officers he “had no idea what was in the sacks.” He said a man named
Tony called at his home one day and left a truckload of sacks. Tony
asked him to keep them for him. Another fellow named Pepe came from
Chicago three or four times. “He picked up some of the stuff and gave
me $600 for rent and expenses--but I didn’t know what it was all
about,” Garza said.
A jury thought otherwise. Garza was sent to prison for five years. And
Muno Pena? He had lost another round to Dave Ellis, but he continued
his operations on a smaller scale. Customs agents are waiting for the
day when he places one foot across the border--and then he’ll be out of
circulation for quite a while.
11
A DIRTY BUSINESS
A cunning and ruthless hoodlum, two crooked Customs employees, two
Greek narcotics peddlers in Shanghai and a supporting cast of killers,
goons and dupes formed one of the greatest narcotics syndicates the
United States has ever known. Over a span of less than two years in
1936–1937, this gang smuggled into the country narcotics believed by
Customs agents to have had a retail value of at least $10 million.
Their system was so simple that it was almost foolproof. Almost ... but
not quite.
The prime mover in this profitable operation was Louis “Lepke”
Buchalter--a name which perhaps doesn’t mean much to the younger
generation. But in the prohibition era and the years of the depression,
Lepke built a fantastic financial empire on a foundation of terror,
violence and murder combined with a genius for organizing. He was,
in many respects, more powerful and more successful than “Scarface”
Al Capone and dozens of other hoodlums of the times who were more
publicized in the nation’s press.
Louis Lepke Buchalter rose to power in the shadow of the Jazz Age,
the era which evokes sentimental memories for so many Americans. But
Lepke’s world was about as sentimental as a tommygun.
He was a small, slender man--5 feet 7--with a dark complexion and black
hair which he parted on the side. He was soft-spoken and seemingly
humble in manner. He had large brown eyes that appeared as soft and
gentle as the eyes of a fawn. But his eyes only masked the evil in this
man who schemed and killed until he ranked at the top of the list of
U.S. criminals.
By all odds, Lepke was the most brilliant--and the most dangerous--of
the criminals. It was Lepke who showed the underworld how to infiltrate
and take over control of labor unions, and how to become silent
partners in the management of industries. It was Lepke who put murder
on a wholesale basis with an organization that became known as Murder,
Inc. It was Lepke who found the chink in the U.S. Customs Bureau’s
defenses against narcotics smuggling--and who made narcotics smuggling
almost a pleasant pastime.
Lepke is worth at least a footnote in any history of our times because
he symbolized an era of graft, corruption and violence the likes of
which the nation had never known before. He was born on February
6, 1897, in Manhattan’s Lower East Side, one of a family of eleven
children. The family lived in shattering confusion in a small, crowded
apartment over the hardware store owned by the father, Barnet Buchalter.
Lepke’s mother called him “Lepkeleh,” the Jewish diminutive for “Little
Louis,” and his friends shortened the nickname to Lepke. He was not a
bad student in grade school. But he quit school after finishing the
eighth grade and for a time worked as a delivery boy at $3 a week.
His father died when he was thirteen. The family broke up and
scattered. The other ten children went on to become respectable, useful
citizens. But not “Little Louis.” He rented a furnished room on the
East Side and turned to crime. He organized raids on pushcart peddlers,
stole from lofts, picked pockets, and lived by his wits. He was sent
to the reformatory and to prison for short terms for larceny, but he
always returned to the old life. He had ambitions to become a big shot
in New York’s underworld.
In the early 1920s, Lepke joined an East Side mob headed by “Little
Augie” Orgen. But while most of the underworld scrambled to satisfy
the country’s unquenchable thirst for bootleg whiskey, Lepke convinced
Little Augie that it was safer, smarter and more profitable to
specialize in labor racketeering and in selling “protection” to
businessmen.
If an employer was having trouble with strikers, Lepke would see to
it that the recalcitrant workers were beaten up by his goons and that
peace was restored at no increase in wages. If union leaders were
having trouble with rank-and-file members, Lepke’s strong-arm squad
would bring the rebels back into line with beatings and threats against
the men’s families.
Other mobs sold such services on a flat-fee basis. But not Lepke. When
his men were hired to put down a union revolt, they remained as members
and then slowly muscled their way into the management of the union. The
members’ dues were increased to pay for the services rendered.
Businessmen who hired Lepke’s strike-breaking services were ordered to
buy the protection on a continuing basis. If they refused, a bomb would
be hurled through a window to wreck a plant or a shop. Acid would be
thrown onto merchandise, or someone’s face would be splashed with acid
as he walked from his place of business to his home.
Those who capitulated--and most of them did--soon found Lepke’s men
demanding a voice in management, even to the dictation of contracts
(from which they received a kickback) and the placement of a man in the
business office to keep a check on the money.
Little Augie was pleased with Lepke’s organizing brilliance and the
profits that were rolling in. But the word got around that he didn’t
like Lepke’s growing strength in the organization, where he was known
as “The Judge” and “Judge Louis.”
Little Augie’s irritation was short-lived. On October 16, 1927, as
he stood in a doorway at 103 Norfolk Street talking with his young
bodyguard, a sedan suddenly swerved to the curb. A voice called, “Hey,
Little Augie!” As the gang chief turned, a burst of machinegun fire
cut him down. His wounded bodyguard was identified by police as John
Diamond--later to become better known as Jack “Legs” Diamond.
The underworld hummed with the story that Little Augie had fallen
victim to Lepke’s ambition. On the basis of an informer’s tip, police
picked up Lepke, “Gurrah Jake” Shapiro and “Little Hymie” Holtz and
charged them with murder. But no one could prove anything and the case
soon was dropped.
With Little Augie out of the way, Lepke set to work to consolidate
his empire. He moved more solidly into the leather, baking, garment,
fur and transportation industries. At the peak of his power, Lepke
personally directed some 250 criminal operations. He rode about New
York in a limousine with a liveried chauffeur. He had a staff of 300
men looking after his affairs, plus an assortment of accountants,
bookkeepers, gunmen, strong-arm men, and experts in such matters as
acid-throwing.
He also put murder on a cash-and-carry basis. If a member of the
mob became careless or talked too much, he was executed summarily.
Dangerous witnesses were ordered to leave the state under the threat of
death--and if they refused to obey, they were killed.
Oddly enough, even at the height of his power, Lepke was virtually
an unknown in New York and throughout the country. While other
hoodlums gained the headlines, Lepke remained in the shadows with few
people realizing the extent of his empire, whose earnings have been
estimated at more than $50 million a year. Nor was it known for twelve
years--1927 until 1939--that Lepke alone had ordered the deaths of from
sixty to eighty men whom he considered a threat to his own safety and
prosperity.
By 1933, however, the operations of Lepke and other racketeers had
aroused such popular indignation that the U.S. government moved against
them. In November of that year a Federal grand jury indicted Lepke on
two counts of violating the antitrust laws through his domination of
the rabbit-fur-dressing industry. He was arrested and released on bail.
He returned home to his wife and adopted son to continue operations as
usual while the wheels of justice turned slowly.
It was during this period that another opportunity came to Lepke quite
unexpectedly. Three hoodlums--Jack Katzenberg, Jake Lvovsky, and Sam
Gross--were allied with other gangsters in the operation of an illicit
chemical plant in Newark, New Jersey. The gang was smuggling opium
into the country, taking it to the plant and extracting morphine from
the opium, to be sold at wholesale across the country. This business
was wiped out on February 25, 1935, when an explosion destroyed the
chemical plant.
Katzenberg, Lvovsky, and Gross had found the narcotics business too
profitable to give up. They began looking around for other ways to get
back into the business, and they decided to talk the problem over with
Lepke. A mutual friend brought them together in his apartment, where
they discussed setting up an international organization which would
obtain narcotics in Shanghai and smuggle them into the United States.
The sale of narcotics was to be put on the same efficient basis as the
sale of murder.
The major stumbling block to the plan was the U.S. Customs. It would
be relatively simple to obtain heroin in Shanghai and to bring it as
far as the port of New York. The problem was how to smuggle it past the
Customs inspectors on a continuing basis that would guarantee a steady
supply with a minimum risk.
Lepke was a firm believer in the adage that every man has his
price--and he was certain he would have no difficulty in finding
someone whose price was reasonable and who would cooperate with the
syndicate. This direct approach had always worked in the past and Lepke
had no reason to change tactics now.
One of Lepke’s first moves was to investigate the Customs procedures at
the New York pier. He found that when vessels arrived at the Port of
New York, the passengers’ baggage and trunks were brought to the pier
for examination. And when they had been examined, a Customs inspector
affixed a colored stamp on each piece of luggage. Once the stamps were
affixed, the luggage could be removed from the pier and placed in a
taxi or in a truck to be carted away.
Lepke saw that the stamps were the key to his problem. If he could find
a Customs employee who would furnish him with the colored stickers,
then a sticker could be affixed to a trunk or a suitcase containing
narcotics and it would pass through Customs without an actual
inspection.
Carefully, Lepke’s lieutenants made inquiries along the waterfront. At
last they found their men, two guards who were willing--for a price of
$1,000 a trip--to furnish Lepke and his men with the necessary stickers
on the day that the narcotics carriers arrived. The price was cheaper
than Lepke had expected.
With easy entry for the narcotics assured, Lepke arranged to obtain
heroin from two Greek dealers in Shanghai.
This was the state of affairs when Jack Katzenberg made a trip to
Brooklyn for a visit with his brother-in-law, Ben Schisoff, a balding,
sad-eyed man with the face of a ferret. Ben and his wife Bella operated
a Coney Island hot dog concession. They cleared about $1,500 to $2,000
in profit each season, enough to live on through the winter and to take
care of the concession rental for the next season.
Katzenberg generously offered to send Ben on an all-expenses-paid trip
around the world by luxury liner. All he asked in return was that
Schisoff bring back two trunks from Shanghai. “You won’t even have
to bother about looking after the trunks,” Katzenberg said, “because
there’ll be somebody to do that for you. And when you get back I’ll
have some money for you.”
Schisoff was confused. (At least that was the story he would tell
Customs agents later.) Why would his brother-in-law suddenly wish to
send him around the world with all expenses paid--and then give him
money at the end of the trip? He knew his brother-in-law was in the
rackets. He knew his reputation as a hoodlum. He also had heard all
the rumors that Katzenberg was connected with the narcotics traffic
even though he had managed to elude Federal officers. Schisoff told
Katzenberg to give him a few days to think it over.
Schisoff finally sat down with his wife and said, “Listen, Bella, I
want to go on a trip by myself. You go to Miami. You’ve worked hard and
now you are entitled to share the money we have. I want to go alone.
You know I am a nervous type of man and I want to go for a couple of
months to recuperate. You can stay home or you can go to Miami or do
whatever you please. How about it?”
But Bella was having none of this business of her husband taking
a vacation alone. She loudly insisted that if he were going on a
trip, then she was going with him. She wasn’t going to let him go
gallivanting off by himself to get into God knows what sort of trouble.
Her answer was “no!”
Schisoff reluctantly told Katzenberg that his sister insisted on going
along. He expected his brother-in-law to call off the deal. But instead
Katzenberg amiably agreed that both of them could go and that he would
pay their expenses. And so on November 15, 1935, the couple boarded the
SS _President Lincoln_ in San Francisco and set sail that day on their
voyage around the world by way of Shanghai.
When the _President Lincoln_ arrived in Shanghai, Sam Gross was
waiting at the pier to meet them. He introduced them to his two Greek
companions and then took them to the Metropole Hotel, where he had
made reservations for them. Sam said, “Now you two get a good rest.
Everything is going all right.”
As Schisoff told the story later: “A few days later, Sam Gross tells
me that he is going away for a week. He said to us, ‘Don’t walk too
often in the street because it is not so good.’ I said, ‘All right.
But what will I do if anything happens? Maybe I’ll get sick. I don’t
know anybody around here.’ So he gave me an address. In case anything
went wrong I should call that telephone number. I don’t remember the
address and the number. It was a Greek fellow, named Jay, and his wife.
Finally Sammy Gross puts a scare into me and tells me not to go into
the streets.
“And so we stayed in the hotel until we got blue in the face. And so my
wife finally says, ‘We have money. Why sit in the hotel? I want to do
some shopping. Everything is so cheap here.’
“So we were sitting there about three days and then I called that
number that Sam gives me and the wife answered. I told her about us.
She answered, ‘All right, I’m going to send my chauffeur to bring you
over....’ She treated us to a meal and we spent the afternoon there and
then went home.
“Gross finally returned and said, ‘Listen, the ship is going to be here
in a day or two. I’ll have two trunks for you to take with you. You
don’t have to do anything. We will put the trunks on board for you and
I will show you what to do when you are on the boat. You forget about
the trunks. When you are about three days out of Marseilles, go to the
purser and say that you want to have the trunks shipped across France
to Cherbourg in transit. Then when you get to Marseilles, there’ll be
somebody waiting for you to take care of everything. That way they
don’t have to open the trunks when they go through France.’”
The Schisoffs had a gay Christmas party at the home of the Greeks,
and four days later they boarded their ship and sailed from Shanghai.
They were met in Marseilles by one of Lepke’s henchmen, who handled
the trans-shipment of the trunks. Then the Schisoffs left the ship at
Marseilles and went by train to Cherbourg to catch the SS _Majestic_
for New York.
Lepke’s man told them, “Don’t put those two trunks on your baggage
declaration.”
Schisoff said, “How am I going to do it then?”
The hoodlum said, “You’ve got eight pieces of luggage of your own. You
put down everything on the declaration that you bought but leave these
two trunks out. They will be taken care of. Don’t you worry about that.”
Schisoff replied, “All right. Whatever you say is all right with me.”
On the night of February 4, 1936, the night before the _Majestic_ was
to dock in New York, Jake Lvovsky and Jack Katzenberg registered at
the Luxor Hotel in New York. A short time after they went to their
rooms they were joined by two Customs guards, John McAdams and Al
Hoffman. It was agreed that Lvovsky would meet McAdams and Hoffman at
the pier the next morning before the _Majestic_ docked and they would
turn over to him the stickers to be placed on the trunks brought in
by the Schisoffs. The stickers were issued to the guards each morning
and a new color was used each day. For that reason the delivery of the
stickers had to be made at the pier.
Lvovsky arrived at the pier as the _Majestic_ was docking. He stopped
and chatted casually with McAdams, who slipped him the stickers. When
the baggage was unloaded, the Schisoffs’ trunks were sent to the
section marked with the initial “S.” Schisoff pointed out the two
trunks to Lvovsky, who walked over casually and sat down on a trunk
to smoke a cigarette, as though waiting for an inspector to check the
luggage. Unobtrusively he took one of the stickers and pasted it to the
trunk. He moved to the other trunk, sat down, and pasted a sticker on
that trunk. And then he strolled away.
A Customs inspector examined the Schisoffs’ suitcases, but he noted
the trunks already had the inspection stickers on them so he permitted
them to be carted off. They were loaded into taxis by Lvovsky and
Katzenberg and hustled off to an unknown destination.
The system worked like a charm. Each time that Lvovsky notified the
two Customs guards of an arrival of a “world traveller” the guards
would arrange to be on duty at those hours so that they could obtain
stickers and pass them on to Lvovsky. Six times the confederates of the
gang made the trip safely from Shanghai without any inspection of the
heroin-loaded trunks.
But Treasury agents were closing in on the gang. Narcotics agents,
with aid from Customs agents, had opened an investigation of Lepke’s
narcotics smuggling ring after an informant had squealed to Narcotics
Commissioner Harry Anslinger. The informant--whose name has never been
disclosed--was a woman with revenge in her heart. Her boy friend--one
of the Lepke mob--had been playing around with another woman and she
wanted to get even with him for his infidelity. She gave Anslinger
enough information, with facts that could be verified, to start the
ball rolling. Bit by bit, the agents closed in on the gangsters. And
they discovered by a close check of the stickers issued to all pier
personnel that there was an irregularity in the stickers which had been
issued to the guards McAdams and Hoffman.
As the agents began to put on the heat, underworld characters started
to talk. Those “world travellers” who had helped bring narcotics into
the country began to confess. Evidence mounted against the gang, and
when the crackdown finally came, a total of thirty-one persons were
involved. Lepke was indicted on ten counts of a conspiracy to smuggle
narcotics into the United States.
At this time--December, 1937--Lepke was a fugitive. A little more than
a year earlier he and Gurrah Jake Shapiro had been convicted on the
antitrust charges brought against them four years earlier. They had
been sentenced to two years in prison and fined $10,000. But Lepke
appealed. He was released under $3,000 bail and immediately went into
hiding.
For almost two years Lepke’s pals hid him from the law. He lived for
a time in the old Oriental Dance Hall on Coney Island. Then, twenty
pounds heavier and wearing a mustache, he moved to a flat in Brooklyn.
Later he occupied a house in Flatbush, posing as the paralyzed husband
of a Mrs. Walker. All this time he continued directing the affairs of
his criminal organization.
But now, in 1939, the search for Lepke had become the most intense
manhunt the country had seen in years. The Federal government wanted
him on the narcotics charges growing out of his syndicate operations.
And he was the No. 1 man on the most-wanted list of New York’s District
Attorney Thomas E. Dewey, who then was opening his first bid for the
Republican Presidential nomination. Among other things, Dewey was
certain he could pin a murder charge on Lepke--who now had “dead or
alive” rewards on his head totalling $50,000.
As the pressures mounted, the hunted man became desperate. And
desperately he tried to wreck the cases against him by sending
witnesses out of the state, by intimidation, and by murder. The heat
was on the underworld as it had never been before. The rumor spread
that if Lepke did not surrender to the authorities, he would be
killed by one of his own kind. Lepke had at last become too much of a
liability even to his old pals.
Hunted and frightened, with every day holding the threat of sudden
death, Lepke began negotiations to surrender to New York Columnist
Walter Winchell--on the condition that he would be turned over to the
FBI rather than New York State authorities.
During the evening of August 5, Winchell received a telephone call from
a man who refused to identify himself. “Lepke wants to come in,” he
said. “But he’s heard so many different stories about what will happen
to him. He can’t trust anybody, he says. If he can find someone he can
trust, he will give himself up to that person. The talk around town is
that Lepke would be shot while supposedly escaping.”
Winchell called FBI Director John Edgar Hoover in Washington and told
him of the mysterious call and Lepke’s willingness to surrender if he
could be assured of protection.
Hoover told Winchell: “You are authorized to state that the FBI will
guarantee it.”
For almost three weeks the dickering continued between Winchell and his
mysterious callers until Hoover finally said, “This is a lot of bunk,
Walter. You are being made a fool of, and so are we. If you contact
those people again, tell them the time limit is up! I will instruct my
agents to shoot Lepke on sight.”
Winchell relayed this information to the intermediary. Then it was that
arrangements were made for Hoover to be waiting in his automobile on
28th Street near Fifth Avenue at 10:15 on the evening of August 24.
Winchell was parked in his car at Madison Square when Lepke came out of
the shadows and stepped into the car beside him. “Hello,” Lepke said.
“Thanks very much.”
Quickly, the columnist drove to 28th Street, where he pulled up behind
Hoover’s car. Lepke quickly moved into the automobile beside Hoover.
Winchell said, “Mr. Hoover, this is Lepke.”
“How do you do,” Lepke replied. “Let’s go.”
And so ended one of the greatest manhunts in American criminal history.
Four months later, Lepke went on trial in the Federal district court
in New York City. He sat in silence, his brown eyes expressionless, as
his former henchmen paraded to the stand to tell the details of their
narcotics smuggling.
Among the government witnesses, many of them pale from sunless days
in prison, were Jack Katzenberg, Ben Schisoff and John McAdams, the
Customs employee. No longer were they afraid of the little man who sat
there staring at them.
The trial dragged through fifteen days, but in the end Lepke was
convicted. He was sentenced to serve fourteen years in prison and was
fined $2,500 on ten narcotics charges. Two weeks later in General
Sessions Court, Lepke was convicted on thirty-six counts of extortion
and sentenced to an additional thirty years in prison.
Among the others involved in the smuggling ring, Lvovsky received seven
years in prison and was fined $15,000. Sam Gross was sentenced to six
years and fined $15,000, while Katzenberg was given ten years and a
$10,000 fine. Both the Customs employees, McAdams and Hoffman, also
received prison sentences.
But the final ordeal for Lepke was yet to come. In October, 1941, Lepke
was taken from prison and returned to New York to stand trial for his
role as mastermind in the operations of Murder, Inc. Specifically, he
was charged with ordering the murder of a former garment industry truck
driver, Joseph Rosen, who had ignored his warnings to get out of town
and out of reach of questioning by District Attorney Dewey at the time
Dewey was investigating the rackets in New York.