To these investigative ends White had been working with OSS scientists on a “truth serum” to be used in interrogations. At the time, the most effective drug developed in the OSS’s labs at St. Elizabeth’s Hospital in the early 1940s was a concentrated form of marijuana, which induced the subject “to be loquacious and free in his impartation of information.” Briefed on the agency’s agreement with the Mafia, White, who would later go on to manage some of the most nefarious schemes in the CIA’s drug-testing program, saw in the OSS’s new associates a fine chance to test the drug on a human guinea pig. At the end of May 1943, White arranged a meeting with Augusto Del Gracio, an enforcer for New York’s crime lord, Lucky Luciano. White offered Del Gracio cigarettes of tobacco mixed with a THC concentrate from marijuana. To White’s great interest Del Gracio babbled openly about the logistics of Luciano’s heroin operation. At one point Del Gracio remarked to White, “Whatever you do, don’t ever use any of the stuff I’m telling you.” Having murdered many of them himself, the strongman was well aware of the fate of snitches and squealers.
In a second session White had increased the THC to such a degree that Del Gracio simply passed out for two hours. White left the sessions satisfied with the efficacy of his “truth serum” but even more unhappy about the OSS’s partnership with the Mafia, having heard Del Gracio talk about the global reach of the Luciano drug networks. He strongly urged OSS head Bill Donovan to distance itself from the criminal gangs. Donovan concurred, and the OSS ceded most of its intelligence operations in Italy and Sicily to the Office of Naval Intelligence (ONI), which had been making its own overtures to the Mafia as part of its efforts to prevent sabotage in New York. The decision didn’t set well with Max Corvo, who had been cut off from his Mafia contacts inside Sicily and was forced to stand by in North Africa as Patton’s Seventh Army hit the beaches at Gela and Licata with the assistance of agents from the Office of Naval Intelligence.
There was good reason for the navy to be concerned. Between December 7, 1941 and February 28, 1942, the Allies had lost seventy-one merchant ships off the Atlantic coast to German submarines. The Allied intelligence services believed that many of the loses were the result of German espionage successes in monitoring ships as they left New York. There was also some evidence that the U-boats were being resupplied off the US coastline. The Office of Naval Intelligence set up a branch in New York headed by Captain Roscoe McFall, a forty-year veteran of the navy. McFall had been charged by Rear Admiral Arthur Train, head of ONI, to secure the New York City waterfront at all costs. “The entire waterfront situation was a matter of official concern,” McFall said. “Information concerning possible sabotage by enemy agents in the Port of New York, and information concerning subversive activities among those who worked as longshoremen, stevedores and other similar workers was of great interest to Naval Intelligence. Furthermore, Naval Intelligence was greatly interested in obtaining information that enemy agents might be landed on the coast.”
McFall’s team in New York included Commander Charles Haffenden, who headed an investigations unit called the B-3, and Lieutenant Anthony Marzullo, a lawyer and a former aide to New York Governor Thomas Dewey, who was an expert on Sicily. In December 1941, McFall ordered Haffenden and Marzullo to develop a strategy for enlisting the aid of underworld figures in New York. McFall later said that “the use of underworld informers was a calculated risk that I assumed as District Intelligence Officer.” Within a few months, more than 150 ONI officers were involved in the counter-espionage operation, which the group called the “ferret squad.” “Intelligence as such is not a police agency,” Marzullo later explained. “Its function is to prevent. In order to prevent, you must have a system and the system in its scope and latitude must encompass any and all means which will prevent the enemy from securing aid and comfort from others. By any and all means, I include the so-called underworld.”
The task of the ONI became somewhat more urgent on February 9, 1942, when the USS Normandie, retooled to cruise at fast speeds to evade German U-boats, sank in flames at its dock on the Hudson River. Although it turned out that the sinking of the Normandie was most probably an accident, at the time sabotage was strongly suspected. After the Normandie disaster McFall instructed his officers to use the New York City police and district attorney’s offices to help open contacts with the Mob.
On March 7, McFall and Haffenden held the first in a series of meetings with Manhattan District Attorney Frank Hogan and his deputy in charge of the rackets bureau, Murray Gurfein. Hogan assured the ONI officers of full cooperation and offered to turn over all of his files on the leading Mob figures in the city. (Hogan, a long-time associate of Thomas Dewey, had helped put Lucky Luciano behind bars in 1936 for compulsory prostitution.) Haffenden, now in charge of recruitment for ONI, said he was interested in more than mere development of sources on the waterfront. He asked Hogan if it might be possible to enlist Mob chieftains to act as overseers in the supervision of informants. Hogan said this shouldn’t be a problem, particularly as the Mob leaders tended to be resolutely anti-Fascist on the grounds that Mussolini had been systematically wiping out their Italian cousins. The navy men also expressed concern about the reliability of intelligence generated by the Mafia. Hogan reassured them that the threat of selective prosecution and other punitive measures would keep them in line.
Hogan’s deputy Murray Gurfein (as a federal judge he would rule for the New York Times thirty years later in the Pentagon Papers case) suggested an approach to Joey “Socks” Lanza, then under indictment for extortion. Lanza, a Luciano lieutenant, controlled the Fulton Fish Market and the United Seafood Workers Union. Lanza’s indictment had stemmed from his habit of demanding kickbacks from workers in the fish market and from union members, and for beating those who failed to pay him. Lanza owned a long rap sheet, with arrests on charges of conspiracy, burglary, assault and murder. His parole officer considered him “a ruthless racketeer.” This didn’t deter the navy from seeking him out. On March 26 Gurfein and Haffenden arranged a meeting with Lanza at Haffenden’s suite in the Astor Hotel, where they asked the gangster for help in rooting out spies and saboteurs on the Brooklyn docks. Lanza swiftly told the DA and the navy spy of his willingness to help. “I go along 100 percent,” Lanza said. “I want to put an end to those sinkings.”
But Lanza turned out to be mostly a big talker. After several weeks the thug had given Haffenden little in the way of useful information. His most significant contribution was to provide the navy spies with union cards so that they could prowl the docks under cover. He also suggested that the counter-espionage operation could be aided immensely if the support of the big boss were enlisted. And who would that be, Haffenden inquired. Lucky Luciano, Lanza replied. “He’s the man who snaps the whip on the entire underworld.”
Charles “Lucky” Luciano was born Salvatore Lucania in the village of Lecara Freddi, near the Sicilian capital of Palermo, on November 11, 1897. In 1907 the Luciano family moved to lower Manhattan, where his father, Anthony, found work in a brass bed factory. Charles quickly turned to a life of crime, and by 1916 he had been arrested on charges of peddling drugs, the first in a string of arrests over the next decade for offenses ranging from felonious assault to drug dealing and from weapons possession to bootlegging. Many of these encounters with the law stemmed from his violent struggle for control over the notorious Five Points gang.
In 1918 Luciano happened into an association that was to last half a century and make him the most powerful mobster in the world. In late October of that year he was engaged in the mundane task of beating one of his prostitutes while a nervous Bugsy Siegel, fourteen years old at the time, looked on, a pen knife in his hand. As the prostitute’s screams drifted down to the street below they were heard by a young man named Meyer Lansky, who busted into the brownstone, ran upstairs, flung open the door, knocked Luciano on the back of the head and pulled the gangster off the woman. Hot on Lansky’s heels were the New York cops, who duly arrested everyone. In the
paddy wagon, Lansky and Luciano struck up a conversation and soon found they had large areas of mutual interest. Lansky was then the boy genius of the Lepke and Gurrah gang, which controlled much of the heroin trade in New York.
It was not long before Lansky convinced Luciano that heroin was the perfect black market commodity. It was easy to smuggle. There was an opportunity to monopolize the market, and the drug was enormously profitable. Luciano’s entry into the drug racket alienated him from the older Sicilian Mafia dons, who had steered clear of the drug trade – not from any moral qualms but because they thought it might unnecessarily antagonize the police. On October 16, 1929, the old dons kidnapped Luciano, drove him to a New Jersey warehouse, hung him from a beam by his wrists, taped his mouth, beat him with a bat, slit his throat, stabbed him with an ice pick and left him for dead. The hoodlums didn’t check for vital signs, which was a big mistake because Luciano managed to work himself free and soon began to exact a thoroughgoing revenge.
Over the next four years Luciano, Lansky and their associates in Murder, Inc. eliminated over seventy of the old-line capos and set up a crime syndicate that Lansky claimed to have modeled on John D. Rockefeller’s Standard Oil Trust. The crime syndicate board directors included Lepke, Gurrah, Luciano, Lansky, Siegel, Abner “Longie” Zwillman, Vito Genovese, Dutch Schultz and Joe Adonis. Lansky once boasted that their underworld empire was “bigger than US Steel.”
As befits empire builders, Lansky and Luciano wanted order and an absence of troublesome and bloody encounters with the law. To this end they established a wide-ranging system of political pay-offs and bribes. In New York City these were overseen by Frank Costello, whom Senator Estes Kefauver christened the “Prime Minister” of crime. The duo also sought to establish an off-shore entrepôt for their heroin operations, and Lansky traveled repeatedly to Cuba in the early 1930s to forge an arrangement with Fulgencio Batista, the US-backed dictator, which gave the syndicate a monopoly on gambling operations in Havana plus assurances that their shipments of heroin, manufactured in Sicily and eventually in Marseilles, could be landed and stored there pending distribution in the United States. In return, half the profits from the casinos went to Batista and his cronies.
The man whom Lansky and Luciano later picked to run the Cuban gambling and drug interests for the syndicate was Santos Trafficante, a Sicilian-born gangster who lived in Tampa. Trafficante and his son, Santos Jr., became intimate friends with Batista. In later years, the CIA asked for Santos Jr.’s help in killing Castro and returning Cuba to the Mahagonny ambience of the Batista era.
In New York, Luciano didn’t relinquish his interest in the traditional enterprise of prostitution but simply added a new entrepreneurial twist. Luciano made sure that the prostitutes were addicted to heroin and paid them with diluted doses of the opiate. The doped-up prostitutes were forced into a superexploitive work pace, so much so that when Manhattan DA Thomas E. Dewey began to train his sights on Luciano, the prostitutes were eager to testify against him. Fearing Dewey’s crackdown, a Luciano lieutenant, the psychotic Dutch Schultz, recommended that the crusading prosecutor be assassinated. Luciano and Lansky correctly felt that this would be politically imprudent and instead ordered the assassins at Murder, Inc. to kill Schultz, thus ironically leaving Dewey to put Luciano away. The prostitutes opened up to Frank Hogan, whose engaging and priestly interrogation style earned him the nickname “Father Hogan.”
Dewey’s men finally arrested Luciano in Hot Springs, Arkansas in 1936. During the trial, Dewey, whose political ambitions were intense, made the front pages day after day and finally secured conviction of the crime boss on no less than sixty-two counts of racketeering. Luciano pulled a stiff thirty to fifty years and on the recommendation of a prison psychologist, who noted his violent temper and history of drug use, was sentenced to solitary confinement in New York’s most brutal penitentiary, Dannemora, as inmate No. 92168.
Between 1936 and 1942, Lucky Luciano made three efforts to win clemency or parole. Each time he was rebuffed. Then, with Joey Lanza’s suggestion to ONI’s Haffenden, Luciano’s fortunes changed abruptly. Naval Intelligence put out its first feeler to America’s top gangster through Luciano’s lawyer, Moses Polakoff, a former federal prosecutor and himself a veteran of Naval Intelligence in World War I, who had maintained close ties to the navy ever since. Polakoff had reportedly earned a fee of $100,000 for his work for Luciano in the 1936 trial, a gigantic sum at the time.
Polakoff told Haffenden and District Attorney Gurfein that he would be happy to help the navy in any way he could, and felt Luciano would as well. Polakoff added significantly that “if Luciano made an honest effort to be of service, they would have to bear that in mind at a later date.” But, Polakoff said, there was a problem. He claimed he didn’t know Luciano well enough on a personal level to convey this kind of offer to him. However, the lawyer intimated he knew the perfect intermediary, someone “whose patriotism, or affection for our country, irrespective of his reputation, was of the highest order.” Polakoff was talking about Meyer Lansky.
Thus, on April 11, 1942, Haffenden, Gurfein and Polakoff met with Lansky for breakfast at Longchamps, a restaurant on West 58th Street in Manhattan. Lansky said he would be willing to advance the proposal to Luciano, but advised that the gangster might be more cooperative if moved from the rigors of Dannemora to less austere confinement. The Office of Naval Intelligence swiftly sent a letter to New York’s prison commissioner, John A. Lyons, requesting that Luciano be transferred to a “better facility,” where he could be interviewed by ONI officers and “others.” An ONI memo records that “the Division Intelligence Office requested the transfer of Charles “Lucky” Luciano from Clinton Prison [that is, Dannemora] to Great Meadows prison so that he might be more readily accessible … We are advised that contacts were made with Luciano thereafter and that his influence on other criminal sources resulted in their cooperation with Naval Intelligence which was considered useful to the Navy.”
On May 12, Luciano was moved to Great Meadows, a relatively new prison outside Albany. Lyons gave permission for Luciano to meet with Lansky and permitted the encounters to take place without the usual security procedures for visitors, such as fingerprinting and the presence of a guard. John Lyons, commissioner of prisons, said that he’d gladly made these concessions to Luciano “to save the life of one American soldier on a single American ship.”
On May 17, Lansky and Polakoff traveled by train to Great Meadows and relayed to Luciano Naval Intelligence’s request for cooperation. Lansky later testified that Luciano was at first reluctant to go along with the navy’s proposal, agreeing only on the condition that the arrangement be kept secret. “He had a deportation warrant attached to his papers,” Lansky said. “And he didn’t want his cooperation with the US government to become known because whenever he would be deported and went back to Italy, he might get lynched. He was fearful of bodily harm.” The intelligence officers had no problem with Luciano’s request for secrecy, since they themselves had every incentive to keep things quiet.
In later meetings Lansky and Luciano plotted out the logistics of what the navy was so eager to get – namely, a Mob order to dockland to cooperate with the anti-sabotage effort. Luciano told Lansky to contact Johnny “Cockeyed” Dunn, the boss of the Hudson River docks and Luciano’s strongman in the International Longshoremen’s Association; the Camarda brothers, overlords of the Brooklyn waterfront; Mikey Lascari, Luciano’s boyhood pal who handled the New Jersey operations; Frank “the Hands” Costello, Luciano’s political henchman; and Albert Anastasia, the CEO of Murder, Inc., who would take care of anyone who got out of line. “You go up,” Luciano told Lansky, “and mention my name and in the meantime I will have the word out and you won’t have no difficulties.”
Over the next few weeks there was a constant shuttle of Mafia commanders to Great Meadows Prison to receive personal instructions from Luciano. Visitors personally approved by Commissioner Lyons included Lanza, Costello, Joe Adonis a
nd Bugsy Siegel. The phrase used by Commissioner Lyons to justify these visits was “so that the inmate might assist the war effort.”
In the meantime Lansky was meeting with Haffenden and other Naval Intelligence officers at their headquarters in the Astor Hotel, orchestrating the infiltration of Naval Intelligence agents onto the docks and into the unions operating there. This was a time when special cargoes of war matériel for the planned invasion of Europe were being dispatched to Great Britain and to North Africa. The navy was worried not only about sabotage, but also about work stoppages and strikes – particularly the organizing efforts of Harry Bridges, the Australian-born union organizer with close ties to the Communist Party who had led the 1934 general strike on the docks in San Francisco. The Justice Department was busy trying to deport Bridges when he showed up on the East Coast in 1942, traveling between Boston and New York encouraging the dockworkers to abandon the mob-infested International Longshoremen’s Association and join his International Longshoremen and Warehousemen’s Union.
Not for the last time there was a confluence of interest between criminal and intelligence organizations to crush radical unions. We will see the same story repeated in Shanghai and in postwar Italy and France. In abetting crime/drug cartels and crushing independent political movements or unions, the CIA and its forebears never hesitated for a moment to make common cause with criminals. Take the congenial conversation between Haffenden and Joey “Socks” Lanza in 1942, as they worried about the organizing activities of Bridges, code-named Brooklyn Bridge. The phone conversation was tapped by Manhattan DA Frank Hogan, who was keeping his own eye on the partnership between Naval Intelligence and the Mob:
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