Empire of Crime

by Tim Newark

  In September 1930, President Herbert Hoover invited Anslinger to take charge of the newly formed Federal Bureau of Narcotics (FBN) under the overall control of the Secretary of the Treasury. It was to be an elite crime-busting agency, just like the FBI, and Anslinger couldn’t have hoped for a more perfect job. He was only 38 years old.

  Within a few weeks of being in office, Harry Anslinger was embarrassed by a senator from South Carolina, who stood up in the Senate, waving a tin of opium. He had bought it only a block away from the Capitol. This prompted the FBN to launch its first major investigation of the narcotics underworld and, in 1930, they found that it was still very much dominated by the Chinese.

  There were opium dens in most American cities, and Chinese immigrant gangs – the Tongs – ruthlessly controlled them, alongside prostitution and gambling in their communities. The Tong gangsters made for exotic figures. In New York’s Chinatown, it was a little moon-faced henchman who took on his rival mob, the On Leongs:

  He wore the shirt of chain mail [with] which all of the Tong killers of the period protected their precious bodies, he carried two guns and a hatchet, and at times he would fight bravely, squatting on his haunches in the street with both eyes shut, and blazing away at a surrounding circle of On Leongs with an utter disregard of his own safety. He seldom hit what he aimed at, or anything else for that matter, but so long as he could pull the trigger he was dangerous to anyone up, down or sideways within range.

  With an eye to self-promoting publicity that would sustain him throughout his career, Anslinger met the senator’s challenge and targeted the opium dens along Pennsylvania Avenue. He got a break when he recruited an undercover agent from the On Leongs, but the brave Chinese informer was shot down dead in the street by fellow Tong members when they discovered his betrayal. It was an early lesson in the murky reality of Anslinger’s business.

  Not wanting to risk any more lives, the FBN chief decided on a simultaneous raid of 30 opium dens. With the assistance of 400 police patrolmen, they swooped on the illicit dens, cleared out their smoking equipment and took the operators to police stations. Hour after hour, the saturation raids went on. Anslinger went with the police and on one occasion was confronted by a well-dressed Chinese man in a business suit.

  ‘Why didn’t they cart you off with the others?’ Anslinger barked at him.

  ‘I’m the mayor of Chinatown,’ he replied in flawless English. He protested against the violence of the raids, but Anslinger cut him short.

  ‘You get these dens out of here,’ he told him. ‘If you or the Tongs try to open up these joints, I’ll raid them night after night. We’ll smash them into teakwood pulp.’

  The worlds of narcotics and prostitution went hand-in-hand, noted Anslinger, taking up the Yellow Peril menace of the previous decade. Chinese pimps were using drugs to seduce young women, especially white girls, giving them a few puffs of opium. ‘I felt simply wonderful,’ one 18-year-old woman told an FBN investigator. ‘I thought it was great. We ate little bits of Chinese candy. I was dancing with a Chinese boy. We danced a lot.’

  The Chinese candy was laced with cantharides, a sexual stimulant, the apartments were kept hot and the girls were encouraged to strip off their clothes. After seeing to their ‘guests’, when the girls wanted to relax the Chinese pimps gave them pills containing heroin. Soon they were hooked and the ‘free’ heroin had to be earned through serving more and more clients. The link between drugs and sex outraged middle-class Americans and Anslinger successfully used this to ensure his department was well funded.

  Having made some initial inroads into the domestic misuse of drugs, Anslinger knew he had to get a grip on how they were getting into the United States. For help with that, he turned to the research carried out by Russell Pasha in Cairo and Sir Malcolm Delevingne in London. The FBN got in touch with their imperial colleagues and one major route into the East Coast cities was revealed as originating in Canada. This had nothing to do with the Chinese and everything to do with the network of Europeans shifting processed white powder drugs from European manufacturers, part of the geographical drugs map already exposed by the Cairo-based Central Narcotics Intelligence Bureau.

  A secret report compiled by the Royal Canadian Mounted Police in Montreal, Quebec, chronicled the activities of a drug smuggler called George Howe, who had spoken to an undercover agent a few years earlier.

  ‘Howe has told Dufresne,’ said the report, ‘that one Rosenblatt, a heavy narcotic dealer of New York City who has recently visited Montreal, has given Howe some $2,000 with which to purchase narcotics in Europe.’

  Howe was born in Belgium to a British father and travelled on a British passport back and forth to Canada. In 1920, he brought with him to Montreal a number of statuettes purchased in Brussels. Nine of the statuettes contained 51 eighth-ounces of morphine sulphate and two figurines five half-ounces of cocaine hydrochloride. They were destined for a millinery store in Quebec run by a ‘Madam Howe’, but the deal went bad when she was arrested.

  Undeterred, Howe continued to travel from Antwerp to Montreal. In August 1922, his luggage was thoroughly searched as he stepped off a transatlantic steamer, but no illicit drugs were found. ‘Howe stated on return to Canada at that time,’ said a report from the Canadian High Commissioner, ‘that he had been in Belgium studying chemistry and art.’ In fact, he had just had a major cache of narcotics seized from him by the Belgian police.

  Howe was closely connected with Laurent Deleglise, who headed a major smuggling ring in Europe. Back in 1919, Deleglise bribed the superintendent of construction on the Cunard Line to get him access to all shipping. Having secured this route, he tried to bribe his way into Ottawa, but was uncovered and had to leave Canada. Thereafter he used a team of smugglers.

  ‘Deleglise was the brains of the whole affair,’ said a Canadian investigator. ‘His first policy was to keep each employee of his as far away from the others as possible, making each work independently and as far as possible never meet any other.’ This way one arrest would not imperil the whole gang. His carriers would deploy a variety of methods of hiding their shipments:

  The shipper of the drugs would load up one or two trunks full of drugs and send them aboard the ship, taking tickets, he would then miss the boat and the baggage would be held unclaimed. The shipper would then arrive by another route or boat and go to some small town and wire or write for his trunks, omitting to send the keys. The Baggage man would explain the difficulty of opening the trunk to the Customs Officer who would not bother his head and pass it out, or possibly the Customs man was squared, this is not known. It is known that he was either crooked or too lax to open the trunks.

  When Deleglise sent narcotics to the US, he had them forwarded by express post to a Japanese store in New York City. This may well have been the distribution centre used by several prominent US mobsters who dealt in narcotics in the 1920s, including Lucky Luciano and his criminal mentor, the millionaire gambler Arnold Rothstein. As Anslinger had predicted, these gangsters had made a fortune out of bootlegging alcohol during Prohibition but were now looking to other high-profit methods of illegal income.

  Piecing all this past intelligence together, both Anslinger and Russell Pasha focused their attention on destroying the most recent drugs syndicate and its master criminal, who was based in France. Called Elias Eliopoulos, this super-dealer was an elegant gold-tipped-canecarrying Greek who moved in elevated business circles and was very much at home on the boulevards of Paris. With money in his pocket from his successful entrepreneurial father, Elie – as he was known to his society friends – was hungry to make his own fortune and was very much taken by a conversation he had had with a fellow Greek, who told him about the money to be made from shipping dope to China. Encouraged, Elie was introduced to Jean Voyatzis, the largest importer of prepared white drugs into the Far East. They met in Tientsin in north-eastern China, one of the cities opened to western traders as a result of the Second Opium War.

  Elie struc
k a deal with Voyatzis in which the latter agreed to supply him with raw opium from China. Elie had this sent to two French pharmaceutical manufacturers – the Comptoir des Alcaloides and the Societe Industrielle de Chimie Organique. The French chemists were delighted to receive the opium at below market cost and reciprocated by providing Elie with processed narcotics that he shipped back to Voyatzis. The French companies acted under government licences that supposedly limited their quotas of dangerous drugs, but, no doubt, this was overcome by the enormous supplementary profits to be made from supplying Elie. Soon, he had struck similar deals with other French chemical companies to provide morphine and heroin.

  Sitting at the centre of a magnificently efficient narcotics business, Elie and his brother George, who had joined in the venture, enjoyed enormous profits gushing into their bank accounts. At one time, it was estimated that Elie was receiving from Voyatzis more than $50,000 a month. Bearing in mind that Anslinger was only earning $9,000 a year at the time, it is hardly surprising that social commentators noted Elie splashing his cash on champagne, beautiful women and the finest food in the grandest restaurants in Paris.

  Such wealth provided protection too, enabling him to bribe French government officials and police. Indeed, he was helpful enough to tip off French law enforcers about rival drug dealers who made the mistake of selling the goods in their own backyard in France.

  When the outrageous role of the French chemical companies was finally revealed by Russell Pasha to the League of Nations in Geneva in 1930, similar factories were simply set up in Turkey and Eastern Europe.

  Elie rolled with the shift in operations, putting all his efforts into magnifying his profits by supplying drugs to an increasing network of dealers and smugglers spanning the globe – including America – and that very much concerned Anslinger. Principal among these international dealers was the Italian-American August Del Grazio. A known associate of Lucky Luciano and Legs Diamond, he was their main agent in setting up direct links with Elie’s dealers in Europe.

  Previously, the two mobsters had tried to strike a drugs deal by themselves when in September 1930 they travelled in luxury on an ocean liner to Weimar Germany. The trip ended in farce when the high-profile Diamond was arrested in Germany and deported very publicly back to New York from Hamburg. He growled at journalists, telling them he was there to visit spa towns to cure his stomach ailments. When one cheeky reporter asked him if he had enjoyed his stay in Germany, he barked, ‘I hate it.’ Others reported he was there to perform in a German cabaret.

  Luciano carried on with their narcotics business in Hamburg more discreetly, but handed it over the following year to Del Grazio, who was entrusted with doing business for him with one of Elie’s partners. This would also end badly and it revealed a dimension to the international drugs trade that constantly led to its own demise – dealers liked ripping off other dealers.

  The double-cross began with Legs Diamond, who had made a fortune out of hijacking consignments of bootleg booze from rival mobsters. When he extended this to the narcotics trade, he made powerful enemies. Carlos Fernandez Bacula was a former Peruvian diplomat based in Vienna and part of Elie’s syndicate. Using his diplomatic passport and its subsequent immunity, he smuggled several consignments of heroin into New York – up to an estimated one and half tons of the drug, worth some $37 million. On his final trip, he was staying in a hotel and distributing 150 kilos of heroin through various agents. One carrier came back bloody and beaten, saying that his 50 kilos had been stolen from him.

  A few days later, Legs Diamond knocked on the door of Bacula’s hotel room and introduced himself. Famously charming, he sympathised with the Peruvian’s losses and offered to use his connections to get it back. Bacula knew Diamond’s reputation as a ruthless killer but could see little alternative to accepting the offer. A couple of days later, Diamond returned with 30 kilos, saying he’d had to use the other 20 kilos to pay off his contacts. Diamond then expressed concern at the whole of Bacula’s shipment totalling 130 kilos.

  ‘You’re bats,’ he told him. ‘Somebody’ll bust in. The safest thing to do is to get it to another place. There’s a hotel downtown where I got connections. Nobody would touch it there.’

  To reassure Bacula, he told him to have the stash guarded by his own Austrian bodyguard. The next day, having moved the drugs, the bodyguard was found dead in a pool of blood in the hotel room. His wrists had been slashed in an effort to make it look like suicide. The 130 kilos were missing, presumably stolen, Diamond told Bacula. The Peruvian ex-diplomat hurriedly sailed back to Europe to explain himself to Elie.

  Diamond probably thought he’d got away with the crude scam, but Elie was far more sophisticated and bided his time. When New York drugs envoy Del Grazio returned to Europe in 1931, Elie set him up in a double-cross. In Istanbul, Del Grazio took receipt of $10,000 worth of morphine cubes. He asked for them to be packed in crates with machine parts and then sent by train to Hamburg, from where they would be shipped to America. The Turkish manufacturer agreed, but had the morphine cubes secretly removed when they reached the warehouse in Hamburg. He was then going to tell the American gangster they had been stolen en route – just as Bacula had been told by Diamond – a perfect moment of vengeance.

  Greed, however, got in the way of the sting and another of Elie’s colleagues offered the mislaid $10,000 consignment of morphine cubes to Del Grazio – if only he could pick them up in Hamburg. Del Grazio grew suspicious at the similarity of the two deals, and when he turned up at the German port he was furious to be asked to pay twice for the same consignment of drugs! The story of Elie’s revenge that went wrong became a major source of amusement in the underworld. But it also revealed a drugs cartel at war with itself and that made it vulnerable to the narcotics-busting crime agencies run by Harry Anslinger and Russell Pasha.

  Shortly after the Elie–Del Grazio morphine farce, an American consul in Turkey alerted Anslinger to the 30 November train trip from Istanbul to Berlin taken by Del Grazio, during which the German police had arrested him.

  Fearing his business empire was about to implode, Elie sent word to Russell Pasha in Cairo that he wanted to talk and set the record straight. Interviewed in Athens by an agent of Russell’s Central Narcotics Intelligence Bureau and an agent from Anslinger’s FBN, the suave king of narcotics poured out all the details of his business but maintained he was being falsely linked to the Del Grazio shipment in Hamburg by the devious Americans. He didn’t want to go down for a payback that had gone wrong.

  With all the information provided by Elie, Anslinger broke up the American end of his network and many of the smugglers were arrested and imprisoned, including Bacula. Del Grazio, however, escaped major punishment and continued to be a key player in New York narcotics, later becoming involved in murky dealings with the CIA and even plotting to get Lucky Luciano out of jail through a secret deal with the US government.

  Elie was also too big to be imprisoned. Having told Anslinger and Russell Pasha all he could about the international drugs trade, he was allowed to retire to Greece with much of his wealth intact. When the Nazis invaded his country, he became a passionate anti-Semite and collaborated with them before setting sail for South America. He even turned up in New York, where he paraded his wealth at Park Avenue parties, before being deported back to Greece, where he ended his life, selling arms to both the Israelis and the Arabs.

  Elie’s Washington attorney informed Anslinger when he passed away.

  ‘Too bad,’ replied the FBN chief.

  ‘You’re charitable,’ said the lawyer. ‘After all the trouble he caused.’

  ‘Not at all,’ said Anslinger. ‘I simply know where he’s going – after this, hell won’t be fit to live in.’

  Although Anslinger would harbour many suspicions about the complicity of the British Empire in narcotics trading over the next few decades, it had been his close working relationship with imperial drugs-buster Russell Pasha that had helped nail one of the biggest crimelord
s of the period.

  6

  THE DARING SIR CECIL

  JUST AS PRIME MINISTER GLADSTONE had predicted, the British Empire’s well-meaning efforts to prohibit the Indian export trade of opium was causing a dramatic rise in illegal smuggling. From his desk in Whitehall, it was the task of the UK’s narcotics expert, Sir Malcolm Delevingne, to clear up the mess.

  In January 1927, he sent a letter of warning to Prince Charoon of Siam (now Thailand). The British Empire had been encroaching on this independent ancient kingdom throughout the late nineteenth and early twentieth centuries. It had absorbed its northern Shan provinces into Burma and in 1909, with its Anglo-Siamese Treaty, had taken four predominantly ethnic-Malay southern provinces to make the northern states of Malaya – the Unfederated Malay States. Great Britain considered the territory within its sphere of influence and Delevingne did not hold back in telling the Siamese what to do.

  ‘I hear that the Siamese Government have recently arranged for the importation of 1100 chests of Persian opium into Siam through MA Namazie of Singapore,’ said Sir Malcolm. ‘This Namazie is a connection and business associate of the notorious Namazie of Hong Kong and was himself concerned in some illegal drug transactions in Indo-China not very long ago.’

  Delevingne had heard that the government of the Straits Settlements (including Singapore, Penang and Malacca) was buying Persian opium from Namazie and had warned them not to do so again. The problem was that the Chinese population of the Straits Settlements had not been weaned off its addiction to opium and its colonial government, deprived of high-quality Indian opium, was doing its best to replace the shortfall – or face widespread Chinese discontent. Delevingne was aware of this problem, but was keen to cut out the gangsters that were making money out of the situation. So, if only Siam would step into line too, then they could exclude the undesirable Namazie altogether.