V For Victory, Vice And Vegas

Part VIII

For U.S. Armed Forces

Two Lire

A Foreboding spread across the United States in the early months of 1942. Since the cataclysm at Pearl Harbor, the news had been all bad and was getting worse: The Japanese, so long underrated as a military power, had smashed through the Philippines, the islands of the western Pacific and were bringing much of Asia under the umbrella of their Greater East Asia Co-Prosperity Sphere. Europe and much of North Africa were captives of Hitler's new order, and although the blitzkrieg had been stopped at the gates of Moscow by winter snows, few considered this more than a temporary halt to the Nazi advances. In the United States, President Roosevelt might talk confidently of ultimate victory and the people might believe, but so far there was only disaster. And the enemy was coming closer. German U-boats prowled the Atlantic Coast and that winter the beaches were stained with oil and other flotsam, testimony to the loss of ships, lives and vital cargo. A band of German agents was landed one night by U-boat on the eastern top of Long Island and, though quickly captured, the audacity of the landing did nothing to calm the national nerves.

The worse the reports, the greater the fear of fifth columnists and saboteurs. That fear sent Government forces swooping down on all Japanese on the West Coast, herding them into isolated internment camps. In the East, although few overt actions were taken against Germans and Italians, their loyalty also was suspect, especially by many in the military who viewed any foreigner as a potential enemy agent and who waited with dread for an expected outbreak of sabotage.

Some of those fears had already seemed realized. On February 11, 1942, the night sky over blacked-out Manhattan burst into flame. Berthed at a Hudson River pier, the French luxury liner S.S. Normandie, interned at the fall of France and then requisitioned by the United States, was being converted into an Allied troopship capable of transporting an entire division. Now she was in flames; she burned for days, then rolled over and died. Despite a series of investigations, the cause was never satisfactorily fixed, though there were many theories: sparks from a welding torch in the hands of a careless ship fitter; flammable debris littering the vessel igniting spontaneously; a saboteur's match.

If no one was able to explain the cause, the spark that gutted the Normandie did have an immediate consequence, and one that could not have delighted the American underworld more. To Navy officials in Washington and at the headquarters of the Third Naval District in Lower Manhattan, the destruction of the Normandie rekindled long-held suspicions about the lack of security along the New York waterfront. Many of the longshoremen and others in the fishing and shipping industries that ringed the harbor were Italians--immigrants or the sons of immigrants. If these men felt greater loyalty to Italy than to the United States, then the waterfront was swarming with potential saboteurs, agents who could foment strikes and other troubles to tie up the port at a crucial phase of the war, who could commit acts of destruction, who might feed information to the Germans lying offshore, who might even use their fishing boats to supply those submarines. How could there be any security along the waterfront, especially when the docks were the bastion of the underworld and men such as Albert Anastasia, the lord high executioner of Murder, Inc., and his brother, Anthony "Tough Tony" Anastasio, one of the most powerful leaders of the International Longshoremen's Association?

Such fears inspired one of the most bizarre episodes of World War Two. It was called Operation: Underworld, and the nation's leaders of organized crime--Meyer Lansky, Frank Costello and, above all, Charles "Lucky" Luciano--saw in it the keys that would unlock the gates of Dannemora prison, where Luciano had already spent more than five years of a 30-to-50-year sentence as the boss of organized prostitution. From them, through their legitimate contacts, the Navy received a subtle message that Italian racketeers not only were loyal Americans but were in a unique position to offer the country much help against its foreign enemies.

The idea was as farfetched as it was offensive, but the Navy was desperate and a young reserve officer in Naval Intelligence, Lieutenant Commander Charles H. Haffenden, was assigned to investigate the feasibility of enlisting the underworld and its leaders in the war effort. Haffenden was a strange choice, for he knew little about the New York waterfront and even less about the underworld. Having no idea where to start, in April 1942 he turned for help to the office of Manhattan district attorney Thomas E. Dewey. The racket buster himself was too busy to deal with Haffenden directly--his political activities occupied almost all his time; he had already lost the 1938 New York gubernatorial race to Herbert Lehman, had made a serious but unsuccessful bid for the 1940 Republican Presidential nomination, and now, with his eyes still on the White House, was again engaged in an all out effort to capture the governor's mansion in Albany. So Dewey turned Haffenden over to two key assistants, Frank S. Hogan (already anointed to succeed Dewey as Manhattan district attorney, an office in which he would reign until 1974) and Murray Gurfein (a Dewey aide during the Luciano trial in 1936 and later to become a U.S. District Court judge).

Hogan and Gurfein had just the man for Haffenden to see--Joseph "Socks" Lanza, the semiliterate but all-powerful ruler of the Fulton Fish Market. "Joe Zox," as his friends called him, was so absolute a dictator that no fish went into or out of the city-owned market without payment of tribute to him--ten dollars from every boat arriving and $50 from every truck departing--and no stall operated without his paid-for approval. No one challenged Lanza, for he had met challenges in the past with sudden violence and had managed to beat both murder and gun indictments. During the mid-Thirties, he had even been able to maintain his control while serving a Federal sentence in Flint, Michigan, for conspiracy to monopolize the fresh-water-fish industry in New York. Furthermore, his influence reached into both the world of politics and the world of organized crime, in which he was a leading figure. His brother-in-law, Prospero Vincent Viggiano, was a powerful Tammany district leader; one of his closest friends was Albert C. Marinelli, long one of the absolute monarchs of Tammany Hall; he had been partners in a number of operations with Joe Adonis, Luciano and Costello, who had been best man at his wedding in 1941.

But as the war began, Lanza was in trouble. The American Federation of Labor, finally fed up with his extortion and strong-arm activities, had thrown his United Sea Food Workers Union out of the house of organized labor. And Dewey's office had him indicted for shaking down a Teamster local. Even these troubles, though, had not yet shaken his control over the fish market and the fishing fleets that daily sailed from New York out to the open sea. He was, then, the ideal man for Haffenden to contact.

Lanza responded quickly. In fact, underworld sources maintain, he had been told to expect the call and had rehearsed his responses. He agreed to meet with Haffenden, but not in public; if they were seen together, he said, it might be taken the wrong way by his friends, what with the rash of informers like Abe Reles and Allie Tannenbaum. He would meet Haffenden at midnight on a park bench near Grant's Tomb.

The meeting went as scheduled and Lanza could not have been more helpful, perhaps hoping that his cooperation would lead Dewey to deal more kindly with him when his case came to trial (it didn't: He eventually pleaded guilty and was sentenced to seven and a half to 15 years in prison). He agreed to do everything in his power to combat sabotage and fifth columnists, authorizing Haffenden to put intelligence agents and communications devices on fishing vessels and trucks and throughout the fish market.

But at a second meeting soon after, as Haffenden asked for further cooperation, Lanza declared that his own powers were strictly limited. He had no control, he said, over the longshoremen not over a hundred other areas where the Government might want help. There was only one man who could weld the entire American underworld, and the entire Italian- and Sicilian-American community, into a patriotic force devoted to the Allied cause: Charlie Lucky.

Back went Haffenden to Gurfein for advice and assistance. Gurfein called Luciano's attorney, Moses Polakoff. Polakoff hedged, suggested that instead of sounding out Luciano Immediately, it might be wise for Gurfein to explore the matter with one or two of Luciano's closest friends. Gurfein agreed. A breakfast meeting was arranged at a hotel overlooking Central Park and Polakoff arrived with Lansky.

Nearly two decades later, while seeking haven in Israel from a variety of American indictments, Lansky gave his version of that breakfast. Gurfein, he said, "explained the situation to me. I went immediately to see Frank Costello, telling him the story and asking what does he feel about it. Frank was patriotic and felt that help should be given. So we made up a white lie and we decided that we will tell Charlie Lucky that if he will be helpful in this case, it might help him to get out of prison."

Though nothing had been done with out his knowledge and approval from the very inception of Operation: Underworld, Luciano was not about to appear overeager. When the call came asking him to meet with Gurfein and Navy officials, he initially refused. He would talk with nobody, he said, as long as he was in Dannemora; he wanted a more congenial environment. So he was moved, first temporarily to Sing Sing for the initial conferences, and then more permanently to Great Meadow Prison, north of Albany, the country club of New York State penitentiaries.

In this more relaxed atmosphere, Luciano agreed to do all he could to help the United States win the war. But, he informed Gurfein and the Navy, in order to do his best, he would need easy access to his friends in the underworld to get his orders out and around the country. At Great Meadow, Luciano was given a private office for use during his secret meetings and permission was granted throughout the war years for a steady procession of mobsters to visit him for private discussions. Among those who arrived regularly were Lansky, Costello, Adonis, Willie Moretti, Tommy Lunchese, Mike Miranda and Lanza, until he, himself, went to prison.

If they talked about national defense, they also talked about a lot more, for they were concerned primarily with the Syndicate in its wartime search for wealth. They may all have been self-professed patriots, but there was nothing in their definition of patriotism that said they couldn't make a buck out of the war (and in this they differed little from many legitimate businessmen). And there were plenty of ways to do it, especially since many Americans wanted to continue enjoying the amenities of life despite shortages, rationing and the laws. As it had during Prohibition, the Mob was both willing and determined to supply the demand. People wanted ration stamps so they could buy meat, other foods, gasoline, tires and other rationed goods; the underworld provided millions of stamps to those who would pay for them--stamps pilfered in raids on Federal depots, purchased from dishonest Government officials, counterfeited.

Not only did the racketeers supply the stamps, they soon supplied the rationed commodities themselves and thus made further inroads into legitimate business in the course of building a black market. Led by Lucchese and Anastasia, they used wartime shortages to tighten their grip on the garment industry. Because of the scarcity of beef, the meat industry became the target of a power drive by Carlo Gambino, until then only another ambitious and rising hoodlum in the family run by the Mangano brothers and Anastasia. Assisted by such tough and violent lieutenants as Paul Castellano (who would later emerge as partner of Gambino's brother Paul in the huge Pride Wholesale Meat Company) and Sonny Franzese, Gambino organized the meat purveyors in Brooklyn, then spread his influence across New York. Under his rule, the industry was tightly controlled and paid off handsomely. The butchers knew that the dollars going into Gambino's pockets not only ensured an end to any trouble but also guaranteed a steady supply of choice cuts of meat (since Gambino and his friends had moved into wholesale meat packing, as well) and all the ration stamps they needed. For the customers, it meant that at Mob-controlled markets they could buy all the meat they wanted, with or without ration stamps--at prices well above the legal ceiling.

Meanwhile, Lansky, Costello and others had found another enterprise equally suited to their talents. As a kind of patriotic gesture to show that they, too, would make sacrifices to the war effort, they had shuttered their gambling casinos in Havana and other places difficult to reach because of travel restrictions and even closed some of their fancier operations in the United States--but in reality to concentrate their efforts on black-marketing. Gasoline and tires were even harder to get than meat or clothes--unless you knew somebody. So the Syndicate moved in, buying through fronts hundreds of gas stations that never ran dry, and made no great fuss about ration stamps. And the same stations always seemed to have plenty of recapped tires for sale at a price. There were millions to be made by profiteering in shortages during the war, (continued on page 96)Victory, Vice And Vegas(continued from page 94) and the Mob and its friends made them.

It was such operations and how to continue them in peacetime that mostly concerned Luciano and his visitors during those years at Great Meadow, in sanctuary provided by the state of New York at the request of the United States Navy. But Luciano did give at least some thought to his Government assignment. He ordered dock workers and the underworld to cooperate with the military and, in fact, there were very few acts of sabotage along the American waterfront or in any other area under Mob control during the war years. But were such dictates from Luciano really needed? It seems most unlikely that longshoremen or the leaders and rank and file of American organized crime might have aided national enemies whose victory would have meant their own undoing. Indeed, through the years, few have more stridently proclaimed their devotion to the United States--or reaped more from the American system--than the gangsters.

It was also claimed that Luciano dispatched orders to the Sicilian-American community to give the military any photographs and postcards of the Sicilian landscape to aid in topographic studies of the island; and that Luciano persuaded the powerful leaders of the island's Mafia to assist the Allied landings in 1943. But Luciano had not been in Sicily since 1906, when, as a child of nine, his family emigrated to the United States. Though he had risen to become perhaps the most powerful ruler of American organized crime, the ties between the American underworld and the Sicilian Mafia were, at best, remote, and if Sicilian criminals helped, it was because they decided it was in their own interest. For years they had been under attack, threatened with extermination by Mussolini; it only made good sense to aid those who would topple the Fascist dictator and restore the old system.

Some years later, the Navy's coordinator of Operation: Underworld, Commander Haffenden, would dismiss the racketeer's contribution. "Luciano was like all other informers we used in our intelligence work," he said. "He did no more than any good American citizen would have done. I can't set him up on a pedestal as having done anything great, because he rendered only normal cooperation." But at the time, Haffenden had lauded Luciano for making a "great" contribution to victory. And Gurfein had declared, "There is no doubt that Luciano did wield a tremendous and peculiar influence in the underworld and, from what I understand, he did do some good in creating this underworld counterespionage system." No one, however, would discuss the details of Luciano's work.

Such secrecy was useful. It permitted Luciano's parole, without much explanation, by Dewey, who had sent him to prison in the first place.

In the possession of Luciano's lawyers were sworn affidavits from the major witnesses at his 1936 trial stating that they had lied under oath and that their lies had been concocted in Dewey's office under threat of prosecution on other charges. An appeals court had rejected similar affidavits in 1938, but then Luciano was a recently convicted felon, the heralded boss of the American underworld and a name with which to frighten children. By 1942, he had been in prison long enough for his notoriety to subside, while Dewey himself had become highly vulnerable. He was a national figure, a candidate for high state office and a potential President. Charges that he had suborned perjury, even if untrue, would certainly not have helped his image as the white knight in shining armor shattering the rackets and bringing to the state and the nation honesty and good government.

According to underworld stories, a deal was struck. The affidavits would be filed away to gather dust and Luciano would not appeal for a new trial. A large bank roll--some have put it at $250,000 or more, with Luciano subscribing a major part--would be secretly put at the disposal of Dewey's campaign organization. And the muscle of the Mob would cut down the normally overwhelming Democratic majorities in New York City to help ensure Dewey's victory. In exchange, Luciano would later receive his freedom.

In November 1942, Dewey was elected governor, then reneged on a promise he had made not to seek the Republican Presidential nomination in 1944. To Luciano's relief, he lost heavily to Roosevelt and returned to Albany.

On May 7, 1945, the very day the war in Europe ended, Luciano's petition for executive clemency was dispatched to the governor. Dewey turned it over to his state parole board, its members all his appointees. At the hearings, there were general statements to the effect that Luciano had performed noble and, because of security, necessarily secret labors for the Allied cause. The board unanimously recommended parole.

On January 3, 1946, Dewey announced his agreement with the board's recommendation. The gangster would go free, but he would not be permitted to remain in the United States. "Luciano," Dewey said, "is deportable to Italy.... Upon the entry of the United States into the war, Luciano's aid was sought by the Armed Services in inducing others to provide information concerning possible enemy attack. It appears that he cooperated in such efforts, though the actual value of the information provided is not clear. His record in prison is reported as wholly satisfactory."

Some years later, Dewey amplified that statement in an interview with an editor of the New York Post. He said, "An exhaustive investigation ... established that Luciano's aid to the Navy in the war was extensive and valuable. Ten years is probably as long as anybody ever served for compulsory prostitution. And these factors led the parole board to recommend the commutation, combined with the fact that Luciano would be exiled for life under law."

On February 9, 1946, Luciano had his final look at the city where he had grown up and whose underworld he ruled. He was hustled aboard a converted Liberty ship, the S.S. Laura Keene, and sent to Italy. In the hours before the scheduled noon sailing, all his old underworld friends and a score or more of politicians went to the ship for a farewell party. Also on hand was a small army of reporters hoping for a final word at a shipboard press conference promised by the United States Immigration and Naturalization Service. But when they arrived, they could only stand in the bitter cold 100 yards distant, watch the curtained limousines arrive and depart and try to guess what was going on. In their way stood a gang of longshoremen, armed with sharpened baling hooks; they had been massed by Anastasia and Anastasio to protect Luciano and his well-wishers from prying eyes. When the newspapermen turned to members of District Attorney Frank Hogan's staff for intervention in their behalf, they received no help. The authorities were not anxious to participate in a clash between reporters and dock workers.

As the Laura Keene cast off, several of the dock workers yelled, "So long, Charlie ... you'll be back." That was exactly Luciano's intention. He had left all his holdings in the hands of Lansky, Costello and Adonis, but he did not intend that this gift should be permanent. He had already set in motion plans for his return, if not directly into the United States, then at least close enough to American shores to resume control of the American underworld and fend off any rivals.

Perhaps the most ambitious of these rivals was his old lientenant, Vito Genovese. As Luciano was leaving, Genovese was about to re-emerge after an absence of nearly a decade and make his play for the throne. In 1937, with New York authorities closing on him for racketeering and murder, Genovese had put more than $1,000,000 into a satchel and fled to Italy. On his honeymoon trip there a few years earlier, he had become acquainted with a number of officials in Mussolini's government; now he sought them out again and curried their favor to guarantee himself a certain degree of comfort during his visit to his native (continued on page 157)Victory, Vice And Vegas(continued from page 96) land--a visit, he soon realized, that was going to be prolonged by a world war.

His personal safety and comfort, Genovese decided, lay in a public espousal of the Fascist cause, and with a flourish he handed over $250,000 to build a Fascist Party headquarters. Later, when war broke out, he further demonstrated his loyalty to Mussolini by financing and supervising construction of a munitions factory. For all his public efforts, Mussolini personally awarded Genovese the title of Commendatore.

But Genovese feathered his Italian nest with more than money and patriotic gestures. He made friends in high places and did favors for the right people, including Il Duce himself. In 1943, the Italian dictator was particularly incensed at the anti-Fascist writings of a political émigré named Carlo Tresca in his New York Italian-language weekly, Il Martello. Genovese promised to deal with this problem to Mussolini's complete satisfaction. Though the war was on, Genovese managed to get a contract back to New York, and one day in 1943, Tresca was shot to death on Lower Fifth Avenue.

Perhaps Genovese's closest friend in the government was Mussolini's son-in-law, the Italian foreign minister, Count Galeazzo Ciano. Imagining himself the ultimate sophisticate, Ciano constantly searched for new pleasures as old ones paled, and he eventually discovered cocaine. Genovese became his personal supplier. He asked little money and used his influence with Ciano to make contacts not just in the Italian narcotics racket but directly at the source, in the poppy fields of the Middle East. With Ciano's protection, he became one of Italy's biggest and richest narcotics dealers.

By 1944, however, the fortunes of Fascism had collapsed. Italy surrendered and Mussolini was in flight (he was caught in the north and executed by partisans early in 1945). The prisons were filling up with those who had been high in the regime or who had cooperated with it, and those not yet captured were the object of massive hunts as war criminals. But not Genovese. Almost as soon as Americans occupied the country, he turned up at the headquarters of the Allied military governor, Colonel Charles Poletti, a former lieutenant governor of New York and onetime acting governor. The bilingual Genovese was promptly hired as an official interpreter on Poletti's staff, working out of the huge supply base at Nola.

That job, however, was merely a cover for his real activities. He became the biggest black-market operator in occupied Italy, with the overt and covert cooperation of a number of high Army officials. He dealt in medicines, cigarettes, liquor, wheat, food of all kinds, clothing, anything stocked at Army supply depots to which he had ready access. His position in the inner circles of the military government gave him freedom of movement, freedom from immediate suspicion and an open door to the supplies pouring into Nola and the other bases.

And in his pockets, Genovese carried testimonials to his great loyalty and dedicated service to the United States. From Captain Charles L. Dunn, Nola's provisional officer; from Major E. N. Holm-green, the civil-affairs officer; from Major Stephen Young, there were warm references to Genovese's "invaluable" contributions as an interpreter and advisor, to the fact that he was "honest ... trustworthy, loyal and dependable ... worked day and night ... exposed several cases of bribery and black-market operations among so-called civilian personnel ... is devoted to his adopted home, the U.S.A ... served without any compensation whatever."

But there was at least one man who was not quite so ingenuous. Sergeant Orange C. Dickey of the Army's Criminal Investigation Division was assigned to investigate the disappearance of large quantities of vital supplies from Nola, Foggia and other military depots. Almost immediately, he began to come across the name Genovese on papers diverting shipments, assigning trucks, allocating supplies. Dickey looked further, found two Canadian soldiers involved in black-marketeering; they told him that whenever they delivered truckloads of supplies to Italian civilian middlemen, the password was, "Genovese sent us." Dickey dug deeper and came up with the most disturbing information of all. The interpreter working deep within the American military government, with access to military secrets and with the confidence of high officials, was suspected by Counterintelligence of being a German spy, a suspicion based on his long history of close ties with Italian Fascists.

Dickey reported his findings to Captain Dunn and others in the summer of 1944. He was ordered to drop the investigation. He went to Rome to see Colonel Poletti and Brigadier General William O'Dwyer, the Brooklyn district attorney on leave for military service, who would later run for New York City mayor. They told him Genovese was of "no concern" to them. But Dickey persisted. In August 1944, on his own hook, he walked into headquarters at Nola and arrested Genovese as a black-market operator and suspected enemy agent. Still, the American military in Italy refused to press the case. And from his cell. Genovese continued to run his black-market operation and to receive a steady parade of visitors, his old Army friends and supporters.

In frustration, Dickey wired the FBI in Washington, informing them of Genovese's arrest and asking if he was wanted in the United States.

The past that Genovese had fled returned. Ernest "The Hawk" Rupolo, one of the killers Genovese had hired to murder a man named Boccia, had long been fretting in prison, serving a sentence for another murder Genovese had hired him to commit, one that had misfired. Rupolo had decided to talk about the Boccia murder and gave Brooklyn authorities not just the facts but a corroborating witness, a cigar-store salesman and sometime underworld hanger-on named Peter LaTempa, who had been around when the details of the killing were discussed. A murder indictment naming Genovese had been secured and when Dickey's message arrived, Brooklyn authorities advised the FBI that someone did, indeed, want Genovese.

The Army could have tried Genovese on the charges filed against him by Dickey. Instead, it dropped them and ordered Dickey to take Genovese back to New York to face capital charges. Genovese, of course, was not anxious to make the voyage. "At various times," Dickey later said, "I was offered many things. At one point, I was offered a quarter of a million dollars to let this fellow out of jail." When Dickey refused the money offers. Genovese tried other enticements: gifts, jobs, anything else he desired. Still Dickey refused. Genovese then threatened him and his family. Dickey still would not be deterred. He took Genovese back to New York and turned him over to the police.

Genovese was jailed in Brooklyn while the district attorney's office prepared its case. On January 15, 1945, however, that case collapsed. At his own request, LaTempa was being held in protective custody in Brooklyn. He was not a well man. That evening, he was stricken by a severe attack of gallstones. Several pills dissolved in a glass of water were taken to him for his pain. Within minutes, there was no corroborating witness against Genovese. According to a toxicologist who performed the autopsy, LaTempa had been given enough poison "to kill eight horses." (Soon thereafter, Rupolo, the other witness, was freed; he lived for some years awaiting gangland retribution and in August 1964, he vanished. A few weeks later, his body surfaced in Jamaica Bay, weighted with concrete, mutilated by an ice pick and bullets that had blown off the back of his head.)

Brooklyn authorities continued to hold Genovese for more than a year, hoping to secure new evidence that would permit bringing him to trial. When at last, in June 1946, they were forced to turn him loose, an angry judge said to him, "Genovese, by devious means, among which were terrorizing of witnesses, kidnaping them--yes, even murdering those who could have given evidence against you--you have thwarted justice time and again."

Genovese was welcomed back into the high councils of the Syndicate at a series of parties thrown by his old friends and he moved rapidly to take control, in Luciano's name, he asserted, of the exiled leader's organization. He also began a series of encroachments into the Brooklyn domain of Philip and Vincent Mangano and their feared underboss Anastasia, and into the territory of Joe Bonanno. Moreover, he argued for rapid expansion of narcotics operations as a sure way to make everyone rich and provide plenty of work for the ordinary soldiers.

But Genovese's intended victims prepared to resist his take-over, even if it meant an underworld war such as had not been waged since the Castellammarese struggle. And other leaders prepared to fight his increasing emphasis on narcotics, convinced that the profits were not worth the trouble junk would cause. The Organization, they said, had evolved into an orderly business, supplying the illicit needs and desires of society. It provided services and products that hurt nobody and, consequently, many politicians and police were willing to look the other way, provided they received their share.

But narcotics were universally disapproved, would guarantee new crackdowns and new heat on the underworld. So they wanted no part of heroin or other drugs.

Genovese's ambitions split the old Luciano family. During his decade in Italy and Luciano's in prison, its regent had been Costello. He was a benevolent, tolerant and generous ruler who did not impose his views on others and did not foment trouble with his peers. He had worked quietly and assiduously, cultivating friends, contacts, and allies in every stratum of society, had become such a political power that he could name judges, city councilmen and other officeholders, and the word around Tammany Hall on any new appointment or important decision was, "Clear it with Frank." As a result, Costello had won great respect and power throughout the underworld and, with Lansky, was considered the wisest, most intelligent and judicious leader. It would be no easy thing for Genovese to topple him should Costello decide to resist.

Perhaps there was only one man who could heal the splits before they tore the Syndicate apart. That was Luciano himself, and late in November 1946, he was on hand, ready to do some knitting and to reassert his own authority. With a legal Italian passport and visas for half the countries in Latin America, Luciano turned up one afternoon at the Hotel Nacional in Havana, registering under his own legal name, Salvatore Lucania, in a suite reserved for him by Lansky. And within a few days, he had settled down as though he never intended to leave, in a villa in the exclusive Miramar suburb. He was even able to demonstrate a legitimate reason for his presence in Cuba: Soon after his arrival, he purchased a small percentage of the casino at the Hotel Nacional from its owners--Lansky and his good friend Fulgencio Batista, the onetime Cuban strong man who, living in Miami and preparing for a comeback, was a major power behind the regime of President Ramon Grau San Martin.

Luciano summoned all the major chieftains of the American underworld to Havana for the first full-scale convention of the Syndicate since the early Thirities. Just before Christmas, mixing with the other holiday fun-and-sun seekers, they began to arrive, by plane and boat, singly and in pairs. From New York, there were costello, Adonis, Genovese, Anastasis, Bonanno, Lucchese, Moretti, Miranda, Augie Pisano, Joe Profaci and his brother-in-law and anointed heir, Joesph "The Fat Man" Magliocco; from Chicago came Tony Accardo, the reigning ganglord, and the Fischetti brothers, Charlie and Rocco, cousins of Al Capone, who by then was out of prison and dying of advanced paresis only 90 miles away at his Palm Island mansion off Miami Beach; Carlo Marcello and the Syndicate's New Orleans gambling czar, "Dandy Phil" Kastel, came from Louisiana; Santo Trafficante arrived from Floride; there were several from other cities and, of course, Lansky, who had made all the arrangements at Luciano's request.

Had anyone noticed or commented upon the arrival of such a galaxy of racketeers, there was an ostensibly legitimate reason for the assemblage: a party at Christmas to honor an Italian boy from New Jersey who had become the idol of the nation's bobby-soxers and yet had never forgotten his old friends. His name was Frank Sinatra and he flew to Havana with two old friends, the Fischetti brothers. While the gang leaders came bearing cash-stuffed envelopes for the returning boss--estimates of the total money run from $200,000 all the way up to several million--Sinatra had a few tokens of his own to dispense. Some years later, a gold cigarette case would turn up in Luciano's possossion engraved: To my dear Pal Charlie, from his friend, Frank Sinatra.

For more than a week, from Christmas through New Year's, the visiting mobsters partied long and worked hard. They gave their allegiance to Luciano as the chariman of the board of organized crime, the man to whom they would turn for advice, counsel and major policy decisions. They agreed to cooperate, to end feuds and growing rivalries, to respect one another's jurisdictions and to keep the peace. They discussed narcotics, but in an atmosphere charged with recrimination, tension and bitterness. Luciano always maintained that in the councils his was the strongest voice in opposition to narcotics; he had learned, he said, by bitter experience, with his prison term in 1916 and his arrest in 1923, that narcotics was a racket that didn't pay off because of the peril involved. And his views were shared by Lansky, Costello, Lucchese, Stefano Magaddino--the Syndicate's Buffalo boss--and a few others. So divided was the discussion that eventually the subject was table, with no decision on an Organization policy; each ruler would follow his own dictates.

And then there was the distressing affair of the Organization's West Coast viceroy, Benjamin "Bugsy" Siegel. During the war years, Siegel had begun to have visions of a new empire, one that would mine gold out of the desert. Gambling was legal in Nevada, but the attraction then was Reno. Las Vegas was only a sleazy oasis, offering a couple of greasy spoons, a few slot machines and some gas stations catering to tourists on their way to Los Angeles. Siegel dreamed of Las Vegas as a great metropolis, a gambling paradise unmatched anywhere in the world. He began to lay plans for a luxury hotel and casino that would open up the town. His enthusiasm was infectious and he persuaded his underworld partners to back him. When Lansky, the Mob's treasurer and financial genius, announced his support, the money flowed in.

Siegel named his dream hotel the Flamingo and, to decorate it in the most lavish manner, he gave a free hand and an unlimited bank roll to his mistress, Virginia Hill, who at one time or another had shared beds with almost the entire underworld hierarchy, including Adonis, Costello, the Fischettis, Accardo and Frank Nitti. But Siegel knew he would need more than a hotel, however spectacular, and desert gambling to woo the customers from Reno. His lure, in addition to the tables, would be the best food, the best accommodations and the greatest entertainers, all at such low prices that no high roller could afford to stay away.

With an initial building budget of $1,500,000, Siegel handed the construction contract to the Del E. Webb Construction Company of Phoenix (Del Webb would later become part owner of the New York Yankees). Though both labor and materials were still scarce, Siegel's Flamingo had little trouble getting all it needed; it required only a little Mob muscle in the right places. Ground for the Flamingo was broken in December 1945, and it did not take Siegel long to discover that his insistence on quality--concrete walls, imported woods and marble, special sewer lines for every bathroom--was wrecking his original budget. Time and again, he went back to Lansky and his other underworld partners for more money, and time and again, though not without some grumbling, they gave him what he needed. When he needed still more, he began to hit up his friends and acquaintances in Beverly Hills and throughout the motion-picture colony, holding out the promise of enormous profits when the Flamingo finally opened. But with the constant delays and mounting expenses--the Flamingo would eventually cost more than $6,000,000--the Organization began to fret. Promises were not enough.

The Flamingo's financial backers were angry at Siegel, and he had also incurred the wrath of Accardo, the Fischettis, Murray "The Camel" Humphreys and others in the Chicago underworld. One of Siegel's major assignments on the West Coast had been to handle the Mob's betting operations, in partnership with Jack Dragna, the leader in Southern California until Siegel turned up. For the bookies to operate, they needed a racing wire to give them instantaneous track results. The dominant wire in the country then was Continental Press Service, based in Chicago and owned by James M. Ragen, who had succeeded Moses Annenberg as the country's racing czar when Annenberg went to prison. Ragen's independence was not something the Mob could tolerate, so it decided to go into competition, setting up the Trans-American Publishing and News Service. Siegel was given the responsibility for ensuring its success in the West. With muscle, threats and a little violence, Siegel did exactly that. Soon he had a lock on nearly all the bookies in his area and was charging them up to $100 a day for his service, which they could not do without.

But, with Ragen still around, the Chicago Mob was not yet satisfied. It offered to buy Ragen out; he figured that even if he sold, his former competitors would not let him live long enough to enjoy the profits. He refused the offers. So, in June 1946, Ragen was gunned down as he walked along a Chicago street. Though hit by several bullets, the marksmanship had been poor and he ended up in a hospital under round-the-clock polite guard. In September, Ragen suddenly died; an autopsy revealed that he had been poisoned by mercury.

With Ragen gone, the Chicago Syndicate took over Continental and told its West Coast partner, Siegel, to close up Trans-American. He refused, then demanded $2,000,000. Harsh words flew back and forth, and the men in Chicago decided to play for time.

Thus, in Havana during Christmas 1946, there were men very unhappy with Siegel--his partners in the Flamingo and his partners in Trans-American. Siegel was not invited to the meeting, was not even told about it, but he was well aware of his unpopularity and felt the need to improve his underworld relations. Though the Flamingo was still unfinished, he decided to demonstrate how right his predictions had been and announced that it would officially open on December 26. George Jessel would be master of ceremonies, with entertainment provided by Xavier Cugat's orchestra, Jimmy Durante and an army of beautiful girls. Siegel's close friend George Raft would be on hand to greet the customers. Unfortunately, as things turned out, there were few customers for Raft to greet. The night was cold and rainy, grounding the planes that Siegel had chartered to bring in gamblers and Hollywood celebrities. Few tried to find alternative means of travel.

The debacle of the Flamingo's opening night did not endear Siegel to his old friends, and then came disturbing news from his oldest and closest friend, Lansky. Siegel was not only a flop as an impresario but, Lansky said, he was a thief as well. Lansky had learned that Miss Hill was making frequent trips to Europe, depositing several hundred thousand dollars in cash in a numbered account in Switzerland; the cash had come from the Flamingo's building fund.

Nobody, not even an old and trusted comrade like Siegel, steals from his underworld friends and gets away with it. Siegel's execution was ordered, but first he would be given time to try to prove that his Nevada dream might actually come true.

In mid-January, the Flamingo closed while finishing touches were added. The corporation was reorganized and Siegel found himself reduced from majority ownership to no more than a ten-percent partner. But he worked hard to get the Flamingo ready for a new opening, perhaps unaware of the Havana decision on his future or perhaps aware of it and hoping to produce a success that would cancel the contract. In March, his labors were complete and the Flamingo reopened, but with no better fortune than the first time. It seemed as though every gambler who showed up at the tables had an incredible run of luck. The losses piled up. Checks made out by Siegel to Webb and others in payment for work on the hotel-Casino bounced and Siegel grew increasingly edgy. One night, Webb arrived at the hotel to pick up a payment. Siegel, he said, "was a remarkable character. Tough, cold and terrifying when he wanted to be--but at other times a very easy fellow to be around. He told me one night when I was waiting for my money that he had personally killed twelve men. But then he must have noted my face or something, because he laughed and said I had nothing to worry about. 'There's no chance that you'll get killed,' he said. 'We only kill each other.'"

In May, Siegel seemed to relax. There had been no overt moves against him and the Casino finally was turning around; that month it cleared $300,000. But it was too late. Word had reached Lansky and others in the Syndicate that not only had Siegel accelerated his work on the hotel but he had also accelerated his skimming, had now siphoned off at least $500,000, had dispatched Virginia on another European trip, and there were rumors that he was preparing to follow her there.

Early in the morning of June 20, 1947, Siegel returned to Los Angeles from Las Vegas. He visited his favorite barbershop and seemed in a relaxed and cheerful mood as he talked about the glowing prospects of the Flamingo and the imminent arrival from the East of his two daughters. From the barbershop, he went to see his lawyer. In the evening, he had dinner at Jack's Cafe on the beach with a friend, Allen Smiley, and Virginia's brother, Charles "Chick" Hill, and his girlfriend, Jerri Mason. Just before ten in the evening, they returned to the Beverly Hills mansion at 810 North Linden Drive that Siegel had rented in Virginia's name.

At 10:45 P.M., Siegel and Smiley were relaxing in the living room, talking and reading the newspapers. Suddenly, a fusillade from a .30-caliber carbine, fired by an assassin standing in the bushes outside the living-room window, blasted through the room. One bullet tore through Siegel's head, ripping out his eye and tossing it across the room. Four more slugs struck his body, cracking his ribs and piercing his lungs. Three more missed, shattering small objects around the room and burying themselves in the wall. At the first shot, Smiley dove to the floor and escaped injury.

Almost the minute Siegel collapsed dead on a sofa, three men walked into the Flamingo in Las Vegas and announced that they were taking over. They were all longtime workers in Lansky's fields: Morris Rosen, Gus Green-baum and Morris Sidwirtz, better known as Moe Sedway. And in Los Angeles, Jack Dragna promptly assumed command of the Syndicate operations on the West Coast.

The murder of Siegel, never solved, prevented him from seeing his Las Vegas dream come true. In the decade that followed, the city flourished: Hotel-casinos, whose garish architecture and lavish decor were matched only by places in Miami Beach, rose one after another along the Strip pioneered by Siegel, each trying to exceed the others in entertainment, food, accommodations and gambling facilities. Behind almost every one was underworld money and control, with the mobsters both competing and cooperating with one another. The biggest guessing game in Las Vegas was who really owned what, though it was assumed that Lansky had a piece of everything.

Within a year of Siegel's murder, Lan-sky's money financed the Thunderbird. When the Desert Inn opened two years later, it was widely heralded as the culmination of the dream of a longtime "clean" gambler, a man named Wilbur Clark, who reputedly was free of Mob connections. As it turned out, the Desert Inn was actually financed and 74 percent owned by Moe Dalitz, then the Syndicate's Cleveland overlord, and his friends and associates from Prohibition days, Morris Kleinman, Sam Tucker, Lou Rothkopf, Thomas Jefferson McGinty, and others. When the Sands opened its doors in 1952, the money and control belonged to men whose names rarely appeared on the record: Lansky, Adonis, Costello, New Jersey mobster Joseph "Doc" Stacher, Florida and Kentucky bookie Eddie Levinson, Minneapolis crime leader Isadore Blumenfeld, better known as Kid Cann--and nine percent belonged to Frank Sinatra. The Sands's official greeter was a man named Jack Entratter, who had been a bouncer at the Stork Club and the Copacabana in New York and for a time had been the front man for the real owners of the Copa-- Costello and Adonis.

The Sahara opened the same year as the Sands, and on the record it belonged to three smalltime Oregon gamblers. But they got their stake from the Chicago-New York-Cleveland Syndicate money men. It was the Chicago Mob--Accardo, the Fischettis and Sam "Mooney" Giancana--that ended up owning the Riviera casino and then hired Greenbaum, one of the Lansky trio who had taken over the Flamingo at Siegel's death, to run it. (In 1958, Greenbaum earned his employers' displeasure, for reasons never fully explained. So he was fired in the usual way: He and his wife had their throats cut one night at their home in Phoenix.)

The Dunes brought riches to Raymond Patriarca, the Syndicate's Rhode Island boss; the Stardust was another annuity for Dalitz; and the Tropicana kept Costello and his partner Kastel from want. And, of course, there was Caesars Palace, whose architecture and decor were supposed to evoke images of ancient Rome but inspired comedian Alan King to remark, "I wouldn't say it was exactly Roman--more kind of early Sicilian." Financially ensconced in the Palace were Patriarca, Accardo and Giancana; Jerry Catena, one of Genovese's chief lieutenants; and Vincent "Jimmy Blue Eyes" Alo, a Lansky associate. But perhaps the biggest stake in the hotel-casino was held by James R. Hoffa and the Teamsters Union's pension fund, and that was only one of the union's holdings in the gambling capital. Before Hoffa was through investing Teamster pension funds in Las Vegas, he had seeded more than $50,000,000 into the city, mostly in the form of permanent loans. Caesars Palace itself received more than $10,000,000 in Teamster money and the rest went into several hotels and casinos (including the Landmark, the Fremont and the Dunes); Dalitz' favorite charity, the Sunrise Hospital; two golf courses and a miscellanea of downtown business properties.

As the years went on, other unlikely people began to work the Las Vegas money mines. In the mid-Fifties, the Parvin-Dohrman Company (headed by Albert B. Parvin, a onetime interior decorator who had laid the carpets for many of the big hotels) bought the Flamingo. In the Sixties, it bought the Fremont and then sold the Flamingo to an investment syndicate headed by Miami Beach hotel man Morris Lands-burgh (the Eden Roc), who, as it happened, was an old friend of Lansky's. Parvin then paid Lansky a $200,000 finder's fee for having turned up Landsburgh and used remaining Flamingo assets to set up the Albert Parvin Foundation to provide fellowships for students from underdeveloped countries. (On the foundation's board sat Robert F. Goheen, president of Princeton University, Robert Maynard Hutchins, head of the Center for the Study of Democratic Institutions, and U. S. Supreme Court Justice William O. Douglas.) Landsburgh and his friends soon tired of the Flamingo, about the time the Government began its investigations of his New York-London charter gambling flights and of his part in Las Vegas skimming operations, for which he, Lansky and some others were later indicated. So the Flamingo was sold again, this time to Kirk Kerkorian, a former nonscheduled-airline operator who now heads Metro-Goldwyn-Mayer.

But the most unlikely figure of all to hit Las Vegas was billionaire recluse Howard Hughes. In an effort, perhaps, to own a state of his own, or maybe just to get back into an old-time love, show business, or maybe just because he thought there was money to be made, Hughes started buying up Las Vegas in the mid-Sixties, taking over a number of the Mob-owned hotels and other properties. In rapid succession he bought the Desert Inn, the Sands, the Castaways, the Frontier, the Landmark, the Silver Slipper, Alamo Airways, North Las Vegas air terminal, the Krupp Ranch and television station KLAS-TV. Before Hughes finally fled the spotlight turned on by the Clifford Irving hoax and the lawsuits of his former chief of staff, Robert Maheu, he had served at least one beneficial purpose. Though the Organization never completely abandoned the Las Vegas gold fields, its influence and control began to wane with the increasing dominance of Hughes. Before, there had been a widespread feeling that only the mobsters could run casinos profitably; the Hughes operations proved that this was only a Mob-perpetuated myth. And the arrival of Hughes also pushed some Nevada officials out of their easy chairs to take a closer look at the casinos that they had long claimed could not be controlled.

Finally, the Las Vegas transition gave the lie to the old idea that, given the opportunity, the wise men of organized crime can and will run a business honestly. Gambling in Nevada is both legal and, even after the heavy taxes that nearly support the state, enormously profitable. By most estimates, tourists spend around five billion dollars in Las Vegas every year and casino profits average about 20 percent of that. But an honest count has never satisfied the Syndicate. Almost from the start, a percentage of the casino take--perhaps as much as 20 or 25 percent--has been skimmed off the top, carried away in satchels by Mob couriers to Lansky and other underworld financiers. That skim has formed the basis for one of the Mob's most successful ploys, the "laundry" business. Much of the money was deposited in numbered Swiss accounts, where it disappeared and was "laundered," returning to the United States in the form of loans to other Mob enterprises (which, of course, claimed the interest as tax deductions) or for investment in, hence further control of, legitimate businesses.

Just how much has been skimmed off the top in Las Vegas through the years few are even willing to guess. But in 1969, Lansky, Landsburgh and several others were indicted, charged with skimming $36,000,000 from the Flamingo alone between 1960 and 1967.

Siegel could never have imagined the riches that would pour into the Mob treasury when he first broke ground in the Nevada desert. Neither could those who handed down his death sentence at Christmas 1946. The place envisioned as the future gambling capital of the Western Hemisphere was Havana, where the Mob's money was moving in a flood, right along with the American tourists suddenly freed from the wartime travel restrictions and seeking pleasure in the Caribbean sun.

Cuba, at that moment, seemed the ideal spot from which Luciano, with the help of his old friend Lansky, could resume his direct rule of the American underworld while waiting, hopefully, for the day he could return to New York. With a legal passport, visas and residency permit, and with a legitimate stake in the casino at the Hotel Nacional, Luciano had every reason to feel secure.

He reckoned without Harry Anslinger, director of the U. S. Treasury Department's Bureau of Narcotics. Anslinger was convinced that Luciano, despite his protestations to the contrary, was the brains behind the burgeoning international drug traffic, was the man responsible for the sharp increase in the flow of narcotics into the United States. When word reached Anslinger that Luciano was luxuriating in Havana, he blew. He sent a formal demand to Cuban president Grau San Martin that Luciano be thrown out, stating that he had no business in the Americas and was a positive danger to the security of the United States as long as he remained.

At first, the Cubans did no more than politely acknowledge the demand. Benito Herrera, chief of the Cuban Secret Police, shrugged that Luciano "has maintained contact with certain interests in the United States and he has been receiving money from business interests, which allows him to live lavishly. But so far as we have ascertained, there is no evidence that he is mixed up in any illicit business in Cuba." And the Cuban minister of the interior, Alfredo Pequeno, noted that while Luciano "is a dangerous character and a perjurer ... his papers are in perfect order." Luciano had spread his money around Havana to good purpose.

But Anslinger would not relent. He went to President Truman, argued his case so forcefully that the President gave him the power to take whatever steps he thought necessary. Anslinger promptly announced that until Luciano was shipped back to Italy, the United States would send no more medical drugs or supplies to the island. With no facilities to manufacture their own, the Cubans capitulated. Late in February 1947, Luciano was arrested and thrown into the Tiscornia Immigration Camp in the steaming swamps across the bay from Havana. Then his friends in the Cuban government tried to strike a deal. They would expel Luciano, to be sure, but to Venezuela, which had offered to grant him residency. Anslinger would not hear of it. If Cuba wanted drugs and medicine, then Luciano had to go back to Italy and nowhere else.

At last, Luciano himself gave in. Early in March, he boarded a Turkish freighter, the S. S. Bakir, for the long, slow voyage back across the Atlantic. He would never again come so close to American shores. But until his death in Italy in 1962 from a heart attack, he would continue to play a dominant and often decisive role in the workings of the U. S. criminal Organization he had done so much to create.

And now that the Organization had completed its transition to peacetime operations, Luciano, through couriers, was ready to settle back and reap the rewards of Las Vegas, Havana and the other gambling centers, to exploit the boundless opportunities opening up in the postwar world. The violence and notoriety of the Thirties, the sensational Murder, Inc., trials of the early Forties belonged to an era that most people wanted to relegate to history, and now that the Syndicate had learned how to operate stealthily in the shadows of legitimate business, mobsters envisioned a future of harmony, prosperity and invisibility. That vision soon was shattered by a very junior Senator from Tennessee named Estes Kefauver, who would shed new light on the American underworld.

Luciano Sent Back to Italy

Gangsters Move In On Black Market

This is the eighth in a series of articles on organized crime in the United States.