J. Edgar Hoover: The Man and the Secrets (51 page)

Hoover stressed that the plan must be implemented immediately: “There is no time for training and organizing a new corps.” Fortunately, the Army, Navy, and FBI just happened to have their South American operatives available.
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But, unknown to Hoover, his plan was doomed even before he submitted it. As he’d already shown, by chopping $6 million off Hoover’s 1946 budget request, Harry S Truman was no fan of the FBI.

Nor was he convinced the South American operation was a good idea. In a series of conversations with his budget director, Harold Smith, Truman complained that the FBI, MID, and ONI were spending too much money in South America. Moreover, he was not sure, he told Smith, whether the FBI presence there was good for inter-American relations. Why should the United States have a police agency operating in foreign countries? As for the bureau itself. Truman was, as usual, plainspoken. He was “very much against building up a Gestapo,” he said, and he “strongly” disapproved of certain FBI practices,
including, particularly, Hoover’s snooping on the sex lives of bureaucrats and members of Congress.
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On September 5, 1945, more than a month before Hoover submitted his plan, Truman told Smith that he intended to limit the jurisdiction of the Federal Bureau of Investigation to the United States.

Hoover would get around this by assigning “legal attachés”—in Bureauese, “legats”—to many of the major capitals, ostensibly to serve as liaisons with foreign government agencies. But when, on January 22, 1946, Truman signed an executive order establishing the National Intelligence Authority (forerunner of the National Security Council) and the Central Intelligence Group (precursor of the Central Intelligence Agency, or CIA), J. Edgar Hoover wasn’t asked to serve on the first, nor was he even considered to head the second. But neither was William J. Donovan.

Even then, Hoover didn’t give up. According to Harry Vaughan, the FBI director made one of his now rare visits to the White House, in an attempt to persuade the president that the Central Intelligence Group should be made an auxiliary of his organization. Truman said no. He’d already told Vaughan that one man shouldn’t operate both organizations, that he would get “too big for his britches.” Hoover had plenty to do in the United States, he added.

Hoover was “very provoked” by the president’s refusal, Vaughan recalled, “and he tried to argue with the president, giving his pitch about his organization, that it was operating smoothly, that it could be expanded more easily than starting a new organization.

“Truman never refused to listen to an argument, but once he made up his mind, that was it. He said no, and when Hoover persisted, he said, ‘You’re getting out of bounds.’ ”
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Although obviously unhappy with the decision, Hoover knew enough to back down. For the time being.
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“No single individual or coalition of racketeers dominates organized crime across the country.”
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To the amazement of others in law enforcement, the nation’s top cop, J. Edgar Hoover, director of the Federal Bureau of Investigation, continued to maintain this public stance, as he had all through Prohibition and all the years since repeal.

There was no such thing as “organized crime,” Hoover insisted, no such thing as a “Mafia,” while the claim that there existed a “national crime syndicate” was itself “baloney.” There was only local crime, which was, of course, the fault of local police departments.

For a moment, in 1939, it appeared that Hoover was ready to take on the mob. But the “capture” of Louis “Lepke” Buchalter was a one-time thing, and, as Hoover’s critics were quick to point out, the only reason Lepke had surrendered to Hoover (and Walter Winchell) was that Lepke’s associates had decided to sacrifice him to relieve the pressure on their own activities.

A number of theories have been advanced to explain Hoover’s curious myopia. Former special agents tend to blame it on the director’s obsession with “stats.” Maintaining a 96-98 percent conviction rate wasn’t difficult when you were dealing with bank robberies, car thefts, kidnappings, and white-slave cases—and could pick and choose which cases you wanted to prosecute. But organized crime cases were hard cases, from start to finish. Merely to indict a major mob figure might take hundreds of agent hours and then, all too often, result in a hung jury or an acquittal. An inveterate horse player, Hoover didn’t like the odds.

There were also practical considerations. Developing informants in a closed society sworn to
omertà
wasn’t easy. Again, it required lots of time, to establish trust, to probe for the potential informant’s most vulnerable spots. And, given the “type” of special-agent material the director favored—with no minorities and little ethnic mix—the possibility of training convincing undercover agents was nil, even if Hoover had permitted their use, which he didn’t, except in cases involving Communists.

The fear of corruption was also a factor. As a former attorney general, Ramsey Clark, who battled with Hoover over the organized-crime issue on numerous occasions, put it, “You have to reckon the very strong human qualities of J. Edgar Hoover. He was a unique man, not at all evil by any means. He really believed deeply in integrity, as he defined it, as he saw it. He took real pride in the fact that no FBI agent was ever convicted of
any
corruption. It was an important gospel to him. Organized crime depends on corruption, and he knew that. You get into organized crime and it’s messy as hell and you get men knocked-off and you get men bought-off and you watch the Anslingers and Hogans [Harry Anslinger headed the Federal Bureau of Narcotics; Frank Hogan was the New York district attorney] and all the others struggle in the muck and mire for a full career and with no discernible impact.

“It’s dirty, and sometimes the dirt rubs off, and he wanted clean work, easy work. He wanted to be a winner.”
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Personalities may also have had something to do with it. A former deputy AG recalled, “He got in a big pissing match with Harry Anslinger over at Narcotics, who he didn’t like, and Anslinger had the Mafia coming up out of the sewers the same way Hoover had the Communists coming up out of the sewers. So Hoover got himself locked in saying there was no Mafia.”
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There were still other theories. “One was that [Hoover] did not want to
cause trouble for powerful friends on Capitol Hill or in city halls and statehouses who were themselves cozy with mobsters,” Sanford Ungar has written. “Another was that some of the director’s own wealthy friends were involved in dealings with the underworld.”
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Others suspected the reason was even more personal. They concluded that J. Edgar Hoover himself was on the take, that he had reached an accommodation with the syndicate, and in particular with the New York crime boss Frank Costello.

Such talk was not new. It had started in the 1930s, during the director’s Stork Club period. Although Westbrook Pegler was one of the few to allude to it in print, this possibility was widely discussed by others in law enforcement, who were puzzled by Hoover’s denial of what even the rawest cop on the beat knew.

According to one tale, Hoover and Costello met regularly on a bench in Central Park—hardly a secret meeting place—to discuss mutual interests, including tips on the horses. Other accounts had the pair socializing at the Waldorf, where both had complimentary suites, or, in most versions, at the Stork Club.
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Like Hoover, Costello was a Stork Club regular, as were numerous other mob figures, and the club owner, Sherman Billingsley, who numbered J. Edgar Hoover among his closest friends, was himself a former bootlegger who had served time at Leavenworth. Billingsley’s past, of which Hoover was well aware, apparently bothered the FBI director no more than did his virulent prejudice against unions, “niggers,” and (with only a few exceptions, the most prominent, of course, Walter Winchell) Jews.

But Hoover was much too conscious of his reputation to be seen fraternizing with so notorious a gangster as Costello. According to Costello’s biographer Leonard Katz, Winchell first introduced the two men during the search for Lepke, but “although they did treat each other in a civilized manner…it was hardly an intimate relationship.” For one thing, Katz notes, “Costello didn’t like Hoover and considered him a ‘professional blackmailer’ who used the information his agency gathered for his own personal ends.”
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Yet there is no question they met or that they reached an accommodation, of sorts. According to Hoover’s friend and presidential crony George Allen, who was present, Costello once tried to strike up a conversation with Hoover in the Waldorf barbershop. But the director angrily rebuffed him, saying, “You stay out of my bailiwick and I’ll stay out of yours.”
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This was, in effect, what both did. Costello for the most part stayed clear of federal crimes, and especially those over which J. Edgar Hoover claimed jurisdiction,
and Hoover, for his own still-mysterious reasons, refused to admit that a national criminal organization existed.
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There were still other rumors, both durable and persistent, to the effect that the syndicate, having come into possession of evidence proving Hoover’s alleged homosexuality, had blackmailed him into keeping his hands off their activities.

If Hoover seriously doubted the existence of organized crime, he certainly learned differently in 1946, when the Capone mob decided to take over the lucrative racing-wire business.

For nearly twenty years, the Nationwide News Service had dominated the field. Started in the early 1920s by Moses “Moe” Annenberg, the wire service provided up-to-the-minute betting odds and racing results to bookmakers in 223 cities in the United States, Canada, Cuba, and Mexico. It was an immensely profitable enterprise—subscribers paid a stiff fee for the service, which was indispensable to their operations—and, together with the
Daily Racing Form,
which he also owned, it gave Annenberg a near-monopoly on racing information. Apparently because of an understanding with the national crime syndicate, the mob kept its hands off the wire service while Annenberg still owned it. But in 1940 Annenberg was sent to prison for tax evasion, and the business, now renamed the Continental Wire Service, was taken over by one of his partners, James M. Ragen.

In 1946 the mob made its move. Acting under orders from the former Capone lieutenant Jake “Greasy Thumb” Guzik, Benjamin “Bugsy” Siegel set up a rival service, Trans-America wire, and, through threats and strong-arm tactics, persuaded many of the West Coast bookies to drop Continental and subscribe to Trans-America. In California alone, 2,300 bookmakers succumbed to Siegel’s ungentle persuasion.

Guzik also tried the direct approach, offering to buy Continental for $100,000 and a share of the profits. Either way, Ragen figured, he would be eliminated, and even though he knew it meant “putting a big X through my name,” he refused to sell.

Aware the mob had him targeted, Ragen met secretly with Joe Liebowitz, a Chicago civic leader active in the current campaign to clean up the Windy City. He was willing to talk to the feds, Ragen told Liebowitz, in return for protection. Liebowitz relayed the offer to his friend Drew Pearson, and the columnist in turn “sold” it to Attorney General Tom Clark and FBI Director J. Edgar Hoover.

James Ragen knew a great deal. Friends since childhood, he and Moe Annenberg
had bloodied their knuckles and heads as circulation managers in the infamous Chicago newspaper wars, then remained partners ever since. When they started their first wire, it was Ragen who helped Moe map out an ambitious plan to make sure their service became “not just the dominant racing wire in the United States but the only one.”
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Distancing himself from possible prosecution, Annenberg had let Ragen handle the seamy side of his operations. Ragen not only knew the internal setup of the Capone organization; he knew which “respectables” fronted for its criminal enterprises and which cops and judges and politicians were on the take. Moreover, dealing with gamblers all over the United States and three other countries, his knowledge wasn’t confined to Chicago. He knew most of the mob bosses elsewhere, including Annenberg’s close friend Meyer Lansky.

Equally important, the year 1946 marked a turning point in the history of organized crime in America. Now that World War II was over, the national syndicate was making a concerted effort to resolve the differences between the various Mafia “families” by allotting specific territories and criminal enterprises to particular family groups, while at the same time taking over legitimate businesses and forcing out “independents” such as Ragen.

All this Hoover must have learned when he assigned a team of his agents to interview Ragen. It took them nearly two weeks.

However, like Louis “Lepke” Buchalter and Anna Sage, James Ragen learned that J. Edgar Hoover was not always a man of his word. When his agents had finished interviewing Ragen, not only did the FBI director refuse to give him protection, but someone—possibly in the Justice Department—tipped off the mob that Ragen was “blabbing to the feds,” and a month later three men gunned down Ragen on a Chicago street corner.
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Almost miraculously, Ragen survived and appeared well on the way to recovery when, six weeks later, he went into sudden, severe convulsions and died. Although a Chicago policeman was on guard outside his hospital room, someone had managed to spike his Coke with mercury.

“Although I pleaded with J. Edgar Hoover, he wouldn’t even give a bodyguard to Joe [Liebowitz],” Drew Pearson recalled. “He had previously refused a bodyguard to Ragen.”

The columnist was more than a little interested in what Ragen had told the special agents. As he wrote in his diary, “The FBI interviewed Ragen at great length. They brought back a multitude of tips, leads and evidence. Tom Clark told me afterward that it led to very high places. J. Edgar Hoover intimated the same thing. He said the people Ragen pointed to had now reformed. I learned
later that it pointed to the Hilton hotel chain; Henry Crown, the big Jewish financier in Chicago; and Walter Annenberg, publisher of the Philadelphia
Inquirer.
”
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