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Zebra Murders

UPDATED June 21, 2002 09:05 PM
The Gemstone Files: 1900-1929
Era of Bootleggers and Robber Barons

©2002 by Jim Moore

1900 - Carrie Nation, Kansas anti-saloon agitator, started raiding saloons with her hatchet. Her campaign later led to Prohibition, though heroin and cocaine remain legal.

That same year, the "bucket shops" begin - a nationwide stock market fraud in which Joseph Kennedy is said to have played a role, along with his Crime Syndicate buddies like Arnold Rothstein, who later supplied Kennedy with bootleg scotch and possibly heroin beginning in 1920.

In “The Big Bankroll,” Leo Katcher gives us the following description/definition of the “bucket shop,” an operation which began shortly after the Civil War when railroad stocks flooded the market and were purchased by thousands of investors:

“The bucket shop was a cut rate, bargain basement securities supermarket. It operated on the layaway, or installment, plan, with very little down. Purchasers of stocks could buy on a margin as low as one point.

“The bucket shop was a brokerage house. It had the normal complement of tickers and a board on which prices were posted and they came over the tickers. In their early days the bucket shops were straight gambling houses.”

The bucket shops enjoyed their initial popularity from 1900 until the “financial panic” of 1907. After a decade the booming economy brought on by World War I began a second round of activity, this lasting until the market crash in 1929. The operations were not exclusive to New York City. Several successful operations had branch offices in other cities in the country.

While no dollar figures from the bucket shop operations were ever tallied, New York State bankruptcy courts did report that during one five-year period customers were bilked to the tune of over $212 million dollars.

Arnold Rothstein

Rothstein did not have a direct hand in the ownership of these bucket shops. He backed some of the major operations like Dillon & Company and E. M. Fuller & Company. These operations, although large and profitable, required less start up money. However, what they did require was protection. This is where Rothstein prospered. With Rothstein’s influence with the police, the prosecutor’s office and Tammany Hall, he helped protect the bucket shop operators from legal harassment and from regulatory laws that might be initiated in the state capital.

When a bucket shop operator was arrested, Rothstein would post bail and provide legal counsel. However, when E. M. Fuller & Company, an operation run by Edward Fuller and William McGee, went under costing investors some $5 million, a newspaper journalist, Nat J. Ferber of the American, investigated the losses, which resulted in sensational trials and media coverage – and Rothstein’s presence in front of a grand jury.

When E. M. Fuller & Company filed bankruptcy, all of the assets, as well as the two principals, disappeared. Fuller and McGee were hiding out in the Rothstein home riding out the storm. Once Rothstein hired the law firm of Fallon and McGee (no relationship) to represent them, the two men surrendered. This would begin a five-year long saga involving trials and grand jury hearings, with the case never really being resolved.

In the ensuing investigation prosecutors found checks totaling $353,000 made out to Rothstein, who was then called before the grand jury to testify. Allegations were made that the payments were either gambling losses Fuller was repaying to Rothstein, including supposed bets made on the 1919 World Series, or that Rothstein was laundering the stolen Liberty Bonds through the company. This latter belief arose after it was revealed the same type of bond laundering occurred with Dillon & Company, a bucket shop run by Rothstein intimate Philip “Dandy Phil” Kastel, in which $407,000 had been loaned to Rothstein with Liberty Bonds put up as collateral.

During the inquiries Rothstein seemed nervous at first, but then began to enjoy matching wits with the prosecutors. As the inquests dragged on for years he became a formidable foe to them. Perhaps the highlight of Rothstein’s testimony came during an exchange regarding how the gambler had obtained the Liberty Bonds. After much bantering between the prosecutor, judge, and Rothstein, the judge suggested the question put to Rothstein be rephrased.

“Where did you buy the Liberty Bonds, or, if you did not buy them, where did you procure them,” asked the prosecutor.

“Now, that’s a question I can answer,” replied Rothstein. “I can’t remember.”

In the meantime, Fallon and McGee were busy defending Fuller and McGee, each time the trial ending in a hung jury. After the second trial a juror admitted he had been bribed by Fallon, not only in the Fuller trial, but also in an earlier one in which he had sat on the jury. When a second person came forward to corroborate the allegations, Fallon found himself on trial. In what was considered his greatest courtroom performance, Fallon ably defended himself and was acquitted by an awe struck jury. As Fallon made his way out of the courtroom he stopped in front of Ferber, the journalist whose investigation had initiated the bucket shop trials. In a voice loud enough for the entire courtroom to hear, Fallon told him, “I promise you I’ll never bribe another juror.”

Fallon’s trial brought to an end the sensationalism that surrounded the bucket shop investigations. It also was the last hurrah for Fallon. The “Great Mouth Piece” died not long afterward and one of the shooting stars of the 1920’s Broadway scene was extinguished. (Arnold Rothstein - Lawyers and Bucket Shops)

Jun. 3, 1900 - International Ladies' Garment Workers was founded in New York, providing an inroad for a mob takeover of union movements.

1901 - "At times Capitalism and Communism would appear to be in conflict, but this writer is confident that their interests are in common and will eventually MERGE FOR ONE-WORLD CONTROL. That policy Woodrow Wilson's Point Six has never been dropped. Capitalism and Communism...are merely their twin mechanisms to destroy the SOVEREIGNTY of Christian nations. They will merge them into the projected superstate...They are SELLING US INTO SLAVERY and using our material resources for their own nefarious world-wide purposes..." - G.K. CHESTERTON

Jan. 10, 1901 - Texas had its first significant oil strike.

Sep. 6, 1901 - President McKinley was shot in Buffalo, NY by "an anarchist", Leon Czolgoz; McKinley died Sept. 14.

Aug. 6, 1902 - Arthur Simon Flegenheimer aka Dutch Schultz was born on August 6, 1902 in the Bronx. His parents were both German Jews. His mother, Emma had tried to raise little Arthur in the orthodox faith. Her efforts were not entirely in vain, in later years Schultz would develop respect for his religious upbringing. At different stages of his life he claimed to be Jewish, Protestant and Catholic. It was not uncommon for him to turn to religion at times of crisis during his career as one of America's most vicious mobsters.

Jan. 22, 1903 - US and Colombia signed a treaty to start digging the Panama Canal through Panama (still part of Colombia). Colombia then rejected the treaty and Panama (with covert US help) declared its independence Nov. 3. Three days later, Nov. 6, President Roosevelt recognized Panama as a sovereign nation and defied Colombia to do anything about it. On Nov. 18, Roosevelt signed a new treaty with the new nation of Panama.

August 1903 - "Let me tell you the following words as if I were showing you the rungs of a ladder leading upward and upward: Herzl, the Zionist Congress, the English Uganda proposition, the future world war, the peace conference - where with the help of England a free and Jewish Palestine will be created." - MAX NORDAY (a Jew) [Speaking at the Zionist Congress at Basel]

1904 - Ida Tarbell published the muckraking shocker History of Standard Oil. which exposed the power and corruption of John D. Rockefeller.

1905 - "The PROTOCOLS OF THE LEARNED ELDERS OF ZION may be briefly described as a BLUEPRINT for the DOMINATION OF THE WORLD BY A SECRET BROTHERHOOD. Whatever may be the truth about their authorship...there can be no doubt that the world society to which they look forward is nothing more or less than a WORLD POLICE STATE.

The Protocols have been widely termed a hoax, a fraud and a forgery designed to whip up anti-Semitism across the world. Most right-wingers who believe they are real will be disappointed to learn that they are indeed a hoax, but not the hoax most would think. The Protocols were genuine, but originally referred not to Zion - but to Sion, an entirely different secret French brotherhood better known as the Prieure de Sion - the difference between an "S" and a "Z". The fraud served two purposes: hide the true identity of those behind the plot, and shift the blame (and hatred) toward the Jews.

"...a copy will be received in the British Museum on August 10th, 1906. The professor who translated them did so out of a concern to expose what he believed to be a ruthless, cold-blooded conspiracy for the DESTRUCTION OF CHRISTIAN CIVILIZATION...They remained unknown outside Russia, however, until after the Bolshevik Revolution, when Russian emigrants brought the book to North America and Germany." - DANIEL R. WOOLMAN, Ph.D. []"World Conquest Through World Government" ("The Protocols of the Learned Elders of Zion") Translated from the Russian of Sergyei A. Nilus 1905 by Victor E. Marsden (Former Russian Correspondent for "The Morning Post") 1905/1922]

" with bad instincts are more in number than the good, and...the best results in governing them are attained by violence and terrorisation...not by academic discussions...

"...if the willing to yield some of his power...the slackened reins of government are immediately...caught up and gathered together by a new hand...fitting into the place of the old already WEAKENED BY LIBERALISM...the power which has replaced that of the rulers who were liberal is the power of GOLD...

"Behold the alcoholic animals, bemused with drink, the right to an immoderate use of which comes along with freedom...their youth has grown stupid...from EARLY IMMORALITY...

"...Violence must be the principle, and cunning and make-believe the rule for governments...we must not stop at bribery, deceit and treachery when they should serve towards the attainment of our end..." - Protocol #1

"...The Goyim [gentiles, non-Jews] are not guided by...historical observation, but by theoretical routine...we have persuaded them to accept as the dictates of science (theory).
"...we are constantly, by means of our PRESS, arousing a blind confidence in these theories. The intellectuals of the Goyim will puff themselves up with their knowledges and WITHOUT ANY LOGICAL VERIFICATION OF THEM will put into effect all the information available from science...think carefully of the successes we arranged for DARWINISM, MARXISM, NIETZSCHEISM...
"...The part played by the Press is to...give voice to the complaints of the people, to express and to create discontent...Through the Press we have gained the power to influence while remaining ourselves in the shade; thanks to the Press we have got the GOLD in our hands..." - Protocol #2

"...Abuses of power will put the final touch in preparing all institutions for their overthrow...All people are chained down to heavy toil by poverty more firmly than ever...from want they will never get away...
"We appear on the scene as alleged saviours of the worker from this oppression...Socialists, Anarchists, Communists...
"By want and the envy and hatred which it engenders we shall move the mobs and with their hands we shall wipe out all those who hinder us...When the hour strikes for OUR SOVEREIGN LORD OF ALL THE WORLD to be crowned it is these SAME HANDS which will sweep away everything that might be a hinderence thereto. (The Biblical "Anti-Christ?")
"...Teach in National schools...the division of men into classes and conditions...THERE CANNOT BE ANY EQUALITY...After a thorough study of this knowledge, the peoples will voluntarily submit to authority and accept such position as is appointed them in the State...
"...we have been leading the peoples from one disenchantment to another, so that in the end they should favor of that KING-DESPOT OF THE BLOOD OF ZION, whom we are preparing for the world [Again: The Anti-Christ?] ...brute force...turns mobs into bloodthirsty beasts. These beasts...FALL ASLEEP again every time when they have drunk their fill of blood, and at such time can easily be riveted into their chains..." - Protocol #3

"...It is indispensable for us to UNDERMINE ALL FAITH, to tear out of the mind of the Goyim the very principle of God-Head and the Spirit, and to put in its place arithmetical calculations and MATERIAL needs.
"In order to give the Goyim no time to think and take note, their minds must be diverted towards industry and trade. Thus, all the nations will be swallowed up in the pursuit of gain and in the race for it will not take note of their common foe. But...what is withdrawn from the land by industry will slip through their hands and pass into...our classes.
"The intensified struggle for superiority and shocks delivered to economic life will create...disenchanted, cold and heartless communities. Such communities will foster a strong aversion towards...religion. Their only guide is gain..." - Protocol #4

"...Nowadays it is more important to disarm the peoples than to lead them into war: more important to use for our advantage the passions which have burst into flames than to quench their fire...The principle object of our directorate consists in debilitating the public mind by criticism...leading it away from serious reflections calculated to arouse resistance...distracting the forces of the mind towards a sham fight of empty eloquence...
"In order to put public opinion into our hands we must bring it into a state of bewilderment by giving expression from all sides to so many contradictory opinions and for such length of time as will suffice to make the Goyim lose their heads in the labyrinth and come to see that the best thing is to have no opinion of any kind in matters political...This is the FIRST SECRET.
"The SECOND multiply to such an extent national failings, habits, passions, conditions of civil life, that it will be impossible for anyone to know where he is in the resulting chaos, so that the people in consequence will fail to understand one another...[It will] sow discord in all parties...and...discourage any kind of personal initiative which might in any degree hinder our affair. THERE IS NOTHING MORE DANGEROUS THAN PERSONAL INITIATIVE: if it has genius behind it, such initiative can do more than can be done by millions of people among whom we have sown discord.
"We must so direct the education of the Goyim communities that whenever they come upon a matter requiring initiative they may drop their hands in despairing impotence...
"By all these means we shall so wear down the Goyim that they will be compelled to offer us international power of a nature that...will enable us without any violence gradually to absorb all the state forces of the world and to form a SUPER-GOVERNMENT (European Common Market?)...Its hands will reach out in all directions like nippers and its organization will be of such colossal dimensions that it cannot fail to subdue all the nations of the world." - Protocol #5

*This is merely a sample. There are 24 protocols in all, and many of them are several pages long. For those of you who are reading a printed copy and don't have a computer, you can gain access to the rest of them through the computer at your local library. Just type in "protocols" and you should get a list of several sites carrying them. They are worth the trouble to look them up: They will blow your mind!

1906 - Opium based narcotics and cocaine flowed freely in this country until the first two decades of the 20th century. The first attempt to regulate drugs came with the Pure Food & Drug Law of 1906, but few restraints were imposed.


Mar. 13, 1907 - Financial panic gripped the nation as a depression hit, manipulated by the nation's top bankers and financiers.

1916 - The Harrison Act was passed and while it was enacted to control the narcotics traffic it was mainly a revenue measure. However, it was effective enough that by 1921 there was for the first time a demand for illegal drugs.

When Flegenheimer [Dutch Schultz] was fourteen, his father left home. What effect this had on the young man is hard to determine. Shortly after this desertion though, Flegenheimer quit school. Schultz never admitted that his father abandoned the family. He preferred to tell people that his father was a fine person and died during Schultz’s teenage years. Working a variety of odd jobs, Flegenheimer soon realized that an honest day’s work was not going to make him happy…or rich. He began hanging out at the Criterion Club where Marcel Poffo, a local hoodlum whose police record included bank robberies and extortion, befriended him. Hoping to impress his mentor, Flegenheimer began his criminal career by holding up crap games that refused to pay a percentage to Poffo. (Dutch Schultz - The Early Years)

Oct. 18, 1917 - Three events took place in Arnold Rothstein’s life that became legendary and created a reputation for the gambler that certainly preceded him and made him the talk of New York.

The first incident occurred in 1917. August Belmont owned a horse named Hourless, whose trainer, Sam Hildreth, was considered one of the best in the country. During the 1917 racing season Hourless lost in a three-horse race to that year’s Kentucky Derby winner, Omar Khayyam. Hildreth knew he had been outsmarted by Hourless’ rider, a dishonest jockey who dropped his whip during the race. When the New York season was over an enterprising track owner agreed to put up a purse for a grudge match between the two horses. On October 17, the day before the race, Rothstein decided to bet $240,000 on Hourless, but could not find anyone willing to handle a wager that large. Later that day, Rothstein received a telephone call and was informed whatever bet he was willing to place there was a man who would accept it – no limit.

Rothstein knew immediately that there must be a fix. He called Hildreth and voiced his concern regarding the sudden change of heart of the bookmakers to take his bet. If there was going to be a sucker in this race, it was not going to be Arnold Rothstein. At the last minute Hildreth changed jockeys and Hourless won convincingly. Rothstein pocketed a cool $300,000.

This bet was the largest Rothstein had won up until this time and he would exceed it twice in 1921. (Arnold Rothstein - Legendary Feats)

1919 - Next to the “Night of Sicilian Vespers,” Arnold Rothstein’s “fixing” of the 1919 World Series is the underworld’s most popular myth. The reality is, however, as Leo Katcher claims, “He did not fix the Series. Rothstein’s name, his reputation, and his reputed wealth were all used to influence the crooked baseball players. But Rothstein, knowing this, kept apart from the actual fix. He just let it happen.”

The series between the Chicago White Sox and the Cincinnati Reds was won by the underdog Cincinnati team five games to three (at the time the series was best of nine). Eight players from the Chicago team conspired to throw the games due to their intense dislike of owner Charles Comiskey, who they considered a cheapskate. However, the American League did not respond until over a year later after the completion of the 1920 season. At that time all eight players involved were banned from playing baseball for life. Ban Johnson, the president of the American League, was certain of Rothstein’s participation in the fix and openly said so. To which Rothstein responded, “My only connection was to refuse to do business with some men who said they could fix it…I intend to sue Ban Johnson for libel…”

Rothstein traveled to Chicago to testify before a grand jury investigating the fixed games. Part of his testimony follows:

 “The whole thing started when (Abe) Attell and some other cheap gamblers decided to frame the Series and make a killing. The world knows I was asked in on the deal and my friends know how I turned it down flat. I don’t doubt that Attell used my name to put it over. That’s been done by smarter men than Abe. But I wasn’t in on it, wouldn’t have gone into it under any circumstances and didn’t bet a cent on the Series after I found out what was underway. My idea was that whatever way things turned out, it would be a crooked Series anyhow and that only a sucker would bet on it.” 

An attorney representing Comiskey and the White Sox believed Rothstein, as did the members of the grand jury. Despite the fact that Rothstein was cleared and never charged his name will forever be linked to Major League Baseball’s darkest hour. (Arnold Rothstein - Legendary Feats)

1919 - At the age of seventeen, Flegenheimer [Dutch Schultz] received his first and only prison sentence. Arrested for burglarizing a Bronx apartment, Flegenheimer used the name Charles Harmon (an alias he would continue to use). He was sent to Blackwell’s Island, a brutal prison located in the middle of the East River. It later became Welfare Island and today is known as Roosevelt Island. Flegenheimer was not an ideal prisoner, and the experience certainly did nothing to rehabilitate him. In fact he was so unruly that he was transferred to a tougher prison, Westhampton Farms, from where he escaped for a few hours. He was returned and an additional two months were added to his sentence. Upon his return to the Bronx, his old Bergen Gang buddies anointed him “Dutch Schultz,” much to the chagrin of his loving mother. (Dutch Schultz - The Early Years)

July 4, 1921 - Arnold Rothstein hits it big at the race track. The first bet occurred on July 4. Independence Day was the second of the three big racing days that took place at the New York horse racing tracks (the other two being Memorial Day and Labor Day). On this holiday Rothstein was betting on his own horse, Sidereal.

Sidereal’s entrance in the day’s third race was a last minute decision by Rothstein. In fact, the horse was stabled at Belmont Park and the race was being run at Aqueduct. Rothstein sent Carolyn to fetch the horse while he maneuvered around the busy track drumming up business and, at the same time, trying to be as inconspicuous as possible so not to tip his hand. Rothstein “borrowed” as many as forty trackmen to do his bidding in placing bets on Sidereal. By the time the horse arrived at the track the paddock judge told the trainer he had beaten the deadline by a mere six seconds. Sidereal won the race and Rothstein earned the incredible amount of $850,000. (Arnold Rothstein - Legendary Feats)

Aug. 20, 1921 - Weeks later, on August 20, Rothstein won $500,000 by betting on another of his horses, Sporting Blood, in the Travers Stakes. Rothstein had received some quality information about problems the favored horse was experiencing. He was quick to take advantage of the information – for which he always rewarded the provider well.

Despite the rumors that swirled about Rothstein’s horses, both Herbert Bayard Swope and Carolyn Rothstein insisted that he ran an honest stable. “Arnold was never mixed up in a crooked race,” Carolyn maintained. “He made his big winnings on races where he had superior information. He used every possible trick to find out more than anyone else and get the best odds.”

August Belmont (Corbis ©)

One of those who believed the rumors was August Belmont. Leo Katcher describes Belmont’s confrontation with Rothstein in his effort to keep him away from his racetrack.

“You know your reputation,” Belmont said. “It hurts racing to have you such a conspicuous figure.”

“What are you trying to say?” Rothstein demanded.

“You know what people are saying, Arnold,” Belmont replied. “And what they’re thinking. Half the country believes you were the man who fixed the World Series.”   (Arnold Rothstein - Legendary Feats)

Mid-1920s - Rothstein was not a pioneer in the field of dope peddling, instead he was introduced to the big money potential by both Lucky Luciano and Waxey Gordon. By the mid-1920s many of Rothstein’s income producers had gone by the wayside. The bucket shops were gone, the stolen bond market had ceased, he no longer owned gambling houses, and he had retired from rum running. Rothstein was still collecting money from all the people he had backed and bankrolled in illegal activities. His bail bonding and insurance companies were still thriving as well as all of his legal enterprises. Several individuals who had entered the rum running and bootlegging market after him were becoming millionaires many times over. Rothstein’s only influence over them was with his connections to Tammany Hall.

It was during this time that Rothstein decided to devote his efforts to organizing the drug trafficking in this country. His interest was in wholesaling, not the street pushing of narcotics. Entering at this level, his only competition came from unscrupulous members of the medical profession. Rothstein’s goal was higher as he set out to regulate supply and demand and organize the drug trade on an international basis.

Rothstein employed several men to do his overseas bidding. Among them were Harry Mather, “Dapper Dan” Collins, Sid Stager, George Uffner, and Jacob “Yasha” Katzenberg. Rothstein then purchased the well-known importing house “Vantines.” The establishment had a legitimate reputation and shipments arriving from China and the orient received only a cursory inspection. Rothstein made sure that when he got word someone was furnishing a home that Vantines received part of that business. It was reported that Fanny Brice “was made” to purchase thousands of dollars of furnishings and bric-a-brac from Vantines to adorn a new apartment. In addition to Vantines, Rothstein purchased several antique shops and art galleries to serve as legitimate fronts for his drug business.

As waves of narcotics began to permeate the city and create a new generation of drug pushers and addicts, Rothstein’s bail bond business kicked into high gear following increased arrests. Nat J. Ferber, the American journalist who had earlier exposed the bucket shop rackets, was instrumental in revealing the narcotics epidemic. Ferber wrote, “Rothstein established himself as the financial clearing house for the foreign dope traffic…He was the only man in the United States who could, and did, establish a credit standing with the foreign interests sending drugs into this country.”

Leo Katcher informs us, “Of all Rothstein’s enterprises, this had been the most carefully developed. He had given it time, effort and all his intelligence. Yet, it was the most costly business that ever occupied his time, his interest and his money.”

Ironically, Rothstein never made a cent from his narcotics ventures. Every dollar he received was put back into the operation and he died while the business was moving forward – at full steam. (Arnold Rothstein - Overlord of Drugs)

By the mid-1920s, Dutch Schultz realized that bootlegging was the way to make serious money. He got involved in the beer trade working as a strong-arm goon for some of the bigger operators. He once drove a beer truck for the legendary Arnold Rothstein, and at one time he and Charles “Lucky” Luciano were members of the Jack “Legs” Diamond gang. (Dutch Schultz - The Early Years) By this time, one of Luciano's customers - and partners - was Joe Kennedy, father of the future president.

1924 - Diamond Joe Esposito was undeniably the most powerful man in Chicago, perhaps North America. All of the day's hoodlums, in one way or another, were in his debt: Al Capone, Johnny Torrio, Jake Guzik, Paul Ricca, Murray Humphreys, Frank Nitti, Jack McGurn, and Tony Accardo. Esposito's "Black Hand" touched enterprises far beyond Chicago. He routinely boasted of meetings with Calvin Coolidge and dispensing votes and favors at the President's request.

Early Fall 1924 - When Coolidge asked Esposito how he could be repaid for his recent political assistance, he requested a promise that the President not interfere with a Chicago takeover of all union operations coast to coast. After all, if he [Esposito] controlled the votes, those were votes for Coolidge, he reasoned. He also asked that men in his organization be supplied with sugar - Joe Kennedy in Boston, Sam and Harry Bronfman in Canada, Lewis Rosenstiel in Cincinnati and Joe Reinfeld in New Jersey - along with special protection and all bootlegging rights. Esposito got exactly what he wanted. (3:22-23)

At a private meeting in the Chicago Bismark Hotel, Ricca proposed a coast to coast union takeover, enabling the Outfit to indirectly control American industry. Present were Lucky Luciano, Rocco Fischetti, Herry Ducket, and Sylvester Agoglia. Meyer Lansky was there, but because he was "a Jew boy" he had to wait in the lobby until the meeting was over. He had come with Luciano. Murray Humphreys had started the idea with a takeover of the Chicago south side dry cleaners union just a few years earlier. Now, where there weren't unions, the Outfit created them.

Humphreys' logic: Control a workforce and you control the livelihoods of countless families sustained by those jobs. Threaten them with loss of work, the efforts of thousands of husbands, wives, sons and daughters can be mobilized in support of virtually any scam the gang could dream up, including swinging elections.

After the dry cleaners union, they took over the building trades, barber's union and motion picture operators' union. People suddenly became members of unions they'd never heard of and began paying dues and fees to Syndicate front men in exchange for "protection from violence." It had become a perversion of the original mafia created to provide protection from real dangers facing the Italian and Sicilian immigrants. (3:100-103)

1928 - By now, Lucky Luciano and his group had gained control of the Democratic Party so effectively that when Al Smith ran for president, he first came to Luciano for his support, which he received. ("The Last Testament of Lucky Luciano - Part 2" by Martin A. Gosch and Richard Hammer, Penthouse, Oct. 1974)

Early 1928 - In early 1928, Dutch Schultz was bartending in a speakeasy owned by childhood friend Joey Noe (pronounced Noy or Noey, depending on whose book you read). While working here Schultz gained a reputation for brutality when someone triggered his temper. It was perhaps this ruthlessness that made Noe admire him and take him on as a partner. The two men were soon on their way to building a beer empire in the Bronx and beyond.

With the profits from their speakeasy they opened more operations. They began to purchase their own trucks to avoid the delivery cost of wholesale beer. The beer for their operations was obtained from Frankie Dunn, a Union City, New Jersey brewery owner. Schultz would ride shotgun to protect his trucks from being hijacked.

The two partners realized they could increase their profits by supplying beer to their rivals. If speakeasy owners turned down overtures to purchase beer from the Schultz/Noe combine, they were soon warned to buy it, or else. Joe and John Rock were brothers who decided to play hardball with Schultz. John quickly stepped aside, but his stubborn Irish brother refused to give in. One night Joe Rock was kidnapped by members of the Schultz / Noe gang, and brutalized. Rock was beaten and hung by his thumbs on a meat hook. The gang allegedly wrapped a gauze bandage over his eyes that had been smeared with the discharge from a gonorrhea infection. His family reportedly paid $35,000 for his release. Shortly after Joe Rock went blind.

These tactics instilled fear among Schultz’s competitors and heightened his reputation for utter ruthlessness. It also made it easy for the partners to muscle in on the beer trade in the Bronx. As the operation grew, new beer suppliers were needed to fill the orders the gang was receiving. In addition, they began to attract a group of enforcers who would soon make a name for themselves. Among this group of toughs were Abe “Bo” Weinberg and his brother George, Vincent Coll and his brother Peter, Larry Carney, “Fatty” Walsh, Joey Rao, and Edward “Fats” McCarthy.

Jack "Legs" Diamond (police mugshot)

The operation, which began modestly in the Bronx, was now expanding over to Manhattan’s upper West Side into the neighborhoods of Washington Heights, Yorkville, and Harlem. Schultz and Noe moved their headquarters out of the Bronx and onto East 149th Street in Manhattan. However, the gang’s move to Manhattan brought them into direct competition with Jack “Legs” Diamond.

The response from the Diamond gang came quickly. At seven o’clock on the morning of October 15, 1928, Diamond’s men ambushed Joey Noe outside the Chateau Madrid nightclub on West 54th Street near Sixth Avenue, while Schultz was rumored to be meeting with rumrunner William V. “Big Bill” Dwyer. Although Noe was wearing a bulletproof vest, slugs ripped through his chest and lower spine. Noe apparently got off a number of shots in return. Witnesses reported seeing a blue Cadillac bounce off a parked car, losing one of its doors before speeding away. When police found the car an hour later, they discovered the body of Diamond gunman Louis Weinberg (no relation to Bo and George) dead in the back seat.

Noe was rushed to Roosevelt Hospital. Despite a valiant effort by the hospital’s staff, Noe slowly faded away. By the time he died, three weeks later on November 21, he weighed a mere ninety pounds. In Paul Sann’s excellent biography, To Kill the Dutchman, he discusses Schultz’s feelings about Noe’s death:

“There is no question that Schultz was crushed. Noe was the closest intimate of all his days. He might have drawn some inspiration from a hoodlum like Marcel Poffo, but Noe, who always called him Arthur, as when they were kids on the street corner without a care in the world, put him on the golden highway. When Noe was with him, he could give the armed guard a night off, and Noe for that matter, was the only one he ever took along when he went to see his mother.”

In the wake of the shooting of Joey Noe, Schultz was bent for revenge. On November 4, 1928, the financier of the New York underworld, Arnold Rothstein, was shot in the Park Central Hotel and died two days later. While the most common theory for the murder was that Rothstein had welshed on a gambling debt to George McManus, it was rumored that Schultz may have been involved because of Rothstein’s friendship with Diamond. Perhaps supporting this theory was the fact that the first person McManus called after the shooting was Schultz attorney, Richard J. “Dixie” Davis. After the phone call, Schultz associate, Bo Weinberg picked up McManus and spirited him away. McManus was later cleared of the killing.

Bo Weinberg

Another theory involved Diamond because he felt Rothstein had double-crossed him in a recent narcotics deal. Whatever the case, when Diamond, the so called “clay pigeon of the underworld” due to the number of times he was shot, met his demise on December 18, 1931, Bo Weinberg’s name was connected to the murder. (Dutch Schultz - The Early Years)

Schultz was then on his own. He would never again have a partner and he moved freely in the New York underworld as an independent operator. By the late 1920s his influence became so great that he was invited to meetings called by Lucky Luciano and his associates as they began to build a national organized crime structure.

At one of Luciano’s meetings the importance of police and political payoffs was being discussed. A vote was taken and everyone agreed with Luciano that more money should be expended for protection, except Joe Adonis. Schultz, suffering from the flu, sat alone in a corner of the room so not to spread his germs. Adonis stood looking at himself in the mirror and combing his hair. He then wheeled around and, referring to himself, said, “The star says yes.” With that, Schultz darted across the room, grabbed Adonis in a headlock and breathed heavily into his face.

“Now, you fuckin’ star, you have my goims,” roared Schultz.

The others howled with laughter. However, Adonis did get the flu and was grounded for a week.

May 1929 - Schultz participated in the Atlantic City Conference. The meeting was attended by dozens of mobsters of various ethnic and religious backgrounds from around the country. The main topic of the conference was cooperation between the gangs and the cities they represented, and to discuss plans for the day Prohibition was repealed.   (Dutch Schultz - The Early Years)

NEXT: 1930-1939

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