Top Hoodlum

by Anthony M. DeStefano

  “Here is a man facing fifteen years in prison if he is convicted,” said Downs. “How could I charge a jury on the testimony of [the notary] if he cannot remember whether he administered an oath or not? You cannot guess a man into prison.”

  Downs directed a verdict of acquittal and also indirectly criticized La Guardia’s heavy-handed involvement in pressing the case, telling the prosecutor it wasn’t his fault that the charges against Erickson had been brought.

  “It is not your fault if someone in a fit of excitement wants to throw matters such as this into court,” said Downs. “I am not going to let this case go to the [appellate court] and get scolded for incompetency because I am afraid of some one.”

  Erickson was free of the perjury charge, and La Guardia was apoplectic again. The Mayor went off on one of his anti-gangster tirades, ordering that Erickson be arrested as a disorderly person and insinuating bad things about Downs.

  “Now there are just two kinds of public officials; those who want to put punks, tin horns, gangsters and pimps in jail or keep them out of the city. That is the kind I am,” La Guardia said in a statement. “The other kind are those who want to keep them out of jail and in the city. If anyone wants to take that attitude that is all right with me, but we will not relent.”

  Predictably, Downs reacted angrily, and in a letter sent to La Guardia in June 1939 asked the Mayor point-blank if he was referring to him in his outburst after the Erickson dismissal. Downs got no response from La Guardia when he kept asking the same questions. (City archives show that in 1945, when he was no longer sitting as Mayor, La Guardia made a similar comment about Downs when the judge was running for reelection.) What did happen was that a Queens man, identified in city records as “F.P. James,” wrote La Guardia claiming that Downs had been a race track bettor and had placed bets with a bookmaker bankrolled by Erickson. If true, the allegations would be political dynamite that La Guardia could have used to undermine Downs and cast doubt on his honesty. But city commissioner of investigation William Herlands looked into the allegations and wrote La Guardia, telling him that James had “given us an inaccurate, unreliable hodge-podge of facts containing scattered elements of truth” but nothing worth any official action.

  Meanwhile, Erickson did battle again with the city over the charge that he was a disorderly person and vagrant who had no visible means of support. This is the kind of charge today that might fit many trust fund kids but under modern jurisprudence is an archaic concept. In Erickson’s case it was ludicrous since he had plenty of money and assets, no matter how he obtained them. The vagrancy charge was also dismissed.

  La Guardia’s single minded, bullying actions in going after a bookmaker like Erickson, barring him from the city and pressuring judges, was the kind of stuff that if it happened today would have City Hall tied up in civil rights lawsuits for years and likely liable to pay out millions of dollars in damages. But La Guardia, emboldened by the public adoration he felt and the way people had soured against gangsters, wouldn’t be deterred, no matter how petty he may have looked and how many times the courts ruled against him.

  Frank Costello had moved his slot machine action to Louisiana to get away from La Guardia’s clutches when City Hall in 1934 went on its crusade against gambling. Things seemed fine for Costello in the land of the Big Easy. He and Philip Kastel were raking in big money in profits, over a million dollars a year, and the authorities turned a blind eye for the most part to the presence of slot machines. Graft seemed endemic in Louisiana at that time in all sorts of public contracts and endeavors. For the slot machines it seemed a perfect environment for the business to flourish. Costello and Loretta visited the state frequently; her brothers Harold and Dudley took up residence there, as did Kastel and his wife while they maintained a nice summer home in Connecticut.

  But Costello was a known quantity to the FBI and the Internal Revenue Service. For at least four years, from 1934 to 1937, the IRS installed taps on the telephones of people Costello had dealings with. The IRS even at one point put a tap on a hotel phone used by Costello and Kastel. The same was true for the New York State police and NYPD which passed along information to the federal tax people, some going back to Costello’s bootlegging days. Auditors had been going over Costello’s and Kastel’s tax returns and thought they saw blood in the water. If there was any doubt in Costello’s mind that he was under serious tax scrutiny, that disappeared in late August 1939 when he was called to testify before a Manhattan federal grand jury about the New Orleans slot machine venture he had with Kastel, who also testified. There were also a lot of questions about who had a piece of the partnership Kastel and Costello had set up to run the New Orleans slot venture.

  Armed with what they thought was strong evidence that Costello and Kastel had evaded federal taxes with their New Orleans slots, the U.S. Attorney’s Office in New Orleans indicted them both in October 1939. They also indicted the two Geigerman brothers along with James Brocato and Jacob Altman, both of New Orleans. The government charged that the group evaded over $500,000 in taxes—said to be the second-largest evasion case of its kind at that time—by falsifying ownership records of the Bayou Novelty Company slot machine venture. Costello surrendered in New York on October 9 dressed in one of his signature gray suits, and actually showed up at government offices thinking he had been called down to testify in another national crime inquiry. Instead he was arraigned on the Louisiana charges and held on $75,000 bail, which he raised the next day.

  It would take seven months for the Louisiana tax evasion case to come to trial. In the meantime, back in New York City, Fiorello La Guardia tried to keep the pressure on Costello through the NYPD. In April 1940, La Guardia said he had picked up information that Costello was active along the waterfront and tasked the NYPD with finding out what they could about the situation. The waterfront was actually the turf of at least two mob families, the Mangano clan along the Brooklyn piers and Luciano’s family in Manhattan, particularly around the South Street fish market. Based on what was found in city archives, the cops didn’t find very much about Costello and the docks. In an internal memo, the Manhattan borough detective squad listed the basics about Costello, reporting his incorrect true name was “Saverio” and had records of various arrests, including the 1915 gun case and the 1935 Bell jewelry heist conspiracy, as well as the looming tax case in New Orleans. The police report was barebones and included an allegation that Costello and actor George Raft jointly owned the Hurricane Restaurant at 1619 Broadway.

  The detectives noted that Costello was about to stand trial in New Orleans for tax evasion. The cops promised that detectives “assigned to duty along the waterfront, will continue to give this matter every possible attention.” The police response was a bureaucratic kiss-off and with Costello in Louisiana, there wasn’t really much else for the NYPD to observe about him along the waterfront. Yet, Costello had clout on the waterfront, notably through Joseph “Socks” Lanza, who controlled the Fulton Fish Market, and in Brooklyn with the Camarda brothers, especially Emil Camarda an important official with the International Longshoremen’s Association. Camarda had control with Anthony “Tough Tony” Anastasio, of the so-called “Italian” locals of the ILA. Costello’s ties to the docks would become important later on in the fast approaching period of World War Two. But he had more pressing problems facing him with the tax case.

  Costello’s trial for tax evasion, along with Kastel and the others involved in New Orleans slot machines began on May 6, 1939, and although it wasn’t big news in the New York newspapers it was in Louisiana. The major local interest there was in the political angle surrounding the way Costello said he introduced slot machines into the state through Huey Long. But the evidence didn’t support the government.

  On May 15, 1940, a verdict of acquittal was ordered in favor of Costello, Kastel, and all the others. Frank Costello had managed to escape unscathed from another federal case. Since 1927, the box score read: Costello 3 and federal prosecutors 0. Costello left the
courthouse and neither he nor his attorneys commented. The prosecutors for that matter were also mum. (In 1945, the U.S. Tax Court backed the defense position when it found that the IRS hadn’t proved that Costello and Kastel were equal partners in Bayou. The Tax Court also found that Kastel was liable for the taxes on the entire amount he received from the company, regardless of what he may have shared with Costello.)

  Back in New York several days after Costello walked free, NYPD commissioner Lewis J. Valentine wrote a letter to La Guardia to pass along some perfunctory police reports on Costello and made note of the results in New Orleans, in the process misspelling the judge’s name and misidentifying the court where the trial took place. La Guardia didn’t hide his contempt for Costello.

  “Now that he has been acquitted down in New Orleans, keep a sharp eye on him,” La Guardia wrote back to Valentine. “See that he is kept away from the waterfront and places of public gathering should he return to New York. I consider him a vagrant under the law and appropriate action should be taken.”

  There was no way of La Guardia knowing at the time but with war clouds looming in Europe, history would show that Costello’s ties to the waterfront would actually prove useful in World War Two, when the U.S. military turned to the Mafia—Costello included—to help secure the port of New York against wartime sabotage and help with the invasion of Italy.

  CHAPTER FOURTEEN

  “I NEVER STOLE A NICKEL IN MY LIFE”

  THE STORY, TOLD MANY TIMES about Frank Costello’s political influence, related back to 1932 and the Democratic National Convention in Chicago. It was there, according to George Wolf, that his client entertained delegates in and around the Drake Hotel to work to assure the nomination of Franklin Delano Roosevelt as the party’s presidential candidate. The political wheeling and dealing was just like back home in New York.

  “Here in Chicago, what did it turn out to be?” said Wolf. “Guys running up and down hotel corridors day and night trading votes and offering jobs and threatening political revenge just like little old Tammany Hall.”

  In that case, Costello was very familiar with the machinations of Tammany Hall. After all, he was there in Chicago with none other than Jimmy Hines, the leader of Tammany. Their candidate Roosevelt secured the nomination and went on to win the 1932 Presidential election. All the boozing and schmoozing had paid off. Just to hedge its bets, other branches of Tammany backed Roosevelt’s main rival Al Smith—just in case.

  The story of how Costello became intertwined with Tammany and its power is one of the great mob stories of the era. In a town so solidly Democratic for decades, Tammany controlled government, the court, and cops. Public officials who sought office had to please the leaders of the organization and protect its interests. It was a culture of corruption with payoffs all around. It all seemed so appropriate. Everybody got a taste, and the criminals—on the street and in City Hall—were happy. It wasn’t “honest graft,” the kind George Washington Plunkitt, the Tammany orator, said was okay because it never hurt anybody. “I seen my opportunities and I took them,” was how Plunkitt rationalized lining his bank account. No, these were the kinds of alliances that created the nefarious banks of another sort, the favor banks where politicians were promised support and money if they laid off the criminals and allowed them to go about their illegal businesses.

  Costello had known that it paid to have political connections growing up in East Harlem. He was aware of how Giousue Gallucci, the onetime boss of Little Italy during Costello’s youth, had added to his reputation on the street by being involved with politicians. He was seen as a man of influence with officialdom, as well as a chief criminal boss of the area surrounding 108th Street—as long as he was able to duck the assassin’s bullet. It was unclear when exactly Costello got involved with the Democratic party. But it appears that at some point he became part of an organization known as The Tough Club, a Tammany organization on the West Side.

  The relationship between the mob and Tammany was one that seemed to be shaped by the reality of their separate worlds. While Tammany was once a power with a great deal of financial resources, that had waned in the 1920s and 1930s. La Guardia had made merit selection for jobs a bedrock of his administration, thus undercutting the patronage Tammany was able to trade upon. Still, it was the Mafia, buoyed by Prohibition, which had the money the organization needed.

  “Tammany Hall was poor and growing poorer, while the mobsters (despite La Guardia’s crackdowns) were wealthier than ever,” said Oliver E. Allen in his book The Tiger: The Rise and Fall of Tammany Hall. “Recognizing the value of protection, the gang leaders required—even demanded Tammany’s aid. By now they were virtually calling the shots and Tammany could hardly refuse to listen since it desperately needed the money.”

  The Mafia projected its powers through Tammany’s district leaders. This was done either, as Allen stated, through the appointment of Albert Marinelli at the behest of Luciano, or through the overall corrupt lives some of the leaders lived. The case in point for the latter was Hines, the man Costello accompanied to Chicago. Hines was leader of a district that included the Upper West Side and Harlem. The West Side was a major storage and shipping area for the bootleggers. Harlem was an area in which gangs competed for the numbers operations, notably Dutch Schultz and Stephanie St. Claire, the brassy, independent black woman who staved off many attempts by the Italians and Jews to cut into her territory or force her out of business.

  Hines had no real clout with St. Claire. But with Schultz, Hines found a steady stream of income in the form of protection money paid by the gambler. The payments came in regular envelopes filled with $500. What Schultz got in return was the knowledge that his political friend Hines had co-opted the Manhattan district attorney, William C. Dodge, by sanctioning his run for the office. It was a very convenient relationship.

  But after grand jurors became exasperated with Dodge’s timid approach to serious organized crime, Thomas Dewey was appointed special prosecutor and things suddenly changed for Hines. After indicting and convicting Luciano, Dewey turned his sights on Hines and the result was just as devastating. Hines was a politician who one reporter said seemed “impregnable to prosecution.” Nevertheless, with Dewey running the grand jury, Hines was indicted in August 1938 for protecting Schultz and his gambling racket. Using the threat of long prison terms to coerce their cooperation, Dewey got two of Schultz’s associates—George Weinberg and Harry Schoenhaus—to become government witnesses. Their testimony showed how rigged the criminal justice system had become under Hines. The Tammany leader, the witnesses said, so controlled city magistrate Hulon Capshaw that cases were dismissed on Hines say-so, with Capshaw telling him, “I have never failed you yet, have I Jimmy?”

  Witness upon witness told of the close ties between Hines and Schultz. Frances Flegenheimer, the widow of Schultz (who had been assassinated in 1935) was an eighteen-year-old hat-check girl when she married the Dutchman. She told of how Schultz and Hines had met in a Manhattan speakeasy known as The Stable in November 1932 and disappeared in the back for about a half hour. When both men came out and Hines left, Schultz told his wife to “forget about seeing Jimmy Hines in here tonight.” Schultz went on the lam shortly after the meeting, but his wife said he still provided her with cash.

  Dodge, like Capshaw, wasn’t indicted in the case. But the witnesses told how pliant the prosecutor had been. Hines described Dodge as “stupid, respectable and mine,” while he bragged that NYPD’s division in Harlem was under his thumb. But those were warm ups. Other witnesses showed how blatantly corrupt Hines had been by the way he had cops demoted because they wouldn’t lay off Schultz’s gambling parlors. Then Dewey pulled another rabbit out of the hat when he called a surprise witness, John Curry, the former Tammany leader who was thrown out through Hines’s power plays in 1934. On the witness stand it was Curry’s turn for revenge when he told the jury that it had been Hines who demanded that Dodge be Tammany’s candidate for Manhattan district attorney in 1933 an
d that NYPD commissioner James Bolan reassign cops in the 65th Division who had been causing problems for criminals and numbers operators.

  Hines was shown to be a man who was used his naked political power to protect the criminals and his friends, as well as line his own pockets, the kinds of things the public and reform politicians like La Guardia had screamed about for years. On February 25, 1939, after only seven hours of deliberation, a Manhattan state jury convicted the once untouchable Hines on all counts. “That’s the breaks of the game,” Hines said after the verdict. He would appeal, but the case finished his political career. The newspaper trumpeted the Dewey victory. “Democracy Cleans Its Own House,” The Evening Post said in one editorial, to be followed by “Bankrupt Tammany Must Now Be Liquidated.”

  Frank Costello didn’t come up in the Hines trials, despite his own ties to Tammany. Federal authorities were breathing hard trying to make a tax case against him in New Orleans over the slot machine business. But in New York, Costello remained untouchable, although not totally unnoticed. His name did come up when La Guardia released a report about Frank Erickson’s gambling empire. The fifteen-page document prepared by William B. Herlands, then the city commissioner of investigation, listed Costello as one of the “underworld characters” Erickson had a relationship with. Herland’s list included Joe Adonis and Schultz’s old and now disbarred lawyer Richard “Dixie” Davis. Still, Costello was out of reach of La Guardia or any of the local prosecutors.

  Costello had built his power base not only on gambling and his command of the Luciano crime family but also on his ties to Tammany. He held no official position in Tammany: it would have been ludicrous and foolish if he had. What Costello did do was to cultivate close ties and friendships to a number of Tammany’s district leaders, the men who commanded the local political clubs tied to the main organization. One district leader was Dr. Paul F. Sarubbi, and another John DeSalvio (also known as Jimmy Kelly). Two others were Abraham Rosenthal and Clarence H. Neal Jr.