Boardwalk Empire: The Birth, High Times, and Corruption of Atlantic City

by Nelson Johnson

  What the agents found were gambling rooms operated out of storefronts and as part of restaurants and nightclubs. They were run as if gambling was legal and open to anyone who walked in off the street. The furnishings of the rooms varied from those rooms that were quite austere, with rows of crude benches, to others that were elegantly furnished salons. Some of these casinos operated on two floors; the street floor being cheaply furnished for the $.50 and $1 players, while the upstairs was luxuriously equipped for $5 and $10 players. Complimentary food and beverages were served, and the management of the casinos paid round-trip railroad fare to any player producing a ticket showing they had come to town that day to gamble.

  Indicative of the volume of gamblers was that Atlantic City’s horse rooms paid “track prices.” This meant they paid the same odds as those paid at the racetracks. Without a routinely heavy volume of bets there wouldn’t have been enough of a “spread” to justify paying the prevailing odds. Nucky had total control over the horse rooms. He had gone to Chicago in 1935 and made arrangements with the underworld Nationwide News Service for the exclusive agency in Atlantic City for racing results. Each room paid $200 per week for this service. The price charged by Nationwide News was $40 per week with the difference going to Nucky.

  Most of the gambling rooms were involved with everything from horse races and numbers to casino games such as blackjack, poker, craps, and roulette. The rooms that emphasized horse races usually provided craps tables or a game of poker so there would be a second chance to grab the money lost on the horses. The higher priced casinos were usually connected with nightclubs, and the accommodations—food, booze, or broads—were equal to any casino in the world. The smaller rooms had average daily winnings of $500 to $1,000 per day, while the larger rooms grossed $5,000 to $6,000 per day.

  Those nightclubs/casinos, which flourished under Nucky’s reign, were the 500 Club, Paradise Café, Club Harlem, Little Belmont, the Bath and Turf Club, the Cliquot Club, and Babette’s, which was one of the most chic gambling casinos of that era, attracting patrons from around the country. “Only the very best people went to Babette’s. They had the best steaks and mixed drinks in town, and great entertainment. I saw Milton Berle there when he was first startin’ out.”

  These nightclubs were nationally advertised and well known, featuring name bands and Broadway or Hollywood stars as entertainers. The owners didn’t care if they turned a profit on the nightclubs; the main reason for having them was to attract business to their gambling casinos. The owners of Atlantic City’s gambling rooms were all underworld figures, most of whom had arrest records and lived a fast life. Many of them used aliases or were known by nicknames: there was William Kanowitz, who was known as “Wallpaper Willie”; Lou Khoury went by “Lou Kid Curry”; Michael Curcio aka “Doc Cootch”; and Martin Michael, known as “Jack Southern.” Had Nucky gone by “Enoch” he would have been considered an oddball.

  The most prevalent gambling racket in Atlantic City was the “numbers” game. In a city of 66,000 year-round residents and in a game where the average bets ranged from $.05 to $.10, the enormous volume of play is revealed by the fact that the daily winnings for the number syndicate averaged between $5,000–$6,000, or $1.5 to $2 million per year. The numbers game became so popular there were two plays per day, one for daytime and one for evening. As part of their probe, the agents surveyed nearly 1,500 local retail businesses, interviewing the individual owners. Of these, 830 signed affidavits admitting under oath that their place of business was used to sell numbers. Another 200 to 300 admitted to writing numbers but were afraid to sign affidavits. “If you went to the corner store to buy a quart of milk, you could get your change or play a number. Nearly everybody who had a business wrote numbers.” Nucky had succeeded in making the entire community a partner with the rackets.

  By the spring of 1939 the investigation had produced more than 40 indictments. The first indictment of the racketeers was against William Kanowitz and David Fischer, who were horse room operators. Following them were the indictments of the principals of the numbers syndicates. In approximately the same period, charges were filed on the county highway contracts and the city garbage contracts. In all, nearly 30 of Nucky’s lieutenants were awaiting trial. They were continually pressured by the agents and repeatedly called before the federal grand jury in Camden. But there were no cracks in the wall. Rather than testify against Nucky, Atlantic City’s racketeers accepted contempt citations and perjury indictments.

  The first tax evasion defendant to go to trial was Austin Clark, a numbers banker. With the exception of the judge having to remove three of Nucky’s strong-arm men who were sitting in seats directly in front of the witnesses, the trial was uneventful. Clark was found guilty and sentenced to three years in jail but still refused to cooperate. The government had hoped Clark’s conviction would cause the other members of the numbers syndicate to reconsider their silence. But the agents had underestimated the resistance of Nucky’s lieutenants.

  With the conviction of Austin Clark, Nucky and his people began to obstruct the government in the preparation of its cases. Witnesses for upcoming trials were requested to appear at the FBI’s office on the second floor in the new Post Office Building on Pacific Avenue. Most of them never showed. Those who did were, immediately after meeting with the government’s lawyers, whisked to the offices of the attorneys for the defendants where they were questioned on what they had discussed with the FBI. William Frank was beside himself at the resistance Nucky was putting up. It’s best to let Special Agent Frank speak for himself:It now became perfectly clear the opposition was well-organized. It was not a case of individuals committing perjury, but the perjury was the result of a gigantic conspiracy and must have been planned by lawyers. Every day that the grand jury sat a group of lawyers hung around in the corridor of the Post Office Building ready to step in and defend anyone who was either cited for contempt or indicted. There is no question but that these lawyers were engaged by the organization and were not representing individual defendants. One Bondsman was always present, and always posted bond, no matter who was indicted.

  As Frank learned, his battle with Nucky was only beginning.

  The Austin Clark verdict was followed by several guilty pleas and convictions of minor defendants, all who refused to cooperate with the government. The first major trial hitting at the core of Nucky’s empire was that of the numbers bankers, totaling 14 defendants. They were charged with conspiracy to commit perjury and income tax evasion in connection with the numbers syndicate.

  The government began its case on April 29, 1940, with high hopes of convicting all 14 defendants. In addition to the testimony of the agents, the prosecution was forced to use as witnesses employees of the defendants. These witnesses didn’t know enough to incriminate Nucky and weren’t making enough money to risk imprisonment. They gave the government the same statements they made to the grand jury; nevertheless, on cross-examination by the defense they answered “yes” to any leading question put to them. This destroyed the value of their testimony and the government had to rely on telephone records and statements made by the defendants to prove its case. But the jury wasn’t convinced, and after two days of deliberating the court declared a hopeless stalemate. William Frank and his agents weren’t about to quit and requested the U.S. Attorney’s office to move for a re-trial, which was scheduled in July.

  Several weeks after the first trial, the judge who heard the case received a letter informing him one of the defense lawyers had bribed several jurors. While the agents were unable to prove a bribe had actually been paid, they later obtained convictions against several of the defendants and one of their lawyers for jury tampering. The lawyer was Isadore Worth, a former Assistant U.S. Attorney. Worth was convicted and disbarred the following year.

  A second trial on conspiracy charges against the same 14 numbers bankers began on July 8, 1940. The government’s case went in much stronger than the first time and the prosecutors were certain of a conv
iction. Despite the prosecutors’ confidence, the defendants didn’t appear the least bit concerned. This time only two of them took the stand in their defense. Their lawyers put up little resistance, almost as if they were conceding the case. The agents, prosecutors, and judge were baffled when the jury returned a verdict of not guilty.

  William Frank feared his investigation was at an end and knew Nucky Johnson was behind the acquittal. Judge Biggs, who heard the trial, was troubled by the jury’s verdict and urged Frank to have his agents question the jurors. The result was startling. One of the jurors, Joseph Furhman, was a plant, some think, by friends of Nucky’s in the Federal Clerk’s office. He was personally acquainted with two of the defense lawyers, Carl Kisselman and Scott Cherchesky. Furhman’s brother was an attorney associated with Kisselman. It was common for Kisselman and Cherchesky to meet Furhman socially for lunch and to shoot pool together at the Walt Whitman Hotel in Camden. Neither Kisselman nor Cherchesky advised the court of their relationship with Furhman at the time the jury was selected.

  Upon questioning the jurors, William Frank learned the prosecution never had a chance. From the first day of trial, Furhman ridiculed the government’s case to the jurors and mocked the judge and the prosecuting attorneys. When the deliberations began, the ballot was eight to four for conviction; however, Furhman was a strong personality and badgered the other eight jurors until he succeeded in getting them all to change their votes. The defendants were tried again—on the substantive crimes as opposed to conspiracy—in March 1941, but only after the panel of jurors had been carefully screened and lectured to by the court. This time there was a conviction.

  With Austin Clark and several other defendants sitting in jail and a conviction of all 14 numbers bankers in hand, William Frank and his people turned on the pressure. Frank had the U.S. Attorney subpoena the convicted defendants before the grand jury and questioned them concerning the payment of protection money to Nucky. In response to their perjury, Frank threatened them with a second indictment and, if convicted, a second jail term. The pressure was more than they could handle. It wasn’t possible for all 14 to remain silent, and several of them agreed to testify in exchange for leniency on their sentences. A critical witness who came forward was Ralph Weloff, one of the partners in the numbers syndicate. Weloff admitted that from 1935 through 1940 he and others personally delivered to Nucky a minimum of $1,200 per week in protection money. That was all the agents needed. The government obtained a second indictment and pressed for trial on both of them, which was scheduled in July 1941.

  The tampering with the first two juries to hear the trial of the numbers syndicate haunted William Frank and the prosecutors. Albert Marino, the judge who presided at Nucky’s trial, ordered a careful check of the entire jury panel to prevent any meddling by Johnson. Sure enough, several days before Nucky’s trial was scheduled to begin, the agents uncovered a third conspiracy to tamper with a jury.

  In May 1941, Zendel Friedman, who was a partner in the nighttime numbers game, went to trial and was convicted of income tax evasion. One of the people from the group of prospective jurors for Nucky’s trial had sat on Friedman’s case. When questioned by the agents, this juror revealed that Zendel Friedman and Barney Marion had offered him a bribe. Two days later a second and a third juror gave statements that they too had been offered bribes and that one of the persons who made the offer was employed with the Atlantic County Sheriff’s office (Nucky’s brother, Alf, was sheriff). This person, Joseph Testa, admitted that Nucky’s bodyguard, Louie Kessel, had asked him to approach the juror.

  The government assumed the publicity given to the other jury tampering matters would discourage Nucky’s people from trying it again, but they were wrong. The contempt citations, convictions, and jail sentences of the people involved in jury tampering hadn’t deterred Friedman at all. If Nucky went to such lengths to protect a single numbers racketeer, what would he do to save himself? With the trial only a week away, the prosecution was on the verge of panic.

  On July 14, 1941, after 4½ years of exhaustive work by William Frank and his team of investigators, Nucky’s case finally went to trial. The courtroom was standing room only and had a carnival atmosphere.

  Nucky was a national phenomenon and lived up to his reputation, appearing the first day in a vanilla-colored suit, red carnation, and lavender tie, sporting a straw hat and brass-handled cane. His case received so much advance publicity that special press tables had to be set up in the courtroom to accommodate the more than 30 reporters from throughout the nation who attended the trial each day. Hawkers and vendors of all kinds set up shop outside the courthouse to make a buck off the crowds. Despite having the testimony of Corio on the railroad contract and Weloff on the protection money, the prosecutors were ill at ease as the trial began. In preparation for one of Nucky’s rumored defenses, the government summoned 125 persons prior to trial whom they believed the defense might call as witnesses to support Nucky’s alleged “political expenses.” Frank wanted to explain to them the meaning of perjury. Most of the people summoned never showed. Nucky posted one of his goons in the lobby of the Post Office Building where the agents had their office. Those witnesses who did show were told to go home.

  Joseph Corio, who had resigned his judgeship, was the main witness in the first half of the government’s case. It had been rumored for years that Nucky was Tony Miller’s silent partner and A. P. Miller, Inc. was a front by which Nucky profited on government contracts. Corio’s testimony confirmed the rumors and provided the details. According to Corio, Nucky had received 50 percent of all Miller’s profits since he was in business, but the kickback on the railway station was 60 percent. There were numerous delays in the final awarding of the contract and Miller became so nervous he might lose it he agreed to increase Nucky’s share of the profits.

  Miller’s contract with the railroad was a “cost plus” agreement. Under the terms of the contract, Miller submitted bills periodically and received payments for the sums expended plus a small portion of the profit to pay for his overhead. The remainder of the profits was retained by the railroad until the job was entirely completed. Should Miller fail to live up to the terms of the contract, the amount retained could be forfeited as a penalty.

  When Miller received his first check, Nucky demanded his share of the profits. Miller explained that his money had to wait until the end of the job, but Nucky’s greed was too great. In January 1934 the written contract was prepared. Judge Jeffers asked Corio’s secretary to destroy her shorthand notes, but without telling anyone, she hadn’t. The only two copies that Nucky knew of were his and Miller’s, and both of them were destroyed.

  Nucky’s lawyer, former U.S. Attorney Walter Winne, made repeated inquiries to learn if the government had a copy of the contract, but each time the prosecution denied him. The court rules at the time permitted this and Winne went to the Department of Justice in Washington and offered to plead Nucky guilty if the government would show him the contract. The U.S. Attorney’s office refused, and it wasn’t until the trial when Corio’s secretary produced a copy of the document that Miller and Nucky had signed. Nucky testified to the contrary, but there was no way the jury could believe his denials.

  As to the second half of the government’s case, the protection money, the government eventually had more witnesses than they needed. Once Ralph Weloff made the decision to testify, he encouraged other members of the numbers syndicate to do the same so that he wasn’t alone. Weloff testified that the numbers syndicate began making weekly payments to Nucky in 1933. The purpose of these protection payments was to ensure there were no raids and that no out-of-towners competed with them. Should there be a problem with the police or a renegade numbers operator, the syndicate’s contact person was Atlantic City Police Detective Ralph Gold, who was in charge of the vice squad.

  Weloff and others testified that between 1935 and 1940, they personally delivered $1,200 in cash to Nucky each week. In all, a total of 12 numbers racketeers testif
ied that protection money had been paid to Nucky. Despite tough cross-examination, their stories held up.

  Nucky’s lawyer, Walter Winne, began the defense by conceding that his client had received the money. “We admit that we received money from the numbers racket in Atlantic City. We are not too proud of that source, but we deny that we ever received as income any money that we did not report for taxes.”

  Winne then proceeded to outline his defense. He began by declaring that the numbers operators had approached Nucky and asked for his help. The numbers game was looked on in Atlantic City as something that should be legalized. Weloff and other numbers people had filed a petition with the City Commission containing the signatures of more than 7,000 local residents in which the petitioners requested city government to recognize the numbers game as legitimate. Nucky was just following the wishes of his constituents, and the money he received was used to support his political organization. According to Winne, Nucky’s sole profession was that of a politician. All the payments he received were political contributions, which were spent to finance the Republican machine. As Winne stated, his client needed “plenty of oil to run his political machine.”

  Proof of the money spent was a shoebox filled with more than 800 receipts, which were presented to the court through the testimony of James Boyd, Clerk to the County Freeholder Board. According to the testimony of Boyd and Rupert Chase, a messenger in Nucky’s treasurer’s office, Nucky had spent more than $78,000 on political expenses during the several years involved on the tax evasion charge. The remainder of the income that the government could prove was included in Nucky’s tax return under “commissions.”

  Nucky took the stand and testified he had taken the money from the numbers syndicate and spent it “to elect candidates that were friendly to my policies and to carry on throughout the year the building up of my organization—taking care of the poor, paying rent, buying coal.” Further testimony in support of the defense that all the money had been used for politics came from the mouths of three local newspaper publishers. The newspapermen testified they had received money for the purpose of publicizing Nucky’s organization and that their editorial policy was favorable to his candidates.