by Alix Kirsta
Deputy Commissioner Marcus was best placed to investigate the situation, having previously worked as an assistant U.S Attorney in the Southern District of New York, where his closest colleague was another brilliant and ambitious young lawyer, Thomas Dewey, shortly to become New York’s most famous crime fighter. Marcus, like Thomas Dewey, knew all about Joe Rao’s background, including the likely identities of his very eminent, outwardly respectable “protectors”. For Marcus there was never any mystery about Rao’s exalted position on Welfare Island. Marcus realised that the most valuable aspect of the raid on the island was not only the uncovering of gross abuses, crime and corruption: equally important, the raid provided a road map, pointing to where the real control and corruption almost certainly originated. Once David Marcus identified Joe Rao as the kingpin of Politicians’ Row, he was virtually certain who was the real power behind the throne.
Chapter Two - Barons of the Underworld
Although in 1934 Joe “Joie” Rao was not a household name compared to legendary mobsters like Al Capone and Legs Diamond, by the time of the Welfare Island raid he was nonetheless a familiar and feared figure in New York’s underworld. He had been a member of the Italian-American mafia for long enough to also become well known to New York police, magistrates’ courts, the Manhattan District Attorney, and many judges. The son of an Italian immigrant who owned a feather shop on East Harlem’s 107th Street, Rao seemed destined to join the mob. He was a cousin of the Lucchese crime family’s consigliere Vincenzo Rao and went on to marry Lena Stracci, the sister of gangster Joseph “Joe Stretch” Stracci. By the time he was sent to the prison on Welfare Island in late 1932 on charges of extortion, he was already a notorious gangster with a long criminal record, which included five arrests for murder, violent assault, burglary, extortion and racketeering none of which had interfered with his criminal career. Rao’s lawyers had managed to get all these charges dismissed, except for his 1932 conviction, for which he was serving a three year term. Rao’s imprisonment was a setback which surprised his cronies, who until then had regarded him as invincible. At the outset of his criminal career in the 1920s, Rao had started out as a humble foot soldier for Giovanni “Joe the Boss” Masseria, head of the Genovese family and the most powerful single figure at the time on New York’s Italian-American crime scene. Masseria, known for his close links to Al Capone in Chicago, had on his payroll a group of young upstart mobsters including Lucky Luciano, Vito Genovese, Albert “Mad Hatter” Anastasia, William Moretto, Joe Adonis and Frank Costello. Several years later, those cosa nostra young bloods were to revolutionise organised crime in America by creating a national “syndicate”, whereby all rackets were run as cartels along the lines of a corporate business, with executive directorship, control and financing undertaken by a ruling “commission” composed of the most senior and powerful capos - or heads - of five individual crime families.
Long before the mafia adopted that business model however, Joe Masseria, the self-proclaimed capo di tutti capi (boss of all bosses) demanded absolute supremacy in the Italian-American underworld and would brook no rivals. It was his ruthless ambition which led to many of the bloody turf wars and massacres of the early 1930s, especially the brutal Castellammarese gang warfare between Giovanni Masseria and Salvatore Maranzano, so-called because Maranzano came from Castellammare del Golfo in Sicily. Maranzano took Masseria’s mantle of capo di tutti capi after arranging his rival’s execution at a restaurant in Coney Island in April 1931. But his reign was short lived. Salvatore Maranzano was himself shot and stabbed to death in his Manhattan office five months later by a team of Jewish assassins including Bugsy Siegel and Samuel “Red” Levine, recruited from the ranks of the Jewish Mafia by Meyer Lansky, the eminence grise behind such younger generation Italian mobsters as Lucky Luciano.
While Rao learned to duck and dive between these warring factions, he eventually took over the administration of affairs of the infamous 107th Street mob where he controlled and financed the distribution of narcotics in Harlem and the Bronx, as well as arranging protection payments from gambling, bookkeeping, and prostitution rackets in the neighbourhoods. An acknowledged associate of Ciro “the Artichoke King” Terranova, he also became a silent partner in a numbers bank run by Joseph Valachi and his brother in law Joe “Stretch”, and found time to do business on the side with such hardened criminals as “Trigger” Mike Coppola, millionaire Frank Livorsi, who made a killing in black market sugar, and Charlie “Bullets” Albero, holder of the mob’s arrest record, with 27 arrests dating back to 1911. A close associate of the gang was Joe’s cousin Vincent Rao, a multi-millionaire owner of many New York apartment buildings. He too had many different arrests under his belt for grand larceny, murder and illegal possession of a revolver: like his cousin Joe, Vincent had been either acquitted or discharged on each count. Also on friendly terms with the 107th Street gangsters was Joe Rao’s brother in law Joe “Stretch” who had become chief enforcer for the “Italian Mob”, so named to distinguish its members from the Irish and Jewish gangsters who were especially prominent and successful in New York’s organised crime scene during the Prohibition era of the 1920s and early 1930s.
The 107th Street mob has been described as the most vicious group in 1930s New York. In 1932, a year before the repeal of Prohibition, they began to diversify and extend their tentacles to other rackets, realising that the lucrative days of bootlegging would soon be over. In anticipation of that day, they moved their activities to the garment district in midtown Manhattan, where they branched out into extortion rackets, demanding protection payments from trucking firms, also muscling in on the booming narcotics trade. As is traditionally the case with the Mafia the world over, what gave this gang much of its power was kinship, whether through blood or marriage. With three powerful relatives, his cousins Vincenzo and Vincent and his brother in law Joe Stretch, Joe Rao carried clout among several gangs. In fact, one of the dangerous aspects of his criminal activities was that he had few lasting loyalties, tending instead to form alliances with several different groups and mob bosses depending on how much enrichment was in it for him.
What ultimately led Rao to be feared and respected by the mob in equal measure was his eventual long term association with Jewish-born Mafioso “Dutch” Schultz, aka Arthur Flegenheimer. Born in the Bronx in 1902, Schultz had risen to fame in the 1920s as the Bronx Beer Baron, who controlled the manufacture, importation and distribution of illegal brew throughout New York City. Pre-empting the repeal of prohibition, he went into the restaurant racket and then became king of the so-called “numbers game” or policy racket, an illegal version of the lottery in which the odds were a thousand to one and winning numbers were always “fixed” by Schultz’s men to ensure players never won much from their bets. From earlier criminal investigations, David Marcus knew it was the Schultz connection which ultimately conferred on Rao the power to run Welfare Island as his personal fiefdom. Marcus had heard that when Rao was convicted in 1932 and given a prison sentence, he asked to be sent to Welfare Island knowing he could organise a drugs racket - a rumour Marcus had no reason to disbelieve. Given his close relations with New York’s most powerful millionaire mobster, Rao would have had ample support and few obstacles in his drug trafficking operation and any other racket he decided to run on the island.
Today, Dutch Schultz may not be remembered as a gangland celebrity such as Bugsy Siegel or Charles “Lucky” Luciano, immortalised on film and TV, but there was a time when Schultz’s power in New York’s underworld was virtually second to none. In contrast to the alliances between members of the various Italian clans, Dutch Schultz was the last independent mobster who refused to become a part of the new style syndicate. Never a team player, Schultz knew he had too much to lose by forging partnerships. By 1930, Schultz held New York in the same way Al Capone ruled Chicago and could afford to operate solo. In 1934 he had been running the hugely profitable numbers game for several years, aided by a loyal handpicked team of lieutenants and foot s
oldiers, enforcers, lawyers, accountants and bankers. The average daily take in bets was reported to be around $35,000; estimates of Schultz’s annual income from the policy rackets was put at $12-$14 million. He kept a low profile, bore a perpetually sullen expression and lacked the sinister glamour of many Jazz Age gangsters. With a miserly nature verging on the pathological, he lived frugally, wore cheap suits and shirts, abhorred ostentatious behaviour and flashy clothes and cars. Journalist Meyer Berger, who interviewed Schultz for the New York Times, described him as having the appearance of “an ill-dressed vagrant …. or at best a guy with a special talent for looking like a perfect example of the unsuccessful man.” Schultz told Meyer that he never spent more than $35 for a suit or $2 for a shirt, claiming: “Only queers wear silk shirts. I never bought one in my life. Only a sucker will pay $15 or $20 for a silk shirt. Such display is vulgar. Hell, you can get a good one for two bucks.”
Schultz’s associates – like his enemies – knew enough about him to see through this fusty image, which belied a steel core of remorseless cruelty – and an insatiable lust for money. A born businessman, he ruled his tightly run enterprises according to a strict profit motive: not for luxuries or status symbols, in which he wasn’t interested, but purely for the money. As his lawyer, Richard “Dixie” Davis, used to say about Schultz: “You can insult Arthur’s girl, even steal her from him, spit in his face, push him around and he’d laugh it off. But don’t steal even a dollar that belongs to him. You’re dead if you do.”
What his aides feared most was his sudden explosive anger. Many saw him as a psychopath, without empathy, impervious to the suffering of others. When he suspected that Jules Martin, one of his associates in the restaurant racket, had attempted to defraud him of $25,000, he called Martin to a meeting at a hotel suite in New Jersey, where Schultz at the time was lying low, on the run from the New York authorities on charges of tax evasion. An argument flared up between Schultz and Martin, and, as Martin was loudly trying to talk his way out of any blame for the missing money, Schultz whipped his pistol from inside his trousers, where he always kept it, rammed it into Martin’s mouth as he was talking and pulled the trigger. Lawyer Dixie Davis, a terrified witness, recalled his employer’s action as mechanical, almost nonchalant. “It was simple and undramatic – just one quick motion of the hand. The Dutchman did that murder just as casually as if he were picking his teeth. No one had time to move. Julie Martin didn’t even have time to look surprised. Martin was right in the middle of a sentence as the gun blasted like a howitzer in the flimsy little hotel room.” Once Martin’s body was removed, Schultz worried that the blood from his shattered brains which now stained the carpet might be traced back to him if hotel staff called the police. Instantly, he came up with the perfect cover-up. He pointed to a recent recruit to his gang, a young teenage thug, and told one of his aides to hold the boy’s arms. He turned to Bo Weinberg, a burly thug of a man who carried out Schultz’s beatings and assassinations, snarling: “Break his nose.” When Weinberg hesitated, saying “What do I want to hurt the kid for?” Schultz shouted at him. “Do it.” Shrugging, Weinberg smashed his huge fists into the boy’s face, mashing it to a bloody pulp. As blood gushed from his shattered nose, Schultz pushed him onto a chair and held his head over the existing bloodstain on the carpet, letting the boy’s blood trickle onto the existing stain. Schultz then phoned down to the front desk asking for the hotel doctor to patch up a friend who had been in a fight over a card game.
Another small time crook foolish enough to try and muscle in on one of Schultz’s rackets was Joseph Rock. He was kidnapped by Schultz’s thugs, who beat him senseless. For extra measure, Schultz ordered his enforcers to tape a piece of dirty gauze, covered in pus, tightly over Rock’s eyes. The gauze was contaminated with syphilis, and Rock eventually went blind. Joel Shapiro, who also believed he could outwit Schultz, fared equally badly, being rammed into a large barrel containing cement which was taken on a boat out of New York harbour and dumped into the Atlantic Ocean.
Not only his rivals and enemies had reason to fear for their lives. So intense was Schultz’s paranoia that even those closest to him were not safe. Not even Bo Weinberg, one of his most faithful, trusted aides and brother of Schultz’s business manager, George Weinberg. Bo Weinberg eventually aroused his boss’s suspicion by spending time downtown in the company of rival mobsters. Even though there was no reason to doubt Weinberg’s loyalty – on the contrary, he was acquiring secret inside information from the rival gangs which benefited Schultz – Schultz was eventually consumed with seething resentment. Soon, Bo Weinberg went missing and was never seen again. Reportedly, like Shapiro, he had been tied up, his feet encased in a block of cement and dumped into the East River.
Well known for his close links to New York’s Tammany Hall politicians, Schultz declined to cut deals with other mob leaders, preferring to set his own rules and keep the millions he made from the takings of the numbers games he singlehandedly controlled throughout Harlem and the Bronx. During the early 1930s, the numbers racket is estimated to have yielded an annual return of $100 million. In 1933, his street runners, responsible for collecting money from all the players, when threatened with a 50% pay cut, stopped work and organised themselves into a union. Within the first week of the strike, one of the bank’s takings from the players dropped from $9,000 a day to $186. Schultz soon backtracked on the men’s pay cut. In view of the spectacularly lucrative rewards from both the beer business and the numbers racket it was hardly surprising that rival gangsters hoped for a piece of the action. When Schultz went into the slot machine business he teamed up briefly with Frank Costello and, “Legs” Diamond and Vincent “Mad Dog” Coll from Hell’s Kitchen to act as his enforcers. Unwisely, Coll and Diamond both attempted to hijack the business. Neither survived long. In October 1931, Legs Diamond was killed, reportedly by Schultz’s men: when asked by journalists about the murder, Schultz retorted: “Diamond was just another punk with his hands in my pockets.”
Vincent Coll and his Irish gang managed for some time to reap benefits from the pickings of some of Schultz’s businesses, while attempting to wipe out his key associates. One of their chief targets was Joe Rao, who by then had become a prominent Schultz lieutenant. In May 1931, Rao narrowly escaped death when a group of men drove their car past a Harlem restaurant where he was dining and opened fire. Although Rao escaped harm, two fellow diners were blasted to death and two bystanders were injured. Months later, on a hot July evening, Rao was standing in front of a social club on 107th Street when he noticed an open car cruising down the street towards him: inside three men were holding machine guns. As they drew close and took aim, Rao ducked and, though wounded, dashed around the corner out of range. However, a group of children playing outside their stifling tenement apartments, splashing in the cool waters of a fire hydrant spray, were not so lucky. In the onslaught of non-stop machine gun fire, five year old Michael Vengali was torn apart by sixty bullets and died in hospital. Four of his playmates were also hit, including his brother: all suffered critical injuries. A baby was shot in the back as he slept in his pram.
The tragedy was the culmination of an exceptionally bloody year of ferocious, gun battles and contract killings. An unusually high number of innocent passers-by were often the victims. The July 1931 child shooting - dubbed “New York’s child massacre” by reporters - was condemned throughout the US, as the most ruthless crime in 20th century New York gang warfare. It was also one of those atrocities which, by generating continued press condemnation and public outrage, galvanised the city’s authorities, including politicians, social reformers and anti-crime organisations, into demanding a crackdown on organised crime. One such politician, the fiery Jewish-Italian Republican New York State senator, Fiorello La Guardia, launched a series of excoriating attacks on organised crime, while denouncing the failure of the New York authorities to tackle the problem. The massacre of the innocents would eventually prove to be a turning point in the public’s attitud
es towards mob violence.
Vincent Coll was widely believed to be behind the child massacre, and fifty New York detectives hired to hunt down the killer were ordered by the police commissioner to “bring back Vincent Coll, dead or alive”. The commissioner also issued his men with shoot to kill orders. “In the past six months, the police have killed sixteen gunmen racketeers and wounded six. This is not enough. Don’t be the last to draw. Pull first and give it to ‘em.” Despite one of the biggest manhunts in the city’s history, Coll remained at large, until two years later when he was gunned down, apparently by Schultz’s men, as he talked on the phone in a booth on 23rd Street.
Dutch Schultz’s New York-wide influence also gave him a loud voice on Welfare Island, which, over the years, had seen a big turnover in prison inmates previously in his employ. And, because Joe Rao, who had served Schultz well, narrowly survived several assassination attempts by Schultz’s enemies, it followed that he expected to rely on Schultz’s continued support once he was sent to Welfare Island. Although, by January 1934, Schultz had been lying low for almost a year evading the Federal authorities who wanted him for income tax evasion, insiders knew he hadn’t gone far. There were reports that he was hiding in Upstate New York, sometimes returning under cover to his New York apartment, even running some of his operations from his friend Polly Adler’s brothel in a Manhattan apartment which Schultz had found for her. In her biography, A House Is Not A Home, Adler confirmed that Schultz would frequently spend extended periods at her place, bringing with him such trusted lieutenants as Lulu Rosenkranz and his financial “fixer”, mathematical wizard Otto “Abadaba” Berman, so called because he regularly came up with complex mathematical combinations which ensured the odds were stacked against the majority of players who had taken out bets. So, even while on the lam, it was business as usual for Schultz. That included keeping tabs on how Rao’s rackets were doing in jail and making sure he received necessary protection from those with ultimate power, i.e Schultz’s own partner in crime, the most influential politician in Tammany Hall.