Authors: Gus Russo
The Outfit (17 page)
Once again the European immigrants were ahead of the curve: They knew that offtrack betting was widely accepted, and legal, in Europe, where it was the principal form of horse-race wagering. “Off-course” betting was legalized in France in 1930, largely as a method of discouraging bookmaking. The combined offtrack bets in England and France accounted for 85 percent of all bets placed. It was only a matter of time before the American upperworld prevailed and seized the action.
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At least one key bookmaking takeover was assigned to Joe Accardo during this period. One can imagine Frank Nitti, Paul Ricca, Curly Humphreys (before going off to “college”), and Joe Accardo at one of their daily morning meetings deciding to acquire the bookmaking operation of the Russell brothers.
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In the thirties, Harry “the Muscle” Russell and his brother David ran the most profitable ’lay-off operation in the Loop from their headquarters at 186 North Clark Street. In bookie parlance, a lay-off joint is a place that takes bets based on odds and the results it receives over the telegraphic wire service provided by a larger organization. At these locations, bettors pick three numbers they hope will correspond to three winning horses assigned the same numbers. Author Joseph Albini described the lay-off in his book
The American Mafia:
“By knowing the results of the first two races [from the wire service], the operators can foretell how many potential winners they have . . . If they find that they have a large number [of bets] with the first two winning digits, they can then ’lay off a portion of these bets with other gamblers. The ’lay-off here refers to the process whereby the operator bets with a larger gambling concern a portion of the customers” bets having the first two digits. By doing this, should the last digit create a large number of winning tickets, the operator can collect from the lay-off source and hence balance his own losses.’
Of course the lay-off was only employed on the rare occasion when large numbers of bettors held the same two winning numbers. Nonetheless, the wire information was crucial to keeping bookies from having what could have been a catastrophic day. Key among other reasons for the bookies’ dependence on the wire reports were that bettors might have race results relayed by telephone without the bookie knowing the contest had been concluded (such “postbetting” could destroy a bookie); or conversely, a crooked bookmaker with information right off the wire could accept losing bets for a race he knew was already decided. For these and many other reasons that will be seen, the wire service was indispensable to the race betting business. The wire operation, controlled by an upperworld collusion with Western Union, was able to extort huge sums from all bookies for their precious information. The profits far surpassed even what the Outfit took in from the bookies. It would therefore become targeted for takeover by the Outfit, but the process would not go into high gear for a few years to come. In the meantime, Joe and the Outfit were happy to run their stable of bookies and muscle in on Harry the Muscle.
Joe Accardo was fast mellowing in his role, having learned the art of the velvet glove from Curly. Just a few short years earlier, a bat-wielding Joe Batters would have dispensed with the Russell brothers in a markedly sanguine manner. Now, the nattily attired
boss
Accardo simply arranged a business merger. It was a partnership that flourished, expanding into other states, for over a decade.
7. The Sharks
Backstopping the gang’s gambling revenue was the affiliated scam known as loan “sharking,” a bastardization of Shakespeare’s “Shylock,” the Jewish moneylending antagonist of
The Merchant of Venice.
With so many of their customers losing at their almost-impossible-to-win games, the Outfit became a full-service provider, offering high-interest loans to those who could not meet obligations made to bookies. The scam consisted of the Outfit’s channeling a portion of their huge profits to loan sharks at, say, 2 percent interest. The sharks, known in the Chicago vernacular as juice men, then loaned the money out to the “juiced-up” loser at double or triple that interest
per week.
This compound interest is known as the sharks’ vigorish, or vig. It is easy to see how a debt can rise exponentially in short time: A $100 loan becomes $120 at the end of week one, $144 a week later, $172.80 the third week, and $207.36 the fourth week, etc. Often, a minimal-paying client ends up paying back the original loan numerous times over - much like the now legal version of loan-sharking known as credit cards.
Given that their victims were believed to be other lowlifes, the sharks were virtually unmolested by police. And since no one was being arrested, loan-sharking benefited from low overhead, as graft was unnecessary. With millions loaned out at any one time, loan-sharking was second only to gambling in profits for the Outfit.
With the combined revenues from sharking, bookmaking, and the innumerable versions of gambling, the Outfit’s coffers were bursting. And the booming business was supervised for the Outfit by Joe Accardo, who personally tapped Outfit chieftain Louis Campagna to run two gambling joints, the Austin Club and the El Patio, in Cicero. Years later, Campagna testified that he “bought into” the operation for $1,500, but netted over $75,000 per year. Accardo’s other key crewmen helping to hold it all together were Frankie Pope (bookies), Pete Penovich (games of chance), and Hymie “Loud Mouth” Levine (collection).
By 1934, Joe Accardo was overseeing an empire that numbered more than seventy-five hundred gambling establishments in Chicago alone. In 1941, the
Chicago Tribune
unearthed some of the Outfit’s books and reported that by then “the boys” were grossing $320,000 per month; estimates of the portion of the take that was funneled to Ed Kelly and his bribe-infested City Hall have run as high as 50 percent. The headquarters for the graft exchange was the Lawndale Scrap Iron & Metal Company on South Kedzie Avenue. In what must have appeared a surreal scene, politicians and gangsters met at prearranged times inside the Lawndale office. In one line were the gangsters with cash in hand; in the other, the pols waited with open palms outstretched. From behind his desk, a former investigator for the state’s attorney’s office coordinated the corrupt circus, periodically announcing, “You’re next.”
With Joe Accardo’s games running smoothly, the gang continued to keep its antennae scanning for the next source of treasure. The next target chosen was the logical extension of local union work already under the aegis of Curly Humphreys. According to Curly’s daughter Llewella, the scam had its genesis some years earlier when she’d overheard her parents in conversation. “It all started with my mother,” Llewella recalled. “She was a fan, crazy about movie stars. So she mentioned to my father, ’Why don’t we go into this business so that I can meet everybody?’”
The subsequent extorting of the entire motion picture industry gave the Outfit a foothold in Hollywood that it never entirely relinquished. Although a high-profile bust-up of the racket in 1941 gave the impression that the scam was over, in truth the convictions were too little, too late. The gangsters from the Windy City had so thoroughly infiltrated key unions and production houses that their influence remained intact for decades to come. In its embryonic stage, the assault on Hollywood followed Curly’s proven formula that combined political payoffs and labor racketeering. Years before Humphreys went to jail in 1934, he laid the groundwork for the “Hollywood Extortion Case” when he met his next pawn, Thomas Maloy.
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. The game had its origins in eighteenth-century Europe, where it was known as hazard. It was introduced to America in New Orleans, where it became popular with African-Americans, who are widely credited with creating its playing rules. Much like jazz music, craps quickly expanded beyond the borders of the Big Easy, migrating up the Mississippi River to the Windy City.
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. The intergang agreement is believed to have been reached when the New York bosses met with Outfit leaders in a Chicago restaurant in 1934.
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. New York’s Off-Track Betting Corporation opened its doors for business in 1970 at Grand Central Terminal. Within five years it would command 147 locations and become the largest “retail establishment” in New York, grossing $758,673,000 per year.
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. During this period, the boys met at a revolving list of Italian restaurants and saloons, so as to remain untroubled by the authorities. According to one insider, the gang had no fears of being overheard while conducting business: “When they came in, everybody else cleared out.”
“
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o politician ever turned his back on a bundle of currency,” Tommy Maloy once said to his union subordinates. Emulating knowledgeable hoods like Curly Humphreys, Maloy followed up his words with action. As the boss of Local 110, the Motion Picture Operators’ Union, the feisty Irishman resembled Humphreys in one other way: When the payoff failed, Maloy upped the ante until he got what he needed. Although he succeeded for a time, Maloy learned the hard way that he was a mere stepping-stone in a great Outfit scam that saw them plant permanent roots in the City of Angels. In a three-stage operation that included Outfit takeovers of two key unions and Johnny Rosselli’s maneuvers in Los Angeles, the gang from Cicero undertook the first of many endeavors that propelled them permanently onto the national scene.
Thomas E. Maloy was born in Chicago in 1893 and spent his youth gaining a reputation as a tougher-than-usual gang member. Eventually he came to the attention of local union strong-arm Maurice “Mossy” Enright, known as the boss of the building trade unions as well as the garbage workers. For a time, Enright had been a slugger for North Side gangster Deanie O’Banion, before evolving into a fearsome union organizer who did not shy away from bombing a recalcitrant business owner’s building. Maloy became Enright’s chauffeur, squiring Mossy around in his long, terrorist-filled sedan known as the Gray Ghost. The young Maloy also became Mossy’s protege, absorbing his teacher’s insights until one day in 1925, when Enright earned the distinction of becoming Chicago’s first drive-by shooting victim.
Maloy proceeded to take work as a projectionist in a small Chicago movie house, while simultaneously running a craps game under the theater’s stage. After performing muscle work for the theater operators’ union boss, Jack Miller, Maloy was bequeathed the top spot when Miller resigned. Maloy retained his position through intimidation backed up by blackjacks and dynamite. Supposedly, at Maloy’s first official union meeting, the membership erupted in a near riot, threatening strikes against the theaters and violence against its own leadership. Maloy wasted no time asserting his position by spraying the union hall’s ceiling with bursts of machine gun fire. The members lost their nerve and became submissive to Chicago’s newest “alpha dog.” With his theater as a base of operations and with Enright as inspiration, Maloy quickly began slugging his own way up, becoming a never-convicted suspect in nine murders, including that of one unbowed theater owner murdered in Maloy’s office.
Tommy Maloy’s chief scam, and the one that brought him to the attention of Curly Humphreys, was the systematic extortion of local movie theaters, especially the lucrative Balaban & Katz chain of houses. Barney Balaban, who later moved west to run Paramount Pictures with his brother, and Stan Katz, future VP of MGM, started with one theater in 1908 and by 1930 had built up Chicago’s most prosperous movie chain, numbering dozens of houses. The B&K empire was obviously dependent on its film operators, and by extension, Tommy Maloy’s Motion Picture Operators’ Union. In a manner that would have brought a smile to the face of his mentor Mossy Enright, Maloy extracted huge sums from B&K (among others) for the promise of union tranquillity. At the time, union rules mandated that there be two workers in the projection booth, one for picture and one, the fader, to synchronize the phonograph machine to the then silent movies. It was known that one man could perform both tasks, so Maloy told B&K he could arrange for one-man projection suites in their theaters for a “contribution” to his favorite charity: Tommy Maloy. In addition, Maloy was able to squeeze small wage increases from his marks, thus keeping his membership placated. Like so many other labor racketeers, Maloy made a show of throwing crumbs to his membership while simultaneously robbing them blind.
While Maloy enjoyed his $125 per week B&K kickbacks (in addition to his $25,000-a-year union salary), his workers made their own contributions to the Maloy Fund: “Special assessments” were added to union dues whenever Maloy needed a Caribbean cruise, or a $22,000 European vacation with his mistress; unwitting members rewarded their leader with gifts of a $4,000 bathroom and a $5,000 bar, so he could ostensibly conduct business at home. Investigators later conservatively estimated that Maloy plundered half a million dollars from his union treasury.
It was a virtual impossibility that Maloy’s golden goose would evade the Outfit’s radar. In fact, the gang had been interested in the entertainment business since the days when Al Capone had first booked his favorite jazz bands into his speakeasies. At that time, Capone had developed a relationship, likely a silent partnership, with Dr. Jules Stein in his infant booking agency with the inflated name the Music Corporation of America (MCA). Native Chicagoan Stein got his start as a booker of bands and sometime bootlegger. Like Capone, Stein battled with Roger Touhy, who tried to muscle Stein out of the booze business. It is widely believed that Stein allied with the Syndicate to gain protection from Touhy. As one Chicago investigator told writer Dan Moldea, “Touhy was nothing next to Capone and his boys, and that’s where Stein’s connections were.” Stein was soon using Capone’s musclemen to force theaters to book his acts. One such thug, Willie Bioff, would figure prominantly in one of the Outfit’s boldest takeovers. Among Stein’s earliest clients was a young actor named Ronald Reagan, who frequented the Club Belvedere in Iowa, which was owned by the Outfit.
An interesting sidebar to the saga of Capone hitman Jack McGurn reflects the increasing camaraderie between gangsters and the Hollywood glitterati during the Syndicate era. Recently, Bing Crosby biographer J. Roger Osterholm wrote of the crooner’s periodic rounds of golf played with partner Jack McGurn: “Crosby just loved golf; he didn’t care who he played with,” said Osterholm. “I stress that it was just very innocent; it was just to play golf.” Osterholm adds that Crosby ditched McGurn when he learned of his line of work. But the biographer vastly understated the true nature of the Crosby-McGurn liaison.
Recently released FBI documents and interviews with knowledgeable Chicagoans add a far more sinister dimension to Crosby’s odd golf pairing. The FBI’s documentary record shows that Crosby was the unlucky recipient of numerous Black Hand-type extortion threats, some of which are included in his FBI file. According to the Bureau, Crosby paid out many thousands of dollars over the years to the extortionists. At some point, Crosby had enough, according to one witness who circulated on the Outfit’s periphery. That witness, a woman whom we will call Ruth Jones, was McGurn’s golfing partner. One day, Jones asked McGurn how he came to play golf with Crosby, and McGurn told her the origins of their friendship.
“Crosby was doing a gig at the Chicago Theater on Wabash,” says Jones, “when he was met backstage by two freelance Black Handers.” The extortionists gave Crosby two days to pay up, or else. The savvy Crosby knew where to seek relief: his manager, the legendary Dr. Jules Stein, founder of MCA. As a man familiar with the workings of the Capone Syndicate, Stein knew just where to turn for help with Crosby’s Black Hand problem. His name was Jack McGurn.
On the appointed day, McGurn arrived at the theater, where he was introduced to Crosby in advance of the extortionists’ arrival. The two thugs arrived at what they thought was Crosby’s dressing room, only to be met by the legendary enforcer McGurn. “They knew very well who Jack was and what they were in for,” recalls Ruth Jones. “Jack beat the shit out of them and then threw them out into the back alley, which borders the dressing room.”
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Bing Crosby was both beholden and enthralled. He engaged McGurn in a lengthy conversation, at times asking what favor the singer could do for the gangster. McGurn refused all the overtures, but when the conversation turned to their mutual love of golf, McGurn’s resolve weakened: “Well, there is one thing you might do - meet me for a round of golf.” Crosby happily obliged, and the two were soon hitting the links at Chicago’s Evergreen Country Club. The friendship blossomed, with McGurn playing rounds with Crosby on McGurn’s visits to Los Angeles to do business with Johnny Rosselli and other Outfitters. Stein later moved to Hollywood, where MCA would live up to its vaunted moniker, becoming the most powerful agency in town. It should also be recalled that prior to Hollywood’s christening as the movie capital, the Windy City had that distinction. Like Stein, many other local movie folk relocated west, forming the backbone of the motion picture industry as it is known today.
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In the 1920s, one fifth of all films shot were produced in Chicago, and since these productions needed cooperation from Syndicate-controlled trade unions, Capone (via Curly) became well acquainted with the workings of the movie machine. Ironically, the studios paid the Syndicate’s unions off for the privilege of immortalizing many of Chicago’s own hoods in gangster films starring actors such as Jimmy Cagney and Edward G. Robinson.
The Outfit’s encroachment into the theatrical world was, in hindsight at least, a predictable expansion of its empire. Al Capone reportedly ordered the takeover of Maloy’s union from his “vacation” home on the island of Alcatraz. Others believe the decision was reached in an Outfit meeting with Joe Accardo, Frank Nitti, Curly Humphreys, Paul Ricca, and attorney Joe Bulger in attendance. Of course, the scenarios are not mutually exclusive. In any event, the gang bided their time, waiting for the perfect opening. They did not have long to wait, since Tommy Maloy’s road to riches was becoming bumpy, and like so many before him, he sought out the help of Al Capone’s heirs.
For years, a number of theater owners had refused to pay Maloy to waive the union’s two-operators-per-booth requirement. By 1930, with the nation’s financial depression adding to their woes, the owners had had enough and began complaining to local politicians, prompting a Cook County state’s attorney to open an investigation into Maloy’s activities. In desperation, Maloy turned to the Outfit’s payoff guru, Curly Humphreys. Together the two men trundled off to the state capital in Springfield and began spreading around bags of cash. Consequently, legislation was introduced mandating the use of two operators “for the safety of the public.” This was long after moviemakers began syncing the sound on the filmstrip, making the fader operators even more redundant. At the same time, one of Maloy’s rivals for the union leadership turned up murdered. Some believe the description of the dapper young shooter with the mane of curly, dark hair precisely described Curly Humphreys. However, as with other gangland murders, nothing ever came of it.
The Hollywood Kid
With the Outfit’s hooks now firmly embedded in Maloy’s union, events unfolding in Los Angeles were about to play into its grand scheme. By the early thirties, the gang’s West Coast ambassador, Johnny Rosselli, had also began to focus on the world of entertainment, very likely at the directive of his Chicago superiors. Rosselli’s bootlegging partner, Tony Cornero, had moved on to Nevada, where he opened a gambling casino, cashing in on the newly passed Wide Open Gambling bill. The legislation was helped along by Johnny and Curly, who had made special graft-delivery trips to the state capital. Now Rosselli glommed onto the movie studio bosses, who were themselves enamored of gambling and gangsters.
Propitiously, Rosselli had recently become the Outfit’s Los Angeles gambling czar, thanks to deals made back in his gang’s Chicago headquarters, and agreements reached with their Commission counterparts in New York. By the time Capone “went away,” he had struck a partnership with upperworld race-wire king Moses Annenberg: Capone’s boys were paid $100,000 to muscle out Annenberg’s Chicago competitors in the nascent wire business. Although the Outfit was not content to merely stay a partner in the lucrative wire service, at least it had a toehold. Out in the City of Angels, Johnny Rosselli became the point man for Annenberg’s expanding empire, forcing bookies to subscribe to the service. With L.A. mayor Frank Shaw thoroughly bribed, the operation flourished. Given the studio bosses’ predilection for the ponies and their infatuation with hoods, the suave Johnny Rosselli was a natural fit. Long before the Outfit’s studio takeover scheme congealed, Hollywood had entered into a fawning relationship with gangsters: Ben Siegel of the New York gang was already a known conqueror of starlets; Frank Costello was chummy with Columbia’s Harry Cohn and the William Morris Agency’s George Wood; box office sensation (and gambling addict) George Raft was a virtual member of Owney Madden’s gang out of New York (and later Arkansas).
Johnny Rosselli became the movie honchos’ bookmaker and personal adviser, placing bets and socializing with the likes of Joe Schenck (United Artists), Harry Cohn (Columbia), and Joe Kennedy (RKO and Film Booking Office). As bookie to the studio heads, Johnny would glean information vital to the Outfit’s movieland aspirations. By either threatening to expose hidden skeletons or to call their vigorish, Rosselli was able to acquire silent partnerships for the Outfit in many Hollywood careers. It is believed that in this way the hoods “sponsored” actors such as George Raft, Chico Marx, Jimmy Durante, Jean Harlow, Gary Grant, Clark Gable, and Marilyn Monroe. Rosselli’s near fraternal bond with Harry Cohn gave him, and by proxy the Outfit, an education in the ways of the motion picture business. Cohn typified the thug as businessman. A former small-time crook from New York, “White Fang” Cohn was a ruthless executive who openly spoke of his reverence for Benito Mussolini, as well as his disdain for workers’ unions. Although Depression-era Hollywood suffered huge drop-offs in profits, studio heads like Harry Cohn continued to live extravagant lifestyles, but the skilled workforce was forced to make concessions. By early 1933, studio employees watched in disbelief as their high-living employers slashed wages by a staggering 50 percent. On July 24, 1933, the International Alliance of Theatrical Stage Employees (IATSE) struck. The strike by IATSE, then the largest union in the entertainment field, and affiliated with 99 percent of the nation’s theaters, could not be ignored by the studios and their collective, the Association of Motion Picture Producers (AMPP). When the AMPP resolved to break the strike, the choice for the role of strikebreaker was easy: Cohn’s new tough-guy buddy from the Chicago Outfit, Johnny Rosselli.