.

Ries helped the government’s case by implying that Capone’s hidden hand at running the gaming dens. He said Al’s brother Ralph hired the gambling club’s managers and that Guzik bade him not to hand over cash to “anybody besides himself and the man he would send for it, not even Al.”     

The defense then got Ries to admit he never saw Capone take any of the cash or even handle money or accept any wagers when he saw the gangster at the Ship, Hawthorne and Radio.

Then on October 13, while the subpoenaed Johnny Torrio and reputed Capone partner Louis La Cava waited outside the courtroom, the prosecution surprised observers by resting its case, believing to have proven it. Capone’s lawyers immediately argued that they had not done so, had not provided enough evidence for conviction, and moved for the judge to order a direct acquittal. Wilkerson, by implication agreeing that the prosecution had submitted sufficient evidence, declined the request and instructed the defense to either present its case or provide a final argument to the jury.

Capone’s side started its case on October 14. Coincidentally, the Hollywood actor Edward G. Robinson, whose hit film Little Caesar, in which he played a Capone-like gang chief, was in theaters, showed up among the spectators permitted in the courtroom. One reporter wrote with irony that Robinson apparently came by “to give Snorky [Capone] a few pointers [on] how a real gangster should act.”    

The defense’s case strategy proved faulty from the start – his lawyers called a number of bookmakers to swear that Capone lost a lot of money betting on horse races. Their reasoning was that perhaps Capone’s gambling losses might excuse his tax bills, which made no sense. Deductions from losses are permitted only for taxes owed on winning wagers.  

The first Capone witness, a cigar dealer who also accepted handbook wagers, praised the gang leader as a reliable horse race bettor, risking $1,000 to $5,000 a pop on horses from 1924 to 1925. However, Capone had no luck with the horses, losing from $8,000 to $10,000 in 1924 and as much as $12,000 the next year. A handful of other defense witnesses made the same point – Capone lost large sums at the track: more than $217,000 (equal to $3.9 million in 2021) from 1924 to 1927. Not one of them could name a single time Capone won a bet. The news prompted famous journalist Damon Runyon to quip that he had given the award of “world’s worst horse player to Mr. Alphonse Capone.”

Taking a different tack, the Capone defense called two illustrious men to the stand: Elmer Irey, head of the Treasury’s Intelligence Unit, which started the Capone investigation, and one of the prosecutors, Assistant U.S. Attorney Green himself.

Irey testified that his unit began probing Capone’s finances on October 18, 1928. He acknowledged that a court had sentenced Capone to serve 11 months in prison from 1929 to 1930 on a concealed weapon conviction.

In answer to Capone lawyer Albert Fink, Green volunteered that Capone’s ex-lawyer Mattingly testified before the grand jury that indicted Capone on the tax charges. But when Fink then argued the defense must be allowed to read Mattingly’s testimony to see if it was consistent with the notorious letter, prosecutors objected, stating that grand jury proceedings had to remain secret. Wilkerson agreed with the prosecution, which did not cross-examine the witnesses. 

With that, Fink rested Capone’s defense. Fink hoped to bruise the government’s case with the jury by raising uncertainly about Mattingly’s letter to spark reasonable doubt. Again, he asked Wilkerson for a directed not guilty verdict and claimed that Irey’s testimony that the investigation began in 1928 meant a three-year statute of limitations had expired. Wilkerson again rejected his plea.

With that, the prosecution summed up its case to jurors. Grossman stated that the government proved Capone spent $40,000 in 1927 and $86,000 in the next two years, and that the gangster’s own witnesses claimed he wagered more than $200,000 from 1924 to 1927.

“Who is this man and where did he get his money?” Grossman asked. “You have the high privilege of putting the stamp of disapproval on the whole Capone organization and the conduct of the defendant.”

Then his colleague Clawson reminded the jury that the Mattingly letter described how Capone earned $266,000 in income from the mid- to late-1920s, but he never filed an income tax return. 

Michael Ahern, for the defense, offered the jury a strange literary analogy – he compared the federal government’s crusade to get Capone to what the Ancient Roman statesman Cato the Elder once said: “Carthage must be destroyed!”

Fink then rose to insist the prosecution had not presented “a scintilla of evidence that [Capone] made a dollar,” only that he bought things, from 1924 to 1928, and that the checks signed by Guzik to buy furniture could have been loans. He said the defense had revealed how Capone, right after his release from prison in 1929, did attempt to pay his income tax.

“How in the world can you find him guilty of willful intent to defraud the government [that year]?” he asked, adding that prosecutors took aim at his client “merely because his name is Al Capone.”

Fink admonished the jurors to “not be swayed by the argument that the defendant is a bad man. He may be everything he is said to be, but do not for that reason find him guilty of something of which he has not been proven guilty.”

On October 17, the trial’s last day ended with the prosecution’s rebuttal. U.S. Attorney George E.Q. Johnson requested the jury to “draw your own conclusion” about where the cash originated to pay for the money orders that enriched Capone. In answer to Fink’s summation, Johnson made perhaps the most enduring statement of the tax evasion trial of the infamous leader of a violent Chicago crime group who had served so little time behind bars.  

“Future generations will not remember this case because of the name Alphonse Capone, but because it will establish whether or not a man can go so far beyond that law as to be able to escape the law,” Johnson said.

The judge excused the jury for deliberations at 2:40 p.m. They took eight hours to reach a verdict. It was almost 11 p.m. Capone, in his room at the Lexington Hotel, dashed to the court, and at first received relieving news. The verdict came in “not guilty” for the single felony tax evasion count in the first indictment for tax year 1924. The jury found him guilty of a felony charge for evading taxes in 1925, but not guilty on three misdemeanor charges. Jurors ruled the same for 1926 and 1927 – guilty of a felony on count one, not guilty on the lesser counts.

Finally, the panel found him innocent of felony evasion for tax years 1928 to 1929, but guilty of two misdemeanor allegations of willfully failing to file tax returns.

The jury’s peculiar result in total rendered Capone not guilty on 17 of the 23 charges. But their guilty verdicts on the three felonies carried a maximum sentence of five years in prison and a $10,000 fine each, and up to one year in county jail and a $10,000 levy for each of the misdemeanors.

Capone stood before Wilkerson for sentencing on October 24. The judge gave him the maximum five years in federal prison and a $10,000 fine on the first felony conviction. However, Wilkerson allowed for the five years on the second felony to run concurrently with the first, meaning only five years total.

Then he dropped the bomb. Capone had to serve the five-year term on the third felony consecutively, essentially creating a 10-year prison sentence. He granted one misdemeanor conviction to run alongside the first felony sentence, but then ordered Capone – after serving the federal prison time – to do one year in jail for the remaining misdemeanor count, and then six additional months on a contempt of court conviction. The bottom line was 10 years in the federal pen, one and a half years county jail time. If Capone won on appeal for the felony convictions, he would still have to serve the jail sentence. He also had to pay $50,000 in fines and court costs (nearly $900,000 today).

“I guess it’s all over,” Capone said to his hapless lawyers. “You done all you could.”

While being led away, Capone told news photographers: “Get enough, boys, you won’t see me for a long, long time.”

While in the Cook County jail for six months, awaiting transfer to federal prison, Capone resumed his duties as boss of the Outfit through messages to visitors – including Guzik, Murray “The Camel” Humphreys and, some claim, Lucky Luciano and Dutch Schultz. He also sent telegrams and made telephone calls.

Capone lost his appeals, first in the U.S. Circuit Court, then, in 1932, the U.S. Supreme Court. The government almost immediately transferred him to the federal prison in Atlanta, where he would enjoy special privileges, for a while. In 1934, to his violent objections, the feds put him, along with 52 others in Atlanta, on a special, barred, steel train and delivered him to the far-stricter federal slammer on Alcatraz Island outside San Francisco.

In 1939, with good behavior credits, and suffering from dementia due to untreated syphilis, Capone gained release after serving eight years. The government again put him on a train and drove him secretly to meet his family outside Gettysburg, Pennsylvania. In 1940, his family moved him to their estate in Florida, where he died of a heart attack on January 25, 1947, just days after his 48^th birthday.

Online display ads on your computer and apps on your smart phone might include malware linked to a truly modern organized crime racket – digital ad fraud. Over the past few years, this underrated scam has risen to become one of the biggest money-earning illegal rackets worldwide.

Last year, online advertisers lost about $35 billion in payments to fraudsters who used automated bots and “click farms” of employees to imitate ad impressions and fake viewership to receive payments, according to the Israel-based cybersecurity firm CHEQ. Fraudulent phone apps alone garnered $4.8 billion for scammers last year.

Digital ad fraud, born of the fourth industrial revolution of technology, is one of the latest lucrative organized crime schemes in a world economy increasingly globalized since the 1980s. How does it stack up to the other profitable international rackets as of 2021? It’s up there, but nowhere near the largest illegal businesses operated by crime groups.

Rackets are illegal businesses operated by criminal organizations to produce cash profits for members. The oldest of crime rackets include theft, burglary, armed robbery, extortion, loan sharking, smuggling, murder, prostitution, narcotics, counterfeiting, illicit gambling, tax evasion, labor racketeering and fraud.     

It was around the time that traditional American organized crime entered a steep decline in the mid- to late 1980s that the globalization of the world’s economies began to take shape, and international crime plots expanded with it, according to the FBI. 

As of 2021, total revenues for what are known as transnational organized crime (TOC) groups approach $2 trillion per year. Online access permits TOCs to commit crimes from almost anywhere. As the FBI states:

“TOC groups may encompass both the Eastern and Western hemispheres and include persons with ethnic or cultural ties to Europe, Africa, Asia, and the Middle East. These groups, however, are able to target victims and execute their schemes from anywhere in the world; thus, the extent of their presence within a particular area does not necessarily reflect the degree of the threat they pose.”

Here are the top five most profitable rackets for the world’s transnational crime outfits:

1. Counterfeit products and pirating

The counterfeiting of proprietary consumers goods and pirating of copyrighted movies and other digital content – collectively known as intellectual property theft – make for the world’s most valuable crime racket.

Consumers drive these crimes, looking for bargains on faked versions of branded items they want. Organized crime is happy to provide them. And it works like a charm. The Global Brand Counterfeiting Report of 2018, by the India-based business think tank R Strategic Global, put the total profits from worldwide counterfeiting and piracy at $1.2 trillion as of 2017, and projected that to rise to $1.8 trillion by 2020.

Counterfeiters take advantage of brand-name consumer products by copying items protected by trademark, including toys, medical equipment, pesticides, phones, auto parts, electronics, food and beverages, and then selling them at a markdown prices. They imitate well-known items using cheap substances, such as low-quality fabrics and low-dose chemicals, which are used in fake and ineffective pharmaceuticals.

Piracy is mainly the online theft and infringement of copyrighted entertainment products, such as on-demand movies, TV shows, and illegally intercepting broadcasts from subscriber-only streaming services. Cyber-pirates also exploit websites such as YouTube to steal and sell protected videos. Others sell illegally copied DVDs and CDs.  

Estimated losses to multinational product makers from online orders of falsified items alone in 2017 was about at $323 billion. For makers of high-end consumer products – i.e., clothing, footwear, handbags, watches and sunglasses – losses totaled about $30.3 billion. The Organization for Economic Co-operation and Development (OECD), a business institute in Paris representing 38 nations, learned that the most popular brands for fakes are watches by Rolex, apparel by Louis Vuitton and Gucci and shoes by Yeezy and Croc. The counterfeit products searched most often by consumers online are fabricated Gucci belts and slide sandals. Countries with companies suffering the biggest financial losses from knockoff purchases are the United States, France, Italy, Switzerland and Germany.

Profits for counterfeiters are ever increasing with the expansion of e-commerce platforms such as Amazon, eBay and China’s Alibaba and Baidu. It extends to the COVID-19 pandemic era. Criminals in Italy, for example, have hawked counterfeit protective masks and fake vaccines. 

As many as two out of five products sold on the Internet these days are counterfeit, according to a study by the U.S. Government Accounting Office.  

More than 55 percent of the worldwide supply of bogus goods come from many low-paying, mass-producing “sweat shop” factories in China. Another 25 percent originate from China-run Hong Kong. Most are shipped inside thousands of containers by sea to ports where customs officials are overwhelmed or receive bribes to look the other way. The leading export points include Hong Kong, Singapore, Saudi Arabia, Africa, the Ukraine and the European Union. 

Many fake goods come from online orders sent en masse in small packages to consumers by international post or express mail. In the United States, the sheer volume of millions of these parcels makes it hard for Customs and Border Protection officers to locate and intercept them.

What is the single most smuggled product in the world? Answer: cigarettes. About 600 billion of the tobacco products are trafficked per year. The main goal is tax evasion, worth about $30 billion a year, according to the United Nations Office on Drugs and Crime (UNDOC).

2. Drug Trafficking

Information on profits from drug trafficking (specifically heroin, cocaine, marijuana. LSD, methamphetamine, ecstasy and fentanyl) can be inexact and present challenges for investigators. Hence, the disparities in estimated revenues for global illegal drug sales. Still, the profits are alarmingly high, and qualify as the world’s second most lucrative racket.

One study by the Washington, D.C., nonprofit research firm Global Financial Integrity estimated the yearly worth of illicit narcotics sold worldwide at between $426 billion and $652 billion. Meanwhile, the perhaps overly cautious OECD places it from a low of $45 billion to a high of $500 billion. The OECD blames the wide range on the difficulty of measuring varied sets of data on drug prices from different countries, imprecise methodology and flawed assumptions by researchers.

Heroin remains the most profitable of illegal drugs. More than 430 tons of it flows into the global market per year, according to the UNDOC. Afghanistan produces by far the highest amount of opium used to make heroin – 380 tons annually – with only five tons of it seized and 375 tons trafficked. From there, the drug is distributed on two main paths. The Balkan Route, which transports about $20 billion worth of heroin per year, runs through Iran, Turkey, Greece, Bulgaria, and Southeast and Western Europe. The Northern Route, valued at $13 billion a year, wends its way via Tajikistan and Kyrgyzstan to Kazakhstan and the Russian Federation.

Europe has emerged in recent years as a major destination for cocaine trafficking, with Colombia as the leading source of supply. The cocaine smuggled into the United States originates mainly in Peru and Bolivia.

In the United States alone, illegal drug users spent $150 billion in 2016, with marijuana and heroin being the largest retail markets, according to the RAND Corp.

Mexico, long a significant source of trafficking to the U.S., has seen changes in criminal rackets recently. The country has nine main drug trafficking groups, as of 2020, the Congressional Research Service reported. The Sinaloa and Jalisco New Generation cartels still reign. Mexico grows opium and sends heroin to the United States. It ranks with China in fentanyl trafficking. However, the value of its drug trafficking has declined to as little as $10 billion to $20 billion a year, or only 1 percent of Mexico’s gross domestic product, Forbes magazine reported in 2021. Why? Mexican groups have shifted toward more-profitable human and commercial sex trading, with migrant trafficking alone being a $41 billion business in 2020, and, as we will see later, fuel theft.             

3. Human trafficking and forced labor

This category involves the exploitation of human beings, from migrant trading and exploiting people for commercial sex trafficking to forced labor (adults and children), or what experts call “modern slavery.” As of 2017, about 25 million people worldwide were trapped in a state of slavery, about 71 percent of them women and girls, according to the International Labor Organization (ILO) of Geneva. Most of the women and girls were trafficked for sex work, the men and boys for agricultural, mining and construction labor. The ILO estimated in 2016 that criminal captors earned $150 billion in profits from forced labor, $99 billion of it from commercial sexual work and $51 billion from agricultural, domestic and other compulsory toil. The human trafficking and forced labor take place in developed and undeveloped economies, from the Asia-Pacific region to Africa, Europe, the Middle East, Latin America and North America.   

Human trafficking only happens “with the collusion of corrupt officials with criminal gangs,” the OECD reported.

4. Illegal logging

The removal and sale of illegally cut timber has been profitable for many years but has soared lately to rank among the world’s foremost rackets. The value of illicit wooden logs obtained by cross-border organized crime networks ranges from $51 billion to $152 billion per year as of 2021, according to the U.S. Agency for International Development.

Valuable rare timbers such as rosewood, the most in-demand wood in Asia (often used in fine furniture and musical instruments), and mahogany are among those harvested and stolen in violation of permitted quotas and local controls on overcutting tree species. Other thieved logs are “laundered” through legitimate plantations and front companies to saw mills for conversion to construction timber, wood paneling and paper. The hot spots for timber thefts are Southeast Asia (including Cambodia and Indonesia), Central and South America (Peru, Colombia and Brazil, especially the Amazon Basin), Western and Central Africa, British Columbia and the U.S. Pacific Northwest.

The scope of this lesser-known racket is enormous, with little awareness among consumers of wood products. Interpol, the European law agency, found that illegal logging creates 15 to 30 percent of all the world’s forest products. Crime networks commonly falsify logging permits, offer large cash bribes to government officials and hide illegally cut logs by mixing them with legal ones. As a result, countries and cities literally lose billions in uncollected taxes. Some of the illicit logging networks receive funding via hidden investors from Asia, the European Union and the United States.

5. Fuel theft

Another underrated global racket is the theft of one of the world’s most precious commodities – fuel, including crude oil, diesel, gasoline and other refined liquid energy. Companies transferring vast amounts of fuel are necessarily vulnerable to thieves.

The London-based accounting firm Ernst & Young estimated this year that stolen fuel amounts to $133 billion annually. The leading culprits are Mexican drug cartels, Italy’s Mafia and syndicates from East Europe and Africa. Among the main targets for thefts are oil pipelines, refineries and ships. The top countries for this theft include Mexico, Nigeria and Azerbaijan. Thieves aim for refineries for the large caches of fuel stored in one place.      

Mexico’s state-owned oil giant Pemex loses more than $1 billion per year from constant tapping of fuel pipeline flows and refineries by organized gangs. Some drug cartels have shifted to fuel theft, seen as more lucrative and less risky than smuggling drugs, according to Mexico News Daily of Oaxaca, Mexico. Cartel gangs, including Los Zetas, Caballeros Templarios and Santa Rosa de Lima, rip off fuel through extortion, violence and kidnapping of company employees, corrupting police and politicians, and mass murders of rival gang members. More than 1,100 illegal taps of Pemex’s gasoline pipelines took place just in September 2020, and taps increased five-fold from 2011 to 2016. Gangs often peddle the gas to the public in small containers at a large discount.

Fuel bandits use a number of different methods aside from diverting from pipelines, according to the trade publication Oilman Magazine. Organized stealing also takes place at sea, with criminals sending small barges to intercept and transfer fuel from oil tankers. Other groups, such as off the coast of Libya, conspire to remove fuel from a legitimate ship to a criminal ship, and then trade it to various countries as an import. Armed rings of Nigerian pirates storm moving tankers and rob fuel at gunpoint in the Gulf of Guinea. Corruption is crucial for these plans to work – 57 percent of oil thievery involves bribery of officials along the way, Ernst & Young reported.

It was the most brutal collection of bloodthirsty characters ever produced by organized crime in America. Murder Inc.’s inception, activities and inner workings shocked 1930s society and made newspaper sales soar with sensational headlines and salacious details of underworld death-dealing and deceit.

The proverbial house of cards actually began to fall in the late 1930s, slowly at first, because all the dots were far from being connected by the various law enforcement agencies. Gang-busting was the order of the day during the Depression. In Manhattan, Thomas Dewey put away Charles “Lucky” Luciano in 1936, then went hunting for fugitive Mob kingpins Louis “Lepke” Buchalter and Jacob “Gurrah” Shapiro on antitrust violations, while the feds also wanted Lepke for narcotics. In Brooklyn, Assistant to the Special Prosecutor John Harlan Amen led investigations into corruption, bail bond and racketeering rings. All the while, bodies of slain hoodlums were popping up around the city and all the way to upstate New York, almost always with the same suspects but never any convictions. Unbeknownst to the authorities at the time, all of this was connected to larger, more heinous criminal exploits.

In February 1940, William O’Dwyer became Kings County district attorney, and within a couple of months his prosecutors were tracking down a slew of unsavory characters. The DA’s interest was either piqued or forced by two factors in particular: a grieving mother and a convict with a grievance.

O’Dwyer listened to the woman’s story of how her son was killed and who she believed the perpetrators were. The disturbing tale was corroborated in letters penned by the convict. As fate would have it, several of the suspected villains were already in custody; it merely became a question of which one would start singing. The DA’s office convinced two low-level hoods to talk, Anthony Maffetore and Abraham Levine, followed by one of the most brutal leaders of the gang — Abe “Kid Twist” Reles.

Why were they so willing to talk? Back then, the authorities could apply serious pressure and threats; the possibility of being put to death in the electric chair was a very real and present danger. Soon, more stool pigeons joined the choir, Albert “Tick-Tock” Tannenbaum, Mickey Sycoff and Seymour Magoon among them, while others such as Jack Drucker, Irving Cohen and Jacob Migden chose to go on the lam (all of them were eventually apprehended). By the summer of 1940, O’Dwyer’s office had in custody those they felt were the primary culprits, the most sinister of the lot: Martin “Buggsy” Goldstein, Harry “Pittsburgh Phil” Strauss, Harry “Happy” Maione and Frank “Dasher” Abbandando.

The task of sorting out how best to link the defendants with particular murders was daunting because prosecutors estimated Murder Inc. carried out more than 100 homicides nationwide. The DA settled on trying Goldstein and Strauss for the 1939 murder of Irving “Puggy” Feinstein, while Maione and Abbandano would go on trial for the 1937 murder of George “Whitey” Rudnick.

The biggest shocker related to Mob boss Buchalter. Lepke, who had been hiding out, turned himself in to federal authorities on narcotics charges in 1939, but New York pushed hard to get him. Lepke was handed over to local prosecutors to face capital murder charges in the 1936 shooting death of candy store proprietor Joseph Rosen. Emanuel “Mendy” Weiss and Louis Capone (unrelated to the Chicago Mob boss) joined Lepke on the charge.

Birth of a catch phrase

“They all had killer’s eyes. When you look into them … you see no hate, love, fear or courage and you never can tell what your subject is thinking.”

—Burton Turkus, assistant district attorney, 1944

What was Murder Inc. exactly? In terms of the Mob’s Depression-era quasi-corporate evolution, the idea behind its formation, perhaps ironically, was to limit the violence that always brings more heat on the organization as a whole. The smartest of gangland bosses realized that dead men can’t pay their debts, but if someone becomes an outright liability, there must be an organized, sanctioned system in place to deliver violence.

As the story goes, two of the top dogs — Buchalter and Albert Anastasia — had just the right type of guys in mind for the job. Culled from the Brownsville and Ocean Hill sections of Brooklyn, a core team of Jewish and Italian thugs were tasked with dishing out Mob justice upon informants, deadbeats, witnesses, rivals and basically anyone whom the upper brass issued a contract to kill. These hired killers had a collective history of violence second to none in the Brooklyn underworld.

Notwithstanding the debate over when, exactly, this band of killers officially went on retainer, it can be traced back to a point of origin between 1931 and 1934. As time went on, Murder Inc. expanded to include both direct and loosely associated underlings and assassins, but the base of operations eventually was established inside Mrs. Rose Gold’s otherwise nondescript corner store at 779 Saratoga Avenue.

The catch phrase “Murder Inc.” went viral after most of the gang was broken up by law enforcement during the first half of 1940. Not unlike the hazy origins of the murderous crew itself, the question of who actually came up with the phrase is subject to debate, but it likely was the brainchild of one of two imaginative newspapermen: Asa Bordages or Harry Feeney. Within the underworld, the killer group was simply known as “The Combination.”

Trial by fire

The fall of Murder Inc. was a continuously unfolding event, with convictions, executions and appeals continuing well into 1944. But 1941 proved to be the fateful year for most of the core individuals. Burton Turkus, assistant DA, spearheaded efforts to swiftly prosecute beginning in the spring of 1940. He had the defendants tried in groups or pairs. The testimony of turncoats such as Reles, Tannenbaum and Magoon had a devastating effect. Rich in courtroom drama and scandalous side stories, the trials proved truth is indeed stranger than fiction. Lurid tales of icepick and meat cleaver killings were enhanced by accounts of gang girlfriends frolicking on beaches with celebratory killers and assisting in evidence destruction.

Murder Inc.’s unraveling was a convoluted, far-reaching affair cast with many lead actors and dozens of supporting roles. Some could argue the prosecution overreached, arguing for death sentences based not on forensic evidence but almost entirely on testimony of equally culpable underworld turncoats. Still, it didn’t take long for the zealous prosecutors to tally up wins and see the defendants handed capital punishments.

The first men led to the electric chair were Goldstein and Strauss. They were put to death in June 1941. Maione and Abbandando saw a glimmer of hope when their convictions were overturned in 1940, only to have those hopes dashed when their sentences were upheld in April 1941. They were put to death in February 1942.

Numerous other Murder Inc. trials were underway almost simultaneously. In Essex County, New Jersey, Charles “The Bug” Workman went to prison for the 1935 murder of Arthur Flegenheimer, better known as Dutch Schultz. Authorities whisked Reles and Tannenbaum to Los Angeles in September 1941 to testify against Benjamin “Bugsy” Siegel for the 1939 murder of Harry Greenberg (Siegel was acquitted), and in New York’s Nassau, Monticello and Sullivan counties, cold cases were being reexamined and trials commenced against other syndicate associates, including but not limited to Irving “Big Gangi” Cohen and Vito Gurino.

Into the hereafter

In a bizarre turn of events, the prosecution’s star witness — Reles — either fell, jumped or was thrown from the sixth-story window of a hotel on November 12, 1941. Reles, in protective custody with other witnesses at the time, was scheduled to testify in the biggest of the Murder Inc. trials, against boss Buchalter. The death didn’t alter the inevitable, though. Tannenbaum’s testimony proved sufficient. He had been within earshot of Buchalter issuing the murder contract for underlings to take out Joseph Rosen. That was enough evidence to condemn Buchalter, Weiss and Capone to death. The trio were marched into Sing Sing’s death chamber on March 4, 1944.

Although other trials were still taking place, Buchalter’s death marked the end of Murder Inc. executions and would go down in history as the only instance when a Mob boss was put to death.

As for the legal eagles O’Dwyer and Turkus, the former became New York mayor but unceremoniously left office amid scrutiny for never pursuing Murder Inc. boss Albert Anastasia, the mysterious and unsolved death of Abe Reles, and his alleged “friendship” with Mafia heavyweight Frank Costello. Turkus, meanwhile, publicly claimed he wasn’t after fame, but he certainly took to it with ease. He embarked on speaking tours and radio appearances and co-wrote a book with Sid Feder, titled, appropriately enough, Murder Inc.

Christian Cipollini is the author of Murder Inc.: Mysteries of the Mob’s Most Deadly Hit Squad and Lucky Luciano: Mysterious Tales of a Gangland Legend.

Ask many Las Vegas newcomers and visitors to identify the city’s origins, and they will say a mobster named Bugsy Siegel invented the town. Although this is a myth nurtured and perpetuated by fact-challenged writers and creative filmmakers, it is nonetheless fair to say that Siegel had a significant impact on Las Vegas — both intentionally and unintentionally.

Benjamin “Bugsy” Siegel’s seven-year involvement with the city, from 1941 to 1947, culminated in the Flamingo Hotel, a $6 million casino resort that set a new standard of quality for Las Vegas. The Flamingo’s sleek design, modern décor and luxury amenities represented a dramatic turn for a town that had previously embraced a dust-covered Old West theme. Siegel’s vision expanded upon the more modest plans of Billy Wilkerson, who conceived and started the Flamingo’s construction.

But Siegel’s enduring impact on Las Vegas has been felt even more because of something over which he had no control. On June 20, 1947, six months after the Flamingo’s opening, Siegel was murdered in Beverly Hills, California. Police investigations uncovered multiple motives, but resulted in no arrests, and Siegel’s killer is still a mystery almost 75 years later. The murder of Siegel, which generated front-page headlines across the country, ultimately contributed to the allure of Las Vegas. Many visitors were drawn to the city on the prospect — however realistic — that the guy sitting next to them at the poker table or the bar might be in the Mob. This sense that Las Vegas offered opportunities to rub shoulders with the underworld — without any real complications — boosted the city’s growth more than any single casino ever could.

And so, beyond the details of his comings and goings in Las Vegas during the 1940s, Siegel has become a central figure in the city’s history. He was the first larger-than-life organized crime personality in Las Vegas. In his local dealings, he generated mostly positive feelings. His Las Vegas lawyer, Lou Wiener, recalled in his oral history that Siegel “was a visionary, and he was a great guy.” Wiener said that when Siegel died, “I felt I lost a good friend. … I was a great admirer of his, not for what he did if he did do it, but for what he did here.”

Although never convicted of murder, Siegel was widely regarded as a brutal enforcer and hit man, from his adolescence in New York through his racket-building years in Los Angeles. He narrowly escaped a murder conviction in Los Angeles when a key witness, Abe Reles, fell out of – or was tossed out of – a hotel window. Wiener and others certainly saw a different side of this hoodlum, who had Hollywood good looks and a temper that earned him a nickname he hated. The Las Vegas version of Ben Siegel perhaps was the man he wanted to become – a legitimate businessman.

The true origins of the Flamingo — and Siegel’s role in it — remain muddled for those who have relied on Hollywood to tell the story. Reflecting its ongoing commitment to accurately interpreting the history of organized crime and law enforcement, The Mob Museum will unveil a new exhibit, The Fabulous Flamingo, on Friday, August 13. This exhibit and its artifacts aim to pierce the myths and set the record straight.

Before the Flamingo

First, Las Vegas was a well-established community long before Siegel arrived. Founded as a railroad town in 1905, it expanded dramatically in the early 1930s with the construction of nearby Hoover Dam and the statewide legalization of gambling. Hoover Dam, completed in 1935, became a popular tourist attraction.

Las Vegas took another big leap forward in the early 1940s with two war-related projects: an Army air base and a magnesium processing plant. Both projects brought thousands of men and women to the Las Vegas Valley. The population explosion spurred the development of two casino resorts on Highway 91, south of Las Vegas. The El Rancho Vegas opened in 1941, and the Hotel Last Frontier debuted in 1942. These were the first two resorts on what eventually would become known as the Las Vegas Strip.

Meanwhile, Fremont Street in downtown Las Vegas continued to expand as well. The El Cortez opened in 1941, the Pioneer Club in 1942 and the Golden Nugget in 1946. The notion that Siegel “invented” Las Vegas is pure fantasy.

Siegel himself certainly knew this. Before he became involved with the Flamingo in 1946, he had invested in other Las Vegas casinos, and he was very involved with the race wire here. The race wire was a service that transmitted horse race information and results around the country. The timely availability of this information allowed bookies to take off-track bets. The Mob seized control of the race wire business, with Siegel in control of the Southwest, including Las Vegas.

Las Vegas was particularly valuable because Nevada was the only state that permitted off-track betting. As a result, Siegel, through his partner, Moe Sedway, operated the race wire in a number of Fremont Street casinos. By the mid-1940s, Siegel reportedly was receiving $25,000 per month in race wire payments from race books in Las Vegas.

Records show that in August 1941, Siegel invested $18,000 in the Northern Hotel on Fremont Street. He then heavily invested in the Frontier Club, also on Fremont Street. In 1943, Siegel tried to buy the El Rancho Vegas on Highway 91, but his offer was refused. Interestingly, Siegel’s underworld reputation kept him from acquiring the El Rancho Vegas. Its founder and owner, Thomas Hull, seeking to quell rumors, told the Las Vegas Evening Review-Journal, “The people of Las Vegas have been too good to me for me to repay them in that way. Mr. Siegel has contacted me several times with an offer to purchase, but I have told him I was not interested, and that goes for all time.”

Two years later, Siegel joined a group of fellow mobsters in the purchase of the El Cortez. They sold it a year later, presumably pouring their profits from the sale into the Flamingo’s construction.

Wilkerson’s vision, Siegel’s legacy

Not only did Siegel not invent Las Vegas, he did not even invent the Flamingo. That credit goes to Billy Wilkerson, publisher of the Hollywood Reporter newspaper and owner of a number of stylish Los Angeles restaurants and nightclubs.

Wilkerson bought the land on which the Flamingo would be built, and he started construction in late 1945. But Wilkerson, a compulsive gambler, soon ran short of funds. He had lost hundreds of thousands of dollars at casinos on Highway 91 and on Fremont Street. He turned to the Mob for financial help. Siegel, the Mob’s point man in Las Vegas, worked side by side with Wilkerson for a few months, but disagreements ensued, and Siegel eventually forced Wilkerson out and seized full control of the project.

Siegel opened the Flamingo on December 26, 1946. The crowds came, at first, and the critics fawned, but the Flamingo had a fundamental problem: Its hotel rooms were still not finished. Further, the casino experienced a strange run of bad luck, as gamblers won more than they lost in the first few weeks after opening. “Bad luck largely explained the losses,” according to Siegel biographer Larry Gragg. “For several nights many gamblers captured big wins.” But, Gragg notes, some of the losses could be attributed to incompetent or corrupt dealers.

Siegel’s rush to start generating revenue for his impatient investors forced him to shut down the Flamingo on February 6, 1947, until the rooms were finished. The resort reopened on March 1, with 100 guest rooms available, and performed better. Siegel’s apparent confidence in improving returns prompted him to schedule a vacation with his two daughters in late June. He traveled to Los Angeles to meet their train from New York.

But on June 20, 1947, while sitting on a couch in girlfriend Virginia Hill’s Beverly Hills house, Siegel was shot to death, leaving a murder mystery that lingers to this day. The Flamingo thrived after Siegel’s demise, setting a new standard for Las Vegas casino resorts with its sleek, modern façade and lavish appointments. Today, the Flamingo remains one of the largest and most recognized resorts on the Strip, though none of the original buildings still stands.

The key artifacts

The Mob Museum’s exhibit is highlighted by several rare artifacts that help to establish the true story of the Flamingo’s origins.

These signature artifacts are supplemented by other unique and hard-to-find objects, including a pair of sunglasses owned by Siegel; a pistol owned by Siegel partner Moe Sedway; a ceramic flamingo given to grand opening guests; and a colorful Flamingo slot machine from the casino’s early years.

In addition, the exhibit features a touchscreen so that guests can dig deeper into the Flamingo story. The touchscreen offers iconic images and compelling stories from the 75 years the Flamingo has graced the Las Vegas Strip.

Allen R. Glick, a decorated Vietnam War veteran and California developer who insisted he knew nothing about skimming by Midwestern mobsters at four Las Vegas casinos he owned in the 1970s, died August 2. He was 79.

Glick passed away in the seaside neighborhood of La Jolla in San Diego, his home for many years, following an extended battle with cancer, his family announced.

Glick was a central character in an infamous organized crime scandal that rocked the Las Vegas casino industry in the 1970s and was later dramatized in the 1995 movie Casino. Through his company Argent Corporation, Glick owned four casinos – the Stardust, Fremont, Hacienda and Marina – second only in number to the Nevada hotels owned by billionaire Howard Hughes at the time.  

The Nevada Gaming Control Board later determined that employees of Argent’s casinos quietly skimmed about $7 million from 1974 to 1976 from slot machines on behalf of Milwaukee, Chicago, Kansas City and Cleveland crime families with hidden interests in the properties.

The saga ended in 1986 with the convictions and federal prison terms for more than a dozen top U.S. mobsters, including Milwaukee boss Frank Balistrieri (who pleaded guilty), Chicago Outfit leaders Joseph Aiuppa and Jackie Cerone, Carl DeLuna of Kansas City and Milton Rockman of Cleveland. 

Glick swore he was not aware of the skimming, and indeed federal prosecutors never charged him criminally in return for his cooperation as a witness before two federal grand juries hearing evidence against the Mob-connected defendants.

The government defended Glick in court as a frightened tool of the underworld secretly responsible for loans from the corrupt Teamster pension fund used to buy the casinos.

However, the FBI would allege Glick hired a private attorney in Washington, D.C., to gather information on federal agents and the grand jury investigation into Argent and Glick to insulate him and others from the probe and possibly suborn perjury. Nevada gaming authorities revoked Glick’s casino license in 1979. 

For years before everything went south for him in the late ’70s, Glick earned glowing reviews in background checks requested by prospective partners and the Gaming Control Board, based on his military service and clean business history. 

A native of Pittsburgh, Glick was a graduate of Ohio State University and the Case-Western Reserve School of Law, then passed the bar in California and Pennsylvania. In 1967, he joined the U.S. Army, serving in Vietnam as a military police lieutenant and then as a captain in Special Operations. The Army awarded him the Bronze Star and three combat air medals for his part in search-and-rescue missions.

Upon leaving the Army in 1969, Glick took a job in San Diego with a suburban home-building firm, the American Housing Guild, and two years later joined the real estate company Saratoga Development Corporation. In 1972, the ambitious Glick used a $2.3 million loan from Saratoga to acquire a major and later controlling share in the Hacienda hotel-casino in Las Vegas, and obtained a Nevada casino license.

The next year, Glick met with Alvin Baron – asset manager of the Teamsters Union’s pension fund and a close associate of former Teamsters president James Hoffa – and Ed Buccieri, a reputed money courier for mobster Meyer Lansky. A plan to buy the King’s Castle casino at Lake Tahoe with Baron and Buccieri fell through, but Glick was now in close contact with pension fund chiefs.

In 1974, Glick set his sights on the Stardust hotel-casino on the Las Vegas Strip. Top leaders of the Milwaukee and Kansas City families took a meeting about Glick. As it happened, Glick knew Joseph Balistrieri, son of Milwaukee Mob boss Frank Balistrieri, from college. Glick then convened privately with Frank Balistrieri that April.

Out of those meetings came a sweetheart deal: Glick would buy the Stardust and Fremont casinos by purchasing control of Recrion Corporation (formerly Parvin-Dohrmann, owned by Delbert Coleman). Then, that June, he agreed to allow Balistrieri’s sons, Joseph and John Joseph, the option to buy Glick’s Argent Corporation for a mere $25,000. Glick thereby curried favor with the Mob boss, who used his clout to gain a big loan from the pension fund.    

Glick met with Kansas City Mafia leader Nick Civella (who died in 1983). Frank Balistrieri sought the help of Kansas City, Chicago and Cleveland bosses to get a Teamsters pension fund loan.

Finally, Glick, at age 32, received a $62.75 million loan from the pension fund. Another investor, wealthy California matron Tamara Rand, would loan him $2 million (and later, on orders from Mob leaders, was killed gangland style).   

As of the fall of 1974, Glick owned the Stardust, Fremont and Hacienda. In October, he announced that Frank “Lefty” Rosenthal would serve as his executive consultant for the three casinos. Later, state gaming investigators learned that the Mob’s skimming operation began that November. 

In May, 1975, Glick opened a fourth casino, the Marina, owning 65 percent of the casino portion.

Rosenthal and Glick would revolutionize sports betting in Las Vegas by adding a large, elaborate sportsbook at the Stardust. Glick and Rosenthal also brought the up-and-coming Siegfried & Roy magic act to the hotel.  

A crooked oddsmaker with ties to Chicago Outfit leader Joseph Aiuppa, Rosenthal turned out to be the overseer for the Mob’s interests and embezzlement of slot machine coins in all four casinos. U.S. investigators also alleged Outfit made man Tony Spilotro had a hand in the operation.

While the Mob’s associates stole from the casinos, Glick, ensconced in his executive office at the Stardust, claimed to be unaware of the skimming that lasted for two years.

State officials discovered and ended the scheme in May 1976. The U.S. Justice Department launched a criminal probe into Glick, who escaped prosecution with his testimony for the feds. In June 1978, the FBI sent 50 agents to Las Vegas, with 83 search warrants, in a series of raids centered on Argent, based on wiretaps and other evidence.

By 1978, Glick, now owing the pension fund $94 million, had fired Rosenthal. Civella, he told federal investigators, before his death threatened to kill Glick’s sons if he did not sell Argent. Glick sold his Las Vegas casinos in December 1979 and returned to San Diego, still worried about potential Mob retaliation against him and his family.

The story of Glick and Argent is central to the book Casino: Love and Honor in Las Vegas, by author and screenwriter Nicholas Pileggi. With director Martin Scorsese, Pileggi co-wrote the screenplay for the 1995 movie Casino. The Glick character in the movie, named Phillip Green,  was played by Kevin Pollak.

Glick saw Las Vegas casinos as a business opportunity, but he was naive about the strings attached to the Teamsters loans he received to expand his operations in Southern Nevada, Pileggi said. “Allen Glick walked into this nightmare without knowing it was a nightmare,” Pileggi said.

When Glick realized how much trouble he was in, he didn’t know where to turn, Pileggi said. Believing that more than a few federal and state authorities in Nevada were in bed with underworld operatives, Glick feared that if he reached out to the wrong officials, those people would let the Mob know, Pileggi said. That could have been the end to Glick’s life.

“Glick was in a dangerous spot,” Pileggi said, like a “frog in the pot that’s slowly boiling.”

Ultimately, Glick found a federal agent he could trust and became a witness, Pileggi said. Glick’s later trial testimony was key to ending the Mob’s lucrative skimming operation in Las Vegas.

When writing the book, Pileggi met with Glick, who came across to the author as smart and cautious. Glick had security around during this time. Reflecting on Glick’s years in Las Vegas, Pileggi said he doesn’t think the former casino owner knowingly served as a front for the Mob or was involved in the skimming operations. If he had been, the FBI would have come after him, too, Pileggi said.

Larry Henry, who writes the Mob in Pop Culture blog, contributed to this report.