Turning his attention to the Costello brothers, Stichman told Goddard that Frank was the other big principal in the conspiracy and that, along with Edward, worked on the “purchasing end” of things. Edward Costello, the prosecutor alleged, had brought in liquor from the French colonies of St. Pierre and Miquelon, as well as other points in Canada, to the vessels on Rum Row. Frank Costello, the prosecutor also charged, was the man who paid off the Coast Guard members at the instigation of Dwyer. To buttress the case against Costello on the bribery charge, a total of five members of Coast Guard were arrested. Another defendant turned out to be Jerome Geigerman, one of Costello’s brothers-in-law whose listed occupation was that of chauffeur, although it wasn’t clear who he drove.
Back in the 1920s, bail was usually set to assure that a defendant would show up in court. In the case of Dwyer, the prosecutor seemed to want to set an example and asked the judge to set a bond of $75,000, a rather exorbitant sum. “Pure romance,” responded Dwyer’s attorney Louis Halle. Dwyer had a wife and five kids in school and college, plus a house in the Belle Harbor, Queens, said Halle. The defense attorney low-balled the amount and asked Goddard to set bail at a mere $500. That was all that was needed, Halle insisted, to assure that Dwyer would stay around to answer the government’s ridiculous charges. Goddard, the judge, thought differently and required Dwyer to post a $40,000 bond.
Showing how important they were in the alleged conspiracy, Frank and Edward Costello were required to post a $20,000 bond each, as were real estate brokers C. Hunter Carpenter and Philip Coffey. Jerome Geigerman had to put up a $2,500 bond while the Coast Guardsmen accused of taking payoffs had to post bonds ranging from $5,000 to $10,000, high amounts for men who didn’t earn much with their modest government salaries ranging from $36 to $100 a month.
Manhattan U.S. Attorney Emory R. Buckner noted that not all Coast Guard members surrendered to the temptations allegedly offered by Dwyer and Costello. Some resisted or else took token payments and turned over the money to their supervisors, thus helping to build the criminal case. But in all the publicity surrounding the Dwyer-Costello arrests, one name that didn’t initially surface was that of Fuhrmann. Annie and Hans Fuhrmann, the beleaguered couple from Long Island, had for several months been giving federal officials information and intelligence that led to the break-up in September of the Waxey Gordon bootlegging ring. With the bigger indictment of the Costello-Dwyer combination, the value of the Fuhrmann information had definitely increased.
But the results of the investigation apparently were too much for Hans Fuhrmann to bear. On the night of January 28, 1926, just days after the big indictment, the body of Hans Fuhrmann was found in the Hotel Arito, at Sixth Avenue and Forty-fourth Street. A policeman said he was found by a hotel maid lying in bed. In Fuhrmann’s left hand was a .38 caliber automatic pistol. He had a gunshot wound to the left temple.
Annie Fuhrmann was convinced her husband had been murdered by mobsters to prevent his testifying at any trials. She pointed to the fact that the previous September another informant had been found murdered in a limousine in Manhattan. Before he died, Hans seemed like he was in a better place, making legitimate money and out from under the yoke of the bootleggers. She also speculated that if it wasn’t the mob then the fault for Hans’s slaying lay with the federal Prohibition agents themselves. Her husband had told her that many of the agents themselves were taking bribes, and she explained that a notebook her spouse had kept recorded which government officers did and didn’t accept payoffs.
“His life as a bootlegger was bad but this was worse,” Annie Fuhrmann said. “They should have watched him . . . they shouldn’t have given him a gun. Now that he is gone how are they going to convict the men who were indicted?”
The Manhattan U.S. Attorney was forced to acknowledge that Fuhrmann had been an important witness against the Wexler and Dwyer groups. But both police and the coroner felt certain that the ex-bootlegger had taken his own life. He left no note. With or without Fuhrmann, the prosecutors were going to push along with their criminal cases.
The arrest of Frank and Edward Costello and the others in the Dwyer case signaled a shift in focus for the federal Prohibition Department. There had always been thousands of petty offenders who violated the Volstead Act, small fish who complained about the way the bigger fish could escape arrest and prosecution. But now the government was willing to gather intelligence, follow leads overseas, and cultivate informants to build cases against the ringleaders. For Frank Costello and William Dwyer, they faced a sea change that could swamp them in a way the worst nor’easter on Rum Row couldn’t.
It didn’t take long for things to get worse for Costello and Dwyer. On January 26, 1926, just over a month before they were initially arrested and two days before Hans Fuhrmann killed himself, federal officials unsealed indictments in the case that indicated how serious the government was in going after both men and their cronies. A total of sixty-two men were charged, including Dwyer, Frank and Edward Costello, the Coast Guard crew members and the others initially arrested the previous December. But there were additional defendants charged, including Frank Costello’s close friend and driver Jack Aloise, more Coast Guardsmen, as well as some former Prohibition agents who had retired and allegedly joined the conspiracy. Also charged was a businessman out of St. Pierre, the French colony off Canada, who came to Manhattan frequently and sold liquor directly to the Costello-Dwyer group, as well as a pilot who had flown out of Curtiss Field to help smuggling ships find their way at sea.
Although no charges of violence were included, the indictments accused Dwyer and Brooklyn businessman and bootlegger James McCambridge of responsibility for a dozen deaths through a mishap at sea. Investigators determined that in November 1924 Dwyer and McCambridge sent the vessel William J. Maloney out to sea on a rum-running mission, knowing that the craft was unseaworthy. The vessel sank on November 16 with the loss of twelve men who left behind a number of widows and a total of twenty-two children without their fathers. Both men were charged under a little-used maritime law and the families of the lost men eagerly gave evidence to help get Dwyer and McCambridge indicted.
“Dwyer’s passion for expansion has been most helpful to us,” chief prosecutor Buckner said sarcastically as he announced the new charges. “His elaborate organization included so many subordinates that when the house began to fall many took refuge in the cyclone cellar of [my] office, gave their testimony and received immunity.”
Dwyer and Costello’s operation had been so large, the prosecutor said, that their underlings rushed to cooperate with investigators to save themselves. This fit perfectly into the government’s plan to move up the food chain and go after the bigger fish. Dwyer, whose flamboyant lifestyle and stature as a sports impresario with his hockey and football teams always grabbed headlines, was the main focus of the government’s wrath. But it was Frank Costello who had been the real architect of the smuggling operations, the man whose sense of organization and contacts had made things work. The problem was that his genius peaked at a time when the Prohibition police, shamed enough by their failures to stem the tide of alcohol, finally started to take action.
CHAPTER SEVEN
“KING OF THE BOOTLEGGERS”
WITH OVER SIXTY PEOPLE CHARGED in the Costello-Dwyer case, there was no way the government was going to try all of the defendants together. So in July 1926, the trial of William V. Dwyer, whom investigators believed was the main “king of the bootleggers,” began in Manhattan federal district court. Jury selection took three days and wasn’t easy because a number of potential jurors frankly told the trial judge Julian W. Mack that they were prejudiced against the Prohibition laws, reflecting a widespread attitude in the public. Eventually a panel of twelve men was selected and included a salesman, coffee merchant, insurance broker, and a jeweler.
Both Frank and Edward Costello were not included in the Dwyer trial. Their charges were scheduled for a later date. But the Dwyer case was really a dress rehearsa
l for what would happen when it was their turn. The prosecutor, Stichman, outlined the case for the jury and said Dwyer was the head of the ring, a man who took tribute from other bootleggers for a set price for each case of liquor they brought ashore from Rum Row under Dwyer’s protection. The ring had a clear division of labor, with different men like Jack Kirsch procuring the booze overseas, unloading vessels which made it into New York harbor, building and repairing speed boats and recruiting crews to man the vessels, noted Stichman. The prosecutor also added that two Coast Guard officers helped Dwyer land 500 cases of liquor on their own Coast Guard vessels.
Just before Stichman called his first witness, Jack Kirsch, the man who was Dwyer’s contact and who located foreign sources of liquor, decided to plead guilty to the three counts in the indictment. The move caused a protest from Dwyer’s lawyers and the other defense counsel but there really was nothing they could do to stop Kirsch from entering a plea. Judge Mack didn’t make any announcement about why Kirsch decided to admit his guilt but in any case, it wasn’t a good omen for Dwyer.
The first witness for the government was Charles Augustus Smith, a mariner, who testified how in March 1923 he met Dwyer in the Loew’s State Theater Building at Broadway and Forty-fifth Street in Manhattan. After the interview, Smith said that Dwyer put him in charge of the boat Dorin, which contained liquor. About a month later, Smith said Dwyer made him navigator of another vessel, the William A. Morse, and told him to go to St.Pierre and Miquelon, the two French islands where earlier Costello traveled to do business for liquor and set up his supplier connections. Dwyer told the crew to pick up as much liquor as they could on the islands, but the William A. Morse had to detour to Halifax after it got stuck in some ice, said Smith.
As he continued his testimony, Smith made matters worse for Dwyer, showing how much pull the rum baron had with law enforcement—and how adverse police were to enforcing the Prohibition law. He told jurors how members of the NYPD had been present when two hundred cargoes of liquor had been brought in from Rum Row for Dwyer during a two-year period from February 1923 to March 1925. Sometimes the cargoes were unloaded at a Bellevue Hospital pier on the East River, again in the presence of uniformed patrolmen of the NYPD, as well as cops from Weehawken in New Jersey during unloadings on the Hudson River, said Smith. In all, Smith reported that Dwyer had paid him a total of $40,000 for his work smuggling in mostly whiskey but some champagne and sauterne. He had only had five loads seized by the Coast Guard.
More damaging testimony was given by a former Coast Guardsman named Paul Crim, who quit after only about six months in the service to become Dwyer’s chauffeur. Crim told the jury how just a month after he joined the service he met Dwyer in Manhattan. Crim agreed to have the vessel he served on act as a convoy vessel for Dwyer’s Rum Row boats to provide protection. Initially paid $100 by Dwyer, Crim said that when he asked for more money he was told that he would have to smuggle liquor to earn the cash. It was in December 1924 that the Coast Guard vessel, known by the acronym “C.G. 203,” traveled to Rum Row and picked up a load of 700 cases of Scotch from a schooner anchored thirty-five miles southeast of Ambrose Light, said Crim. The crew of C.G. 203 then circled the schooner to throw off a nearby Coast Guard cutter and delivered the cargo to piers at Christopher Street on the west side and also on the other side of Manhattan by North River. For their services, the Coast Guard crew got two cases of champagne; Crim said he got $700 from Dwyer.
While Augustus Smith in his testimony had indicated that Dwyer and his associates had the help of NYPD cops, Crim showed that the bootleg king had hooks even into the office of chief Manhattan federal prosecutor Buckner. Crim said that after he left his job with Dwyer he had no contact with him until he suddenly called him at home in early January 1926 to say that sealed indictments had been filed against the ring. Dwyer said he knew that, stated Crim, because he had received information from “someone in Buckner’s office.” Crim should hide, said Dwyer, who helped him stay in a Manhattan hotel. A few days later Dwyer and his lawyer, a slick operator named Louis Halle, advised Crim to go to Montreal, where Dwyer was a part owner of the Mount Royal race track. But federal agents soon tracked him down and showed him a letter from his wife back in New York, all of which Crim said convinced him to return home.
The way Dwyer and his lawyer tried to get Crim out of town was a strong indication of the smuggling king’s consciousness of guilt. The trial wasn’t going well for Dwyer and his nine other co-defendants. Of course, Frank Costello wasn’t facing the music in court, at least not for a few months anyway. But as testimony in Dwyer’s trial continued to unfold, things were happening that would later have an impact on Costello’s fate, as well as that of his brother Edward and their cohorts. It all revolved about a strange, unorthodox federal official named Bruce Bielaski, a former spy who in the years before Prohibition stirred up his share of commotion in an international incident with Mexico.
Bielaski was born in Maryland ten years before Frank Costello. His father was a Methodist minister of Lithuanian descent while his mother was Polish. After earning a law degree, Bielaski became a bit of a rising star in the Department of Justice, straightening out the court system in the territory of Oklahoma before it became a state. Back in Washington, Bielaski in April 1912 was appointed head of what was then known as the Bureau of Investigation, the forerunner of the FBI. It was as head of the bureau that Bielaski made allegations that German businessmen, during the period before the U.S. entered World War One, had attempted to buy newspapers in the States in an effort to get Germany’s position before the American public. He left government service in 1919 to practice law.
It was in 1922, while on a trip to Mexico, that Bielaski was kidnapped in the town of Cuernavaca and held for 10,000 pesos ransom. Bielaski managed to escape from the cave he was held in and walked to the town of Tetecala where an American newspaper reporter brought him back along with the ransom, which had been assembled by a friend. While the Mexican press accused Bielaski of staging his own kidnapping, nothing ever happened to him.
But the lure of government service for Bielaski was strong, and by 1925, Gen. Andrews, the man in charge of the federal effort to enforce Prohibition enticed him to return to government employment as an agent. But it wasn’t just as any ordinary agent. His job was to find out, among other things, who had been bribed by the bootlegging ring, and to do that Bielaski decided to go undercover and bring some of the corrupt Coast Guardsmen into the government’s fold as witnesses. This was the era before undercover operations were common and the tactics used by Bielaski were ahead of the times. Defense attorneys called him and his associates “superspies” who were part of some invisible government. During the Dwyer trial it was shown that some of the cooperating witnesses had been given money by Bielaski while they waited to testify against Dwyer. Under cross-examination the witnesses denied that they were part of a government plot to frame Dwyer or that they agreed to work for Bielaski as part of a bargain to “save your own carcass from a dungeon.” Crim did concede that Bielaski held something over him while he testified: he had never been arraigned on the smuggling charges he faced in the case.
Dwyer’s case went to the jury on July 26, 1927, and from the way Judge Julian Mack instructed the jurors on the law you wouldn’t be far off the mark to think that he was trying to prejudice the panel against the defendants. Even the reporters covering the case back then thought there was bias.
“There is no contradiction by other witnesses of the things stated by the government witnesses” said Mack. Unless the testimony was untrue “it is your duty to accept it,” he explained. In other words, the government witnesses had carried the weight of the day, unless it could be shown they were lying. He even seemed to tell the jurors that if Dwyer or his co-defendants wanted to take the stand to explain away things they could have—but didn’t.
Mack also told the jury that it didn’t matter one bit what they individually thought about the Prohibition laws or if they drank in spea
keasies or in private. He said the panel was “duty bound, as jurors, to apply the laws as I give it to you, the evidence, utterly without regard to your personal observance, or non-observance of that law.”
If the jurors also had any feelings about General Andrews or his aide, Bielaski, they should put them aside, although Mack said that if they misused government funds then that could affect Bielaski’s credibility. Mack did make one important statement favoring the defense and that was that government witness Augustus Smith was found to have lied in parts of his testimony, something he said worked to the benefit of two of the defendants—but not Dwyer. Although he didn’t know it at the time, Mack planted a seed in Costello’s mind as he watched the trial about how he should handle his own defense. If Bielaksi and his tactics were viewed as problematic by potential jurors, then maybe the case could be won, Costello thought.
The jury got the case just before noon on July 26. It was at 11:00 P.M., after just over six hours of full deliberations that the panel came back with a decision. It was a split verdict: six of the defendants were acquitted; Dwyer was convicted of one count of conspiracy. One of those acquitted was Edward Gallagher, a former Coast Guard captain who was alleged to have protected the rum boats and used a Coast Guard cutter to bring in 1,400 cases of liquor.
Dwyer took his verdict calmly and even shook hands with Manhattan U.S. Attorney Buckner who then asked the defendant if he had received a “square deal.”
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