Scarface and the Untouchable

by Max Allan Collins

  But George Johnson was determined to try. On January 5, he received the final report on the special agents’ investigation, listing the names and addresses of conspirators—everything the prosecutor needed for warrants. That afternoon, he met in secret with the recently elected Cook County prosecutor, John Swanson, to plot a large-scale invasion. Once they’d decided on a course of action, Swanson put in a call to William F. Russell, Chicago’s new police commissioner.

  “May I have ten squads of police tonight?” Swanson asked.

  “Twenty, if you like,” Russell replied.

  The next morning, before sunrise, Ness met the raiders at the corner of Ninety-Fifth Street and South Park Avenue, north of his parents’ home. After several rainy days, a cold snap had hit Chicago. The temperature hung around freezing, streets and piles of snow ice-crusted. Fifteen special agents waited in the predawn darkness with ten U.S. marshals and a handful of state’s attorney’s investigators. Then twelve squads of Chicago police showed up—around one hundred officers in all, ignorant of the task ahead.

  The federal men broke the cops into separate units and deputized them all, giving them temporary authority to work outside the city. Each squad had an address to visit and a warrant to serve; no one was told where the others were headed. They took off in one long convoy, cars weighed down with shotguns, rifles, and machine guns.

  Just as dawn broke, they reached the Heights and split up, fanning out toward their assigned targets. Once there, they would wait till the prearranged time to go in and bust down doors, rounding up the gangsters before they could resist.

  The plan hinged on first striking one unlikely location: Chicago Heights City Hall. The building doubled as headquarters for the police department, which remained under the tight control of local mobsters. The raiders knew these officers would sound the alarm as soon as they got wind. For successful raids, they had to shut the cops down first.

  That task fell to John Stege, deputy commissioner of the Chicago Police Department. A bespectacled bulldog with silvery hair and a no-nonsense manner, Stege breezed into City Hall at 5:00 A.M. and marched up to the desk sergeant.

  “Where are the keys to this joint?” he demanded.

  His bluster bowled over the officer, who gave up the keys. Only then did the desk man bother asking why.

  “We’re running the place for a while,” Stege said.

  The sergeant’s eyes bugged out.

  “We’ll need all the room you have in a few minutes,” Stege said. How were they fixed for cells?

  Before the sergeant could reply, Stege went to check for himself, finding three women in one and ordering them out. When the desk sergeant complained, Stege locked him up in their place.

  Then his detectives flooded into the building, rounding up all the other officers, including the local chief of police, putting them in jail as well. As the morning wore on and more policemen reported for duty, they quickly found themselves behind bars, too.

  Meanwhile, the gutting of Chicago Heights had begun. Federal agents and police broke into the homes of twenty-five suspects, arresting them all in under an hour. Most gave themselves up. Some, assuming the heavily armed invaders were mob killers, seemed relieved to be arrested. A few made a break for it, firing off potshots before dashing into the street, where raiders outran them. No one was hurt, but frightened neighbors hid and called police, demanding to know what was happening. The officers commandeering City Hall assured them everything was fine.

  “There would be a lot of emotion at the separation of the women and children from their men,” Ness recalled, never quite understanding how a killer could ever be kind to anyone. Breaking the law was one thing, taking a life quite another. Frank Basile’s family had loved him, too.

  Each home housed a small arsenal—rifles, shotguns, revolvers, and hundreds of rounds of ammunition. Police emerged with weapons stacked like cordwood, knees buckling. Long lines of arrested men wearing caps and heavy overcoats, downcast faces hidden from photographers, marched into paddy wagons and rode down to City Hall. Searched during booking, nondescript suspects gave up thick bankrolls and diamond rings.

  The raiders were confident they’d rounded up the men responsible for the deaths of Martino, Gilbert, Basile, and many others. They paraded Ness’s would-be murderer, Mike Picchi, before the prisoners, to see if his presence sparked the slightest reaction, believing him to have pulled the trigger on Martino. Picchi remained tight-lipped and impassive, while the arrested men said they’d never seen him before.

  “Their silence,” Jamie told the press, “smacks of the Mafia.”

  Federal officials remained in charge of Chicago Heights into the night, trusting local cops only with routine tasks. Feds kept an eye on the homes of city leaders, too, should any corrupt officials try to escape. Meanwhile, the prosecutors, including a jubilant John Swanson, examined evidence uncovered in the raids.

  “We are anxious to find the fellows higher up,” Swanson told the Chicago Daily News, adding with a smile, “I don’t know who they are, but I have my suspicions.”

  The grand jury handed down a sweeping conspiracy indictment in May, declaring that since January 1925, the Heights mob had operated seventy-five stills and manufactured at least three million gallons of illegal alcohol. Among the eighty-one defendants were the gang’s key local leaders, as well as two former police chiefs. No less than fifty-five were convicted, though many pleaded guilty in exchange for light fines. Federal officials had cleaned up Chicago Heights in the short term, but the Outfit would remain deeply enmeshed for years to come.

  Included on the list of conspirators was John Giannoni. The payoff man for the Heights mob escaped the massive raid but remained a fugitive until July, when federal agents arrested him at a saloon in Gary, Indiana. Facing bribery charges in addition to a bootleg indictment, Giannoni pleaded guilty and received eighteen months.

  Lorenzo Juliano also managed to avoid the Heights cleanup—on June 20, 1930, his battered, bullet-riddled body turned up in an abandoned car near Blue Island, south of Chicago. His killers were never caught or identified, but his death may have given Frank Basile’s family some measure of satisfaction.

  The most imporant discovery of the Heights raids, however, had little to do with bootlegging. The raiders hit the home of Oliver J. Ellis, owner of a roadhouse just north of town. Unlike the other arrested men, Ellis lived on a country estate behind a tall iron fence. In his garage, investigators found an abundance of liquor and four hundred–some neatly stacked slot machines. They smashed them with axes and sledgehammers, keeping three for evidence.

  But the real treasures were financial records. A ledger documented income from each slot machine, adding up to about $725,000 a year. A bankbook made out to a mysterious “J. Lazarus” pointed to a First State Bank account in Chicago Heights, leading to a wealth of canceled checks and deposit sheets documenting a massive influx of cash. This money had been parceled out to Ellis and four others.

  Questioned by Jamie and others, Ellis admitted he was the collector for booze and gambling profits in the Heights. He even confirmed those profits were “split five ways,” one share his, but refused to say who got the other four. His most damning admission came as an afterthought.

  Had he paid any tax on this income?

  No, he had not.

  Ellis probably felt he had nothing to hide. That the government could collect taxes on illegal income had only recently been decided. When the federal income tax became permanent in 1913, Congress restricted it solely to “lawful” revenue. But this changed in 1921; after bootlegging became big business, Congress deleted the word lawful from the Revenue Act. The Supreme Court affirmed it in 1927—now every American who earned an illegal income in excess of $1,000 a year was also guilty of failing to pay his or her taxes.

  To make a tax evasion case, however, the government needed absolute proof a defendant had earned income—bank slips, ledgers, check stubs. Showing he or she spent too much money, without visible
legal means of support, was not enough. And criminal enterprises such as bootlegging, gambling, and prostitution tended to be cash businesses, leaving no money trail.

  By admitting he’d never paid taxes, Ellis unwittingly gave Elmer Irey’s Intelligence Unit their entrée. They scoured his bank records, collating each check, documenting where all that booze and slot machine money had gone. Those checks bore some very familiar names, among them Jack Guzik and Frank Nitto.

  But the investigators found one individual they couldn’t track down—a Mr. James Carson, who cashed a check dated June 27, 1928, in the amount of $2,130.

  Carson’s account at the Pinkert State Bank in Cicero, Illinois, had recently been closed out. The bank claimed not to know his whereabouts. But Intelligence Unit agents Archie Martin and Nels Tessem, looking over the bank’s records, discovered Carson had opened his account on the same day a Mr. James Costello Jr. closed out his. Both accounts had contained identical amounts of money.

  Convinced Carson and Costello were one and the same, the agents traced Costello’s account to another bank customer with a bland name, whose individual deposits were mostly multiples of $55—the wholesale price of a barrel of beer in Chicago. Three more such customers led to a familiar name.

  Ralph Capone.

  The taxmen already had a history with Ralph.

  Back in 1926, tax agent Eddie Waters had gone to various Chicago mob figures and urged them to pay their taxes. Bottles Capone took him up on it and declared a pitifully small income.

  Then Ralph refused to pay the $4,086.25 he owed—instead offering $1,000, all (he said) he could afford. He dickered for the next few years, gradually upping his offer to cover the full tax debt but never agreeing to pay the interest and penalties.

  By then it was too late. Thanks to Ellis, the government now had proof that Ralph (under the name James Carter) had $25,000 in the bank on the same day he offered them $1,000. In the years since, he’d amassed more than $1.8 million.

  The Intelligence Unit had enough to slam a cell door on Ralph, but now they set their sights higher. They’d opened an investigation into brother Al in October 1928, but found nothing—no checks, no bank accounts, no tax returns, no receipts. As far as the taxmen were concerned, Scarface Capone was a ghost. But the evidence seized in the Jamie-Ness Heights raids had given them their first wedge into his organization.

  Who knew what they might find if they kept digging?

  Part Two

  Citizen Capone

  The St. Valentine’s Day Massacre, February 14, 1929.

  (Library of Congress.)

  Capone, about a week later, with boxer Jack Sharkey in Miami.

  (Cleveland Public Library Photograph Collection.)

  Eleven

  January–March 1929

  By 1929, Al Capone—elementary school dropout, shoeshine boy, newsie, street tough, whorehouse tout—was the unofficial face of Chicago.

  Take the arrival two years earlier of Italian dictator Benito Mussolini’s “round-the-world flyer and good-will emissary,” as reported by Fred Pasley. Landing on Lake Michigan, rolling in at Grant Park, aviator Francesco de Pinedo was greeted by waving flags, cheering citizens, and city dignitaries, the latter including one Alphonse Capone—among the first to shake the honored visitor’s hand. The police department had sought Al’s presence to quell threatened anti-Fascist demonstrations.

  The city’s most notorious gangster was now an official greeter and peacekeeper.

  On a given workday, the Outfit leader could be found behind several layers of bodyguards in his office, suite 430 of the Lexington Hotel, his mahogany desk nestled in the curve of a bay window with four large views of Michigan Avenue. At any time, Capone might get up from his chair—expensive, hand-carved, with a towering, bulletproofed back—and look out with field glasses over the South Side he ruled. Crimson curtains ringed the windows, matching the red and gold plaster on the walls.

  The décor ran to ostentatious displays of wealth and masculinity, from the beautiful Chinese chest and cuckoo clock to hunting and fishing trophies, including the mounted head of a moose. One visitor noted Abraham Lincoln memorabilia, including a bronze paperweight of the Lincoln Memorial and a framed facsimile of the Gettysburg Address. On Capone’s desk sat stacks of mail, a gilded inkstand, and nine telephones. Coat off, attention divided between a host of tasks, Capone looked as much the captain of industry as any member of the Chicago Association of Commerce. He was taking pains to clean up his speech, and questioned one editor, politely, of his paper’s habit of alluding to him as “Scarface.”

  “Does your newspaper consider it fair play,” he asked, “to refer to a physical disfigurement every time it mentions my name?”

  “The man was right,” the editor admitted. “I just had not thought of it before.”

  As Capone assumed an air of legitimacy, so did his organization. He began pushing the Outfit toward greater diversification, realizing—unlike the wets and drys—Prohibition would not last forever. He saw particular potential in labor racketeering—taking control of a union and then bilking its members.

  For years, a powerful protection racket had strangled Chicago’s laundry business, setting high prices enforced through beatings and bombings. After failing to break the racket in court, Morris Becker, owner of a chain of cleaning and dyeing establishments, appealed to a higher authority: Al Capone.

  The gangster partnered with Becker to form a new corporation, Sanitary Cleaning Shops, Inc., ensuring no racketeers would ever try to extort them. Capone’s end was $25,000 a year.

  “I have no need of the police or of the Employers’ Association now,” Becker told the press. “I now have the best protection in the world.” And Capone could now truthfully claim to be “in the cleaning business.”

  As always, he treated his partner fairly. But Becker was a businessman, like Capone—the gangster showed less respect for the men of organized labor.

  Meeting with union leaders in his office, Al would provide a drink and a smoke, before offering himself as a silent partner—for half the dues and command of the treasury. Labor officials who agreed got to keep their well-paid positions; those who refused faced threats, bombings, and intimidation.

  Capone soon controlled the unions, from coal truck drivers who kept the city warm in winter to elevator operators who allowed workers to reach their offices in Chicago’s many skyscrapers. The town could not afford to see such workers walk out, and so the Outfit could—and did—extort a fortune in strike insurance.

  The ganglord’s mercenary attitude toward unions reflected a dim view of the labor movement, which he saw as just another racket—a scheme to prevent workers from enjoying the freedom to sell their labor.

  “The members,” he said, “will always vote for the loudest talker, the guy who promises the most in the way of more pork chops. You give it to them with one hand and you take it away with the other. As long as their take-home pay is higher this year than it was last year, they don’t care how much you take from them in the way of dues.”

  Maintaining control of a union often meant silencing the opposition, violently if necessary.

  “You either buy these wiseacres off by giving them jobs on the union payroll at good salaries,” Capone told a Tribune reporter, “or you scare them off. If they don’t scare, you take them in the alley. When they get out of the hospital, if they still want to squawk, you get rid of them.”

  The Unione Siciliana (recently renamed the Italo American National Union) continued to give Capone problems. Al’s handpicked local president was shot in the head on a rush-hour sidewalk in the Loop, leaving an opening for a candidate selected by Joey Aiello. Aiello had been dodging Capone hitmen while nursing his own need for revenge since the recent killing of his uncle. But Aiello’s pick for president got taken out by shotgun.

  Then the Capone Outfit placed one Pasqualino “Patsy” Lolordo in the presidential post—the kind of job that can get a guy killed in his own parlor, which is what h
appened to the well-named Patsy. Mrs. Lolordo tentatively identified Joe Aiello as one of the killers until she was convinced to honor the code of silence.

  Meanwhile, Capone was at Palm Island enjoying another Christmas season, leaving Frank Nitto in charge back home. Al had succeeded in elevating Joseph “Hop Toad” Giunta to the top of the Chicago Unione Siciliana, giving Giunta the Murder Twins, Anselmi and Scalise, as bodyguards.

  But Capone rarely saw the need for violence, finding bribery to be a much more effective tool. Another journalist summed up Capone’s philosophy: “Why kill a man when you can buy him so cheap? You learn his price—and you pay it.”

  A rival Capone couldn’t seem to buy off, portly gangster George “Bugs” Moran, still headed up the North Side mob. Moran’s criminal record stretched back to his teens—horse theft. Never one to shrink from a fight, Moran bore a prominent scar on his neck from a knife slash in 1917, the same summer Capone got his own scars. Like Capone, Moran sought to conceal his disfigurement, but his efforts—bundling up in a scarf or hiding behind high collars—succeeded better than his rival’s.

  With his reputation for brawn over brains, and a full, fleshy face with its cleft chin, the dark-haired Moran struck some as dour, even morose. But he also had a broad smile and a sharp sense of humor, echoing his old boss, Dean O’Banion. Moran once complimented a Chicago judge’s “beautiful diamond ring.”

  “If it’s snatched some night, promise you won’t go hunting me,” Bugs quipped. “I’m telling you now I’m innocent.”

  Yet like O’Banion, Moran “could go berserk when provoked,” one relative recalled—hence the nickname “Bugs.” The deaths of his partners—beginning with mentor O’Banion—had led Moran to focus his fury on Capone, rarely calling the gangster by name, preferring “the Beast” or “the Behemoth.” He derided Capone as a glorified pimp—always a sore spot for Al—and branded him a coward for not fighting his own gun battles, as Moran so often had.