Top Hoodlum

by Anthony M. DeStefano

  “You! You’re a hell of an Italian!” said Luciano.

  “Sure, I am,” the detective replied. “I am a hell of an Italian.”

  On April 17, Luciano was sent back to New York to face the charges.

  The trial of Luciano and his co-defendants began in June 1936, less than two months after he had been extradited to New York. It was a hard-fought case by all sides. Dewey brought in a parade of witnesses and in his opening statement to the jury said that it was Luciano who took over the vice racket in 1933. He did that, Dewey said, by driving other men out of business, forcing them to pay up to join his syndicate or leave town.

  As he did with the Mafia families generally, Luciano organized the business, creating a thriving operation that had more than 200 brothels in the city staffed by over 1,000 women, Dewey said. The pressure was applied to bookers who sent prostitutes to brothels, to either buy their way into the syndicate for $10,000 or leave town. The men were persuaded by the tap of a gun butt to do the right thing, the prosecutor stated. The weekly fee for any booker who joined the combination was $100 a week.

  The first witness to tie Luciano into the syndicate was an ex-con named Joseph Bendix who had done time in Sing Sing prison. Bendix said that he wanted a job as a collector of cash from the brothels and finally met Luciano at the Villanova restaurant on West Forty-sixth Street to ask for the job. Luciano thought the job was a bit beneath Bendix and chided him for asking only for $35 a week.

  “If you are willing to work for $40 a week, it’s okay with me,” Luciano said, according to Bendix. “I’ll tell Little Davie [Bertillo] to put you on. You can always meet me here.”

  Like some of the prostitutes who testified, Bendix had baggage impacting his credibility, in his case an attempt to obtain a lighter sentence by telling prosecutors he had information about $1.5 million in stolen securities, information that prosecutors decided was worthless. The women, all of whom were looking for leniency from the court and in some cases were drug addicts, testified about seeing Luciano in person or heard that he was supposed to be the head of the syndicate.

  As the trial progressed, Luciano and the other nine defendants (three others had pled guilty during the case) tried to upend the government case by showing that Dewey was trying to threaten them with long prison sentences to falsely implicate the Mafia boss as the czar of prostitution. Finally, Luciano himself took the witness stand to deny he was involved in the scheme. The results were disastrous. Under four hours of brutal cross-examination by Dewey, Luciano was forced to admit he had been a bootlegger, had lied in the past to police and had peddled narcotics as a youth. Luciano admitted he knew gangsters like the late Joseph Masseria, Louis “Lepke” Buchalter, and Bugsy Siegel. But when he denied knowing Ciro Terranova, the fabled “artichoke king,” Dewey showed the jury telephone records from Luciano’s suite in the Waldorf-Astoria that showed calls from there to Terranova’s house in the Bronx.

  Early in the morning of June 7, 1936, a Sunday, Luciano and eight of his co-defendants were convicted of compulsory prostitution. The jury needed only about six hours to reach its verdict. Luciano appeared to show no emotion, but others clenched their fists, trembled, or sneered. Dewey put out a statement that Luciano was “the greatest gangster in America” and that he controlled narcotics, policy, loansharking, the age-old Italian lottery, and rackets in industries like the garment center.

  Dewey had done the job he set out to do, get the conviction of a top racketeer. But over the years many would criticize his tactics, saying it prompted witnesses to give perjured or carefully sculpted testimony to get Luciano at any costs. According to Sciacca, during an interview he had with the madam Polly Adler in 1955, she baldly stated that she knew some of the witnesses Dewey used in the case against Luciano and that his staff “put words into their mouths and gave them all of the information they needed to tell a convincing story.” Adler added, according to Sciacca, that “those girls lied because they’d been threatened by Dewey, they admitted that quite freely.” Also years after the Luciano trial in 1972, Frank Hogan, one of Dewey’s aides, who later went on to become Manhattan’s longest-serving district attorney, admitted that under modern rules of criminal procedure and jurisprudence Luciano might not have been convicted. Back in the 1930s, defendants had no right of discovery of evidence before trial so they couldn’t investigate prosecution witnesses or get access to various versions of the statements they gave investigators, admitted Hogan. Back then it was trial by surprise and sometimes ambush.

  But Luciano was convicted under the law as it was in 1936 and as inadequate and as unfair as the rules of law were then by modern standards, that was the lot he was cast. When it came time to sentence Luciano, Judge Philip J. McCook gave him a term of thirty to fifty years. Upon hearing that, Luciano’s eyes flickered, but he remained composed. He promised to appeal, a process that took months and in the end was futile.

  With Luciano now out of commission as boss, and with his top lieutenant Vito Genovese having hastily fled to Italy with $750,000 crammed into his luggage to avoid an arrest for murder, command of the crime family fell to Frank Costello, the man who claimed to be legitimate and who fancied himself as nothing more than a businessman. But in reality, Costello was the gangster under the radar who not only had tight relationships with Luciano but also with powerful mobsters like Joe Adonis and Meyer Lansky, like-minded powerful men who didn’t need the status of being a mob boss to feel secure in what they did.

  Costello had some legitimate businesses—real estate and automobile sales and service—but his big money had come first from the Prohibition bonanza and then from the slot machine operations, which, depending on where he operated, were either illegal or somewhat legal, depending on how much he could pay off the cops. With his respectability, Costello was a somewhat reluctant prince of the Mafia, a man who stepped into the shoes of Luciano when needed—and 1936 was a time when the mob needed Costello’s steady hand on the tiller.

  It was only a year earlier that Costello and Luciano had seen how easy it was for things to spin out of control with some of their colleagues in crime. Take the case of Dutch Schultz, the Bronx beer baron and gambling boss, otherwise known as Arthur Flegenheimer. A German-American Jew, Schultz was a volatile character, particularly when his life and livelihood was threatened as often proved to be the case. In one instance, Dewey, wearing the hat of a Manhattan federal prosecutor before he became special state prosecutor, tried to prosecute Schultz on income tax evasion. Schultz’s lawyers got a change of venue from Manhattan by claiming he couldn’t get a fair trial in New York City, and the case was transferred for trial to the upstate town of Malone.

  Once in Malone, Schultz did his best to influence public opinion by donating to charities and helping children. The local citizenry ate it up and in 1935, Schultz was acquitted on the federal charges. The jury verdict made La Guardia apoplectic and he promptly threatened to have Schultz arrested if he ever came into New York City limits again. Beset by big legal bills, worried about his future, and with his rackets hurting, Schultz had beseeched Luciano and the Mafia commission to have his nemesis Dewey killed. Luciano and the others thought Schultz was nuts for wanting to kill the prosecutor, and in turn a team of assassins shot Schultz and some of his sidekicks in the Palace Chophouse, a Newark restaurant, on October 23, 1935. Schultz survived the fusillade long enough to receive the Last Rites as a Catholic (he had converted to the religion earlier) before finally dying of his wounds on October 24. He was thirty-three years old. Burial for Schultz was in Gate of Heaven Cemetery in Westchester. Although it is a Catholic place of interment, Schultz’s mother asked that he be buried in his Jewish prayer shawl and his yarmulke.

  Such was the volatile world of the Mafia of which Costello was now a leader. Prosecutors like Dewey were on a tear, and La Guardia was acting like a little Napoleon on a mission to rid the city of racketeers. As carefully as he tried to be, Costello was now at a point in his life where he could find himself in trouble becaus
e of the actions of others. Costello found out the hard way in the very strange case of the theft of jewels from Mrs. Margaret Hawksworth Bell in Coral Cables, Florida. It was one of the strangest episodes in Costello’s life and came close to costing him his freedom.

  CHAPTER TWELVE

  “I KNOW EVERYBODY”

  IF WRITERS LIKE DAMON RUNYON and Dashiell Hammett needed a good, true-to-life detective to give inspiration to their stories they would have been happy with what Noel C. Scaffa had to offer. A dour man with black hair, a short-trimmed moustache, and a thick nose, Scaffa was one of those private gumshoes who constantly found himself in the newspapers and sometimes in trouble with the law, an occupational hazard from the way he did things. Scaffa was known as the “Great Retriever,” the man who could find stolen jewels and get them back, often with no questions asked. Cops didn’t like him all that much and Scaffa got arrested numerous times as he worked his magic in the underworld, often skirting the edge of the law.

  Born in Sicily and arriving in New York in 1891, Scaffa’s family seemed well off until the financial panic of 1907 wiped out his father’s wealth. The old man died the next year and to support himself and his family, Scaffa took a job as a clerk in Maiden Lane, the insurance canyon in lower Manhattan where all the big firms had offices. At the age of twenty, he joined the Pinkerton Agency, the premier detective shop. He got his first big case quickly when the great tenor Enrico Caruso and his wife left their East Hampton home on Long Island for a trip to Cuba and discovered on their return that thieves had made off with $450,000 in jewels.

  Scaffa was assigned the Caruso case, mainly because the Caruso servants spoke only Italian, a language the detective was familiar with since he was a child. Despite his efforts, Scaffa couldn’t solve the case or recover the jewels. He told his bosses that the case could have been solved if the company had connections within the world of thieves and fences who regularly trafficked in stolen jewelry.

  While he couldn’t break the Caruso case, Scaffa realized that a good detective needed connections in the world of thieves if there was ever to be any hope in finding stolen jewels. He started his own detective agency around 1921, and while he took all kinds of cases to pay the bills, he developed a cache for recovering bangles and baubles. Apart from real estate, jewelry was one tangible thing the rich liked to flaunt. By doing so, they were advertising their assets to thieves and making themselves prime targets for rip offs.

  From his days with Pinkerton, it became clear to Scaffa that thieves really didn’t want to keep the jewels but would hold them for ransom, parting with them if they were able to be paid a portion of what the stones were worth. Scaffa reckoned that since insurance companies would pay the owners only about 60 percent of the value, the thieves would part with the stones if they got paid part of the remaining 40 percent of value. Once the stones were returned, the company wouldn’t have to pay 60 percent, just 30 to 40 percent—to the thieves—to make the recovery.

  Scaffa got to try out his modus operandi for the first time in a big way when thieves hit the Fifth Avenue apartment of Jessie Donahue. Lost in the break-in were diamonds and other stones worth a reported $650,000, but with insurance covering only up to $114,000. While police worked the case relentlessly, Scaffa, representing one of the insurance companies, waited with a sandwich and cups of coffee for a telephone call he guessed would come. It did. The caller asked for the “man in black,” the nickname for Scaffa because of his preference for dark suits. About a week after the robbery, Scaffa walked into the lobby of a Manhattan hotel and met with a man identified in news reports as Sam Layton. Both men exchanged packages and then about two weeks after Mrs. Donahue had lost her jewels they were returned by Scaffa to the insurance companies. He never identified the mysterious Layton. The cops charged Scaffa with compounding a felony, and after a mistrial the case was dismissed.

  After his success in the Donahue case, Scaffa’s reputation as the go-to man for the recovery of jewels spread. Scaffa got involved in other big recoveries and over the years was said to have found $10 million in stolen property, mostly diamonds. He became a celebrity, the object of awe and envy. He frequented Broadway nightclubs—he was single—and rubbed shoulders with the likes of Costello and others in the underworld. Scaffa seemed to have a formula for success in his peculiar line of work. But his methods would wind up getting both he and Costello in trouble.

  It was January 26, 1935, a time when Costello was making good money in Louisiana with the slot machines. In nearby Coral Gables, Florida, two low-level thieves from Brooklyn named Nicholas Montone and Charles Cali broke into the hotel suite at the Miami Biltmore of Margaret Hawksworth Bell, manhandled her, and robbed her of over $185,000 in jewels, including four strings of matched pearls, a diamond bracelet, and a 32-carat diamond ring. Montone was armed with a nickel-plated revolver and Cali with a. 25 caliber automatic pistol. Her older, millionaire boyfriend Harry Content tried to stop the heist but also got robbed, losing a watch and $100 in cash. Both victims were gagged and tied to chairs. Clearly, Bell got the worst of the deal in terms of the monetary loss.

  The theft was a big story because Margaret Hawksworth Bell was what was known in the tabloids as a “society” dancer who performed in various follies and reviews, often done in hotels. She was slim and attractive, and at the age of eighteen caught the eye of Content, then fifty-two years old. Content saw her during a performance in a Manhattan hotel and was smitten. The problem was that the older Wall Street investor was already married, and his wife wouldn’t give him a divorce. Margaret, being younger and wanting to get married, wed a young Army captain in 1927, only to see the marriage end a year later. In 1930, Margaret married James Bell, described in the newspapers as a millionaire broker and polo player. They divorced after five years.

  Margaret Bell and Content had finally resumed their relationship in 1935 after the death of his wife and Margaret’s recent divorce. Having so much experience in marriage and divorce, Margaret was one of those ladies who acquired an impressive collection of jewels over the years, and in the circles she traveled—aside from real estate—stones were the one tangible item of property and status that was coveted. Both she and Content had plans to get married when the robbery occurred. Bell had worn some of the stones to the race track the afternoon before she was hit, advertising to the world and to any enterprising thief who wanted to know that she had some fancy jewelry with her.

  The high-profile nature of the Bell and Content relationship gave the crime extra reason to be high on the radar of FBI director J. Edgar Hoover. His investigator soon discovered that the suspects Montone and Cali, who were both identified leaving the hotel by a doorman, had ties to the nightclub worlds in both Miami and New York, notably upstate Saratoga Springs. Hoover then brought up Scaffa’s name as a pivotal player in the recovery of the gems while other law enforcement officials said the case involved “figures notorious in the New York underworld.”

  Just four months after the robbery in Coral Gables, Montone and Cali were convicted in Miami. But as Hoover had indicated, the case had more to it than those two defendants. FBI documents disclosed that the agency was digging deeper into the case and had become suspicious of both Scaffa and Frank Costello. Although Cali was arrested in Miami, Montone had fled after the robbery to New York and stayed four days at the Warwick Hotel before finally being arrested. During his stay at the Warwick, Montone had called Costello’s telephone number, according to the records. Costello apparently helped hire a lawyer to represent Montone.

  What put the case high on Hoover’s list was the suspicion that private detectives like Scaffa were in collusion with jewel thieves in which reward monies for the stolen items was, as one FBI memo stated, “procured through false representations to the policy holding insurance companies.” The FBI had come across numerous cases up and down the Atlantic seaboard and what gave the agency special interest was the passage of the “National Stolen Property Act,” which essentially made it a crime to move stolen i
tems in interstate commerce.

  In the Bell case, FBI suspicion fell upon Scaffa because of problems with his story about how he located the jewels. Bell’s jewels were found in a railroad station locker in Miami shortly after the theft. Cops had been given the key to the locker by Scaffa, who said he received it from a man he didn’t know. FBI officials also had heard, but had trouble confirming, that Costello had advanced some of the money used in the heist by some of the principals. By May 29, 1935, Hoover was getting a flurry of messages from his subordinates about the progress on the case against Costello, Scaffa, and others. The messages were coming to him about once an hour, which in the era before email and texting was fast.

  It was actually on May 29 that Scaffa and two other men, Al Howard and “Broadway Charlie” Stern, were taken into custody by FBI agents. They were taken in on charges related to the federal stolen property statute. Scaffa suffered from the added indignity of being hit with a perjury charge as well. Costello was also being sought, but according to one FBI memo written by Hoover was hiding out after he caught a tip he was being sought. Costello eventually did turn up on May 31 and, accompanied by an attorney, surrendered to federal authorities. It was then that the FBI got Costello to make a detailed statement about his life and how he did business. Coming some sixteen years before he testified to Congress, Costello’s statement to the agents, while self-serving in ways, gave them a peek at what he was all about. He was a man who played things close to the vest.