The Last Testament of Lucky Luciano: The Mafia Story in His Own Words (29 page)

Schultz was left with few alternatives. What he feared was that the FBI men on his trail might deal with him as they had dealt with John Dillinger and other public enemies. He had no desire to face that. In November of 1934, he suddenly showed up in Albany, turned himself in, and remained in jail for several weeks while his lawyers argued with the court about the amount of bail, finally set at seventy-five thousand dollars. For more than a year thereafter, his preoccupation was entirely with his tax struggle.

The last thing Schultz wanted was to be tried in New York City, where the climate had turned frigid toward underworld leaders. Schultz’s attorneys won a change of venue, and in April of 1935, he went on trial in Syracuse, New York. The government’s case, developed by Dewey and his staff more than two years earlier (Dewey had resigned as United States Attorney in 1933 and gone back to private practice), was argued by John H. McEvers, a special assistant to Attorney General Homer Cummings. The defense was simple and took only three hours. There was no denial that Schultz’s income was large, even larger than the government claimed. But, the defense argued, Schultz had not filed returns because his lawyers had told him he did not have to, since his income was from an illegal source — bootlegging (which, the defense took care to point out, was only an ancient memory since
Repeal) — and so was nontaxable and did not have to be reported. When that advice had proved wrong, Schultz had made his offer to pay the hundred thousand dollars.

The jury debated two days and then reported that it was hopelessly deadlocked, seven to five for conviction.

The government immediately moved for a second trial, this time in July in the upstate city of Malone, close to the Canadian border. Schultz, who arrived several weeks early, donned a gregarious and lavish manner as he toured the Malone taverns standing everyone to free drinks. He contributed heavily to local charities, making no secret of his gifts, and attended the major social events in company with Malone’s mayor and other political and business leaders. Finally the clergy raised the alarm about this corrupting influence. Schultz’s bail was revoked and he was lodged in a Malone jail cell, but not before he had made a deep impression on that economically distressed community and had, he later told Luciano and others, made a number of Malone citizens very rich.

When the new trial began, the government’s case was a reprise of the Syracuse trial. The defense, too, was almost identical, with the jury informed that whether convicted or not, Schultz intended to do his duty as an American citizen and pay over to the Treasury the hundred thousand dollars he had offered. The jury deliberated two days, as had the earlier jury, but this time it found Schultz not guilty. Said the foreman, Leon Chapin, director of the New York State Dairymen’s League, “We feel the government utterly failed to show that he earned so much as a nickel of tax income and we based our verdict on that belief.”

Federal Judge Frederick H. Bryant was outraged. He told the jury in icy tones: “Your verdict is such that it shakes the confidence of law-abiding people in integrity and truth. It will be apparent to all who have followed the evidence in this case that you have reached a verdict based not on the evidence but on some other reason. You will have to go home with the satisfaction, if it is a satisfaction, that you have rendered a blow against law enforcement and given aid and encouragement to the people who would flout the law. In all probability, they will commend you. I cannot.”

Judge Bryant was not the only one shocked by the verdict, nor
was Attorney General Cummings, who called it “a terrible miscarriage of justice.” Back in New York, toward which Schultz promptly headed, his underworld associates were stunned and a little shaken. For more than a year they had been confident he would follow Capone and Gordon to federal prison, and they had been planning and working as though it would be years before he appeared on the streets again; they were dividing the spoils.

“We were all sure that Dutch hadda get it. We didn’t think there was no way he could beat a federal tax rap that was that solid. Maybe I was the one who helped him more than anyone else. When Dixie Davis came to me to tell me about gettin’ the case moved out of New York, I said to him, ‘Dixie, you’re representin’ the biggest miser since King Midas. You gotta get Schultz to spread some loot around.’ He did just that and so he bought his way out. There was a big reaction when we knew Schultz was comin’ back. The guy who was most worried was Bo Weinberg.”

Abraham “Bo” Weinberg was the Dutchman’s senior lieutenant, the man who kept the books and who knew every facet of the Schultz empire. During his time of trouble, Schultz had been drawing off large sums from policy, protection and the other rackets to pay for his battle, and Weinberg had begun to worry that the empire might go down the drain with the ruler. “Bo went to see Longie Zwillman over in Jersey — they was in lots of deals together — and asked him to help him out. Longie listened to him and then he brought Bo over to see me for a private meet, near Grant’s Tomb up on Riverside Drive.” Luciano listened to Weinberg’s proposal with considerable interest. Weinberg offered to reveal all of Schultz’s interests and turn the empire over intact to Luciano, Zwillman and their allies, who, he knew, were already making moves in that direction. With sweat pouring off his face that cold March day in 1934, Weinberg explained to Luciano that he wanted to prevent the destruction of the empire by a war over its control. All he wanted was to continue as its overseer and receive his current fifteen per cent of the total take.

Luciano quickly called a meeting, at the Waldorf Towers, of himself, Zwillman, Adonis, Costello, Lansky, Lepke, Lucchese and Genovese. “I explained Weinberg’s deal and I told them I felt like a grave-robber in a way. Here we was, talkin’ about cuttin’
up Schultz and he wasn’t even in the can yet. Then we got down to cases. The responsibility for breakin’ up Schultz’s territory hadda be mine because that’s the way everybody wanted it.” In his division, Luciano gave policy and gambling to Costello and Lansky, liquor to Adonis, restaurant rackets to Lepke and Lucchese, as well as other enforcement operations. Zwillman received the Jersey operations, after promising to split them with Moretti.

“All the time we was whackin’ up the business, I could see Vito lookin’ at me like a hungry pig. So I said to him, ‘Vito, what part do you think you oughta have?’ Vito looked at me with his mouth open. He was expectin’ me to tell him, but when I asked him, he was too fuckin’ surprised to answer. So I said, ‘Maybe you’d like it all?’ At that minute, you could’ve heard a pin drop on the plush rug in my apartment at the Towers. The place turned to ice. Nobody said a word for a couple minutes. Finally, I broke it up and said to Vito, ‘I want this to teach you a lesson. Someday, if you don’t stop bein’ greedy, it’s gonna kill you. There’ll be no junk, and I mean it. Don’t ruin what we’re doin’ here today by addin’ a new business to somethin’ that Schultz never handled.’ Then I turned to Meyer and Frank and I said, ‘Vito goes in with you and he gets twenty-five per cent; you two guys split the balance.’ As for me, I get a piece off the top of everythin’. And if, by some miracle, he beat the rap, everythin’ would go back to him. Everybody was happy; I didn’t make no enemies and I got mine. We made a solemn vow that nobody would ever know about this meet and what happened. I knew Dutch wouldn’t like it, but after all, he’d have to appreciate that I didn’t let his whole territory go down the drain through a war.”

Then Schultz returned to pick up the pieces. He was back no more than an hour before he sensed trouble. Immediately he contacted Luciano, who told him that every effort had been made to preserve his operations and only the most capable had been supervising them so they would remain intact.

“The day Schultz come to see me at the Towers, Vito was with me. The Dutchman was so excited that we’d all been so nice to him that he almost started to cry. And then, I’ll be damned if he didn’t start to talk about the Catholic religion; he wanted to
know what it was like to be a Catholic, whether Vito and me ever went to confession, if we knew what a guy had to do to switch into Catholicism from bein’ a Jew. I almost fell over when he told us that while he was layin’ low, in all his spare time, he was studyin’ to be a Catholic. I swear, from that minute on, the Dutchman spent more time on his knees than he did on his feet. He told us he was sure Christ was what helped him get through the bad eighteen months, and what finally got him the acquittal.

“It’s funny. When I first started hangin’ around with Jewish guys like Meyer and Bugsy and Dutch, them old guys Masseria and Maranzano and lots of my friends used to beef to me about it. They always said that some day the Jews was gonna make me turn and join the synagogue. So what happens? It ain’t me that gets turned, it’s the Dutchman. That’s some joke.”

Despite his newfound concern with the spiritual, Schultz managed to spend a considerable part of his time on his feet, and what he saw as he walked around his territory he didn’t like at all. Much of his time was now spent in New Jersey, in order to avoid the constant harassment directed specifically at him by Commissioner Valentine’s elite unit in the police department. In New Jersey, his interests had been handled by Zwillman, but when Schultz talked to Zwillman, he came away convinced that he was being threatened with seizure. He was certain that this could not have been possible without the connivance of Bo Weinberg.

Schultz set a trap. Luciano later learned that Schultz had Zwillman’s home staked out — to put a tail on Weinberg would have been a waste of time, for despite his bulk, Weinberg could have slipped one in minutes. The stakeout paid off. One warm evening in September, Weinberg’s car was spotted driving through Zwillman’s gate. A hurried call brought Schultz and when Weinberg left about an hour later, the Dutchman was waiting for him. Weinberg was never seen again.

“One of the boys in the stakeout seen him murder Weinberg and he told me about it. He said Dutch killed Bo with his bare hands. This fellow wanted me to know that Schultz had blood in his eye but was too smart to show it to me. It was like a warnin’ that Dutch might start his own war against all of us. It was a lucky thing that Dutch never got time to go to work on us, because
Tom Dewey had just been appointed special prosecutor in New York City and he had the same blood in his eye about Dutch — to put him away.”

Though La Guardia had won City Hall, the situation at the New York district attorney’s office had not improved. In the same election, Tammany’s man, William Copeland Dodge — “stupid, respectable and my man,” as Jimmy Hines described him — had squeaked through, thanks to the bankroll and the muscle of Tammany’s underworld support. About Dodge’s stupidity, Hines was right. In response to mounting pressure to do something about graft, corruption and the rackets, Dodge empaneled a special grand jury. Then he refused to do anything about the evidence it accumulated. The grand jury ran away. It demanded that Governor Herbert H. Lehman name a special prosecutor if he really wanted to see the city cleaned up. Lehman, a Democrat, acceded. He offered the job to several prominent Republican lawyers; all declined, until he reached the name of Thomas E. Dewey. Early in 1935, Dewey moved in and targeted Dutch Schultz.

The rumors quickly spread that Dewey was about to indict Schultz for his control of the restaurant-protection racket, that Dewey’s plans went further and included a murder charge that could land Schultz in the electric chair. Luciano and his friends heard that Dewey had gathered evidence that on a snowy March night in Albany in 1935, Schultz had murdered one of his restaurant enforcers, Jules Modgilewsky, sometimes called Jules Martin or simply “Modgilewsky the Commissar.” (Some years later, Dixie Davis, on trial for crimes of his own that would send him to jail, told the full story of that Albany night — how Schultz pulled a gun in a hotel room and shot Modgilewsky while Davis looked on.)

If Dewey could do the job, all well and good. But Luciano was not so sure he could. “Nobody was sure he could do it. After all, look how the Dutchman beat the federal rap. An airtight case in Dewey’s office didn’t mean it was gonna be an airtight case in court.”

What particularly concerned Luciano and his friends was the strategy Schultz might employ to beat the charges, especially the
protection one. If Schultz believed he was certain to go to prison for a long term, would he be inclined to take some of his friends with him? He knew enough about their operations, Luciano’s and everyone else’s, to do just that. Or would he, perhaps, to make a trade — his freedom for Luciano’s and the other racketeers’ — reveal all he knew? And if Schultz somehow did manage to get off without saying a word, would he then demand control of all that had been his in the past and start a war to take it?

“All of us was very worried. It seemed like Joe A. and Frank and Meyer and Torrio — the whole bunch of us — spent more time havin’ meetin’s than takin’ care of our business, and it was all about how to handle Dutch Schultz. Finally the whole thing got settled, because Albert Anastasia came to me and said that Dutch wanted him to stake out Dewey’s apartment up on Fifth Avenue. This was supposed to be a secret, but Albert never held nothin’ back from me. He said that Dutch wanted to find out how easy it would be to knock off Dewey, and he offered Albert the contract at any price.”

As far as Luciano was concerned, this was about the last thing anyone needed. It would violate one of his sternest precepts — “We didn’t kill nobody but our own guys, if they give us too much trouble, and we never made a hit without a unanimous vote of everybody on the council. If one guy said no, then it was off. Outsiders was strictly outa bounds. I set up them rules and nobody was gonna break ’em. I just couldn’t see how we’d be able to buy our way out of trouble if we let Dewey get knocked off.”