Island of the Damned (8 page)

Outside
the murky confines of district attorney Dodge’s office however, other prosecutors were determined not to let Schultz or Jimmy Hines drift off the radar. The Federal authorities, including the Internal Revenue Services (IRS), which had successfully prosecuted Chicago gangster Al Capone for tax evasion, now turned their attention to New York gangsters like Dutch Schultz. The U.S Attorney’s office under George Medalie, and his chief assistant, Thomas Dewey, was eager to co-operate. Thomas Dewey - who had shared an office with Welfare Island crime-buster David Marcus - had been investigating organised crime for several years, and his ultimate goal was to smash Schultz’s racketeering empire, bringing down the gangster’s Tammany fixer with it. Dewey’s boss and mentor George Medalie shared Dewey’s determination and the two prosecutors set about collecting vital, major evidence of Schultz’s activities and connections.

Buoyed
by his successful prosecution of numbers of racketeers for tax evasion, Dewey prepared a tax evasion case against Dutch Schultz which led to Schultz’s indictment in 1933. After the charges were filed, Schultz went on the run and, with Jimmy Hines’s help, managed to lie low. As the Federal investigation intensified, in November 1934 Schultz turned himself in in Albany in upstate New York, believing he would receive more lenient treatment outside his home town. He was tried in nearby Syracuse in April 1935: the trial resulted in a hung jury. At his second trial that July, in the small upstate town of Malone, he was acquitted. An outraged Mayor La Guardia denounced the verdict as a disgraceful miscarriage of justice, and told the press: “He won’t be a resident in New York City. There is no place for him here.” To which Schultz responded: “So there isn’t room for me in New York? Well, I’m going there. Tell La Guardia I will be home tomorrow.”

By
that time, New York Governor Lehman had appointed Thomas Dewey to be New York’s Special Prosecutor whose brief was to concentrate solely on the investigation and prosecution of racketeering and other organised crime. Dewey’s newly created post had come about when a so-called “runaway grand jury” investigating gang related crime, rebelled against William Dodge’s inefficient and interfering methods, including his withholding of evidence concerning Dutch Schultz’s rackets, that should have been presented to them. The indignant grand jury members demanded the instatement of an independent prosecutor with broad powers to investigate organised crime, enabling them to do their job properly. Dewey’s new department, run separately from the D.A’s office, was granted extraordinary power and resources: his team included twenty assistant attorneys, ten investigators, and many other employees. The New York Police Department put over sixty of their officers at Dewey’s disposal. Governor Lehman authorised the creation of a special grand jury to hear Dewey’s cases and appointed Philip McCook, a close supporter of La Guardia, as judge. And so New York’s mightiest battle against modern organised crime began. Free from interference by Tammany appointed officials, Dewey continued the pioneering investigations begun by Judge Samuel Seabury several years earlier, and vowed to bring key members of the underworld to justice.

Chapter Seven - The Net Closes In

Dewey went on to win convictions and long prison sentences for loan sharks, illegal gamblers, and racketeers in the restaurant business and the waiters’ union. His successful 1937 prosecution of “Lucky” Luciano on charges of running a prostitution ring, made him a national hero and he was elected Manhattan District Attorney at the end of that year. However, while putting Dutch Schultz behind bars remained Dewey’s biggest dream, events soon forced him to redirect his efforts elsewhere. When Schultz returned to Manhattan in August 1935, news of Dewey’s probes into racketeering, including his own ventures, began to infuriate him. Afraid the net could come down on his gambling empire, the paranoid mobster started brooding obsessively about Dewey. Soon Schultz was planning vengeance against the man responsible for bringing tax evasion charges against him, and now digging into his business affairs. Recognising Dewey as his nemesis, he decided the prosecutor must be removed, and concocted an elaborate assassination plan: ordering his men to shadow Dewey night and day and note his daily routine, a suitable time and venue for the murder was eventually decided upon.

Before
putting the plan into action, Schultz called a meeting with the six leaders of the “National Crime Commission”, the mafia syndicate, anticipating their support. Instead, the commission voted against Schultz’s plan, deciding that however much they feared and loathed Dewey, his murder would only shine a greater light on their activities, causing more problems than it would solve. Enraged, Schultz shouted: “I still say Dewey should be hit, and I’m going to do it myself.” Hearing him brag that he would murder Dewey within the next forty-eight hours, the alarmed syndicate leaders realised that he was out of control, and mentally unstable enough to carry out the threat. The top brass decided he had to be stopped. On the evening of October 23rd 1935, a car carrying several members of Murder Inc., the national crime syndicate’s assassination division, pulled up at the Palace Chophouse in Newark, New Jersey, where Schultz was holding a meeting with his lieutenants. The hit man strolled into the restaurant and swiftly gunned down Otto ‘Abadaba’ Berman, Abe Landau, and Lulu Rosenkranz, finishing off Dutch Schultz as he came out of the men’s room. Schultz, who lingered on in a coma, died in hospital three days later, without naming his assassin.

In
the eighteen months following Schultz’s murder, Thomas Dewey went on to indict surviving key members of his gambling racket, which was now being run by Richard “Dixie” Davis, Schultz’s lawyer who was also a close associate of Jimmy Hines. Davis was tried and convicted of running a racket in 1937, and, having been disbarred, agreed to co-operate with prosecutors in return for a relatively lenient sentence. Eventually the stage was set for what the press hailed as New York’s “trial of the century”. Waiting to appear on the witness stand was a cast of underworld characters led by Jimmy Hines, who in May 1938 was arrested and indicted, with eight other defendants, on thirteen counts of conspiracy to run and promote Schultz’s numbers racket. Hines’s eight co-defendants included George Weinberg, Schultz’s business manager and brother of the gang’s chief hit man Bo, whose disappearance Schultz had engineered several years earlier. An eerie presence hovered, like Banquo’s ghost, throughout the proceedings: it was Dutch Schultz.

Dew
ey and his team had built an impressively solid case against Jimmy Hines, who was by then aged 62 and an unlikely looking villain with his white hair and genial yet unassuming manner. George Weinberg, the principal go-between for the Schultz organisation and Hines, told the court he had first met Hines in 1932 when he was ordered one night to pick up the politician and take him to a conference in Schultz’s apartment. There Schultz told Hines he wanted protection, in particular an assurance there would be no arrests of the top men in his policy operations and a guarantee that any cases involving his men would be dismissed if they reached the magistrates’ courts. When Hines assured Schultz he would take care of all that, the gangster handed $1000 to Hines, and then instructed Weinberg to pay Hines $500 a week and “any other reasonable amounts up $1000.” These weekly payments continued from 1932 until the end of 1935 and were recorded on the policy’s payroll as expenses, entered either under “J.H”, “Pop” or “the old man”.

From the outset, Hines delivered without fail. If ever a Schultz employee faced criminal charges, his case was adjourned until Hines arranged for it to be heard by one of his two “tame” magistrates, Judge Francis Erwin and Judge Hulon Capshaw, who would dismiss the cases or issue a modest fine. On one occasion Weinberg was in a restaurant with Hines when they bumped into Judge Capshaw. When Hines mentioned that he had “a very important policy case” coming up in front of him, asking Capshaw “would you be able to handle it for me?” The magistrate promptly nodded, saying: “I have never failed you yet. I will take care of it.”

Only
a word was needed from Hines for heads to roll, especially in the New York police department. When “Boss” John Curry, the retired former leader of Tammany Hall gave evidence, he revealed a standard procedure for dealing with police who cautioned or arrested too many of Schultz’s associates. First, George Weinberg would call Hines, complaining about those policemen’s behaviour. Then, Hines phoned Curry, identifying the troublesome officers. Curry rang the Police Commissioner asking for those men to be taken off their beat, and the commissioner forwarded the message to their commanding officers. Even senior detectives, some with distinguished arrest records, were demoted and transferred to a “safe” beat. As the weeks progressed, it became clear that Hines was the orchestrator of the whole conspiracy. After Hines went onto Schultz’s payroll, the arrest record in one police division which had been as high as about twenty per day, dropped instantly to eight, and sometimes only four a day. By the end of 1932, arrests were few and far between.

The
extent of Hines’s power was also clear during the 1933 election of Thomas Dewey’s predecessor, former New York district attorney, William Dodge. That year, when it seemed possible the next New York mayor might be Fiorello La Guardia, enemy of all organised crime, Dutch Schultz began to fret about not having “the right kind of guys in high office in town.” Weinberg recalled Schultz saying to him: “we have to concentrate on the D.A more than anything else.” Again, Hines proved to be Schultz’s saviour, assuring him that William Dodge, a former magistrate, was the man for the job. As Hines reportedly told George Weinberg: “I want William Dodge because he is stupid, respectable and my man.” At the trial, Dixie Davis testified that when Hines informed him he was going to put recommend Dodge as the next district attorney, Davis thought it was a bad idea. “I told Hines, ‘Dodge is stupid, he doesn’t know what it’s all about, and he would be harmful to us because of his stupidity,’” said Davis, to which Hines replied: “I wouldn’t worry about it. I can handle him”. It was Schultz’s money that paid largely for Dodge’s campaign. According to Weinberg, he was once asked to deliver $3,000 for the campaign at the office of Hines’s lawyer. Hines turned to Dodge, sitting with him in the office, and said: “Do you know George? This is one of Dutch Schultz’s boys. This is where I am getting the money for your campaign.” Dodge grinned and shook Weinberg’s hand with obvious gratitude. Dodge’s campaign manager later confirmed in court that he had received up to $30,000 from Schultz’s organisation.

Another
staggering revelation was Dixie Davis’s admission that Hines insisted D.A Dodge quash the 1935 grand jury investigation into Schultz’s rackets. This ultimately led the grand jury to demand the appointment of Thomas Dewey as Special Prosecutor. Dixie Davis admitted telling Hines that Dewey’s appointment was to be avoided at all costs. “I knew Dewey was a bad guy from our standpoint. I went to see Hines at his country home and said to him: ‘Dewey will destroy us all.’ I urged him to go and see Dodge and see if he could stop the appointment.” Hines agreed immediately, promising “I will see what I can do.” It was the first time Hines failed to deliver.

The
Hines trial was a major political sensation. Thousands of New Yorkers thronged the streets in front of Lower Manhattan’s Supreme Court Building, and the proceedings made daily headlines. The drama was long and tense. After many weeks of astonishing evidence, in September the judge declared a mistrial on a technicality and the trial ended. Another trial was scheduled for January 1939, but on the first day, George Weinberg, Thomas Dewey’s star witness, stole a gun from one of the officers who was guarding him and other defendants at a house in White Plains, and blew his brains out. For several days it seemed as if without Weinberg’s crucial evidence Dewey might lose his case, until it was agreed that Weinberg’s testimony given in the first trial could be read out in court. As the second trial progressed, in a surprise move Dewey called Dutch Schultz’s widow, 24 year-old Frances Flegenheimer to the stand. She confirmed she had often met Hines in the company of her husband, sometimes in public restaurants, and that the two men had a close relationship. At times, her husband told her to “forget about seeing Jimmy Hines in here tonight.” Finally, in March 1939 after only seven hours deliberation, the jury found Hines guilty on all thirteen charges. On March 23rd, he was sentenced to four to eight years imprisonment, and after losing his appeal, served just over four years of his term in Sing Sing. He was released on parole in 1944 and lived in relative obscurity with his wife at their home in Long Island, where he died of natural causes in 1957, aged eighty. The Hines conviction dealt the Tammany tiger a crippling blow. Symbolically, good had won over evil and incorrupt government was seen to triumph over bad. New Yorkers again began to feel they could hold their heads up, as the city turned over a new page.

*

The removal of Jimmy Hines, New York’s most powerful “Mr Fixit” and of Lucky Luciano, with whom Welfare Island monarch Joe Rao had also built up a lucrative partnership, left the underworld in disarray. Hines’s imprisonment deprived gangland of its most influential and enthusiastic mediator, and Thomas Dewey’s triumphant crackdown on organised crime proved a significant setback for most of the big-time 1920s and 1930s racketeers. Gangsters, including the celebrated gang, Murder Inc., who had succeeded in preventing Dutch Schultz from assassinating Thomas Dewey, were themselves now paranoid and twitchy: the loss of their leader, Lucky Luciano, prompted once powerful Mafiosi to flee New York for ever. The exodus included Meyer Lansky, who set off for Havana to create casinos for the Cuban dictator General Batista. Frank Costello went to New Orleans to set up new businesses. And “Bugsy” Siegel headed West, first to Hollywood, then Las Vegas where he built the Flamingo Casino and Hotel.

Although, on Welfare Island, the last remains of the penitentiary had been demolished in 1936 and the ground cleared to make way for eventual property development, by the time Hines was convicted, the chief players in the island’s final, darkest episode were either dead, behind bars, or had moved on. Commissioner Marcus MacCormick went on the transform and modernise the US penal system, concentrating in particular on the education and rehabilitation of young offenders. His chief aide, David Marcus, who was appointed Commissioner of Corrections, MacCormick’s former post, by Mayor La Guardia in 1940, served as a colonel in the Second World War. He went to Israel in 1948 as a field commander where he was appointed a Lieutenant General by Israeli Prime Minister David Ben-Gurion, becoming Israel’s first Jewish general. A few hours before the Israeli-Arab cease-fire began, 42 year-old Marcus was killed by an Israeli sentry who mistook him for the enemy.

Thomas
Dewey pursued his political ambitions and became the 47th Governor of New York State in 1943, remaining in office until 1954. Although he won the Republican nomination for President in 1944, and again in 1948, he lost both elections. Fiorello La Guardia - New York’s beloved “Little Flower” - served three terms as Mayor of New York and is widely credited with having created the modern city of New York, leaving its citizens reinvigorated, proud and optimistic about their metropolis.

One
man however remained untouched by any ambition to reform. With his former protectors either dead or behind bars, Joey Rao returned to his old ways and remained in the news. Although Rao’s first reversal of fortune began on January 24th 1934, with the raid on Welfare Island, another setback occurred on 5th January 1935, when, after a brief trial, he was tried for savagely beating up a policeman outside a Harlem dance hall in 1932. Although Rao had been sent to Welfare Island on charges of extortion while the trial for the policeman’s assault was pending, the authorities insisted he faced trial for the prior crime. So, just before Rao’s release date from Welfare Island in February 1935, he was found guilty of the assault and sent to Sing Sing for two years. Several years later, together with his old partner in crime, “Trigger” Mike Coppola, he was arrested and held in custody for over a year under suspicion of beating to death of a Republican district captain on election day 1946. Eventually Rao was released, and continued dabbling in drugs and gambling rackets until his sudden death from a stroke in May 1962 aged 61.

*

Today, almost eighty years after the scandal of Welfare Island, most people’s first response on arriving in Roosevelt Island – as it was renamed in 1976 – is disbelief. Can the cool breeze, the scent of brine and flowers, the fields, parklands and peaceful waterfront all exist a mere five minutes from the clamour and concrete of Manhattan?

T
his leafy haven, known as New York’s best kept secret, has become one of the city’s most desirable residential locations, offering a near rural existence for its 10,000 locals who include actors and artists, writers, politicians working at the United Nations and medical staff from the hospitals on Manhattan’s Upper East Side. At weekends, old and young men fish on the river bank; a jazz quartet plays by the water’s edge; families and neighbours gossip over evening drinks; others picnic on the grassy slopes.