The Outfit

by Gus Russo

  In his autobiography, Bobby Baker, the infamous Washington influence peddler, described how he had delivered a briefcase stuffed with $25,000 in cash to a Kefauver aide in 1960. The money had originated with a Texas group hoping to acquire an NFL franchise, but who were opposed by Washington Redskins team owner George Marshall. After the money changed hands, Kefauver’s committee conveniently found that Marshall had been operating an illegal monopoly with his Washington Redskins Television Network, which televised their games throughout the South. That same year, the Dallas Cowboy franchise was awarded to a group headed by Texas oilman Clint Murchison, Jr.

  After his death in 1963 at age sixty, it was learned that Kefauver had owned stock valued at $300,000 in drug companies that he had been charged with regulating in the Senate. His chief counsel and close friend from Tennessee, attorney Bernard Fensterwald, Jr., said at the time, “My God! What if a hostile newspaper had gotten ahold of that?”

  In the year after the Kefauver Committee disbanded, the forty-six “contempt of Congress” citations it had issued were heard in court, with only three being upheld. In overturning one such charge, Judge Martin of the Sixth Circuit U.S. Court of Appeals ruled that Humphreys and the Outfit had in fact outwitted the combined wisdom of the Senate’s gaggle of attorneys. “The committee threatened prosecution for contempt if [the witness] refused to answer, for perjury if he lied, and for gambling activities if he told the truth,” the court concluded. Judge Martin added that “to place a person not even on trial for a specified crime in such a predicament is not only not a manifestation of fair play, but it is in direct violation of the Fifth Amendment to our national Constitution.” And despite Halley’s constant promises that his questions could not implicate witnesses in a federal crime, the court believed otherwise. In the case of Joey Aiuppa’s citation, Judge Martin wrote in his opinion:

  The motive of the committee and its examiners in calling Aiuppa as a witness was largely to connect him, by his own admission, with the operations of nefarious organizations engaged in criminal activities on a national scale . . . It is evident that most of the information sought to be elicited from Aiuppa concerning his activities was already in the hands of the committee . . . The courts of the United States could not emulate the committee’s example and maintain even a semblance of fair and dispassionate conduct of trials in criminal cases.

  In the years since the Kefauver hearings, the public has been treated to the sight of countless gangsters, as well as unfairly persecuted leftists, repeating for various congressional tribunals the mantra introduced by Curly Humphreys and the Outfit. After his legal triumph, Curly took a much deserved vacation at Owney Madden’s gangster spa in Hot Springs, Arkansas. There soon appeared over the fireplace in Curly’s Oklahoma home a new wooden plaque he had carved while on vacation. The inscription read, “I Refuse to Answer on the Grounds That it Might Incriminate Me.” It was his self-bestowed award for his invaluable gift to future congressional witnesses.

  The Outfit’s long history of financial success owed much to its awareness that every scam it conceived had a built-in, finite life span. Nonetheless, if the gang was fortunate, an operation might be milked for years before the G would crack down or the upperworld would appropriate it for itself. Thus when Western Union, under pressure after the Kefauver investigation, began clipping its wires to suspicious distributors such as the Outfit’s Continental Press, Accardo and his minions took it in stride. After all, by this time, Chicago’s empire of crime was awash in profits, and the nation’s newest immigrants were nothing if not the definition of survivors. In addition, closing down Continental would be only a temporary halt in the gang’s bet-taking franchise, as the resourceful rogues would eventually oversee a massive sports betting operation that included everything but racing; with the growth of gamblers’ interests in professional sports teams such as baseball, football, and basketball (not to mention boxing and college sports), there would be few tears shed over the loss of the ponies. In a few years, after being forced to relinquish their handbook invention over to the upperworld, who labeled their version “offtrack betting,” the Outfit’s bookmaking network merely adapted to the new situation.

  While Accardo and his buddies enjoyed the good life, starry-eyed, Outfit-connected Chicagoans continued to bring new ideas to the table, hoping to mimic the success of Mooney Giancana, who had “made his bones” with the bosses when he’d brought them the numbers and the jukebox rackets, which continued to bring treasure to the confederation. One of the more inventive, if distasteful, scams concocted during this period involved duping the city’s entire population for almost two years, while the hoods netted a quick couple million. When the deception was revealed, Windy City citizens were sickened, literally. In January 1952, federal inspectors revealed that since 1950, millions of unknowing Chicagoans, as well as tourists, had been ingesting horse and mule meat when they thought they were eating hamburger.

  Filly Mignon

  Months earlier, Governor Adlai Stevenson had begun hearing rumors that the Outfit had been selling millions of servings of “horseburgers” in the Chicago area, arguably the meatpacking capital of the world. An initial investigation by the state’s superintendent of foods and dairies, Charles Wray, was fruitless, with Wray declaring that he was unable to prove the allegations. A subsequent inquiry by the federal government’s director of the Office of Price Stabilization (OPS), Michael Howlett, reached a much different conclusion: For the last two years, Illinoisans who had ordered Black Angus were instead ingesting Black Beauty.

  The allure of the new racket was obvious: Florsemeat could be purchased wholesale for ten cents a pound, whereas ground beef was fetching four times that price. Gang-controlled processing plants were producing a blend of 40 percent horseflesh and 60 percent ground beef. The malicious mixture was then doctored with “dynamite,” a chemical that gave the meat a red tint and also disguised any rotten portions. Finally, the concoction was sold to restaurants for eighty cents per pound. If the hoods’ consciences needed assuaging, they could rationalize that Europeans, and especially those from southern Italy, had eaten horsemeat continually for ages.8“It’s all in your mind,” admitted one UPI reporter covering the story. “Horsemeat is as clean as beef or pork.” Although the surfacing of the operation led to allegations that the horsemeat was spoiled, these contentions were not corroborated by any statistical surge in intestinal maladies. Apparently, no one even detected a difference in taste.

  During the swindle, millions of pounds of the meaty concoction were served to the public. One of the equine suppliers later admitted to selling one hundred thousand pounds of horseflesh per week to the plotters. Another supplier sold fifty-five thousand pounds in thirteen days, and one small wholesaler was found to have bankrolled $250,000 in four months. And since the “blended” product sold at a cheaper price, otherwise honest meatpackers had adopted the practice in order to compete with their less scrupulous competitors. Eventually, more than twenty-five large wholesalers had joined the racket, and many of the city’s best restaurants, such as the swank Blackhawk on Randolph Street, had fallen prey to the fraud. The local wags had a field day, utilizing an assortment of peptic puns as they invented new names for the fare on local menus: “chili con filly,” “colt cuts,” and “porterhorse steaks,” all followed by a “pony of brandy.”

  The initial arrests naturally involved the underworld masterminds. In Louis Campagna’s Berwyn suburb, Meyer Ditlove, who managed a horse-slaughtering plant, was arrested for bribing a state food inspector to not inspect his meat shipments; in Lake Zurich, authorities nabbed Joe Siciliano, the owner of the Lake County Packing Company, who expressed shock over his arrest, exclaiming, “Gee, you’d think I ground up Man o’ War!” But as the investigation proceeded, it became apparent that the horseburger episode was just one more proof of Al Capone’s contention that “nobody’s on the legit.” The gangsters had once again exploited a culture that was, with a few exceptions, corrupt from top to bottom. The
feds eventually learned why state food inspector Charles Wray had failed to unravel the deception: He had been paid $3,500 by Joe Siciliano to look the other way while the gang “loaded” the ground-beef stocks. Wray was fired and indicted, and more than a dozen other state inspectors were likewise relieved of duty, with some admitting to having taken $450 per month to allowr the horsemeat to flow. Both Chicago’s chief food inspector and its health commissioner, who had held the post for almost thirty years, were forced to resign. The commissioner was soon indicted, but the charge was eventually dismissed.

  Surveying the growing list of civil servants and politicians of both parties caught up in the scandal, The Nation’s Carey McWilliams wrote that it was “silly” to blame the scandal on the underworld alone. After the revelation that some 4.5 million pounds of horsemeat had been eaten in Chicago in twenty-four months, a number of the city’s most famous restaurants were forced to close, some permanently. Grocery stores reported that sales of hamburger dropped 50 percent, and a flurry of ads began appearing in the local media in an effort to reassure consumers. One business owner, Chris Carson, gave away more than one hundred thousand hamburgers “writh all the trimmings” to help restore customer confidence in his product.

  The public’s reaction to Kefauver’s “Mafia” and the loss of the horseburger racket appear to have marked a turning point in the Outfit’s business plan. Combined with the 1950 passage of the Johnson Act, which outlawed slot machines in every state but Nevada, the charged atmosphere convinced the Outfit bosses to reconnoiter. After years of bootlegging, bookmaking, and labor racketeering, the hoods decided they had amassed a bankroll sufficient to fulfill the ultimate immigrant dream: investing in legitimate upperworld businesses. Throughout the early fifties, the gang acquired countless Chicago-area companies. In addition to massive real estate tracts, car dealerships, food processing and distribution plants, restaurants and liquor stores, the gang purchased eight local hotels, according to the Chicago Daily News. An article from the period in the Chicago Tribune noted, “The millions rolling in from the rackets touched [Joe] Accardo with gold. He acquired stocks, bonds, hotels, restaurants, auto agencies, liquor firms, appliance companies, and a sprawling stone house in River Forest, where even the plumbing was gold-plated.” Writing in The Nation in 1952, Carey McWilliams con­cluded: “The gambling racket is dead. The mob is now infiltrating into big business - all business - and all the political power it can muster will be used to put official ’muscle’ into operation against legitimate merchants and manufacturers.”

  But the gambling racket was far from dead; only the illicit variety was temporarily drying up. As chance would have it, a new, and legal, gambling venture was now available to any individual or consortium with deep enough pockets to meet the prohibitive start-up costs. It became apparent to the newest Second City entrepreneurs that the legitimate commercial venture with the greatest profit potential was the embryonic casino industry, sanctioned only in Nevada and in the nation’s offshore playground, Cuba. The concept was a no-brainer from the start. Since casino gambling was legally structured to give “the house” the advantage at the tables, owners had no need to fix games to make a profit. (The house’s built-in advantage ranged from 1 percent for blackjack to 5.2 percent for roulette to a staggering 20 percent for keno. The numbers seem small until they are multiplied by the billions wagered yearly.) It soon became a gangster truism that the only gamblers who win are the ones who own the tables. In addition, with the vast amounts of clean cash wafting through the count room, the gangs would have an ideal setup in which to launder income from less savory enterprises; not to mention what could be stolen, or “skimmed,” from the uncounted stacks of cash.

  The upperworld typically waxed euphemistic when describing its participation in one of the oldest of vices. For the sake of appearances, gambling was now to be called gaming, and in the 1950s the Outfit, as content with the hollow distinction as anyone, jumped headfirst into the gaming industry.

  1. When investigators pressed Gilbert about the paucity of gangster arrests, Gilbert replied that he had arrested Roger Touhy for the Jake Factor kidnapping. At this time, of course, Touhy was still wrongfully imprisoned, and the Humphreys-Courtney concocted sham had not yet been exposed.

  2. The security guard’s name is known to the author, but attempts to locate him have been unsuccessful.

  3. When speaking with Robinson, Korshak calmly stated that he believed his targeting by Kefauver was due in large part to a recent expose of Korshak by Lester Velie in Collier’s magazine. Korshak explained that Velie had not only exaggerated the facts, but often invented them. But according to Sidney, there was a reason for the Velie attack: Velie had held a twenty-year grudge against Korshak since their college days at the University of Wisconsin, where Korshak, a boxing champion, had punched Velie (whose real name was Levy) in the nose.

  4. Humphreys was particularly sensitive about this issue, since his daughter, Llew­ella, suffered from mental instability and had spent three years in a sanitarium in Kansas, setting Humphreys back some $36,000. Years later, the FBI’s hidden microphone picked up Humphreys talking about the Kefauver incident: “When you get into something, like when he starts out, you know, about my daughter “Is your daughter nuts?” - I could have up and powdered the guy.”

  5. The author spoke with one of Hill’s many Chicago lovers who recalled, “I once told her that she played a prick like Harry James played a trumpet. She laughed and said, “That’s funny. Spread the word.” She was quite proud of her abilities.”

  6. In his seminal 1968 book on the power elite, The Rich and the Super Rich, Ferdinand Lundberg reached sober conclusions on the Kefauver episode: “Senator Estes Kefauver found representatives of the vulpine Chicago Mafia ensconced in the Illinois legislature, which has been rocked by one scandal of the standard variety after the other off and on for seventy-five or more years. What he didn’t bring out was that the Mafians were clearly superior types to many non-Mafians.”

  7. Ironically, Kefauver selected as his Chicago organizer attorney A. Bradley Eben, who had been the Outfit’s lead lawyer in the Hollywood extortion trial.

  8. During the 2001 European mad-cow-disease scare, French restaurants openly sold meals featuring horsemeat as a substitute for beef.

  Part Four

  Vegas

  (The New Booze III)

  13.

  Cohibas and Carpet Joints

  The glitzy, high-stakes world of casino gambling was anything but alien to the bosses of organized crime at midcentury. The Outfit had dipped a tentative toe into those waters during the previous two decades, but the New York and Florida gangs had been the first to take the concept seriously. Although the casino enterprise was one of the few gambling ventures in which the Chicagoans were behind the curve, they would soon make up for lost time. The Outfit’s decision, in the wake of Kefauver, to go increasingly legit, was not a total transformation, however; they had not lost their habit of making truckloads of money quickly. And the illegal opportunities afforded by legal casino gambling provided the perfect link in the hoods’ evolutionary chain.

  The boss who had run the gauntlet years earlier for all the gangsters who would follow was Curly Humphreys’ East Coast alter ego, the genius of the New York Commission, Meyer Lansky. After rising to the top of the New York bootlegging trade, the greatest Jewish gangster in history focused his immense talents on casino gambling. And he chose as his laboratory the tropical paradise of Cuba with its amenable president, Fulgencio Batista y Zaldivar.

  A Sunny Place for Shady People

  Meyer Lansky first came to Havana in the 1930s, having already earned a reputation as the owner of the best “carpet joints” in America. These gambling parlors were the first to deliver the card, wheel, and dice games from the backrooms and sawdust floors of saloons into their own dedicated, upscale nightclubs. Lansky was thus among the forefathers of the plush gaming industry, establishing clubs up and down the East Coast. Naturally, for th
ese illegal clubs to operate in the open, the compliance of local officials was required, and Lansky, like every other gangster boss, took advantage of the inherent greed of the upperworld. With officials properly satiated, Lansky oversaw carpet joints that succeeded wildly, due in large part to their reputation for fair gaming and intolerance for cheats. These Lansky traits brought him to the attention of Cuba’s new military leader, Fulgencio Batista, a U.S. sponsored strong-arm with visions of creating a combination of Paris and Monte Carlo in the Caribbean.

  Batista’s dream of a Cuban music and gambling paradise was hindered by his homeland’s notorious reputation as an unregulated haven for cardsharks and swindlers. In this free-for-all atmosphere, where come-on games with names like “razzle-dazzle” and “cubolo” flourished, casual tourists were being robbed, and serious gamblers had no reason to play in the first place. To make matters worse, the races at regime’s premier, beautiful racetrack, Oriental Park, were rightfully perceived as being fixed daily. Again, the serious bettors and horse owners stayed away. When Batista sought to remedy the scandalous state of affairs, he wisely sought the expertise of a Polish-born, Brooklyn-bred thirty-five-year-old expert with a reputation for running the most honest gambling concessions in the United States. Born Mair Suchowljansky, he was now known as Meyer Lansky, the New York head of the Commission.

  Unlike the Outfit, Lansky and pals had been transshipping their bootlegged alcohol through Caribbean ports for over a decade and were well acquainted with the allure of the tropics. At the time of Batista’s takeover, Cuba’s two main gambling parlors consisted of a small, plush venue inside Oriental Park, and the classic Grand Casino Nacional nightclub, with its Greek architecture, fountains, and statues in the nearby town of Marianao. With Lansky agreeing to kick back 30 percent of the take to Batista, a successful partnership that would last for three decades was formed. Lansky more than lived up to his end of the deal, bringing his own trusted pit crews from his Florida carpet rooms, and single-handedly building a new reputation for Cuban casinos that eventually succeeded in attracting the hemisphere’s high rollers. The partnership flourished until 1944, when the new Cuban president ousted both Batista and Lansky. They both relocated to southern Florida, where they stayed close friends and neighbors, waiting until the day when the United States would reinstall Batista at the helm of his corrupt dictatorship.