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Part 2

Kefauver Committee Interim Report #3 May 1, 1951

U.S. Senate Special Committee to Investigate Organized Crime in Interstate Commerce

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82ND CONGRESS             SENATE                    REPORT 1st Session                                        No. 307

THIRD INTERIM REPORT OF THE SPECIAL COMMITTEE TO INVESTIGATE ORGANIZED CRIME IN INTERSTATE COMMERCE

PURSUANT TO S. Res. 202 (81st Congress)

A RESOLUTION TO INVESTIGATE GAMBLING AND RACKETEERING ACTIVITIES

MAY 1 (legislative day, APRIL 17), 1951. --Ordered to be printed UNITED STATES GOVERNMENT PRINTING OFFICE WASHINGTON: 1951

SPECIAL COMMITTEE TO INVESTIGATE ORGANIZED CRIME IN INTERSTATE COMMERCE (PURSUANT TO S. RES. 202, 81ST CONG.)

ESTES KEFAUVER, Tennessee, Chairman HERBERT R. O'CONOR, Maryland CHARLES W. TOBEY, New Hampshire LESTER C. HUNT, Wyoming ALEXANDER WILEY Wisconsin

RUDOLPH HALLEY, Chief Counsel ALFRED M. KLEIN, Associate Counsel DOWNEY RICE, Associate Counsel GEORGE S. ROBINSON, Associate Counsel JOHN L. BURLING, Associate Counsel JOSEPH L. NELLIS, Associate Counsel HAROLD G. ROBINSON, Chief Investigator

The committee wishes to express its appreciation to Judge Morris Ploscowe, of New York City, and the Commission on Organized Crime of the American Bar Association of which Robert P. Patterson is chairman, for their valuable assistance in the preparation of this report.

TABLE OF CONTENTS Page WEB PART ONE I.  Conclusions.........................................1 Recommendations..................................5 II. Introduction.......................................20 Acknowledgments of appreciation.................21 III. Suggestions for action by State and local governments ................................................26 IV. The city stories: Miami, Fla......................................30 Kansas City, Mo. ...............................37       St. Louis, Mo. .................................43       Philadelphia, Pa. ..............................46 Chicago, Ill. ..................................50       Tampa, Fla. ....................................63 Cleveland, Ohio.................................67 Detroit, Mich. .................................71 WEB PART TWO (This Web Page) New Orleans, La. ...............................77       Las Vegas, Nev. ................................90       The West Coast..................................94 San Francisco, Calif. Los Angeles, Calif. Saratoga, N.Y. ................................106 New York City..................................109

V.  Analysis of the city stories: Syndication of crime and the Mafia.............144 The role of the wire service in organized crime ............................................150       Syndicated basketball, football, and baseball betting.....................................160 Comeback money.................................161 The narcotics traffic..........................164 Infiltration of racketeers into legitimate business....................................170 Breakdown of enforcement machinery.............181 Official corruption and connivance.............183 Public responsibility..........................186

VI. Committee accomplishments.........................188

VII. Should gambling be legalized?.....................192

[Editor's note: Page numbers have been deleted from the text of the report. The numbers are shown above to provide a reference to the original printed report. Because it was especially long, this report was divided into two web sections. This is section 2.]

82D CONGRESS              SENATE                    REPORT 1st Session                                        No. 307 CONTINUED FROM SECTION ONE NEW ORLEANS Louisiana presents a complete case history on how national gambling and racketeering elements align themselves with local operators in a metropolitan area, Mayor DeLesseps S. Morrison told the committee at its first open hearing in New Orleans. Information offered by Mayor Morrison, businessmen, ministers, other citizens, and local law-enforcement officials, supplemented by the reluctant testimony of a parade of gamblers, wire-service and slot-machine operators, and narcotics peddlers, traced for the committee the nature, extent, and history of this alliance.

The activities of organized crime covered by the committee in this area were mainly four: Slot-machine operation, the conduct of gambling casinos of varying degrees of luxury, the extensive wire services which supported the heel bookmaking operations throughout the area, and the narcotics traffic.

The interstate nature of all four activities was made perfectly clear: They made extensive use of equipment or supplies brought in from the outside on common carriers. They depended extensively on interstate facilities of communication. They were operated wholly or in part by men from other sections of the country. Illegal in themselves, these activities were carried on by men with criminal records who had close and frequent associations with gangsters all over the country. And, finally, their operations depended in large measure on the negligence, the active support, or the participation of some local law-enforcement officials, who in large measure could nullify the efforts of diligent officials and public-spirited citizens in their own or nearby jurisdictions.

I. The slot-machine story

Huey Long's welcome to Costello and his slot machines when they were banished from New York gave the impetus to the present alignment of interstate and local operators in slot machines, gambling houses, bookmaking, and related activities, Mayor Morrison testified. From 1936 to 1946, the companies of the transplanted New Yorker, Phil Kastel, and his New York partners, Frank Costello, Jake Lansky, in cooperation with local gentry such as the narcotics vendor, Carlos Marcello, operated slot machines illegally and openly throughout New Orleans. They created a monopolistic arrangement whereby only the machines of their syndicate were permitted. They built up a business with a profit in the millions. Costello and Kastel were tried in 1939 on charges of trying to evade payment of $500,000 in Federal income taxes on 1936-37 income from the slot machines approaching $3,000,000, but were acquitted.

Just before his election in 1946, Morrison said, the Costello-Kastel syndicate withdrew their slot-machine and other operations into the adjoining parishes. They continued to use the city as a storage and distribution point until, in 1947, the city police raided the warehouses of their company, the Louisiana Mint Co., and confiscated 1,000 machines. Three hundred and ninety were destroyed before Costello and Kastel filed suit for damages and enjoined the city from destroying the remaining 600. The courts sustained the city's contention that, although the Costello-Kastel machines dispensed mints, they were still slot machines and illegal, and therefore could be destroyed.

This action ended the activity of the Louisiana Mint Co. in New Orleans, hut not the presence of coin machines. Certain types of pin-ball machines known locally as "one-ball bandits" operate legally in the State and are licensed. The city issues about 2,000 of these licenses annually at $50 per machine. But Morrison was of the opinion that these, while they showed no automatic payoff when they were inspected for licensing, could easily be changed thereafter or could register free games for which payment would be made over the counter in the location where the machines were placed. Detection by watching every machine was obviously, difficult.

The city was seeking to determine whether it could refuse to license machines of companies operating legal pinball devices in New Orleans, but illegal slot machines elsewhere. He listed for the committee some eight companies, holding licenses for about 75 machines in the city, among whose owners were Phil Kastel; Costello's brother-in-law, Theodore Geigerman; and Carlos Marcello, or known personal or business associates of Marcello, or owners of record known to be acting as a front for him.

1,000 UNLICENSED PIN-BALL MACHINES From the president of the trade association of coin-machine operators, John Bosch, the committee learned that the licensed pinball machines do not represent the entire number operated in the city. Bosch estimated that the members of his association number about 45 and operate about 1,200 machines - all presumably licensed. Another 60 or 70 operators, he said, were not in his association. In all, he thought, there were at least 3,000 machines in the city, 1,000 above the number Morrison knew to be licensed.

The rules of his association and Mr. Bosch's explanation hinted that all these machines were not operating legally. One rule allowed the collection of $3 per machine from every operator for various miscellaneous expenses. Another rule stated that unless a machine was tagged with the association membership card and the name of the company, it would not be represented by the association when it was picked up. Pressed for an explanation, Bosch could not avoid the inference that "picked up'' meant picked up for paying off. Bosch admitted that the association had lawyers on retainer; one of them getting over $300 a month was also the city attorney whose duty it was to prosecute pin-ball machine violations. Bosch would not estimate what the $3 per machine brought the association annually; he rejected the committee estimate of $100,000 as far out of line. Nor could he explain the uses of the fund or what was included in miscellaneous expenses.

Outside of New Orleans, slot machines operated openly in public places in flagrant violation of the law. The sheriff of Jefferson Parish would not dispute the committee counsel's estimate of 5,000 machines in his jurisdiction. Two ministers from Harrison County in Mississippi said there was one slot machine to every 25 inhabitants - operating in restaurants, barber shops, filling stations, and various other business or gambling places. The sheriff and town marshal of New Iberia, and the sheriff of St. Bernard Parish gave similar testimony concerning the wide-open operation of slot machines in their parishes.

Questioned about where he bought his machines, Kastel refused to confirm that they came from Mills Bros. in Chicago, nor would he explain transfers of vast sums of money, S75,000 in one case and $50,000 in another, from them to him, or from him to them, as slot-machine transactions. But the Jefferson Parish sheriff knew the machines operating in his area came from that company. Warren Moity, a young man who went into the slot-machine business in New Iberia to get first-hand evidence, said the rebuilt machines he bought were originally from the same company.

Until recently a member of the executive committee of the pin-ball association was Angelo Gemelli, a full-time New Orleans police officer assigned to the duty of "checking" pin ball operations and arresting operators who paid off. Obviously, Gemelli was in a most favorable position to "persuade" nonmembers to join and pay the heavy dues assessed. Gemelli received as "expenses" 10 percent of all amounts he collected for the association for "campaigns."

Nor was Costello the only out-of-State man involved. John Bertucci, another witness, testified he owned an interest in a pinball and phonograph machine company which was a Mississippi corporation and the company he operated in New Orleans was a branch of it. Moity, when he let it be known that he wished to enter the slot-machine business, was contacted by a man from Florida, who became his partner and brought his machines in from that State.

II. The gambling casinos

The parishes of Jefferson and St. Bernard, Mayor Morrison told the committee, have one of America's largest concentrations of gambling houses, wide open in violation of the law. Typical of the swank casinos was the Club Forest, whose activities early in 1951 were described to the committee. The club had a restaurant, bar, and grill. It had a casino, open to the public for day and night operation.

The daytime operation included the "big game" - the dice game - for which there were three tables, another small dice table, two roulette wheels, two blackjack games, a football pool and a race-horse book. The club paid $378 a week for its wire service.

The night operation included a keno game, six roulette wheels, small dice games, four tables of blackjack, from two to five tables for the big dice game. Customers of the gambling casino could have drinks and cigarettes on the house. If they ran out of money they could cash checks or get loans on their jewelry. The casino had approximately 48 slot machines - 5-, 10-, 25-, 50-cent and $1 machines, and also a horse-race machine.

The club reported its assets at the end of the fiscal year November 30, 1949, as $718,904, and its gross receipts for the casino and other games including the slot machines as $2,008,796. This information was elicited from underlings and the records they brought in. The club owners, the three Mills brothers, Frank, Arthur, and Henry, and their partners, Edwin Litolf, Alfred B. Scherling, Gonzales Azcona, Lawrence Luke, and Vic Gallo, remained in hiding throughout the investigation.

Equally elaborate and boasting in addition expensive night-club entertainment was the Beverly Club establishment opened in the same parish late in 1945, just in time to provide Kastel and Costello with a refuge for their New Orleans enterprises. His original partners, Kastel told the committee, were Costello, A. A. Rickefors, from whom he first rented and later bought the grounds and building, Carlos Marcello, and Lansky. When the latter sold his 20 percent interest he received $100,000 for it. Costello, admitted to a 20-percent interest in the club, also received first $1,000 a month and then $1,500 a month salary to act as a good-will agent and talent scout for its night-club shows.

The Jefferson Parish town seat of Gretna with its population of 14,000 had at least 6 large gambling, clubs with horse parlors, the town marshal told the committee. The sheriff of Iberia Parish knew of at least four, and the sheriff of St. Bernard recognized the names of half a dozen others. The committee heard the names of many others, small and large, operated in the unincorporated parts of the parishes. In Harrison County, Mississippi, the committee was told, gambling rooms were marked by signs overhead indicating "No Minors Allowed." Such signs were commonly seen in connection with public restaurants and grills.

III. The wire services

With an important race track in the area, with handbooks running openly throughout the parishes, and with horse rooms figuring substantially in the activities of the luxurious gambling casinos, New Orleans was an important focal point for the wire services of the Continental Press Service. One of its lines ended in a building just outside the Fair Grounds race track and operated only during the racing season. Obviously this was Continental's means of getting information from the track for dissemination throughout the Nation. Other Continental lines went to the Gretna and New Orleans offices of the Daily Sports News which published racing results and forms.

During the struggle of the Capone group in Chicago to take over Continental, the New Orleans wire installation became the object of a typical, successful, and mysterious attempt at muscling in. The attempt involved setting up a branch of Trans-American, the Capone news service, as a rival to the local branch of Continental by men with criminal records and connections with the Capone gang. Typically, the rival service lured employees from the local service and created an eventual merger of the two with the Chicago group or its local representatives holding the lions share of the participation. Everybody involved in the struggle - the owners of the services and their employees, or law-enforcement agents with an intimate knowledge of the wire services in other respects - refused to testify at all or gave meager information with extreme reluctance. The picture had to be pieced together from meager admissions, court documents, Western Union records, and committee investigative reports.

John J. Fogarty, owner with his son of the Daily Sports News, had been publishing racing results and forms in New Orleans for nearly 30 years. He received his information over a direct wire from Continental Press from Chicago. He insisted he was an independent owner, not an agent of Continental. But he had a characteristic agreement, made personally and orally in Chicago, with the manager, Tom Kelly, requiring him to pay $4,000 a week when he could, as much as possible in weeks when that sum was too large.

Shortly after Mayor Morrison came to office, he found that another wire service outlet, the Southern News Publishing Co., had been set up a short distance from an office of the Daily Sports News. On two successive days, the police raided both on a charge of conspiracy; while they were not violating the handbook laws of the State in their own parish, they were the instruments of violation in other parishes. The raids and the subsequent proceedings revealed that Southern News had been set up by a native son named Joseph Poretto, whose criminal record caused the chairman to brand him one of the worst characters to appear before this committee. He had connections with the Capone gang established in Cicero, and connections with their Trans-American Service, for which he had evidently tried and failed to set up a bootleg wire service in Houston. Among Poretto's associates in Southern News Publishing Co. were Ralph Emory, son of an old associate of Al Capone, several former employees of Fogarty, and two brothers of Carlos Marcello.

Within a short time, a new service, ostensibly the Daily Sports News, opened in Gretna. Neither Fogarty nor Poretto would discuss what happened in the interval, nor would they admit any association. But the idea of a merger was supported by the Western Union records. The wire service Western Union rented to Southern News in New Orleans was transferred to the Daily Sports News address in Gretna, and shortly thereafter discontinued while the service to the Daily Sports News went on uninterrupted. The committee also had information that, before the raids, Fogarty and his son owned the Daily Sports News outright, and that when business was resumed afterward, the Marcellos figured largely in the ownership.

The key position the Daily Sports News held in the bookmaking business in the area was also revealed by the records of the Western Union. From the same address at which it received the news from Continental, the Daily News paid monthly rentals on 66 so-called unequipped wires, with terminal points in as many different locations in Louisiana, Mississippi, and Alabama. These were electrified, dormant wires, without transmission or receiving equipment, installed for service at some time, then when service was discontinued, presumably not removed to save the cost of a possible reinstallation.

Admittedly equipment could be attached without the knowledge of the Western Union. An agent of the company verified the fact that the rental on one such wire, to Pass Christian, Miss., was $186 a month. Some 20 other wires with terminal points in New Orleans were paid for at prices varying from $10 to $33 a month. Mayor Morrison testified that it was over some of these wires that his police department found the only direct service to bookmakers in New Orleans after the two raids.

For the rest, bookmakers in New Orleans as in the outlying parishes relied on getting their information and placing their bets through telephones which connected with the horse rooms and bookie parlors serviced by these wires. 'Every telephone in New Orleans, Mayor Morrison stated in emphasizing the need for over-all metropolitan enforcement of bookmaking laws, is a possible source of handbook violations so long as wide-open gambling goes on in the outskirts of the city.

IV. The narcotics traffic

From Thomas McGuire, agent in charge of the Bureau of Narcotics in New Orleans, the committee learned that the drug traffic here ranked in importance with that of other metropolitan port areas. The bulk of heroin, major item in the traffic, he said came from New York by common carrier, plane, ship, or train. Its price at the time was up to $300 an ounce, higher than it had been up to the previous month. Marijuana, which came into the area in greater than normal quantities, came from the Mexican border via Galveston and Laredo, Tex. His unit, he said, was investigating the participation of Mafia members in the narcotics traffic. Their tightly knit organization made them difficult to deal with. Any place which operates wide open, McGuire said, tolerating prostitution, gambling, and so forth, is the perfect field for narcotic peddlers who are frequently involved in other types of rackets. Of his own knowledge, McGuire knew that peddlers came in for supplies from other States; he had recently arrested a former resident in from California in search of supplies in the area in which he had previously worked and with which consequently he felt familiar. Other peddlers, friends of a recent deportee named Sam Carollo, move in and out from Kansas City. The sheriff of Jefferson Parish minimized the dope traffic in his own jurisdiction. He knew and took pride in the part one of his own men had played in a recent haul of narcotics supplies worth $21,000. But he was sure that Carlos Marcello, who had served time for narcotics peddling and was a resident of Jefferson Parish, was never caught in his jurisdiction. The committee had information that Carlos and his brother Anthony owned a boat used in running narcotics into the port of New Orleans. Both, when questioned, refused to answer questions as to their narcotics activities, as well as practically every other question except their local address, on the grounds of self-incrimination.

V. The importance of Carlos Marcello in New Orleans rackets

In every line of inquiry, the committee found the trail of Carlos Marcello. Kastel stated that Marcello was an original partner in the Beverly Club; from another witness, it was learned that he was its registered agent. Several witnesses testified that he had an interest in another luxurious club, the Old Southport, in which his associates were two of his seven brothers and a brother-in-law. He was rumored to have bought this club outright for $160,000. Marcello's brothers were found in the raid on the Southern News Service, and figured in the partnership of the Daily Sports News. Marcello owned interests in horse parlors and bookie joints such as the Bank Club and the Billionaire Club. He had an interest in Kastel and Costello's Louisiana Mint Co., in the L. & B. Amusement Co. with his brother-in-law, and in half a dozen other slot-machine companies operating in and around New Orleans. In addition, according to the sheriff of Jefferson Parish; Marcello advanced money to people who were building business establishments of one kind or another, and put his slot machines in these locations. Whether or not he and his brother Anthony had boats running narcotics into New Orleans, it is a fact that Marcello had served time for dope peddling among other things and had asked and been refused a. Presidential pardon. Toll calls connected Marcello with Harry Brooks, close associate of Mickey Cohen, Joe Civello, narcotics violator, and Sam Yarras, brother of Chicago hoodlum Dave Yarras, a prominent figure in the fight between the "mob" wire service and Continental Press. Also in touch with Marcello was Charles Gordon, a main cog in a national football betting syndicate. Carlos talked over the phone to one Vincent Vallone just before the latter was murdered in Houston, Tex., in a Mafia-type killing. Among the many bars, restaurants, and inns in which Carlos Marcello had a financial interest was the Willswood Tavern, declared to be a hang-out for Mafia members. His legitimate business interests include all kinds of food concerns, particularly sea foods and frozen foods.

Marcello was born in Tunis, Africa, of Sicilian parents and came here in October 1910. He has never become a citizen. In view of this fact and in view of his record which the chairman stated made him one of the leading criminals in the United States today, the question was raised as to why he had not been deported.

VI. Typical bookkeeping of gambling enterprises

Proof of long suspected juggling of figures and keeping of books which did not accurately reflect the facts was found in the New Orleans testimony of Vernile Cavalier, a former dice man and cashier at the elaborate Club Forest. The books and records of the Club Forest, as produced by the public accountants who maintained them, were a model of bookkeeping practice, but Cavalier's story raised serious doubts as to the true situation. Cavalier said that on occasions when Deputy Sheriff Cassagne came into the club, one of the managers would instruct him to withdraw sums of over $1,000 for "ice," or protection. It was Cavalier's impression that the sum so drained off was merely taken off one of the dice tables as a loss, just as if one of the players had won the sum with a lucky streak. Committee investigators were unable to find any account or record of expense in the Club Forest's books which might relate to the "ice."

Then too, there was found the extremely questionable practice of charging off, as an expense or loss against the club's gross, the astronomical sum of $372,000 in 1 year with the explanation that this represented moneys lent to players and customers which was not repaid, or for bad debts resulting from "rubber" checks tendered by customers. Even granting the incredulous theory that many would be so bold as to hand these case hardened operators bad checks, the fact that much of the money so advanced was immediately lost by the customers at the tables without leaving the casino would render this theory of loss to the club somewhat paradoxical. Notwithstanding, equally amazing sums have been charged off through the years without apparent action by the tax authorities to question or disallow.

Having found such evidence of withdrawals of funds for the purchase of official tolerance going unrecorded, the question is immediately raised and the issue apparent - how much more money is drained off the top by those in control of the various gambling operations which never gets into the books?

VII. The frustrated attempts of citizens' groups to get court and official action

Outside of the city of New Orleans, citizens' attempts to bring about local official action met with frustration. Rev. Dana Dawson, a pastor of a Metairie church, organized a citizens' league in Jefferson Parish to close up the gambling casinos. They brought a. padlock suit against the Club Beverly and the Club Forest. Dawson testified he was approached first by Pete Perez, the dice foreman at the Club Forest, and was promised funds for the new Sunday-school building if the suit were dropped. Then it was suggested that Dawson might be satisfied if gambling was closed up in the Metairie district of the parish.

Sheriff Clancy took part in some of these conversations with Perez and Dawson. He told the pastor what a nuisance it was for him as sheriff to have to get jobs in these clubs for his friends. He boasted that he had placed about 2,000 people there, and stressed the economic value of the clubs to the district because of the jobs they provided. Perez and Clancy continued to make contributions to the church from the owners of several gambling casinos.

But the padlock suits were pressed. Both the Reverend Dawson and the attorney for the group, Mr. James McCain, recounted that they were in the courts for 4 years. The suits were fought on the ground that the act under which they were brought was unconstitutional, because it permitted legal action to be taken in any part of the State. The suits were in fact brought in the district in which the clubs were located. Despite two unanimous decisions of the State supreme court directing the lower court to try the case on its merits, the case was never tried and the act under which the suit was brought was finally declared unconstitutional by a 4-to-3 decision.

In Harrison County, Mississippi, ministers and public-spirited citizens had similar experiences. Rev. Douglas Carroll and Rev. Thomas Carruth recounted their concern about the concentration of 21,000 boys at Keesler Field, the biggest radar school in the world, some of whom came to their spiritual advisers in great distress because they had been unable to resist the temptation of the slot machines or had been unable to resist the temptation of the slot machines or blackjack games and had dropped their entire pay on the day they received it. The ministers went around, took pictures of the slot machines in restaurants, filling stations, grocery stores, and other places. They told about the mass meetings they held in protest against official inactivity. Through a Presidential order, the machines were finally removed from Keesler Field. But the Reverend Carroll and the Reverend Carruth testified they could never get convictions in the courts of the city for the craps, blackjack, and other games which were run wide open in Biloxi and other parts of the coast. When their attorney laid the matter before the Governor, the ministers said, he refused to do anything, presumably because it was a county matter.

In Iberia Parish, a young defeated candidate for mayor, Warren Moity, was shocked to have friends tell him they were in the slot-machine business but that they could operate only if the marshal and the sheriff were paid off. Sufficient interest was stirred up to start a grand-jury investigation; but, under a foreman who himself played the slot machines, no true bill was returned. Moity then tried a newspaper campaign. The papers would not even take his paid advertisements. At that point, Moity decided he would go into the business himself. He told his own partner, who was a brother of the conniving marshal, Howard LaBauve. Within a few days, Moity testified, he was contacted through a slot-machine distributing company, by a former Florida slot-machine operator named William Webster. Just to "front" for the machines, Moity was to get 25 per-cent of the business; his partner another 25 percent, and Webster 50 percent. When Moity went to obtain locations, he found there were no good ones left; those were held by the son-in-law of Sheriff Ozenne and by the brother-in-law of Marshal LaBauve.

Moity was promptly approached, he said, by LaBauve and was told that his machines would be destroyed unless LaBauve and Ozenne were paid off. After 3 months Webster and Moity broke up. They weren't making any money above the Federal and State licenses and the payments to the marshal, the sheriff, and the trade association. Webster took his machines back to Florida.

Moity then bought machines of his own. When he refused to pay protection, he and the owners of the locations were threatened. At least once he was shot at. He was threatened when it became known that he was going to Washington to ask the assistance of this Senate committee. Having done so, Moity tried to sell his slot-machine business. By putting an advertisement in a magazine, he got a prospect and a $$750 deposit from a prospective purchaser. But the latter couldn't come to terms with LaBauve and Ozenne and withdrew. Consequently, at the time he testified in New Orleans, Moity said he was still in the business, with 25 machines on location in public places, paying off in cash strictly against the law. Urging the committee to do something to compel local officials to enforce the laws or resign, Moity said he realized how difficult it was for people with families and businesses to stand up, as he had done, against threats rid against the knowledge that the legally constituted bodies would not help.

VII. Official inactivity

The committee heard the testimony of the sheriffs of four parishes and the town marshals of two incorporated towns. Every one of them stated that he knew slot machines, handbooks. gambling, and in some instances prostitution went on openly in his jurisdiction, although most of them added that they had seen none of these activities themselves.

Rowley, the sheriff of St. Bernard Parish since 1939, observed that back in the 1870's the constable and justice of peace were paid out of gambling funds. He pointed to the present-day anomaly of the State and the United States collecting taxes on slot machines, which are illegal, and then subjecting the owner to the danger of the seizure of machines whose existence is revealed by the tax payment. Sheriff Ozenne of New Iberia Parish made the same point through his attorney - the existence of the tax on these machines creates a hiatus; they are illegal, but they have them all over the State.

In New Orleans, the sheriff of Jefferson County, "King" Clancy, a graduate lawyer, arrogantly declined to answer, on the grounds that it would incriminate him, the question whether gambling was against the law in his parish and whether he had ever made any effort to enforce the antigambling laws. But when he later came to Washington to purge himself of contempt, he admitted that he had done nothing. He justified his failure to keep his oath of office on the ground that upward of 1,000 people, most of them old or underprivileged, were employed in the five or six big casinos in his parish and for their sake gambling had been condoned.

Beauregard Miller, the town marshal of Gretna, which is the Jefferson Parish seat, also used the economic argument. He said flatly: "Without gambling, the town would be dead. It has a population of 14,000 and its main business is gambling." He added that anybody who closed the town up would be defeated at elections. Marshal LaBauve of New Iberia said that slot machines ran openly, and prostitution had gone on in restricted districts of the city all his life. Nobody objected. The health department examined the girls to see that they were not infected with venereal disease.

There was much evidence that these and other Law-enforcement officials were not only neutral toward but obstructive to law enforcement. Sheriff Clancy admitted in Washington that he had accompanied the Club Forest dice dealer on his visit to the Reverend Dawson and had made every effort to persuade Dawson to drop the suits against the casinos.

Some of the officials had relatives engaged in the gambling and slot-machine activities. Sheriff Ozenne's son-in-law, in addition to his slot-machine interests, owned a night club and gambling casino. LaBauve's brother-in-law had slot machines. Sheriff Rowley denied knowing that his 40-year-old nephew was a gambler, and insisted he did not know what business he was in. There were other evidences of participation in gambling enterprises by police officers.

A former superintendent of police in New Orleans, George Reyer, who had once been president of the International Association of Police Chiefs, admitted that shortly after he left the force in 1946 he teak his present job with the Daily Sports News, checking for wire taps. He also admitted that he was not a wire expert and that in 4 years he had never found a tap. But he had a salary of $100 a week. Reyer also had an interest in several gambling casinos which linked him with the owners of the Club Forest, but the committee could not definitely establish that these interests extended back into the time of his police service.

There was also definite evidence of direct bribery before the committee. Moity testified that Marshal LaBauve called him personally to demand a payoff for himself and Sheriff Ozenne if he intended to stay in the slot-machine business. Moity said that on LaBauve's instructions he did in fact pay one Amer Rodrigue $50 a month for 3 months. Both Ozenne and LaBauve denied anything more than casual conversations with Moity, and denied getting money from Rodrigue. They knew Rodrigue as a gambler and a slot-machine mechanic.

DEPUTY SHERIFF FREQUENTED GAMBLING CLUBS Clancy, too, was reported to have a collector of protection money, one Cassagne, a deputy, who, Clancy admitted in Washington, was the man who made the arrangements for finding jobs for people in the casinos. Cassagne was admittedly seen around the clubs by Kastel at the Beverly, and by the night dice supervisor at the Forest. The latter testified that, after one of his night bosses had followed his customary procedure of taking a sum of money from the bank for "ice," he had seen Cassagne enter a private room with him. In New Orleans, Clancy refused to state on the grounds that it might incriminate him whether he had ever received any money from Cassagne. In Washington he denied it flatly but admitted that Cassagne made collections, and might possibly have taken a cut himself. Cassagne's collections were for charity, Clancy said, and the people who wanted them accompanied him when the collections were made.

Kastel admitted that Cy Ernst, one of Clancy's deputies, drove him home from the Beverly casino. At times he was carrying large sums of money with him.

While a committee investigator was serving a subpena at the Beverly club on January 18, 1951, a uniformed officer of the Louisiana State police entered the gambling club and delivered a set of license plates to Kastel's private office, passing through the gaming room to do so.

Outright payments for protection were most clearly established in the case of Sheriff Grosch of Orleans County. His divorced wife testified that in the last 6 years of their life together, ending in 1940, while he was chief of New Orleans detectives he had accumulated $150,000 in a safety box which she had bought on his instructions under an assumed name, using a false address. She had seen him receive money every week from a man named Julius Pace, identified elsewhere as a slot-machine and music-box dealer. She had herself received $39 every week in an envelope handed her by one Larry Copeland, also a slot-machine operator. A man whom she understood to be running a house of prostitution came every Saturday night and brought them their food for the week.

Grosch handed her other sums of money in small bills for her to change at one bank or another into large ones, to put in the safety box in the attic.

Today a woman of responsibility, the supervisor of nurse's aides in the hospital operated by Tulane University, Mrs. Grosch's testimony was corroborated by documents and witnesses. An employee of the Rolland Lock Co., from which Mrs. Grosch said she bought, the box, produced records which jibed in every particular with her story. And finally Mrs. Grosch produced two written agreements made at the time of her divorce, one for the record which gave her $5,000, and another, a secret agreement, which made a settlement of $35,000. It indicated that Sheriff Grosch's wealth 10 years ago was far larger than could be explained by his salary of $186-a month.

The sheriffs and town marshals denied ever receiving any campaign contributions from gamblers, slot -machine operators, and bookmakers. But Bosch, head of the Association of Coin-Machine Operators in New Orleans, confronted with a check for $100 to one L. Scanlon, admitted it was for his campaign as civil sheriff. The members made contributions through the association. They decided what they would give in some fashion about which Bosch was vague. It depended on the office and what they collected. Usually they gave to both sides. They contributed some $8,000 to Morrison's campaign, Bosch said; about $5,000 to one of his opponents, and a small sum to still a third candidate.

Evidences of unexplained wealth were not confined to Sheriff Grosch. Rowley, sheriff of St. Bernard Parish, who knew of no trial for a gambling offense in his district since 1940 and could recall no conviction at all, admitted to a supplementary income of from $6,000 to $8,000 within the past 3 years. He owned a 1949 Ford, financed partly by a trade-in, and a 1949 Cadillac which he had bought for cash extracted from his own strongbox in his bedroom at home. At the time of the committee's hearing in New Orleans, the box contained between $15,000 and $20,000. Asked the source of his funds, the sheriff refused to answer on the grounds of self-incrimination.

SHERIFF'S SALARY, $5,700; INCOME, $20,000 Questioned about his income, Sheriff Clancy estimated before the Washington hearing that it was about $20,000 annually over the past 4 years. Yet, it must have been considerably more than that by his own figures. While his salary was never more than $5,700, he admitted to an annual income of nearly $5,000 in an oil interest with Judge McCune and others, which he had not reported to the Committee in the papers requested under subpena. In addition, Clancy said he had made $78,000 through betting at the races or through bookmakers. The only records he had, he said, were his bank deposits. He attributed his extraordinary success to his restraint in playing only the last two races on any day, and to the advice he received from jockeys and owners who felt indebted to him because they knew they could always come to him for a loan if they were broke.

Just as the connection of the local mobsters with the out-of-town gamblers and racketeers can be summarized in the activities of Carlos Marcello, the involvement of a local law-enforcement officer was epitomized in "King" Clancy. That all these gambling and racketeering operations were illegal, and that in law and in fact he had the power to close them up tight, Clancy admitted to the committee in Washington, in contrast to his New Orleans refusals to answer. Clancy told the committee that since his New Orleans appearance he had actually closed down the slot machines. Asked about the lush gambling clubs in the towns, Clancy first insisted that policing them was the job of the city police department but admitted, he had jurisdiction to close them up, and promised he would do so.

Clancy admitted that Kastel had consulted him about opening up the Beverly Club. At the time there was a casino there, but the operators were not making any money. Kastel asked him, Clancy said, whether he would have any objection to his taking over. Clancy told Kastel he would have no objection, so long as other people didn't complain, and Kastel gave people jobs. When the committee ventured that the other clubs couldn’t have been happy about it, Clancy averred they said nothing to him. At that point, Clancy conceded to the committee that he was the high power who gives clearances; they opened when he said they could, and when he said they should close, they closed.

In Washington, Clancy displayed a considerable knowledge of all these illegal operations which high lighted his equally considerable professions of ignorance. He knew that Marcello was partner of Kastel and Costello in the Beverly Club. He wouldn't admit that any deputies were employed by the casinos, but admitted he couldn't tell whom he had made honorary deputies without the records before him, and such persons might be employed at the casinos and be misusing their badges.

He had not only gone to the Reverend Dawson about the padlock suits; he knew that four separate gangster groups continued to give money to the Dawson church, and said they gave money to other churches also. He conceded that the committee would be justified in saying that his office was actually running an employment agency for the gambling casinos.

Just as he knew and could testify to many of Marcello's activities and interests in the gambling casinos, Clancy knew of his activities in connection with slot machines. He said that the Dixie Finance Corp., in which he had an interest, might be loaning money to slot-machine distributors.

Clancy knew that the large casinos had horse rooms, wire service, and facilities for laying off bets throughout the country. He knew that the headquarters of the Daily Sports News was the fan-out point for all the handbooks in the area. He knew there had been a merger of two rival wire services, but didn't know anything about the muscling-in procedure. Clancy denied in New Orleans that there were two telephones listed in his name at the Daily Sports News address, just a block away from his office as sheriff. In Washington he confirmed it and said it must have been a mistake which the telephone company would have to straighten out.

Clancy knew Kastel, but no more about his criminal record than he had read in the papers. He did not know Kastel's friend Costello. Clancy knew of no alleged Mafia meetings, operations, or hang-outs. He was sure the recent narcotics haul in his parish had not been intended for sale there but for the preparation of cigarettes to be sold in New Orleans. Marcello, a Jefferson Parish resident, though not a desirable character, had never been apprehended in his and Clancy's home territory on narcotics charges, the sheriff admitted.

Clancy knew that slot machines were bought from Mills Bros. in Chicago, but not that negotiations were in progress for a. proposed slot-machine factory in his parish to defeat the purpose of the recent law against interstate shipment. He knew there was a State law ordering officers to seize and destroy slot machines on penalty of removal from office, and admitted that his failure to do so was a flagrant violation of his oath of office.

PATHS OF CRIMINALS EASED BY OFFICIALS Thus "King" Clancy, in his history and attitudes, his personal and business associations with flagrant lawbreakers, posed flatly and succinctly for the committee the problem of the admittedly negligent local official who eases the path for organized crime and its use of interstate facilities, but who can be dealt with personally only by local action.

He typified in effect the foundation on which the whole structure of organized gambling and racketeering rests. Without conniving and participating officials like him, neither the wire services and bookmaking interests emanating from Chicago nor the gambling and racketeering elements allied with Costello of New York nor the local criminals like Carlos Marcello and Joseph Poretto could have used the interstate facilities of communication and transportation to further their illegal enterprises alone or in concert with other racketeers from all over the country.It is apparent from the foregoing that the following patterns of organized crime and gambling are present in New Orleans;

1. The association of native gamblers and gangsters with outside racketeers, particularly those from the Costello-Lansky-Adonis syndicate.

2. A deep-seated aversion on the part of the lawfully elected law-enforcement officials to enforce the laws which they have sworn to uphold.

3. The personal enrichment of sheriffs, marshals, and other law-enforcement officials because of their failure to enforce the gambling laws and other statutes relating to vice.

4. The interference with attempts of civic and religious groups to improve law enforcement in particular communities.

5. The attempt to justify "wide open" conditions by the so-called benefits they confer through employment opportunities and by the fact that the "people" (who are never asked) want it that way.

6. The failure to see that the apology for wide-open conditions is colored by the self-interest of the officials who have a vested stake in the maintenance of the status quo.

7. The brazenness of law-enforcement officials, who in gangster style refuse to answer questions, concerning their law-enforcement activities on the ground of self-incrimination.

8. The failure of the central State government to take effective steps to compel local law-enforcement officials to enforce gambling and vice laws.

LAS VEGAS, NEV. In the course of its investigations throughout the country, the committee was repeatedly struck by the magnitude of the gambling business and by the pattern of domination of this business by an interlocking group of gangsters, racketeers, and hoodlums. In all of the localities previously discussed in this report, gambling, except for pari-mutuel betting at race tracks, is prohibited by State and/or local law. Although some of the participants in this tremendous illegal business of gambling were relatively frank about their operations, the majority of the witnesses on this subject before the committee exhibited an extreme unwillingness to reveal information about their gambling activities.

With the exception of those States which permit on-track betting and a few which permit certain special and relatively insignificant forms of gambling, Nevada is the only State which presently legalizes gambling within the framework of a State and local licensing system.

In an effort to obtain reliable information about the size and methods of operation of top-flight professional gamblers and to investigate further the interstate ramifications of the gambling underworld, while still conforming to the letter and spirit of its original authorizing resolution, the committee heard testimony on gambling operations in the State of Nevada.

The basic law legalizing gambling in Nevada was enacted in 1931. This law permitted gambling operations by persons who paid a license fee and received a license from the county authorities. Since that date, a number of changes have been made in the licensing system and the law, which was last amended in 1949, now requires that all persons who engage in gambling operations, including the operation of handbooks, must be licensed by the State as well as by the county or city in which they operate. State licenses are issued by the Nevada State Tax Commission which is empowered to hold hearings and to grant and revoke licenses on the basis of the qualifications of the applicants or licensees.

The committee was told by Clifford Jones, lieutenant governor of Nevada, and William J. Moore, member of the State tax commission, that prior to 1949 little or no effort was made to screen the applicants for State licenses. Lieutenant Governor Jones and Mr. Moore both testified that since 1949 an effort has been made to keep out persons known to have criminal records or strong affiliations with out-of-State gambling syndicates. No attempt had been made, however, to eliminate the undesirable persons who had been operating in the State before that time. Both the lieutenant governor and Mr. Moore themselves participated in the operation of hotels which included more or less large-scale gambling casinos. Gambling is a legalized business in Nevada and there is no question as to the character of these gentlemen, who were most cooperative in their testimony before the committee. However, the committee's inquiries revealed that the caliber of the men who dominate the business of gambling in the State of Nevada is on a par with that of professional gamblers operating illegal gambling establishments throughout the country.

"BUGSY" SIEGEL WAS LAS VEGAS RACKET CZAR Before he was shot to death in 1947, Benjamin "Bugsy" Siegel was undoubtedly the gambling boss of Las Vegas, Nev. Siegel, who had carried on gaming operations in California and elsewhere before coming to Nevada, had been associated with "Lucky" Luciano, Frank Costello, Joe Adonis, Meyer Lansky, and other influential members of the eastern underworld. From about 1942 until the time of his death Siegel controlled the race-wire service in Las Vegas through Moe Sedway, an ex-convict, gambler, and long-time associate of many New York mobsters whom Siegel brought to Las Vegas. Through a control of the wire service, Siegel controlled the operation of all hand-books operating in Las Vegas. He refused wire service to any book unless he or his agents actually operated and managed it. During the period of the Trans-American-Continental fight over control of the race-wire service, Siegel, who was closely connected with members of the Capone mob, dispensed the Trans-American service and in some cases, serviced bookies who were also receiving the Continental service. Siegel was shot to death in California a few days after Trans-American went out of business.

Until his death by violence, Siegel had a controlling interest in the Flamingo Hotel at Las Vegas, one of the country's most elaborate gambling establishments. Associated with Siegel in the hotel and its gambling enterprises were Moe Sedway, Allan Smiley, a gambler with a long criminal record who came to Las Vegas with Siegel, Meyer Lansky, and Morris Rosen also old-time associates of the New York mob.

After Siegel's death the operation of the Flamingo was taken over by Sanford Adler, a gambler with a long record of arrests, and a number of his associates. Adler entered into an agreement with Sedway, Rosen, and Gus Greenbaum who controlled the wire service in Phoenix. Under the agreement, Adler was to have control over the operation of the hotel, although Rosen, Sedway, and Greenbaum held the controlling number of shares in the hotel. After a violent disagreement with Greenbaum, Adler suddenly sold out his interest and retired to his gambling clubs in Reno and Tahoe, leaving Greenbaum, Rosen, and Sedway in undisputed possession of the lucrative Flamingo operation.

With Siegel removed from the scene, Sedway and Rosen attempted to carry on Siegel's monopoly over the race wire. Trouble over the wire service came to a head when service to the Santa Anita Turf Club was cut off. The Santa Anita Club, owned and operated by the Stearns brothers, adjoined the Frontier Turf Club, a former Sedway-Siegel operation, in which Rosen had succeeded to Siegel's interest. Sedway attempted to negotiate a merger with the Stearns, but instead they tapped the Frontier Club wire service and continued to operate independently.

At this point, Robert Jones, county district attorney of Clark County, and a partner of the lieutenant governor, became alarmed about the situation in connection with the distribution of the wire service in the State. He addressed a letter to the Nevada Tax Commission expressing grave concern over the situation prevailing in Las Vegas as a result of the monopoly of the race-wire service, and stated that the "situation was fraught with danger to the public peace." In accordance with Mr. Jones' suggestion, a hearing on the wire service was held in Las Vegas late in 1948. The testimony given in these hearings revealed that although Connie Hurley nominally held the race-wire contract for Las Vegas, arrangements for the distribution of the service to Las Vegas bookmakers were actually made by Rosen and Sedway. As a result of the hearings, Rosen was forbidden to carry on gambling operations in Nevada. He has continued to hold a controlling interest in the Flamingo Hotel, however.

OLD-TIME RACKETEERS STILL OPERATE Another million-dollar gambling operation in Las Vegas is the famous Desert Inn run by Wilbur Clark, an old-time gambler, who at one time worked on the gambling boats off the coast of California. Clark's associates in the construction and operation of the Desert Inn include Sam Tucker and Thomas J. McGinty, Cleveland gamblers; Moe Dalitz, an old-time bootlegger and gambler, and Morris Kleinman, a gambler and bootlegger who for many years has been associated with the biggest gambling operations in Ohio.

The Bank Club in Reno is owned and operated by William Graham and James McKay, who were convicted of mail fraud in New York, but who returned to Nevada after the expiration of their prison terms. At one time, Graham and McKay sold a one-third interest in the Bank Club to Joseph Stacher, a well-known eastern gambler. Stacher was reputed to be willing to spend as much as $250,000 to elect city officials who would license him to operate as a partner in the club. His application for a license was, as a matter of fact, denied by the Nevada Tax Commission before any action was taken on his application for a city license.

Also operating in Reno are Mert Wertheimer, a big-time Michigan gambler who has been in partnership in Florida with such notorious gangsters as Joe Adonis, the Lanskys, and Frank Erickson, and with Lincoln Fitzgerald and Daniel Sullivan, members of the Michigan gambling syndicate.

Benny Binion, one-time king of the rackets in Dallas, Tex., has also been involved in gambling operations in Reno.

It is also clear to the committee that the gambling operations in Nevada are inextricably tied to interstate commerce. The bookmakers receive bets from many out-of-State sources and lay off bets with bookmakers outside the State of Nevada as a daily practice, they use telephone wires and other facilities of interstate commerce. Part of these transactions are cleared by use of the mails. Several of the gambling syndicates are financed to a very substantial extent and exist largely on money from outside States. Most of the gambling public comes to Las Vegas from places beyond the borders of Nevada.

It seems clear to the committee that too many of the men running gambling operations in Nevada are either members of existing out-of-State gambling syndicates or have had histories of close association with the underworld characters who operate those syndicates. The licensing system which is in effect in the State has not resulted in excluding the undesirables from the State but has merely served to give their activities a seeming cloak of respectability.

The reform of the race-wire service which was hoped for as a result of the legislation enacted after the 1948 Las Vegas hearings seems to have been equally unimpressive. The 1948 act requires the impartial distribution of the wire service to all licensed bookmakers, and gives the tax commission power to fix rates and inquire into the operation of the wire service.

William Moore, a member of the tax commission, told the committee that although the commission must pass on any increases over the rates charged in 1948, the commission has made no attempt to fix rates, or to eliminate the practice of fixing rates on the basis of a percentage of the bookmaker's take. It is this practice of charging for the wire service on the basis of a percentage of take which effectually makes the distributor of the wire service a partner in every bookie operation, and which inevitably leads to violent competition for control of the wire service.

Mr. Moore also told the committee that the commission had confined itself to passing on complaints from bookmakers - which, strangely enough, had been limited to one complaint in 3 years - and had undertaken no independent scrutiny of the wire service operation.

The profits which have been taken from gambling operations are far greater than those which can be earned quickly in any other business. The availability of huge sums of cash and the incentive to control political action result in gamblers and racketeers too often taking part in government.

In States where gambling is illegal, this alliance of gamblers, gangsters, and government will yield to the spotlight of publicity and the pressure of public opinion, but where gambling receives a cloak of respectability through legalization, there is no weapon which can be used to keep the gamblers and their money out of politics.

Taking Lt. Gov. Clifford Jones as a particular instance: 2 1/2 percent of the Pioneer Club had been sold to him for $5,000 in the year 1941. Thereafter, his annual income from this operation was 44,000. Jones is also a member of a law firm, and one of his partners is Robert Jones, district attorney of Clark County.

As a member of the State tax commission, William Moore's particular function is to deal with licensees engaging in bookmaking and gambling operations. Mr. Moore also has a gambling operation of his own, being a part owner of the Last Frontier. He recently made a deal for wire service and received a rate which in. the opinion of the committee gives him a considerable financial advantage over his competitors. Mr. Moore explained the reason for the comparatively low rate was that his operation was a new one, but the committee found at least one other similarly new operation which had not been given the same low rate.

The conditions above described arc not healthful. Gambling is the big business in the cities of Las Vegas and Reno, the two largest cities of the State of Nevada. A short tour of either of these cities suffices to show that gambling is the major preoccupation of the residents in both places. As a case history of legalized gambling, Nevada speaks eloquently in the negative. WEST COAST I. Racket pattern

The racket pattern in California was found to be similar in general to that in other sections of the country, in that various forms of gambling furnished the backbone for other rackets by reason of its heavy profit. It was noteworthy, however, that - probably because of an awakening brought about by the activities of the California Crime Commission - law-enforcement officers, grand juries, and prosecutors had combined to accomplish certain results. The committee found that the race wire service had been outlawed in California, although it was obviously obtainable on a sneak basis. Many major gambling figures have utilized neighboring Nevada to base their activities, preferring the less hazardous operation by telephone with their customers in California.

Other indications of the increased vigilance of law-enforcement agencies were found in testimony that table gambling casinos were practically nonexistent, but the gamblers had devised collapsible crap tables which could be hauled about in the rear of an automobile for use in sneak games.

Further evidence of resistance to the shut-down was disclosed in the testimony of' Mayor Fletcher Bowron of Los Angeles, one of the leaders in the war on crime, that the racket element had combined in an abortive attempt to reopen his area to the rackets by forcing a recall election. For a time there were many establishments running "bridgobingo." This is a type of gambling similar to bingo except that the participant is required to demonstrate his ability to engage in the bingo game by engaging in a so-called game of skill beforehand. These games of skill were but a mockery and subterfuge, as a child of tender years could readily accomplish the skill portion of the game. Between the first inquiry by the committee into these games in November 1950, and the committee hearings in February 1951, it was found that the bridgo-bingo games had virtually disappeared because of police activity and the disclosures that, almost without exception, the games were operated by known racketeers hiding behind an individual without a criminal record who fronted for them.

As in other localities, the "lay-off" system in handbooks was found. California bookies were found to be in close touch with "lay-off" establishments as far away as Shreveport, La., and Florida where John O'Rourke testified he received bets over the telephone from Mickey Cohen in Los Angeles, resulting in a loss to O'Rourke of some $50,000 in a short period of time

II. The "vice squad pattern," and diffusion of police responsibility are of material assistance to organized crime

As found nearly everywhere, jurisdictional difficulties of law-enforcement agencies materially assisted the criminal element to operate with a minimum of harassment. The fact that the investigative and police jurisdiction of law-enforcement agencies stopped at a city, county, or State line was used to advantage by the underworld figures who consistently sought refuge in the area where they found more "official tolerance" but, by penetrating the better policed areas by telephone and by a continuously moving operation which never tarried long enough to invite police action, they found themselves able to defeat the law. For instance, the Guarantee Finance Co. case disclosed headquarters in one county which was actually the nerve center of operation but the customers in large measure being serviced by this gambling organization were located across the county line. There was also the peculiar geographic set-up whereby the area known as the Sunset Strip, an island in the midst of Los Angeles, not subject to the law enforcement jurisdiction of the Los Angeles police, became a natural haven for those engaged in activities offensive to the Los Angeles police.

As was the case with Mayor Fletcher Bowron, the vigorous opposition to the racket pattern by Chief of Police William H. Parker of Los Angeles met with resistance. Testimony adduced disclosed the detection and prevention of an attempt on Chief Parker's life.

Meanwhile, in Los Angeles County where officials seen to be more "tolerant," sheriff's deputies from time to time were charged with nonfeasance and even more serious collaboration with criminal figures. Sheriff Eugene Warren Biscailuz of Los Angeles County testified that he questioned the officers involved but they denied the allegations, and he conducted no further investigation of the charges.

As elsewhere in the country, there were interesting examples of accumulation of wealth in the hands of law enforcement officers. William Robertson, a former police officer in Los Angeles, could not remember his net worth but a. admitted that it was over $100,000. He resigned from the police force when an investigation into sources of his income was pending. In the Guarantee Finance case, the books disclosed an item of $108,000 referred to as "juice," the California term for "protection." In Florida it is "ice." In view of the fact that the Guarantee Finance was a "50-50 book" with participating bookmakers sharing the expense, a payoff of $216,000 was indicated. Investigation and testimony thus far have failed to develop the identity of the recipients of this "juice." Further, there were found a number of instances where law enforcement officers profited handsomely from business deals made easy for them. For instance, former Capt. Al Guasti of the Los Angeles sheriff's office, was able to purchase a liquor license for $525 and within a short time sell the license, taken in his wife's name, for about $12,000.

Other officers participated in similar liquor license deals, realizing quick profits. In this connection the "vice squad pattern" was again found. This is a device used in many cities where the rackets thrive. The police department bosses set up a vice squad composed of a chosen few directly accountable to them. They instruct the remaining law-enforcement officers to stay away from gambling and vice and to channel any complaints to the vice squad for action or, in most cases, inaction. By this device, a small clique frequently controls the collection of the protection pay-off. It directs police activity against operations that conflict with those who are "in" or those slow to recognize their responsibilities to purchase "official tolerance" to operate. As an example of how this pattern works, it was found that in Los Angeles County even the vice squad "didn't move freely without instructions from Captain Pearson.” In the case of one raid, Captain Pearson wrote a note to the sergeant in charge of the squad saying:

Make your raids specifically at 10 o'clock. At that time, the gambling tables will be covered. Observe the girl show and then leave. During that time, there will be no gambling conducted so your officers will not be embarrassed. Captain Pearson admitted that the note was in his own handwriting.

Evidence of obstruction of justice by violence and the tendency of the criminal to take the law into his own hands was found in the shocking shotgun murder of Attorney Sam Rummel. His voice was forever silenced on December 11, 1950, the day following a conference with Sheriff's Officers Guasti and Pearson. At the time that a grand jury was probing the bookmaking and protection of the Guarantee Finance syndicate, Rummel called on Guasti on Sunday, December 10, 1950. Guasti arranged for a clandestine meeting in an automobile between Rummel, Pearson, and Guasti. Guasti admitted to the committee that Rummel said he was going to discuss the Guarantee Finance case before the grand jury and that he "had some information." Further testimony developed that Pearson met Rummel later in the evening and made available records about the investigation, obtained in his official capacity. It was the following morning that Rummel was "removed permanently" from consideration as a witness who might shed some light upon the corruption that was evident in the Guarantee Finance syndicate. Guasti admitted to the committee that he did not bother to advise the Los Angeles police, who were investigating the murder, of the events on the day prior to the shooting.

In another case, law-enforcement officers found their path toward conviction for narcotic violations of the notorious Sica brothers blocked by the gang murder of Abraham Davidian, the man considered by the prosecution to be the key witness and "sine que non" to conviction. Needless to say, Davidian's death completely stultified their efforts and the Sicas went free. Perhaps the lesson learned from the death of Abe "Kid Twist" Reles, whose untimely demise in New York prevented the prosecution of the triggerman in the Murder, Inc., case, served the California hoodlums well.

Further manifestation of the disregard for the processes of justice was found in the revealing recording adduced in the Los Angeles hearing of the committee in which the unguarded conversation of under-world figures was brought to light. In Dallas, Tex., Herbert Noble, who has just survived the eleventh attempt to take his life by dynamiting his automobile and airplane, among other things, was engaging in a war for control of the Dallas racket with Benny Binion. So many attempts have been made on Noble's life that he is called the Clay Pigeon. Binion left Dallas after Noble's wife was murdered. Her last act was to step on the starter of the automobile usually used by Noble, thereby detonating the dynamite placed in the car by those who wished to eliminate Noble. According to the story brought out in the testimony, Binion moved to Nevada but continued to maintain an interest in the lucrative Dallas rackets and sent an emissary, Harold Shimley, to Dallas in an effort to make peace with Noble.

Vigilant Dallas police learned of the move and recorded the ensuing conversation between Shimley and Noble which took place in a tourist cabin near Dallas. The conversation furnished a graphic insight into the tactics of these lawless elements. Shimley made an effort to convince Noble that Binion did not want trouble and was not responsible for the murder of Noble's wife. Shimley maintained that Binion had spent thousands of dollars of his own to track down the perpetrator of this shocking crime and claimed that he had found the individual who had purchased the dynamite and intended to arrange to square matters by gangland methods. The alleged purchaser of the dynamite had been arrested and incarcerated. Shimley told Noble that he (Binion) said, "I can get the killed in the penitentiary." Noble replied, "Well, that's good enough for me." During the conversation a telephone call was made to Binion, who remained in Nevada, from the men in the tourist cabin in furtherance of the peace effort. There is no record of these individuals ever advising law-enforcement officials of the information they insisted had been developed concerning the killings.

III. The persuasive Mickey Cohen and magnetic William Bonnelli

No discussion of the California crime picture would be complete without reference to the notorious Mickey Cohen. Although the recent police surveillance and publicity attendant to Cohen's activities have undoubtedly exerted a deterrent effect on Cohen's activities, his name is inescapably woven into the pattern of rackets in southern California. Cohen is frequently mentioned in connection with gambling enterprises and has been known in handbook circles as a lay-off man for Nation-wide horse bets. Cohen's tendency toward strong-arm tactics is evidenced by the treatment he administered to Jimmy Utley in broad daylight in a Los Angeles restaurant. It has been related how Cohen pistol-whipped Utley in the presence of numerous patrons of the place but none of them, including Utley, would testify about what they had seen. Again, Cohen accompanied Joe Sica, when the latter called upon Russell Brophy, the race wire service distributor in California, to find out why Brophy had declared Sica "out." Sica was unable to persuade Brophy that he was "in" and, in the ensuing fight, Brophy was administered a bad beating. Cohen's enthusiasm mounted and he tore the telephones out of the place.

Cohen has explained that in recent years he spent money in excess of his reported income by reason of loans made to him by various individuals. These "loans" amounted to over $140,000 and Cohen admitted he was in no position to repay them. In one instance Hyman Miller, a bookmaker, "lent" Cohen $5,000 which Cohen had never repaid. Cohen apparently added insult to injury by administering a beating to Miller after they had "harsh words." On another occasion Cohen successfully "borrowed" more than $20,000 from the then president of the Hollywood State Bank on a completely unsecured basis. Cohen claimed he was able to arrange this loan merely by talking to the president of the bank, without posting collateral or security, and without giving any promissory note. It was emphasized that the loan was from the personal funds of the bank official and did not involve the bank's funds.

William G. Bonelli, a member of the California State Board of Equalization which controls the issuance of liquor licenses, proved to be an interesting witness. Previous testimony had developed that Bonelli's campaigns for office had shown a number of law-enforcement officers and racketeers to be prominent supporters. William Robertson, operator of a gambling establishment and former Los Angeles policeman, made collections for Bonelli's campaign totaling $15,000 to $17,000.

Another admitted backer of Bonelli was Capt. Al Guasti of the Los Angeles County sheriff's office who, as previously related, was able to purchase a liquor license for less than $600 which subsequently sold for $12,000. The individual who arranged for Guasti to obtain the liquor license was William J. Cook, who is one of the principals in Bonelli's campaign. Cook appeared as a partner with Bonelli in a venture known as the Hillview Oil Co., which later became a corporation in which both held stock. Bonelli testified that the stock which he bought at $1 per share was to date a losing proposition. Notwithstanding, Cook was able to sell one share of the Hillview Oil Co. stock which cost him $1 to the operator of the Rainbow Room, a liquor licensee, for $2,000. Another licensee paid $1,000 for half a share of stock which cost Mr. Cook 50 cents.

WIRE SERVICE IN CALIFORNIA Under California law the race wire service has been outlawed. Notwithstanding, the bookies seem to be able to circumvent the law to obtain the information so vital to their existence. Although there is no evidence of direct wire outlets in the State, there have been at least four occasions of "tapping" Western Union cables which parallel the Southern Pacific tracks and carry Continental Press racing news through California to Mexico. On one occasion the tapping, obviously for gambling purposes, was so crudely done that it threw off the entire block signals system of the railroad.

Russell Brophy, who controlled the distribution of the racing news, testified in the hearing of the Interstate and Foreign Commerce Committee that he was receiving racing information by short-wave radio from Mexico and disseminating it in California. There was no testimony as to how he paid for the information but Edward McGoldrick, of the General News Service in Chicago, a Continental distributor, testified before this committee that his service was receiving $500 per week from Stanley Cohen in San Francisco under an oral agreement that McGoldrick would furnish Cohen with wire service to San Francisco if and when it became legal to run wires into California again. The $500 per week payment closely approximated the amount paid for the racing news in San Francisco when the wire was legal. McGoldrick was unable to explain how Cohen could be assured of exclusive representation of the wire service in San Francisco and it seemed highly incredible that Cohen would be paying $500 per week ad infinitum merely to protect a franchise to obtain news service which could not be transmitted into the State legally. Although there appeared to be no business relationship between Continental Press in Chicago and Stanley Cohen from the record, Cohen's 1949 tax return disclosed an expense item of $46,300 for "Continental Press Service." A further interesting item was an expense of $23.909.24 for "telephone."

When the committee sought to question Cohen about his obvious wire-service activities he refused to give any information and has been cited for contempt. Thus there remains the paradoxical situation in California in 1949 where Brophy, son-in-law of the late James Ragen, murdered Continental Press principal, claimed California wire service was obtained by radio from Mexico, which incidentally has a Continental Press drop, and McGoldrick, of General News, a Continental subdistributor in Chicago, claimed that Stanley Cohen was paying General News $500 per week for a very nebulous consideration. But Cohen's books failed to support these payments and, on the contrary, disclosed $46,000 paid to Continental Press, all of which took place during a year when the wire service was outlawed in the State. The inescapable conclusion again appears that the Continental Press Service subdistributors are merely dummies along the path which the racing news travels from Continental to the bookie, and that the funds extracted from the bookies for the service wind up in the coffers of Continental.

IV. Corruption among internal-revenue employees

A new technique for extracting money from taxpayers was developed by several Internal Revenue Bureau employees in the west coast area. Patrick Mooney, formerly chief field deputy at the Bureau of Internal Revenue at Reno, Nov., for a number of years was an officer in the Mountain City Consolidated Copper Co., which seemed to be nothing more than a "shadow mine." In other words, there is no record of the mine ever producing anything of value and it was not worked. For many years Mooney prepared the tax returns for Elmer "Bones" Remer, a prominent California gambler. Remer had a tax deficiency of $773,535 for the years 1941 to 1946. In 1946, Mooney testified, he had an income-tax warrant against Remer calling for the payment of about $7,000 or $8,000. Remer had a check ready to pay the tax assessment but, after talking with Mooney, instead bought $2,400 worth of the copper company stock and deducted $2,400 from the check to the Government. According to Mooney "it was all adjusted anyhow." Apparently Remer was not bothered further by tax difficulties at this time.

In addition to Remer, several hundred others, most of whom were having tax troubles, bought stock in the mine. Many of them have been identified as gamblers and gambling-house operators in that area. Apparently a participant in the scheme with Mooney was Ernest Mike Schino, the former chief field deputy, office of the collector of the northern district of California. Schino was the recipient of 5,000 shares of the stock from Mooney and, as "it would not be right to put it in Mooney's name" according to Mooney, it was put in the name of Schino's sister.

There was evidence that Gertrude Jenkins, a convicted abortionist who was having tax difficulties, paid $5,000 to Mooney, half of which was to go to Schino to "fix" her case. On the other hand, Robert J. Kaltenborn, the owner of a large wholesale automobile-parts store in Las Vegas, was recently convicted of violation of the internal revenue laws. During the time he was under investigation he was approached by Martin Hartmann, who purported to be a stock salesman for the Mountain City Consolidated Copper Co., with the suggestion that Kaltenborn buy $3,500 worth of M. C. C. C. stock for the purpose of taking a short-term loss to charge off on his income tax. He explained that Mooney, of the internal revenue in Nevada, and secretary-treasurer of the copper company, would show him how to do it to evade prosecution. Kaltenborn did not play ball and subsequently was convicted. There were other incidents of unusual relationships between internal-revenue employees and those under investigation, such as a case where an internal-revenue employee was instrumental in bringing together a taxpayer under investigation with the madam of a house of prostitution also under investigation, for the purpose of establishing a new house of assignation near a military installation.

Subsequent to the committee hearings most of the employees involved have been removed from the service and a Federal grand jury is considering the entire matter.

V. The role of Arthur H. Samish

The strange tale of the part played by an almost unbelievable character, Arthur H. Samish, in the California picture nearly defies description. Mr. Samish can safely be called "Mr. Big" in California. His physical weight, around 300 pounds, can be calculated fairly accurately but the weight of his influence in the affairs of that State would be most difficult to estimate. Mr. Samish describes himself as a "public relations counsel" or a "policy consultant" and has declared on at least one occasion, "I am the legislature." His forte is representation of organizations and associations as a lobbyist before the California Legislature. Prior to the actual arrival of the chairman of the committee for the hearings in California, committee investigators were rebuffed in their attempts to examine Mr. Samish's records; thus it was necessary to explore his methods in open hearing and the revelations were startling.

For many years one of Mr. Samish's clients has been the California State Brewers Institute, a trade association composed of 11 of the 14 breweries in California which accounts for 86 percent of the beer production there. The officers of the institute testified that the organization was a nonprofit association, the stated purposes of which were to "educate and elevate the minds of men" and to "encourage civic enterprises with a view of attaining the maximum benefits for all concerned. The dues of the association were established on a per-barrel basis according to the production of beer by the member breweries. An assessment of 4 cents per barrel produced by the member breweries was turned over to the institute and placed in a bank account to be disbursed under the authority of the directors of the institute. This assessment amounted to a very substantial sum when it is considered that in 6 years the total sum paid into this fund by the breweries amounted to well over $500,000. According to the testimony, the practice of the brewers, some of whom testified, has been to deduct this entire assessment for tax purposes on their books as "an operating expense." The members also pay another 5 cents per barrel to the institute, which money is deposited in a special account in the Crocker First National Bank of San Francisco. Mr. Samish is a virtual dictator over the disbursement of funds from this account. Deposits from the 5-cent assessment in the last 6 years from the brewers to the institute aggregated $935,943.19. It has been the practice of the member breweries, according to the testimony, to deduct again as "an operating expense" 50 percent of this additional assessment. The other 50 percent is considered non-deductible as an operating expense on the theory that half of the fund is used for nondeductible purposes. Thus the member brewers contribute a total of 9 cents per barrel of beer to the institute. Under this agreement nearly $2,000,000 has been paid in during the past 6 years with the brewers charging off, as an "operating expense," 6 1/2 cents on each barrel as a tax deduction. But examination of the record to determine if this, in fact, is "operating expense" is in order.

The committee labored through a lengthy interrogation of the institute officers, member brewers, Samish's bookkeepers and Samish himself in an effort to find out what became of this tremendous sum of money. In connection with the $1,000,000 "Samish fund", Mr. James G. Hamilton, Secretary of the California State Brewers Institute, testified that the checks are drawn at the request of either Mr. Samish or his representatives in his office. From the record:

Question. So, that Mr. Samish directs these three gentlemen to draw the checks. Would you say that he is in complete control of that account? The CHAIRMAN. For practical purposes.

Answer: For practical purposes; yes.

Question. Now, who keeps the books and records as to that account?

Answer. I don't know.

Mr. Hamilton, who is a full-time paid employee handling the administrative affairs of the institute, appeared strangely uninformed with respect to what became of the bank statements and canceled checks of the account. He advised that the statements and checks were sent to Mr. Samish's office and that the institute had no record of the expenditures; that the institute "acts merely as an agent in the collection and deposit of the funds."

Mr. Samish's function, as described by Mr. Hamilton, was summed up by Senator Kefauver in this question. "For practical purposes he makes the legislative and political decisions for the brewers of California?" Mr. Hamilton answered "Yes."

Further it was estimated that members of the institute, persons connected with organizations and their families, wholesalers, and retailers who would be affected by the Samish influence would number around 500,000 in California. Senator Kefauver inquired of Mr. Hamilton: "Now, when it comes up as to whether a proposed referendum is to be good or bad for the brewing industry, whether an election of a State Senator, a member of the legislature or the passage of a bill in the legislature will be good or bad, that decision is made exclusively and wholly by Mr. Samish?" Mr. Hamilton said, "That is my understanding; yes."

The examination of William P. Baker, president of the California State Brewers Institute and also president of the Regal-Amber Brewing Co., was very enlightening. Mr. Baker was one of the three individuals authorized to draw checks on the "Samish account" of the institute. He testified that he did not question the checks which were presented to him for signature. He "imagined" they came from Samish's office, but he had never had occasion to refuse to sign any checks and "supposed" that Samish kept a record of the checks; further that the only checks he remembered signing were to Mr. Samish and these took up all of the fund. The net result of that interrogation of the members of the Brewers Institute with respect to the disbursement of the funds from the special account was, "See Mr. Samish."

Mr. Samish proved to be not at all disturbed by his inability to account for expenditures traced to him and deducted by, the brewers as expense to save themselves many thousands of dollars in Federal taxes. After considerable fencing, Mr. Samish finally testified that the checks on the "Samish fund” were made up in his office and sent to the institute for signature and returned to his office. When the canceled checks were returned by the bank with the monthly statement, the canceled checks and the statement and a handwritten record of the checks drawn for the month were delivered to his office by the institute. In answer to a question as to what became of the statement and canceled checks, Mr. Samish testified:

I take the recapitulation, the bank statement, and the canceled checks and I throw them in the wastebasket. From time to time Mr. Samish referred to a written agreement he had with the institute. It was pointed out that, under its terms concerning expenditures, there was to be a "report made." He was asked how a report was made in the light of his testimony that he destroyed all records, and the testimony from the institute officials was that they kept no records. Mr. Samish replied, "I don't work on that end of it." The agreement further provided that Mr. Samish should have no authority to incur expenditures until the institute authorized them. He was asked how this could be reconciled with the statement he made that he drew checks upon his own authority. He said, "I just do it." He was asked if this did not breach his contract. He answered, "I haven't even given that any consideration."

During the interrogation Mr. Samish produced a handwritten notation of a number of checks drawn in the past year. It was noted that on October 3, 1950, a check was drawn to cash in the amount of $15,000. Mr. Samish was asked where the cash went. He explained that during the general election period many "cash" checks were drawn looking toward seeing that— honest, outstanding officials that subscribe to the temperate use of beer, wine, spirits and other things are returned to office.

This colloquy followed:

Question. And where does the money go, sir? Answer. It is expended.

Question. It is expended?

Answer (nodding affirmatively).

Question. And what does that mean?

Answer. Well, it is expended in connection with campaigns.

Question. And who gets it?

Answer. The cash is handled through me.

Question. You get the cash, then?

Answer. Yes.

Question. And what do you do with the cash?

Answer. We spend it. Make contributions and distributions. .



Question. Well, sir, we are not arguing policy with you. We are trying to find out where the money went, physically; whose hands it got into.

Answer. Well, it comes into mine.

Question. And then where does it go from yours?

Answer. It is given in contributions.

Question. To whom?

Answer. To different campaigns.

Question. Name one

Answer. Well, I don't keep a record of that. I would be glad to see if - to see if I can find it for you.



Question. Now you have the money in your hand; you have $10,000; you are going to give it to the campaign committee. How do you do it?

Answer. I handle it. I have been doing it for a great many years.

Question. Do you handle it in cash?

Answer. Well, we pay bills sometimes. Sometimes we may handle it in cash.

Question. What is wrong with writing a little check to the campaign committee?

Answer. I tell you what I decided after this situation: I told Mr. Hoertkorn [his bookkeeper], "For your information, starting March 1, [1951] everything in that fund is going to be by check."

The CHAIRMAN. May I ask a question at that point. Mr. Samish, just looking here at one month - for instance in May of 1950 - you have "contributions $10,000," "$10,000," "$10,000," "$10,000" - four of them definitely marked "contributions" there; others here, "liquor," and somebody is a trustee, and "Louis Lurie Company" - I guess that is printing. But anyway, there is $40,000 in "contributions" that I assume that you handle by paying some bills or giving to the candidates, or whatever it may be.

Question. Is there a distinction between "cash" and "contributions"?

The CHAIRMAN. Is that the same thing?

Answer. "Cash" and "contributions" are the same thing.

Question. Who decides whether it is going to be a contribution or cash?

Answer. All of our contributions, with rare exceptions - once in a while we may make a check out if I don't happen to be around, or for what reason I don't know. But I would say 95 percent of it is in cash.

In view of the prohibitions in the Federal Corrupt Practices Act, the disbursements by Samish of substantial sums "in connection with campaigns" indicate that there is a strong possibility of a violation of this act by the Samish group. Among other things, the act prohibits campaign contributions by corporations. Samish was found to have issued a circular letter to the brewers discussing "all candidates" and admitted that they had been called upon by some of the

Attorney General of the United States has been asked to look into the matter.

Samish testified that about $153,000 per year was received into the special account to be disbursed according to his direction. In the 1-year period of 1950 at least $105,000 of this sum was checked out for "cash." Samish claimed in his books that the money was spent for "contributions." Notwithstanding, he was unable to tell the committee during his testimony exactly where as much as $1 of this sum was spent. An interesting example of his vagueness and indefiniteness was a passage which took place about an item of $13,317.94 which Samish reported in his personal income-tax return for the year 1949 under "rentals." Samish said the money came from "a little oil venture." He said he owned oil properties in Indiana and Texas and he didn't know which one - "really I don't."

Question: A "little" item you can't remember? Answer: Oh, it's small. That's right. I can't remember.

Question: All right, sir. See if you can remember this one: Another $13,000 in your expense for 1949 for entertaining - $13,899.35. What is that for?

Answer: Oh, I can't give you any details.



Question: In general, who is entertained $13,000 worth?

Answer: I can't tell you. If you want to ask or inquire about those things, I think our tax consultant, or our tax counsel, will explain everything to your satisfaction.

Question: Is he the one who spends the money?

Answer: That isn't a question of that.

Question: Yes; it is the question.

Answer: Well, I don't know. I just don't know, Mr. Rice.

The light regard with which Samish holds money is further illustrated by his statement about some of his fees. Samish related that he received a yearly income from a number of accounts, one of which was Schenley Industries of New York. He said, "I get $36,000 flat fee from Schenley Industries." Senator Kefauver said, "You must do a lot of work for them for $36,000. Samish replied, "Well, I do at times, Senator, I do but not always. I mean I am `callable' when they want me." Samish testified that he had previously been paid as much as $46,000 by Schenley but the amount of his fee was reduced to $36,000, the reason being that "I was earning too much money."

Apparently Samish has been none too discriminating in his choice of friends and associates. For instance, he testified he had on several occasions gone to Hot Springs, Ark., for the baths there. While there he talked with the notorious Joe Adonis, alias Joseph Doto, one of the major racket figures in the country. He said, in answer to a question about meeting Adonis any place outside of Hot Springs, "Oh, I eight have seen him around New York.'' While in Hot Springs there was a telephone call placed from his room to the Beverly Country Club in New Orleans, which at that time was one of the best known gambling casinos in the country. The committee testimony has reflected that the club is operated principally by "Dandy Phil" Kastel and that Frank Costello has an interest in. the place. When asked the reason for his call to the Beverly Club from Hot Springs in April of 1950, Samish replied, "Well, I couldn't tell you. Maybe I wanted to say, `Hello', to Mr. Kastel or Mrs. Kastel.' Pressed further about the conversation, he said "I don't recall. I really can't say. I just can't say. I don’t know. I don't know the nature of the conversation." It was also indicated to Samish that while at Hot Springs he had made numerous calls to Chicago to a telephone listed to the Jack Stone Cigar Store, 217 North Clark Street. He was asked what the calls were for, and answered that he probably was looking for a tip on "a horse or anything."

An example of another type of Samish influence and accomplishment was brought out through the testimony of C. H. Palmer, counsel for the Alfred Hart Distilleries, of Los Angeles, Calif. In1943, Alfred Hart was anxious to open a new liquor distributorship in San Bernardino County, one of the largest counties in the United States. A partnership with Edward Seeman was formed in 1943 for this purpose. Seeman, according to Sheriff James Stocker, was operating slot machines and pinball machines in that section. After about 2 months, there were some negotiations between Arthur Samish, State Senator Ralph Swing, Alfred Hart, and his attorney. Mr. Palmer, the attorney, advised that "Mr. Seeman was in some sense representing Mr. Ralph Swing." A new arrangement was made and a new partnership formed with Alfred Hart retaining 51 percent of the interest and the balance distributed to Ralph Swing, Edward Seeman, and Miss Edith Mack identified as a friend of Samish. The testimony reflected that almost immediately the enterprise flourished. Seeman's investment was said to be $100, Senator Swing's $500, and Edith Mack $100 or $200. Within the first 3 months of the operation, Miss Mack's share of the profits was at least $2,700.

When there was a reorganization in 1948, Hart purchased the interest of Seeman and Swing. In addition to his dividends over the years, Senator Swing received $16,000 in cash, plus 6,000 shares of stock which were sold for $24,000. In addition to his substantial dividends, Seeman received $16,000 cash and 8,000 shares which were sold for $48,000. Miss Mack retained her interest. In discussing Samish's participation in bringing these people together, Senator Kefauver commented to Mr. Palmer, "It was very pleasing to Mr. Samish to have some participation in getting Mr. Swing a good business deal like that?" Palmer answered, "Well. I think it is fair to say that it was a feather in his cap." Senator Kefauver went on to say, "I suppose it would be helpful to Mr. Samish to have Senator Swing on his side,'' to which Mr. Palmer agreed. Thus, we find an apt illustration of Samish's ability to accomplish a very profitable financial arrangement for a State senator, although there would be no record traceable to Samish.

What makes the Samish story even more incredible is the fact that many of the disclosures of questionable practices made during the committee hearings of 1951 had been exposed in part as long ago as 1938 when there was a legislative investigation in California. The results were incorporated in a report prepared by Howard R. Philbrick made September 28, 1938. Strangely enough, the report, after being made a part of the record of the California Legislature, was almost immediately expunged from the record and copies disappeared to the extent that the report became a virtual collector's item. The report was a work of several former FBI agents and extremely exhaustive. Parts were read into the committee record. Among other things, charged in its summary findings were:

The principal source of corruption has been money pressure. The principal offender among lobbyists has been Arthur H. Samish, of San Francisco, through whose accounts has passed at least a total of $496,138.62 during the years 1935 to 1938. * * * Lobbying of the type represented by Mr. Samish as distinguished from open legislative representation has been a major corrupting influence. * * * Mr. Samish from one client industry obtained a political fund in excess of $97,000 between 1935 and 1938 - quite distinct from Mr. Samish's own compensation fund from the client. He could spend the political fund without accounting and in fact kept no disbursement records.

In that report, Samish was quoted as saying, "I am the governor of the legislature. To hell with the Governor of the State." As far back as 1938, the investigators encountered the same difficulties in dealing with Mr. Samish's record as had the Senate committee representatives. Those predecessor investigators said that, "Mr. Samish's records were not records as a bookkeeper would understand the term. They were notations of income items and check-stub records of bank-account withdrawals. Further, there was no itemization of Samish's expense, deduction. * * * Mr. Samish's return to the Federal Government in 1937 is not in compliance with rules and regulations of the United States Treasury Department and does not attempt to set up figures which actually reveal Mr. Samish's true income."

In view of the findings of this committee, recommendations have been made to both the Commissioner of Internal Revenue and the Attorney General of the United States that Arthur Samish's practices and those of the California Brewers Institute and the brewer members thereof be examined with a view to:

1. Disallowing the deductions of the brewers as "operating expense" in the 9-cent assessment fund, amounting to nearly $2,000,000 in the past 6 years. This fund has obviously been expended principally by Arthur H. Samish for purposes almost entirely unexplained.

2. Assessing Samish for additional income in view of the fact that Samish admitted personally receiving, in the past 6 years, nearly $1,000,000 in cash from the brewers. This sum should be considered income to him and taxable accordingly, unless he is able to show that the money was expended for properly deductible purposes. In other words, from the record it could be said that the money went into Samish's own pocket and stopped there.

VI. Attempt to circumvent new Federal law against shipment of slot machines

During the hearing in San Francisco early in March 1951 there was brought into the hearing room a new contraption just shipped to California from Chicago. Testimony of Allen Krause showed that despite the very recent passage of Federal legislation prohibiting the interstate shipment of slot machines, at least one company, the Buckley Manufacturing Co. of Chicago, had already produced a machine which was said to be a non-coin-operated device but appeared to be very similar to a console slot machine and had already shipped a pilot model to California. Mr. Krause had ordered one of the machines and explained that the machine would operate after the bar-tender or operator of the establishment had thrown a switch which would permit the playing of the machine. Obviously it was intended that any coins which changed hands would go to the bartender and the pay-off as indicated after the turning of the wheels would be made by the bartender. Thus, it was intended by the operators to argue that although the machine might be adapted to accomplish the same purpose as a slot machine, "it was not coin-operated." It appears that the racket element has no intention of abandoning the lucrative slot-machine business even though recent Federal legislation has been designed to paralyze this illicit industry.

SARATOGA COUNTY, N.Y. The testimony before this committee clearly established that sometime toward the end of July or beginning of August 1947, Superintendent of State Police John A. Gaffney requested a survey to be made of gambling in Saratoga County. This order was transmitted to Inspector Charles LaForge, who made the survey assisted by several troopers. Their findings were incorporated in a report which Inspector LaForge made on August 4, 1947. This report describes in detail six separate gambling establishments, namely, the Chicago Club, Delmonicos, Smith's Interlochen, Piping Rock, Arrowhead, and Newman's Lake House. Each report indicates by whom the establishment is operated, a description of the property, and its location, together with the gambling equipment observed therein.

A typical example of such description is the following: Club Arrowhead, operated by Joe Adonis of Brooklyn, Charley Manny, New York City, J. A. Coakley, alias O. K. Coakley, Lefty Clark, Detroit; description, frame building, outskirts of city, consisting of bar, restaurant, and casino all on first floor; gambling equipment, five roulette wheels, one large wheel, five card tables, two crap tables, two bird cages.

All of the establishments described in the LaForge report in addition to having open gambling, sold food and liquor, and were all duly licensed by the State Liquor Authority. This La Forge report was forwarded by Inspector LaForge to Chief Inspector Francis S. McGarvey, who prepared a condensed memorandum bearing the same date, August 6, 1947, covering 1 1/2 pages, listing each of the clubs.

The LaForge report and the McGarvey memorandum were transmitted to Superintendent of State Police Gaffney on the same date, August 6, 1947. Up to this point police action was more than prompt. The report was completed and personally delivered to Gaffney with unusual expedition, not being permitted to go through the usual channels.

Despite the great hurry to complete the report and deliver it to Gaffney, Gaffney testified that he merely read the report and immediately filed it away. He only remarked to Chief Inspector McGarvey, who had delivered it in person that, "This looks like a sizable operation." He took no further action although both Chief Inspector McGarvey and Inspector LaForge were awaiting orders to close the gambling joints, an order which never came. Superintendent Gaffney stated that the report submitted to him through his own organization made him aware of the fact that there was a very substantial operation going on in Saratoga which was run by some well-known and unsavory characters with national criminal reputations, such as Joe Adonis, Lefty Clark, and others. He further testified that the only reason he took no action was because he received no request from the local authorities to intervene and that the Governor had failed to give him orders to do so.

According to Superintendent Gaffney State troopers can only take action in cities at the request of local authorities or at the order of the Governor. He based his opinion on section 97 of the executive law. This provision of law was read to him and it was pointed out that this statute grants to the State troopers the powers of peace officers anywhere in the State. The only limitation on State police activities within cities is contained in the last sentence of section 97, which reads:

but they, the State police, shall not exercise their powers within the limits of any city to suppress riots and disorder except by direction of the Governor, or upon request of the mayor of the city, with the approval of the Governor. Thus, the sole restriction on the activity of the State troopers within cities relates to the suppression of riots and disorder. This has no application to the subject of gambling. When this was pointed out to Superintendent Gaffney, he shifted his position and stated that State police did not intervene in cities without express order or request, because of policy and not, because of any statute.

LEAVE GAMBLING IN SARATOGA ALONE, UNLESS--- Superintendent Gaffney testified that neither he nor anybody on his behalf took the matter of gambling in Saratoga up with the Governor, or with any member of his staff. When pressed as to the cause of his failure to inform the Governor or his staff, Gaffney stated that he felt that they knew about it since, "It's been going on for 25 years to my knowledge." In this connection, it should be stated, that one of the committee's investigators testified that LaForge told him the report had been ordered by the Governor's office and was "delivered to the Governor's office. LaForge denied having said this and he and the other members of the State police denied it to be the fact.

When the chairman asked, "In other words, you just knew you just weren't supposed to do anything about it," Mr. Gaffney answered in the affirmative. He also stated that when one gets to be the superintendent of the State police he is supposed to have enough savvy or understanding to leave gambling in Saratoga alone unless he is told to go in.

Gaffney also testified that if he brought the matter to the Governor's attention on his own initiative, he would be "out, on the side-walk." But he took the opposite position when pressed by Senator Tobey who asked: Gaffney, "Well, if you saw Tom Dewey and said, `This is a rotten condition, what shall I do, Mr. Governor,' what do you suppose he would say." Superintendent Gaffney answered, "Go in and clean it up." These two answers are irreconcilable.

Subsequent to the testimony of Superintendent Gaffney, this committee received from Hon. Thomas E. Dewey, Governor of the State of New York, a report made to him by his counsel, Lawrence E. Walsh, together with a statement from the Governor himself. The report is a substantial whitewash of Superintendent Gaffney, going so far as to state, "At several points during Superintendent Gaffney's examination, he was victimized by complicated questions which assumed facts not proven but even facts contrary to those proven." Nevertheless the report concludes:

Since September 1949 weekly inspections by the State police have completely eliminated organized gambling in the city of Saratoga. Even this conclusion is at variance with the facts. The undisputed testimony shows that gambling was going full blast in. August 1949, during the racing: season when the gambling houses are wide open. The season ends at the beginning of September. When the racing season of 1950 began in August of that year, the State Police closed down gambling. Right up to the beginning of the season; the gamblers made preparations to open. There was no general understanding that the city was closed down. The Walsh report fails to explain why the State police acted to prevent organized gambling during the racing season of 1950 but did not take any action during any prior years.

It should also be noted that Superintendent Gaffney, as well as his subordinates, testified that all of the gambling establishments referred to in the LaForge report, were licensed by the State liquor authority. These witnesses stated that it was a ground for revocation of the liquor license, if gambling were permitted on licensed premises. No valid explanation was given for the failure of these State officials to report these conditions to the liquor-authority or of the failure of the latter agency to take any action. Mr. Walsh's report is also significantly silent on this subject.

Walter A’Hearn, one of two detectives on the Saratoga Police force, testified that in the 19 years he had been a member of the force, he never made an arrest for gambling and his general practice on going into the various clubs in Saratoga was to go as far as the lobby but not to go into the gaining rooms. He would not go beyond the dining room. He also testified he never had orders to go into the gaming rooms, and that it was his opinion that if he had gone in he would have been out of a job.

A study of this witness' savings bank account showed the significant fact that in the years when gambling was permitted in Saratoga, he made substantial deposits at the end of the gambling season. In the years when there was no gambling, he made no such deposits. The witness testified that he and his partner earned extra income by escorting the cash to some of the gambling establishments from the bank, for which he was paid at the rate of $10 a night. For this purpose, a police automobile was used. This practice was carried on with the knowledge of Chief of Police Patrick F. Rox. It is apparent from the testimony in executive session of both Chief of Police Rox and Sheriff Hathorn, that they knew of the gambling conditions in Saratoga. Chief of Police Rox like Detective A'Hearn, felt that it was to his own best interest to take no action and to issue no instructions for taking of action in connection with the gambling. Sheriff Hathorn took a similar position.

It is gratifying to note that on the basis of the disclosures of this committee, the Governor has ordered a special investigation in Saratoga. Despite the critical tone of Mr. Walsh's report the Governor's statement is most complimentary, pointing out the "great positive contributions made by the Senate subcommittee * * *."

It is apparent to this committee that open gambling in Saratoga has existed for many years with the knowledge of the New York State police and of public officials and the local political organizations that control such public officials. It is the opinion of the committee that these public officials and political organizations profited from the flagrant disregard of criminal statutes. But what is equally disturbing to the committee is that these Saratoga operations contributed enormous sums to the coffers of some of the most notorious hoodlums in the country.

NEW YORK CITY INTRODUCTION

Public concern over organized crime was at a high point when this committee held its hearings in New York City. A Brooklyn grand jury was inquiring into the ramifications of a bookmaking empire that was reputed to have done a $20,000,000 business and to have paid over $1,000,000 a year to the police for protection. Grand juries in New York County had under consideration the misuse of firemen's funds and the heartbreaking degradation of our college students through basketball fixes, arranged by professional gamblers. There was public: apprehension over the increased narcotics traffic and its mounting toll among teen-agers.

In contrast to other cities visited by the committee, however, some of the principal law-enforcement officials in New York City were keenly alert to the menace of organized crime. The struggle against organized crime, with its deep roots in gambling, received tremendous impetus from the prompt and effective action of New York County District Attorney Frank Hogan against Frank Erickson following his confession of bookmaking activity before the McFarland Committee in Washington last year. Erickson's incarceration on a gambling charge was remarkable in that a top-flight gambler had suffered a sizable penalty for flouting the law. Hogan has been waging a courageous war against Costello and the crime syndicate for many years. Miles McDonald, district attorney of Kings County, deserves great credit for the tireless way in which he has been digging into the operations of the Gross bookmaking empire, despite repeated attempts to discourage their investigations.

Both District Attorney Hogan and District Attorney McDonald, and many able members of their staffs, were extremely cooperative with the committee in making available to it data from current and prior investigations. These data were of great assistance to the committee in its task of following the ramifications of organized crime in interstate commerce.

The New York hearings were vital to the committee for a number of reasons. New York City, because of its size, location, dominance in the country, complexity of its population and governmental problems, is one of the major centers of organized crime. It is, in fact, the headquarters of the Costello-Adonis-Lansky crime syndicate which is in close and cordial relationship with the country's other major criminal syndicate, the Accardo-Guzik-Fischetti group based on Chicago. The committee wished to determine what there was in the local situation that fostered the illegal operations of the Costello-Adonis-Lansky criminal syndicate in New York City as well as in other States.

In its 8 days of public hearings and 3 days of private hearings in 1951, following 2 private hearings held in 1950, the committee heard a total of 89 witnesses in addition to interviews and conferences with approximately 500 others. There were 40 at the open hearings and 49 at the closed hearings. These witnesses included public officials, political leaders, law-enforcement officials, Federal officials, including those of the Bureau of Narcotics, the Bureau of Internal Revenue, the Bureau of Immigration, and others. The committee heard from former Mayor William O'Dwyer; from two of his chief aides and intimate friends, Frank Bale and James F. Moran; from another former O'Dwyer aide, John Murtagh, who was former commissioner of investigation, and now chief magistrate of the city, having been appointed to that position by O'Dwyer. The committee heard considerable testimony concerning water-front conditions from such witnesses as Mr. Philip Stephens, business manager of the New, York Daily News; Mr. Walter Hedden of the Port Authority of New York; and from various water-front racketeers, including Albert Anastasia, who was heard at closed hearing, and his brother Anthony, who was heard at the open hearings.

District Attorney Miles McDonald and his able assistant, Julius Helfand, appeared to testify about police corruption in Brooklyn and to portray for the committee the gambling operations they had uncovered and the ramifications of these operations in New Jersey and in other States. The chairman of the newly formed New York City Crime Commission, former Assistant Secretary of a of State Spruille Braden, appeared to give his views. At a later hearing in Washington, Judge Samuel Leibowitz, who had played a prominent part in connection with the grand jury investigation in Brooklyn, also testified and gave the committee the benefit of its factual knowledge and its views.

The New York hearings covered many facets, including the links between crime and politics, crime on the waterfront, large scale book-making and gambling operations, narcotics racketeering, operations at the Roosevelt Raceway, gambling conditions in Saratoga, and links between gambling in New York and New Jersey. It particularly stressed both the personnel and the form of the huge crime syndicate which is primarily directed by Costello, Adonis, and Lansky. Not all of these subjects were explored at the open hearings, but all of them were covered either at closed hearings, open hearings, or in the committee's investigations. Most of the subject matter, however, revolved around the testimony of two major witnesses, Frank Costello and William O'Dwyer. Both of these witnesses were questioned on a wide variety of subjects bearing on organized crime and its links with politics with the result that practically all of the information developed in the New York hearings could most expeditiously be related by reference to the testimony of these two witnesses.

FRANK COSTELLO A simple point illustrates the stature of Frank Costello in New York City. According to Ambassador O'Dwyer, when he was an Army officer attached to the Air Force in 1942 with orders "to keep Wright Field clean," he found it necessary to obtain some information from Frank Costello. Despite the obvious disinclination which the former prosecutor of Murder, Inc., must have had to go into the home of Costello, O'Dwyer did not even think of calling Costello to the offices of the Army Air Corps; he went to Costello's home. The record is complete with evidence of persons in high political positions going to Costello's home at Costello's call. In fact, one former judge, during the regime of Tammany leader Hugo Rogers, as recently as 1948, was known to be the man behind the throne. Hugo Rogers stated on private examination, "If Costello wanted me, he would send for me."

I. Costello-The legitimate businessman

What manner of man exercises this power and has this prestige? Both Costello and his counsel, George Wolf, protested at the executive and public hearings that Costello was falsely charged with being the leader of a national crime syndicate. They were thankful for the opportunity to testify so that they could dispose of the fantastically untrue stories about Costello.

Costello stressed his legitimate business interests in real estate, oil, and other things. According to Costello, he is not a politician, but only a friend of politicians. His political influence goes no further than that of any man who has lived in one neighborhood for many years. He maintains an apartment in one of the most fashionable buildings on the West Side of New York, has a. summer home, in Sands Point, and travels regularly to Florida, New Orleans, and Hot Springs. He claimed that he had no connection with bookmakers. His associations with known racketeers were purely out of friendship and when he met them in other States, it was purely by chance.

This picture of Costello as a legitimate businessman, which he and his counsel were trying to create, was blurred considerably by additional testimony. His legitimate interests, it was shown, were slight, taking little of his time. From 1944 to 1950, he had owned a parcel of hind and the buildings thereon at 79 Wall Street. A management company managed it for him. He had recently invested in a company, making infra-red ray broilers, but until his counsel told him, he could not answer the committee's question as to the characteristic feature of his product. While Costello testified that his counsel, Wolf, was his principal advisor on business interests, Costello had invested on the advice and casual conversation of his good, friend, Frank Erickson, $4,000 in cash in oil, which he increased through the years to a total of $41,000. He admitted he didn't know anything about the oil business, had made the additional investments solely by laying hunches. He also was an investor for a time in Consolidated Television Co., in which Meyer Lansky and Joe Adonis also had investments. Apart from real-estate investments, Costello admitted, his last previous legitimate business had been a company manufacturing chocolate-covered ice-cream sticks in 1920. Before that, he had had other real-estate ventures, had manufactured kewpie dolls as punchboard prizes, and, prior to his arrest and incarceration on a charge of carrying a gun, had been employed in a piano factory.

On detailed examination of Costello, it became perfectly apparent that his legitimate business consisted of a very few investments about which, on examination, he had practically no knowledge himself and which required practically no time or attention from him. The characterization which he gave himself as being a legitimate businessman simply cannot be sustained.

II. Illegal activities of Costello

Costello's illegal enterprises were neither so quickly ascertained nor so easily described. He admitted a present 20-percent interest in the Beverly Club from which he received first $1,000 and more recently, $1,500 a month for acting as a good-will agent and talent scout. The Beverly Club has one of the most elaborate gambling casinos in the New Orleans area, operating all kinds of gaming devices in clear violation of Louisiana law. With some reluctance, Costello also admitted to an interest in the Piping Rock Casino in Saratoga in 1943, but he claimed that he was not personally responsible for this operation, sharing only in the profits because he financed a man who was interested in it. A letter from Meyer Lansky. to his accountant, however, indicates that Costello had an outright 30-percent interest in the casino and that Meyer's brother Jack and Joe Adonis also shared in it.

Costello was in the slot machine business in the early thirties in New York City. He admitted that it was in partnership with his present New Orleans partner, Phil Kastel. Mayor Fiorello LaGuardia put him out of business in New York City. In the mid-thirties, the late Huey Long invited him and his slot-machine business into Louisiana, intending, as Costello stated, to legalize them and tax them for various State enterprises. Before he saw Long again, Costello said, Long was assassinated and the plan failed of accomplishment. But Costello's illegal slot-machine business remained under the management of Phil Kastel and flourished. Costello admitted that his income from this slot-machine operation was over $70,000 in 1946. Costello insisted that he left the active management of the slot-machine business wholly to Kastel since the time of the survey made at Long's request. Legally made telephone taps in 1943, raised considerable doubt as to this contention. They show Costello giving specific orders with respect to the purchase price and makes of machines. Costello, moreover, visited New Orleans every year for about 30 days. However, he denied that his annual visits to New Orleans were in connection with the slot machines or Beverly Club business. He denied that Kastel or the Louisiana businesses in which he was interested paid his expenses. While the hotel bill was listed in Kastel's name, Costello said he always reimbursed him.

Costello's testimony that he left the management of the slot machine business to Kastel, and that he had nothing to do with purchasing machines was manifestly untrue. It should be examined to see whether it is actually perjurious.

III. Costello and bookmaking

That Costello had been involved in the bookmaking business at one time was apparent from the fact that in 1943 he testified that he took bets on commission, handing them over to other bookmakers and receiving 5 percent of the total bet during the 1920's.

To this committee as to the Senate Committee on Interstate and Foreign Commerce, headed by Senator Ernest W. McFarland, a year ago, Costello wanted it known that he had no connection with book-makers and had had none for 15 years or more. His own and other testimony make it difficult for the committee to accept this contention. Apart from the former mayor's statement that at the time he sought Costello out in 1942, he knew him by reputation as an outstanding bookmaker, there were two episodes which indicated that Costello's relationships to bookmakers were a great deal closer than that of the average bettor. George Morton Levy, attorney for the Roosevelt Raceway with an extensive financial interest in the track himself, testified that for 4 years ending in 1949, he had paid Costello $15,000 annually, out of his own personal funds, to have Costello keep bookies away from the track. The arrangement started in 1946, Mr. Levy testified, when the racing commissioner, Mr. Benjamin Downing, said that if the track were not cleared of bookies, its license would be withdrawn. To satisfy Downing, Levy called Costello and asked his assistance. Costello stated that be told Levy he didn't think he could do anything, but he would talk around at the bars at the Waldorf, Gallagher's, Moore's, etc. Complaints stopped at once, Levy testified. Downing was satisfied, and a year later, Levy insisted on giving Costello payment for his service, although Costello assured him he hadn't done a thing and didn't want payment. But $60,000 was paid over and received, the last payment being made more than a year after Downing's death. Levy stopped payments when the Bureau of Internal Revenue refused to allow him to deduct them as a business expense. Both Costello and Levy testified that before 1946 Levy never consulted Costello about his trotting track affairs. On cross-examination, Levy stated that the private race-track police apparently could not satisfy Commissioner Downing. He pointed out that the private race-track police were not Pinkertons, but asserted that he did not have and never had had any personal objection to the Pinkerton men at the track.

Both the testimony of Levy and that of Costello is seriously contradicted by a telephone conversation between Costello and Levy. The telephone call made in 1943 was intercepted by agents in District Attorney Hogan's office pursuant to a legal authorization for wire tapping.

The conversation reads as follows:

LEVY. "Hello, Frank. This is George Levy. I tried to get you yesterday. Can you be up there today?" COSTELLO. "I don't think so. Any day you can, give me a ring."

LEVY. "Have you got a minute, Frank?"

COSTELLO. "Sure."

LEVY. "In Downey's, or Dewey's presence, we were told not to have Mahoney or Walger, but to have Pinkertons. Pinkerton sent us a contract and it is the god-damnedest thing you ever saw. They can refuse to let in anyone that they choose. John Rogus is all steamed up. Yesterday, we had a meeting in Mineola and Downing said he could see no reason for convicting a man without a fair trial. I called Empire City for a conference with O'Brien and asked him if we could get our own agency. O'Brien turned it down. So you see, Frank, all Bleakley would have to do is call in the local police and he could stop the meet. We did not think we would open today. We saved the thing by putting in a 24-hour cancellation clause - which I see is in there. If we could only get O'Brien to budge an inch. We can't jeopardize the bookmakers. They are just as liable to arrest President Roosevelt s wife for prostitution, as not. It's like holding up a gun against you. They may have enough pride to step out."

COSTELLO. "If they make any errors, you are subject to a suit."

LEVY. "As boss, you should be able to tell them. The way it stands now you better tell George. As for Pete, he does not want to go into the pari-mutuel department. I will have to create something for him."

"I can't play golf Sunday. I ran a pencil into my hand, and I can't hold a club. Dunnigan stood up swell. All three did."

COSTELLO. "I will probably see you Sunday. We can sit on your front lawn and cut up your business."

Both Costello and Levy had previously, when confronted with this testimony, denied that Costello had ever recommended any of his friends or relatives for positions on the track, but on being confronted with this telephone conversation, both recalled that one Pete, who called Costello, "Uncle Frank," had been given a job at the track at Levy's request.

Both Levy and Costello claimed that the conversation was impossible and that there would be no reason for keeping the bookmakers off the track, but on a previous occasion, when testifying before the grand jury of New York County in 1943, Costello said that there would be every reason to assure that the bookmakers could stay on the track. Costello testified that the telephone conversation might be explained because it was necessary to have bookmakers on the track in order to keep the large bettors from upsetting the odds on the pari-mutuel machines.

Levy's explanation of the above conversation is in effect that the Pinkertons did not want to allow Costello to attend the opening of the Yonker's track, and that be was explaining this to Costello. A simple reading of the telephone conversation in connection with Levy's later explanation is determinative of this question.

The "George" referred to in this conversation was unquestionably George Uffner who has had close connections with Costello. He was a known bookmaker for years though Costello denied knowing this fact. When the committee asked why the telephone at Costello's Sands Point home was in Uffner's name, Costello explained that when he bought the place he could not obtain a phone unless he could persuade a friend to give his up. Uhler obliged him by giving Costello his phone. The testimony of both Costello and Levy is not only highly improbable, but inconsistent with the 1943 wire tap and with Costello's explanation of it to the grand jury in 1943. The question remains one for the prosecuting authorities whether perjury has been committed.

IV. Costello and liquor

Costello has frequently admitted having been a bootlegger during prohibition days. In his testimony, in the appeal proceedings in 1933, he stated under oath that he had been in this business in the early 1920's, prior to 1925, and he so stated also in sworn testimony before the New York State Liquor Authority given in 1947.

The precise date of Costello's bootlegging activities is important because in 1925, he took an oath of allegiance to the United States in connection with receiving his final citizenship. At that time, he swore to upholding the laws of the United States. Since he admitted that thereafter he engaged in bootlegging, it would appear that his oath was false. In fact, he engaged in bootlegging before 1925 as well.

There is ample evidence in the files of the Immigration authorities to correlate Costello's admission that he was in fact in the bootlegging business prior to 1925. In fact, Costello was indicted for bootlegging together with Bill Dwyer, the bootlegger king, and 61 other persons in December of 1925, but this indictment was dismissed against Costello after many of the others were tried and convicted.

Further evidence that Costello was active in the bootlegging business at the time he received his citizenship appears on his application for citizenship in which he gave the names of two character witnesses as sponsoring citizens, who were in fact at that time engaged in the bootlegging business with him. Before this committee, Costello vigorously denied that his two sponsors were in the bootlegging business with him, particularly since they were described in the citizenship application as being in the real-estate business. Under cross-examination, Costello insisted that one of these witnesses, Harry Sausser, had never been known to him as a bootlegger, but only as a legitimate real-estate man. At this point, Costello was confronted with his testimony in 1947 before the New York State Liquor Authority in which he stated that one Harry Sausser was the person through whom he arranged the importation of liquor from Canada. Costello admitted to fraud by asserting under oath that he had never arranged for bringing of liquor in from Canada despite the fact that he admitted to this activity, not only to the New York State Liquor Authority, but also before the New York State grand jury. Finally, he admitted that a Harry Sausser had been in the bootlegging business with him. At this point, he asserted that he knew two or possibly three Harry Saussers, and that the Harry Sausser who was in the bootlegging business with him was a wholly different person from the Harry Sausser who he knew to be a legitimate real-estate man and who had been his sponsor in the citizenship application. At the hearing, Senator Tobey appropriately referred to this story as "the tale of the flying saucers.”

Little credibility can be attached to Costello's contentions, particularly in view of the circumstances under which the admissions were wrested from him after repeated self-contradictory stories. In fact, Costello testified that he understood the legitimate Sausser to be a railroad man and not even to be in the real-estate business as appeared on the naturalization application.

Costello's testimony concerning his relations with Johnny Torrio, Capone's predecessor in Chicago, was an equally contradictory story. He testified before this committee that he had met Johnny Torrio once or twice and knew his reputation only through the newspapers and did not have any dealings with him. When he was confronted with his testimony before a Federal Treasury agent in 1938, that at the request of Irving Hahn, he contacted Torrio and had at least two conversations with Torrio about the sale of a large liquor company which Torrio owned. He retreated to the position that he just did not remember what his testimony might have been. On two occasions, subsequent to 1938 and prior to his testimony before this committee, he had been asked about his relationships with Johnny Torrio, and on both of these occasions, he denied under oath that he knew Torrio at all. These were the grand jury Aurelio disbarment proceedings in 1943 and testimony before the State liquor authority in 1947.

It might here be stated parenthetically that Costello's answers with relation to Torrio are typical of his answers with relation to practically every other matter. He admits as much as he thinks he has to and does not hesitate to change his story to suit the occasion.

Another transaction involving the liquor business and Costello in the late thirties engaged the attention of the committee. In the spring of 1938, as Costello admitted, he endorsed a note of a Mr. William Hells for $325,000 so that Helis, Kastel, and Haim could buy out the English liquor company, Whitely Distributors, for which Haim, at the time, was the American distributor and Kastel the good-will man. Costello insisted he backed the note out of pure friendship. In. executive session, he had not mentioned the simultaneous negotiations that Haim and Kastel were conducting to have Costello take over as American good-will man, an operation which would have given Costello at least $30,000 a year and $25,000 in expenses, to act as promoter for the products of this company. The deal fell through, Costello stated, because of the objections of the attorney for Hells to the Costello connection. Costello insisted to the committee that thereafter he had no further interest in Whitely Distributors, even though Haim and Helis did eventually buy the concern. If he told a Federal agent in 1938 that he had an interest in Whitely, he might have been "optimistic," Costello explained.

He denied that he ever received any money or income from Whitely. He couldn't recall a telephone conversation in which; early in a morning in June of 1943, he had called his wife to tell her that an envelope would come from Irving Haim at 5 o'clock, that if she were not planning to be home he would have to make other arrangements, and that she knew where to put it. He denied flatly that it could have been money. Confronted with the fact that two of his friends, Judge Aurelio and Abe Rosenthal, Aurelio's district leader, had testified in 1943 that Costello told them when they were in his house that the liquor he was serving was one in which he had an interest, Costello said that be must have been boasting or that what he meant was he had an interest in Kastel who had an interest, in the business. Committee counsel pointed out that Kastel had left the business in 1940. Confronted with the fact that in applying for the lease on his present apartment, Costello had put himself down as general manager of the distributing company for Whitely, Costello said he was anxious for a place to live and his statement was just a white lie. Asked why Sam Haas, an attorney in hiding from a subpena in connection with gambling operations in Ohio, would have had Costello down in his telephone book as available at the office of this liquor company, Costello said that maybe he told him he could get him there through Kastel. He could not remember the telephone calls to him there from Haas, of which the committee had evidence.

All of the above reeks of perjury and it should be carefully examined by the United States Attorney to see if the crime of perjury, as technically defined, was committed by Costello.

V. Costello's naturalization

Costello was naturalized in 1925. In the last section, reference was made to apparently untrue statements in his application for naturalization and to his patently false oath to uphold the constitution and laws of the United States taken when he became a citizen.

In addition, Costello admitted under examination by the committee that in his application for citizenship, he failed to reveal that he had used alias "Frank Severio" because had he done so, the Immigration authorities would have learned that he had been convicted of illegal possession of a gun under this name, and it was his understanding that his citizenship application would have been delayed. He admitted having revealed in his citizenship application other aliases which were innocuous because he had not been convicted of crime under these names.

The committee understands that the New York office of the Bureau of Immigration and Naturalization at least once recommended the revocation of Costello's naturalization because of fraud. The committee heartily agrees with this recommendation and urges that prompt attention be given to this matter. Costello has also admitted that, since becoming a citizen, he has engaged in illegal bootlegging and illegal slot machine and gambling operations. The committee believes that he is an outstanding gambling operator. There is no question that he has been a strong and evil influence on New York politics. On the other hand, by his own admission, he has never taken the trouble to exercise his duty as a citizen to cast a vote in an election.

The question of whether or not Costello could or should be deported after his naturalization has been revoked is open to some question. It is probable that under existing laws, he could not be deported as his record now stands, but there is every reason to believe that if he is convicted for perjury he has committed before this committee, and if he is convicted for his present illegal gambling activities in the State of Louisiana, that he will probably be subject to deportation. This matter requires careful study and aggressive action.

VI. The "net worth" of Costello

When Senator Tobey asked O'Dwyer what he considered the basis of Costello's appeal to politicians, O'Dwyer replied, "It doesn't matter whether it is a banker, a businessman, or a gangster, his pocketbook is always attractive." The committee made strenuous efforts to find out what was in Costello's pocketbook. In executive session, his counsel had promised to produce a statement of net worth within 2 weeks. This was in the form of a stipulation made in Costello's presence and with his consent. At the open hearings he refused it on the grounds that the interim report of the committee was so prejudicial to the witness as to make any reply to the question of net worth incriminatory. On this point as on others, after considerable questioning and continued refusals to answer, Costello has been cited for contempt.

The committee brought out whatever indications of his wealth it could find. His affluent mode of living has already been mentioned. He had made oil investments of over $40,000. He made a profit of approximately $119,000 on his sale of 79 Wall Street in 1950. His wife owned the house at Sands Point purchased 7 years ago for about $30,000. She owned a few lots in Florida valued at $7,500. In 1949, Costello had reported an income of some $16,000 in bets out of a total reported of $29,000. His receipt of $60,000 from Levy has already been commented upon. Costello admitted to having in a strong box in his home some $40,000 in cash; and another $5,000 in cash secreted in his summer place. He had bank accounts of about $100,000. His annual income from the Louisiana Mint Co. had run around $70,000 a year. That his name was acceptable on a note of $325,000 in 1938 was an indication that he was held to be a man of wealth even then. He receives an apparently unearned monthly salary of $1,000 or $1,500 from the Beverly Club. The $27,000 he had lost in a taxicab a few years ago, he stated, represented the return of moneys Kastel owed him, plus a loan in cash of $15,000 from his brother-in-law which he might have needed for a real-estate deal. Costello explained that money was taken in cash because he might no have been able to get a check cashed quickly, although he had $100,000 in the bank. Costello admitted that he now owes Erickson, the big bookmaker, $30,000. He also had borrowed $50,000 in two installments from Erickson at about the time he purchased the 79 Wall Street parcel for $55,000 cash over the $250,000 mortgage. He denied knowing whether or not this loan from Erickson had anything to do with Erickson's borrowing at about the same time $100,000 from a Mr. Gallagher, president of the Pennsylvania Exchange Bank, an acquaintance of his of many years. The committee received no satisfactory reply to the question why he borrowed so much money from Erickson at a time when he seemed to have ample funds of his own and when he disclaimed any interest in Erickson's operations. Costello's only reply was he did not want to leave himself short.

VII. Costello's relations with gangsters and racketeers

The New York syndicate is headed by Frank Costello, Meyer Lansky, and Joe Adonis. Willie Moretti and others, including Abner ("Longie") Zwillman, Vito Genovese, and Joseph Profaci figure in the picture. Others might be mentioned with these, hut the recital of additional names would add little to the outline.

The one most important exception is Charley "Lucky" Luciano, who together with Costello succeeded to the leadership of the New York gang during the prohibition era. Luciano was convicted during the 1930's by present Governor Thomas E. Dewey, but while in prison apparently continued to maintain his contacts with the mob. Meyer Lansky, in particular, worked to effect Luciano's release on parole which took place in 1946. The parole itself has been subject to much question, having originally been primarily justified in the public eyes by assertions that Luciano had rendered unusually valuable service to this country during the war. On an investigation by this committee, it appeared that Meyer Lansky had arranged for the transmission of certain information from Luciano to the Intelligence Service of the United States Navy. There was no evaluation of this information whatsoever. One Charles R. Haffenden, who wrote a letter supporting the parole and stating that the services were of great value, testified before the committee that he had no knowledge at all as to the value of the services, but that he had written a letter while in a hospital recuperating from war wounds and had simply attempted to be generous at the request of Luciano's counsel. It now appears that the parole must be justified on some basis other than that of Luciano's contribution to the war effort.

On Luciano's release from prison, Lansky and Costello went to Ellis Island to say good-by to him. They were alone with him for at least a half hour. Two years later, when Luciano managed to enter Cuba, Costello met him there; Lansky actually went to Italy and saw Luciano in that country. Luciano was visited by practically every top hoodlum while he was in Cuba. Moreover, the night before Luciano sailed, while he was still being held under guard for deportation, his friends were permitted to come aboard and hold a party for him bringing with them tubs of food and wines. Although the Immigration guards remained at a discreet distance while the party was in progress, the Immigration authorities were never able thereafter to prove that such a party had been held, and in fact their records show that no party was held. Since then, the committee has obtained evidence satisfactory to itself that there was such a party and that the boat was protected during this period by a group of longshoremen who refused to let outsiders, including newspapermen, aboard.

Costello, Lansky, and Adonis were in the television business together in 1949. They are all admittedly close friends. They were all in the Piping Rock Casino together in 1933. Lansky and Adonis were in the gambling business together in the Colonial Inn in Florida, and Lansky and Costello were partners in the Beverly Club in New Orleans. As recently as the summer of 1950, Adonis spent several weeks at Hot Springs with Ed McGrath, a notorious water-front racketeer, occupying the same suite. McGrath is the brother-in-law of James "Cock Eye" Dunn, who was recently electrocuted for a water-front murder. Shortly before Dunn's apprehension for this murder, he vacationed in Miami with Lansky. Anastasia, who was the head of the enforcement division of Murder, Inc., was stated by William O'Dwyer to have been an underling of Adonis. Albert Anastasia, and his brother Anthony, are leading powers on the water front, and Albert Anastasia has moved into a mansion located only five blocks from Adonis's home in New Jersey. These interrelationships will give some idea of the close ties between the various members of the New York mob in the various rackets.

With men of known criminal and racketeering records, Costello had close business and personal relationships. Frank Erickson was a close friend. He was a third member of the golf foursome in which Costello and Levy played regularly. The fourth was an internal revenue agent who now enjoys a $4,000 annual income on a $200 investment in the raceway in which Levy was interested. Erickson admitted they played once a week up to the time of his conviction. While most of his legitimate business deals were through his counsel, George Wolf, Costello admitted that his oil investments were made on the casual invitation of Erickson. When Costello needed large sums of money, he borrowed from Erickson.

Costello's relationship to Willie Moretti, one of New Jersey's gambling overlords, seems to the committee to be that of boss and follower although Costello denied they were anything but close intimate friends of such long standing that he was godfather to Moretti's oldest child. A series of telephone conversations to and about Moretti indicates much more than a purely social relationship. According to grand-jury testimony, Moretti called Costello 130 times in 5 months ending in 1943. When Moretti became ill, began to have hallucinations and talk too much, Costello admitted he might have suggested a friend that he go away. That Moretti called him "Chief" when he telephoned, was nothing, Costello said; they called each other that. But the committee had no record of any calls in which Costello called Moretti "Chief." In one conversation, Costello reported to a friend, "I will keep him out there at least a month more." When Moretti's brother Solly called to say Willie wanted to come home to take his wife to a doctor, Costello replied that he had to stay out there. Costello called a doctor to ask him to telephone Moretti in California and see what he thought of his conversation and let him know.

Meyer Lansky had an interest in the Beverly Club when it first opened; his brother Jack was a partner of Costello’s in the Louisiana Mint Co. in New Orleans and in the Piping Rock Casino in Saratoga Springs. Before the committee in Washington, Longie Zwillman confirmed Costello's testimony that they know each other very well. Costello admitted that Jerry Catena, another Nov Jersey gambler associate of Moretti, had been with him in New Orleans and Habana on a visit. Joe Adonis, Costello stated, was a very good friend of his. "Socks" Lanza, another notorious New York racketeer, had visited his home. Costello had told a 1943 grand jury that Lucky Luciano was an acquaintance. He admitted to the committee that he knew Luciano very well. He went with Luciano's attorney, Mr. Polakoff, and with Meyer Lansky to see him off, on the day of his deportation in 1946. Another witness, George White, narcotics agent stated that in their company at the time was Albert Anastasia. Costello also admitted that he saw Luciano about a year later in Havana.

His out-of-town acquaintanceship and relations with gangsters and racketeers was equally extensive. Costello maintained that he did not know that Carlos Marcello, one of the worst criminals in the country, was in the Beverly Club partnership until after the club opened. The articles of incorporation of this club, however, showed that Marcello was not only one of the incorporators but was also the registered agent for the club. Kastel himself, as Costello finally admitted, had a criminal record for stock fraud. Bugsy Siegel, Costello said, he knew from New York. He knew the two Fischettis, Tony Accardo, and Jacob Guzik, of the Chicago mob but denied any business dealings with them. He knew Tony Gizzo, characterized as the traveling secretary of the Kansas mob, but none of the other members. He had spent time with Arthur Samish of California in Hot Springs; their meetings were by chance. It was just accident that he knew all these people, Costello told the committee. Many of these gangsters and racketeers were in Florida at the same time as Costello last year. Costello denied having seen any of them except Moretti and a New Jersey gangster named Nick Delmore. He denied there was a convention there, and branded as ridiculous the statement that there was a convention in Atlantic City at which the territory for gambling throughout the United States was divided up.

VIII. Costello's influence in politics

Questioning revealed that Costello is now friendly with many Democratic district leaders in Nov York City. He stated that he knows the leader of Tammany, Carmine DeSapio, very well. Of the 16 districts in Manhattan, Costello knows, with varying degrees of intimacy, leaders, coleaders, or both, in at least 10 districts. Some like Sam Cantor and Frank Mancuso he had known over a period of 30 years or more; they were intimate friends who came to his home for dinner. In another district, the leader was Louis De Salvio, not only a friend but the son of a former leader and long-time friend, the late Jimmie Kelly, and the brother-in-law of Little Augie Pisano, a well-known mobster. Another acquaintance of 4 or 5 years was the leader of the second district, Vincent Viggiano, cousin of "Socks" Lanza, the fish-pier extortionist, and cousin of the former leader, Dr. Paul Sarubbi. Al Toplitz, until recently both a district leader and chief clerk of the board of elections, had been, like Cantor, a guest of Costello's at his home for Thanksgiving dinner in 1950 and was an old friend. One of his predecessors in the board of elections, Abe Rosenthal, had likewise been a good friend of Costello's. Mancuso, in addition to being a district leader, had held an executive position in Tammany Hall.

While James Moran testified that he met Costello only casually, bumping into him here and there by accident, Costello characterized him as a friend, intimate enough to drop in to see him for cocktails. Irving Sherman, Costello testified, he saw with great frequency. He knew that Sherman worked for O'Dwyer's election.

Asked what was the basis of his ability to influence these politicians Costello said it was hard to explain. He thought it stemmed from the fact that he had lived all his life in Manhattan. "I know them, know them well, and maybe they got a little confidence in one." He had never voted, Costello testified, never made a political contribution; never belonged to any political organization. He denied that his influence was based on fear; that he was in a position one way or another to defeat a candidate in the primaries. Nor would his help be enough to elect anyone. He disclaimed any modesty; he was simply not a politician, just a friend of some politicians.

Costello denied that he had had any part in defeating Paddy Sullivan in a primary campaign. He had asked Sullivan's support in 1942, when he tried to put over Fay as leader, and Sullivan had refused to commit himself on the ground that he did not wish to support anyone who had the support of Neal, one of the leaders close to Costello. Some time later, Sullivan was defeated in a primary fight. Costello would not deny that he might have offered to help Sullivan in his primary campaign in return for his support, but denied any share in Sullivan's defeat.

Costello reached the height of his power in New York politics in 1942 when he unquestionably had complete domination over Tammany Hall. At that time, Costello supported: Kennedy for leader of the hall. Kennedy was Costello's second choice as Costello originally favored Neal's candidate, Fay. However, Costello and Neal decided that they could not bring about Fay's election, and then Costello brought Kennedy into the picture. Without Costello's support, Kennedy would not have had a chance, Costello being able to control the votes of Abe Rosenthal, Dr. Sarubbi, Jimmy Kelly, and Neal and being able to influence the votes of several others, provided a nucleus which he was able to use to bring about Kennedy's election. Costello admitted that Kennedy "might be obligated to him." The fact is that Kennedy was Costello's man.

So close was the relationship between Costello and Kennedy that when Dr. Sarubbi and Abe Rosenthal sought to bring about the nomination of Thomas Aurelio for the supreme court, they went to Costello rather than to Kennedy. Costello asked Kennedy to support the nomination and Kennedy agreed. In the following months, Aurelio's supporters among the leaders at least twice felt that Kennedy might weaken in his determination and swing his support to another candidate. Both times they called upon Costello for help. Both times Castello went to Kennedy and reminded him of his promise. On one occasion, he said to Kennedy:

My word is as good as my bond. You gave me a commitment. Are you a man or a mouse? Aurelio received the nomination and was reelected to the supreme court.

It is well known that Aurelio telephoned Costello to thank him and pledged his undying loyalty. It is equally well known that the district attorney of New York County, Frank Hogan, at that time had a legal wire tap on Costello's phone. As a result, Hogan was able to conduct a very extensive grand jury investigation, and also conducted disbarment proceedings against Aurelio which resulted in findings in Aurelio's favor. The testimony in these proceedings and the wire taps themselves were extremely helpful to the committee. The wire taps in particular gave a vivid picture of Frank Costello as a political boss and an underworld emperor. They reveal him as a busy man conducting his affairs on the telephone from 8 to 10 in the morning, talking to people all over the country about business relating primarily to slot machines and numerous other matters in which the conversation reeks of criminality. They reveal him as a king maker who received calls not only from Judge Aurelio, but also from Judge Savarese, from Loscalso, whom O'Dwyer later appointed a judge, and a large assortment of other political figures. All showed the utmost deference for the ruler.

When Costello finished his telephoning, he leisurely went to the barber shop at the Waldorf-Astoria Hotel where those in the know could meet him and arrange their business. Then he would proceed to lunch at one or another of the large hotel. In the afternoon, if he did not play golf, he would eventually go to the bar at the Copacabana night club, at the Waldorf, at the Hotel Madison, or some other expensive place. There he would meet those who had been told they could find him. After the Copacabana night club was opened, arrangements to meet Costello at one or another of these places, would be made by phoning the Copacabana where one of the employees was kept informed of such matters and was able to advise the proper people.

A typical example of Costello's excellent arrangements along these lines was a little dinner arranged with Judge Aurelio who informed him that Kennedy had definitely committed himself. Aurelio and Rosenthal were to proceed to dinner and to meet Costello there, but first Costello arranged to meet Kennedy and some of the leaders at a nearby bar. With everything settled, Costello proceeded to his dinner date to tell the news to Aurelio. He graciously remarked that he would like to know Aurelio better and would be willing to have him to dinner at his apartment.

When Kennedy decided that Dr. Sarubbi was becoming too ill to handle his duties as a leader, he asked Costello to talk to Sarubbi. When Sarubbi wanted his son-in-law appointed to the bench, which later occurred, he apparently talked to Costello about it because Costello remarked on one telephone call that Sarubbi wanted his son-in-law made a judge. When Loscalzo was an up and coming assistant district attorney in Queens, he took a trip out to Costello's golf club in order to meet Costello in the hope that Costello would put a good word in for him with Kennedy.

Costello's influence certainly did not end when Kennedy left the leadership of Tammany Hall. He has testified that he was on very friendly terms with James Moran, Costello's close friend and appointee, and that he was on very intimate terms with Irving Sherman. During the Tammany leadership of Hugo Rogers, Costello again rode very high. Despite Costello's assertions that the Aurelio revelations drove him out of politics, the fact remains that Hugo Rogers came to Costello's home for breakfast after the election of 1945. Costello testified that they did not talk politics, but when Rogers was leader of Tammany, as recently as 1948, Frank Mancuso was admittedly the man to see in order to accomplish anything with Rogers. Costello did not hesitate to admit that Frank Mancuso was his very intimate friend. During the Rogers regime at Tammany Hall, four members of the Tammany steering committee were all very good friends of Costello; Mancuso, Harry Brickman, Sidney Moses, and DeSapio.

Costello told the committee that after the public furor over the Aurelio revelations, he absolutely divorced himself from any participation in politics. If he meets his political friends, they talk and have a drink but if the talk goes to polities, Costello said, he pays no attention. While he admitted that district leaders usually talk politics when they get together, "With me they sort of curb their conversation because they know I am against it, I don't want to hear about it no more, since 1943."

That was his explanation for having heard nothing from Irving Sherman about his assistance to O'Dwyer from 1943 to 1945 except that he was for him. Even if he did invite Hugo Rogers to his house for breakfast after Rogers' election in 1945, Costello was sure they didn't talk politics. Nor was there any politics at his Thanksgiving Day gathering last year when two of his guests were a leader from the Harlem district and the former chief clerk of the board of elections, now in the corporation counsel's office.

He denied having said a kind word for Loscalzo whom O'Dwyer later appointed judge, although he admitted that Loscalzo had come all the way out to a golf course to see him and ask him to put in a good word and introduce him to Kennedy. Nor had he had anything to do with proposing Louis Valente as candidate for surrogate. The luncheon which he attended with Mancuso, Generoso Pope, Sr., DeSapio, and Judge Valente was to plan their part in a charity drive in which Pope was interested. But Costello couldn't remember what the charity was. The drive had never taken place; nor could Costello remember what part he was supposed to have taken in it, or what assignments the other political leaders had. Driven to admitting that this was contrary to his executive session testimony, Costello finally would not deny specifically that the subject of the Valente candidacy had ever come up. He simply couldn't remember. Nor would Costello admit that he had ever said a kind word for Judge Lupiano, a son-in-law of his friend, the late Dr. Sarubbi. He conceded that he might have said over the telephone that he thought maybe Sarubbi wanted to make a judge out of him.

That Costello's influence has continued down to the present day was the impression of Charles Lipsky, a friend of O'Dwyer, who testified that when O'Dwyer said he would not run in 1949, he got Sherman to take him out to see Costello in an attempt to win Costello's support for his candidate for mayor. The following year when O'Dwyer resigned and there was to be a special election, Lipsky stated, he tried to get Adonis to see Costello on the same errand.

It is apparent to the committee that despite Costello's protestations, his sinister influence is still strong in the councils of the Democratic Party organization of New York County.

THE TESTIMONY OF WILLIAM O'DWYER I. His career and views on crime

In an hour-long statement Ambassador O'Dwyer outlined for the committee his qualifications for speaking as an expert on the matters under the committee's consideration. He testified that he had been a member of the New York City police force from 1917 to 1924 - the years of upheaval and the serious problems of prohibition following the First World War. Before 1917, Mr. O'Dwyer stated, crime was localized and without honor. But the disrespect for law which prohibition created, made criminals acceptable to many people and, therefore, respectable. The lush living the bootleggers enjoyed as the result of their illicit liquor traffic, made them enviable, especially in the slum districts from which they recruited their helpers. Even the Nation-wide syndication of crime as we know it today, Mr. O'Dwyer traced to the exigencies of the liquor traffic. Every bootlegger who took a load of liquor from one place to another, was in danger of hijacking by another bootlegger. They organized armed gangs to protect their trucks. Rather than shoot each other up, they soon formed alliances. Necessarily, these were wholly in the hands of law violators. But there had to be some rules, and an enforcement agency in the Underworld. In addition, the bootleggers corrupted the police. These were changes which took place before O'Dwyer left the police force in 1924.

He left the police department in order to practice law, having studied law at night while still a patrolman. For the next 7 years O'Dwyer practiced law. Then Mayor McKee appointed him to the magistrate's court, where among the other troubles of the ill-housed, ill-fed, ill-clad slum dwellers who came before him, he had an opportunity to observe the evil effects of the slot-machine, which he said, he wholly eliminated when he later became mayor. After reviewing his efforts to alleviate some of the evils revealed to him during his service as magistrate, O'Dwyer pointed out that he was appointed a county court judge late in 1937 by Governor Lehman, and was elected a year later for a full 14-year term. Two years later, he was elected district attorney of King's County. He took office on January 1, 1940, at a time when racketeering conditions were so notorious that a special prosecutor John Harlan Amen, had already been assigned to study rackets in Brooklyn, including gambling. After 2 1/2 years as district attorney, O'Dwyer left to enter the Army. He returned to the district attorney's office briefly in 1945 while he served simultaneously on the war-refugee board. He resigned in 1945 to become the Democratic candidate for mayor. He served as mayor for 5 years, resigning less than a year after his second election to take his present post as Ambassador to Mexico.

O'Dwyer testified at considerable length, and also presented voluminous and interesting documentary material concerning his accomplishments as mayor. The committee does not have jurisdiction to go into the merits of the many social and community contributions to which O'Dwyer alluded, but it has carefully noted them and unquestionably he accomplished many noteworthy achievements. Certainly it would be unfair to give the impression that the matters in which this committee is interested give anything like a complete picture of O'Dwyer's accomplishments in public office.

II. Murder, Inc.

O'Dwyer had spent 2 1/2 years as Kings County district attorney tracking down and prosecuting the group of notorious killers known as Murder, Inc. His office had managed to indict a number of young gangsters for stealing cars which were later used in the commission of murders, of which about 20 had been committed in 1 year. One of these gangsters was Abe Reles who was induced to turn State's evidence. From him and other witnesses O'Dwyer's office learned that there was a clear-cut well-planned criminal organization covering the entire country. Jurisdiction of various criminal enterprises was allocated to certain individuals. There was a judicial set-up, a kangaroo court holding trials at various places all over the country concerning violations of jurisdictional rules and regulations at various places. In certain sections of the country the "combination" had men to carry out the one order these kangaroo courts issued, namely, death. The executioners were organized into "troops" and only one person was authorized to direct them in carrying out any killings. O'Dwyer learned that the organization was ruled by what the underworld termed the "combination." There was no chief man in charge.

There was a mutual understanding among the members of the underworld in various cities throughout the United States. They agreed to things among themselves. Payment to the "troops" O'Dwyer stated was not in money but in jurisdiction of specific illegal activities in particular areas, from which they collected enough money to keep them going. In return for this privilege, the individual members of the "troops" were required to carry out any orders they might receive. According to O'Dwyer, the man who directed all the killings done by the Brooklyn group and the leader of the Brooklyn "troops" was Albert Anastasia.

O'Dwyer had told a grand jury in 1945, which had investigated the conduct of his office, that Anastasia's boss was Joe Adonis. O'Dwyer said Reles had told him Adonis was one of the six big bosses of the combination. O'Dwyer stated that besides Adonis, who had the gambling concession, the other big men were Bugsy Siegel, who had the west coast; his partner, Meyer Lansky, who, in addition to gambling, went in for such things as narcotics; Luciano, who was regarded as very big; Longie Zwillman, and Willie Moretti. Costello, O'Dwyer said, was never mentioned in connection with murders in Brooklyn. He was only mentioned along with several other persons in connection with the turning in of Lepke, narcotics king and killer who was later tried and executed.

Of the men whom O'Dwyer identified as the big six, all were friends or associates of Costello. Adonis, Zwillman, Moretti, and Lansky appeared at one time or another before the committee as did Albert Anastasia. Luciano is in Italy, a deportee since 1946, following a 9-year incarceration here. Bugsy Siegel was murdered in typical gangland fashion on the west coast.

Despite the excellent positive accomplishments of the Murder, Inc. prosecutions, it became apparent when the work was examined in retrospect that there were many glaring deficiencies. None of the top six were prosecuted or even touched in the investigation, with the exception of Bugsy Siegel, who was indicted in California and in whose case, O'Dwyer refuse to produces Reles as a witness at the trial although he did produce him before the grand jury in California. As a result, Siegel never was tried.

Even Albert Anastasia, described by O'Dwyer as the boss murderer, below the top six, was not indicted. Several other major characters appear to have escaped prosecution, and the very promising investigation of the water front in Brooklyn, then controlled by Anastasia, was allowed to die. Although O'Dwyer had explanations for all of these matters, a grand jury was convened in Kings County in 1945 to discover the reasons for these failures. The grand jury handed down two presentments; the first in October just before the November election at which O'Dwyer won the mayoralty, and the second late in December. The October presentment strongly condemned the conduct of the district attorney's office and made serious charges in connection with the failure to prosecute Anastasia and to proceed with the water-front investigation. Between the first presentment and the second presentment, but after the election, O'Dwyer testified before the grand jury. He stated:

Question by the grand jury. You have heard the evidence, Mr. O'Dwyer, which we have heard and known for many weeks and which was the basis for our presentment? Answer. Yes.

Question. Now will you agree with us that we were right in handing up the presentment?

Answer. Yes. I agree that the presentment was fully justified and I will say so at any time.

The grand jury found in its second presentment:

1. We find that every case against Anastasia was abandoned, neglected, or pigeon-holed.

2. We find that William O'Dwyer, as district attorney, and Edward A. Heffernan, chief of staff, failed and neglected to complete a single prosecution against Anastasia.

3. We find that there admittedly was available competent legal evidence, sufficient to warrant the indictment, conviction, and punishment of Anastasia for murder in a case described by William O'Dwyer himself, as "a perfect murder case."

The grand jury attributed this to "negligence, incompetence, and flagrant irresponsibility" and stated that there was no satisfactory explanation.

O'Dwyer has branded the grand jury presentments as political documents, inspired by a mayoralty campaign, although the second presentment was handed down a month and a half after election. He asserts that the presentments were expunged from the record and that the judge who expunged them referred to their political inspiration. While these matters as stated are true, they do not represent the whole facts. The presentments were expunged on the technical ground that they contained recitations of evidence, but behind the presentments are many volumes of sworn grand jury testimony, including that of O'Dwyer and this testimony stands on the record and fully supports the grand jury conclusions. In fact, O'Dwyer agrees that there was a serious failure, but he asserts that the fault is not his but should be attributed to his subordinates and the acting district attorney who took over when O'Dwyer entered the Army in 1942.

The foreman and acting foreman of the grand jury have written to this committee stating that 22 public-spirited citizens, carefully selected and without ulterior motives, acted only on sworn testimony and that they resent any inference that they were influenced by anything but the testimony before them, including that of O'Dwyer.

III. The failure to prosecute Albert Anastasia

Mr. O'Dwyer told the committee that he had had only one case against Albert Anastasia, the murder of Diamond, in which the independent witnesses required by law were available. One of these witnesses was a small sickly boy, who actually saw Jack Parisi shoot Diamond. The other was Reles who said he had been with Anastasia when the details of the murder were planned and could place him in the murder car at the corner some distance away from the actual crime. This was the "perfect case" to which he had referred, when he testified before the grand jury.

But in the 20 months Reles was held under guard, consisting of six policemen at the Half Moon Hotel on the theory that he would be safer from gang retaliation there, than in prison, O'Dwyer admitted he had not prosecuted Anastasia nor had he even sought an indictment against him.

As soon as it became known that an investigation was under way and could not be stopped Anastasia and Parisi disappeared, according to O'Dwyer. Fearing that the gangsters might endanger the life of the young witness or his parents, O'Dwyer stated that he did not seek an indictment, since the child would have to be used as a witness. Asked why he did not indict Anastasia alone since for that he needed only Reles and the driver of the murder car, Julie Catalano, who was also available, O'Dwyer explained that where two men are involved in a crime, it is impractical to indict and try them separately. Furthermore, he said he was very busy with other murder cases and even if Anastasia was one of the worst criminals in America "you don't stop prosecuting other murders that are ready to proceed while you are waiting to get him."

Reles, O'Dwyer admitted, did implicate Adonis in one case. Asked why he didn't proceed against Adonis, O'Dwyer explained that Amen had arrested Adonis, and had talked to Reles. Furthermore, the idea of getting Reles before the grand jury and asking him what he had to say about Adonis was one of the things that had never occurred to him.

Reles was also a witness in a murder charged against Bugsy Siegel. The first time Roles was brought out to testify, O'Dwyer explained, something was wrong with the indictment and Siegel was released. O'Dwyer said he thought Roles was there when the second indictment was returned. But a newspaper account indicated that O'Dwyer appeared before the California judge himself, justifying his refusal to bring Reles to California because his primary obligation was to the people of his own jurisdiction. He was reported as saying that he did not want to risk having his Brooklyn cases discredited by the failure of the testimony to convict Siegel in California. With the collaboration of the local district attorney according to the newspaper report, O'Dwyer argued for Siegel's dismissal. However, O'Dwyer told the committee, that the reason Siegel could not be convicted in California was because of Reles' death.

O'Dwyer's perfect case against Anastasia became imperfect when Reles died. Shortly after 5 one morning in November of 1941, Reles’ body was found, fully clothed, on a balcony of the Half Moon Hotel, five stories beneath his room. A sheet on which presumably he had lowered himself dangled against the wall. According to O'Dwyer, Reles died trying to escape, although at another point he testified that Reles was terrified of gang retribution.

According to Frank Bals, who was the chief investigator in the district attorney's office, and the immediate superior of the police guard, Reles was trying to play a joke on his guard. He was attempting to reach the lower floor, re-enter the hotel, climb back upstairs, and confound the policemen outside his door. Asked how Roles could have made his preparations without the guards hearing anything, Bals explained to the committee they must all have fallen asleep. O'Dwyer rejected the contention that Roles was thrown out the window, based on pictures showing that the body fell farther from the building than it would have, if Roles went out of the building on his own power. O'Dwyer also rejected Bals' theory.

Asked what he did to establish responsibility for the loss of his most important witness against a top-ranking murderer, O'Dwyer explained that he and the police commissioner considered it a pure case of negligence on the part of the police officers. The best that could be done was to provide a departmental trial for the six police guards. O'Dwyer conceded he had appeared as a voluntary witness on behalf of the men at the trial, stating they were blameless. Nevertheless, they were demoted.

If the men were blameless, O'Dwyer was asked, was not their superior responsible for setting up a faulty system of protecting the witness? He had reviewed the set-up at the beginning, O'Dwyer said, and thought it adequate. He did not learn until afterward that Reles was assigned alone to a room at the end of a corridor and that guarding him consisted of having a policeman walk down the corridor once an hour and look at him. But he insisted that Bals, who was in charge of the detail, could not be held responsible for something which happened in the dead of night, when he was not there, even though he was the one who assigned the men to their task and supervised the arrangements.

O'Dwyer told the committee he could not have gotten an indictment against Anastasia after Reles’ death which would have stood up. If, as the grand jury presentment stated, he had not issued instructions to his successors about the case, it was because it was wholly unnecessary. The man who was taking over was an experienced lawyer who had been practicing 20 years longer than O'Dwyer himself. He had been in the office a year and a half and knew what was going on. Moreover, the other three men who with O'Dwyer had been in complete charge of the Murder, Inc., cases - Moran, Bals, and Heffernan - continued in the district attorney's office. If nothing was done after he left the office, it must have been because their superiors gave them no orders. Before he left, O'Dwyer stated, he had had Burton Turkus, the indictment lawyer, prepare a review of the case, and his report on file indicated that while there was no case against Anastasia at the time, the man's record was such that the investigation should be carried on.

Nor would O'Dwyer concede to the committee that the removal apparently on Moran's order of the wanted cards on Anastasia, Romeo, and several other racketeers from the police files condemned in the grand jury presentment, was of any significance. Yet within a shart time after the removal of the cards, Anastasia and Romeo returned to Brooklyn. Anastasia entered the United States Army. Everybody knew, O'Dwyer said, that the men were wanted, cards or no cards. The grand jury was wrong in asserting that their removal indicated to those whom he left in the office that there was no case against the men. Nor, according to O'Dwyer, was the removal of the cards responsible for the release without questioning of Romeo (who could have been an important witness against Anastasia) when he was held in the magistrate's court on another charge. Romeo was found dead in a river near Wilmington, Del., 2 weeks later. Since the removal of the cards was unimportant there was no reason for reprimanding Moran when O'Dwyer returned to his office in 1945.

During his Army service, O'Dwyer stated, he couldn't be expected to find time to make any inquiries about the conduct of the case against Anastasia, which he admitted was the most important in his career. He had no recollection of a busy conference (6 hours) in the district attorney's office, 6 months after he left, which a newspaper account characterized as "making the office hum" and looked almost like old times, when. O'Dwyer was in the thick of the Murder, Inc., prosecutions. Nor did he recollect that he stated that he had reviewed the work of the office and that he highly praised the work of the acting district attorney.

It was apparent to the committee that O'Dwyer held no grudge against either Bals or Moran for their respective roles in the death of Reles and the inactivity against Anastasia. Moran, without any legal training, had been O'Dwyer's personal choice for chief clerk of the district attorney's office. He had brought him in from the county court where he had served as the court attendant. He had the power to open and close investigations and was one of three persons authorized to begin grand jury investigations. All during O'Dwyer's Army service Moran handled O'Dwyer's personal financial affairs.

He had such regard for Moran's ability, intelligence, and loyalty, O'Dwyer said, that when he became mayor he made Moran a deputy fire commissioner and, shortly before his resignation, gave him a life job as commissioner of the board of water supply, where, though he had no engineering training, he could, by virtue of his position, over-rule decisions made by engineers.

This is the same Moran who was visited regularly in his office in the fire department by Louis Weber, a well-known policy racketeer.

When O'Dwyer was asked whether he could think of any proper reason which Moran could have for seeing Weber at regular intervals, he said that he could not. Both Moran and Weber are now under indictment for perjury before this committee. Moran denied that Weber had visited him between three and six times in the 4 years he was in the fire department. Weber denied that he even knew Moran. In addition to the contradictions between the stories of Moran and Weber, both were contradicted by the fireman who was on duty outside of Moran's office and who testified that Weber visited Moran much more often and on a regular basis, approximately once a month. The testimony of this fireman has since been corroborated by the committee. This is the same Moran to whom John Crane, president of the Uniformed Firemen's Association, said he gave $55,000 of the funds of the association as a gift, because it was necessary to do so in order to keep Moran’s friendship and to obtain justice for the firemen from Moran. The entire matter of Crane's testimony is discussed below.

Bals, similarly, was so close a friend that, as Bals himself testified, the day O'Dwyer returned from California to take up his duties as the newly elected mayor of New York City, Bals met him at the airport, and they discussed what his function in the new administration should be. The day after O'Dwyer took his oath of office, Bals was appointed seventh deputy police commissioner. He was able to resign less than 2 years later, with a pension of $6,000, an income $1,000 larger than any he had earned in any previous position on the police force.Bal's history in the post of seventh deputy police commissioner is discussed below.

IV. O'Dwyer and the water front

"There was never any doubt in my mind," stated O'Dwyer, "that Anastasia really owned that water front and had strong henchmen, too." It is obvious that one of the ways of breaking Anastasia's stranglehold on the water front was through a prosecution for the larcenies, extortions, and shake-downs in which he was involved. No such prosecution was instituted against Anastasia. The Brooklyn grand jury found in its December 1945 presentment:

14. We find that the proof against Anastasia was neglected, disregarded, and deposited in the office files and vaults until prosecution was barred by the Statute of Limitations.[2] John Harlan Amen, who had been appointed special prosecutor to inquire into corruption in Kings County, had started a water-front investigation into the affairs of the six racketeering unions that Anastasia controlled (the so-called Camarda unions). Amen had to institute court proceedings in order to get possession of the books of these unions.

On April 30, 1940, the day after the Supreme Court directed the production of the books and records, but before the order could be signed, O'Dwyer instituted his own investigation of the water front. The books and records for which Amen had been fighting were brought directly to O'Dwyer's office. There was an intensive 3-day investigation by his staff; in 1 night over 100 witnesses were questioned.

From these witnesses, O'Dwyer stated to the committee it was learned that Anastasia and Romeo and other gangsters had been stealing hundreds of thousands of dollars from unions and had destroyed their original books.

Three days later, Heffernan, one of Mr. O'Dwyer's assistants, began grand-jury proceedings, and testimony before it showed crimes of extortion, larceny of union funds, destruction of union books and falsification of new ones, kick-backs in wages for the benefit of the racketeers. When O'Dwyer started his investigation, Amen suspended his own and turned all his records over to O'Dwyer's office. Two weeks later the O'Dwyer investigation was suspended.

They had, O'Dwyer said, as much information as they needed on the extortion cases. With his small staff he couldn't handle everything at once. He felt the emphasis should be on the murder cases. There would be 2 or 3 years left before the statute of limitations ran out on the extortion cases.

O'Dwyer admitted that he had never ordered the water-front investigation reopened and that in consequence his suspension resulted in a complete discontinuance. While he was in the office before he went into the Army, he said, he had no time; he was busy with the murder cases. O'Dwyer told both this committee and the grand jury that he had a right to expect that the acting district attorney would reopen the prosecution of the water-front rackets.

But the grand jury found, and the evidence shows:

"12. We find that William O'Dwyer himself did nothing further about them prosecutions and investigations, nor did he instruct anyone else to do anything about them." In this connection O'Dwyer made the point that he should not have had to give specific instructions since several of his assistants knew about the cases. O'Dwyer intimated further that Amen could have resumed the investigation and denied the contention that a special prosecutor in New York State is not supposed to take jurisdiction where a regularly constituted district attorney is doing the job.

Asked what he had done while he was mayor about water-front conditions, O'Dwyer referred to a police shake-up and various investigations that he had ordered. But he could point to no accomplishments from these investigations except the shifting around of police officials assigned to the docks.

The committee did not have sufficient time to present in detail the evidence resulting from its own water-front investigations. But it is apparent to the committee that racketeers are firmly entrenched along New York City's water front with the resulting extortions, shake-downs, kick-backs from wages, payroll padding, gangster infiltration of unions, and large-scale gambling. The committee was impressed by the story of Mr. Philip Stephens, business manager of the Daily News, who told of the attempt to shake the Daily News down for $100,000 in connection with the unloading of newsprint. The inevitable results of racketeer domination of the water front were also presented to the committee by Mr. Walter Redden, of the New York Port Authority, who told of the increasing diversion of freight from New York ports by shippers who refuse to put up with racketeering conditions. Most significant to the committee is that the gangster who still appears to be the key to water-front racketeering in New York is the same Albert Anastasia.

V. O'Dwyer and police corruption

Miles McDonald, district attorney of Brooklyn, and his assistant, Jules Helfand, outlined for the committee the magnitude of the gambling operations and the accompanying police corruption which they were currently in the process of investigating with the aid of a grand jury. Mr. Helfand estimated for the committee that, on the basis of the number of scratch sheets sold in New York City, a minimum of $300,000,000 a year was bet with bookmakers alone, a figure he considered to be an extremely low estimate in consideration of the fact that one bookmaker alone, Harry Gross, had taken in $20,000,000 in a year. In addition, Mr. Helfand stated, other fantastic sums were bet annually by professional bookmakers in lay-off bets, that is, in interstate gambling among the bookmakers themselves. Mr. Helfand described the interstate tie-up of gamblers in New York, who phone their bets to New Jersey wire rooms, operated in many instances by New York gamblers. Mr. McDonald asserted that no large-scale gambling operation can be conducted without the knowledge and consent of at least that segment of the police department charged with the enforcement of the gambling laws, namely, the plain-clothes division. For large-scale gambling to be going on, they have both to know it and to be involved in it. He was of the opinion that the original charge that about $250,000 was being paid weekly to police in protection money was not far wrong. Mr. Helfand added that it is impossible for a bookmaker to operate more than 48 hours anywhere without the protection of police. Where raids were made and book-makers arrested, in Brooklyn, Mr. Helfand said, they found notations in their records and accounts of "ice" payments, which give some indication o the amounts paid for police protection. At an Army base luncheonette, for instance, a notation of $1,200 a month for "ice” was found for that one place alone.

Mr. O'Dwyer agreed with Mr. McDonald and Mr. Helfand that bookmaking cannot exist on a large scale without police protection. He also agreed that the Brooklyn investigation and Erickson's indictment indicate bookmaking was going on on a large scale during his administration. Erickson's, he thought, was the largest scale there is, but he insisted he did not know where Erickson's operations took place nor how he operated.

After prolonged questioning as to whether former Police Commissioner O'Brien could have failed at least to have sensed the condition now being uncovered in Brooklyn, Mr. O'Dwyer finally agreed that he should have known about it. But Mr. O'Dwyer insisted that former Chief of Detectives Whalen, a policeman who had come on the force with him, had absolutely nothing to do with gambling conditions; that that was the responsibility of the plain-clothes division. Although Whalen was the head of the detective force, he could not have been expected to know the situation which the Brooklyn investigation was now uncovering, according to O'Dwyer.

Questioned concerning special investigations into police corruption he himself had instigated, Mr. O'Dwyer stated that he had actually ordered only one. Immediately after taking office as mayor, he appointed Frank Bals seventh deputy police commissioner. Bals, as chief investigator for O'Dwyer in the Kings County district attorney's office, had been in charge of the police detail guarding Reles.

Bals, O'Dwyer said, was not there to investigate police corruption, but to organize information about the identity, habits, associates, and hang-outs of the prosperous hoodlums whose influence on the adolescents of the slum areas both he and Bals had come to deplore during their work on Murder, Inc. O'Dwyer admitted that gathering of data on movements of criminals is a normal police function, but he said it was not being done properly. The police rarely knew about criminals outside their own precincts, and Bals had been sent in to correct the situation.

According to Bals, however, this was not his job at all. He had an information squad of six detectives and six plain-clothes men assigned to him to gather information about gambling. While Bals denied ever telling our staff that the plain-clothes men were the money men in the police force, that they were paid by the gamblers and had a list of how much to collect from each one, he admitted saying that he believed some top brass in the police department were crooked. Bals said that he had been relieved of his function, and his squad was abolished, because he got into the hair of the top brass.

That there were objections to Bals from the police officials O'Dwyer readily admitted. Commissioner Wallander, O'Dwyer stated, complained that Bals' activities were disturbing the commands throughout the city to the point where police morale was affected. Relying on Wallander, whom he knew as a good commissioner, inherited from the LaGuardia regime, O'Dwyer said he didn't pursue the question further, but permitted Wallander to do what he thought best. As a result, Bals' squad was taken away from him after 2 months; he was left with one man. Bals may have passed on some information but never submitted any reports; and O'Dwyer conceded he had accomplished nothing. O'Dwyer had not heard, he said, the charge that, with the advent of Bals' squad, Bals was the person to see in regard to police protection of gamblers. Bals himself said charges that his men were involved with bookmakers were never substantiated.

Although defending Bals' record against the contention of committee counsel that Bals was a man whom he should have known was incompetent, from his failure in the Reles case, and should not have been appointed a seventh deputy commissioner with a job cutting across police department lines, O'Dwyer at last conceded that this appointment was a mistake. But O'Dwyer claimed he corrected it after 2 months. However, Bats remained a seventh deputy for nearly a year longer, with almost no duties beyond reporting daily to the commissioner. There was nothing in his job which required him to be made a deputy commissioner; the seventh deputy commissionership was a post which had been vacant for some time and had no essential function. Bals' appointment gave him the benefit of a clause in the city charter which made it mandatory to give a retiring commissioner a pension no smaller than that of any other deputy commissioner, no matter what his previous earnings and consequent pension rights had been.

Late in 1946, Mr. O'Dwyer told the committee, despite his confidence in Arthur Wallander, then police commissioner, and his chief inspector, Martin Brown, he felt that not everything was being done which should be done in connection with curbing gambling. He, therefore, ordered John J. Murtagh, commissioner of investigations, to have his department make a running study of how gambling was being enforced by the police department. Mr. O'Dwyer asked the committee to have Judge Murtagh tell what he did about Erickson and Adonis and Costello. The committee granted the request, although it had been unable to find any reports on gambling and corruption in the department of investigation files, and had been told by Judge Murtagh that he had made none, because what he had done had been in the nature of an operation to jazz up the police department and not an investigation.

Claiming before the committee that his was the most methodical, thorough investigation of bookmaking that has been made by any office, Judge Murtagh described the accumulation of information about the telephone calls to and from known bookies, made through subpenaing records of the New York Telephone Co. and the cooperation of the New Jersey Telephone Co. Asked what prominent bookmakers were caught by the system and who they were, Murtagh said thousands of telephone wires were pulled out in New York, but the main lay-off points were in New Jersey, outside of his jurisdiction. Although he gave information to the New Jersey authorities about Erickson, Adonis, and Moretti, in 1947, Murtagh claimed they did not act until 3 years later. In contradistinction to committee counsel's observation that Federal prosecutors had long ago told New Jersey of the gambling operations in that State, over which they, as Federal agents, could do nothing, Murtagh insisted that it was his information which resulted in Erickson's testimony before the McFarland committee that he was a bookmaker, and enabled Hogan to move in on his New York office, arrest and convict him. Asked why in 3 years he could not have moved against Erickson, Murtagh claimed first that he didn't believe Erickson had a New York office until the wire-room information to New Jersey forced him to move to the city; furthermore, prosecution was the district attorney's job, not his, Murtagh stated.

Asked whether the wire room had turned up any evidence of the $20 million Gross bookmaking operations in Brooklyn, Murtagh said, "Not to my knowledge, but if Gross was active, * * * there unquestionably is a good deal of information there regarding his activities." He couldn't recall what had happened in connection with the Dugout Cafe, which an anonymous letter called to his attention in 1948, as being the scene of wide-open bookmaking, and was later identified as the place where Gross paid off. But Murtagh was sure it had been referred to the proper person in the police department.

Asked about his investigation of corruption in the police department, Murtagh stated the only corruption he found was that which existed under LaGuardia, as revealed in the records of a Harlem policy banker, who had methodically set down in code, which Federal agencies helped him to break, the amount of protection money paid to members of the police department by rank. Asked whether he had instituted any new investigation into this graft in the police department, Murtagh said it was 3 years old by the time he got it. When it was pointed out that there seems to be the same kind of graft in the police department now, Murtagh remarked, "unfortunately the enforcement of the gambling laws do tend to corrupt men called upon to enforce them." Asked whether his conclusion, therefore, was that he didn't bother to enforce the laws, Murtagh insisted this was a misinterpretation.

He had continuously, since he took office, investigated the connection of bookmaking and the police department, Murtagh stated; he had questioned every ranking police officer under oath, but had made no analysis of their testimony. He had questioned 500 cops upon their financial status on the basis of a form he worked out and which McDonald is now using for police called before the grand jury. Murtagh told the committee, "I don't believe the cops are honest, but nothing turned up." These same financial statements have since been subpenaed for perusal before the Brooklyn grand jury, which has been reported to include the activities of the department of investigation, during O'Dwyer's regime, in its inquiry.

Back on the stand, Mr. O'Dwyer reiterated that Murtagh had made an important contribution in passing on to the New Jersey authorities information about Adonis and Erickson. He conceded that the value of the wire room would be to find the police corruption which enabled bookies to operate and to catch the big bookies. On the basis of McDonald's investigations and the evidence of scratch-sheet sales, which in 1946 to 1949 were far greater than in other years, O'Dwyer admitted, bookmaking went on on a large scale in the years 1946 through 1949; there had to be local bookmakers to bet with and Gross was one of them. O'Dwyer protested the questioning about the action of his administration in closing up one bookmaker named Katz in 1949, said to be one of the biggest bookmakers in Brooklyn. He assured the committee it had nothing to do with his political feud with Abe Stark, Katz's landlord, and an opponent of O'Dwyer's candidate for the borough presidency in 1949.

Asked why, if Erickson was jailed in 1950 and Gross indicted in 1951, his investigators had been unable to produce results, O'Dwyer replied that there is a big difference between castigation by a police or an investigation department and the powers of a court and a grand jury. If that were understood, he said, his recommendation for a grand jury once a year in every county would win support.

In the light of this recommendation, O'Dwyer was asked what his position was in reference to the investigations just before he resigned as mayor. O'Dwyer said he always favored investigations of complaints of corruption. His characterization of the Brooklyn investigation as a "witch hunt" was due to emotion over the realization that the few conniving grafters on the force would be taken as typical of the 18,000 men on the force, rather than the policeman who had just been killed in the performance of his duty, when he had rushed to someone's defense. His statement that the investigation was interfering seriously with the efficiency of the department and blackening the police force simply described what always happened, O'Dwyer said. The action of his commissioner of investigation; in investigating the chief investigator on McDonald's staff, had been undertaken because two of the policemen were supposed to have been derelict in their duty. The committee pointed out, however, that after departmental trial, the two policemen were exonerated and sent back to work, and that the episode had been interpreted as an attempt to impede the work of the Brooklyn district attorneys. Asked whether he had ever talked over with McDonald what he was doing before he termed it a "witch hunt," O'Dwyer said he had not because he was so sure the police department was clean, he had such absolute faith in the commissioners and in Murtagh, who assured him everything was all right, he could not imagine such things could happen as McDonald's investigation was disclosing.

On the witness stand O'Dwyer admitted that subsequent events proved McDonald to be right and that he had apologized to McDonald for the "witch hunt" statement.

VI. O'Dwyer and Costello

For over 4 years, O'Dwyer issued public statements deploring sinister influences in Tammany Hall. O'Dwyer insisted that this not only meant Costello, but also the venal people that are leaders. He admitted, however, that Costello was a dominating influence behind these venal figures.

O'Dwyer stated that he had never found an occasion to say publicly that he had seen the leader of Tammany (Kennedy) in Costello’s home. Kennedy's debt to Costello also did not stop O'Dwyer from supporting him in a leadership fight on the West Side, after Kennedy had been forced out of the Tammany leadership by the Aurelio revelations. O'Dwyer said in this fight he made a choice between two evils, and Kennedy was the lesser.

O'Dwyer was questioned about some of his appointments of men who were known to be friends of Costello. O'Dwyer appointed Hugo Rogers to the traffic board, "because of his special knowledge of the subject," although he had heard that Rogers, as leader of Tammany Hall, was a close friend of Costello, and was dominated by Mancuso, Costello's pal. O'Dwyer denied knowing that Rogers' assistant in the borough president's office, Philip Zichiello, was a brother-in-law of Willie Moretti, the New Jersey racketeer and big-time gambler. When Zichiello was ousted from his position in the borough president's office by Rogers' successor, Wagner, O'Dwyer appointed him as deputy commissioner of the department of hospitals. When asked whether he could not have found someone else for the hospital job, O'Dwyer replied, "There are things you have to do politically if you want cooperation." He had rested on the bar association's approval of Loscalzo as judge, O'Dwyer stated, although he knew that he was the "Joe" referred to in the telephone tap when Aurelio thanked Costello, and said, "Now we have to take care of Joe." He had not known that Loscalzo sought out Costello to ask him to say a good word for him with Kennedy. O'Dwyer remembered appointing Rosenthal, another good friend of Costello and a district leader, to a job, although he could not remember that it was as assistant corporation counsel. He didn't know until he read it in the papers, said O'Dwyer, that Lawrence Austin, whom he appointed city marshal, was a cousin of Irving Sherman, another Costello intimate. Loscalzo is the judge who disqualified himself in the Erickson ease.

In 1945, O'Dwyer testified before the grand jury in Brooklyn that he had had two meetings with Frank Costello. Testifying before our committee, O'Dwyer could recall only one meeting and Costello also testified that they had had only one.

The occasion of this meeting, according to both O'Dwyer and Costello, was an investigation being conducted by O'Dwyer in the latter part of 1942 when he was a major in the Army Air Forces. O'Dwyer was attached to Air Procurement with orders "to keep Wright Field clean." According to O'Dwyer, an anonymous letter was received at the district attorney's office in Brooklyn, charging certain contract frauds at Wright Field by a Joe Baker and mentioning that he was a friend of Frank Costello. O'Dwyer testified that he had Irving Sherman, who was a close friend of both his and Costello's, arrange for the meeting with Costello. O'Dwyer took Moran with him. In this connection, it may be of some significance that Moran's recollection was that it was Moran who arranged the appointment, and that he did it through Mike Kennedy, leader of Tammany Hall, because he had never previously met Costello. Costello, however, testified that he had met Moran previously.

O'Dwyer did not ask Costello to come to any Army office because he was "no longer a district attorney with a fistful of subpenas, but just a little major or maybe a lieutenant colonel." O'Dwyer testified that Costello told him that he knew a Joe Baker, but did not know whether this Joe Baker had an interest in Air Force contracts and that Costello himself had no interest in Air Force contracts. O'Dwyer never attempted to see the Joe Baker whom Costello knew to check further on the letter, nor did he ask anyone else to do so at this time. Although O'Dwyer thought the entire matter important enough so that he personally went to Costello's home, he did not follow up the Costello meeting in any way until several months later when another letter came to Wright Field about Joe Baker. This second letter was referred to other investigators, who followed through.

The committee had before it at the hearing the Army file on the Joe Baker matter. There is no reference in it whatsoever to O'Dwyer's meeting with Costello. There is certain information from O'Dwyer but none relating in any way to Costello or suggesting a relationship between Baker and Costello. O'Dwyer states that he did give such information to his superiors.

In the course of the Army investigation, the record discloses, the relationship was discovered between Baker and Costello.

No action was ever taken by the Air Corps barring Baker from Wright Field, although an associate of Joe Baker was barred. Baker himself is a close associate of Costello and Phil Kastel and lives in luxurious quarters at the Hotel Madison in New York City, which at one period was a favorite meeting place of Costello. Baker has no legitimate source of income to account for his mode of living.

At Costello's home, when O'Dwyer was there, were also Michael Kennedy, then leader of Tammany Hall, Judge Savarese, Bert Stand, formerly secretary of Tammany Hall, Irving Sherman, as well as Moran.

O'Dwyer testified that he had a private conversation with Costello and then some little amenities with the other persons present. Bert Stand testified that he had met Kennedy on the afternoon of the meeting and that Kennedy asked him to come along to Costello's apartment and said there was to be a cocktail party there. Stand did not remember any private conversation between Costello and O'Dwyer. He said that the conversation was general and that there was some talk about the 1941 election campaign, primarily between O'Dwyer and Savarese. O'Dwyer stated to the committee that he was very surprised to find Mike Kennedy in Costello's apartment at the time when O'Dwyer had an appointment to be there to discuss official business. He testified that the presence of the leader of Tammany Hall in Costello's apartment made a very strong and lasting impression upon him, one which he never forgot.

For many years, O'Dwyer has issued public statements deploring sinister influences in Tammany Hall. O'Dwyer first insisted before this committee that he had reference to certain venal leaders of Tammany and not specifically to Costello. Later in his testimony, however, he stated that Costello was a dominating influence behind these venal figures and was, in fact, one of the sinister influences in Tammany Hall. Despite this, he had never found an occasion to say publicly that he had seen the leader of Tammany in Costello's home, or to make public this concrete evidence of the relationship between Tammany Hall and Costello. Although he never forgot Kennedy's presence in Costello's apartment, he publicly supported Kennedy in seeking to regain the position he held prior to the Aurelio revelations. O'Dwyer publicly characterized this move to support Kennedy as a clean-up of Tammany and he advanced Kennedy as a clean leader. He stated to the committee that as between Kennedy and incumbents, he made a choice of the lesser evil.

VII. O'Dwyer's friends

All during the war, O'Dwyer told the committee, he saw a good deal of Irving Sherman, a known gambler and intimate of racketeers. He did help him in a big way, O'Dwyer said, referring to inquiries Sherman made for him for his Army work. O'Dwyer knew that Sherman was a good friend of Costello and a good friend of Adonis. He knew Sherman was a shirt manufacturer, doing business with the Navy, but not that he was also engaged in getting contracts for other persons on a 5 -percent basis. He told the 1945 grand jury that he wouldn't be surprised to know that Sherman had been a collector for Adonis and Costello and Lepke. While he heard that Sherman had had a dining room and gambling casino in New York's garment district, he said that McLaughlin, a former telephone man, who claimed to have seen him there, must have been mistaken. Nor did he know that this same witness, at the request of Sherman, had tested his wire for possible taps. McLaughlin testified that at Sherman's request he had also tested wires for Kastel, Nat Herzfeld, and Costello, and that Costello personally paid him. Costello denied this.

All during his Army service, O'Dwyer told the committee he sought Sherman out every time he came to Washington. They kept in touch by long-distance phone all over the country. Once, at least, he agreed he, Sherman, and Marcantonio had met together, but the occasion was purely social; he was not seeking political assistance from them. Sherman, he admitted, did help him throughout his 1945 campaign, as Costello, Moran, and Charles Lipsky had testified. He had utilized what help he could give.

There was also testimony that Moran and Sherman kept in touch with each other. The fire department receptionist stated that Sherman came frequently to Moran's office, announcing himself as Dr. Cooper. He found out his real name only when Moran was out one day, and his caller asked the receptionist to announce him to Commissioner Quayle as Irving Sherman. Moran admitted these visits of Sherman, and said the alias was just a joke between them.

O'Dwyer denied that his friendship with Sherman and the aid Sherman rendered in the 1945 campaign in any way tainted him with the Costello influence. Sherman, according to O'Dwyer, never asked for anything in return; never asked him to go easy on bookmakers, even though Sherman's business partner is the brother of one of New York's biggest bookmakers.

Questioned about friendships he shared with Joe Adonis, O'Dwyer said he recalled meeting him casually years ago; he could not remember where. He was sure that witnesses who had told the committee they had seen him in Adonis' restaurant were mistaken. However, Judge George Joyce, his law associate of 6 months, and one of his dearest friends, was and is a friend of Adonis. Quayle, whom O'Dwyer appointed to the fire department commissionership, is a good friend of Adonis. Kenneth Sutherland, the district leader who recommended O’Dwyer for appointment as a magistrate, was also close to Adonis. Lipsky, in whose house O'Dwyer spent many evenings and who was very close to O'Dwyer in 1945, was a good friend of Adonis. Lipsky used to make investments for Adonis. O'Dwyer told the Brooklyn grand jury in 1945 that Anastasia, Romeo, and other water-front characters frequented the City Democratic Club in Brooklyn, which was run by a good friend of his, Dr. Tom Longo, and had as its president another good friend, Dr. Thomas. But he stated that no friends of Adonis had ever brought pressure on him so that he would not prosecute Adonis.

The committee heard testimony from Charles Lipsky, and Jerome Ambro, an undersheriff when Frank Quayle, O'Dwyer's appointee in the fire department, was sheriff, about the political popularity of the restaurant Adonis ran in the thirties. It was in a poor district, a good distance from the borough hall, yet it attracted with considerable regularity the prominent Brooklyn Democratic political figures of the day. During prohibition it was a speakeasy and had a reputation for good liquor as well as good food. Though he denied any political activity, Adonis admitted that prominent politicians came to his restaurant and he met them there. Among them were, he said, Frank Quayle and Judge Joyce. Adonis admitted that he knew Kenneth Sutherland, Irwin Steingut, Anthony DiGiovanni, Bill O'Dwyer, and Jim Moran, all of whom Ambro said he had seen at the restaurant. Adonis admitted that he went to a lot of political dinners because he felt he was obligated; if a fellow was close to him and asked him to go to a dinner, he would go.

Adonis refused to answer, on the grounds that he would incriminate himself, the question whether he ever gave his political friends any money to help in a primary campaign. But both Jerome Ambro, with obvious reluctance and an attempt to hedge on his executive session testimony, and Charles Lipsky, freely testified to his active assistance to various political leaders.

Lipsky testified that anybody who had a primary fight on the Democratic end came into Adonis' restaurant. Adonis had a lot of friends, and he was free with his money in support of his candidate. Lipsky described Adonis as a fellow who would hardly refuse to help most people who contacted him, particularly leaders in primary fights, and as a result, a great many of the leaders in Brooklyn, Lipsky felt, were under obligation to him. When Ambro ran the campaign of Sam Liebowitz, against the organization candidate Francis Geoghan for Kings County district attorney, Quayle asked him either to support the organization candidate or resign. Ambro resigned. He stopped frequenting Adonis' restaurant. Three years later, he was deposed as leader, and Ambro gave the committee a vivid picture of how he thought it was done; by the use of floaters brought into the district to vote illegally under the eyes of bribed election inspectors, both Republiean and Democratic. He testified in both executive and public sessions that he thought about $30,000 was spent to defeat him; in executive session where he was also under oath, Ambro left the impression with the committee that this money could be traced at least in part to Adonis; hearsay, he said it was, or whatever you want to call it. In open session, he insisted that he never mentioned Adonis, and stated with some emphasis that he did not believe Adonis had any political influence.

VIII. The testimony of John P. Crane

John P. Crane, president of Local 94, International Association of Fire Fighters, testified before the committee on two separate days. On the first occasion, he refused to testify on the ground that his testimony would incriminate him. The committee thereafter obtained a court order for the production of certain testimony Crane had given before the New York County grand jury. Crane was recalled and testified that he had made certain withdrawals from the bank account of his association, that these withdrawals were made by check counter-signed by two other officers of the association, that Crane had received cash for the amounts of the cheeks and had turned over this sum to certain persons. They included $55,000 turned over to Moran, $35,000 of which was stated by Crane to have been gifts and $20,000 of which was a campaign contribution in the 1949 mayoralty campaign. Crane testified that he also made a campaign contribution in cash of $10,000 to O'Dwyer, and one of $3,500 to John Crews for Dewey's Oregon primary. Moran and O'Dwyer have denied receiving these moneys. It is understood that Crews publicly stated that he did receive a contribution of $3,500 from Crane.

Crane testified before the grand jury and told our committee:

Some time in 1946 - and this is what you want to know, Mr. Hogan - Mr. Moran was appointed Deputy Fire Commissioner, and I want to say that I admire Mr. Moran. But at least he was a man that had some basis you could work with. Moran allegedly was strong enough in his position in the O'Dwyer administration that if he said "no," nobody could move O'Dwyer to say "yes."

Crane stated to this committee:

Senator TOBEY. Then why did you give him the money? Mr. CRANE. Because in my experience - which is limited - when I find a man such as Mr. Moran and whose influence is such that a word from him can help or hurt us, I want him on my side.

Senator TOBEY. So you underwrite Jim Moran; is that it?

Mr. CRANE. I underwrote what?

Senator TOBEY. You underwrote him $35,000 in the expectation, or the hope - either one you want to use - that he would come across and be kind to the men you serve in the Fire Department; is that it?

Mr. CRANE. That's right, sir.

According to Crane, he went to the Gracie Mansion sometime around October 12, 1949, and saw Mayor O'Dwyer alone on the porch at Gracie Mansion. Crane states that he told the mayor at that time that he had promised him the support of the firemen and that he offered him some evidence of that support on the occasion, in the form of $10,000 in cash in a red manila envelope. Crane states that O'Dwyer took the envelope, thanked him, but did not look inside the envelope.

O'Dwyer specifically denied that he met Crane on the porch of Gracie Mansion, that he saw Crane alone at the Gracie Mansion in October 1949, or that he ever received any cash moneys or any campaign contribution from Crane.

O'Dwyer also testified before the grand jury, where he waived his immunity. Crane did not waive immunity before the grand jury.

As the matter now stands, the committee does not have sufficient evidence to form a conclusion concerning the transactions alleged by Crane to have occurred. It is hoped that the continued investigation by the district attorney of New York County will produce concrete evidence to establish the truth.

The committee felt that Crane's testimony was of such importance that public inquiry had to be made of Crane, Moran, and O'Dwyer.

IX. The patterns of O'Dwyer's conduct

A single pattern of conduct emerges from O'Dwyer's official activities in regard to the gambling and water-front rackets, murders, and police corruption, from his days as district attorney through his term as mayor. No matter what the motivation of his choice, action or inaction, it often seemed to result favorably for men suspected of being high up in the rackets. Although he admitted he could have indicted Anastasia alone for at least one murder, he did not do so on the ground that it is a poor practice to indict only one defendant for a crime in which two are involved. When he could have indicted both Anastasia and his companion Parisi, he did not, again, this time on the ground that to do so would endanger the health and possibly the life of a small boy. He failed to indict Anastasia or any of his companions on extortion charges because he was busy with the murder cases; but the investigation of the water-front rackets which Amen started, and O'Dwyer took over, was never resumed in the 2 years before he entered the Army or at any time thereafter. Despite the admitted importance of Reles to what he conceded was the most important murder case his office had, O'Dwyer was content to label his escape through death as the result of negligence; he never fixed the responsibility. He personally appeared to absolve the six policemen guarding Reles from blame at their departmental trial, and he rewarded their superior, Bals, as well as Moran who apparently ordered the removal of the "wanted cards" which in effect closed up the investigation on Anastasia and his associates, with intimate personal friendship and financial preferment through lucrative city positions.

Toward other official agencies engaged in law enforcement or investigation, Mr. O'Dwyer exhibited a sometimes antagonistic attitude. He characterized the 1945 grand jury presentments upon the work of his own office, as having been inspired by political bias. Five years later, he branded District Attorney McDonald's grand jury inquiry into gambling and police corruption a "witch hunt." Though he denied that the action of his commissioner of investigation, in investigating two policemen, attached to McDonald's investigating staff, for dereliction of duty, was designed to hamper the Brooklyn investigation, it did, in effect, delay its operations for several weeks, although in the end the men were exonerated in a departmental trial and sent back to work.

The tendency to blame others for the ineffectualness of official efforts to curb the rackets and the ensuing corruption has also turned up very often at every stage in O'Dwyer's career. California was to blame for not turning up sufficient evidence against Siegel. Amen had Adonis under arrest and had access to Reles; why didn't he act? Why didn't Amen resume the water-front investigation after he, O'Dwyer, suspended it? Why did not his successor, the acting district attorney, move against the water-front rackets? As mayor he depended upon his subordinates; if there was any laxity, they were at fault.

The committee found it necessary to present the stories of O'Dwyer and Costello in detail, because they illustrate so dramatically one of the major factors that must be overcome before substantial progress can be made in dealing with organized crime. When racketeers and gangsters have great influence in selecting public officials, they can paralyze law enforcement. Unless such influence is eliminated, gangsterism and racketeering will flourish in any community.

X. Gambling in New Jersey

Scratch sheet statistics and other specific evidence indicate that during the LaGuardia administration vigorous action against gamblers forced many of them to transfer their major operations to New Jersey, although relying on patrons in New York City for their support. During the O'Dwyer administration, bookmaking in New York increased but many of those who had moved to New Jersey continued their interstate operations.

Among the most prominent of these was Frank Erickson, who, however, conducted a sufficient amount of business in New York City that District Attorney Hogan was able to convict him for bookmaking in 1950. Many other bookmakers conducted similar interstate business operations with seeming impunity in New Jersey, particularly in Bergen County.

Emboldened by the success of the bookmakers, operators of gambling houses began to conduct operations across the Hudson River from New York, relying primarily on a New York City clientele. The committee held hearings concerning a series of gambling houses operated by Joe Adonis, Salvatore Moretti (Willie Moretti's brother), Anthony Guarino (whom the committee questioned in the New Jersey State penitentiary at Trenton, N. J.), James Lynch, Arthur Longano, James Rutkin, and Jerry Catena. Some of these same operators had gambling houses in other places, including Saratoga, N.Y., and Florida. All of them have close associations with notorious racketeers, and several were very close associates of Frank Costello, who at least on one occasion visited New Orleans with Jerry Catena, and who, as has been previously pointed out, was extremely close to Joe Adonis, Salvatore and Willie Moretti.

These gambling houses employed persons who appeared to ride a circuit traveling from Florida to New Jersey, to Saratoga, and even to Nevada.

The customers were transported from New York free of charge in automobiles provided by the house. They were given all they wished to eat and drink of the very best in food and liquor, but the minimum bet at the crap tables was $5, and in practice, few bets were made under $20. In 5 months during which this operation cashed checks in a New York City bank, they totaled $1,000,000 a month in cheeks of customers. The practice of banking gambling checks in New York City was stopped by District Attorney Hogan, who convicted Max Stark, the individual who brought the checks to New York and cashed them. Following this conviction, Guarino was indicted and pleaded guilty in New Jersey. No others were indicted in New Jersey, despite the fact that the name of James Lynch appeared on the back of almost every check as endorser. After Guarino "took the rap" for the entire group, the houses continued to operate in New Jersey until the early part of 1950 when they closed down. There were no further prosecutions in New Jersey until after this committee publicly aired the situation. Then Adonis and others were indicted.

Although the various gambling houses reported profits of from $100,000 to $250,000 annually for income-tax purposes, it is obvious that the profits must have run to many millions of dollars a year. A study of the operations of gambling houses indicates that if $1,000,000 a month was cashed in checks, the monthly profits must have been close to this amount. The reason for this is that most of the customers brought cash with them as a general rule, and the few who won back their losses would redeem the check before leaving.

There is great suspicion that some of the individuals who appeared on the record as partners in these gambling operations were simply dummies for others, and that the huge profits made between 1945 and 1950 were used to finance many of the top members of the eastern crime syndicate.

CONCLUSIONS FROM THE NEW YORK HEARINGS The New York City hearings demonstrated to the committee that:

1. Frank Costello has close personal friendships, working relationships, and mutual financial interests with leading racketeers in the city, State, and Nation, confirming the opinion obtained elsewhere that he, Joe Adonis, and Meyer Lansky formed the eastern axis of a combination of racketeers working throughout the Nation.

2. The extortion rackets on the water front of today and 10 years ago, the bookmaking rackets in New Jersey and New York, the gambling casinos in New Jersey and Saratoga, the narcotics traffic, and even the wave of murders in the late thirties and early forties, were not and are not isolated enterprises. They were and are the work of men whose personal friendships, working acquaintanceships and mutual financial interests were established by the testimony, and represent different aspects of the far-flung illegal operations of the eastern crime syndicate.

3. There can be no question that Frank Costello has exercised a major influence upon the New York County Democratic organization, Tammany Hall, because of his personal friendships and working .relationships with its officers, and with Democratic district leaders even today in 10 of the 16 Manhattan districts. Costello also had relationships with some Republican political leaders.

4. Despite Mr. O'Dwyer's frequent public castigation of Tammany Hall, and his acknowledgment that Frank Costello was a sinister influence therein, he has been on terms of intimate friendship with persons who were close friends of Costello. Many of his intimate friends were also close friends of racketeer Joe Adonis. He has appointed friends of both Costello and Adonis to high public office.

5. During Mr. O'Dwyer's term of office as district attorney of Kings County between 1940 and 1942, and his occupancy of the mayoralty from 1946 to 1950, neither he nor his appointees took any effective action against the top echelons of the gambling, narcotics, water-front, murder, or bookmaking rackets. In fact, his actions impeded promising investigations of such rackets. His defense of public officials who were derelict in their duties, and his actions in investigations of corruption, and his failure to follow up concrete evidence of organized crime, particularly in the case of Murder, Inc., and the water front, have contributed to the growth of organized crime, racketeering, and gangsterism in New York City.

6. The pattern of connections between crime and politics is well established in New York City, certain counties of northern New Jersey, and Saratoga. A great deal remains to be done by public officials and the citizens of these areas to alter the basic pattern.