ORGANIZED CRIME IN INTERSTATE COMMERCE
SPECIAL COMMITTEE TO INVESTIGATE
CRIME IN INTERSTATE COMMERCE
UNITED STATES SENATE
S. Res. 202
AS AMENDED BY
S. Res. 60 and S. Res. 129
31 (legislative day, AUGUST
27), 1951.-Ordered to be printed
GOVERNMENT PRINTING OFFICE
WASHINGTON : 1951
COMMITTEE TO INVESTIGATE ORGANIZED CRIME IN
[Pursuant to S. Res. 202, 81st Cong., as
amended by S. Res. CO, 82d Cong., and S. Res. 120, 82d Cong.]
R. O'CONOR, Maryland, Chairman
ESTES KEFAUVER, Tennessee
CHARLES W. TOBEY, New Hampshire
LESTER C. HUNT, Wyoming ALEXANDER WILEY, Wisconsin
RICHARD G. MOSER, Chief Counsel
DOWNEY RICE, Associate Counsel
JAMES M. HEPBRON, Administrative
III. Recommendations and
IV. Background of the
V. Staff and
VII. The findings of the
A. Practical results of committee's
B. Illegal narcotic
(a). The drugs of
(b). Laws regulating
(c). Cause and nature of
(d). Drug use by young
(e). Methods of importation
C. Crime in medium-size
(a). Atlantic City, N. J
(b). Covington and Newport,
(c). Scranton, Pa.
(d). Reading, Pa.
D. Crime in large
(a). New York
(b). Northern New
E. Introduction of corrective
F. Status of contempt
G. Use of television, newsreels, and
radio in congressional hearings...................... 99
FINAL REPORT OF THE SPECIAL SENATE
COMMITTEE TO INVESTIGATE ORGANIZED CRIME IN INTERSTATE COMMERCE
(legislative day, August 27) 27), 1951.-Ordered to be printed
Mr. HUNT (for Mr. O'CONOR), from the Special
Committee To Investigate Organized crime in Interstate Commerce,
submitted the following
[Pursuant to S. Res. 202, 81st Cong., as
amended by S. Res. 60, 82d Cong., and
S. Res. 129, 82d Cong.]
I. GENERAL OBSERVATIONS
This committee has served as a powerful
searchlight, exposing widespread national and local crime conditions to
public gaze. Its activities have had a tremendous effect upon the whole
field of law enforcement. Everywhere throughout the country citizens,
made suddenly aware of the character and ramifications of organized
crime, have risen up to demand greater vigilance in stamping out crime
In the first phase of its activities
ending on May 1, 1951, the committee concentrated primarily on the large
cities. Since that date it has directed its attention largely to the
field of narcotics and to crime in medium-size cities.
Everywhere it has turned there has
followed an enormous increase in local enforcement activity.
In many cities, large and small,
visited by the committee, corrupt officials have been forced to resign,
grand juries and enforcement officials have doubled their vigilance, and
gangsters have gone into hiding. Even Virginia and the District of
Columbia, which were not themselves the subject of investigation, have
felt the repercussions of the committee's work in adjacent Maryland. In
Maryland itself at least four investigations not previously under way
are now being conducted largely as the result of the committee's
disclosures. In New York, four new investigative bodies not in
existence before the committee began, are now at work.
In the field of narcotics, the
committee's searchlight has created a Nation-wide awareness of the
seriousness of this great evil. As a result, investigations have been
started, court procedures have been modified, remedial laws have been
passed, educational programs have
2 ORGANIZED CRIME IN INTERSTATE
been undertaken and the despicable drug peddler has
run for cover. The President of the United States only recently has
been prompted to call for increased penalties in narcotics cases.
The committee's study of selected
samples of medium-size cities was necessarily less spectacular than in
the large cities, but a vitally important fact was established, namely,
that the same pattern of crime conditions found in the large cities
exists in Main Streets throughout America. Crime must be attacked at
the local level and it is from the local level that the committee has
received a flood of pleas for information, guidance, and help.
When the committee's life ends the man
in the street in every local community will want to know what is to take
As the result of the committee's
activities there exists a great public awareness of the nature and
extent of organized crime. The public now knows that the tentacles of
organized crime reach into virtually every community throughout the
country. It also knows that law enforcement is essentially a local
matter calling for constant vigilance at the local level and a
strengthening of public and private morality.
People everywhere are pleading for a
means of keeping alert to crime conditions and avoiding a return to the
state of public complacency and indifference under which gangsterism has
thrived for so long. The demand for a permanent force that can, in some
measure, replace this committee must be met.
With a view to answering this demand,
the committee, in its Third Interim Report, proposed the establishment
of a Federal Crime Commission, and a bill to accomplish this has been
introduced. The Commission contemplated by this proposal is an
independent Federal agency in the executive branch of the Government,
organized and staffed independently of other Government agencies, and
required to report to the Congress.
This bill is opposed by the Treasury
Department and the Department of Justice, and Senator Wiley has
expressed his dissent. Although the committee does not recede from the
proposal, a realistic approach compels the committee to recognize that
enactment of the bill cannot be accomplished in a short period of time.
In the meantime, it is highly desirable
that some action be taken promptly to afford local communities a means
of obtaining help in their attacks upon organized crime.
The answer seems to lie partly in the
field of local, privately constituted crime commissions. Several of
these have been in operation for a number of years and they have shown
themselves to be highly effective. They are not investigative or
policing agencies. Their function is to observe local crime conditions,
to cooperate with civic, educational, and enforcement agencies where
possible, and to report to the public any evidence of laxity or
A great step forward would be
accomplished in the field of law enforcement if privately constituted
crime commissions of this character could be established in every city
in the United States where
ORGANIZED CRIME IN INTERSTATE COMMERCE 3
organized crime presents a serious problem, and if
a central agency could established which would foster the establishment
of local commissions and serve as a clearing house and coordinating
agency for their information and experience.
Experience has shown that the crime
commission movement cannot progress unless it has a national parent body
with sufficient prestige and funds to give it drive. It is believed
that if Congress fosters the establishment of such an organization,
funds from private foundations or philanthropists can be obtained to
give it permanent life.
This report contains a commendation for
establishment of an organization of this character.
1. The illegal sale of narcotic drugs
represents an evil of major proportions requiring for its eradication
the combined efforts of law enforcement bodies, legislators, educators,
and parents. It should be attacked at all levels of the Nation's social
structure. If not successfully overcome in the near future, it may do
lasting damage to the youth of the Nation.
2. The organized gangster syndicates
will unquestionably turn to the sale of narcotic drugs when they are
driven out of the presently lucrative field of gambling. As they did at
the end of the prohibition era, when bootlegging no longer offered
substantial profits, they will turn to another form of illegal activity.
Under present conditions, narcotic drugs offer them the most profitable
opening. Their protestations that they would not stoop so low are
hollow in the light of the recent arrest of Waxey Gordon in New York
City on a narcotics charge.
3. There has been a startling increase
in the abuse of drugs by young people, many of whom are unaware of its
frightful consequences. They fail to realize that they are dealing with
what is, in effect, a contagious disease which brings degradation and
slow death to the victim and tragedy to his family and friends.
4. There has been a tendency to shroud
the subject of drug addiction in a veil of secrecy. The result is that
young people learn about drugs from bad associates or from the drug
peddlers in the back streets and alleys, rather than from qualified
sources of information. It is for this reason that many young people
have tried drugs, innocently unaware of the dangers they face.
5. Addiction is extremely difficult to
cure. It is a chronic condition with a high rate of recurrence. If
discovered in time, addiction may be prevented, but once it occurs the
victim can overcome it only through a painful and bewildering perplexity
of treatment entailing difficult physical and psychological
6. Members of the public generally are
not aware of the fact that voluntary, noncriminal patients may be
treated at the United States Public Health Service Hospital at
Lexington, Ky., and that patients who cannot afford to pay are treated
7. The United States Public Health
Service Hospitals at Lexington, Ky., and at Fort Worth, Tex., do not
have sufficient facilities for caring for all of the women patients in
need of treatment. Furthermore, there is not sufficient segregation of
young patients from
4 ORGANIZED CRIME IN INTERSTATE
older hardened addicts. There is considerable
danger that youngsters going to these institutions for the first time
are retarded in their recovery by mingling with the older addicts.
If the public should become fully aware
of the availability of these hospitals for voluntary patients, it is
entirely possible that the demands upon them will increase materially.
In that event additional Federal facilities may be required.
At the State level, the facilities for
treatment appear to be wholly inadequate.
8. The illegal sale of narcotic drugs
pays enormous profits to the lowest form of criminal, namely, the
peddler who is willing to wreck young lives to satisfy his greed. No
penalty is too severe for a criminal of such character. Until recently
the courts have been far too lenient toward narcotic violators. Short
sentences do not deter the potential peddler and suspended sentences are
a waste of judicial effort.
9. The drug representing the greatest
problem is heroin, the importation and possession of which are forbidden
in the United States. All of the heroin now used in this country is
smuggled in from abroad, for the most part by passengers and seamen
carrying it off ships on their persons. Because of the case of
concealment, checking its flow through customs search is extremely
difficult. Present practices and procedures for canceling the sailing
papers of seamen convicted of narcotics violations are unsatisfactory.
10. The most effective means of
combating the narcotics problem is through effective enforcement
facilities. The Narcotics Bureau of the Treasury Department is
efficient and effective as far as it is able to go, but it is pitifully
undermanned considering the enormity of the task assigned to it. With
sufficient personnel, the Narcotics Bureau could do more than any other
force toward stamping out the illegal importation and sale of narcotic
drugs. Most addicts would like to see the traffic stamped out so that
it will not be available to them.
At the local level, there are too few
enforcement officers who have had experience in specialized fields,
especially in the field of narcotics. Although the Narcotics Bureau of
the Treasury Department works in close cooperation with the authorities,
its manpower is not sufficient to permit it to furnish training to local
11. Barbiturate drugs, such as
luminal, seconol, amytol, and the other products popularly known as
sleeping pills have not yet become an object of organized crime.
However, in its study of narcotics the committee learned that their
addiction properties when used in large quantities are as severe as
those other narcotic drugs. Their sale should be the subject of strict
regulation under both State and Federal law.
12. The Commission on Narcotics of the
United Nations has made great strides in bringing about cooperation
among the nations of the world regarding control of the production of
opium and of the manufacture of drugs derived from opium. The countries
in which the drugs are manufactured have been fairly successful in
limiting the output to the actual medical needs of the world.
On the other hand, the countries where
the opium poppy is grown have found it to be impossible, in spite of
strenuous efforts, to regulate
ORGANIZED CRIME IN INTERSTATE COMMERCE 5
the quantities planted and cultivated by the
farmers. These countries grow enough opium poppy plants to produce 40
times the amount of opium needed for legitimate medical purposes.
It is believed that, whereas in the
growing countries the quantity cannot be regulated, complete prohibition
against the planting of opium poppy plants could be enforced.
Except in the case of cocaine, which
represents a minor problem, adequate synthetic substitutes have been
developed for opiate drugs, especially for morphine, which is the
principal pain-relieving product. Although the synthetics are easy to
produce, it is believed that their manufacture could be regulated within
reasonable limits. The medical profession would not be materially
handicapped if opium poppy growing were prohibited throughout the world.
1. The same pattern of organized crime
found in large metropolitan areas exists in the medium-size cities with
similar evidence of official sanction or protection. In some cases the
protection is obtained by the payment of bribes to public officials,
often on a regular basis pursuant to a carefully conceived system. In
other cases, the racketeering elements make substantial contributions to
political campaigns of officials who can be relied upon to tolerate
their activities. Sometimes these contributions will support a whole
slate of officers in more than one political party, giving the
racketeers virtual control of the governing body. Democracy vanishes in
a captive community because the ordinary citizen for practical purposes
has nothing to say about his Government.
In many cities, large and small, there
is evidence of active and often controlling participation by former
bootleggers, gangsters, and hoodlums in the political affairs of the
community. In some cases this participation extends to other cities and
even to the government of the State. Underworld characters do not
engage in politics for the good of the community or the Nation. They do
so for the purpose of increasing their power and wealth and gaining
greater protection for their illegal activities.
Organized crime has been able to
flourish and grow largely because of the economic power wielded by
gangsters. The ordinary, honest citizen cannot expect to be able to
compete in either business or government with persons who obtain wealth
and power through illegal means.
2. Wiretapping is a powerful tool in
the hands of law-enforcement officers. Federal agents are seriously
handicapped in their regular enforcement work by the legal restrictions
which presently surround this valuable instrument of investigation. If
properly safeguarded by the same restrictions that are imposed by law
upon searches and seizures, wiretapping does not infringe upon the right
of privacy of the honest citizen. Several States, notably New York,
have laws which permit the use of wiretapping pursuant to court order
and subject to reasonable safeguards. These laws work satisfactorily
and without objection on the part of law-abiding citizens. A similar
Federal law would represent an important contribution to law
6 ORGANIZED CRIME IN INTERSTATE
III. RECOMMENDATIONS AND SUGGESTIONS
A. RECOMMENDATIONS FOR ACTION AT THE
1. Establishment of National Crime Coordinating
In order to keep the searchlight of
public vigilance turned upon crime and corruption in a manner that
leaves at the local level the basic responsibility for law enforcement
and at the same time affords centralized guidance and coordination, the
committee proposes the establishment of a privately constituted National
Crime Coordinating Council.
The Council would be a body composed of
representatives of privately established local crime commissions. Its
first chairman would be designated on an interim basis by the President
of the United States to serve until appointment of his successor. As
soon as the organization was established it would nominate five persons
from whom the President would select a chairman to succeed the interim
chairman. The chairman so designated would serve for a term of not more
than 2 years at which time the same procedure would be followed for
selection of his successor. Congress would appropriate the sum of
$100,000 to be applied as a grant in aid to the Council for the purpose
of permitting it to organize and begin its activities. It is not
contemplated that the Congress would be called upon for any additional
funds. Thereafter, the Council would be expected to obtain its funds
from charitable foundations or other private sources.
Solely to provide the mechanics for
establishing the Council at the initial stages, the Attorney General of
the United States would have the responsibility of drafting its charter
and bylaws, arranging for its organizational meetings, and otherwise
sponsoring its creation. Local crime commissions now in existence would
be invited to serve as its charter members and thereafter it would
sponsor throughout the country other local crime commissions which would
also become members or chapters of the national organization.
The functions of the Council would be
To foster the establishment of privately constituted local crime
commissions wherever needed throughout the country.
To serve as a clearinghouse for information of interest to local crime
To inquire into and study such new patterns or innovations in organized
crime as may develop and to make the results of its studies available to
appropriate agencies and to legislative bodies so that immediate
deterrents may be devised.
To sponsor meetings for the purpose of exchanging ideas and information
regarding local crime conditions to which would be invited
representatives of local social and civic organizations, religious
groups, educational bodies, women's clubs, law enforcement agencies, and
all other groups having an interest in crime conditions.
The committee believes that
establishment of the proposed National Crime Coordinating Council would
constitute a great contribution toward the cause of law enforcement
because it would provide at the
ORGANIZED CRIME IN INTERSTATE COMMERCE 7
local level the civic vigilance without which the
evil of complacency and indifference may soon return.
As previously pointed out, this plan
differs substantially from the proposal for a Federal Crime Commission
as described in the third interim report. The Federal Crime Commission
would be an official agency in the executive branch of the Government;
whereas the National Crime Coordinating Council would be a private
agency serving the local, privately established crime commissions
constituting its membership. If the bill now pending in the Senate for
establishment of the Federal Crime Commission should be enacted, the
official functions of the Commission would not be in conflict with the
private activities of the Council, although a demarcation of
responsibilities between them might be advisable to avoid duplication of
2. Continuation of crime investigation
Section 7 of Senate Resolution 202 as
added by Senate Resolution 129 provides that on or before September 1,
1951, this committee "shall transfer all of its files, papers,
documents, and other pertinent data to the Senate Committee on
Interstate and Foreign Commerce, which committee shall under and by
virtue of the authority of section 136 of the Legislative Reorganization
Act of 1946, continue the study and surveillance of the subject matter
of this resolution."
This committee hopes that the study of
organized crime will continue and it is gratified that the Committee on
Interstate and Foreign Commerce has already taken cognizance of the
foregoing provision. It is suggested that serious consideration be
given to the problem presented by the witnesses who have evaded the
With regard to the District of
Columbia, this committee has, on several occasions, received evidence
that the city of Washington may be a pivotal point for gambling
operations of considerable size. There is also evidence before this
committee of widespread traffic in narcotic drugs within the District.
The committee therefore strongly recommends that an appropriate
committee of the Senate undertake a thorough investigation of crime
conditions in the District of Columbia, including the relationship of
such conditions to crime in adjoining areas.
3. Coordinate information regarding narcotics
It is recommended that one of the
activities of the proposed National Crime Coordinating Council be to
serve as a clearinghouse for information regarding local action taken in
connection with the illegal sale and use of narcotic drugs.
At the present time, aside from the
information on enforcement supplied by the Bureau of Narcotics, there is
no central agency to which civic, educational, religious, and
enforcement agencies may turn for information regarding the subject of
narcotics. Each community is approaching the matter in its own way
without having the benefit of experience gained in others. Duplication
and waste of effort would be reduced if coordination of activities could
be brought about by use of a central clearing agency.
4. Narcotics Bureau training squad
A squad should be organized in the
Narcotics Bureau of the Treasury Department having as its function the
training of local enforcement officers in the specialized techniques
required for narcotics law
8 ORGANIZED CRIME IN INTERSTATE
enforcement. The squad should consist of at least
10 experienced Federal narcotics agents who would furnish instruction to
local enforcement agencies everywhere.
Such a program would increase greatly
the number of trained narcotics agents serving throughout the country on
both Federal and local levels.
5. Increase staff of Narcotics Bureau
The Appropriations Committees and the
Congress are to be commended for action in increasing the appropriation
of the Narcotics Bureau to provide for 30 additional agents. The
studies of this committee, however, indicate that the problem presented
by the importation and sale of narcotic drugs has reached such magnitude
that at least 40 more agents, in addition to the 30 provided for, are
urgently needed. This would cover the enforcement needs as well as the
local training program described in the previous recommendation.
Enforcement is the one point in the
entire narcotics problem where results of a tangible nature will be
evident immediately. Given the men, the Bureau, with the help of local
agencies, can do much more to erase this evil than it is able to do
under present conditions.
6. Promote narcotics education
A Nation-wide educational program
regarding the character and effects of narcotic drugs and the nature and
results of addiction should be developed by the Federal Security Agency
and made available to educational institutions, civic organizations, and
enforcement authorities throughout the country. The objective of the
program should be to lift the veil of secrecy from the subject and to
bring it out into the open where it can be dealt with in an intelligent
and effective manner. The present authority and funds of the Federal
Security Agency are sufficient for this purpose.
7. Increase drug peddlers' penalties
Federal laws increasing the penalties
that the courts may impose upon convicted drug peddlers should be
enacted without delay.
8. Increase treatment facilities
The facilities for treating drug
addicts in Federal institutions should be increased to permit
accommodation of more women patients and segregation of young addicts.
Public awareness of the fact that the United States Public Health
Service Hospital at Lexington, Ky., is open to voluntary patients and
that its services are free to those who cannot pay, may result in a
substantial increase in patients. In that event the facilities of that
hospital should be increased to meet the needs then found to exist.
9. Require notice to seamen's and longshoremen's
unions of narcotics convictions
The Narcotics Bureau should notify the
appropriate national unions of all narcotics law convictions of seamen
and longshoremen in order that the unions may more easily enforce their
rules calling for expulsion of such cases.
10. Cancel sailing papers of narcotics violators
The Coast Guard should be empowered and
required to cancel the sailing papers of any seaman convicted of a
violation of the narcotics laws, irrespective of whether the violation
occurred on land or at sea.
ORGANIZED CRIME IN INTERSTATE COMMERCE 9
11. Prohibit opium production throughout the
The United States representatives at
the United Nations should work toward the adoption of measures that will
prohibit the growing of opium poppy plants in any country of the world.
12. Attorney General's Crime Conference
The Attorney General of the United
States made a substantial contribution in the effort to combat organized
crime in calling an Attorney General's Crime Conference which had its
meeting in Washington in February 1950. The importance of the
conference was shown by the fact that it was addressed by the President
of the United States. It was attended by Federal and local enforcement
officers, prosecuting attorneys and by representatives of municipal,
county, State, and Federal officials.
The conference made notable
achievements among which were the recommendation for enactment by the
Congress of legislation preventing the use for gambling purposes of
interstate communication facilities and prohibiting interstate shipment
of gambling devices. The legislative committee of the conference in
cooperation with the Attorney General prepared bills to effectuate these
recommendations. The bill preventing interstate shipment of slot
machines was passed by the Eighty-first Congress.
Extensive hearings were held by the
Interstate and Foreign Commerce Committee of the Senate, and the
wire-service bill was unanimously reported favorably, the report being
made by Senator McFarland of Arizona, now majority leader.
The committee strongly recommends that
the Attorney General call annual conferences of this kind and that the
legislative and other committees of the conference have more frequent
sessions to study and propose legislation at both Federal and local
levels to combat organized crime.
In addition to the foregoing
recommendations, the committee made 22 recommendations in its Third
Interim Report. In order to have recommendations of the committee made
available in a single place, those contained in the Third Interim Report
are se forth below:
Congress through a continuation of this committee should for a further
limited period continue to check on organized crime in interstate
commerce. The basic function of the committee should he to scrutinize
the efforts made by the Federal agencies to suppress interstate criminal
operations, and particularly the racket squads described in later
recommendations. It will also follow up the legislative recommendations
made in this report.
racket squad should be organized in the Justice Department.
Appropriate legislation should be enacted to set up an independent
Federal Crime Commission in the executive branch of the Government.
The establishment of the Special Fraud Squad by the Bureau of Internal
Revenue of the Treasury Department is one of the most effective and
useful steps taken to collect taxes from the criminal clement.
committee applauds the Department for this act and recommends that it be
supported with necessary appropriation and that it work in close
cooperation with the special racket squad if set up by the Department of
Justice as is recommended by the committee. The Bureau of Internal
Revenue should maintain on a current and continuing basis a list of
known gangsters, racketeers, gamblers, and criminals whose income-tax
returns should receive special attention by a squad of trained experts.
Procedures leading to prosecution should be streamlined and speeded up.
10 ORGANIZED CRIME IN INTERSTATE COMMERCE
Bureau of Internal Revenue should enforce the regulations which require
taxpayers to keep adequate books and records of income and expenses,
against the gamblers, gangsters, and racketeers who are continually
flouting them. Violation should be made a felony.
Gambling casinos should be required to maintain daily records of money
won and lost to be filed with the Bureau of Internal Revenue. They also
should be required to maintain such additional records as shall be
prescribed by the Bureau. Officials of the Bureau of Internal Revenue
should have access to the premises of gambling casinos and to their
books and records at all times. Where the casino is operating illegally,
in addition to the aforementioned obligations, the operators of the
casino should be required to keep records of all bets and wagers.
The law and the regulations of the Bureau of Internal Revenue should be
amended so that no wagering losses, expenses, or disbursements of any
kind, including salaries, rent, protection money, etc., incurred in or
as a result of illegal gambling shall be deductible for income-tax
The transmission of gambling information across State lines by
telegraph, telephone, radio, television, or other means of communication
or communication facility should be regulated so as to outlaw any
service devoted to a substantial extent to providing information used in
internal revenue laws and regulations should be amended so as to require
any person who has been engaged in an illegitimate business netting in
excess $2,500 a year for any of 5 years previously, to file a net-worth
statement of all his assets, along with his income-tax returns.
transmission of bets or wagers, or the transmission of moneys in payment
of bets or wagers, across State lines by telegraph, telephone, or any
other facilities of interstate communication, or the United States
mails, should be prohibited.
prohibition against the transportation of slot machines in interstate
commerce should be extended to include other gambling devices which are
susceptible of gangster or racketeer control, such as punchboards,
roulette wheels, etc.
The penalties against the illegal sale, distribution, and smuggling of
narcotic drugs should be substantially increased.
The immigration laws should be amended to facilitate deportation of
criminal and other undesirable aliens. To this end, the committee
recommends the adoption of the legislative proposal heretofore
recommended by the Commissioner of Immigration and contained in section
241 of S. 716 (82d Cong.), now pending before the Senate Judiciary
The Immigration Act of February 5, 1917, should be amended to provide
punishment for smuggling, concealing, or harboring aliens not entitled
by law to enter or reside in the
Attorney General should be authorized to revoke suspensions of
deportation and to make such revocation ground for the cancellation of
certificates of naturalization granted aliens who have succeeded in
getting their immigration status recognized but who are later found to
be ineligible for such relief.
The personnel of Federal law-enforcement agencies should be materially
increased. Consideration should be given to eliminating inequities, in
the salaries of law-enforcement officers, many of whom are woefully
underpaid for the duties they perform and the risks they undertake.
The existing Federal law with respect to perjury should be tightened;
the committee endorses H. R. 2260 (82d Cong.) and recommends its
The Attorney General of the United States should be given authority to
grant immunity from prosecution to witnesses whose testimony may be
essential to an inquiry conducted by a grand jury, or in the course of a
trial or of a congressional investigation.
The committee favors the passages of legislation providing for
constructive service by publication or otherwise upon a witness whose
testimony is desired who evades personal service upon him.
committee favors passage of the legislation recommended by the Alcohol
Tax Unit of the Treasury Department to prevent racketeering elements
from entering the liquor industry and to eliminate any now in it. The
committee also favors passage of legislation which will extend the same
Federal protection to local-option States as is now extended to the
wholly dry States against the illicit transportation of liquor into the
The committee recommends that the present Federal regulation and
application forms which require a listing of individual owners,
partners, and holders of Alcohol Tax Unit permits, be amended, so that,
in addition to the
ORGANIZED CRIME IN INTERSTATE COMMERCE 11
requirements, the names of all beneficial owners be stated: also that
the application forms require the disclosure of all previous arrests and
convictions. A report should be filed with the Alcohol Tax Unit of every
charge in such interests or in management as such occurs.
The committee recommends that the Interstate Commerce Commission be
required by law to consider the moral fitness of applications for
certificates of necessity and convenience as one of the standards in
acting upon applications for such certificates or transfers of
A number of the committee's previous
recommendations, above, called for administrative action by the Treasury
Department and the Department of Justice. The committee is gratified to
note that these have been put into effect, and commends both agencies
for the constructive way in which they have acted upon both the letter
and the spirit of its recommendations. Both the Secretary of the
Treasury and the Attorney General, with their staffs, have been
consistently helpful and cooperative in every phase of the committee's
B. SUGGESTIONS FOR ACTION BY STATE AND
1. Revision of outmoded laws and
adoption of uniform laws.--State and local prosecutors sometimes
attribute their ineffectiveness in law enforcement to the inadequacy of
the laws they are called upon to enforce. The committee therefore
suggests that State legislatures might reexamine their criminal laws
with a view to correcting any such deficiencies, especially in the
fields of gambling and the other illegal activities that have been found
to constitute the basis for organized crime. The committee strongly
endorses efforts to develop and promulgate uniform State laws on
gambling, vice, narcotics, racketeering, and related areas of criminal
2. State legislative or executive
investigations.--State legislatures in more cases might profitably
appoint legislative committees, with broad subpena and investigative
powers, for the study of organized crime within their borders, perhaps
patterning the duties of such committees after those of this committee.
The establishment of crime investigating commissions in the executive
branches of State governments is also suggested.
3. Enact laws relating to
barbiturates.--The committee suggests that special attention be
directed by States to regulation of the sale of barbiturate drugs to
require that they be sold on prescription only. Some States have already
enacted such laws. These laws should be so drafted as to conform to
corresponding Federal legislation which is now pending and uniformity
among the States is highly desirable.
4. Provide treatment facilities for
addicts.--The committee strongly suggests that local government,
civic, educational, and religious groups promptly survey the facilities
available for the detection and treatment of addiction, and that, where
necessary, additional facilities be provided in order that persons,
especially young people, abusing drugs may be discovered at early stages
and treated promptly.
5. Conferences of local prosecutors.--State
attorneys general should take the initiative wherever possible to insure
better coordination among local prosecutors. In a few States attorneys
general have had conferences with district and county attorneys for the
exchange of views and information and to emphasize the need for close
cooperation in dealing with organized criminal activities. The committee
12 ORGANIZED CRIME IN INTERSTATE COMMERCE
urges attorneys general of other States to adopt
this practice on a regular basis.
6. Organization of State crime
conferences of citizens groups.--The interest currently being shown
by public-spirited citizens, educators, religious groups, and civic;
organizations in the assault on organized crime should be kept alive,
and fully utilized. Continuing public support of the activities of
enforcement officials is of great importance. Officially sponsored crime
conferences, where civic leaders can meet and exchange views with
enforcement officials, might well be organized on a State-wide basis
from time to time, perhaps in coordination with the activities of the
National Crime Coordinating Council described in this report.
7. Use of State income tax data.--Much
valuable information on the activities of organized crime is available
in State income-tax returns. Special staffs could be organized to
screen this material in order to provide local law-enforcement officers
with many leads which are not presently available to them.
8. Utilization of Federal
occupational-tax data.--Federal occupational-tax returns require
disclosure of the identity and activities of liquor dealers,
slot-machine operators, the possessors of gangster-type firearms and (if
H. R. 4473, now pending before the Senate Finance Committee, is enacted)
gamblers. These returns are available to State and local enforcement
officials by a special provision of the Internal Revenue Code. They
have not been widely relied upon, and the committee urges local
authorities to take advantage of such information wherever it would help
them in detecting violations of applicable local laws.
9. Closer relations with Federal
enforcement agencies.--State and local enforcement units which deal
with organized crime are invited to avail themselves fully of the
research and training facilities and the accumulated data which are
available in parallel Federal agencies, the Federal Bureau of
Investigation, the Narcotics Bureau, and the Alcohol Tax Unit, and to
reciprocate with assistance, and a steady flow of suggestions and
information to these agencies.
10. Prohibiting political
contributions by racketeers.--State legislation similar to that
proposed in this report for Federal candidates prohibiting campaign
contributions by racketeers might be considered to safeguard the
democratic processes at the State level. Gangster participation in
local campaign activities has been clearly exposed in a number of
instances and remedial action therefore seems appropriate, especially in
the case of candidates for offices which involve any aspect of law
In addition to these suggestions, the
committee made seven suggestions in its Third Interim Report. In order
to have all of the suggestions of the committee to local authorities
available in a single place, those contained in the Third Interim Report
are set forth below:
committee might well be appointed in each State to make a thorough-going
investigation of the problem of organized crime.
Grand jury investigations could well be instituted in every community in
which wide-open gambling and racketeering conditions exist, so that
local responsibility for such conditions can be fixed and determined.
might be advantageous for each State to institute a survey of its
law-enforcement agencies with a view toward bringing about greater
ORGANIZED CRIME IN INTERSTATE COMMERCE 13
greater centralization of responsibility for lax enforcement of the
criminal law, and greater efficiency.
Organization of rackets and special purpose squads in each State with
sufficient manpower and authority to make investigations and arrests in
connection with organized criminal activities would be helpful. Such
squads are particularly desirable on both the State and local levels, in
connection with the suppression of narcotics traffic.
State would do well to analyze the provisions of its criminal law and
its sentencing practices so as to make certain that deterrent sentences
are imposed upon offenders engaged in criminal activities connected with
Each State should consider legislation making it possible to deprive any
establishment of its license which permits gambling games or gambling
operations on its premises.
citizen crime commission charged with the duty of observing the
activities of local law-enforcement agencies and with the duty of
observing and reporting on local crime conditions would be helpful in
each large community.
IV. BACKGROUND OF THE COMMITTEE
This committee was created by Senate
Resolution 202, Eighty-first Congress, which provided that the
committee's authority was to terminate on March 31, 1951. By Senate
Resolution 60, Eighty-second Congress, its life was extended to May 1,
1951, and by Senate Resolution 129, Eighty-second Congress, its life was
further extended to September 1, 1951.
The members of the committee from its
inception have consisted of Senator Estes Kefauver, Democrat, Tennessee;
Senator Herbert R. O'Conor, Democrat, Maryland; Senator Lester C. Hunt,
Democrat, Wyoming; Senator Charles W. Tobey, Republican, New Hampshire;
and Senator Alexander Wiley, Republican, Wisconsin. For the period from
the creation of the committee to May 1, 1951, Senator Kefauver acted as
chairman, and Senator O'Conor has served as chairman since May 1, 1951.
The activities, findings, and proposals
of the committee during Senator Kefauver's chairmanship are set forth in
the Third Interim Report dated May 1, 1951. This final report covers
the period of Senator O'Conor's chairmanship from May 1, 1951, to
September 1, 1951.
V. STAFF AND ORGANIZATION
As of May 1, 1951, the committee's
chief counsel and all but two of the members of its legal and
investigative staff had resigned, having served for the periods for
which they had committed themselves. It therefore became necessary for
the committee to rebuild its staff anew. In view of the brief life
available for the committee's work, it was necessary to create a staff
large enough to do a highly concentrated job in a short period of time,
tapering off as investigative projects were completed.
Richard G. Moser was appointed chief
counsel on May 14, 1951, and Downey Rice remained as associate counsel.
George H. Martin remained as director of information and James M.
Hepbron was drafted by Senator O'Conor to serve on a voluntary basis as
administrative assistant. A new staff of lawyers was selected
consisting of the following: John P. Campbell, Edgar H. Farrell, Jr.,
Robert E. Frisch, Lawrence C. Goddard, Rufus G. King, Jr., R. P. S.
14 ORGANIZED CRIME IN INTERSTATE COMMERCE
nell, Robert F. Morten, Roswell B. Perkins, Norman
Polski, Wallace Reidt, and Nicholas John Stathis.
In addition, three lawyers who had
served previously with the committee assisted it from time to time on a
per diem basis. These were Joseph L. Nellis, Alfred M. Klein, and John
J. Winberry. Another former associate counsel, George Robinson, now
with the Army Air Force, also provided assistance on occasions.
Investigators were selected from
various sources. Col. Elmer F. Munshower, superintendent of the
Maryland State Police, loaned two detectives to the committee, namely,
Murray E. Jackson and Thomas S. Smith. The Now York City Police
Department, through the co-operation of former commissioner (now United
States judge Thomas F. Murphy and later of Commissioner George Monaghan,
loaned the committee four members of that force, namely, Detectives
Terence J. Harvey, Jr., Ellsworth Monahan, and Sherman Willse; and
Police-woman Georgette Carroll. The Department of Public Safety of
Newark, N. J., through Commissioner James B. Keenan, made the Services
of Detective Michael G. Jordan available to the committee for a short
period of time.
The Narcotics Bureau of the United
States Treasury Department, through the courtesy of Commissioner Harry
J. Anslinger, supplied the committee with the services of Charles
Siragusa, who acted as chief investigator, and it also made available
from time to time the services of Agent John T. Cusack.
The Alcohol Tax Unit of the Bureau of
Internal Revenue, through the courtesy of Mr. Dwight Avis, loaned to the
committee two investigators, namely, Jacob E. Erkilla and Michael A.
From the Bureau of Internal Revenue,
through the cooperation of Mr. George Schoeneman, former Commissioner of
Internal Revenue, the services of Raymond L. Adams, an internal-revenue
conferee, were made available to the committee. Mr. Edward J.
FitzGerald, public-relations expert of the United States Public Health
Service, served the committee on a part-time basis through the
cooperation of Surgeon General Leonard A. Scheele.
In addition, the committee employed the
following independent investigators: William D. Amis, Fred V. Bruch,
Joseph R. Bucher, Francis X. Mulrean, and Robert Rehman.
Mr. Wayne C. Grover of the Bureau of
Archives made available the services of Paul Soules, a systems expert,
who undertook the difficult assignment of placing in readily usable form
the large mass of documents, reports, and correspondence which the
committee had accumulated during the previous year. The Department of
Justice loaned the committee Mrs. Paul Soules, who served as assistant
The rebuilding of the entire staff on
short notice presented an organizational problem of considerable
difficulty falling mainly on the shoulders of the chief counsel who was
engaged simultaneously in preparing for the committee a program of
investigations and hearings to be completed within the then remaining
period of 3 1/2 months.
Deserved tribute is paid at this point
to the extraordinarily devoted and efficient work performed by the
members of the Crime Committee staff, ofttimes under the most trying
conditions. In the very limited time available normal schedules were
completely forgotten. No committee staff ever addressed itself more
painstakingly to the duties at hand.
ORGANIZED CRIME IN INTERSTATE COMMERCE 15
To the leadership of the committee's
chief counsel, Richard G. Moser, must be attributed in great measure the
excellent results achieved by the staff under his direction. It would
not have been possible to have found a chief counsel better equipped by
the standards of learning, keen insight into the vast complexity of
questions involved, or a more conscientious devotion to the fulfillment
of this important assignment. Mr. Moser did not seek this post but the
committee records officially its unanimous conviction that his
contribution to the public service has been exemplary and will have
lasting beneficial results.
Mr. James M. Hepbron, who served on a
voluntary basis as administrative assistant to the committee, brought to
the investigation a wealth of valuable experience gained through his
many years as the guiding figure of the Baltimore Criminal Justice
Commission, and in the service of the United States Navy Intelligence.
His mature judgment in the handling of administrative matters, and his
assistance in the direction of various phases of the investigative work,
were of the utmost value. He merits public commendation for his wholly
satisfactory handling of vital segments of the committee's functions.
Downey Rice, associate counsel, who had
been with the committee from the beginning of its activities, was an
unerring source of competent advice. His investigative talents and his
technique of examination of witnesses at hearings assisted immeasurably
in the development of testimony of importance to this committee's
program. Helpful in like manner was George H. Martin, director of
information, who also served in an investigative capacity on many
occasions throughout the committee's activities. The many other members
of the legal staff, as well as the clerical assistants, were uniformly
capable and helpful. They well merit our thorough commendation.
The committee also wishes to
acknowledge the splendid cooperation accorded by August J. Bourbon,
administrative assistant to Senator O'Conor, and also by Julius N. Cahn,
executive assistant to Senator Wiley, of Wisconsin. Both of these
gentlemen rendered invaluable assistance during the life of the
committee and were of the utmost help in connection with the committee's
The committee likewise would be remiss
in the extreme if it failed to acknowledge gratefully the very valuable
and continuing assistance and advice given by Mr. J. Edgar Hoover,
Director of the Federal Bureau of Investigation, and his assistant, Mr.
Louis B. Nichols, and by Mr. Harry J. Anslinger, Commissioner of
Narcotics of the Treasury Department, and his deputy, Mr. George W.
The committee had the benefit of their
wide knowledge of crime conditions throughout the country in the
planning of its program and throughout its activities, and their
unfailing courtesy and helpfulness contributed vastly to the committee's
The committee also acknowledges the
cooperation and able assistance furnished to it by Frank S. Hogan,
district attorney of New York County, N. Y., and Miles F. McDonald,
district attorney of Kings County, N. Y., and the members of their
The committee again records its deep
appreciation for the great contributions made to its work by the
distinguished group of lawyers and judges who constitute the American
Bar Association Commission on Organized Crime of which Hon. Robert P.
Patterson is chairman and Judge Morris Ploscowe is executive director.
16 ORGANIZED CRIME IN INTERSTATE COMMERCE
The member telephone companies of the
Bell System and the American Telephone & Telegraph Co. continued to
display commendable willingness to further the causes and aims of the
committee by frequent and sometimes costly research into their records,
the utilization of which contributed in great measure toward the
unraveling of the interstate ramifications of the rackets explored.
Thousands of communications have been
received from public-spirited citizens offering encouragement and
constructive suggestions. The committee takes this opportunity publicly
to thank these correspondents and to acknowledge their interest and
The newsmen who have followed the
committee's career also deserve a hearty word of thanks for their
courtesy and patience. Their work, as a link between the committee and
the American public, has contributed immeasurably to the achievements
described in this report.
The committee adopted as the basic
program for its new staff the following subjects:
1. Illegal narcotic drugs.
2. Crime in medium-size cities.
3. Crime in large cities.
4. Local effects of national crime
5. Introduction of corrective
The selection of places to be
investigated (including cities within States represented by the five
members of the committee) was a decision unanimously concurred in by the
members. Similar unanimity has characterized every major decision of the
committee from its inception.
A summary of the committee's objective
under each of the foregoing headings is set forth below.
1. Illegal narcotic drugs.--From
every corner of the country there came rumblings of an insidious evil
beginning to eat its way into the fiber of the Nation's youth. Shocking
stories were reaching the committee of young people, confused and
unnerved, turning to the use of narcotic drugs, either as a form of
pleasure or as an escape from psychological strains they could not
master. It was obvious that these young people were wholly ignorant of
the disastrous effects of narcotic addiction upon their lives and their
families and that they failed to realize that narcotic addiction
requires long hospitalization in a secured institution withdrawn from
ordinary living. Unchecked addiction and its concomitant craving result
in a life of degradation and crime. These young victims were the
innocent prey of the lowest form of criminal known to society, the drug
It seemed clear to the committee that
if its legislative program should be successful in driving organized
gangster syndicates out of the field of gambling, these racketeers would
ultimately turn to other forms of illegal business activity just as they
had turned from bootlegging to monopolized gambling. Many a hoodlum has
stated with pride that he had never stooped to the sale of drugs, but he
said that only because gambling was a sufficiently profitable source of
income. Deprived of gambling, he would have no difficulty in adjusting
his resilient conscience to the sale of drugs. No better example of
ORGANIZED CRIME IN INTERSTATE COMMERCE 17
can be found than the case of Waxey Gordon, once
notorious bootlegger, then a racketeer gambler, and recently arrested
for drug peddling.
The evils of monopolized gambling are
great. Many a family has been driven to poverty and many a child has
been unnecessarily deprived of life's opportunities because his parents,
tempted by a distant hope of sudden wealth but ignorant of the enormity
of the odds against them, have gambled away the family's pay envelope.
But these evils are nothing compared with the sorrow and tragedy to
individuals and families alike resulting from drug addiction.
Accordingly, the committee undertook an
intensive study of the whole field of narcotic drugs, including the
(i) the types of narcotic drugs;
(ii) the laws restricting their
importation, sale, and use;
(iii) the cause and nature of drug
(iv) the extent of drug use by young
(v) the methods of illegal importation
and sale; and
(vi) the possible remedies.
The results of its study are set forth
under an appropriate heading in this report.
2. Crime in medium-size cities.-The
work of the committee as described in the Third Interim Report showed
the existence of organized gangster syndicates exercising monopolistic
control over illegal gambling operations in most of the large cities of
the country. It showed that the mobs which had their beginnings in the
prosperous bootlegging combines of the prohibition era had turned from
the illicit liquor traffic to the equally lucrative field of illegal
gambling, often operating under corrupt official sanction.
The committee decided that its work in
this field would not be complete without a study of the less conspicuous
but equally important field of gangster operations in medium-size
cities. It had received a flood of requests from every type of
community for investigation of local crime conditions. As only a small
fraction of these requests could be satisfied in the short time
available and in any event only those presenting interstate aspects, the
committee decided to select a few medium-size cities as
samples. Those selected were the resort town of Atlantic City,
N. J.; the suburban towns across the river from Cincinnati, namely
Newport and Covington, Ky.; the mining town of Scranton, Pa.; and the
industrial city of Reading, Pa.
These cities were selected not because
they are considered to be more crime ridden than other communities of
their size but because they seemed to be representative samples of many
other communities throughout the country and their comparative proximity
to Washington made investigation more feasible in the light of the
shortness of time and limited funds at the committee's disposal.
The committee's objective was to
ascertain whether there exists in medium-size cities the same pattern of
gambling operations as was found in the large cities.
A detailed description of the
committee's activities with respect to each of these communities appears
further on in this report.
3. Unfinished investigation of
large cities.-At the conclusion of the committee's hearings in
March, there remained a certain amount of unfinished business. In New
York, Irving Sherman, a close friend of Ambassador William O'Dwyer, had
eluded the committee's search.
18 ORGANIZED CRIME IN INTERSTATE COMMERCE
The New York story was not considered complete
without his testimony. Abner Zwillman, former bootlegger and underworld
character of substantial importance, who had avoided appearance before
the committee in March until the last minute, had testified at that
time, but because of the pressure of time the whole story had not been
told. Further investigation of his background, connections, and
influence was considered desirable.
In Miami, Sheriff James Sullivan, who
had been removed from office as the result of the charges made against
him by witnesses appearing before the committee, had been reinstated.
This called for further investigation of the Florida criminal picture.
Seven witnesses from Chicago and Cleveland who had been arrested
pursuant to Senate warrants, had not been heard.
Baltimore, Md., hub of one of the great
horse-racing centers of the world, was one large city which had not been
investigated, but which seemed to require study in view of its proximity
to Washington, D. C., and in view of the committee's previous emphasis
on the Continental News Service which has an important distributing
outlet in that city. The committee decided to include in its program
not only Baltimore but also Anne Arundel County and Prince Georges
County of Maryland.
A summary of the results of these
projects is set forth later in this report.
4. Local effects of national crime
investigation.-It is apparent from a review of the huge mass of
correspondence received by the committee that the publicity given to its
hearings had profound effect upon law enforcement throughout the
country. Everywhere people were rising up to demand that police and
prosecutors exert greater vigilance in tracking down and convicting the
criminals who thrive under the protective umbrella of official
corruption. There arose a national awareness of the fact that gambling,
although perhaps relatively harmless when conducted on an individual
basis, could become, in the hands of monopolistic gangster syndicates
operating across State lines, a cause of general breakdown in law
enforcement leading not only to laxity in all branches of crime
prevention but also to a decline in the quality and integrity of local
It was also apparent that public
interest in law enforcement would continue only so long as a spotlight,
such as is created by the activities of this committee, was directed at
the problem. When the committee goes out of existence, there is serious
danger that public complacency and indifference will take the place of
the present state of vigilance. Obviously, local governments cannot be
expected to turn the spotlight on themselves; the pressure must come
from an outside force that is not subject to improper local influences.
In some cities the problem has been
approached by establishment of crime commissions privately operated and
financed. In others, existing civic organizations have attempted to
place the pressure of vigilance upon public officials.
The committee felt that it should give
attention to a study of this problem with a view to arriving at a
solution that would be helpful from a long-range standpoint. This
report sets forth a description of the Nation-wide effects of the
committee's work and its studies regarding the possibility of avoiding a
return to a state of public apathy toward law enforcement.
ORGANIZED CRIME IN INTERSTATE COMMERCE 19
5. Enactment of corrective
legislation.-The committee considered one of its major
responsibilities to be the preparation and introduction of legislation
in line with the proposals contained in its Third Interim Report, as
well as such additional legislation as its further investigative work
might indicate to be desirable. In spite of the heavy schedule of the
Eighty-second Congress, the committee decided to proceed with its
legislative program and to press for its enactment. Its progress in
this regard is reported below.
VII. THE FINDINGS OF THE COMMITTEE
PRACTICAL RESULTS OF COMMITTEE'S WORK
The basic function of this committee
was to study the interstate aspects of organized crime. However, its
activities had the practical effect of turning a high-powered
searchlight, not only on interstate crime conditions but also its
byproduct, local crime conditions all over the Nation.
Through the medium of television, the
citizens of the country for the first time had it driven home to them
with dramatic and startling impact that top-ranking hoodlums and
underworld leaders were in their midst and were not story-book
Some controversy has arisen by reason
of the committee's decision to permit televising of some of its hearings
but it is undeniable that this modern medium of communication was a
particularly potent factor in arousing the public from its apathy. The
result has been an overwhelming demand for reform in the entire field of
Prosecutors and police have been
rigorously prodded in areas where laxity in law enforcement had become
an accepted thing. In other sectors where vigilance already had been
exercised by prosecuting and policing agencies, still tighter measures
were invoked against the law-breakers.
Underworld figures who had been
regarded as immune from prosecution have found it expedient to take long
vacations from their usual sinister activities. Not a few of them
have been impelled to take indefinite holidays in places far removed
from their usual haunts.
The public reaction to exposure of the
evils to which the committee devoted its attention has been exceedingly
In its Third Interim Report the
committee set forth a series of seven suggestions to State and local
authorities designed to promote improvement in local law-enforcement
conditions. The reaction to these suggestions has been very encouraging
and the committee is tremendously heartened by the splendid display of
interest on the part of State and local authorities in countless areas
from coast to coast.
Although the committee has found that
crime and lawlessness are not confined to the larger cities of the
United States, it is an inescapable fact that the larger cities are
considered to be the underworld strong-holds. It has been gratifying to
the committee to note that in practically every State in the country
where there is a city with a population in excess of 500,000, positive
action has been taken along the lines suggested by the committee.
Privately constituted crime commissions
have either been organized or revitalized in a vast number of
communities and in these sections
20 ORGANIZED CRIME IN INTERSTATE COMMERCE
where such commissions have not been formed,
similar activities are being undertaken by civic organizations having
the same broad objective.
The American Bar Association Commission
on Organized Crime will submit its report to the American Bar
Association at its annual meeting in September. Its work and
recommendations have already been of great assistance to the committee
and to local groups and legislatures. Its report will be awaited with
great interest. In the field of uniform laws and other efforts to
combat crime particularly at the local level, this commission can
continue to be of substantial assistance. The committee hopes greatly
that it will be continued as a permanent commission of the American Bar
Grand jury activity has attained a new
vigor probably unknown heretofore on such a wide scale. Indictments are
pouring forth in ever-increasing numbers as illicit enterprises and
corruption receive closer scrutiny.
Formation of special racket squads has
been reported on all levels, Federal, State, and local. The Bureau of
Internal Revenue has swung into concentrated action with racket squads
operating across the Nation and reports of commendable progress in
investigations of tax evasion by gangsters and racketeers have already
Crime legislation received special
attention in nearly every State legislature which held 1951 sessions.
Eleven States have taken steps to tighten their narcotics laws; eight
have imposed new controls on horse racing and other sports events; five
have introduced new book-making laws. Ten States have revised their
laws to give better control of gambling, and one, Iowa, has put into
effect the Wisconsin-Minnesota type of restriction (providing for
cancellation of all licenses for any public premise where gambling is
allowed), which the committee specifically urged in its Third Interim
Four legislatures have provided new
plans for assuring better centralized control of local law enforcement;
three have tightened and improved grand jury procedures. The uniform
laws drafted in the 1930's to give better control over interstate
activities received new impetus, and were the subject of
legislative action in nine States.
North Carolina and Texas, as the
forty-seventh and forty-eighth States to ratify the Interstate Probation
and Parole Compact., extended that excellent measure throughout the
United States. Nearly a dozen States took steps to create special
legislative or executive agencies to study crime problems.
In California a study committee on
organized crime has been authorized by the Governor and the legislature
and is scheduled to take action within a short time. Wholesome results
of grand jury investigations in southern California have been high
lighted by one grand jury report in Los Angeles which named 60 persons
as defendants in connection with a $7,000,000 bookmaking operation.
Suspected violations of California's
State income-tax laws are being given close study and demands have been
forthcoming for increased penalties for narcotics violations.
Mickey Cohen, the notorious west coast
hoodlum, has been convicted of income-tax evasion and has been sentenced
to 5 years in prison and fined $10,000. The committee, during its
California hearings, spent considerable time in an inquiry into his
ORGANIZED CRIME IN INTERSTATE COMMERCE 21
As a result of the committee's
spotlighting of conditions in New York State, Governor Thomas E. Dewey
named a five-man crime commission that has been active for months.
Saratoga, to which this committee devoted considerable attention during
its New York hearings in March, is the scene of a protracted
investigation which already has produced some indictments and the
resignation of the sheriff.
In New York City a crime commission
organized under the chairmanship of Mr. Spruelle Braden, formerly
Ambassador to Argentina, also is actively functioning. The attorney
general of New York, like this committee, has been making a lengthy
investigation of the narcotics evil and James J. Moran, close friend of
former Mayor William O'Dwyer, was compelled to resign his lifetime
position as water commissioner to which O'Dwyer had appointed him, and
he has been convicted of perjury in connection with his testimony before
this committee. Disclosures before this committee that he had
chauffeured Irving Sherman, friend of O'Dwyer and Frank Costello, from
LaGuardia Airport, forced Deputy Chief Police Inspector Abraham Goldman
into retirement. The police department in New York City has undergone a
drastic overhauling marked by the application for retirement of 505
members of the department to avoid having to comply with a new law
requiring 30 days notice of intent to retire.
In New Jersey, Joseph Doto, alias Joe
Adonis, labeled by this committee as a coleader with Frank Costello of
the east coast underworld, has been sent to prison, along with several
of his associates. Racket squads are operating at the State level. The
liquor licensing authority has the power to revoke licenses where
gambling is permitted, and a padlocking law has been drafted to close
such places permanently.
In New England a privately constituted
crime commission with branches in several States has been organized. In
Maine a 5-month secret probe financed by the Governor's office had
produced 146 indictments in Cumberland County, the State's most populous
areas, as of May 30, 1951. The legislature adopted a new gambling law
making bookmaking, lottery, numbers, and similar offenses felonies
instead of misdemeanors and providing stiffer fines and prison
In Connecticut the State police
commissioner and the Governor took prompt action to prevent gamblers and
racketeers driven from other States from seeking refuge in Connecticut.
The Connecticut Legislature stiffened the penalties for sale of
narcotics to minors, and in New Britain a big-time bookie was fined and
imprisoned for 1 year.
In Delaware the legislature also took
prompt action and enacted measures improving the procedure for search
and seizure, increasing penalties for bookmaking and gambling, and
making jail sentences mandatory for second offenses.
The legislature in Florida adopted six
bills designed to deal more effectively with gambling, including more
stringent regulation of the wire service. Unfortunately, one bill -
which would have outlawed the printing of scratch sheets, wallboards;
and other detailed horse-race information, was vetoed by the Governor.
Increased law-enforcement activity was
reported by the attorney general of Illinois. In that State some 1,200
slot machines were seized and destroyed by the State police and two
large bookmaking establish-
22 ORGANIZED CRIME IN INTERSTATE COMMERCE
ments -- one grossing more than $6,000,000 a year,
were raided and closed. A withdrawal of utility transmission facilities
forced 28 others out of business.
In East St. Louis, Ill., scene of
widespread operations in the past, gambling was dealt a terrific blow.
The police commissioner who had tolerated bad conditions in the past
was soundly defeated when he sought reelection and a new sheriff was
Police activity in Chicago against the
gambling element has proceeded on a constant and sustained basis over a
period of months and the Chicago Crime Commission has won a notable
victory by persuading the legislature to pass a bill permitting grand
juries to stay in .session for 3 months instead of 1.
Crime committees and good government
commissions have been organized in several Indiana cities and slot
machines that formerly were operated openly in a number of sections have
been forced into storage.
In Iowa the legislature passed a law
whereby any firm convicted of operating gambling slot machines, pinball
machines, or punchboards, would automatically be deprived of all of its
licenses to operate any type of business.
The attorney general of Kansas has made
an exhaustive survey of law-enforcement machinery in the State and the
legislature made an appropriation to support the peace officers school
at the University of Kansas, although it killed legislation sponsored by
the attorney general which would have made slot machines, punchboards,
pinball, and other such machines illegal.
Citizens groups previously organized in
northern Kentucky to fight organized gambling and crime continue to be
active and have made their weight felt.
In Louisiana organized gambling in
Jefferson Parish has ceased to exist in accordance with the promise made
to this committee by the sheriff but gambling is reported to be
continuing in St. Bernard Parish. Slot machines which formerly were
found in practically every kind of business establishment in Louisiana
continue to remain in storage. Five contempt actions grew out of the
committee's hearings in New Orleans. Although the case against "Dandy
Kastel, associate of Frank Costello, has been
dismissed, other contempt proceedings have been more successful. John
J. Fogerty, co-owner and operator of the wire service, entered a plea of
nolo contendere and was given a fine while Carlos Marcello, recognized
kingpin of Louisiana racketeering, has been convicted and has received a
sentence of 6 months in prison and a fine of $500. The cases against
Marcello's brother, Anthony, and against Joseph Poretto still remain to
The committee's investigations into
conditions in Maryland drove bookmakers and other gamblers under cover,
and sale of scratch sheets and other materials used by the gambling
element is reported to have become almost nonexistent. A legislative
committee was authorized by the legislature to sot up a committee to
study crime and the State prosecutor has submitted a recommendation for
a new search and seizure law. In Baltimore, the Mayor set up a special
committee to combat the narcotics evil and a special narcotics squad was
established in the police department. The State's attorney secured a
ORGANIZED CRIME IN INTERSTATE COMMERCE 23
for use in narcotics cases. A Baltimore police
lieutenant whose dealings with a known gambler were exposed by this
committee was removed from office. There was a general intensification
of law-enforcement activity throughout the city and the State.
In Michigan, the legislature restored
the so-called "one-man grand jury" and there have been increased
activities in narcotics law enforcements.
The attorney general of Mississippi has
advised that the suggestions of the committee for action on the State
level will be presented to the legislature of that State when it
convenes in 1952.
Reports from Missouri indicate that
crime investigations have been launched by a State senate committee and
by several special grand juries. In Jasper County, a grand jury
investigation led to the resignation of the prosecuting attorney and a
magistrate. The State senate committee looked with favor on the
suggestions of this committee for centralization of responsibility for
enforcement of criminal laws and for a survey of the various State
law-enforcement agencies. The Kansas City Police Department now has a
racket squad whose primary duty is the enforcement of the gambling laws.
In both Kansas City and St. Louis, the authorities and the crime
commissions concentrated their fire on the wire service, and Pioneer
News Service went out of business.
The attorney general of New Hampshire
sought legislation to make prison sentences mandatory in certain types
of gambling cases and backed a uniform narcotics law.
In Ohio, Governor Lausche has launched
a program to strike hard at those guilty of peddling drugs to school
children; and in Cincinnati, the highly favorable reaction to the
exposure of organized crime has revitalized an agreement with the
telephone company for removal of service where gambling operations are
Grand jury investigations have been
reported in several areas in North Dakota and Oregon, and in some
sections of Pennsylvania. In South Carolina, the Charleston Chamber of
Commerce has decided to organize a local crime commission, and
activities against organized criminal elements in Texas are worthy of
considerable praise. Notable among the achievements in Texas was the
conference called by the attorney general in March which was attended by
district and county attorneys from all parts of the State. The
legislature furnished commendable cooperation by enacting practically
all of the legislation recommended by the group, which included bills
outlawing possession of slot machines, punchboards, and policy games.
The attorney general sought and secured injunctions against both the
telegraph and telephone companies, prohibiting gambling information from
being disseminated over their wires. Grand juries have been active and
a crime investigating committee of the legislature has been functioning.
Citizens in many parts of Texas have voluntarily begun the formation of
local crime commissions.
The National Junior Chamber of Commerce
at its annual meeting praised this committee for its accomplishments and
adopted the study of organized crime as its major project for the
The committee is proud of the part it
has played in helping to bring about this fine record of accomplishment
on the local level, although it realizes that there still remains a
great deal to be done.
24 ORGANIZED CRIME IN INTERSTATE COMMERCE
B. ILLEGAL NARCOTIC DRUGS
The illegal traffic in narcotic drugs
exemplifies organized crime at its devastating worst. It represents one
of the great tragedies of our times, especially when it preys upon young
people who are ignorant of drug addiction not only upon themselves as
individuals but also upon the family and society as a whole. .
Addiction resulting from an ignorant or
depraved attempt to obtain temporary pleasure is an inexcusable tragedy.
Drug addiction is a form of contagious disease with a high recurrence.
Anyone who starts abusing a drug for whatever reason is immediately
exposed to a serious danger of becoming addicted. Addiction occurs in a
very short time and once it occurs there is no going back. The addict's
whole life changes from one of usefulness and normalcy to one of
suffering and degradation and in many cases, eventually to crime. One
of the great contributions that could be made to the welfare of the
young people of today would be to bring home to them the cold fact that
narcotic drugs are to be avoided like the plague.
Against this backdrop of tragedy, the
picture of the dope peddler promoting drug addiction in order to create
new customers is nothing short of revolting.
A parade of witnesses representing
every sector of the narcotics problem came before the committee.
Physicians explained the properties of drugs, the course of addiction,
the clinical processes of its treatment, and the psychological
after-effects. Citizens of aroused communities described alarming local
situations and told of efforts to stem the evil of narcotics abuse.
Heartbroken parents described the tragedies that had befallen their
children through drug addiction. Enforcement agents bared the workings
of the international network through which illegal drugs move and the
fabulous amounts of money involved in the traffic.
The committee traveled to the Maryland
House of Correction, the Woman's Prison of Maryland near Baltimore, and
to the United States Public Health Service Hospital, Lexington, Ky., to
hear the story first-hand from prisoners serving time for narcotics
violations and from patients under treatment for addiction. The
professional nonaddict peddlers told of giving "for free" enough heroin
to get new customers "hooked," i.e., dependent on drugs; and of
employing addicts as "testers" to judge the quality of the merchandise
at the wholesale level. Nervous teen-agers, still jittery following
withdrawal of narcotics, spoke haltingly of the confusion and the futile
misery of the drug habit. Some had suffered enough for a dozen lives,
yet they were not old enough to vote.
From the testimony of these witnesses
and from other data submitted for study, the committee formulated the
observations that comprise the body of this report on the illegal
narcotics market and. the extensive many-sided problems it presents.
(a) The drugs of addiction
The drugs usually abused to the point
of addiction are grouped as stimulants and depressants, according to the
effects they produce on the behavior of the user.
Of the stimulants, the most common and
most dangerous is cocaine, derived from the leaves of the coca plant
growing in South America
ORGANIZED CRIME IN INTERSTATE COMMERCE 25
and Java. In large doses, cocaine incites a
transient reaction, followed by extreme nervous discomfort,
irritability, and paranoid delusions that make the user a menace to
those around him. Among the other stimulant drugs are benzedrine,
dexedrine, and mescaline, a drug used by the Indians in the southwestern
United States to "help them see God."
The depressants, on the other hand,
relieve tension and nervous disturbance, producing a false and temporary
feeling of well-being. They are used medically as pain relievers
(called "analgesics") and many of them are necessary and extremely
valuable for this purpose. They include opium and its derivatives such
as morphine, heroin, dilaudid, codein, and metapon, to mention a few.
They also include synthetic pain relievers such as demerol, methadon,
and the new levo-iso-methadon. The depressants also include alcohol and
marijuana. The bromides and barbiturates are classed as hypnotic drugs.
Frequently addicts take a depressant
and a stimulant simultaneously, the depressant serving as an antidote
for the dangerous and unpleasant effects of the stimulant. Known as a
"speedball," one of these concoctions is a mixture of heroin and
cocaine. The former relieves tension and anxiety; the latter furnishes
the concurrent feeling of well-being and subdues fatigue. Some addicts
engage in the viciously dangerous practice of spending long hours
balancing the exciting effects of the cocaine with the restful euphoria
of the heroin.
According to Federal law, the
habit-forming drugs, those for which the Government provides addiction
treatment facilities, are cocaine, coca leaves, codein, dicodid, hycodan,
dilaudid, heroin, marijuana, laudanum, demerol, isonipecaine, methadon,
metapon, morphine, opium, pantopon, paregoric, mescaline, and other
drugs that may be designated by the President. These statutes do not
encompass alcohol, the barbiturates, or the bromides.
(b) Laws relating to narcotic drugs
Recognizing the profound seriousness of
the rapidly growing drug-addiction problem, Congress passed in 1914 the
first comprehensive Federal narcotics law -- the Harrison Act. Under the
provisions of this law, commerce in medicinal and other legitimate
narcotics was legalized and controlled under the Federal taxing power.
By the same mechanism, illicit traffic in opium and its derivatives and
in the coca leaf and its derivatives (cocaine) was outlawed.
The Miller-Jones Act, passed in 1922,
established a system of import and export permits and restricted the
import of raw narcotic material to medical needs. By an amendment
adopted in 1924 the dangerous and currently popular heroin was forbidden
entrance to this country as was also opium for use in manufacturing
The Opium Poppy Act of 1942 insures
against the growing of opium poppies in the United States.
Controls on the traffic in marijuana
were imposed by the Marijuana Tax Act of August 2, 1937. It provides an
occupational tax on all persons legally permitted to produce, sell or
deal in marijuana. There is also a heavy transfer levy when
unauthorized individuals are involved in a marijuana transaction.
On the state and municipal levels,
uniform laws and ordinances help to control the traffic in narcotics
within their jurisdictions. Forty-two states have enacted the Uniform
Narcotic Drug Act and
26 ORGANIZED CRIME IN INTERSTATE COMMERCE
two others have the equivalent. The only states
which do not have restrictive legislation are Kansas, Massachusetts, New
Hampshire and Washington. Recent enactments in Illinois and New York
have stiffened the penalties for sales to minors.
(c) Cause and nature of addiction
The crux of the narcotics problem lies
not in the drugs themselves but in the persons who abuse them. Addiction
involves taking drugs in excessive quantities.
Some individuals by reason of their
physical and psychological make-up can become addicted to drugs more
easily than others. Persons easily addicted are referred to as
"addiction prone." There are some individuals who are relatively immune
to addiction. The difficulty is that no one knows for certain whether
he is addiction prone until after he has become addicted and then it is
The most a victim can expect from
treatment is to be taken off the drug and furnished psychological aid to
remain off it. Medicines given during treatment do no more than relieve
the tortures of withdrawal. No one, however strong his psychological
framework, should run the risk of ruining his life and the lives of his
friends and family by using any narcotic drug except under the strictest
medical control. Prescribed in proper amounts, narcotic drugs are
important aid in the practice of medicine and serve the humanitarian
purpose of helping to alleviate the pain of the suffering. They should
not be denied those who need them merely because of their addicting
qualities. Until a nonaddicting pain reliever is discovered, physicians
must use narcotics. Those who divert the stream of legitimate narcotics
for their own selfish gain, actually rob the sick and the injured.
Although the therapeutic use of opium
traces back some 6,000 years, nonmedical addiction dates only to the
latter part of the nineteenth century when the "social use" of opium for
its euphoric effect became known in India and China. Many of the
cure-all patent medicines so popular in the United States at the turn of
the century had opium as their principal ingredient. These preparations
were later banned from public sale by the Federal narcotics control
Most habitual users of narcotics
have psychoneuroses and personality disorders of varying degree,
ranging from those of the criminal psychopath to the immature thrill
seeker who craves extraordinary excitement. Addiction prones experience
difficulty adapting themselves to the ordinary pressures and tensions of
living. They may be extremely dependent or unusually hostile, incapable
of entering into normal human relationships. In their discomfort, they
frequently suffer obscure symptoms of indeterminable origin.
The average human being has normal
defenses with which to cope with life's disappointments, frustrations,
and conflict. But the potential addict lacks this natural ability to
battle successfully against emotional problems and the anxieties they
engender. If he looks to narcotics to ease his pain, subdue his
disturbance, and escape his problems, he may find in drugs the
substitute for his weak defenses. The feeling that "all is well" gives
him a paper crutch of power and security and he is on the way to a heavy
drug habit that only a life of crime can maintain. This is the weak,
irresponsible creature on whom the parasitic illicit narcotic trader
feeds and grows rich.
The course of addiction is easily
illustrated by the testimony of individuals who were addicted to heroin.
As one 17-year-old boy
ORGANIZED CRIME IN INTERSTATE COMMERCE 27
described it, he was associating with boys older
than who were using drugs. They urged him to try it, telling him he
would get a kick out of it. They assured him he would not become
"hooked" if he merely "sniffed" or "snorted" it. He tried snorting and
did not like it. Later he tried again and did not mind it so much.
Then the older boys explained to him that it was cheaper to take heroin
in the veins because the effect was greater with a smaller quantity. So
he tried "mainlining," that is, shooting the drug directly into his
veins with a hypodermic needle. He tried this a few times and one
morning he awoke feeling very sick. He took a shot arid felt well
again. From then on lie was "hooked."
The boy had developed a physical
dependency on the drug and had to keep taking it in ever increasing
quantities to avoid being sick. He no longer took it for pleasure, he
had to have it. He became irregular and inefficient at his job and
finally had to quit. Finding drugs became a full-time job. For money,
he borrowed, stole and forged Government checks. He said there was
nothing he would not have done for drugs. He ended up in a Federal
prison where he was taken off the drug and allowed to go through the
painful suffering of withdrawal.
This is not an isolated case. The same
story is told by hundreds of addicts who blame their predicament on bad
company and inadequate surroundings. Without exception, they say that
the addict's life is one of perpetual misery and if they had realized in
advance what they were headed for, they would have avoided drugs like a
(d) Use of drugs by young people
In the past 24 months, America has been
jolted to its foundations by the discovery that youngsters, especially
in the larger cities, are using narcotic drugs, many to the point of
addiction. New York, Chicago, Baltimore, and Washington, D. C., saw big
increases in the number of under-age drug users coming to the attention
of the police. In a large number of cases, these young people were
engaging in crime for the sole purpose of supporting their drug habit.
The United States Public Health Service
Hospital at Lexington, Ky., the larger of the two Federal hospitals
devoted chiefly to treating addicts, compared the year 1946 when
patients below the age of 21 represented 3 percent of the patients in
the hospital, with the early part of 1951 when, with a higher total
patient count, the proportion of young patients had climbed to 18
percent. Nearly three-quarters of these youngsters had no record of
criminality or delinquency prior to addiction. Testimony from an
experienced social worker on the situation in New York City revealed
that the narcotics problem cuts across all social and economic lines. A
young negro addict from Chicago said, "There is no segregation in the
use of dope."
The committee interviewed many of these
youngsters, among them a 19-year-old boy who quit school, throwing away
a full scholarship in an eastern university, because of narcotics. To
support his habit, he stole Government pension checks. A midwestern
college freshman said he dropped out in the middle of his first semester
and shortly thereafter was arrested for stealing money from the mails,
all because of dope. Another collegian revealed that he and his friends
grew marijuana in a yard and dried it in the oven of their apartment
28 ORGANIZED CRIME IN INTERSTATE COMMERCE
before rolling it into cigarettes. Girls in their
late teens with narcotic addiction lasting several years, admitted that
they had resorted to prostitution rather than endure the horror of going
While many of these boys and girls do
not evidence the character and personality disorders of the veteran
addict, they have proven themselves susceptible to drugs, at least
enough to continue taking narcotics to the point of becoming "hooked."
Representing the carefree, thrill-seeking youth, they told the
committee that they started on narcotics or "junk" as they sometimes
call it, out of curiosity, because their friends were doing it and
because they didn't want to be considered "square" or unsophisticated.
Youngsters place great value on
"belonging" in their group. They resent the rejection that would go
with being labeled "chicken" by their associates in the playground,
ice-cream parlor, or on the street corner. So they tend to follow the
leader who unfortunately turns out to be a hoodlum or emotionally
twisted "bebopper", bent on introducing them to the pseudo pleasures of
smoking marijuana and shooting heroin.
Mr. James R. Dumpson, consultant on
correction and delinquency of New York's welfare council, described the
situation in east Harlem as follows:
workers dealing with gangs all report that the rate of marijuana usage
is at least 50 percent with this being a very conservative figure in
their estimation. These include youths 13 years of age, and you have
many indications that the age of this type of addiction is lowering
steadily. In fact, one minister reported that several 9-year-old boys
had been approached by peddlers attempting to have them take the drug *
social athletic club in one of the blocks with a membership of about 50
boys, at least 18 to 20 were known to be regular heroin users.
Dr. Lois Higgins, director of the crime
prevention bureau in Chicago, cited statistics on the growth of the
narcotic problem in her home city. In 1948, 136 out of 738 arrests were
under 21. The following year, under-age persons accounted for 203 of
2,230 narcotic arrests. Of the total of 4,437 narcotic arrests in 1950,
1,107 were under 21. And for the period January 1 to late June 1951,
Dr. Higgins gave a figure of 989 under-age narcotic arrests.
The path to addiction ran practically
the same throughout the testimony taken from young addicts. In their
own vernacular, Mr. Dumpson put it this way: "They say they go from
sneaky Pete to pot to horse to banging." In ordinary language this
describes the popular sequence --drinking wine, smoking "reefers" or
marijuana cigarettes (sometimes starting at the age of 13 or 14) then
sniffing or "snorting" heroin, finally injecting it directly into the
Cutting across the thousands of words
of testimony, the committee concludes that these youngsters are mildly
neurotic. Addiction among our youth is a problem the seriousness of
which cannot be under-estimated especially in the world's present state
of instability. Many adolescents are mildly neurotic and therefore
somewhat addiction prone. Under present conditions, even post
adolescent young people are under unnatural strain. Boys of draft age
and the friends who surround them feel great uncertainty as to what the
future holds for them. Their lives are engulfed in an atmosphere of
Much was said in the testimony as to
the role of the parents. The love and affection of intelligent parents
does much to give a child the feeling of security that will keep him
away from drugs. Where a
ORGANIZED CRIME IN INTERSTATE COMMERCE 29
sense of security cannot be attained, supervision
of the child's activities and immediate attention to any evidence of
drug use is essential.
Medical authorities believe that most
of the young people who have been exposed to drugs are sufficiently
intelligent to be capable of complete rehabilitation if the problem is
tackled promptly. Without exception the addicts who testified stressed
the belief that if they had known the horrors of drug addiction, the
suffering, the personal degradation and the crime, to say nothing of the
discomfort and bewildering perplexity of treatment for addiction, they
never would have played with drugs. They have learned that "It can't
happen to me" is a cruel hoax.
The committee believes that drug
addiction should be treated as a contagious disease and that its
sufferers should be treated as patients, not as criminals. It also
believes that like any disease it can be attacked with greater vigor if
brought out in the open and discussed in a forthright manner. If by
education the young people of the Nation can be made aware of the true
character of narcotic drugs and the dangers of addiction, they will
become strong fighters in the campaign against the evil.
(e) Methods of illegal importation and sale
The narcotic drugs lend themselves
conveniently to illicit traffic. A fortune in narcotics can be carried
in one pocket. Easy to handle, transport, and conceal, drugs slip
quickly through the underworld's serpentine labyrinth, making it
extremely difficult for enforcement officers to track down the carriers.
Narcotics have a ready market of
insatiable consumers who keep coming back for more, often several times
a day. The amount an addict will use depends solely on the amount he
can get. He will "shoot" all he has available.
Narcotics move in a seller's market
where the customer is always wrong. Dope peddlers charge all the money
in the buyer's pocket, keeping him financially, as well as physically,
enslaved. Witnesses told the committee how in Baltimore the identical
quality and quantity of heroin sold for three times the amount charged
in Washington. Drug sellers swindle their customers, adulterating the
merchandise to almost nothing, heedless of the suffering they inflict on
their victims. An addict who "squeals" to the authorities is likely to
get a "hot shot" (a highly concentrated or poisoned dosage) the next
time he comes to the peddler for his drug. The helpless addict
struggles along from day to day a captive of the greedy criminals who
have him hopelessly trapped.
Most American addicts, including
practically all of the younger group, use heroin, the drug banned by law
from the United States since 1924. Since heroin is the drug peddled on
street corners through organized crime syndicates, its traffic presents
the most serious aspect of the narcotic problem. Morphine and the
opiate synthetics are more commonly diverted from legitimate channels,
often by forging prescriptions and stealing from drugstores. The
committee heard several addicted nurses and pharmacists tell how they
obtained medicinal drugs in this manner.
Heroin is a fine white powder
legitimately manufactured for medical use in several countries including
Italy, Turkey, and China. How-
30 ORGANIZED CRIME IN INTERSTATE COMMERCE
ever, through illegal dealings, a substantial part
of this legal output, after it leaves the factory, finds its way to the
United States, concealed on the persons and in the luggage of crewmen
and passengers coming in from abroad.
In Italy, a kilogram (a fraction over 2
pounds) of heroin sells on the illicit market for from $1,000 to $1,500.
Transported overseas and landed safely in the United States, its value
leaps to $6,000 to $10,000. Once inside this country, it is divided and
diluted with milk sugar, traveling many miles and the price doubling
each time it changes hands. As the price soars the quality dwindles, so
that the final concoction as it reaches the hands of the addict in
capsule form consists of not over 2 percent pure heroin. It is handled
under the crudest of conditions with no attention being given to
cleanliness or antisepsis and when the addict uses it, he has no idea
how much poison, contamination, or germ matter he is shooting into his
More than a million of these capsules
are made from a kilo. Thus, along the route from the back door of the
factory in Italy to addicts' blood, the illicit heroin pays a dividend
of at least $1,000 for every dollar invested.
Some peddlers deal in 1-ounce
quantities which they can buy for as little as $50 to $100 for an ounce,
depending on how good their "connection" is. On American soil, this
ounce is worth over $200 and by the time it is watered down and parceled
out to other peddlers, it may bring as much as $5,000.
Experienced enforcement officers
believe that the present influx of heroin from abroad is managed by the
Mafia with Charles "Lucky" Luciano, notorious gangster, vice king, and
racketeer deported convict, now resident in Italy, as the operating
head. His chief lieutenant is believed to be an Italian resident named
Joseph Pici and one of his principal contacts in the United States is
believed to be Joseph Biondo, former small-time New York politician who
visited Luciano a few months ago and is now a fugitive.
World-wide in scope, the Mafia is
believed to derive the major source of its income from the distribution
and smuggling of narcotics. An undercover agent of the Treasury
Department's Bureau of Narcotics testified at length before the
committee just after his return from an extended assignment in Italy.
Asked whether Luciano is the kingpin of the Mafia, the agent responded
that if "Lucky" isn't the kingpin, "he is one of the royal family," that
he receives large sums of money from American gangsters and that he
certainly wields influence in Mafia policy matters. To the question "Is
Lucky Luciano the kingpin of the narcotics traffic in the United
States?" he answered, "The United States and Italy." The agent further
revealed that in Mafia circles, Luciano enjoys the honorable title
"Don," a symbol of the respect and esteem the membership holds for him.
In sworn statements made by Luciano to
the Italian police, he claims to be a poor man. He says he brought with
him from America about $22,500 and since coming to Italy he has received
from time to time other sums of money averaging a few thousands of
dollars each as gifts from old friends in the United States. Since his
present residence in Italy, which dates from 1947, Luciano was
interested in a pastry shop in Palermo, but he claims that after 2 1/2
years the business
ORGANIZED CRIME IN INTERSTATE COMMERCE 31
failed and he lost 7,500,000 lire. He says he has
no other commercial activities in Italy, although he plays the horses
frequently. He said, "All of the money which I brought to Italy and
that which I have received subsequently from my friends in America, I
have spent about 500,000 lire a month, I expect, which comes from the
United States and not from activities in Italy, because all of the
business affairs I have tried to conduct in Italy have come to a bad
In Italy, Luciano is close to Nicolai
Gentile, well known in New York rackets, who while under indictment for
a narcotics charge, jumped bail and fled to Italy in the early 1940's.
Gentile also enjoys the Mafia title of "Don". Joseph Pici, Luciano's
narcotics lieutenant, is currently a codefendant with Luciano in a
narcotics investigation being conducted by the Italian Government. Pici
previously had lived in the United States, but was deported on a white
slave conviction. Several years ago, he smuggled himself into the
United States, bringing with him 15 kilos of heroin which he delivered
to the Kansas City Mafia organization. Pici's current whereabouts are
Other deportees now in Italy who are
believed to be associated with Luciano include Ralph Liguori and Gaetano
Chiofalo, alias Charlie Young.
A narcotics agent testifying before the
committee described a heroin transaction and the role played in it by
the Mafia and Luciano's henchmen. He told of 28-year-old Frank Callace
of the One Hundred Seventh Street mob in New York, sent to Italy in
April of 1951 to pick up some heroin. Callace first contacted his uncle
of the same name who had previously fled the United States because he
was wanted by the FBI. The uncle and nephew, both of whom are
considered members of the Mafia, met in Palermo and proceeded to Milan
where they met in a hotel to talk quantity and price of heroin. They
checked out of the hotel shortly after returning to Palermo. Then they
received a telephone call from Pici, Luciano's lieutenant, and
backtracked to Milan. The younger Callace was arrested in the Rome
airport en route to Palermo with a suitcase containing three kilos of
heroin. The police had been tipped off by an anonymous telephone call.
Internal circulation.-- Mystery
and secrecy enshrouds the movement of illegal narcotics within the
United States. The innocent looking white powder travels hundreds of
miles from dockside to consumer, usually carried by hand.
Small peddlers make periodic trips to
their "connections" (mostly in other localities) buying just an ounce or
two at a time in order not to keep a supply on hand. One witness, a
very small-time peddler, told of making evening calls on his
"connection" in another city. After the money passed, the "connection"
left and would not return until the following morning with the order.
So, in this case, the deal included a night's lodging.
On the high level, the "big shot" of
course never enters the picture visibly; except perhaps to be seen
talking to his boys. He makes no deliveries and accepts no money direct
from a purchaser. He merely finances the deal, reaping the lion's share
of the profits. The assistants to the big shot after seeing the
customer's money and assuring themselves of his intent to buy, usually
go by air to the source (usually in New York) and bring back enough
stock to fill the order. Seldom
32 ORGANIZED CRIME IN INTERSTATE COMMERCE
are large stores cached in the city from which
distribution is being made.
A narcotics agent related to the
committee a fascinating story of undercover work in 1950. Posing as a
peddler, he helped track down several top operators of a major narcotics
syndicate of which San Antonio, Detroit, Chicago, and New York were the
key cities. The agent gained the confidence of a peddler named Robert
Kimball, the Texas link of the chain. Following arrest for illegal sale
of narcotics, Kimball expressed willingness to cooperate with the
Narcotics Bureau in bringing his associates to justice. He and the
agent purported to become partners.
Kimball's practice had been to import
marijuana from Mexico and sell it to connections in Detroit, Chicago,
and New York, who in turn supplied him with heroin for outlets in Fort
Worth, Dallas, Galveston, New Orleans, San Diego, Hollywood, and San
Francisco. In an effort to buy a kilo, Kimball and the agent made
nearly a dozen trips to the syndicate's headquarter cities, making ounce
purchases along the way. The big shipment eluded them for weeks, but
meanwhile they met other eager buyers with pipelines to Cleveland,
Topeka, Kansas City. In the course of their travels, they were offered
an "in" to an illegal gold transaction, but the profit wasn't big enough
for them to accept. Early in December, Kimball was murdered in Texas by
a former night club partner. From that point, the agent carried on
alone, acting as the sole Texas contact for the syndicate. Late in
December in a New York hotel room, he succeeded in arresting Anthony
Pisciotta of the high echelon of the syndicate as Pisciotta was making
delivery of two kilos of heroin. A half dozen other members were
arrested simultaneously. The "master mind" of the syndicate is still
free and one of the other leaders known as "Fat Sam" escaped to Florida
where he is believed to be in hiding now.
Since the time of that testimony,
newspapers all over the country have been filled with stories of further
major arrests connecting the illegal dope trade with organized crime,
national and international.
The July 28 papers featured the
breaking up of a $30,000,000 combination narcotics and counterfeiting
ring. This group made and sold bogus American currency or goof money
with which they bought illegal drugs. A tie-up between this group on
one side and the Mafia-Luciano mob and a French underworld mob on the
other, is suspected. It is believed that 50 pounds of pure heroin were
smuggled into the United States each month by agents of the ring.
On August 1, 1951, narcotics agents and
the New York City police closed in on Irving Wexler, more familiarly
known as Waxey Gordon, former beer baron and wartime black marketeer,
now turned dope dealer. The committee had known of this case but had
stayed away from it to give the Narcotics Bureau a free hand. Waxey was
caught with 2 pounds of heroin reportedly destined for coast-to-coast
trade. It is believed that his market centered on the west coast and
that he was in the process of expanding eastward. Whether his market
linked with or worked in competition to the Luciano enterprises is not
known to the committee.
The press painted a dramatic picture of
the underworld big shot, now a fourth offender, kneeling on a sidewalk
of New York, begging the arresting officer, "Please kill me, shoot me.
I'm an old man and I'm through. Don't take me in for junk. * * *"
ORGANIZED CRIME IN INTERSTATE COMMERCE
his minions offered the policemen $25,000 to let
"I[...]" go. Gordon and his associates were held for a total of $500,000
On August 4, 1951, the story of an
international combine employing couriers to carry narcotics of Italian
origin on airflights from New York to Canada, broke with the arrest of
five men carrying $20,000 worth of heroin. Thought to be the biggest
narcotics syndicate in Canadian history, this group is allegedly linked
with the international cartel headed by Luciano.
It is of interest to observe that only
two or three of the characters involved in all of these dope empires,
were themselves addicts.
(f) Possible remedies
The committee has come to the
conclusion that illegal narcotic drugs constitute an evil of great
magnitude. The problem calls for vigorous and effective action at all
levels of our social and governmental system.
The problem should be attacked from
many different angles with the hope that the combined effect will be to
stop the spread of illegal drug use and perhaps eventually reduce it to
controllable proportions. The committee suggests the following
(i) Sociological approach.--The
deep-seated sense of personal insecurity which causes an individual to
be addiction-prone may be the result of any one or more of a number of
complex forces. Personal tragedy, unidentified childhood frustrations,
family discord, poverty, loss of employment, and similar factors
contribute to this. Perhaps the congenital character of the
individual's nervous system is as important a factor as any. The addict
seldom feels that he is to blame for his predicament and in large
measure he is right. His affliction is caused by forces he cannot
understand or control. He is sick and should be treated as such.
Obviously any action which has the
effect of improving living conditions, strengthening the home
environment and generally contributing to the security of the individual
will help eliminate the causes of drug addiction.
(ii) Education.-The committee
does not subscribe to the theory that public discussion of drug
addiction should be avoided to protect nonaddicts from being tempted to
try drugs. As in the case of venereal diseases, the attack upon which
has been greatly enhanced by public knowledge, the committee believes
that much will be gained by a carefully devised program of education
designed to make the people of the Nation aware of the true facts
regarding the excessive use of narcotic drugs.
Most of the objection to public
discussion is based upon a danger which the committee believes can be
avoided in a well-conceived educational program. There is no doubt that
a drug user before he is actually "hooked" experiences a temporary
pleasurable sensation and it is this sensation that might tempt others
to try it. Improved emphasis on this sensation should be avoided and
the true facts with regard to it should be brought out.
Actually, the sensation is extremely
short-lived and is ordinarily followed by addiction within a period of
from 10 days to 3 weeks of repeated use. Once addiction sets in, the
victim cannot go back and from then on he takes the drug not for
pleasure but for the sole purpose of avoiding the dread sickness caused
by his physical need for the drug.
34 ORGANIZED CRIME IN INTERSTATE COMMERCE
The committee believes that education
should start in the schools and social organizations of the country and
should be carried from there to the home. The basic responsibility for
such a program rests on the shoulders of the country's educational
leaders who should carry it forward at the local level.
facilities.--Medical science has not yet found a specific for the
cure for drug addiction. Much has been accomplished in this direction
at the United States Public Health Service Hospitals at Lexington, Ky.,
and Fort Worth, Tex., but the only available treatment is to take the
addict gradually off the drug and thereafter, through psychiatric
treatment, to attempt to help him overcome the deep-seated weaknesses
that contributed to his illness.
The Lexington and Fort Worth hospitals
are minimum-secured institution with modern hospital facilities to treat
narcotic addiction and any other chronic or addict condition from which
the patients may be suffering. Although these hospitals were
established to receive Federal prisoners who are also addicted to drugs,
they also admit nonprisoner addicts as voluntary patients. There are no
separate accommodations for prisoner and nonprisoner patients. These
hospitals are excellently managed under the supervision of Dr. Victor H.
Vogel and Dr. Richard B. Holt, medical officer in charge at Lexington
and Fort Worth, respectively.
Facilities for the treatment of
addiction at State and community levels are extremely limited. The
establishment of local clinical resources, at least for putting new drug
users under immediate treatment, may preclude the tragedy of addiction
in many cases.
Perhaps the greatest weakness in the
field of treatment lies in the lack of facilities for following up
patients after they leave the hospital.
Actual rehabilitation of the addict
covers a span of years, not merely the 4 to 6 months spent in the
controlled hospital environment. Supervision of the patient is
necessary for a long period beyond the direct treatment phase. It is
wasteful to spend millions of dollars each year caring for these addicts
if they are to go back among people who are abusing drugs and thus be
exposed to the temptation of starting again.
The United States Public Health Service
has prepared and is hoping to undertake a program of local follow-up on
a trial basis in New York or Chicago or both. The plan is to send teams
of social workers and psychiatrists to those cities to maintain contact
with former patients and assist them in using community facilities to
help them rebuild their lives.
Local communities over the Nation can
make real contributions toward insuring the rehabilitation of addicts by
providing adequate mental health services where they may seek and
receive understanding and intelligent advice. Too often the former
addict will seek the answer to his dilemma in narcotics, lacking a
secure source of counsel. One worthwhile utilization of community funds
might consist of providing transportation for addicts to proper
(iv) Increased penalties.--Bills
are now pending in Congress, two sponsored by members of this committee,
proposing sharp increases in the fines and prison sentences that may be
imposed for violation of the Federal narcotics laws. Efforts should be
made to enact legislation along these lines.
ORGANIZED CRIME IN INTERSTATE COMMERCE 35
The committee believes that casting the
shadow of steep penalties over the path of the dope peddler will do much
to deter him. A criminal bent upon performing an illegal act always
weighs the risks against the rewards. At present the financial reward
to the peddler seems to outbalance the fear of a 1- or 2-year prison
term with a fair chance of having his sentence suspended.
In this connection, much can be
accomplished by making judges aware of the seriousness of the crime of
drug peddling. A judge passing upon an individual case is often tempted
to be lenient, but if he appreciates the true relationship between the
case before him and the over-all aspects of the drug evil, he will be
more likely to mete out the punishment that is deserved.
(v) Increased enforcement.--Old-time
addicts who have spent their lives struggling to escape from the drug
habit say that the best solution to the problem is to kill the source of
supply. They say that as long as the drug is available to them, they
are not able to resist it.
The Narcotics Bureau of the Treasury
Department has a staff of 180 skillful agents serving long hours in what
is probably the most hazardous type of enforcement work. Under present
conditions this number of men is discouragingly small. Mr. Harry J.
Anslinger, head of the Bureau, is convinced that with twice the force he
could stamp out the peddling of narcotic drugs. The committee believes
he is right.
(vi) Port and border control.--The
committee was impressed with the futility of attempting to stop the flow
of heroin through customs search at the borders. The drug is so easy to
conceal that finding it on the person of a passenger or sailor or in the
many hiding places aboard ship is virtually impossible. The type of
search that is required to find hidden drugs is often obnoxious to the
person being searched and, even when done on a sampling basis, it gives
rise to some resentment.
However, the committee feels that the
present procedures of the Customs Bureau in this regard should be
continued as a deterrent to drug smuggling.
It appears that one of the principal
methods of smuggling heroin into the country is on the persons of
sailors, especially those on ships of foreign registry. It is believed
that this accounts for the present flow of drugs from abroad into the
port of New York. The committee believes that customs inspection should
be directed particularly at these ships and their crews, at least until
the present influx has been checked.
American sailors and longshoremen for
the most part belong to unions which have strict rules regarding the
smuggling of drugs. A man convicted of a narcotics violation is subject
to discharge from the union and the union leaders who testified before
the committee said that these rules are strictly enforced. They also
testified that drug smuggling is extremely repugnant to most American
seamen and longshoremen and that a man known to be smuggling is likely
to be forced off the job by his fellow workers.
There appears to be one step that the
Coast Guard could take that would be helpful in the case of seamen. As
long as a seaman has his sailing papers, it is difficult for the unions
to keep him from working. If a seaman is convicted of a narcotics
violation which occurred aboard ship, the Coast Guard will lift his
papers. Apparently, this is not true if the violation occurred on.
36 ORGANIZED CRIME IN INTERSTATE COMMERCE
In view of the serious character of a
narcotics violation, irrespective of whether it occurs at sea or on
shore, and considering the fact that seamen are believed to be an
important source of importation, the committee believes that a man
convicted of this crime is not fit to hold sailing papers. It believes
that the Coast Guard should extend its practice in this regard to men
convicted of narcotics-law violations occurring on land.
Another step that the committee
believes would help in the enforcement of union rules would be for the
Narcotics Bureau to inform both the appropriate national unions and the
Coast Guard of all narcotic convictions involving seamen and
longshoremen. In the case of the unions, this information could .be
passed along to the locals in the regular publications.
(vii) Revised court procedures.--Early
in April of 1951, Chicago's chief justice of the municipal court, Edward
S. Scheffler, issued an order designating a specific courtroom for the
special purpose of hearing all cases in which narcotics are in any way
involved. Special prosecutors were assigned to the narcotics court, the
first of its kind to be created, by the State's attorney for Cook County
and the corporation counsel of the city of Chicago. In addition, the
Chicago Board of Health appointed a full-time psychiatrist to serve this
court. There are also present a social worker and representatives of
the Crime Prevention Bureau. This appears to be an experiment worth
watching and studying with a view to putting similar arrangements into
effect in other jurisdictions. It is a step in the direction of
treating the addict, as a patient rather than a criminal.
(viii) Mexican border.--Information
has reached the committee to the effect that in towns across the Mexican
border where Americans may come and go without restriction, a dangerous
situation has arisen involving narcotic drugs. Many youngsters are
visiting these towns for the sole purpose of obtaining drugs, including
marijuana and heroin, which can be purchased on the street.
Restrictions on narcotic drugs under our law are of little benefit to
the citizens of border communities if their children are able and
perhaps encouraged to cross freely into Mexico where the drugs are
The Committee believes that the
appropriate agencies of the Federal Government should study this problem
with a view to finding a solution. The answer may lie in prohibiting
minors to cross the border when not accompanied by their parents.
(ix) World-wide prohibition of opium
poppy growing.--Opium, which is the raw material from which heroin,
morphine, and similar drugs are manufactured, is produced in China,
India, Iran, and Turkey. Experience has shown that neither the United
Nations nor the nations themselves are able to control the amount of
opium poppy plants grown. They grow about 40 times the amount required
to satisfy medical needs of the world.
Most of the countries have been wholly
cooperative, although there is some doubt as to the attitude of
Communist China. When the United States representative on the
Commission on Narcotic Drugs of the United Nations called attention to
the large heroin manufacture in Communist China, the Russian delegate
tried unsuccessfully to have his remarks stricken from the record.
Nevertheless, experience has shown that
the manufacture of opiates, as distinguished from the growing of opium
poppy plants, can
ORGANIZED CRIME IN INTERSTATE COMMERCE 37
be controlled within reasonable limits.
Accordingly, a great step forward would be accomplished if the growing
of these plants could be completely prohibited.
This, of course, is feasible only if
there arc adequate synthetic substitutes for the medicinal opiates. In
this connection, the committee heard the testimony of Dr. Henry K.
Beecher, of Harvard University, head of the department of anaesthesia of
Massachusetts General Hospital. He told the committee that methadon and
levoisomethadon, newly developed products, are not only adequate
substitutes, but in many ways superior to morphine as pain-relieving
drugs. He said, "I shouldn't be worried at all if there were no
morphine." Dr. Beecher said that adequate synthetic substitutes for
codeine have not yet been developed but he considers codeine to be a
minor problem compared with morphine.
The committee is satisfied that these
synthetic substitutes make the manufacture of morphine entirely
unnecessary and that nothing of importance would be lost to the medical
profession or to the people of the world if the growing of opium poppy
plants were wholly prohibited in every country.
The very existence of opium appears to
be the root of one of the greatest evils known to man and the committee
strongly urges the Department of State and the United States delegates
to the Commission on Narcotics of the United Nations to make strenuous
efforts to bring about a world-wide prohibition against the growing of
the plant from which opium is extracted.
C. CRIME IN MEDIUM-SIZE CITIES
As previously stated, the medium-size
cities selected for investigation by the committee were Atlantic City,
N.J.; Newport and Covington, Ky.; Scranton, Pa.; and Reading, Pa. These
cities represent population centers of approximately 100,000.
The purpose of the study was to
ascertain whether the pattern of crime found to exist in the large
cities also prevailed in smaller communities. As it would have been
impossible to investigate all medium-size cities, the committee selected
these five as samples.
The committee found that the same crime
pattern does exist in these cities as in the large metropolitan areas.
The Accardos, the Guziks, and the Costellos who direct the big-city
syndicates have their counterparts in the smaller cities. Territories
may be more restricted, but the modus operandi of the small-town
racketeers is virtually a carbon copy of that followed by the big-city
As in the larger cities, small-city
organized gambling is controlled by former bootleggers, and the emphasis
is on illegal bookmaking which is dependent upon the wire service
emanating from Continental Press Service, controlled by the old Capone
Gambler-politico-police alliances are
readily discernible. The strong inferences of bribery of the police and
marked overtones of large contributions by the mobs to political
campaigns, all for the purpose of insuring noninterference with gambling
operations, are the causes of the existing breakdown of law-enforcement
machinery. Repeatedly the committee was told that candidates for public
office who were not "liberal" toward gambling simply could not be
38 ORGANIZED CRIME IN INTERSTATE COMMERCE
Frequently officials said that they
adopted the "liberal" policy because their constituents want to gamble;
but the inference is strong that the lure of the mob's racket-financed
political machine was more attractive than the vote of the ordinary
Some public officials strongly
insisted, as a point in their favor, that the presence of racketeers
from other cities was never tolerated. The record does not support this
claim. Such law-enforcement activity as is undertaken against these
outside interests is probably more motivated by demands of the
entrenched local mobs to be protected against competition than by a
wholesome desire to rid the community of undesirables.
An unfortunate attitude that helps
nurture organized crime is the feeling that bookmaking and other
gambling violations do not warrant imprisonments. Statutes and
municipal ordinances are ignored by public officials who state that
their days are filled with traffic problems, paper work, complaints
about mischievous boys, etc. They are also ignored by sheriffs who
claim to be tax collectors only. Instead, official warnings or
unofficial word that "the heat is on" are issued sporadically. In some
cities, the custom has grown up of having all gambling cease when grand
juries are in session.
The acute myopia which beset the duly
constituted law-enforcement officials must be provocative to informed
citizens, to whom wide-open gambling violations are so readily apparent.
Is it any wonder that disrespect for law and constituted authority
inevitably follows in the wake of continued and studied disregard of the
The committee also found in these small
cities the same buckpassing of responsibility that appeared in the large
cities. The district attorneys disavow responsibility for enforcement
and insist that they are prosecutors only; the State police stay out of
cities except under rare circumstances, while city authorities close
Small-scale bookmaking in local
communities may seem innocuous, but it is part of a huge gangster
monopoly that reaches its tentacles into every corner of the Nation. A
bookmaker cannot do business without prompt racing information. And
this he cannot obtain except through the interstate monopoly of the
mob-controlled Continental Press Service which obtains the news from the
track illegally, and broadcasts it through an elaborate system of
wigwag, telephone and telegraph. The $2 bet placed with a local
"bookie" is a contribution to a $5,000,000,000 mobster operation.
Similar considerations apply to other
types of gambling. It is believed that if local judges and prosecutors
could be made aware of the interstate aspects of gambling operations and
the serious effect which their sanction has upon the whole structure of
law enforcement, they would view such violations more seriously.
Similarly, the people of the smaller communities throughout the country
should realize that the official toleration of criminal activity,
however small and innocuous it may appear on the surface, contributes to
interstate gangster syndicates and leads to a pervasive lowering of
governmental standards and integrity.
The committee's findings with respect
to each of the smaller cities investigated are set forth immediately
ORGANIZED CRIME IN INTERSTATE COMMERCE 39
Atlantic City, N. J., is a resort town
with a permanent population of 60,000 and a summer influx of 150,000
visitors. Its geographical isolation from the rest of the State has
permitted the local machine to run it largely without interference from
State-wide law-enforcement agencies.
The city is riddled with rackets,
including nearly every known type of gambling operation. Its famous
Boardwalk is lined with stands operating devices purporting to be games
of skill but looked upon by their customers as games of chance. It
contains two substantial numbers syndicates and nearly every cigar store
is a front for a book-maker.
Atlantic City also has a race track
which represents an important source of revenue to the State. Anyone in
Atlantic City can go to the track and bet; yet off-track bookmaking is
permitted by the local police to flourish on a wide scale. Every dollar
bet with a book-maker represents a loss of tax revenue to the State, and
yet the State authorities show very little interest in seeing that local
gambling laws are enforced.
When this committee moved into Atlantic
City at the height of the tourist season, numbers runners and "bookies"
ran for cover and a storm of protest arose from the politicians and
racketeers (both of whom seem to think alike in Atlantic City) to the
effect that business would be ruined. To their chagrin, Atlantic City
has had the biggest year in its history. The gate at the race track and
the pari-mutuel betting have reached a new high.
The exposure of crime conditions in
Atlantic City already has produced a movement by civic groups to free
the city from the clutches of a machine which operates with amazing
discipline. This machine has two heads, one the political boss of
Atlantic County and the other the rackets boss of Atlantic City. The
tracks showing the operating relationship between the two are cleverly
concealed, but the true bosses are known to be close personal friends
and they are frequently seen with their heads together at all hours of
the day or night.
The political head is Frank S.
Farley, State Senator for Atlantic County at a salary of $3,000 a year,
treasurer of Atlantic County at a salary of $6,000 a year, and chairman
of the Atlantic County Republican Committee. Because of the rule of
senatorial courtesy and his strong influence no judgeship or any other
State office in the county can be filled without his approval of the
appointee. His influence over the administration of Atlantic City is
also potent. His law firm is counsel to the race-track association at a
retainer of $20,000 a year, and he has been extremely active in
connection with all bills in the legislature affecting race tracks.
The rackets head is Herman "Stumpy"
Orman, owner of the Cosmopolitan Hotel, which has served for many years
as a rendezvous for political figures and perhaps underworld characters
Stumpy Orman is a gambler with former
bootlegging connections who, until recently, toted a gun under a permit
for which Senator Farley was once a sponsor. His only income records
consist of a little black book which he produced before the committee
and then suddenly snatched back, refusing thereafter to reveal its
40 ORGANIZED CRIME IN INTERSTATE COMMERCE
Anonymous letters received by the committee
indicate that that little book would show the entire racket operation in
Atlantic City, with an accounting of how much each racketeer owes for
protection. Whether this is true may never be known, but it is clear
that Stumpy Orman has a great deal to say about the running of the
Atlantic City police force, and there was testimony before the committee
to the effect that no one can run numbers, make book, or obtain a
license for a Boardwalk game until he clears with Stumpy.
Stumpy Orman has the convenient type of
memory. In testimony before the committee he was able to recite without
hesitation the name and title of practically every public official of
Atlantic City and Atlantic County. His knowledge of local government
and personalities was excellent. On the other hand, with regard to
financial matters, he was unable to remember transactions that had
occurred only a few months before. Bank deposits sent by him from New
York to Atlantic City aggregating over $40,000 during a short period in
1936 had completely vanished from his memory. When asked about bank
deposits made in recent years amounting to $16,000 or more a year in
excess of his gross income for tax purposes, he refused to answer on the
ground that the answer might incriminate him.
There have been three large numbers
operations in Atlantic City. One operated in part of the "white" area
under a partnership consisting of Fred Masucci and Ben Rubenstein, with
a net profit running as high as $38,000 a year. The second operated in
the "colored" areas with a gross profit of about $175,000 a year. This
was formerly operated by Harold Scheper, but because of illness he has
had to divide the operation among several of his lieutenants. The third
was operated by Harry "Cherry" Haggerty. Scheper and Haggerty are both
on probation as the result of gambling convictions obtained in 1947 by a
special prosecutor sent to Atlantic County by the Governor. They report
to Vincent Lane, the assistant probation clerk. It is Lane's duty to
ascertain whether his probationers are complying with the law, but he
told the committee he never saw anything to indicate that these men were
carrying on, under his very nose, numbers operations of large
The administration of the police
department of Atlantic City shows definite signs of deliberate laxity,
creating an almost inescapable suspicion of official alliance with law
violators. The director of public safety is an elderly man who is
unable to devote much time or energy to his job. The actual head is the
assistant director, who is an intimate of Senator Farley and Stumpy
Orman. The chief of police is a man who is obviously putty in the hands
of others. He has very little to do with the administration of the
police force and frequently learns of important changes after they have
occurred. He professed complete ignorance of any bookmaking or other
gambling in Atlantic City and claimed not to know how the numbers racket
runs. The true facts known to practically every other member of the
department are that there are approximately 200 bookmakers operating in
Atlantic City with lay-off arrangements with bookmakers in other cities
as far away as Baltimore.
The police department has a rackets
squad which has orders from the chief to stamp out all gambling but
which never seems to be able to find any.
ORGANIZED CRIME IN INTERSTATE COMMERCE 41
The only arrests of gambling violators
seem to have been made through the efforts of a group of patrolmen on
the force known as the "Four Horsemen." These consist of Francis B.
Gribbin, Jack Portock, and Frederick J. Warlich, plus one or more others
of the younger members of the force who help out from time to time.
These men have undertaken a crusade against protected gambling in
Atlantic City. Although their crusade was sparked initially by
reprisals practiced against them for their leadership in a policemen's
and firemen's pay-raise campaign and by opposition to their campaign on
the part of the city administration, the committee was deeply impressed
by their honesty, sincerity, and extraordinary courage.
These men have faced underworld threats
of bodily harm to themselves and their families and severe reprisals
from the police department itself, all designed to compel them to
refrain from making gambling arrests. But they have remained undaunted.
Nothing could have been more obvious than the manner in which they were
punished by their superiors for their vigor in enforcing the gambling
laws. Their treatment perhaps more than anything else clarifies the
close alliance between the underworld and the official administration of
Atlantic City. The forces against them were working in complete harmony
at every stage.
The conclusive proof occurred when
Stumpy Orman personally interceded and agreed, in return for their
agreement to leave the gamblers alone, to have them transferred back to
their original posts from the lonely, outlying beats to which they had
been shifted as punishment. On the advice of a Special Deputy Attorney
General of the United States, they accepted this "deal" as a test and
within a matter of 4 hours they had been restored to their posts. In
the face of this uncontradicted testimony, the conclusion is inescapable
that Stumpy Orman has controlled the Atlantic City Police Department in
the interest of the underworld gambling fraternity.
The committee cannot too strongly
express its praise of these courageous policemen for the great
contribution they have made to law enforcement and good government and
for their willingness to face ever kind of threat, punishment, and
reprisal for the good of their cause.
The committee was also favorably
impressed by the testimony of Francis L. Smith, former operator of a
Boardwalk game. Smith frankly admitted that he had been "in the
rackets" most of his life, and there is some possibility that he was
motivated by resentment at the treatment he had received when he tried
to obtain a license for a new game. However, he testified before the
committee twice, once in executive session and once in an open hearing,
and on each occasion he testified in a forthright, unhesitating manner
such as to cause the committee to believe he was telling the truth.
Further credence is given to his testimony by the fact that Senator
Farley, against whom Smith made serious charges, was urgently invited by
the committee to appear before it to refute the charges and he failed to
Smith testified that in order to obtain
a license to operate a Boardwalk game he paid the license fee of $1,000
plus an additional $1,000 in cash "under the table" to Joseph McBeth,
the treasurer of the Republican County Committee. He also testified to a
$250 cash payment directly to Senator Farley made in Farley's kitchen in
42 ORGANIZED CRIME IN INTERSTATE COMMERCE
to keep operating. Furthermore, he stated that in
order to get the license in any event he had to obtain clearance from
Stumpy Orman, and there was some indication that Orman resented his
having gone directly to Farley in the first instance.
Although Smith's testimony might be
attacked on the basis of his background as a former small-time
racketeer, the committee feels that it should be given great weight, in
view of the fact that it stands uncontradicted and is entirely
consistent with the testimony of other witnesses whose testimony cannot
be doubted. It establishes a definite link between Farley, the city
administration, and Orman. If other residents of Atlantic City were
willing to show the same courage as Smith in coming forward with
information, the link would probably be forged in a manner that could
not be questioned on any ground.
The most amazing testimony given at the
Atlantic City hearings was that relating to the race-wire service. The
only race-wire drop coming into Atlantic City is at radio station WOND,
which broadcasts racing news received from Transradio News, a
distributor for the gangster-controlled Continental News Service. Many
reports were received to the effect that Lester Burdick, a salesman for
the station, was receiving weekly payments from bookmakers for racing
news. The question that came to mind was how Burdick could charge
book-makers for information anyone can receive over the radio.
It then appeared that Burdick was
executive clerk of the State senate, appointed through the efforts of
Senator Farley, and that he had been seen with Stumpy Orman.
Investigation revealed that he drove two Cadillacs (one a 1951 model),
owned a $20,000 home, spent $1,000 in 1950 for suits costing $200 each,
and paid nearly $2,900 in 1950 toward the operating expenses of Station
WOND. At the same time his 1950 income had been less than $1,900, and
his average income for the last 5 years had been less than $3,000 a
The answer to this mystery was given
through the testimony of a small cigar-store owner in Atlantic City who
testified that he rented his back room to a bookmaker who told him that,
if a man driving a red Cadillac came into the store and asked for a
package of Philip Morris cigarettes he should give the man a $10 bill
along with the cigarettes. The man came in every Thursday while the
bookmaker was operating and received the $10. He later learned that the
man was Lester Burdick.
When Burdick was confronted with this
testimony and asked if it was true, he refused to answer on the ground
that it might incriminate him. He gave the same answer when asked
whether he had not made similar collections all over town and whether he
had not threatened recalcitrant bookmakers with "police visits" if they
did not pay.
Shortly after the hearings Burdick was
removed as executive clerk of the State senate, and the committee is
informed that the matter is now under consideration by the grand jury.
Campbell County, Ky., of which Newport
is the county seat, is directly across the river from Cincinnati, and
many residents and visitors of Cincinnati are accustomed to go there for
the purpose of visiting the lush gambling casinos that have operated
ORGANIZED CRIME IN INTERSTATE COMMERCE 43
Campbell, County for many years. Kenton County,
Ky., of which Covington is the county seat, adjoins Campbell County and
presents a parallel situation. At the time the committee's
investigators visited this area, the gambling operations in both
counties, especially Campbell, were so open that the casual visitor
would gain the impression that gambling is legal in Kentucky.
The fact is that Kentucky gambling laws
are very strict. It is a felony under Kentucky law to "set up, keep,
manage, operate, or conduct" any gambling device or contrivance. The
penalty is a $500 fine and a mandatory prison sentence of to 3 years,
plus permanent loss of suffrage and of the right to hold public office.
However, not a single successful prosecution under this law has been
reported in either of these counties and not one defendant has gone to
The committee had held hearings in
Cleveland on January 17, 18, and 19, 1951, at which it received
testimony to the effect that the Cleveland gambling syndicate, having
been driven out of Cleveland, had moved into Campbell and Kenton
Counties. Accordingly, upon the extension of the committee's life until
September 1, it was determined to investigate these northern Kentucky
The committee found that the city of
Newport under a new reform administration is making fast strides toward
honest law enforcement, despite obstruction on the part of the chief of
police and some of his subordinates. On the other hand, the rest of
Campbell County was found to be wide open.
The committee's investigators visited
the Beverly Hills Country Club, the Latin Quarter, the Yorkshire Club,
and the Alexandria Club, all in Campbell County, and found them to be
operating openly. At the Beverly Hills Country Club, about 150 persons
were observed, in the casino where there were four dice tables, two
roulette wheels, a black-jack table, and chuck-a-luck table. About 100
persons were observed in the Latin Quarter which featured three or four
dice tables and two roulette wheels. An investigator for the committee
was barred from the gaming room at the Yorkshire and told there were no
games in progress, but he noticed in the parking lot far more cars than
were needed to transport the four or five persons in the dining room.
At the Alexandria he found
approximately 250 persons and announcements being made on the
public address system that the blackjack table was open. There was also
a chuck-a-luck table in the place.
In Kenton County the situation was
similar, except that the establishments were smaller and operated more
surreptitiously. Those in operation were the Lookout House, the
Kentucky Club, the 514 Club, the Kenton Club, the Press Club, the Gold
Horseshoe, and the Turf Club.
The committee conducted open hearings
in Washington on July 23, 1951, regarding conditions in Kenton and
Campbell Counties and heard a graphic description of the futile efforts
by church and civic groups to secure better law enforcement. It appears
that Kentucky has a quaint custom under which all gambling ceases during
the three periods of the year when the grand jury is in session. The
grand juries purport to investigate gambling and find none taking place.
Grand juries are in session for a total of about 27 days each year and
the rest of the time gambling continues unhindered.
44 ORGANIZED CRIME IN INTERSTATE COMMERCE
Kent County has been flooded with slot
machines for years and it was estimated on one occasion that there were
1,500 machines in operation. Gambling has been a paramount factor in a
number of court cases arising out of domestic difficulties.
In March 1050, a meeting was held in
Covington attended by representatives of a civic association, law
enforcement officials, and the press of Kenton County. All those
present subscribed to this statement:
have met and conferred concerning commercialized organized gambling and
law enforcement conditions in Kentucky agree to cooperate full-heartedly
in the enforcement of the law. We agree that commercialized organized
gambling must cease throughout the county immediately.
This pledge subsequently turned out to
be meaningless as far as the public officials were concerned. Six
months later, a news article reported that Covington led the State in
the number of slot machine receipts issued by the Government, with 163
listed as having paid the Federal tax. Included was a payment of $5,000
by the Lookout House on 50 machines. As of May 1950, according to the
report of the McFarland committee, wire service was being supplied to
111 bookmakers in Covington.
On January 22, 1951, shortly after the
committee's hearings in Cleveland, the Kenton. County Protestant
Association sent a letter to Judge Joseph Goodenough and Commonwealth
Attorney James Quill demanding a full-scale grand jury investigation of
gambling. Enclosed was the list of slot machine owners and the judge
was reminded of the existence of a permanent injunction outstanding
against the Lookout House. The judge and the commonwealth attorney
discussed the matter and agreed that it was the commonwealth attorney's
responsibility to enforce the injunction. Nothing was ever done about
A representative of the Kenton County
Protestant Association spent 55 minutes before the grand jury giving
testimony about three dozen places that were violating the law. He told
the grand jury he had seen slot machines and other gambling in
practically all of these establishments, but the grand jury and the
commonwealth attorney manifested no interest in the documentary he had
with him and no indictments were returned. As soon as the grand jury
adjourned, gambling was resumed.
Frequent threats of bodily harm were
made against a civic leader who was spearheading a campaign against the
gambling interests. Also, the plate glass front door of his home twice
has been the target for containers of filth. On one occasion, gamblers
operating through the Tavern Owners Association which had made a pledge
of $52,000 toward the local hospital building drive, to be paid at the
rate of $1,500 a month, threatened to discontinue payments on the pledge
unless those promoting the campaign against gambling were persuaded "to
W. Sharon Florer, executive secretary
of the Kenton County Protestant Association, testified that two large
industrial concerns that would have employed hundreds of persons refused
to locate plants in or around Covington merely because of the
community's reputation as a center of wide-open gambling.
Leonard J. Connor, sergeant at arms of
the-Kentucky State Senate since 1942, member of the elections commission
for Kenton County,
ORGANIZED CRIME IN INTERSTATE COMMERCE 45
has operated the Turf Club in Covington since
1937. In his testimony before the committee, he admitted that he had
carried on a book-making operation in the Turf Club since 1937 and that
he paid $28.60 a week for wire service to a man he knew only as "Red."
He said he had arranged for the wire service through W. R. Cullen of
Cincinnati. He also admitted owning four slot machines purchased in
1940 or 1941 in Cincinnati but he said he stored them in his cellar in
June 1951 when the grand jury was in session and the committee opened
its inquiry. He said his brother was once arrested in connection with
the bookmaking operation at the Turf Club; that after that the place had
gone along undisturbed for years.
This public official further testified
that his income from gambling far exceeded that from his bar. He
estimated that the handbook averaged a gross of about $1,300 a week in
race-track bets and that the slot machines were good for $6,000 to
$7,000 a year. Asked if he intended to open up again, Connor replied
that he hadn't made up his mind, he was "just waiting."
Testimony of the most amazing character
was received from Theodore Hageman, field agent for the Kentucky State
Alcohol Board. Mr. Hageman insisted that operation of a gambling
establishment or the commission of any other violation of law was no
basis for refusing a liquor license. The form of application for a
liquor license or renewal contains a question whether there are any
gambling or any gambling devices on the premises. Hageman testified
that "almost 100 percent" of the applicants answer this question in the
Where gambling is found on licensed
premises, Mr. Hageman said, "We are not instructed to interfere with
them, and have not been doing so." He maintained that the board never
suspends licenses for gambling alone, although it may sometimes be
included in general charges of disorder. He does not consider it his
duty to bring gambling violations to the attention of the alcoholic
beverage control board.
Hageman acknowledged that he had been
active in political campaigns including one in 1950 of which he was
chairman. He admitted he collected between $7,500 and $8,000 from
liquor licensees "who desire to make contribution" and he estimated that
20 or 25 licensees had come through with donations.
Hageman's present salary is $3,840 a
year and he testified that the most he ever earned was during his tenure
as city manager of Covington when he was paid $5,000 annually. He ran
twice for sheriff and was defeated, his out-of-pocket expenses in each
campaign, according to his own testimony, approximating $5,000 to
$6,000. Yet he fixes his net worth at $40,000, which includes a new
unencumbered home which cost him $23,960 in 1948, two automobiles,
Government bonds, other securities and some cash.
Hageman's testimony was especially
interesting in the light of what the committee was told by John J.
Moloney, who became a city commissioner in Covington in January 1950.
Mr. Moloney, who is to be commended for his earnest efforts in behalf
of honest law enforcement, testified that a month after he went into
office he was approached by Hageman, who advised him that he was
eligible to participate in a "profit-sharing plan" conducted by the
gambling interests for high appointive of elective officials. Hageman
said Moloney might just as well take the money because people would
46 ORGANIZED CRIME IN INTERSTATE COMMERCE
say he was doing it anyway. Moloney rejected this
offer but was told to let Hageman know if he should change his mind.
Mr. Moloney said that he gradually
became aware of the presence of the Cleveland syndicate in the Covington
gambling set-up and was glad to see that the committee eventually had
proved him to be right. He has made several attempts to drive organized
and syndicated gambling out of Covington, but all of these attempts have
been unsuccessful. In the spring of 1950 he prepared a statement that
he intended to release at a commission meeting, demanding that organized
gambling be driven out of Covington, and showed it to Mayor William
Rolfes. The mayor became perturbed and told Moloney "this will put us
all on the spot," urging, him to withhold it, which he did for the time
Next, Mr. Moloney wrote a letter to the
city manager demanding that the gamblers be forced to cease operations
and to move their equipment out of the city. An order to this effect
was issued by the city manager but there was only partial compliance on
the day fixed for the cessation. At about the same time, Mr. Moloney
was approached by a friend, who said he had been authorized to tell
Moloney that he could have complete control of the police department,
all hiring, firing, and promotions, and could also have the final word
on all hiring and firing in the gambling establishments if he would
terminate his campaign to drive out gambling.
Mr. Moloney refused and continued
thereafter to try to persuade his colleagues on the commission to go
along with his campaign for a clean-up. But he has been completely
ignored in this effort. Mr. Moloney testified that he was told that the
mayor was to receive $150 a week, the commissioners $100 a week, and the
city detectives $150 a month, if they would not interfere with gambling.
Mr. Moloney also related to the
committee the story of a police officer who seized two slot machines in
a Covington place of business. Cliff Brown, an associate of Brink and
representative of the slot machine syndicate, rushed into the police
station and berated the patrolman for his act in front of his superior
officer. The patrolman not long after was suspended on a charge of
drinking on duty and thereafter was harassed to the point where he quit
In February of this year, Mr. Moloney
received another indirect approach and this time a figure of $50,000 was
mentioned. Whether this was a bona fide offer Mr. Moloney was unable to
determine. He frequently received telephone calls threatening him for
his activities and he produced two anonymous letters which had been sent
to him. One of these said, "This is a warning. You had better not
close Covington gambling. You and your friends will be dead. Your body
will be among the missing. Leave gambling the way it is."
Judge Joseph Goodenough of the Kenton
County court was questioned about gambling in the light of a permanent
injunction granted by his predecessor in 1939 against a number of
gambling establishments. No judicial notice is taken of this injunction
and the Commonwealth attorney never takes steps to enforce it, although
it would serve as a quick basis for stopping gambling.
Judge Goodenough asserted that the
crime record of Kenton County is good. But he admitted that up until
January of this year gambling in Kenton County had been "openly
notorious." He knew that before January, slot machines, bookmaking, and
the Lookout House
ORGANIZED CRIME IN INTERSTATE COMMERCE 47
casino were running. The committee had no
difficulty in finding that they were operating after the first of
Admitting that there are never any
prosecutions under the felony statute for gambling, Judge Goodenough
could not explain why grand juries refused to indict. He admitted that
it might be possible to indict the Cleveland mobsters under the
conspiracy statute and it was suggested to Judge Goodenough that the
grand jury might be "inspired" to look back into operations by the
syndicate. The jurist replied, "I am not so much interested in what has
gone on as I am in keeping gambling out of Kenton County, as a judge.
Now my conduct, of necessity, must be restricted. I am a judge, sir."
Mr. Quill, in his testimony, admitted
his authorship of the report of the May grand jury. The committee found
it difficult to reconcile obviously contradictory portions of the
report. In one section, the grand jury observed that "gambling had gone
haywire" in the county, and in another it said that "at the time of our
original convening, the only gambling in the county was slot machines
and handbooks." Requested to explain the grand jury's failure to do
anything about conditions it recognized had existed, Mr. Quill claimed
that the grand jury felt it "unjust and inequitable" to return
indictments for conduct that had been acceptable for years.
The following colloquy between Senator
O'Conor, chairman of the committee, and Mr. Quill throws interesting
light on the attitude of this enforcement officer:
Q. Mr. Quill, you
are an experienced prosecuting officer and a man of wide experience
generally, having been in the legislature and otherwise. It is very
apparent that you are quite conversant with conditions generally and you
are a man of ability. * * * I am asking you for a simple fact, whether
you do not agree with us that widespread gambling activities such as
have been shown here to have existed and are admitted could not exist
without the connivance and the protection of law-enforcement officials.
* * * * * * *
A. I would say
permitted or suffered to happen. I know I tolerated a good bit of it
simply because it had been there since I was born and I knew that was
the way the community had grown and that is what it had all these years.
I felt to improve that condition takes not only law enforcement but
* * * * * * *
Q. Mr. Quill,
wouldn't you think also that such widespread gambling operation with a
large amount of money being realized from the operations could easily
lead to corruption and to graft on the part of the police and other
A. I certainly
think it could, sir, yes, and maybe in many cases does.
Q. And do you
think it might have possibly existed in this case?
A. I would
certainly say it was within the realm of possibility.
* * * * * * *
Mr. Quill admitted that he had never
made any effort to subpena the partnership books and records of the
Lookout House in Covington which is owned and operated by James H.
Brink. The committee had subpenaed these records and found that for the
2-year period of 1948 and 1949, the partners' shares had been as
follows: Marion Brink, wife of James H. Brink $33,860; B. W. Brink,
$16,930; Charles V. Carr, $16,935; Mitchell Meyer, $20,858; John Croft,
$10,429; Samuel Schroeder, $39,583; Louis Rothkopf, $41,765; Morris
Kleinman, $41,765; Moe Dalitz, $41,765; Louise Tucker, wife of Samuel
Tucker, $41,765; and Charles Polizzi, $33,352. Several of these names
will be recognized as those of the Cleveland mob which had moved
48 ORGANIZED CRIME IN INTERSTATE COMMERCE
into Covington and Newport. Brink has testified
that the mob sold their interests to him as of the end of 1950.
Mr. Quill said he had no idea that the
profits of this establishment ran so high until they were dug up and
publicized by this committee.
Mr. Quill told the committee that when
he first became commonwealth attorney "there was very little sympathy"
for enforcement of gambling laws, but that, as a result of this
committee's exposure of the Lookout House as a syndicate operation,
"people became exercised and the laws are easy to enforce now." He was
reminded that the people were exercised as far back as 1939, as
evidenced by the injunction that nobody bothered to enforce. His reply
was that this was an action brought by the attorney general of Kentucky
and the primary responsibility for its enforcement rested with the
Mr. Quill asserted that gambling at the
Lookout House ceased after the committee's Cleveland hearings and that
he would have pressed contempt proceedings under the injunction had
operations there continued. He professed to have no personal knowledge
of gambling at the Lookout House since he became commonwealth attorney
but acknowledged that several years ago, while he was a member of the
legislature, he had lost $40 in a dice game there.
Sheriff Henry A. Berndt of Kenton
County, when asked whether he was the chief law enforcement officer of
the county, retorted: "I am the chief law enforcement officer. I am the
chief fire marshal. I am the chief dog catcher. I am the chief tax
collector. I guess I have probably 150 duties according to the
statute." Berndt said he had nine deputies, six of whom collect taxes.
The other three serve processes. Berndt obeys the statute requiring
inspections insofar as it is possible. The chief deputy, he said, does
the work when he can be spared from his other duties, otherwise there
are no inspections. No gambling was ever found during the inspections.
"We do not really try to make any
attempt at law enforcing," Berndt said bluntly. He claimed that he
repeatedly had told the grand jury that his office could not do so and
at the same time perform its other duties, too. Berndt never heard of
the Cleveland syndicate until the committee exposed their interests in
northern Kentucky. He has not been on the lookout for any of the
members, would not know them if he saw them, and would not know where to
start looking for them.
Chief of Police Alfred Schild of
Covington testified that his chief of detectives and other members of
his staff had been looking for the source of the race wire service for 4
or 5 months without success. He has never been inside the Kentucky Club
in Covington so he does not know what is going on there, although he did
know of a $75,000 robbery there at one time. This was the biggest haul
by gunmen in the history of the city but he did not consider that it
required any personal investigation by him.
It was Schild who told the committee
that gambling clubs in Kenton County advertised in the Kentucky Peace
Officers Association magazine. Asked if he thought it was all right for
the magazine to accept advertisements from gamblers, Schild asserted
that "they didn't advertise as gamblers," and besides they advertised in
other magazines, as well.
ORGANIZED CRIME IN INTERSTATE COMMERCE 49
Schild could not tell the committee how
the gamblers receive "tip-offs" about impending raids. He conceded that
his department had a rule requiring that all warrants be registered at
headquarters before being served. "I don't know why. It's been a rule
for years and years," he added. Schild testified that he was a friend
of John Rigney but professed not to know that Rigney was a leader of the
slot machine syndicate, a matter of common knowledge in Covington.
Turning to Campbell County, the
committee heard testimony describing the commendable efforts being made
to restore order in the field of law enforcement in the city of Newport,
while conditions in the county surrounding Newport are allowed to run
A reform administration came into
control of the city government of Newport in January 1950. Three
officials of that administration testified before the committee, namely,
City Solicitor Fred Warren, City Manager Malcolm Rhoads, and City
Commissioner Charles J. Eha.
Mr. Warren testified regarding the
injunction proceedings brought by the attorney general of Kentucky
against the gambling interests in Campbell County in 1943 resulting in a
permanent injunction. He said that during the period of the litigation
all gambling was eradicated. After the injunction was obtained,
however, gambling gradually was resumed and continued unchecked until
1950. He testified that no explanation was ever given as to why no move
was made to enforce the mandate of the court and he expressed the
opinion that gambling casinos could not have operated too openly and
regularly and for such protracted periods without protection.
Commissioner Eha, who was one of the
candidates supported by the Newport Civic Association, related some of
the difficulties experienced by the reform group in its war against the
gambling interests. He declared that the citizens are now aware that
the city is better off without gambling. He, too, has received threats
because of his activities against gambling. City Manager Rhoads,
who had been a witness at the committee's Cleveland hearings, testified
again in June and July. At an executive session of the. committee held
on June 20, he indicated some surprise when informed that a committee
investigator had found gambling in the Alexandria Club just a couple of
weeks before. When he returned for the July 23 hearing, Mr. Rhoads told
the committee that he was certain that gambling had ceased there because
two detectives had been stationed in the place between 10 p.m. and 2
a.m. every night to make sure no gambling went on. He said the city has
had some difficulty because of "tip-offs" of projected raids but an
effort is being made to determine their source.
The Bobben Realty Co. clearing house
bookmaking operation has been broken up and a. similar outfit has been
routed from the Finance Building in recent weeks. Mr. Rhoads said he
has been trying to break up the wire service to bookmakers but the Ace
Research Service has moved from its former location and he has been
unable to learn the source from which the wire service now emanates.
Mr. Rhoads reiterated a statement he
gave to the committee in Cleveland that he did not feel he could place
any confidence in Chief George Gugel of the Newport Police Department.
He has tried to cure the situation, he explained, by bypassing Gugel
50 ORGANIZED CRIME IN INTERSTATE COMMERCE
men in the department he knows to be reliable. The
gamblers, he said, had also made efforts to buy him off. He told of a
telephone call he received in which he was informed that if he would let
things alone the gambling interests would be willing to pay $1,000 a
week. The same figure, he declared, was repeated to him soon after the
incident by a visitor to his office who he knew was not connected with
the rackets. Telephone calls and letters containing threats of harm to
him and members of his family also have been received by Mr. Rhoads.
The gambling interests, according to
Mr. Rhoads, first try "to buy what they want." If unsuccessful they
move into the second stage, which is to harass officials moving against
their operations. The third is a smear campaign impugning the integrity
of those who oppose gambling activities.
Gambling in Newport in 1949 enjoyed
somewhat of a blessing from the administration then in power which
adopted legislation levying certain taxes on the gambling interests.
The tax bill for the Yorkshire was $8,090.40 under this measure,
clearing houses paid $500, and bookmakers were assessed $250. The city
treasury was enriched to the extent of $50,109.99 in 1949 but, on the
eve of its departure from office, the former administration repealed the
taxing ordinance. Mr. Rhoads said that the new administration would
never have tolerated the special taxing system because "I cannot see any
difference between a city and an individual taking graft."
Suppression of gambling has helped
business in Newport, according to Mr. Rhoads. Bank deposits are higher
and there has been a substantial increase in inquiries from industrial
enterprises interested in the possibility of erecting plants there.
Chief of Police Gugel when called as a
witness, also expressed surprise that a committee investigator had found
gambling in the Alexandria Club in June because his men had told him
there was none. Since the Cleveland hearings, Gugel said, he has been
endeavoring to get rid of all gambling. When pressed to define
specifically what course of action he was pursuing, Gugel replied,
"Still issuing orders to my subordinates." Gugel was asked what he had
done about the Ace Research Service, which supplied wire service to more
than 100 bookmakers in Covington and more than 60 in Newport. He
said he sent his detectives to the outfit's headquarters but they could
not find anything.
Lack of cooperation on the part of
Chief Gugel serves as an obstacle to law enforcement in Newport.
However, the city administration is to be congratulated on the progress
it is making. It is a pity that the law enforcement officers of the rest
of Campbell County cannot be persuaded to follow the excellent example
of the city of Newport.
William J. Wise, Commonwealth attorney
of Campbell County for almost 9 years, was called upon to explain the
widespread commercialized gambling in his section. He said, "I suppose
it was just like Topsy, it just grew up. It has been in existence long
before I appeared on the political scene, and I suppose it has existed
by sufferance, at least that is my opinion." He confessed that he was
"generally aware" of the operations of the casinos, but insisted that he
has told every grand jury it was their prerogative to investigate them,
although none ever did. He did succeed in getting an indictment against
ORGANIZED CRIME IN INTERSTATE COMMERCE 51
member of the Cleveland syndicate, Samuel Tucker, 5
or 6 years ago, but Tucker was acquitted.
The committee's investigation showed
that the Beverly Hills Country Club had gross receipts of $975,000 for
1948 and 1949, a net of $426,199 for that period, distributed to the
following: Samuel Tucker, Moe Dalitz, Rothkopf, and Kleinman, $44,019
each; Charles Polizzi, $32,014; T. J. McGinty, $34,301; John Croft,
$26,583; Harry Potter, $20,008; Mitchell Meyer, $17,150; Samuel
Schroeder, $54,024; and Marion Brink, $40,017. In addition, Tucker was
paid a salary of $10,000 annually from 1945 to 1948, Meyer and Potter
were paid $3,900 each for 1948 and $4,110 each for 1949. The money
wheels took in $70,000, chuck-a-luck, $17,000; blackjack, $51,000;
craps, etc., $244,000, and slots, $69,000.
It is of interest to note that the
partners of Beverly Hills are practically the same as in the case of the
Lookout House in Covington, and that both operations include members of
the Cleveland mob.
When confronted with these figures, Mr.
Wise conceded that they were "fabulous" and admitted that he had never
heard of some of the individuals named.
The committee found that the operations
at the Yorkshire Club were even more extensive for the same 2 years,
with gross receipts amounting to $1,526,000, the gross profit was
$614,000 and the net income, $427,597. The following shared in the
profits: Maurice Ryan, Fort Thomas, Ky., $30,018; Fred Hallam, Bellevue,
Ky., $47,662; Morris Nemmo, Fort Thomas, Ky., $30,493; Robert Bergen,
Fort Thomas, Ky., $24,121; Sam Gutterman, Cincinnati, $10,406; A. R.
Masterson, Fort Thomas, Ky.; E. R. Lowe, Tucson, Ariz.; James H. Brink,
Fort Mitchell, Ky.; Claude Hines, Fort Mitchell, Ky.; George and Frieda
Bregal, Melbourne, Ky., $17,493 each; Alfred Goltsman, George Gordon,
Samuel Tucker, and Ruby Kolod, all of Cleveland, $20,992 each; Abe
Schneider and John Croft, Cincinnati, $34,987 and $33,092, respectively;
and. George Bear, Detroit, $24,296.
Mr. Wise conceded that this operation
was "much more sizable than any of us thought or could have imagined."
Sheriff Ray Diebold of Campbell Count
whose principal qualification for his job seems to have been that he
once served as a "good will" man for brewery, made two appearances
before the committee. The first time he testified that he had never
been in the Beverly Hills Club, the Latin Quarter or the Yorkshire Club,
and that he had never raided them because he had been informed by the
county police that there was no gambling in any of them. He had only
"heard" that the Cleveland syndicate was involved in operations of the
casinos and he had learned from his lawyer only a short time before the
June hearing about the law requiring him, as sheriff, to inspect dance
halls and roadhouses at least once a month. When he testified in July,
he was emphatic in declaring he had been diligent in his inspections and
promised to furnish the committee with copies of his monthly reports
from then on. He still has a clear record of no arrests for gambling
since he had been sheriff. The committee asked why he had never visited
any of the casinos, at least as "good will" man for the brewery. He
replied that the casinos use premium beers only, whereas he was
stimulating business for a local product.
James Winters, chief of the Campbell
County police, told the committee that he had reason to believe that
gambling was going on in
52 ORGANIZED CRIME IN INTERSTATE COMMERCE
places like the Beverly Hills Club and the Latin
Quarter but his men never found any when they made inspections.
Pleading that he had only six men to patrol 508 miles of highway in the
county, Winters said they had little time to look for gambling
Jack Kuresman, Cincinnati public
accountant who represents the Latin Quarter, Yorkshire, Beverly Hills,
and the Merchants Club, testified that his office received daily sheets
which showed wins, losses, expenses and the bankroll at the beginning
and end of each day. He admitted that he had no means of verifying the
wins and losses. Asked why he was unable to produce the records of the
Latin Quarter, Kuresman said that as soon as his clients learned that
the committee was interested in northern Kentucky again they came to his
office and retrieved the records, together with his work sheets.
The committee's survey of conditions in
the area of Scranton, Pa., included some investigation in nearby
Wilkes-Barre and Hazleton. The committee concentrated on the
ramifications of a multi-million-dollar Treasury-balance lottery of
which Louis Cohen is believed to be the ruler. Cohen has a long history
of lottery operations. For years, he and his several brothers have
ruled a lottery empire that covers several States. Louis Cohen divides
his time between a home in Florida and a residence in the Pocono
Mountains outside of Scranton. His name has been linked to night-club
and gambling enterprises in Florida.
The Treasury-balance lottery, according
to testimony obtained by the committee, operates in most of the Eastern
States and in sections of the Midwest. Tickets are sold for 25 cents
and 50 cents, with occasional "specials" during the year selling for $1.
The last five figures of the daily balance issued by the United States
Treasury determine the winners. The ticket plays for 5 days, and top
prize in most instances is $3,000. The odds against the betters are
extremely heavy, and the profit of the racketeers who run the lottery is
A special service of the Western Union
Telegraph Co. speeds the number daily from Washington to 51 subscribers
who have been identified either as the principals or chief agents in the
operation of the racket throughout the East. An additional 16
subscribers located in Chicago, Ill.; Alliance; Barnesville, Berea,
Canton, Cleveland Heights, Cleveland, Toledo, and Youngstown, Ohio, and
Indianapolis, Ind., are serviced out of the Chicago office of the
Law-enforcement officials in Scranton
seemingly are afflicted with the same peculiar blindness toward
organized gambling that has been apparent to the committee in its
inquiries in other cities. Four horserooms running wide open and
heavily patronized were found by committee investigators. A numbers
banker testified that he did business for 20 years without ever having
been arrested himself, although there were three or four occasions when
his runners were picked up. Punchboards littered store counters, and
Treasury balance tickets were openly sold.
It is clearly evident that there is a
strange reluctance on the part of the police in Scranton to arrest
anybody for violations of the gambling laws. Horserooms are never
raided. Periodically, when "the heat is on," the order goes out to
"close and stay closed," but
ORGANIZED CRIME IN INTERSTATE COMMERCE 53
such an edict lacks any prolonged or lasting
effectiveness. The same can also be said for the cities of Pittston and
Wilkes-Barre adjoining Luzerne County.
To units of the Pennsylvania State
Police must go credit for the only successful forays against the
gambling interests, even though they usually follow a policy of not
going into the cities unless requested to co so by the district attorney
or city officials themselves.
In March of this year, without notice
to the Scranton police, several details of State police staged a series
of raids in the city designed to cripple the operations of Louis Cohen.
Vast quantities of Treasury-balance tickets, printing equipment,
engraving plates, stapling machines, and supplies were seized. Seven
persons were arrested. The value of the seized material was in excess
of $50,000 and the tickets being processed were intended for
distribution in the months between October 1951 and February 1952.
A similar seizure in Wilkes-Barre, also
by the State police, yielded an even greater volume of tickets,
materials, and equipment, and struck hard at the source of supply for
so-called independent operators not linked with Cohen.
The committee endeavored unsuccessfully
to serve a subpena on Cohen prior to its hearing in Washington on August
7 in connection with the Scranton investigation. Accompanied by
counsel, Cohen subsequently appeared in Washington and presented himself
to the committee, but insufficient time remained for proper
interrogation of the witness.
While Cohen was evading process, the
committee subpenaed his chief lieutenant in Pennsylvania, Patrick Joseph
Size, of Scranton. Claiming that his answers would tend to incriminate
him, Size refused to give any testimony about his activities or his
dealings with Cohen. He also refused to explain suspicious
long-distance telephone calls made every Friday from his home to
Allentown, Reading, Schuylkill Haven, Wilkes-Barre, and Williamsport.
Jimmy Mack, of Wilkes-Barre, also known
as Vincenzo Maccarone, testified before the committee. He admitted
owning pinball machines and a few slot machines and said that he grossed
$50 to $60 a day as a numbers banker in Wilkes-Barre. Pretending that
he did not know whether the numbers business was against the law, he
pointed to the fact that the police never interferes with him or gave
him trouble in connection with his slot machines. He added that he
operated the slot machines in private clubs outside the city and none of
them ever was seized.
Capt. Harry E. McElroy, director of the
bureau of criminal identification and information of the Pennsylvania
State Police with headquarters at Harrisburg, told the committee that
Sgt. Charles Hartman of the State police had reported a bribe offer from
Jimmy Mack, acting on behalf of Cohen, and that the State police
commissioner had given instructions to Hartman "to string Mack along,"
because all signs indicated that the time was approaching to close in on
the Cohen operations. The advisability of trying to bait Cohen into
passing the bribe was considered but this was eventually abandoned in
favor of the direct thrust that would cripple his operations. Mack
denied the bribe offer but the committee sees no reason for doubting the
word of Captain McElroy.
The treasury-balance racket, Captain
McElroy said, has two divisions. In one division are a number of
independent operators. The other division consists of the syndicate
headed by Cohen. The State is divided into districts with separate
organizations in each district. The racket runs into many millions, in
fact, Captain McElroy estimated that it grosses more than $30,000,000 a
year, with the syndicate operation accounting for more than $20,000,000
of this figure. He identified Size as Cohen's principal representative
in Pennsylvania and declared that information in the hands of the State
police indicates that Cohen operates on an interstate basis.
Captain McElroy told the committee that
raids made during the past 1 1/2 years have resulted in confiscation of
millions of tickets and printing equipment, material and supplies worth
tremendous amounts of money, but he complained that it is difficult to
get evidence against the leaders. "They sit behind somewheres and the
money comes in to them and they don't have direct operations, and that's
that," Captain McElroy declared. He estimated that the operators
realize net profit of about 20 percent of the gross intake. He said he
had heard of many instances where the racket interests refused to pay
the big "hits."
Captain McElroy was asked whether use
of the Treasury balance has the psychological effect of giving the
lottery the benefit of the prestige of the Federal Government. He
testified that he was certain that this was so.
George T. Harris, superintendent of the
Washington office of Western Union, testified that a Western Union
employee is sent every morning to obtain the Treasury balance and he
transmits it directly from the Treasury Department to Western Union's
commercial news department in New York. The number is wired from there
to Chicago from which it is wired to 16 subscribers to this special
service. Fifty-one subscribers in the East are serviced from New York.
Three Scranton subscribers are included in the list. They are Size,
Jack Richards, and R. E. Booth. The other cities to which the number is
sent are Rochester, N. Y.; Plattsburg, N.Y.; Syracuse. N.Y.; Boston,
Mass.; Allentown, Pa.; Niagara Falls, N.Y.; Pittsburgh, Pa.; Manchester,
N.H.; Olean, N.Y.; Johnstown Pa.; Rome, N.Y.; Utica, N.Y.; Elizabeth,
N.J.; Worcester, Mass.; Lewistown, Pa.; Burlington, Vt.; Monessen, Pa.;
Buffalo, N. Y.; Baltimore, Md.; Concord, N.H.; Cortland, N.Y.; Geneva,
N.Y.; Elmira, N.Y.; Johnson City, N.Y.; Beacon, N.Y.; Endicott. N.Y.;
Ilion, N.Y.; Edgewood, R. I.; Fall River, Mass.; Altoona, Pa.; Easton,
Pa.; and Newburgh, N.Y.
The committee also questioned Joseph
Baldassari, a partner in the Baldassari Amusement Co., but he proved to
be extremely uncooperative. The committee had information to the effect
that Baldassari and his brother Al are engaged in an extensive gambling
enterprise operating under official sanction. However, he refused to
answer most of the questions put to him on the ground that his answer
might tend to incriminate him. He produced voluminous records but
refused to disclose their contents. He refused to say whether he knew
Louis Cohen and other underworld characters or whether he took Scranton
police on trips in his airplane. He did admit, however, that his father
was Ulisses Baldassari, who furnished the bail for the seven defendants
arrested by the State police in the raids on Cohen's printing
He declined to say whether he owned any
slot machines and whether his brother ran a horse room at 108 Adams
Avenue. He also refused to say whether he had paid protection money to
any official or whether it was true that he had given a $2,500 ring to
the director of public safety.
At first he refused to name the
partners in Baldassari Amusement Co. but he was finally compelled to
admit that they consisted of himself, his brother Al, and their two
wives. He was unwilling to try to reconcile this with the fact that the
firm's income tax returns listed only the two wives as the partners.
The District Attorney of Lackawanna
County, Carlon M. O'Malley, gave what seemed to the committee to be a
rather unsatisfactory explanation of the small number of gambling
prosecutions in his county. He said his office by tradition is a
prosecuting office, not a policing agency, although he does have four
county detectives. He said he would be naive if he attempted to tell
the committee that the Scranton horse rooms did not exist or had not
existed for a number of years, but he claimed that the responsibility
for any laxity rested with the city police department, which has 175
uniformed men and 12 detectives. He referred to the State police raids
on the Cohen lottery ticket printing establishment last March in
connection with which Patrick Joseph Size, Gregory Size, and others
received fines ranging from $200 to $300 but no jail sentences were
Mr. O'Malley stated that on June 29,
while on vacation, he issued orders to his staff to conduct a survey of
gambling in the areas of Lackawanna County outside of Scranton. This was
prompted, he said, by the reappearance of Cohen-controlled
Treasury-balance lottery tickets in the county. It is significant to
note that this committee's investigators entered Scranton on Juno 20 and
their presence was publicly announced several days before Mr. O'Malley
ordered his survey.
He said his staff reported back that
they and the State police had communicated with all police chiefs in the
communities outside of Scranton and had been informed that they had no
knowledge of a gambling with the exception of punchboards, which they
promised to suppress forthwith.
Mr. O'Malley submitted to the committee
a report of the survey which showed that warnings to cease operations
had been given to all suspected gamblers, including Louis. Cohen,
although Cohen's chief lieutenant, Patrick Joseph Size, was not in
Scranton when the warning was issued. In spite of Mr. O'Malley's
disclaimer of responsibility for gambling in the city of Scranton, the
"close and stay closed" order described in his report was issued to a
number of Scranton gamblers. Those warned included: Richard Booth,
distributor for the Square Deal and Penn Limited Treasury-balance
lotteries; Joe and Al Baldassari, partners in the horse room at 108
Adams Avenue; Charles Pascucci and Nick Rosse, operators of the horse
room in the Greyhound Terminal Building, 218 Adams Avenue; Peter Genello,
a bookie associated with the Baldassari brothers; James "Bus" Caffrey,
operator of a horse room at 217 Penn Avenue; Michael Nemetz, operator of
a horse room at 226 Lackawanna. Avenue; Eugene Allegrucci, distributor
of the Domino Treasury-balance lottery; James
56 ORGANIZED CRIME IN INTERSTATE COMMERCE
Martin, distributor of the Black Diamond
Treasury-balance lottery; Adolph "Dolly" Rosar, distributor for the New
Deal Treasury-balance lottery; Michael Size, distributor for the
Emperial Treasury-balance lottery; Dickey Rose, a telephone bookmaker;
and Thomas Sesso, head of the numbers racket.
Committee counsel posed this question
to Mr. O'Malley: "I wonder if you can explain why it is the place stays
wide open until our investigators arrive and our investigators can find
it (gambling) like any other citizen, yet the police are not doing
anything about it. Are the police receiving protection for that?" His
answer was, "I have no knowledge of that and cannot answer it." Mr.
O'Malley's attention was also called to the fact that the horse room in
the Greyhound Terminal Building was across the street from the district
attorney's office and the Baldassari horse room was in the next block.
He acknowledged that a gambling place in Carbondale was located in a
building owned by the mother of the prothonotary of Lackawanna County.
Mr. O'Malley argued that crime
conditions in Lackawanna County are far better than they were prior to
World War II. He attributed this improvement largely to the action of
the Army and the FBI.
Joseph Scalleat, Hazleton racketeer,
was recommended for contempt by the committee after a brief but highly
irritating appearance. He refused to bring records as directed by the
subpena because he "didn't think it was necessary" and he defiantly told
the committee at the outset that he was going to refuse to answer all
questions. He refused to tell the committee what business he was
pursuing, whether he had any brothers named Sam and Albert, or if he
knew Jack Parisi, a former New York convict, or had any contacts with
him. He refused to say if he remembered Parisi's arrest by State police
in a hide-out located in a building occupied by his sister and her
David F. Haggerty, a constable in
Scranton for 12 years and an owner of harness-racing horses, refused to
tell the committee whether or not he had any interest in the horse room
on Penn Avenue operated by James "Buz" Caffrey. He admitted that he
gave no attention to his duties as constable because it was strictly a
commission or fee office and "I just never went in for it." He testified
that he derives no income from being a constable and that he
"just about breaks even" in the operation of his stable, but he declined
to answer when questioned about the source of $19,500 in "commissions"
listed in his income-tax returns for 1949 and 1950.
The committee asked Mr. Haggerty, "Do
you know of any political contributions made from the gambling interests
in connection with the political life of Scranton?" His answer was, "I
will have to decline to answer that on the grounds it may tend to
Thomas Sesso, who has lived in Scranton
33 years, has been a numbers banker for 20 years and has never been
arrested himself, although his runners were apprehended three or four
times. He told the committee he grossed $15,000 to $20,000 a year and
operated only in a couple of blocks in the central city because "when a
man don't stretch too far the police never get you."
There were times during his years as a
numbers banker that he was compelled to suspend operations. How did he
know "when the heat was on"? His answer, "The city gives the order out
to the cops, something comes out, then I just stop." As a numbers
ORGANIZED CRIME IN INTERSTATE COMMERCE 57
has done well financially. When he gave up his
shoemaking establishment 20 years ago, he had nothing. Now he has
[$?5],000 in cash, three properties, invested money in a mortgage, and a
Lincoln automobile. He was asked, "You are retiring now on your
earnings?" He replied, "That's right. Right now I don't know nothing.
When the future coming, I don't know what I do."
Two Scranton police captains appearing
before the committee blandly insisted that their manifold duties in
other fields of police work left them with little time to enforce
gambling laws. Richard Beynon, the day captain, maintained that he was
responsible only for traffic control. He knew the horse rooms were
operating but didn't know if they had wire service. He knew Treasury
tickets were sold in the city but he claimed he never personally
witnessed any sales. He didn't know the Cohens or anything about them
but he knew the Baldassari brothers as "businessmen" and he also knew
that the numbers lottery was operating. He did not know of any numbers
bankers other than Sesso, but he did not think there were any.
The only slot machines Beynon knew
anything about were located in veterans' posts and private clubs but he
had no knowledge about whether they were operating. Asked about a raid
on a gambling house in West Scranton in which the raiding detail seized
eight or nine men but "lost" all but two of them before the arrival of
the lieutenant, Beynon said he didn't know whether any disciplinary
action had been taken on account of the "loss" of prisoners because that
was not under his jurisdiction.
James G. Conaboy, captain on the 4 p.m.
to midnight shift, testified he knew very little about the numbers
business because operations were virtually over before his shift began.
Office details and handling of complaints about disorderly conduct,
mischievous boys, etc., keep him so busy "that I do not have the time to
personally go out and observe every activity in the city or under my
jurisdiction. From the fact that no patrolman, sergeant, or lieutenant
has ever submitted verbally or written any complaint to me, I had
presumed that the conditions in Scranton were at least favorable, and I
had no occasion to suspect anything else."
If any gambling violation had been
brought to his attention, Conaboy said, he would have made out a report
to the superintendent of police, but "I never had a complaint from a
subordinate, citizen, or anybody else as to the activities of a horse
room or numbers, and therefore I would have no occasion or necessity to
submit a report to my superior."
The Scranton, Pittston, and
Wilkes-Barre horse rooms were all "drops" for wire service being
supplied by Metro-Globe News Service of Hoboken, N. J. In Scranton,
only one operator applied for the service under his own name. The other
three adopted the obviously fictitious names of the "Greek Social Club,"
the "Modern Amusement Co:" and the "B. & B. Club." The Pittston
subscribers were the "Pittston Social Club" and the "Wyoming Valley
Social Club." In Wilkes-Barre the service was furnished to J. Sheerin.
The committee sought the testimony of
Jack Parisi, long-time associate of Albert Anastasia, reputed head of
Murder, Inc., in New York, about his activities in Hazleton, Pa., but
Parisi entered a Philadelphia hospital the day before the committee's
58 ORGANIZED CRIME IN INTERSTATE COMMERCE
August [?]. Doctors confirmed that he was
suffering from a chronic leg injury directly attributed to a bullet
wound in the hip sustained many years ago.
Parisi vanished from New York in 1939
when police began hunting him for two murders. For 10 years he enjoyed
sanctuary in Pennsylvania coal field communities until State police
flushed him out of a specially designed hide-out in Hazleton and turned
him over to the New York authorities. Parisi "beat the rap" in the two
murder eases and returned to Hazleton where he blossomed out as
production manager in the Nuremberg Dress Co. factory at Nuremberg, a
few miles from Hazleton. The owner of the company is Harry Strasser,
alias Cohen, alias Lefty, with a New York criminal record. Strasser and
Anastasia are partners in the Madison Dress Co. in Hazleton, and
Strasser is also listed as the owner of the Mount Carmel Garment Co., in
Mount Carmel, Pa.; the Bobby Dress Co. in Dickson City, Pa.; and the
Interstate Dress Transportation Co. The committee also has evidence of
additional infiltration of the garment industry in Pennsylvania by
racket interests but lack of time and funds compelled the committee to
forego a more intensive investigation of this phase of racketeering
activity in legitimate business.
Except for the aggressive investigative
accomplishments of the Pennsylvania State Police and their noteworthy
efforts to cripple lottery operations centered in the cities of
northeastern Pennsylvania, the committee finds that official lethargy
toward organized gambling is so appalling as to be shocking to the
The "slap on the wrist" attitude
evidenced by the "close and stay closed" orders of nebulous tenure can
hardly be regarded as an adequate substitute for rigid enforcement that
is marked by arrest and conviction and, where the circumstances warrant
Testimony dealing with Reading, Pa.,
was heard by the committee at a hearing held in Washington on June 28,
It was immediately apparent that
Reading was what law-enforcement officers describe as an "open town." (i)
Two horse rooms operated without molestation within a short distance of
the center of the city, one within the shadow of city hall itself ;
(ii) slot machines were openly exposed except for periodic
pronouncements by the district attorney that they must stop, warnings
that received scant attention; (iii) punchboards littered store
counters, with change from purchases being deliberately placed on them
to induce play by minors as well as adults; (iv) numbers were written
openly in many places, including newsstands and barber shops.
Numerous complaints were made in vain
to enforcement officers. District Attorney John E. Ruth answered that
he viewed gambling as part of the life of the community that had to be
accepted and, anyhow, he was a prosecutor and not an investigator. This
was on May 2, 1949, and the following month church groups who approached
Mayor John Davis were told that gambling was part of the nature of the
people of Reading and that the city was not any worse than other cities
of its size. He said it was not his responsibility as mayor to rid the
city of gambling. He said it was the responsibility of the clergy to
induce the people to stop gambling.
ORGANIZED CRIME IN INTERSTATE COMMERCE 59
Western Union records introduced at the
hearing showed that a horse room at 601 Franklin Street had been
receiving wire service from March 22, 1950, until May 28, 1951, when it
became known that the committee was making its investigation. However,
service to a horse room at 31 Poplar Street, which began on March 4,
1950, was still being continued as of June 7th 1951, the date upon which
Western Union supplied the data. The subscriber for the Franklin Street
place was listed as "Ben Moyer" and in the ease of the Poplar Street
operation the subscriber was "Moyer A.C." The service came from
Metro-Globe News Service, Hoboken, N.J., a distributor for Continental
Actually the operator of the Franklin
Avenue horse room was Alex Fudeman, nephew of Abraham and Isadore
Minker, long-standing racket powers in Reading and in control of
practically all gambling. The building in which it operated was owned
by Thomas A. Williams, who admitted that the horse room had been located
in the basement of the building for years. Williams displayed some
remorse over the committee's entry into Reading and the danger of losing
his tenant. As he put it, "Who else would pay $150 a month for it?"
The committee secured from Ralph S.
Kreitz, a lifelong resident of Reading and an operator of slot machines
for more than 20 years, some idea of the "take" realized by the owners
of these machines and their locations. He said he owned about 100
machines and had been operating until the committee's investigators came
to town. He insisted that the machines were all in chartered clubs and
that there were no machines located where youngsters could play them.
These "clubs" were found to have practically no restrictions on
membership, payment of nominal annual dues being practically the only
requirement for membership.
According to Kreitz, profits from the
machines were split on a 50-50 basis between the owner of the
establishment and himself. He estimated the share received by his
locations during the preceding 14 months at $180,000. His share, he
maintained, was only about $60,000 because of heavy expenditures for
beer, lunches, and so forth, to insure "good will." Kreitz figures his
net income "in a good year" at $25,000 to $30,000 after the payment of
all salaries and expenses, but asserted that there were times when he
was forced to close down and "live off his fat." He also admitted that
he operated punchboards and console slot machines, but declared that he
realized very little revenue from these.
Kreitz was never arrested for gambling
or slot-machine operations except once 15 years ago by the State police,
but if too many complaints were made, the local police sometimes chased
him out of his locations. One such period lasted 9 months. He admitted
that there were others in the same racket but he would not name them.
The State police had "knocked off" his machines on two occasions, once
putting him completely out of business. It was some time before he was
able to accumulate enough funds to obtain more machines. He admitted
also that the Federal Government caught up to him in 1948 for income-tax
evasion for which he went to jail.
Kreitz defended gambling and even tried
to picture Reading gamblers as benevolent characters. According to him,
if a man were to lose $500 betting on a horse and the "bookie" learned
that he couldn't afford it, the money would be returned to the man's
family. He said
60 ORGANIZED CRIME IN INTERSTATE COMMERCE
there had been occasions when a player lost $60 or
$70 in his slot machines and he saw to it that the money was refunded
"rather than have any trouble."
Kreitz' personal relationships with
public officials were not without significance. He holds "open house"
for men in all walks of life, including important city officials. The
district attorney visited him once when he was sick and a State
policeman once took him for a plane ride to Florida. He could not
remember whose plane it was. Also, he admitted having given $800 to
Lieutenant Hoffman of the Reading police "to save his life when he was
sick" and that he didn't expect to get the money back. Kreitz is only
one of several racketeers in Reading and his operations are probably
dwarfed by those of the Minker brothers.
Abraham and Isadore Minker, on the
surface, are in the wholesale fruit and produce business and operate two
realty companies. Behind the scenes they engage in activities about
which they refused to testify on the ground that their testimony might
tend to incriminate them. Their nephew, Alex Fudeman, a former
bootlegger who operates the two horse rooms, also refused to testify on
the same ground.
Abraham Minker, a Russian immigrant who
was penniless in 1939 when he was released from Lewisburg Federal
penitentiary, is far from penniless now. He and his brother Isadore
refused to say whether they knew Frank Costello, Owney Madden, Nig
Rosen, Willie Weisberg, or Muggsy Taylor, and they refused to identify
the source of large amounts of miscellaneous income reported in at least
one case in an income-tax return as being derived from "gambling."
The conduct of all three of these
witnesses before the committee was such that they were subsequently
cited for contempt of Congress and their cases are now in the hands of
the United States attorney for the District of Columbia for prosecution.
Perhaps some light is thrown on the
Minkers' affairs by the testimony of their bookkeeper, Miss Ann Brenner,
a reluctant witness whose unexplained accumulation of wealth still
remains a mystery. Over the 4-year period of 1946 to 1949 the combined
income of herself and her sister was approximately $37,000. Yet
during at that time they had invested $17,000 in Government bonds, made
loans totaling $21,000, purchased stocks worth more than $22,000, put
$7,500 in Federal savings and loan bonds, and loaned $24,000 to the
Minkers' Brighton Realty Co. In addition, they had $15,910 in cash in a
safe-deposit box and had three bank accounts. Miss Brenner could not
even hazard a guess as to the balances remaining in these accounts. The
bank records showed deposits over the 4-year period aggregating
$61,037.18. She admitted that the deposits looked high but she guessed,
"It may be the same money rotating."
Miss Brenner's investments included
loans of $4,000 to Lt. Albert M. Hoffman of the Reading police and
$2,400 to Richard Birney, son of the chief of police, but she denied
that these were to incur police sympathy toward the Minkers' operations.
Her explanation consisted of vague
statements about family sayings and frugal living, along with a few
claims that were not entirely consistent with her income-tax returns.
She recalled vaguely that the tax returns of Isadore Minker showed
"miscellaneous income or
ORGANIZED CRIME IN INTERSTATE COMMERCE 61
gambling or something to that effect," and that she
might have seen that on the returns of Isadore or Abraham, or both, but
she brushed this aside by saying, "I am a bookkeeper. I am not to judge
other people's lives."
The most dismal and distressing aspect
of the story of the failure of the law enforcement in Reading was
extracted from Chief Birney, the final witness. The committee can
classify his testimony only as "pitiful." Chief Birney has held his job
for more than 7 years and is the head of a department with a personnel
of 155, including policemen and civilian employees. But he solemnly
told the committee that the top law enforcement officer in Reading was
the sheriff and that the mayor, and not he, was the man who had complete
supervision over the police department under the Third Class City Act of
the State of Pennsylvania.
Chief Birney said he had "assumed" that
the Minkers and Alex Fudeman had been "partly at the head" of the
rackets in Reading for a period of years but it had never been proved.
He had "heard" there had been two wide-open horse rooms in the city for
20 years but no investigation was ever made because he did not receive
any complaints. He admitted that the horse rooms were never raided and
no arrests for bookmaking had ever been made since he became chief.
"The policy of the department is to act on
complaints only on orders from the mayor. No complaints were received,
nor no orders given," was a stock answer made repeatedly to questions
addressed to Chief Birney by the committee. He asserted that a report
of a violation submitted by an officer on the beat was not considered a
Chief Birney said he never consulted
with the mayor about rumors that the horse rooms were operating. He
said his orders were that if complaints were received the police were to
warn the parties responsible, but that no arrests were to be made
"unless absolutely necessary."
"In a small department you don't
initiate action. You wait for orders. You don't set a policy, you
merely carry out a policy. That is what I did," said Birney in defense
of his position. He admitted that he had seen a newspaper article in
1949 which stressed that gambling was wide open in Reading and that "the
syndicate" was getting $5,000,000 annually, but he had done nothing
about it. He denied knowing anything about the special "pagoda" stamp
which was attached to punchboards, suspected as being a sign that those
particular boards were protected, and he admitted that he had never
investigated to find out what he could about any such stamp. Chief
Birney did recall one occasion when a ban on punchboards was ordered,
but he insisted that tobacco and candy companies in Reading stormed the
mayor's office complaining that the ban was interfering with trade and
compelled the mayor to lift the ban.
The committee has no difficulty, after
reviewing the Reading testimony and particularly that of Chief Birney,
in arriving at the conclusion that Reading is a classic example of
political strangulation of a police department at the behest of gambling
interests seeking to thwart any interference with their activities.
62 ORGANIZED CRIME IN INTERSTATE COMMERCE
D. CRIME IN LARGE CITIES
When the committee concluded its public
hearings in New York City in March 1951, there was one witness whose
name had appeared time and again in the testimony of other witnesses but
whose presence could not be obtained. He is Irving Sherman, one-time
intimate friend of William O'Dwyer at the time O'Dwyer was mayor of Now
The committee's desire to question
Sherman in the March hearings had been widely publicized and it was
later learned that Sherman was aware of the fact that he was being
sought, but he failed to appear. Shortly after the Now York hearings
closed, Sherman's lawyer accepted service of a committee subpena for
him, but there has never been a satisfactory explanation of his reason
for desiring to avoid the committee's process.
Sherman had been described as a man of
great mystery who might furnish information regarding the relationship
between some of the officials of New York City and the gangster
syndicates who control bookmaking and the wire service monopoly.
The intimate friendship between O'Dwyer
and Sherman had already been established, as had the friendship between
Sherman and Costello.
From the testimony at previous hearings
of the .committee and from the indictments obtained through the fine
work of District Attorney Frank Hogan of New York County and District
Attorney Miles F. McDonald of Kings County, it had become apparent that
substantial sums had been paid in graft in recent years. Bookmakers
operating on an enormous scale paid regular protection to the police
department but no one was able to ascertain how much of the "take"
filtered through to the top.
In the fire department, it was known
that James Moran, O'Dwyer's loyal friend, who has been convicted of
perjury for his false testimony before this committee, had established a
regular system for collecting graft required to be paid for oil-burner
James Moran, the man who probably knows
more than any other about New York graft lied before this committee and
has since refused to talk at all. After his conviction for perjury, he
was offered the opportunity to tell the truth but he declined the
invitation, perhaps because the 5-year sentence he has received for
perjury is less that what the truth would bring.
With Moran silent, it was hoped that
Irving Sherman might be able to throw some light on the subject.
Sherman had friends on all sides of the fence. Besides being an
intimate of O'Dwyer, he knew Congressmen and other public officials. He
was widely known in the garment industry. And he had known such men as
"Bugsy" Siegel, Frank Costello, "Niggy" Rutkin, and other underworld
characters. He would be a natural for the role of go-between.
The committee found that Sherman would
not be the fertile source of information that many had expected.
However, it felt that he should be called as a witness and the
testimony he gave was not without interest.
He appeared before the committee in a
public hearing in Washington, D.C., accompanied by counsel. He refused
to testify unless all radio, newsreel cameras, and television cameras
were turned off. With
ORGANIZED CRIME IN INTERSTATE COMMERCE 63
great reluctance the committee complied with this
demand cause it was faced with the choice of holding him for contempt or
obtaining his testimony. It came to the conclusion that the public
interest would best be served by doing what was necessary to have him
talk. His testimony confirmed previous testimony of other witnesses to
the effect that he was formerly a good friend of O'Dwyer, working
strenuously for him in the 1945 New York mayoralty election. He
admitted his acquaintanceship with Costello and "Bugsy" Siegel.
Perhaps the most sensational part of
his testimony was to the effect that in late October 1945, just before
the election, he left town at the urgent request of O'Dwyer, who sent a.
messenger urging him to leave immediately in order to be unavailable to
the press. The reason given was that the former expected a newspaper
blast linking Sherman to himself on the one hand and to Frank Costello
and "Bugsy" Siegel on the other. Sherman acceded promptly to this
request, leaving the next day with his family on a trip that had no
destination but which eventually took him to Florida, where he waited
until the campaign was over. When asked why he would make such a
sacrifice, he said, "because the man asked me to, and I thought enough
of him to do it."
When Sherman returned, he found himself
to be an outcast. O'Dwyer would not see him and when he went to see
Moran his identity was mysteriously shrouded in the fictitious name "Dr.
Cooper." Sherman said he thought use of this name was intended as a
joke, but he admitted it might have been for purposes of concealment.
Sherman was closely questioned
concerning his avoidance of the New York hearings. He admitted
discussing his absence with several friends during the time the
committee was actively seeking him, but he denied that he was waiting
for the committee to go out of existence before appearing.
Sherman testified that during the
twenties he had been an adjuster for the American Cloak and Suit
Association, that in 1937 he had gone to California for about 3 years
and then returned to New York in 1940. He described himself as a
legitimate businessman throughout and stated that presently he is in the
clothing manufacturing business. He admitted to an arrest for gambling
but denied any other illegitimate activities.
The following associations of Sherman
were developed in the hearing: While working for the Cloak and Suit
Association, he met and knew Louis "Lepke" Buchalter and Jacob "Gurrah"
Shapiro because "you had to know them * * * they would make you do
that." Sherman denied having had any dealings with them, but admitted
their power over the industry. While in California from 1937 to 1940,
he became friendly with Benjamin "Bugsy" Siegel, and went to the track
with him. He said that Frank Orsatti, of the Orsatti Bros. Theatrical
Agency, introduced them. Sherman gave no satisfactory answer as to his
purpose of his occupation in California, although he denied having left
New York, as did many others, because of the "heat" put on by Gov.
Thomas E. Dewey, then district attorney of New York. He also denied
participation in the then incipient labor shake-down in the movie
According to his testimony, Sherman
returned to New York in 1940, as general manager of Phono-Vision Co., a
New York subsidiary of a
64 ORGANIZED CRIME IN INTERSTATE COMMERCE
California company of the same name of which Frank
Orsatti was president. Frank Orsatti brought Sherman into contact with
Frank Costello, who was represented as being interested in investing in
the enterprise; Sherman negotiated with Costello with a view to giving
him the Louisiana distributorship for Phono-Vision's slot machine type
of projector by which the customer may select and view a movie for 10
cents; Costello wanted the distributorship for "Dandy Phil" Kastel.
Sherman claimed that no significance should be attached to the fact
that Phil Kastel was also Costello's slot machine distributor for
Louisiana. Sherman's idea was that slot machines and Phono-Vision
projectors might well be used by the same customers, including bars,
night clubs, and casinos.
Sherman said that he and Costello
negotiated at some length with Costello coming "to the office, oh, once
or twice a week for quite some time," although Sherman does not know
whether Costello actually put up any money for stock. In this
connection it is of note that Costello, when before the committee in New
York last March, answering a question as to whether he and Sherman
engaged in business together said, "Absolutely not."
In addition, Sherman admitted knowing
Meyer Lansky, James "Niggy" Rutkin, Joe Adonis, and Joe Stacker, alias
Doc Rosen alias Doc Harris, all of whom are known gamblers and
Turning next to Sherman's association
with Ambassador O'Dwyer, Sherman said he met O'Dwyer in the winter of
1941-42 with James J. Moran in a Broadway restaurant, the introduction
being made by a now deceased New York detective named Jack Gorman; the
friendship quickly grew and they saw each other frequently in
Washington; in fact, they stayed at the Mayflower Hotel simultaneously
on 15 occasions during the war years. Sherman thought O'Dwyer "was a
real nice man." Sherman attempted to explain his continual presence in
Washington by saying that he was there to sell Phono-Vision's 300
completed projectors to the Army Signal Corps, and to obtain business
for other corporations.
Sherman's testimony concerning the 1942
meeting at Frank Costello's apartment on the subject of Joe Baker's Air
Corps contracts differed somewhat from that of O'Dwyer. The latter had
testified in March that he thought he had asked Sherman to arrange the
meeting because "I knew he knew Costello." Sherman, on the other hand,
said Moran came to him and asked him to attend, and O'Dwyer was
incorrect when he said that Sherman arranged it. Sherman said he did
not learn what the meeting concerned until afterward because he was
detained at the bar by Mrs. Costello and another man and gained the
impression that he was not wanted in the "huddle" which included
Costello and O'Dwyer.
Sherman denied that there was any
standing arrangement under which he would be brought into New York City
from La Guardia Airport by Abraham Goldman, deputy chief inspector, New
York Police Department, but he said that Goldman had brought him and
Frank V. Connolly, Chief, Special Rating Division, WPB, and friend of
O'Dwyer, in from La Guardia several times. He said that Goldman was a
close friend of O'Dwyer's.
Sherman was in Washington at the
Mayflower at the same time as O'Dwyer at least once a week between
February 14 and March 29, 1945. On the latter date, O'Dwyer announced
his candidacy for
ORGANIZED CRIME IN INTERSTATE COMMERCE 65
the New York mayoralty. However, Sherman said he
had nothing whatsoever" to do with the decision. Sherman, nevertheless,
asked a people in the garment industry "to do everything they can, to
vote, for him, to help him," and collected and turned over to Moran or
Moe Sherman (a deceased raincoat manufacturer) "between four, five,
maybe six thousand dollars at different intervals." This money, Sherman
guessed, was turned over to O'Dwyer.
As a result of the treatment of Sherman
after the election, he and O'Dwyer are no longer friendly.
Sherman was closely questioned
concerning his selective service registration and classification of 4-A,
essential occupation. In his selective service occupational
questionnaire, filed July 17, 1942, on which his classification was
granted, he listed himself as working exclusively for Federal Aircraft
Products, Inc. But the pay roll records of Federal Aircraft indicate
that Sherman was not carried until the week of October 29, 1942.
Sherman continued on the pay roll until the week of October 8, 1943,
approximately 3 weeks after he was deferred and never notified selective
service of his change in occupation. His only explanation: was that the
books must be wrong.
NORTHERN NEW JERSEY
The committee renewed its investigation of Abner
Zwillman because it felt that his previous testimony before the
committee had not been complete.
The committee was greatly handicapped
in its investigation of Zwillman by the fact that honest citizens who
were glad to tell the committee's investigators in confidence what they
knew about his great influence in important governmental circles were
too terrified to testify in the open for fear of personal or political
reprisal or financial ruin. The committee's staff knows that his
influence extends to Newark and other political bailiwicks but time did
not permit full development of these aspects of the investigation.
Like Frank Costello in New York,
Zwillman exercises his influence in New Jersey in a manner that makes
detection almost impossible. He makes it a practice never to attend any
public function and he avoids wherever possible having his name appear
openly in any financial transaction. Twice he sought to avoid testifying
before the committee. In March, after a long search and extensive
conferences with his counsel, he at last testified briefly before the
committee at a time when its time was too limited for a thorough
examination. Many questions asked of him at that time he refused to
answer on the ground that his answers might tend to incriminate him.
When counsel for the committee advised
his counsel in July that he was wanted again for questioning, he
vanished entirely. His counsel claimed they did not know of his
whereabouts, his home was empty with no one to receive telegrams or mail
and a Nation-wide search by the United States marshals, the Coast Guard,
and the committee's staff failed to reveal his whereabouts. The
inference is inescapable that Zwillman, in spite of his wealth and
political power, has a great deal to hide.
Zwillman's beginnings were as a
vegetable cart peddler in the third ward of Newark. His great
opportunity came when he and his childhood friend, Joseph Stacher, found
a chance to go into bootlegging.
66 ORGANIZED CRIME IN INTERSTATE COMMERCE
They eventually became partners in what became the
largest beet-legging syndicate of the prohibition era.
The fabulous bootlegger incarnate
The committee was most fortunate in
having testimony from Mr. Edwin A. Baldwin, a recently retired member of
the Intelligence Unit, United States Treasury, who, with other revenue
agents, conducted an intensive investigation of Zwillman and his
associates covering the period between approximately 1926 and the
beginning of World War II. Mr. Baldwin's testimony and that of Joseph
H. Reinfeld given in the 1950 tax fraud ease of United States v. Rutkin
(in which Rutkin was convicted and received a 4-year sentence and a
$10,000 fine) together paint an amazing picture of Zwillman the
bootlegger. The picture had been known only dimly before the public
hearings in Washington on August 16 and 17, 1951.
From a background of poverty and
privation, he rose in a decade to become the holder of a 40 or 50
percent interest in the Reinfeld Syndicate, an organization which
imported nearly 40 percent of all the illicit alcohol consumed in the
United States during prohibition. The sums of money involved were
staggering, as the following excerpt from the record attests:
"Q. Now, Mr.
Baldwin, as a result of your investigation, can you give us an
approximation in money of how much this syndicate collected from 1926 to
A. All I can tell
you is what we found * * *. We uncovered bank deposits of around
$25,000,000, then we found out that was only part of the syndicate's
operations. We found that the cash they took in they never deposited. *
* *. Mr. Stacher at one time told me that they collected at least as
much cash as they collected (checks). * * *
Q. So that roughly
the Reinfeld Syndicate collected approximately $60,000,000 from their
illegal liquor distributorships?
A. Based on my
investigation, I would say yes."
In the early days Zwillman was big and
tough. He was arrested several times for assault and battery, and once
in 1930 he was convicted of atrocious assault and battery when he beat a
numbers runner almost to death. He came out of the notorious third ward
in Newark, where he helped organize the Third Ward Political Club which
had its headquarters in or near a saloon run by one "Pop" Handler, whose
son, Charles, is presently statutory representative for several of
Zwillman's legitimate companies as well as corporation counsel of the
city of Newark. Among his associates were Joseph "Doc" Stacher, alias
"Doc" Rosen, alias "Doc" Harris, a big-time gambler with a record; Jerry
Catena, whose participation in gambling operations is well known; Willy
Tiplitz recently convicted with Zwillman's cousin, Daniel, for running a
fixed numbers game; Charles Haber, alias Charles Haberman, recently
convicted and sentenced to 10 years on a narcotics charge; James "Niggy"
Rutkin, known in prohibition days as Zwillman's "enforcer."
These men, or most of them, joined the
group led by Joseph Reinfeld, known as the Reinfeld Syndicate. This
syndicate, dealing largely with the Bronfman interests which owned the
Bronfman Distillery of Canada, carried on what they described as the
"high seas operation." The system under which they operated consisted of
bringing liquor from Canada, France, England, Scotland, and Germany to
the little St. Lawrence River island of St. Pierre et Miquelon and there
transshipping it to "rum runway" 12 miles off Sandy Hook.
At that point the syndicate's customers
took over and ran the liquor into the United States. Much of the money
received could be sent in $100,000 and $500,000 lots, frequently in
gold, to Cuba "so that in case this country got too hot for them, they
would have something if they had to flee."
When the customs authorities
investigated the settlement arid obtained a payment of $3,000,000
Zwillman immediately filed several delinquent income-tax returns. When
Mr. Baldwin asked Zwillman why he had done this, Zwillman said, "I saw
what happened to Al Capone, and I said to myself, `Who am I? If they
can put Al Capone in jail, these fellows, they can also put me in.' "
Zwillman after repeal, legitimate businessman
When Zwillman appeared before the
public hearing of the committee in Washington on March 26, 1951, the
following question and answer occurred:
Q. Did I
understand from your testimony that since prohibition days you claim you
have gone legitimate in your business?
A, From that
period of 1935 or 1936 up, I have been trying, Mr. Senator * * * I am
trying -- trying hard.
This endeavor has been signally
successful financially, more so even than the endeavor made by a great,
good friend of Zwillman's, Frank Costello. A short summary of
Zwillman's legitimate activities will demonstrate this.
After repeal, several members of the
Reinfeld Syndicate, including Zwillman and Joseph H. Reinfeld, put the
final liquidation dividend of $250,000 into the new liquor-importing
corporation of Browne-Vintners. To avoid public disclosure of the
participants, all the stock of this corporation was held by a nominee.
The original cost was $1,000 a share. In 1940 Browne-Vintners was sold
to Seagrams for $7,500,000, the sale price per share being approximately
$3,000. Zwillman was alleged to have had a 50 percent stock interest in
the company from its inception, but received only 16 percent of the
proceeds of dissolution. His complaint on this score plus complaints
concerning the allocation of the tax burden and the diversion of
corporate business led to a settlement in late 1942 under which Reinfeld
paid $308,000 to Zwillman, $50,000 to Stacher and $250,000 to Rutkin.
Rutkin failed to report this income in his income-tax returns with the
result that he was prosecuted and convicted in 1950 for tax evasion. Reinfeld
testified in that case that he had been questioned in late 1949
concerning Zwillman's failure to report the $308,000 he received in this
settlement but no action against Zwillman on this score has been taken.
While Zwillman's income-tax returns
were being investigated the confidential agents' reports mysteriously
disappeared from the files of the Bureau of Internal Revenue in
Washington. Later direct quotations from these reports appeared in
legal papers used by Rutkin. Browne-Vintners was not by any means
Zwillman's only legitimate venture after prohibition. In 1935, the
United States Yeast Co. was incorporated and Zwillman at its inception
held 40 percent of the stock for which he paid $10,000. The company
operated at a loss despite the fact that Zwillman poured money into it.
As of August 31, 1936, it owed him $55,947.08 and it was sold in early
1947. There was also the Barr Kegtap System, Inc., incorporated in 1936
and which at the time of its liquidation in 1938 owed Zwillman
68 ORGANIZED CRIME IN INTERSTATE COMMERCE
There are at least six other more
successful ventures in which Zwillman has participated in a managerial
capacity. There is Public Service Tobacco, distributor of cigarettes
through vending machines, owned one-half by Zwillman's immediate family
and one-half by the family of "Big Mike" Lascari, a close friend of
"Lucky" Luciano, who took $2,500 to Luciano in Italy in 1949. This
company for the fiscal year ending November 30, 1949, had gross sales of
Another enterprise is Federal Automatic
Co., Inc., which rents washing machines and which reported gross
receipts for the year 1949 of $114,872.34. Zwillman also owns 97
percent of the shares of E & S Trading Co., dealers in iron and steel
for which he paid $97,000. Finally there are his General Motors
distributorship, parts and service agency, and used-car business. In
the year 1948 alone, the city of Newark, for which Zwillman's lawyer,
Charles Handler, is corporation counsel, purchased $379,983.36 worth of
trucks from Zwillman's business, despite the fact that the other bids
were lower and the same trucks could probably have been bought elsewhere
by the city for $16,000 less.
Zwillman has also invested money in
enterprises in which he takes no part in the management, sometimes using
a "front" to conceal his participation. The committee received
testimony regarding several of these but it is certain that these are by
no means all. In 1944-45, he invested approximately $60,000 in two
independent movie-producing companies; he put about $400,000 into the
purchase of the former United States post office site in Louisville,
Ky., which was later sold at a profit, although he reported a loss in
his income tax returns; and he bought $41,000 worth of bonds in a New
York hotel and $21,000 worth of bonds of the Hudson & Manhattan
Zwillman and his wife own 42,714 shares
(slightly under 2 percent) of the stock of Barium Steel Corp. which is
controlled by J.A. Sisto. Out of fairness, it should be said that.
although Zwillman and Sisto have been close friends for a number, of
years, the committee found no evidence that Zwillman exercises any
influence over the company's affairs. This stock has a present value of
The rough total of these known
investments is $1,100,000, a sum which is substantially greater than the
legitimate investments admittedly owned by Zwillman's intimate, Frank
Costello. Committee testimony indicates that Costello made a $119,000
capital gain from his Wall Street property, has an interest in an
infrared-ray broiler company, and a $41,000 investment in oil wells.
One of the nominees commonly used by
Zwillman is Arthur Garfield Hays of the New York bar. Another man who
has acted as a nominee for Zwillman is Jules Endler, Newark
restaurateur, who was very cooperative in his testimony before the
committee. He asked Zwillman why he needed a "front" and Zwillman
replied that his known presence "might injure" other participants. Mr.
Endler went on to say that in none of the deals in which he had been
associated with Zwillman, had there been a full disclosure of his
participation even to the other investors.
Zwillman the politician
Although Zwillman has been "trying hard" to be a
legitimate businessman since the repeal of prohibition, business has not
been the sole outlet for his funds and energies. He seems to have
ORGANIZED CRIME IN INTERSTATE COMMERCE 69
politics on a rather impressive scale, always
behind the scenes, of course. His reasons for wanting to exercise
political inference are quite obscure.
(i) State-wide.--In the 1949 New
Jersey gubernatorial campaign, Zwillman, through an intermediary,
offered Democratic candidate Elmer Wene $300,000 in return for the right
to approve the man appointed attorney general of the State of New
Jersey. It is to Mr. Wene's great credit that he turned this offer down
flatly, without even permitting the proposal to be fully explained to
him. Mr. James A. Bishop who was Mr. Wene's adviser at the time and who
testified on this subject before the committee, stated that he was
approached by one George Kesselhant, assistant to the Democratic leader
of Essex County, N. J., who came to him to say that he had a very
important offer to make to Mr. Wene. The offer was that "Zwillman would
go for $300,000 to Senator Wene because Zwillman does not want the Wene
administration to hurt him * * * that is all he asks." When pressed for
more specifications, Kesselhant told Mr. Bishop that Zwillman "would
want a friend in the State attorney general's office." Mr. Bishop went
on to say that he understood this to mean that Zwillman desired to name
the State attorney general. Wene was not elected governor and his
Republican opponent received a heavy vote in Hudson County, a county
which has always been overwhelmingly Democratic. As will be seen from
the discussion below, there is a strong chance that Zwillman had
something to do with having that vote swing away from Wene.
On June 26, 1949, a testimonial dinner
was tendered Harold Krieger, assistant corporation counsel of Jersey
City and a close friend of Zwillman's. This dinner was held at the
Essex House, Newark, and was attended by about 1,100 people, mainly
labor leaders and politicians. Krieger as guest of honor received,
among other gifts, a gold-plated typewriter and. money toward a new car.
The toastmaster was Harold G. Hoffman, former Governor of New Jersey,
who appeared admittedly on the invitation of Zwillman.
Previously, in the 1946 Republican
primary for the governorship, ex-Governor Hoffman had solicited
Zwillman's help in the Newark-Essex County area, both by telephoning him
personally and by sending an emissary, Joseph Bozzo. Although Bozzo
insisted that Zwillman contributed no money, he did say that Zwillman
was asked to give all the help he could. The telephone company and
hotel records indicate that on March 26 and April 9, 1946, Zwillman
called the hotel room in Trenton of State Senator Charles K. Barton, at
the time majority leader of the New Jersey Senate. On the first call he
asked for Bozzo and on the second, he asked for and apparently spoke to
Senator Barton. Bozzo believes that these calls were in reference to
Governor Hoffman's candidacy in the Republican primary.
These incidents contrast sharply with
the following testimony given by Zwillman when he testified last March:
Q. Will you tell
the committee whether in the last 3 years you made any political
contributions? * * *
A. I have not made
anything of substance anyhow. * * *
Q. Did you ever
contribute to a gubernatorial campaign in the State of
A. I am quite sure
I did not.
70 ORGANIZED CRIME IN INTERSTATE COMMERCE
(ii) The local level.--In May
1949, the Hague-Eggers administration of Jersey City terminated after
approximately 30 years of uninterrupted rule. John V. Kenny and four
other city commissioners were elected on the so-called Freedom Ticket.
Of these five men, only three remain in power today. The other two
have been stripped of their powers because they would not "work in
harmony" with the new administration. One is Charles Witkowski,
formerly director of public safety, in charge of the police department,
who has been stripped of his powers and today is in charge of the city's
lighting system, while the other is James M. Murray, formerly
commissioner of parks and public property, who presently has under his
control only a public bathhouse.
Commissioners Witkowski and Murray
together with the former head of the city police racket squad, and one
of the patrolmen on the racket squad described for this committee the
present picture in Jersey City. Upon entering office in May 1949, the
Kenny administration continued for about 6 weeks the racket squad it had
inherited from the old Hague-Eggers regime. As this squad proved to be
inefficient in the eyes of Commissioner Witkowski, he recommended a
change of personnel to Mayor Kenny, who suggested replacements. The new
squad, composed of men suggested by Mayor Kenny, made only one arrest in
7 months. Thereupon, Commissioner Witkowski replaced it with men of his
own choosing under Detective Joseph Brooks. This squad went immediately
to work and made approximately 180 arrests in a comparable 7-month
period, with a 95-percent, conviction rate. In the 16-month period of
the squad's operation, over 325 arrests for gambling, numbers, etc.,
were made, the highest per capita percentage in the United States. It
was estimated by Mr. Brooks that the operation of his squad had, since
January 1, 1951, "cost the book-makers in Jersey City in bail alone
approximately $800,000." At the same time, Commissioner Witkowski
organized a water-front squad which made a vigorous effort to eradicate
usury and gambling, and generally to maintain peace along the notorious
Jersey City water front.
The efforts of these squads, and the
success of those efforts, caused Mayor Kenny to say to Commissioner
Witkowski, "Between the gambling squad and the water-front squad, you
are hurting our friends." Kenny attempted to get the same message
across to Witkowski through Commissioner Murray.
Among these friends may have been
Zwillman associates, even though Zwillman, at the public hearing last
March, responding to a question concerning a $50,000 contribution to
Mayor Kenny's 1949 campaign, said:
50,000 cents * * * Mr. Senator, that is another fantasy, and whoever
gave it to you ought to -- I never gave him 50 cents.
Mr. Bishop, when testifying about the
$300,000 contribution offered to Senator Wene in return for the right to
select the State's attorney general in the 1949 gubernatorial campaign,
stated that the intermediary who made the offer for Zwillman said, "You
can tell the Senator that Zwillman will do more for Wene than he did for
Johnny Kenny." Mayor Kenny, in his testimony, denied he had received
help from Zwillman but Bishop seemed quite certain of the accuracy of
his own recollections.
ORGANIZED CRIME IN INTERSTATE COMMERCE 71
Testimony was taken both first from
Harold Krieger, labor lawyer and assistant corporation counsel of Jersey
City, and then from his former wife, Mrs. Muriel Krieger, resulting in
many discrepancies and contradictions. However, Commissioner Murray, to
a degree, con-firmed part of Mrs. Krieger's statements, and Mrs. Krieger
herself testified in a manner that gained the credence of the committee.
Krieger claimed not to remember very
clearly about his dealings with Zwillman. He said he met Zwillman at a
restaurant just before World War II and learned he was in the tobacco
business. He said he might have talked to Zwillman occasionally about
legislation affecting the tobacco business but he could not recall
clearly. He was sure he had never discussed politics with Zwillman. He
said he has seen Zwillman only occasionally but has never represented
him legally or otherwise. He said that the acquaintance was casual and
social, and that he had never sought Zwillman out, although he might
have dropped in at Zwillman's house on occasions when he happened to be
near there on other business. He said that in Florida, he had seen
Zwillman once or twice on a casual basis just because Zwillman happened
to be staying at the same hotel as some of Krieger's friends. Krieger
was asked particularly about visiting Zwillman at his hotel in Florida
in the winter of 1948 and 1949. Krieger was quite vague about the
number of times they had met: "It may have been 10. It may have been
two or three. It may have been 12 or 4."
Krieger admits that he occasionally
talked to Zwillman on the telephone, but he could not recall why he
should have placed two calls costing approximately $6 each to Zwillman
in Waukesha, Wis., on January 20 and 22, 1951.
Mr. Krieger's testimony impressed the
committee as being vague and general, perhaps even to the point of being
evasive. His recollection regarding a number of events seemed to be
Mrs. Krieger, on the other hand, was
much more definite and positive in her testimony. Although she had
refused to testify except under subpena, when she actually reached the
stand she testified freely, openly, and in a straightforward manner. As
she was not in the hearing room at the time Mr. Krieger testified and
did not hear his testimony, it cannot be claimed that she was
deliberately contradicting her former husband.
Mrs. Krieger said that Zwillman and
Krieger consulted each other often on labor and political matters; that
during some periods Krieger would call Zwillman "quite frequently," and
that "there were times when [Krieger] would see [Zwillman] once a week *
* * on Saturdays generally * * * sometimes for 2 months at a time." She
said these visits were always prearranged by telephone and that Krieger
went to Zwillman's house for the specific purpose of seeing him. She
said Krieger's statement that he dropped in at Zwillman's house only
when in his neighborhood was not correct.
Regarding visits by Krieger to Zwillman
in Florida in the winter of 1948 and 1949, Mrs. Krieger testified that
"they used to confer almost every afternoon" by prearrangement. She had
been present on several occasions when they conferred beside the pool at
the Hotel Martinique, and at other times, Krieger would tell her that he
was going over to talk to Zwillman and on his return he would report
that he had done so. Mrs. Krieger also said that in Florida, Krieger
would see Jerry Catena, Zwillman's former associate, the person from
72 ORGANIZED CRIME IN INTERSTATE COMMERCE
whom Zwillman and Lascari bought the Public Service
Tobacco Co. Catena is a big-time gambling operator who was suspected by
Mr. Baldwin, former Treasury intelligence agent, of being a front for
Mr. Krieger denied ever using the term
"Big Fellow" when referring to Zwillman and "Little Fellow" when
referring to Mayor Kenny. Mrs. Krieger, on the other hand, was quite
definite in saying that Krieger used those terms almost exclusively in
referring to Zwillman and Kenny and called Zwillman the "Big Fellow"
even when talking to him. She added that these nicknames were used
partly to conceal the identity of the individuals when talking on the
telephone. Under persistent questioning, she also said Zwillman clearly
dominated Krieger. She said, "Well, he would consult with him and ask
his opinion, and if Zwillman said anything, I believe it was done."
Krieger admitted doing for Mayor Kenny
everything "an individual can do to elect a candidate" in the 1949
campaign in Jersey City but he denied having directed the campaign,
swinging the labor vote, or discussing the campaign with Zwillman. Mrs.
Krieger, on the other hand, stated that Krieger had discussed the
campaign with Zwillman on several occasions, and she recalled a dinner
with Kenny's son-in-law and his wife at which Krieger virtually promised
to swing the labor vote to Kenny. This testimony was supported by that
of Commissioner Murray, who testified that Kenny told him, in an effort
to make Murray more agreeable to the use of Krieger's law office for
press releases, photographs, etc., that "Mr. Krieger was most
instrumental, in fact almost solely instrumental, in getting a labor
parade, which was a very big parade there, during our campaign and that
he did that job almost alone."
The committee believes that Krieger
knows more about Zwillman's participation in politics than he is willing
Zwillman apparently has found it
somewhat difficult to shake off his past associations with criminals.
Indeed, he maintains contacts with so many of them that it would
probably be closer to the truth to say that his effort to "go straight"
in this respect is more half-hearted than difficult. A list of his
associates since repeal and his conversion to legitimate activities
reads like a "Who's Who" in big-time, interstate crime.
Frank Costello, whom he met in the
prohibition era, and whom he admits knowing "very well," is still close
enough to him to be in fairly regular telephone contact. He knew and
called "Bugsy" Siegel, west coast mobster, before the latter's still
unsolved murder in 1947. He admits knowing "fairly well" Meyer Lanky,
E. J. Catena, a convicted murderer, Willie Moretti, Solly Moretti,
Charles "Lucky" Luciano, Frank Erickson, "one, maybe two" of the
Fischettis (Capone's legatees in Chicago), Joe "Doc" Stacher and Joe
Adonis; The following testimony indicates what Zwillman thinks about
Q. Costello is a
big racketeer, isn't he?
A. If I got to
believe what they say about him in the papers, then people will believe
what they say about me, so I am not believing it.
The original purpose of these associations is
illustrated by the following excerpt from Zwillman's testimony:
ORGANIZED CRIME IN INTERSTATE COMMERCE 73
Q. Did you have any
business with Joe Adonis during prohibition?
A. Nothing of
importance. The only reason, you sometimes can't tell. If you sold an
office and you didn't know who the partner was in the office, so he
might have been a partner.
It is to be remembered that the
above-named racketeers, gangsters; and gamblers continue as associates
of Zwillman as of the last few years. In addition, he maintains close
present contacts with Jerry Catena. Catena is a hoodlum whose
convictions include one for bribing a juror when Nicky Delmore was tried
for the murder of a prohibition agent. In the year 1946 Catena and Joe
Adonis as partners received $120,000 from one gambling establishment
alone. Catena is vice president and majority stockholder of People's
Express Co., an organization which attempted to rent for $96,000 per
year the $8,300,000 Newark Union Truck Terminal, the carrying charges of
which are close to $500,000 per year. The local teamsters' union had
virtually closed the terminal down by one of its loading rules but
Catena's representative was able to assure the Port of New York
Authority which built and owns the terminal that People's Express would
have no labor trouble.
Zwillman's partner in Public Service
Tobacco Co. is Michael "Big Mike" Lascari who was brought up in the same
household as "Lucky" Luciano. So close is Lascari to Luciano that he
visited Luciano in 1949 in Italy for a week and admits that he took
Luciano at least $2,500. Lascari also gave "Lucky's" brother a Manhattan
juke-box distributorship after "Lucky's" deportation because, as he put
it, "our relationship, so far as the Luciano family was concerned, was
very close. He was not doing anything; as a matter of providing a means
of making a living I gave it to him."
When asked how he reconciled these
unsavory associations with his endeavor to become and remain legitimate,
Truthfully, I am traveling by myself. I am not looking to run away from
anybody if they are not breaking the law. If they are breaking the law,
they could go their own way, it is none of my business. I am trying
to--I spend my time in the office all day and home all night.
This is the language of the man who
craftily evaded the committee Nation-wide hunt in July and August 1951,
when it was seeking his presence again or a public hearing in
The return visit
The committee returned to the Miami
area in June to view developments since its last investigation.
Information as to events occurring since that last visit was furnished
by the testimony of Dan P. Sullivan, operating director of the Crime
Commission of Greater Miami. Mr. Sullivan expressed concern that little
had been done regarding an investigation of contributors to the 1948
gubernatorial campaign with its interstate racket implications, nor had
the Florida State Racing Commission effectively removed the cloud over
the dog racing in the state because of disclosures of the holdings and
activities of Capone associates.
With regard to the 1948 campaign, three
of the major contributors were Louis E. Wolfson, C. V. Griffin, and
William H. Johnston, principal operator of four Florida dog tracks and
an Illinois race track and an old-time associate of Al Capone's
legatees. The total contri-
74 ORGANIZED CRIME IN INTERSTATE COMMERCE
bution of these three alone was in excess of
$400,000. Yet the incumbent, Gov. Fuller Warren, submitted an affidavit
purporting to reflect the total of contributions to his campaign as
required by Florida law that accounted for $8,825, and he omitted from
his schedule of contributors the foregoing named persons. Further,
there seemed to have been no State interest manifested in the apparent
violation of section 550.07 of the Florida statutes concerning campaign
contributions by an officer or stockholder of a racing licensee
corporation. At previous hearings Johnston had sworn to substantial
campaign contributions to Governor Warren's gubernatorial campaign.
Notwithstanding, Johnston and his tracks seem to enjoy immunity from
State level inquiry.
attempt to control public opinion through the press and radio
Information was obtained in this return
visit to Miami concerning the infiltration of out-of-State racketeers
into the Miami newspaper area in order to protect and insure the
tremendous illicit profit to be made from gambling in that area.
Testimony was received concerning the sponsorship and purpose of a
newspaper founded in 1949 and known as the Daily Mail. An ex-convict
named Harry I. Voiler testified that he had started the newspaper but
denied that any money had been invested by Martin Accardo, formerly of
the Capone gang. However, Mrs. Oretto Y. Carroll, who had been married
to Accardo, testified and produced documentary proof that Accardo had
invested $125,000 in this journal. Mrs. Carroll also said that Voiler
had attempted to enlist her aid in persuading Tony "The Enforcer"
Accardo (Martin's brother), sometimes described as the "new Capone," to
"solicit" advertisements from night-club owners and movie operators.
She stated that the purposes of this paper were (1) to provide prompt
dissemination of racing results and (2) to create a favorable atmosphere
toward out-of-State racketeer elements to be found in Miami. In support
of this latter purpose an editorial from the Daily Mail welcoming the
notorious Frank Costello to Miami was received in the record.
The revelation that Lee Mason, alias
Chicago Phil Friedlander, a man with a lengthy criminal record of many
types of offenses, had been recently serving Miami area radio stations
as a disc jockey and commentator with obvious potentialities as a molder
of public opinion from a point of view most advantageous to the racket
interests, was topped only by Mason's modest admission that "I am
considered more or less of an authority on law-enforcement matters" and
"for 5 years I did a program known as Criminal Court Notes." The
committee did not doubt that Mason could speak with the authority of one
who had viewed law enforcement from many angles, but could scarcely
approve the use of the air waves to the unsuspecting public as a medium
for the expression of his beliefs.
The committee experienced considerable
difficulty in obtaining testimony from the former sheriff of Dade County
(which embraces the Greater Miami area), James A. Sullivan. This man,
who had been removed and shortly thereafter reinstated by Governor
Warren, resigned almost immediately after the committee subpenaed him on
its return visit to Florida. Sullivan presented the dismal picture of a
former standard bearer of public trust asserting his constitutional
ORGANIZED CRIME IN INTERSTATE COMMERCE
privilege against self-incrimination and refusing
to answer questions concerning property acquisition and campaign
Mrs. Ethel Sullivan, wife of the
ex-sheriff, who had personally participated in collecting money for her
husband's 1944 and. 1948 campaigns, said that the money just flowed and
much of it was diverted by her into funds which she used to pay off a
mortgage on the home of her parents in Perryman, Md., and to build a
home for her sister in Aberdeen, Md. At least $30,000 was misapplied in
this way and apparently unreported as income, as both Sullivans have
since been indicted for income tax violations. Mrs. Sullivan was not
above affixing her husband's name to property conveyances and talking an
unsuspecting notary public into the acknowledgment. To believe that
ex-Sheriff Sullivan was not aware of these doings is incredible.
Just outside of Miami, there is a town
of Hollywood, Fla., with a population of about 18,000 people. Hollywood
has been known as a wide-open town. The former city tax assessor, Lee
A. Wentworth, told a lurid tale of vast gambling operations which opened
after the 1948 election. Wentworth and several citizens formed a
committee with the express purpose of combatting the vast gambling
operations in Florida. They had no success whatever in obtaining aid
from the local authorities, so they informed Governor Warren by telegram
and telephone of the situation. They received no reply to either
message. Their efforts evidently harassed the gambling interests
somewhat, as Wentworth stated that on two different occasions he had
been offered $25,000 to stop his campaign against gambling in Hollywood.
Three witnesses testified that the
mayor of Hollywood, Lester C. Boggs, was actively aiding gambling
interest in the city. The testimony revealed that Boggs was on friendly
terms with Jake Lansky, Meyer Lansky, and other big-time gamblers in
When Boggs took the witness stand, he
emphatically denied most of the above testimony, claiming that these
witnesses were political soreheads and disgruntled defeated candidates.
Boggs denied receiving any money from gamblers for protection and
glossed over the "exaggerated" claims that Hollywood was a wide-open
town. Boggs admitted, however, knowing the gamblers named heretofore but
really didn't know what business they were in -- especially if it was
The committee reviewed the powerful
position of affluence and influence in Florida State affairs wielded by
Johnston, who in some investments and operations has fronted for Johnny
Patton, former "Boy Mayor of Burnham, Ill." and currently described as
probably the most important surviving member of the Capone hierarchy.
Attorney Albert D. Hubbard of Miami hesitatingly explained the reason
for a trip made by Raymond Craig, a top Miami gambling figure, and
himself to Chicago in April of 1949. Hubbard had been retained by Craig
to prepare and attempt to push through the Florida Legislature a bill
designed to legalize the handling of off-track bets by bookies. When
shown copies of hotel bills reflecting a visit to the Blackstone Hotel
in Chicago on April 21, 1949, where Johnston maintained an apartment,
Hubbard conceded that he and Craig had gone to Chicago to see Johnston
about the proposed legislation. When asked why Johnston, who had no
official standing, had been sought out, Hubbard acknowledged, "I knew
that Mr. Johnston
76 ORGANIZED CRIME IN INTERSTATE COMMERCE
was a long time friend of Governor Warren's. I
knew that he was in the racing business and I knew that he would he the
logical man to whom Governor Warren would turn for advice concerning
Throughout the Florida testimony the
name of Governor Warren cropped up frequently in questionable
connections. The committee felt that it was only fair on its part to
offer the Governor an opportunity to answer the allegations and charges
made against him. Opportunity to appear voluntarily before the
committee was extended to the Governor on three separate occasions prior
to the June 1951 hearings in Florida. These three invitations were
rejected. As the investigation and then the hearings proceeded, it
became increasingly apparent to the committee that the taking of
testimony from Governor Warren would be desirable. Finally; in light of
the Governor's refusals to appear voluntarily, the committee issued a
subpena requiring his appearance before the committee in Washington, D.
C., on July 9, 1951. Governor Warren refused to respond to the subpena,
resting his refusal on the ground of State sovereignty.
The committee again offered to obtain
testimony from the Governor and notified him that it would receive his
sworn testimony in Tallahassee. Governor Warren replied that he would
be happy to have a "conference" in Tallahassee with the committee, but
left no doubt that he would refuse to take oath in testifying as had
been required by rules of the committee of every other witness who had
appeared before it. In other words, the Governor took the unusual
position that while he would talk to the Senate committee, he would not
swear that his statements were the truth. Such unworn statements could
not be the basis of perjury charges if they were found untrue. Faced
with the persistent refusal of the Governor to appear and testify under
the usual form of oath the committee terminated its efforts to obtain
The conclusion reached by the committee
after its return visit in the summer of 1951 is that despite the most
commendable efforts of certain groups and organizations in Florida, such
as the Crime Commissions of Greater Miami and Tampa, illegitimate
activities, such as gambling continue to exist on an extensive scale.
This gambling is controlled by interstate syndicates and unsavory
associates of some men in high office.
Since the population of Baltimore city
represents approximately half of that of the entire State of Maryland,
the committee's inquiries were directed at first to Baltimore where the
Nation-wide wire service was found to have an important subsidiary. Anne
Arundel County, immediately adjacent to Baltimore city, came in for
scrutiny, and a $6,000,000 gambling operation in Prince Georges and
Calvert Counties was uncovered.
This operation disclosed a welter of
law enforcement complications and jurisdictional problems because of its
interstate character. The District of Columbia and Virginia were
encompassed by the venture, and although the pick-up men and runners
traveled daily across State lines, law enforcement authorities had not
uncovered the operations which had carried on over a considerable period
and involved sizable amounts.
ORGANIZED CRIME IN INTERSTATE COMMERCE 77
Baltimore City.--Maryland is a
racing State. The Baltimore gambling pattern seemed to have sprung from
the bookies' penchant to exploit off-track betting in the territory
contiguous to race tracks. The bookie wire service, scratch sheet
business, and their running mate, the lucrative numbers business,
thrived. That the situation could not have existed without police
knowledge and permission goes without saying.
There is substantial evidence that more
than a decade ago, after the end of the prohibition era, national
racketeers began to muscle in on Baltimore gambling. A bombing episode
in the thirties involving Julius "Blinky" Fink, associate of Nig Rosen's
Philadelphia mob, and numbers operator "Willie" Adams, marked the
beginning of the effort of out-of-State hoodlums to declare themselves
"in" on Baltimore's lucrative numbers business and other gambling.
Investigation. developed the fact that the head of one of Baltimore's
several large numbers syndicates was directly approached by an
out-of-town mobster who stated that his outfit was taking over 75
percent of the Baltimore operation. This muscle man pointed out that
even after such a cut there would still be more profit because of
enlarged operations. Evidently this "muscle" succeeded, as the local
operator withdrew to less dangerous endeavors.
Much of Baltimore's gambling has been
funneled through night club and tavern operations. The club or bar
operation is run in the name of a front in whose name the license is
held. In one case the front, Myer Rosen, frankly admitted under oath
that he had no financial interest whatever and was merely the bartender
for gambler and narcotic violator Louis Oppelman at Phil's Bar. In
another instance the front man, Samuel Aaronson, admitted that he had
borrowed the entire sum to start the business from Ike Saperstein, a
racketeer with a criminal record who was using the Blue Mirror in
conjunction with his gambling operations.
The size of such operations by gamblers
requires, for their own protection, the laying off of parts of their
bets with gamblers in other States. They have done business by
telephone with well-known betting commissioners in various cities, such
as Edward Dobkin of Cincinnati, and Louis Dove of Washington, D.C.
Settlement was sometimes made by check and, of course, the amount of
these checks gives no real idea of the full extent of the gambling
operation. One Baltimore night club front operation showed nearly
$200,000 in 1 year moving through its accounts to gamblers in other
Baltimore has not been without its
other gambling activities -- crap games (with loaded dice), numbers
racket, etc. Willie Adams, one of Baltimore's principal numbers
syndicate operators, admitted his "take" was $1,000 a week.
George Goldberg, long a figure in the
sporting fraternity of Baltimore, came before the committee with an
imposing array of lawyers. He refused to answer all questions except as
to his name. At the public hearing he failed to answer the subpena of
situation in Baltimore has presented a serious problem. The increased
use of drugs by teen-agers has been particularly alarming. The pattern,
generally speaking, followed that of a youth being induced by a friend
to try a "reefer" of marijuana. Later he was induced to try something
78 ORGANIZED CRIME IN INTERSTATE COMMERCE
sniffing heroin a few times, he learned about
"mainlining" or injecting the drug directly into his veins. In short
order, he became a slave to drugs. The cost of satisfying his habit
almost inevitably led to crime. It also led to the enslavement of
others because the young addict soon found that selling the drug was one
means of supporting his own habit.
An extremely interesting revelation
occurred when a committee staff member testified that, following a tip
that a major portion of the marijuana supply for the
Baltimore-Washington area was growing wild in western Maryland and West
Virginia, he explored the countryside along the Potomac near Kitzmiller,
Md., and found marijuana growing in large quantities as a weed on the
land of several unsuspecting farmers. The ease with which the weed can
be grown presents a serious problem in the path of the Bureau of
Narcotics in its efforts to wipe out the use of this stepping stone to
As to the vice and prostitution
situation, undercover investigators of the American Social Hygiene
Association made a survey in late June of 1951 in Baltimore. They found
the city not infested with open or flagrant houses of prostitution.
Numerous bellboys, cab drivers, and others were contacted but refused
to act as go-betweens. However, they found that in 21 bars and night
clubs in Baltimore's notorious "Block," prostitutes were encountered
plying their trade somewhat cautiously. The report then described in
detail the methods of operation in each of the 21 places in the "Block."
The wire service
Howard Sports Daily, the racing wire
service satellite in Baltimore, for years has occupied a key position in
the scheme to furnish book-makers with the vital instantaneous racing
news, odds, conditions, results, and prices which are the sine qua non
of their multi-million-dollar empire. Testimony of Harry Bilson, boss
of Howard Sports, and Leonard Matusky, of the World Wide News & Music
Co., an associated organization, served further to debunk and explode
the feeble claims that the vast wire service network is not in fact
controlled and guided by Continental Press and its Capone gang
counterparts in Chicago.
From Bilson the committee learned that
his company, which has been described as a dummy, performs the function
of gathering the racing news from the tracks in Maryland, New Jersey,
and Florida which is sold to Continental. In turn, Howard Sports buys
the news from Continental and sells it to east coast subscribers
invariably found to be engaged in the bookmaking business. While it is
true that some of the news is sent to newspapers, this excuse for
existence was found to be but a sham when it was learned that the papers
receive the news free or pay a comparative pittance. In previous
hearings the committee had learned how Howard Sports employees acted as
wigwag men in the vicinity of the race tracks to purloin the race
results by telescope and binoculars, then relay it by telephone or
telegraph to Baltimore whence it was introduced into the Nation-wide
circuit. These wigwag men, hired by Continental Press, were thereafter
shunted about like pawns on a chess board on the payroll of
Continental's subsidiaries, such as Illinois Press and Howard Sports.
When information was sought as to the nature of
ORGANIZED CRIME IN INTERSTATE COMMERCE. 79
expenditures aggregating some $50,000 per year for
"rent" ostensibly paid by Bilson's track crew, Bilson was vague and
referred the committee to his track-crew boss Roscoe Odle, who could not
be found either by the committee or Bilson. The question of whether or
not this substantial sum of money which Howard Sports carries on its
books as an operating expense and consequently a deductible item in its
income tax is actually spent for legitimate purposes remains
unanswered. Similar tax deductions which reduce the amount paid to the
Government were claimed for such items as auto expense for Bilson who
admitted that his health would not permit him to drive a car.
Bilson recited a tale incredulous in
the extreme when he told the committee that the news at the tracks is
now being gathered by a mysterious individual whom he has never seen and
could not help the committee to locate, despite the fact that over the
past several months he has paid this man over $800 a week. Following the
passage of a law in Florida calling for a 20-minute delay in the
transmission of racing results this ghost figure telephoned to Bilson
and offered to furnish him with the news. Bilson claimed that he
contracted with the man over the telephone and supplied his track crew
to work with the man whose name was variously furnished to the committee
as R. Gorman, Al Gorman, George Gorman, and George Baker, doing business
as the Tropical News.
The news was supplied with Howard
Sports paying for the crew and the telephone calls from "the voice."
Checks were mailed to him at General Delivery, Hialeah, Fla., and
promptly cashed, but never deposited. Thereafter, "the voice" moved his
activities to the Maryland and New Jersey tracks. Although when at
Pimlico race track in Baltimore, he was practically at Bilson's elbow,
the latter still claimed he had no idea of his true identity. An
interesting side-light was the fact that when "the voice" reached New
Jersey he found it possible to cash his checks at the office of another
wire service distributor in Camden, N. J., called Malbro Communications
Engineers. Malbro officials cashed checks for "the voice," but also
disclaimed knowing his identity. When the committee pressed for leads
to "the voice," Bilson professed an inability to find his own track crew
who were in daily telephone touch with him.
Obviously in an. effort to thwart law
enforcement, the wire service distributors in Baltimore, as elsewhere,
have resorted to a unique method of dealing with their bookmaker
customers. Bilson and Matusky told the committee that they were
servicing customers who paid them in the neighborhood of $50 per week
for the privilege of calling in on the telephone to get the racing news.
The identities of these people were unknown to them and no names were
used, but each customer was assigned a code number. Payment for the
service was received from these "numbers" when some nameless individual
would pay cash at the companies' offices weekly. The committee noted
that the wire service account books reflected discontinuance of these
coded accounts simultaneously with raids by Baltimore police on
The interlocking nature of the wire
service outlets came out in the testimony of Matusky of World Wide News
and Music. It was found that the owner of all of the stock of World
Wide was Sanford Niles of Chicago whom Matusky described as a "roadman"
80 ORGANIZED CRIME IN INTERSTATE COMMERCE
Press. Matusky was to receive $400 per week for 20
years under the arrangement. The company was set up by John D.
McInerney of Chicago who is also an officer of Howard Sports Daily. At
one time a 50-percent stockholder was Roscoe Odle who was boss of the
track crew of Howard Sports. He was drawing $200 per week from World
Wide for duties which Matusky was unable to outline although they seemed
to be his same wigwag work performed for Howard Sports at the tracks.
The three "companies" worked together without written contracts, paying
hundreds of dollars per week for the news, with the price fluctuating
apparently according to the whims of Continental's bosses. No dividends
were ever paid on stockholdings of Howard or World Wide, the practice
being for Continental to drain off any surplus at year's end as payment
for the news.
Although the master plan evidently
called for an avoidance of direct relationship or privity of contract
between Continental and World Wide and an insulated set-up whereby
Continental sold to Howard Sports and Howard Sports to World Wide,
Matusky of World Wide testified that he received calls from
representatives of Continental who reviewed his business and upped the
price he had to pay Howard for the news. Further, and most indicative
of all, was the fact that when World Wide was suffering financial
distress in 1951, Matusky admittedly bypassed the chain of command and
directly called Tom Kelly, general manager of Continental and
acknowledged wire service kingpin and sought his assistance.
Kelly, although having no interest on
the surface in the welfare of World Wide, went into action and caused
Sanford Niles to pour more money from undisclosed sources into World
Wide. The facade of separate corporate entities was completely torn from
Continental's house of cards when Senator Kefauver asked Matusky this
question: "The truth about the matter, Mr. Matusky, is that while you
have these different companies, some of Kelly's employees own the stock
in several corporations and all of you look to Continental and to Mr.
Kelly as being the daddy of the whole thing, don't you?" Matusky slowly
answered, "Well -- I did."
Law enforcement in Anne Arundel County
where several wire service customers remained undisturbed for years
seems to have left something to be desired. It was developed that the
county chief of police, since retired, "investigated" allegations that a
gambling casino was being operated on St. Helena's Island in the Severn
River by viewing the place from the mainland and that police officers
checking into a report of a late shooting involving known gambling
figures reported it was a "backfire" although applicable hospital
records reflected the admission and treatment of the victim for a
A gentleman farmer
For nearly a decade Charles E. Nelson
seemingly enjoyed the pleasures and travels generally associated with
the life of a prosperous gentleman farmer. Owner of a beautiful and
completely equipped stock farm, even to air conditioning, in Prince
Georges County adjacent to Washington, D. C., Nelson, as owner of a
string of race horses, became a well-known figure at auction sales of
ORGANIZED CRIME IN INTERSTATE COMMERCE 81
thoroughbreds. He rose to prominence as the buyer
of blooded stock who could bid and buy for cash without hesitation over
In his appearance before the committee
at its closing hearings Nelson attempted to masquerade as the country
bumpkin even to the point of feigning deafness until committee members,
not satisfied with his pretended naiveté about the source of his income,
finally elicited his answer that "he thought" that his income was from
gambling. Pursuing this opening the committee investigated further and
proved that it was indeed gambling, estimated to gross at least
$6,000,000 per year from the numbers business in Washington, D. C., and
the nearby counties in Maryland and Virginia.
Nelson conceded that he was the
principal owner of "Uncle Billy's" a collection of concessions at North
Beach, Md. The foremost attraction there unquestionably was the
imposing array of "one-arm bandits" whose profit-malting possibilities
have been well established. Claiming inability to discuss his business
affairs without access to what be termed his "little red book," at the
committee's suggestion Nelson was accompanied to his elaborate farm by a
staff member where the "little red book" proved to be a file cabinet of
ledgers and records.
Examination reflected receipts for
bondsmen's fees, lawyer fees, fines of associated individuals for
gambling arrests, receipts for vast purchases of numbers books, adding
machines, coin wrappers, and other accoutrements peculiar to the numbers
business. From the records Nelson was found to have realized a net of
more than $250,000 over a 4-year period from the business he "thought"
might have been gambling. He had acquired in recent years properties
estimated to be worth over $1,000,000.
Notwithstanding the fact that Nelson's
books reflected a net income from his gambling accounts of more than
$50,000 during 1950, not 1 cent of tax did he pay to the Government. How
did he explain this? As a gentleman farmer his losses from the operation
of the farm, which included such questionable deductions as mileage
charges for as many as seven automobiles, exceeded his admitted gains
and thus his method of computation left the Government without any tax
But the figure which was charged off as
an operating expense that interested the committee the most was the
$10,000 which he annually entered as "good will-advertising." Why did
he seek good will? It was shown that one of his practices was to
distribute turkeys at Christmastime to various individuals, some of whom
were members of the police department charged with investigating numbers
Sheriff Carlton G. Beall of Prince
Georges County told how he had been approached by Nelson recently with
an offer of graft of $15,000 per month to be paid by Nelson and Sam
Beard, a notorious Washington area gambler, to the sheriff, chief of
police, and State's attorney for the privilege of running their gambling
enterprises unmolested. According to the sheriff, Nelson had even
embellished his proposal with an offer to help the sheriff find and
makes cases against Nelson's competitors and thus obtain the necessary
publicity and statistics to convince the voters that the laws were being
These proclivities on Nelson's part to
ingratiate himself with police officials caused the committee to
question several county policemen after a witness told of complaining of
Nelson's operations and assisting the police to obtain the evidence only
to find that a planned raid
82 ORGANIZED CRIME IN INTERSTATE COMMERCE
executed simultaneously with the committee hearings
apparently was aborted by an alleged tip-off.
Since the hearings, State, county, and
Federal law enforcement and prosecutive officials have manifested
interest in Nelson's activities.
Judge Joseph Sherbow of the Supreme
Bench of Baltimore City, a fearless jurist, summarized the Maryland
picture when he said:--
operations have slowed down. Bookmaking has taken a definite turn. It
has slowed down somewhat.
He then went on to point out that
bookmakers were very resourceful and had changed their method of
extent - Judge Sherbow said-
they moved out of
Baltimore City and into adjacent counties and now the operation is a
He pointed out that they had not gone
out of business but were following the pattern this committee has found
in other parts of the country where they have withdrawn into an
"insulated" operation, where they move into an apartment or some similar
place and take bets over the telephone without the bettor ever making
physical contact with the bookmaker.
It was further stated by Judge Sherbow
if any gambling or
other illegal venture is in existence for any length of time and is not
discovered by the police, then one of the following several things is
true: (1) The policeman on the beat is blind; (2) or he is incompetent;
or (3) he is corrupt.
Judge Sherbow went on to say that from
his intimate contact with the Baltimore Police Department, he has found
that the vast majority are competent, upstanding, decent policemen. It
was obvious, however, from his testimony that he did not want to imply
that there were not some lax policemen -- for the committee's findings
indicate that there has not been 100 percent faithful performance of
duty. There was, on the other hand, definite evidence that the
Department was under the direction of an absolutely
honest and forthright police commissioner who would vigorously clamp
down on any departure from accepted principles. This was evidenced by
his prompt dismissal of a ranking officer proven to have "borrowed" a
substantial sum from Willis M. "Buzz" King, widely-known gambler who had
been called before the committee.
Immediate reaction to the committee's
activities in the Maryland area has been noteworthy. State's attorneys
in several instances have initiated grand jury action, and have already
brought to trial some of the principals in a large "come-back money"
conspiracy found in existence at the Bowie race track. The committee
from the inception of its investigation in the Baltimore area was
assisted materially by prosecuting and court officers. The State's
attorney, Anselm Sodaro, manifested a keen interest in every particular
and not only was his cooperation most valuable but his prompt action on
the local level was in keeping with his policy of .effective law
enforcement. Mr. Sodaro, a well-qualified prosecutor, is vigorously
probing the situation in the city in the wake of committee disclosures.
The State's attorney in Prince Georges County is committed to further
ORGANIZED CRIME IN INTERSTATE COMMERCE 83
$6,000,000 interstate numbers business of Charles
Nelson and its attendant implications of police and public official
connections. The Maryland General Assembly has authorized a legislative
committee to explore the possibilities of organized crime within the
State. This Senate committee expresses its approval and commendation of
these positive steps for remedial action at the State and local level
which have resulted directly from revelations and investigation of the
During the past 4 months the committee
at various times has conducted hearings to secure the testimony of
several witnesses for whom arrest warrants had been issued by the
Senate. In February after unsuccessful attempts had been made to serve
subpenas, warrants were voted for 17 persons. Those named in the
warrants were Rocco Fischetti; Charles Fischetti; Murray L. "The Camel"
Humphreys; Jacob "Greasy Thumb" Guzik; William G. O'Brien; John
Angersola, alias King; Moe Dalitz, alias Davis; Samuel T. Haas; Morris
Kleinman; Louis Rothkopf, alias Rhody; Samuel "Gameboy" Miller; Morris
"Mushy" Wexler; Samuel Tucker; George Angersola, alias Xing; John Croft;
James Brink; and Louis Levinson.
The warrants were placed in the hands
of Mr. Joseph Duke, the Sergeant at Arms of the Senate. The committee
greatly appreciates the vigilant efforts of Mr. Duke and of the various
agencies of Government which brought about the eventual apprehension of
all the persons named.
Dalitz and Tucker made arrangements to
present their testimony before the committee at the hearing in Los
Angeles on February 28. Guzik, O'Brien, Kleinman, Rothkopf, Croft, and
Brink testified before the committee in Washington prior to the filing
of the committee's Third Interim Report on May 1. Charles Fischetti and
Louis Levinson both succumbed to heart attacks after their apprehension
and before the committee had an opportunity to interrogate them.
The questioning of Rocco Fischetti and
Murray "The Camel" Humphreys, both of whom have been connected with the
Capone syndicate in Chicago, took place at an executive session of the
committee on May 28. Fischetti at the outset read a prepared statement
in which he advised the committee that he would refuse to answer any
questions on the ground of possible self-incrimination. Fischetti
refused to tell the committee who prepared the statement, and he also
refused to say if he was married or if he had any children or what means
of transportation he used to come to the hearing. He has been cited for
contempt and his case is presently in the hands of the United States
attorney for the District of Columbia.
Humphreys, a member of the old Capone
mob, was also a recalcitrant witness and, like Fischetti, he insisted on
reading into the record a statement claiming his privilege against
self-incrimination in terms almost identical with the statement used by
Fischetti. Like Fischetti, he also refused to say who prepared it. He
admitted that he had used the alias of J. Harris during the past but
refused to say why. He also admitted having served 18 months for tax
evasion. Humphreys also refused to say that he knew Ralph O'Hara, Jake
Guzik, Al Capone, "Machine Gun" Jack McGurn, Frank "The Enforcer" Nitti,
or the late James Ragen, who was slain in warfare arising out of efforts
84 ORGANIZED CRIME IN INTERSTATE COMMERCE
the Capone syndicate to muscle into the wire
service. Humphreys also refused to say whether or not he knew Hymie
Levin, Phil Katz, Roy Jones, Willie Nemoth, Frank Costello, Joe Adonis,
or Jack Dragna. He would not tell the committee whether he had ever
been to California, Florida, or New York and declined to say whether he
knew Ralph Pierce, Rocco Fischetti, Paul "The Waiter" Ricca, or Louis
"Little New York" Campagna. Committee counsel asked Humphreys, "Do you
know who killed James Ragen?" He replied, "I am going to have to claim
my privilege on that also, sir." He was asked, "Do you know who killed
William Drury?" Again he replied, "I am going to have to claim my
privilege on that also, sir."
Despite his earlier refusal to say
whether he knew Rocco Fischetti, Humphreys finally was forced to admit
in the concluding stages of his testimony that he and Fischetti had
flown to Washington in the same plane and had eaten breakfast together
in a Washington hotel just before the hearing. Humphreys has also been
cited for contempt. At an executive session of the hearing held on June
19, the committee heard the testimony of Samuel T. Hans, a Cleveland
lawyer; Morris "Mushy" Wexler, of Cleveland Heights, operator of the
Empire News Service, a distributor for Continental Press Service; and
Samuel "Gameboy" Miller, a partner of Wexler in tile Empire News and
identified with gambling establishments in Ohio, Kentucky, and Florida.
At the outset of his testimony, Haas
admitted that he had been indicted for arson in 1919, that he had been
convicted in police court and sentenced to 1 to 20 years, but the
conviction was reversed by the Supreme Court, and the case remanded for
new trial. Indictment was subsequently nol-prossed, and disbarment
proceedings arising out of the indictment were also dismissed. He also
acknowledged that in 1932 he filed a petition of bankruptcy in which he
said that his assets consisted only of $100 and his lawbooks. He
testified that he knew "Big Al" Polizzi, Thomas J. McGinty, and Arthur
"Mickey" McBride and that he was attorney for Wexler in the Empire News
Service. He said that he had known Kleinman since 1925, and that he had
known Rothkopf for about 15 years and Dalitz for about 18 or 19
Haas was questioned extensively about
his connection with the financial maneuvers which brought about the
merger of the Reliance Steel Corp. and the Detroit Steel Corp. leading
to the vesting of control of the merged companies in Dalitz, Tucker,
Rothkopf, and Kleinman. Haas testified that some time after 1940, Dalitz
brought to his office M. J. Zivian who outlined to him a plan whereby
the stock of Reliance Steel Corp. was to be acquired as a preliminary to
the merger with Detroit Steel. As $200,000 was needed, a transaction
was worked out whereby $100,000 of Detroit Steel stock was to be
purchased and deposited along with Zivian's Reliance Steel stock as
collateral for a $200,000 loan. Haas put up one-third and Dalitz
supplied two-thirds of the $100,000. Haas said that his one-third share
of the financing represented his own funds and that he received 333
shares of Detroit Steel which he retained until 1950, when he sold them.
He admitted that it was a very profitable investment and that he
subsequently learned that the two-thirds share put up by Dalitz was on
behalf of Dalitz, Tucker, Kleinman, and Rothkopf.
ORGANIZED CRIME IN INTERSTATE COMMERCE 85
Haas explained his relationship with
Wexler by saying that back in 1924 he represented William Swartz,
Wexler's predecessor as owner of the wire service, in a proceeding
brought to restrain a police officer stationed in front of the
wire-service establishment from interfering with its activity. He
insisted that this was the only time he represented Swartz, who
subsequently was indicted for murder and who was also the owner of the
Chesapeake Operating Co. which ran a club located on the border between
Ohio and West Virginia. When reminded that he had made telephone calls
to Swartz in 1950, Haas insisted that the calls were on behalf of James
"Shimmy" Patton, another client of his. Haas admitted that his brother,
Morgan C. Haas, had been an employee of the Buckeye Catering Co., a
concern engaged in the operation of slot machines. He had obtained the
job for his brother through Nate Weisenberg, known as the slots king of
Ohio, who was found murdered in a ditch in 1945. Haas said that he knew
that Al Polizzi was a partner in this concern but professed not to know
Jerry Milano, the present owner.
Haas acknowledged also that he at one
time had an interest in the Modern Music Co. of Colorado Springs, Colo.,
that went bankrupt but he claimed to be surprised to learn that 35
percent of the final inventory consisted of slot machines. He admitted
that he had received a $5,000 bequest from Fred Koehler, former
Cleveland chief of police, county commissioner, mayor, and sheriff, in
whose safety-deposit box $500,000 worth of securities was found after
his death. Haas referred to Koehler as "a very dear friend of mine" but
declared that he had no idea of how Koehler accumulated this wealth
because Koehler was "very incommunicative."
Haas was examined as to his extensive
real estate holdings in Cleveland but insisted that it was just
coincidence that the holders of adjoining properties in some instances
were Kleinman and Rothkopf. He admitted that in 1944 he had a 37
percent interest in the Burroughs Book Store which he purchased for
$450,000. He acknowledged that he had received $75,000 for the sale of
land on which the Palm Beach Ambassador Hotel in Florida was built in
1946. His former law partner was Harry Cohen, who is now practicing law
in Florida. Cohen represented Jack Friedlander, member of the S. & G.
Syndicate, when Friedlander testified before the committee.
In view of his bankruptcy in 1932,
Haas' accumulation of wealth has been phenomenal. Wexler told the
committee that he was the owner of the Theatrical Grill and a partner of
Samuel "Gameboy" Miller and Robert Kaye in the Empire News Service. He
said that he was in Florida when he learned that he was wanted but
refused to tell the committee with whom he stayed. From Florida he went
to a hotel just outside Pittsburgh and remained there until he learned
of the issuance of the warrant, at which time he came to Washington and
surrendered. Wexler admitted that he was a subscriber to Continental
Press Service but he refused to answer practically every other question
which dealt with his 26 years in the wire service business. He would
not discuss the amount of the annual payments from Empire to Continental
except to say that they varied from year to year. He admitted knowing
Arthur "Mickey" McBride very well but he refused to say how well he knew
Pete Licavoli. He denied that he knew Allan Smiley, west coast racket
figure, or that he knew anything
86 ORGANIZED CRIME IN INTERSTATE COMMERCE
about telephone calls placed to Smiley from the
Theatrical Grill. He refused to answer any questions about telephone
calls placed from the Theatrical Grill to Mike Farah, owner of the
Jungle Inn in Mahoning County, Ohio, or to the Merchants Club in
Newport, Ky. He admitted that McBride had served as an accommodation
endorser in connection with loans he had obtained from a Cleveland bank.
Samuel "Gameboy" Miller listed his
address as Miami, Fla., when questioned by the committee, but he said
that he had lived in Cleveland for 50 years. He admitted that he had
been a partner in the Island Club in Miami with some members of the S. &
G. Syndicate and that he had also been a partner in the Lookout House in
northern Kentucky with James Brink, but he refused to say whether he had
brought Kleinman, Rothkopf, Tucker, or Dalitz into that operation. He
also admitted that he was a partner of Wexler's in the Empire News
Service and that he had been a partner in the Thomas Club in Cleveland
which ceased operating in 1945. He said he acquired his interests in
the Island Club in Miami through Sam Cohen, one of the members of the S.
& G. Syndicate. He estimated his income from the Island Club at about
$15,000. He said he was receiving $30,000 or $40,000 annually from the
Empire News Service for which he performed no services whatever. He was
not sure just why he had a share in that enterprise.
John Angersola, alias John King,
claimed Miami Beach as his residence when he appeared before the
committee at an executive session on August 6 and said he had not been
in Cleveland in 15 years. He admitted that he served time in the Ohio
State Penitentiary 30 years ago for robbery and that he might have used
the name of John DiMarco on an occasion about 20 years ago in Detroit
when he was picked up for suspicion. He refused to say whether or not
he had ever been connected with the Buckeye Catering Co. in Cleveland
and admitted that he had purchased a fishing boat named the Wood Duck
from Arthur "Mickey" McBride for $6,000 or $7,000 about 10 years ago.
He claimed the longest trip he ever made in the boat was to Bimini and
he denied that he had ever taken the boat to either Cuba or Mexico. He
said he sold the boat to "Big Al" Polizzi in 1946 or 1947 for $5,000.
He acknowledged that he had paid
$40,000 in cash for his present home 4 or 5 years ago but he refused to
say how he had acquired this money. The home that he had occupied
before that time he had sold to "Trigger Mike" Coppola for $30,000. He
admits that he had kept cash in a safety deposit box but claimed there
was no cash in it now. When asked what he had done with this cash, he
replied that he might have purchased real estate with it. He admitted
that he is now the owner of the Grand Hotel in Miami Beach and that he
had had an interest in the Wofford Hotel since 1939 or 1940. He has
also admitted having an interest in the Yorkshire Club in Newport, Ky.,
but he claimed he did not know where the Yorkshire Club was located as
he had never been there. He refused to say how he acquired his interest
in it. He also admitted knowing Dalitz, Kleinman, and Rothkopf but he
refused to say whether he had had any dealings with them.
The committee developed some
interesting testimony in the questioning of George Angersola,. alias
George King, who still resides in
ORGANIZED CRIME IN INTERSTATE COMMERCE 87
Cleveland. Angersola listed his occupation as an
organizer for the Cleaners and Dyers International Union at $100 a week
but he was somewhat vague about his duties. He admitted that he also
served as floor manager for the 23 Room, a Miami Beach establishment,
during the winter months for which he also received $100 a week. He
testified that he was able to do this because he received a 10-week paid
vacation from his union duties. Under questioning he finally admitted
that he has not worked actually for the union for a couple of years,
although he was still being paid at the rate of $100 a week. When the
committee sought an explanation for this, George Angersola replied,
"They may need me."
George Angersola admitted that he had
been in jail twice, once for a period of 3 months on a bootlegging
charge and again for 3 months following his conviction for extortion in
1939. He admitted that he knew all of the members of the Cleveland
Syndicate but he denied ever having had any dealings with any of them.
A witness who gave the committee
considerable trouble before he finally accepted a subpena was George S.
May, prominent Chicago business figure and head of the George S. May
Co., which specializes in business engineering. Although May claimed to
have been in Chicago for 53 days during which time efforts were being
made to serve him with a subpena, he admitted that he had never
communicated with the United States marshal or the committee to express
his willingness to accept service and to appear before the committee.
He testified before the committee in
Washington on May 28. He refused to answer any questions about his
connections with the Tam O'Shanter Country Club. He refused to say who
the directors were, who kept the records, who the manager was, who owned
the real estate, or whether there were any slot machines in the club.
He refused to tell the committee whether he knew Ed Vogel, the slot
machine king of Cook County, or whether he had ever had any agreement
with Vogel for a 60-40 split of the proceeds from the slot machines
located in the club.
The committee had information to the
effect that May owned 93 percent of the stock of Tam O'Shanter, Inc.,
which is believed to own the land and buildings occupied by the Tam
O'Shanter Country Club and that the club receives $120,000 a year in
dues, $400,000 from the dining room, $325,000 from the bar, $650,000 for
outside parties, and $45,000 a year from slot machines. May refused to
confirm or deny these figures. He also refused to say whether the club
had been tipped off about impending raids. In the final stages of the
hearing, he admitted that he had told counsel for the committee on one
occasion that if he gave any information "he would not last 48 hours."
May also admitted to the committee that
he had pleaded guilty to a charge of forgery 35 years ago and had been
sentenced to 11 months, but he declared that he had gone straight ever
Because of his refusal to answer
pertinent questions put to him by the committee, May has been cited for
88 ORGANIZED CRIME IN INTERSTATE COMMERCE
E. INTRODUCTION OF CORRECTIVE
Exposing the facts about organized
criminal activities has been only a portion of the task. Disclosures in
the committee's records make an overwhelming case for effective remedial
legislation. Its investigations and hearings have awakened Nation-wide
interest which may be counted on to support Congress in enacting
effective laws where they are needed. Accordingly, the development of a
legislative program has been given major emphasis in concluding the
committee's work. A number of proposals for new laws were put forth in
the Third Interim Report; these have been developed and enlarged, and
other avenues of approach have been carefully explored. The committee
has introduced 23 bills.
It must be borne in mind that the
challenge of organized crime in interstate commerce is not new. In the
last half century the Federal power has had to be invoked many times to
deal with the interstate expansion of criminal activities which could no
longer be curbed by local laws and local enforcement agencies, e. g.,
lotteries (1895); poaching (1900); train robberies (1902); white slavery
(1910); liquor traffic (1913); theft of vehicles (1919); kidnaping
(1923); bank robbery (1934); general larceny (1934); extortion (1934);
theft of cattle (1941). What the committee has brought to light is the
same old problem, but in startling new proportions: the train robbers,
kidnapers, and bootleggers of another era have shifted to new fields,
principally illegal gambling, where they have taken on an aura of
pseudo-respectability and reaped enormous wealth. Their power is so
great that local officials are often bought and sold, sometimes by mobs
located in other States many miles away. Clearly this is a
responsibility of the Federal Government, calling for action by Congress
to impose better national controls and to insure that the national
enforcement machinery will take hold effectively:
GAMBLING: S. 1563, 1564, 1624, 2061
Illegal gambling activities are the
principal source of revenue for today's hoodlums and racketeers, and the
heart of illegal gambling is bookmaking. The "bookie" empire has two
vulnerable points within reach of Congress' power over interstate
commerce: The essential flow of specialized gambling information to the
bookmaker, and this dependence on interstate facilities in placing
lay-off and come-back bets. The committee has introduced three bills
designed to strike at these points.
S. 1563 would substantially eliminate
the so-called wire, services, exemplified by Continental Press Service,
Inc., from interstate commerce. To avoid risks of evasion which are
obvious in applying an inflexible criminal prohibition to so nebulous
and far-flung an activity, the bill makes use of a licensing procedure,
to be administered by the Federal Communications Commission. Any person
(excepting newspapers, broadcasters, and legitimate press services) who
wishes to disseminate gambling information, as defined in the bill, must
apply for a license which can only be issued on a showing (1) that the
applicant is of good moral character; (2) that the proposed operation is
in the public interest; and (3) that the information is not "primarily
for use in facilitating gambling activities which constitute violations
of" State laws.
ORGANIZED CRIME IN INTERSTATE COMMERCE 89
S. 1564 reflects the committee's
recognition that the ultimate effects of S. 1563 may be delayed by
hearings, appeals and court tests, the initial weakness of any
administrative device, and it therefore strikes straight at the source
of the bookmakers' information with a narrow criminal prohibition. The
proprietors of almost all legitimate race tracks and sports events have
long been fighting the wire-service operators, by denying them the right
to send out their bulletins on betting odds, scratches, times, results,
etc. Consequently the operators have been driven to elaborate
subterfuge, sometimes stealing the information from blinds outside the
track or enclosure, sometimes using wig-wag signals, semaphores, special
codes, and even walkie-talkie radio equipment from inside. S. 1564
would make it a Federal crime for any person to transmit in interstate
commerce gambling information "obtained surreptitiously or through
stealth and without the permission of" the proprietor of the event, when
such information is intended to be used for illegal gambling purposes.
It is believed that this measure would be effective at once to stop the
flow of such information, and thus to cripple the wire services before
they are brought completely in hand by regulation under the FCC.
S. 1624 is a combination bill which
consolidates two of the committee's original proposals with certain new
matters. It contains a flat criminal prohibition against using
interstate facilities in connection with any bet or wager, thus putting
an end to lay-off and come-back transactions between gamblers in
different States. The committee has stressed in the record, and will
continue to emphasize, that this law is not intended to punish casual,
private users of the telephone; no drafting technique seemed adequate to
separate the casual user and the professional bettor; the matter is
therefore left to sound discretion at the enforcement level. Telephone
companies would not be affected, since they do not "send or transmit"
messages (see Southern Tel. Co. v. King, 103 Ark. 160 (1912)), and other
carriers would be liable only if shown to have violated the prohibition
"knowingly." The bill also extends Chapter 61 of the Criminal Code, the
old lottery law, to include any other "gambling enterprise" or "scheme
of any kind offering money or other prizes dependent in whole or in part
upon lot or chance," and brings pushcards and punchboards specifically
within its prohibitions. The Slot Machine Act (Public. Law 906, 81st
Cong.) is amended by substituting for the present controlling
definition, which has proved inadequate, a general description of
mechanical gambling devices, which would bring roulette wheels and
so-called one-ball machines, as well as all variations of the orthodox
slot machine, within the scope of the law. Ordinary pinball amusement
devices would not be reached, under the judicial construction that "free
games," when confined to a mere right to operate the machine, do not
constitute a thing of value (see Washington, Coin Machine Ass'n v.
Callahan, 142 F. 2d 97 (C. A. D. C., 1944)).
A further improvement in the
enforcement machinery relating to slot machines is proposed in S. 2059,
discussed under part VI, Tax Measures, post.
The committee lately exposed another
interstate gambling empire of impressive proportions, which has grown up
in defiance of the old lottery law by decentralizing its operations and
attenuating its interstate ties: The Treasury balance lottery racket. A
large part of
90 ORGANIZED CRIME IN INTERSTATE COMMERCE
the success of this operation depends on the
confidence inspired in its patrons by the integrity of the United States
Treasury. Thus the prestige of the Federal Government itself is being
traded upon, and the committee feels that this is an abuse which can and
should be stopped.
S. 2061 would make it a misdemeanor for
any person to base a "gambling enterprise, lottery, gift enterprise, or
scheme of any kind * * * which offers prizes dependent in whole or in
part upon lot or chance" on any official publication or data issued by
the United States.
Additional measures relating to
gambling are "proposed as revisions of the tax laws. See S. 1529 and
1532, discussed under part VI, Tax Measures, post.
NARCOTICS: S. 1695, 1900
Despite existing Federal and State laws
on the subject, the traffic in narcotics still flourishes. The
committee found no deficiencies in the pattern of statutory control,
however, and attributes the present acute problem to a shortage --
quantitative, not qualitative -- of enforcement personnel, and to the
comparatively gentle treatment narcotics offenders have been receiving
at the hands of the courts. The first part of the problem is an
appropriations matter; providing adequate personnel and facilities to
check this "slow form of murder" is a responsibility which the committee
urges Congress never to shrug off or take lightly.
The second relates to the
administration of criminal penalties. It is indisputable that more
severe sentences, meted out to narcotics offenders when they are
detected and apprehended, would facilitate enforcement and tend to
discourage the traffic. The committee unqualifiedly approves efforts to
impress the seriousness of narcotics offenses upon the judges who
ultimately bring this vicious type of criminal to account, and has
accordingly sponsored two bills on the subject.
S. 1695 (companion to H. R. 3490,
passed by the House of Representatives July 16, 1951) would impose the
following penalties for any violation of the narcotics laws: First
offense, up to $2,000 fine and 2 to 5 years' imprisonment; second
offense, up to $2,000 and 5 to 10 years' imprisonment; subsequent
offense, up to $2,000 and 10 to 20 years' imprisonment. No sentence may
be suspended, or probation granted, in any case of a second or
S. 1900 would impose a special penalty
of up to $2,000 and 20 years to life imprisonment, without suspended
sentence or probation, for any violation involving the sale of narcotics
(by a person over 21) to a person under 17 years of age.
Questions have been raised from a
number of sources, however, as to the propriety of imposing arbitrary
minimum sentences in all cases. The committee recognizes the possible
merit of these objections and suggests that they be given due weight in
further consideration of the bills.
The committee discovered a slight
conflict in jurisdiction and practice, relating to narcotics, between
the Narcotics Bureau of the Treasury Department and the Passport
Division of the Department of State. Since the illegal narcotics
traffic is exclusively international in origin, the Narcotics Bureau has
a keen interest in restricting the
ORGANIZED CRIME IN INTERSTATE COMMERCE 91
movements of American citizens known or strongly
suspected to be engaged in the traffic, a matter which is within the
absolute discretion of the Passport Division. After full exploration
the committee believes that this conflict does not warrant legislative
intervention; closer cooperation between the agencies themselves, and
full recognition that the suppression of this traffic is intimately
related to the public welfare of the country, coupled with the manifest
intelligence and good faith found on both sides, promise an adequate
Although the committee explored the
matter thoroughly and is convinced that controls should be imposed upon
barbiturates, no legislation has been proposed to deal with them,
because of the pendency of a joint plan now being worked out by the
Treasury Department, the Department of Justice, and the Federal Security
Agency as a result of the efforts of the Committee on Ways and Means of
the House of Representatives. This plan is expected to result in an
adequate pattern of control.
LIQUOR TRAFFIC: S. 1530, 1663, 2062
The traffic in bootleg liquor into dry
States and dry local-option areas is of sizable proportions and seems
clearly to call for congressional intervention. The committee
disapproves the present tendency among Federal enforcement officials to
make a sharp distinction between tax collection and general law
enforcement, and to concentrate on the former. The laws themselves
account for part of this emphasis, and changes have been proposed
S. 1530 would amend the basic permit
section of the Federal Alcohol Administration Act so as to fix the life
of such permits at 2 years. They are presently issued for an indefinite
period, subject to revocation only by affirmative administrative action
and on certain specified grounds. The proposed change would make all
such permits reviewable biennially, and thus facilitate periodic
clean-ups of the industry. The basic permit is the primary control
imposed on all manufacturers, importers, and wholesalers of alcoholic
S. 1663 (companion to H. R. 1278) would
extend the Federal prohibition against importing liquor into States
which have outlawed the importation thereof (18 U.S.C. 1262) to include
dry areas in local-option States.
S. 2062 is proposed to cure a
fundamental defect in the present law which remains even with the change
worked by S. 1663. Only two States, Kansas and Oklahoma, are affected
by 18 United States Code 1262, for the reason indicated by emphasizing
the word "importation" above. The courts have held that States in
which the sale or use of liquor is prohibited do not qualify for Federal
protection; Dunn v. U. S., 98 F. 2d 119 (C.C.A. 10, 1938). The committee
therefore proposes that the Webb-Kenyon Act (27 U.S.C. 122) which
prohibits importation into any dry State or area, and which has been a
Federal statute since 1913, should be called into play again (the act
has been a dead letter since 1936 for want of a penalty section, which
was repealed by Congress in that year). S. 2062 imposes a fine of
$1,000 and 1 year imprisonment for any violation of section 122. The
committee recognizes that in making this proposal it is reopening an old
debate in the Congress; but experience since the matter was last
considered, as brought out in the committee's hearings and
92 ORGANIZED CRIME IN INTERSTATE COMMERCE
suggests a thorough reappraisal. Amendment 21 of
the Constitution was manifestly not intended to be a shield for
bootlegging activities which fatten organized crime. The committee
believes that this, like gambling, narcotics, and other illegal
activities which pollute the flow of interstate commerce, calls again
for a direct assertion of the Federal power.
The committee also proposes a change in
the penalties affecting the occupational ax imposed on liquor retailers,
in S. 2059, discussed under part VI, Tax Measures, post.
UNLAWFUL ENTRY BY ALIENS: S. 1661, 1662
A number of important criminals were
discovered by the committee to have entered the United States illegally,
and this type of offense frequently appears in the backgrounds of career
gangsters and hoodlums. Besides endorsing S. 716, which would
liberalize the entire process of deportation, the committee has
sponsored two bills relating to this subject.
S. 1661 (companion to H. R. 2793) would
revise section 8 of the Immigration Act of 1917 punishing the smuggling
and concealing of aliens, to eliminate a technical flaw which has caused
the section to be nullified by the courts. See U. S. v. Evans, 333 U.
S. 483 (1948).
S. 1662 (companion to H. R. 2258) would
provide for the reopening of certain cases in which illegal immigrants
may now secure an unassailable congressional suspension of deportation
proceedings against them, when after-acquired evidence shows new grounds
CRIMINAL TACTICS IN TRANSPORTATION: S. 1899
In several parts of the country
evidence of gangster activities and "muscle" tactics was found in
connection with over-the-road trucking. Moreover, the committee is
impressed with the fact that the trucking and forwarding industries have
been peculiarly vulnerable to such activities an. tactics in the past.
When interstate hoodlums are flushed out of gambling they may be
expected to turn up, as they did when repeal disrupted bootlegging, in
other sensitive areas, and the transportation industries are a likely
field for invasion. After a careful analysis of the Interstate Commerce
Act it was concluded that the act itself needed no revisions, since the
powers of the Interstate Commerce Commission, under the present pattern
of the law, are ample and effective. The matter has therefore been
dealt with in a proposed addition to the statement of national
transportation policy, first enacted in the Transportation Act of 1940.
S. 1899 adds a paragraph at the end of
the statement of national transportation policy enjoining the Interstate
Commerce Commission to keep all forms of transportation subject to its
control "free of terrorism, extortion, racketeering and similar unlawful
or unethical business tactics" -- with the practical effect of removing
all doubt that the Commission may take such tactics into account
whenever it applies the standards of fitness, ability, and public
convenience and necessity to applicants for and holder's of
certificates, licenses, and permits under the Act.
ORGANIZED CRIME IN INTERSTATE COMMERCE 93
MEASURES: S. 1529, 1531, 1532, 1660, 2059
The Internal Revenue Code has been
analyzed with a view to tightening controls over organized crime through
the Federal taxing powers. The committee is not persuaded that the
direct imposition of taxes, as exemplified by the Harrison Narcotics
Act, is a suitable general device for curbing illegal activities, and
for this reason it has rejected numerous proposals to impose direct,
confiscatory taxes on various types of organized criminal enterprises.
There is force in the argument that recognizing gangsters and hoodlums
directly for tax purposes tends to compromise the dignity of the Federal
Government and to complicate local enforcement problems. Moreover, the
direct, confiscatory tax might be subject to grave questions on
constitutional grounds. See U. S. v. Constantine, 296 U. S. 287 (1935).
On the other hand, it is felt that the
power to require disclosures and information incidental to the
imposition and collection of Federal taxes should be fully used, when it
appears justified as an appropriate adjunct of general tax measures,
both to protect the Federal revenues and to expose illegal operations.
S. 1529 is a bill to facilitate the
collection of taxes from gambling casinos, whose large cash transactions
and inadequate records very frequently mask revenue frauds. Casinos
which operate lawfully would be required to maintain daily totals of
winnings and losses; those which operate clandestinely would be further
required to record each separate wagering transaction.
S. 1531 would impose a definite
statutory requirement on all taxpayers to preserve the records
supporting their income-tax returns for a period of 7 years. The
present regulation governing this practice is vague and unsatisfactory,
requiring records to be kept "so long as the contents thereof may become
material in the administration of any internal revenue law." Periods of
limitation under the Internal Revenue Code vary, the limit for
prosecutions for income tax evasion being 6 years. Actions for recovery
of taxes under certain circumstances are never barred. The proposed
bill would therefore not only place an unequivocal statutory duty on
persons who now frustrate the collection of taxes by destroying their
records, but would at the same time clarify the position of honest
taxpayers who are uncertain as to their obligations under the present
S. 1532 relates to the deduction of
expenses and losses by gamblers in reporting their net income. The
first section of the bill would prohibit the deduction of any expense
"incurred in or as a result of illegal wagering." The committee is
mindful of the logic of imposing a similar prohibition with regard to
expenses incurred in other illegal activities as well, and further
consideration might be given to this possibility. The second section
changes the present right of taxpayers to deduct wagering losses up to
the amount of wagering gains, by prohibiting the deduction of all losses
incurred in illegal wagering transactions. This would make total
winnings, of the amateur and professional gambler alike, taxable as net
income without any offset for losses, where the transactions involved
are violations of applicable laws.
94 ORGANIZED CRIME IN INTERSTATE COMMERCE
S. 1660 would require any taxpayer who
reports more than $2,500 as income from unlawful sources, for the
current year or any of the 5 years prior thereto, to append a statement
of his net worth to his return. Both in collecting taxes and in
enforcing other laws, enforcement officials have been much handicapped
by a lack of information as to the net worth of gangsters and
racketeers. Such information, over a spread of several years, would
provide a multiple-point cheek on the rise of underworld characters.
There is precedent for this requirement: the Treasury Department has
required net-worth statements, from certain persons reporting large
incomes, since 1937. And it is not believed that the measure could be
effectively resisted on the grounds of self-incrimination. See U. S. v.
Sullivan, 274 U. S. 259 (1927).
S. 2059 is a to write effective
penalties, fashioned after section 145 of chapter 1 of the Internal
Revenue Code, into parts VII and IX of chapter 27, Internal Revenue
Code. These are the parts which impose occupational taxes on the retail
liquor traffic and on slot-machine vendors. In both cases, adequate
returns by the taxpayers affected, and strict compliance with the
registration and information requirements of the chapter, would produce
records of great value to local enforcement officials in detecting and
apprehending violators of their laws. At present these requirements are
indifferently enforced with respect to the liquor traffic, in part, at
least, because the supporting penalty provisions are vague and
unsatisfactory. The problem has not become acute in policing the
slot-machine industry, but the same deficiency exists and should be
ENFORCEMENT OF CRIMINAL LAWS-S. 1625, 1747, 2060
In the course of its work the committee
had many occasions to confer with Federal prosecutors and other
officials who are concerned with enforcing Federal laws. Considerable
attention has been given to analyzing the problems raised by these
officers and their suggestions for improving the enforcement machinery
with which they work. As a result, the committee is sponsoring three
S. 1625 (companion to H. R. 2260) would
relieve the. Government of the wholly unrealistic burden; in perjury
cases based on contradictory statements made under oath, of proving
which of such statements is false.
S. 1747 would remedy a glaring
deficiency. Although many Federal agencies and quasi-judicial bodies
have statutes which allow them to compel witnesses to testify over a
plea of privilege based on self-incrimination, the Department of Justice
itself, with its general responsibility for Federal law enforcement, has
no such power at its disposal. This bill would authorize the compulsion
of such testimony, with an adequate grant of immunity from prosecution
for matters revealed in the course thereof, in all Federal court and
grand jury proceedings, with the added safeguard that the Attorney
General must determine that granting immunity in each individual case is
"necessary to the public interest." S. 1747 is intended to be
complementary with S. 1570, discussed in "Part VIII, Congressional
investigations," post, which confers the same power, amply safe-guarded,
on congressional committees.
ORGANIZED CRIME IN INTERSTATE COMMERCE 95
S. 2060 proposes an important addition
to the Government's rights of appeal in criminal cases. Under present
law, there is no recourse when, at the outset of a criminal case, the
defense successfully moves to suppress evidence upon which the
prosecution is relying. Good cases have been effectively destroyed by
this tactic. The Government should be empowered to seek review of such
orders when it believes they are erroneous, so long as the defendant has
not been put in jeopardy at the time of the appeal. S. 2060 would
The committee heard numerous complaints
of the wholly unsatisfactory situation which prevails with respect to
wire-tapping and the use of wire-tapping evidence in the courts. Study
of this matter has suggested that the strong divergence of views which
has heretofore defeated wire-tapping legislation may now be resolved;
communication and enforcement interests alike agree that the present
situation is intolerable. The committee believes that some interested
agency should take the initiative in working out a generally acceptable
plan of control, and as a starting point, commends the pattern which
appears to have worked satisfactorily in the State of New York (N. Y.
Const., art. I, sec. 12; Code Cr. Proc., sec. 813-a; Penal Code, sec.
CONGRESSIONAL INVESTIGATIONS, S. 2058, 2057
The problems encountered by the
committee in compelling the appearance of witnesses and eliciting their
testimony, although concededly arising in part from the antisocial
characteristics of the type of witness involved, have shown the need for
a thorough study of the investigative machinery which is available to
the two Houses of Congress. This machinery has been found wanting in
The most glaring weakness, which proved
highly embarrassing to the committee and continuously frustrated its
investigations, was the defect in the immunity statute governing
congressional investigations (18 U.S.C. 3486). This section has been
lifeless since the Supreme Court decision in Counselman v. Hitchcock
(284 U. S. 141 (1891)). That case held invalid a law similar to the
present congressional immunity statute. The basis of the decision was
that the immunity granted in the statute was not completely coextensive
with the scope of the fifth amendment, and that it was thus ineffective
as a substitute for the privilege against self-incrimination. S. 1570,
introduced by Senator McCarran, as amended by Senator Ferguson, meets
this objection, and is strongly endorsed by the committee.
The evasive tactics of witnesses sought
by the committee suggest permanent legislation patterned after Senate
Resolution 65, Eighty-second Congress, which brought witnesses in under
warrants of arrest.
S. 2058 would create permanent
machinery for the apprehension under warrants of arrest of persons found
to be evading a congressional subpena, in order to serve process on them
or to exact security for their appearance. This machinery could only be
set in motion after diligent efforts to obtain service in the usual
manner, and only upon a proper finding, by the committee issuing the
subpena, that the witness was willfully evading service. The mere
existence of such a law would put an end to the undignified spectacle of
96 ORGANIZED CRIME IN INTERSTATE COMMERCE
at hide and seek with committee personnel and
Congressional Sergeants at arms.
S. 20[??} gives definite statutory
sanction to present practices in issuing and serving subpenas. The
authority of deputies and committee personnel in this respect is
sometimes nebulous at present, and the committee feels that, since the
courts are scrupulously exacting in all matters relating to the
perfection of service, a statute, to remove all doubts in all cases, is
Attention is also called to a drafting
deficiency which, while not within the committee's compass, should be
corrected. Four of the sections in title 2 U.S.C. (191-4) which control
the power of congressional bodies to take testimony under oath, to
punish for contempt, etc., apply to joint committees only when the same
are created "by a joint or concurrent resolution" -- with the result
that joint committees created by act of Congress are left without such
FEDERAL CRIME COMMISSION
Senate Joint Resolution 65 is intended
to accomplish the proposal contained in the committee's Third Interim
Report calling for establishment of a Federal Crime Commission. It
would authorize creation of a permanent commission in the executive
branch of the Government, organized and staffed independently of other
Government agencies but coordinating its efforts with, and reporting to,
This proposal has encountered
opposition on the part of the Treasury Department and the Department of
Justice. Furthermore, Senator Wiley dissented from it at the time it
The committee does not recede from this proposal
but acknowledges that its enactment may encounter difficulty and that in
any event enactment would take some time. It is therefore proposing, in
addition to this, the establishment of a privately constituted National
Crime Coordinating Council organized in the manner described elsewhere
in this report.
F. STATUS OF CONTEMPT PROCEEDINGS
In the course of the committee's
hearings, it encountered many examples of witnesses who refused to
answer material questions or to disclose the contents of subpenaed
records, on the ground that to do so would tend to incriminate them.
Forty of these recalcitrant witnesses were cited for contempt by the
Senate and their cases were placed in the hands of the appropriate
United States attorneys for prosecution.
The committee has reported to the
Senate the contempts committed by four other witnesses, but the Senate
had not certified the committee reports to the United States attorney as
of the time that this report was filed.
Two recalcitrant witnesses, namely,
Morris Kleinman and Louis Rothkopf, who have also been cited for
contempt, did not rely upon the privilege against self-incrimination but
based their refusal upon the novel ground that the procedure adopted by
the committee in requiring them to testify at a hearing which was being
televised, broadcast, and photographed by newsreel cameras was generally
ORGANIZED CRIME IN INTERSTATE COMMERCE 97
violation of their constitutional rights. The
issues raised by Mr. Kleinman and Mr. Rothkopf by their refusal to
testify will ultimately be resolved by the courts.
The persons who have been cited by the
Senate for contempt, together with the status of their cases, and the
persons whose contempts have been reported to the Senate by the
committee, but not certified to the United States attorney as of the
time this report was filed, are as follows:
Cases in which the committee report has
been certified to United States attorney, but the cases have not as yet
been presented to grand jury:
Anthony J. Accardo,
Murray L. Humphreys, Chicago,
George L. Bowers,
Miami, Fla. Morris Kleinman,
Arthur Longano, Englewood, N. J.
Joseph Doto, alias
Joe Adonis, Palisades, N.J. James Lynch, Palisades,
George S. May,
Ill. John Doyle, Gary, Ind.
Julius Fink, Baltimore,
Pa. Rocco Fischetti, Chicago,
Demarest, N. J. Alex Fudeman, Reading,
William G. O'Brien,
Jacob Guzik, Chicago, Ill.
Case disposed of:
Fla. (acquitted on February 5, 1951, on
motion for a directed verdict).
Cases in which committee report has
been filed with Senate, but not certified to United States attorney as
of the time that this report was filed:
Joseph Baldassari, Scranton,
Joseph Scalleat, Hazleton,
Patrick Joseph Size, Scranton,
OF NEW JERSEY
Case in which the committee report has
been filed with Senate, but not certified to United States attorney as
of the time that this report was filed:
Herman Orman, Atlantic City, N. J.
DISTRICT OF NEW YORK
Indictments for contempt were filed in
the following cases (trial dates not set):
Frank Costello, New York City.
Joseph Doto, alias Joe Adonis, Palisades,
Frank Erickson, New York City.
DISTRICT OF MICHIGAN
Indictments for contempt filed and
defendants' motion to dismiss to be heard some time in September 1951.
Trial dates not set:
Peter Licavoli, Grosse Pointe, Mich.
Mike Rubino, Grosse Pointe, Mich.
Case disposed of. Acquitted on grounds
that notice was defective. The subpena served upon Trilck required his
appearance in Washing-
98 ORGANIZED CRIME IN INTERSTATE COMMERCE
ton and the court held that notice given to his
attorney, directing him to appear in Detroit instead, was not
Russell Trilck, Detroit,
DISTRICT OF OHIO
Indictments for contempt were filed in
the following cases which will be tried some time in September 1951:
Joseph Aiuppa, Cicero, Ill. (Decision on
defendant's motion to dismiss deferred until trial.)
Joseph Di Carlo, Youngstown,
Ohio. (Decision on defendant's
motion to dismiss deferred until trial.)
James Licavoli, Cleveland,
Ohio. (Motion for bill of
DISTRICT OF CALIFORNIA
Indictments for contempt were filed in
the following cases:
Stanley Cohen, San Francisco, Calif.
(Trial date not set.)
David N. Kessel, Piedmond,
Calif. (Trial January 7, 1952.)
Walter M. Pechart, El Cerrito,
Calif. (Trial January 7, 1952.)
DISTRICT OF FLORIDA
Information for contempt filed in one
Coral Gables, Fla. (Arraignment October 5, 1951, on which date
defendant's motion requiring filing of new information will be
argued. If the court should grant defendant's motion, new
information will he filed immediately; if the court denies motion, case
to be set for trial on October 22, 1951.)
DISTRICT OF ILLINOIS
Indictment for contempt filed:
Ralph O'Hara, Tiedtville,
Ill. (Trial date not set.)
Cases in which the committee report has
been certified to United States attorney, but cases have not as yet been
presented to grand jury:
Jack Dragna, Los Angeles,
Pat Manno, Chicago,
Peter Tremont, Chicago,
DISTRICT OF LOUISIANA
Cases disposed of:
John J. Fogarty,
La. (Plea of nolo contendere and
sentenced to 30 days in jail and to pay $300 fine, with jail
sentence suspended and defendant placed on probation for 90 days.)
Phil Kastel, New
La. (Defendant's motion to dismiss was
granted on June 27, 1951.)
La. (Tried and found guilty. Sentenced
to 6 months in jail and to pay $500 fine and required to post $3,000
bond pending appeal.)
Indictments for contempt filed and
defendants' motions to dismiss denied. Trial dates not set:
Anthony Marcello, Gretna, La.
Joseph A. Poretto, New Orleans,
The contempt cases recently decided by
the Supreme Court of the United States have greatly expanded the scope
of the constitutional
ORGANIZED CRIME IN INTERSTATE COMMERCE 99
privilege against self-incrimination. It would seem
under the present state of the law, that a witness may invoke the
privilege even where the possibility of incrimination is quite remote.
The most recent Supreme Court decision on the matter is United Slates
v. Hoffman, 341 U. S. 479 (1951), upholding the right of a defendant
appearing before a Federal grand jury to refuse to state even the nature
of his business. There would seem to be a distinction between
appearance before a body like a grand jury which has power to indict the
witness and appearance before a congressional committee which is
empowered to obtain information for legislative purposes only. As a
matter of law, there is considerable uncertainty as to the extent to
which the court will apply the Hoffman case to the cases of witnesses
appearing before this and other congressional committees.
The contempt cases which have been
certified to the United States attorneys, but which have not as yet been
presented to grand juries, are being reexamined, in the light of the
opinion in the Hoffman case, with a view to determining whether or not
indictments should be sought in those cases.
G. USE OF TELEVISION, NEWSREELS AND
RADIO IN CONGRESSIONAL HEARINGS
As the first congressional committee to
encounter television on an extensive scale at its hearings, this
committee feels that a report regarding its experience and attitude in
that connection would be desirable.
There has been a great deal of public
discussion regarding the advisability of permitting congressional
hearings to be televised. It should be understood at the outset,
however, that the issue does not relate to television as such.
Television is essentially another improved method of public
If hearings are to be conducted in
public, obviously public access to the proceedings cannot be limited to
those who arc able to attend in person. No one can object to having
reporters present who report everything they believe to be of public
interest irrespective of whether the witness likes it or not. No
serious objection has been raised to the use of flash-bulb photographs
for newspaper publication and the use of radio to broadcast public
hearings has been a common practice. Newsreel cameras present the most
difficult problem because of their bulk and the brilliance of the lights
required for their use.
All of these media of news collection
and dissemination have been in use for many years. Adding television
merely has the effect of increasing the number of people who can
actually see the proceedings. Television cameras are quiet and
unobtrusive and they require considerably less light than newsreel
If the subject matter being
investigated by a congressional committee is of limited public interest
the demand made upon it, for access to the hearing by the various media
of public news collection and dissemination will be similarly limited.
If its subject matter is of great public interest, it will be besieged
with requests from the press, the radio, the newsreel producers, and the
television firms for the right to publish and broadcast the hearings.
It is incumbent upon a committee faced with these requests not to
discriminate unjustly among the various media.
100 ORGANIZED CRIME IN INTERSTATE COMMERCE
The committee found, for example, that
when its hearings involved large cities or notorious characters whose
names were of great public interest, all of these media of communication
sought access to the hearings, whereas hearings covering medium-size
cities, where the subject matter was less spectacular, attracted the
press only. Presumably, because of the expense of handling their
equipment, newsreel and television firms attend only if the material has
unusual publicity value.
Accordingly, it is the degree of public
interest, not the desires of the committee, which governs the number of
news representatives and the amount of equipment that the committee will
be asked to allow in the hearing room.
The public has a right to be informed
of the activities of its Government and it is entitled to have access to
public hearings of congressional committees. The witnesses appearing
before the committee also have rights that must be respected, but a
witness does not have any inherent right to interfere with the rights of
the public in this regard. There falls upon the shoulders of the
committee conducting the hearing the responsibility of maintaining a
fair and equitable balance between the rights of both the public and the
The degree to which a witness is
distracted by news devices depends on many factors, including the health
and temperament of the witness. Giving testimony of any kind under any
conditions may be nerve-wracking to some witnesses. Some can bear the
strain more easily than others. Much depends upon the willingness of
the witness to cooperate. A friendly and cooperative witness seldom
objects to being photographed or televised and does not find these
factors to be distracting. The reluctant witness, on the other hand, is
necessarily under greater strain and is more easily distracted by
outside forces. This gives rise to the question of whether the friendly
witness should be given less favorable treatment that the recalcitrant
The committee must always be conscious
of its responsibility to obtain from its witnesses the information
required to fulfill its mission. If a witness refuses to testify unless
a media of news dissemination are diverted from him, the committee
either may recommend that he be cited for contempt of Congress or it may
accede to his request for the purpose of obtaining the information the
witness is able to supply. This requires a careful exercise of judgment
as to which course will be in the best interests of the public.
Crime is nearly always a matter that
attracts wide public attention and it is for this reason that at some of
the more newsworthy hearings of the committee, the various media of news
dissemination requested the right to bring in all of their facilities
and equipment. Drawing the line was not easy.
In order to reduce the amount of
equipment in the hearing room, the committee ordinarily required the
television networks to form a pool so that only one set of cameras would
be in the room. It also attempted to limit the number of newsreel
cameras and in some instances it forbade the taking of still photographs
with flash bulbs during the time when a witness was actually testifying.
In other cases where the witness requested it, cameras, both newsreel
and television, were required to be turned away from the witness during
his testimony. In one case, where the testimony of the witness was
ORGANIZED CRIME IN INTERSTATE COMMERCE
deemed to be of considerable importance, all
cameras, radio, and recording devices were silenced.
The policy adopted generally by the
committee throughout was to attempt to recognize the public's right of
access to the hearings, to avoid unfair discrimination between the
various news media and at the same time to avoid subjecting the witness
to an ordeal that would unduly interfere with the giving of his
testimony. The committee exercised its judgment according to the
individual circumstances of each case.
One of the important factors that
affects the decision of a congressional committee in regard to the
amount of facilities and equipment to be allowed in a hearing room is
the size and character of the room itself. Congress does not have a
hearing room adequately suited for a hearing that is of such widespread
interest that newsreels and television networks will be attracted to it.
Such rooms as it has are not equipped to accommodate modern
photographing and televising equipment in an inconspicuous manner.
An example of the modern method of
handling such equipment is found in the United Nations assembly room at
Lake Success where the room itself is well lighted and newsreel and
television cameras are installed behind a glass partition which blocks
all operational noise. In such an arrangement the equipment is hardly
noticed. If similar facilities were available for the hearings of
congressional committees there would be few occasions when a witness
could justifiably claim that his ability to testify was unduly hampered
by the presence of news disseminating equipment.
Considerable confusion of thought has
resulted from the error of placing congressional hearings in the same
category as trials in court. While it is true that gangsters and
hoodlums when called before this committee and asked to give information
regarding organized crime, were in an uncomfortable position while being
interrogated by counsel and Senators, they were not on trial.
A court trial is entirely different.
It is a judicial proceeding involving the specific facts of an
individual case. A jury is present and must be able to hear and weigh
the evidence without distraction. The fate of an individual defendant
is at stake and great weight must be given to his right to be tried in
an atmosphere that is strictly calm and judicial. It is for these
reasons that the Federal Rules of Criminal Procedure specifically forbid
radio broadcasting of court proceedings.
The function of a congressional
committee, on the other hand, is to obtain information for the purpose
of enacting legislation. The legislative process includes the important
step of enlightening the public regarding the matters under inquiry in
order that intelligent public opinion will be developed. The more
access the public has to the hearings the more thoughtful will its
opinion be. This is a necessary part of the democratic process.
A final point that deserves comment is
the question of commercial sponsorship of the broadcasting of committee
hearings. Unlike most public-interest programs, a congressional hearing
if fully broadcast, occupies long periods of time, often extending over
several days. During this period, a radio or television station or
network, in order to carry the hearings, is required to cancel all of
its regular commercial programs. This involves not only loss of revenue
but also, in some
102 ORGANIZED CRIME IN INTERSTATE COMMERCE
cases, payment of cancellation penalties. Seldom
can a station or network afford to bear this enormous financial burden.
Unless sponsorship is permitted, the
public will be deprived of the privilege of witnessing many important
events. At the same time, it is important to avoid a type of
sponsorship which permits the broadcasting to be done in a manner that
detracts from the dignity of the proceedings.
After extensive study by the committee
and its staff, and discussion with representatives of the radio and
television industry, the committee in an effort to reach an
understanding with the industry adopted a proposed code of conditions
covering the use of sponsored radio and television at its hearings. The
plan adopted is as follows:
1. No television network or station
shall use for the hearings a commercial sponsor not specifically
approved in writing by the committee or its designated representative,
and no sponsor shall be charged by a network or station more than such
reasonable amount as may be consistent with the usual charges for other
programs emanating from a public source.
2. No commercial announcement shall be
broadcast from the hearing room.
3. Breaks for station identification
during the hearings shall be limited to 10 seconds.
4. No network or station shall make
any comment or commercial announcement during the testimony of a
witness, or interrupt the broadcasting of the testimony of a witness for
the purpose of making any such comment or announcement.
5. During each pause or intermission
in the hearings, the network may make a commercial announcement lasting
not more than 1 minute and, except in the case of a newspaper, magazine,
or other publication of general circulation referring to reports of the
hearings to appear in its columns, such commercial shall be
institutional in character and shall make no reference to the hearings.
6. No local station shall interrupt
any portion of the broadcasting of the bearings as received from a
network for the purpose of making any spot or other commercial
7. A network or situation may, at any
time, make a complete break from the broadcasting of the hearings for
the purpose of broadcasting other programs.
8. At the beginning and end of the
broadcasting of the hearings for any day, the network carrying the
hearings shall make the following announcement or its equivalent:
hearings are brought to you as a public service by the X Company in
cooperation with the Y Television Network.
It is hoped that the committee's
experience in this matter will be of some guide to other congressional
committees faced with similar problems.
The committee, immediately after its
creation in May 1950, adopted a code of procedure for its hearings.
This code provided among other things that a witness before the
committee should have the benefit of counsel when requested. Also the
counsel could ask his client questions designed to bring out full
information on a particular matter; questions or interrogatories could
be submitted to the committee to be asked other witnesses who gave
testimony concerning a particular
ORGANIZED CRIME IN INTERSTATE COMMERCE
witness. The code also provided that any persons or
organizations whose names were mentioned in a hearing should be afforded
an opportunity to give their side of the story by testifying or filing a
statement or data in the record designed to clarify any point in
Later, when requests were made to
permit televising of the hearings the committee gave a great deal of
consideration to this problem and ultimately adopted the set of
conditions for sponsored broadcasts set forth heretofore. The committee
had to act on all matters in its hearings without the benefit of
precedent of other committees.
The committee feels that much time in
the development of individual codes for congressional committees would
be saved and hearings would be expedited if the Senate or the Congress
would adopt an over-all code of procedure for all such committees.
Witnesses appearing before the committees and their counsel would then
know the rules of the game and much bickering, questioning and delay
would be avoided.
The committee gives its wholehearted
approval to the proposals which are now pending before the Senate
Committee on Rules and Administration and other congressional committees
for the adoption of such an over-all code of procedure.
After this report was filed, the
committee received notice from the Western Union Telegraph Co. to the
effect that its service regarding the United States Treasury Balance
Reports, originating at Washington, D.C., is being discontinued,
pursuant to the company's policy of cooperating with law-enforcement
Hearings held by the committee under
the chairmanship of Senator Kefauver, were printed in volumes as
Part 1. Florida.
Part 6. Ohio-Kentucky.
Part 7. New York-New Jersey.
Part 2. Federal and
State Officials; California Part 8. Louisiana.
Commission; and Chicago Part 9. Michigan.
Commission. Part 10. Nevada-California.
Part 3. Black
Market Operations. Part 11. Pennsylvania.
Missouri. Part 12.
Federal and State Officials, and Miscellaneous
Part 5. Illinois.
Prior to May 1, 1951, the committee
issued three Interim Reports, Nos. 2370, 141, and 307.
The Library of Congress, Legislative
Reference Service, has prepared an index of all the names found in the
printed hearings listed above, which is being put into print at the
Government Printing Office, and will make the hearings double valuable
to crime commissions, libraries, law-enforcement officials, the press,
etc., to whom the index will be made available.
The hearings held by the committee
since May 1 1951 under the chairmanship of Senator O'Conor, will printed
in volumes as follows :
Miscellaneous Witnesses. Part 17. Maryland-District
Narcotics. Part 18. New
Kentucky. Part 19.
The latter hearings are presently being
printed, and will soon be available to interested parties.
Kefauver Crime Committee
First Interim Report
Kefauver Crime Committee Second Interim Report
Kefauver Crime Committee Third Interim Report