Under Luciano's leadership, the syndicate might have grown to even more treacherous proportions if he hadn't been convicted on prostitution charges in 1936 and sentenced to 30 to 50 years in prison. Luciano supporters cried foul, claiming that the case was a frame based on the testimony of lying pimps and whores who were plea-bargaining themselves out of prison time. Ironically, Luciano personally found prostitution an odious pursuit, though he didn't seem to have any trouble sharing in its profits.
The special prosecutor leading the charge against Luciano was Thomas E. Dewey who at the time didn't realize that Luciano had saved his life earlier that year when Dutch Schultz vowed to assassinate the pesky prosecutor. Luciano knew that this would be bad for business, bringing down the wrath of the government, but Schultz was unwilling to listen to reason from fellow syndicate members. To stop the "Dutchman" from carrying out the hit, Luciano had Schultz killed. He was gunned down as he stood at a urinal in the Palace Chop House and Tavern in Newark, N.J.
Luciano's involvement with Dewey did not end with Lucky's conviction. Dewey, who was later elected governor of the state of New York, sought out Luciano's help during World War II to get the underworld to help with security on the New York docks. In exchange for his help, Luciano was released from prison but deported to Italy.
Luciano, who had been running the syndicate from prison, knew that he would have a hard time maintaining control over his rackets from Italy, so he clandestinely moved his base of operations to Cuba. Eventually the U.S. government learned of his presence there and forced him to return to Italy. The man he left in charge of what would later become known as the Genovese family was part of the new breed of gangster, an Italian, but not a Sicilian, who preferred negotiation over conflict, and for that reason became known as the Prime Minister of the mob.
Acting boss Frank Costello's friendship with Lucky Luciano and Meyer Lansky stretched back to the days of Prohibition in the 1920s. Born in the Italian province of Calabria, Costello understood the value of connections, and unlike his Sicilian counterparts, when he reached into his jacket, he was more likely to come out with bribe money than a gun. Lucky Luciano knew that if his dream for a national crime syndicate was to be realized, he would need a deal maker not a head breaker at the helm while he was in exile.
Costello recognized that the syndicate would never prosper if its rackets were constantly interrupted by arrests and convictions. Growth required stability and continuity, so to protect his criminal enterprises, he ingratiated himself with police officials, politicians, and judges. If a police chief needed a favor, Costello made sure that it was done. If a politician needed votes, Costello delivered. A judge needed money? No problem. Over the years Costello assembled a chessboard full of corrupt officials, working them all to his advantage. Cops would look the other way when Costello's people committed crimes. Judges swayed juries and handed down lighter sentences. Politicians voted down laws that would hinder the syndicate. All thanks to Costello.
Even the nation's top crime fighter, J. Edgar Hoover, the first and longest-sitting director of the Federal Bureau of Investigation, was not immune to Costello's temptations. Hoover loved the racetrack. Though he swore that he never bet more than two dollars on a single horse, he was rumored to send agents to place larger bets for him. Whenever Costello knew that Hoover would be at the track, the Prime Minister would fix races and, using celebrity columnist Walter Winchell as go-between, make sure that the director knew what the sure bets were so that he could place his wagers accordingly. Perhaps this is why Hoover for many years maintained that the Mafia did not exist in America and the FBI had better things to do than chase down what he thought of as mere gamblers. Without serious scrutiny from the federal government, the syndicate flourished.
By the early 1940s, Costello had his hand in many enterprises. He went into partnership with Meyer Lansky to form jukebox and cigarette machine companies. He put together a coalition of gangsters to open a string of gambling parlors in Florida. He and Chicago syndicate underboss Tony Accardo started a bookmaking operation in Miami that raked in $10 million a year in profits. He and Bugsy Siegel explored illegal opportunities on the West Coast. Realizing Lucky Luciano's dream, Costello's reach stretched from "sea to shining sea."
Known for his expensive suits and impeccable grooming (he would typically go to the barber shop at the Waldorf Astoria Hotel every morning for a trim), Costello was a man about town in New York City. He lived in a swank apartment building on Central Park West and kept an ex-showgirl mistress across the park on Fifth Avenue. He was so trendy he even saw a psychiatrist, Dr. Richard H. Hoffman, long before television character Tony Soprano skulked off to see his shrink. Costello had been seeing Dr. Hoffman for two years before the newspapers got wind of it. The psychiatrist told reporters that he had advised his patient to associate with a "better class of people." Costello abruptly terminated his therapy, countering that it was he who had introduced Hoffman to a "better class of people."