(June 6, 2018) The following is an edited excerpt from my latest book, The Devil’s Town: Hot Springs During the Gangster Era. It concerns the arrest, extradition, and trial of Charles “Lucky” Luciano who headed the American Mafia during the 1930s and half the 1940s.
Lucky Luciano’s Unlucky Stroll
When Prohibition ended in 1933 former bootleggers had to find other income sources. Some turned to narcotics, prostitution, and gambling, but one of the biggest opportunities was industrial racketeering. Although traditionally hired as strike breakers, mobsters increasingly learned that they could extort both the labor and management sides of vulnerable industries. After gaining control of labor unions they could require employers to pay illegal fees to end a strike, or to insure that one was prevented. Conversely, company managements could hire the mobsters as strikebreakers against unions that the hoodlums did not yet control. After pummeling strikers, mobsters might have sufficiently intimidated the workers to gain control of the applicable union and thereafter extort money from either the union or the companies employing its workers.
Although industrial racketeering increasingly made newspaper headlines, corrupted politicians were reluctant to act. The port of New York was one of the most vulnerable victims. As a matter of economic efficiency, cargo ships needed to be quickly loaded and unloaded. Each ship could ill-afford to stand idle while longshoremen refused to load or remove its cargo. Ship owners were better off simply paying whatever bribes the Longshoremen’s Union might demand instead of trying to reach negotiated settlements on a ship-by-ship basis. Normally the illegal fees taken by the unions were large enough to share with corrupt politicians who were thereby motivated to prevent police from interfering on the waterfront.
Finally, in 1935 one New York grand jury had had enough. They demanded a broad industrial racketeering investigation. The designated assistant district attorney tried instead to steer the jury toward scrutinizing local chapters of the Communist Party, which he suggested were responsible. As in Hot Springs, New York grand juries were often politically controlled. This one, however, became a run away jury that rejected the Communist conspiracy theory. Despite the assistant DA’s efforts to deter them, the jury petitioned the governor to appoint a special prosecutor. As a result, thirty-four year old Thomas E. Dewey, who would later become a New York governor and twice run for President, was selected to investigate and prosecute New York racketeers.
At age twenty-eight—before returning to private practice—Dewey had earlier become the chief assistant to the federal judge assigned to New York’s most important federal district. When later recruited from private practice to spearhead the prosecution of racketeering, Dewey assembled a staff of twenty lawyers between the ages of 25 and 40, composed mostly of Harvard or Columbia graduates. He also brought in accountants and a crew of youthful police who were less likely to be corrupted than veterans. Finally, he located his team’s offices in a commercial building far from the government facilities where possibly compromised government workers might learn, and pass along, information that could help the suspected criminals.
Despite his best efforts, however, it proved difficult to accumulate enough evidence to charge any notorious mobster with industrial racketeering even though Dewey’s team was convinced that many were guilty. They initially targeted Dutch Schultz who had narrowly escaped tax evasion charges that Dewey had prepared against him a couple of years earlier. Schultz unexpectedly beat the charge in 1935 by having the trial shifted to a small upstate New York town where he spent liberally at various businesses and gave generously to local charities during the trial.
When Schultz learned that Dewey was coming after him again, but this time for racketeering, he asked Luciano for permission to assassinate Dewey. After Lucky consulted other Mafia leaders, the group concluded that instead of Dewey, it was Schultz who should be executed. They wanted to stop him from killing Dewey because such a murder would trigger unprecedented law enforcement retaliation against the Mafia in general. It would also likely cause corruptible judges to cease cooperating with the Mob. As a result, contract gangsters assassinated Schultz only days before he had hoped to kill Dewey himself.
Schultz’s murder forced Dewey to select a second prosecution target. Unfortunately for Luciano, Dewey chose him. It happened almost by accident. One Dewey team member had previously practiced in the women’s court where prostitution cases were heard. She noticed that many of the girls used the same bondsmen, which suggested that the city’s oldest profession was managed by a structured, although illegal, organization. Partly because the victims were themselves criminals, Dewey was reluctant to expose racketeering within prostitution. Nonetheless, he gave the green light to further investigations.
Gradually the team learned that the girls earned about $300 weekly. Typically half went to the madam, while $30 was allotted to meals and medical exams. The remaining $120 was left for the prostitutes, which many shared with their pimps. Each madam paid $10 weekly for each employed girl into a fund used to pay lawyers and bondsmen as needed. A total of about 2,000 women were working in about 300 bordellos. Two otherwise insignificant Luciano underlings managed the entire operation. They dropped his name only rarely such as at times when it might prompt uncooperative participants to pay the required Mafia fees.
Charles “Lucky” Luciano
After a few months Dewey arranged a massive police raid that rounded up about a hundred women. Although judges normally released them quickly on a $300 bond each—or a $25-each payoff—Dewey was able to get the bonds set at $10,000 this time. As a result, the women remained in jail while Dewey’s team questioned them relentlessly to collect additional evidence. Among the male prisoners were bookers and pimps who were threatened with long jail sentences. Ultimately a number of bookers, madams, and prostitutes agreed to testify and finger Luciano as the head of the management organization.
Before Dewey was prepared to spring the indictments he first persuaded the New York State Legislature to change a law requiring that only one charge in an indictment could be tried at a time. The new replacement law allowed multiple charges to be consolidated into a single indictment. That was important for two reasons. First, without it each charge would otherwise need to be tried separately. Second, prostitution’s inherent characteristics meant that participants normally commit violations multiple times. Ultimately Luciano would be arraigned on over ninety counts of compulsory prostitution.
At the time of the Dewey investigation Lucky occupied a $7,000 a year three-room luxury suite under the name of Charles Ross at the Waldorf-Astoria on Park Avenue. He spread money around liberally in order to protect his interests. Among other informants he paid Waldorf clerks and doormen to alert him whenever unfamiliar persons inquired about either Luciano or Ross. He was alone in the suite one day when a clerk phoned to say that a group of men, possibly detectives, had inquired about Ross and were on the way to the room.
Luciano quickly left the building via a freight elevator with nothing but the clothes on his back. He drove to Philadelphia where he met the local Mafia boss, Harry “Nig” Rosen who gave Lucky a Cadillac with Tennessee plates. While in town he bought a new wardrobe and borrowed $25,000 from Rosen.
To the hapless New York police it appeared as though Luciano had simply vanished. Soon police forces launched a multistate manhunt all along the east coast. After learning that he was the target, Lucky drove to Cleveland, left the Cadillac at a train station and bought two tickets for Hot Springs. In order to avoid loneliness while on the lam, he persuaded girlfriend Gay Orlova to meet him in Cleveland and accompany him to Hot Springs. Orlova was a gorgeous Broadway showgirl bold enough about her sex appeal to pose for nude photos in the 1930s. After arriving in Hot Springs in mid-March 1936, Luciano contacted Owney Madden who had moved to Hot Springs after becoming one of New York’s biggest mobsters during Prohibition. Madden introduced Lucky to influential town residents, including potentially helpful law enforcement and other government officials. Among them was Herbert “Dutch” Akers who was the top detective for Police Chief Joe Wakelin. Luciano and Akers quickly became friendly.
Luciano and Orlova settled in for an extended vacation. Sometimes Lucky visited the Central Avenue clubs where he’d place bets with bookies for horses running at Miami’s Tropical Park or Chicago’s Arlington track. Sometimes he’d gamble at club tables, which might involve taking a seat in poker games that included Nick Dandolos, better known as Nick the Greek. Lucky, however, avoided the marathon sessions that Nick relished.
Later Orlova would join him for evenings of dining and dancing at spots like the Club Belvedere. Owney and his Hot Springs bred wife, Agnes, sometimes joined them. New York subordinates phoned Luciano each morning with updates on Dewey, city police activities, general reports on Mafia business and requests for instructions on matters requiring the boss’s decision. Afterwards he might take in the morning air with a stroll along a broad walkway known as Bathhouse Row that paralleled Central Avenue.
During one such walk with detective Akers on April Fools’ Day 1936 the two unexpectedly came across New York detective John Brennan who knew Lucky personally. Brennan was in town on another case involving a theft in Yonkers, New York. A widespread wanted poster for the Yonkers thief, displaying pictures of both the man and his pet dog, caught the attention of the Hot Springs police weeks earlier. Soon thereafter they arrested a visitor fitting the description. Once the detainee was confirmed as the suspect, Brennan went to Hot Springs to return him to New York. While waiting for the extradition papers to be completed, Brennan took a morning walk that resulted in the chance meeting with Luciano and Akers.
As he was walking along Bathhouse Row, Luciano recognized Brennan and asked him what he was doing in Hot Springs, so far from New York. Brennan answered that he was in town to extradite the Yonkers robbery suspect whom, he added, Hot Springs Police Chief Wakelin and detective Akers had arrested. After Akers verified the explanation for Luciano, Brennan asked the New York mobster if he was aware that Dewey had obtained an arrest warrant thereby triggering a multi-state manhunt for him on the east coast. Brennan concluded by asking Luciano to let him take the gangster back to New York along with the suspected Yonkers thief.
Luciano instead asked that Brennan pretend the two of them did not meet while Brennan was in Hot Springs. Brennan declined because if he got caught at the lie he’d lose his job, among other consequences. Before they separated Brennan asked Lucky where he was staying. The Mafia boss answered, “The Arlington.” Next Lucky contacted Owney and asked that the latter recommend a lawyer. Owney suggested Richard Ryan.
Brennan pondered his next move. Due to the fact that Lucky was obviously on good terms with local detective Akers, Brennan decided to inform Dewey’s team and let them decide the next move. Since Dewey was out of the office when Brennan phoned, the detective talked to an assistant who recommended that Brennan arrest Luciano immediately but added that the New York cop should get help from the [Arkansas] Garland County sheriff. Early that same afternoon Brennan and a deputy sheriff arrested Lucky and took him to the jail at the county courthouse.
Lawyer Ryan quickly filed for a writ of habeas corpus with local chancellor Sam Garrett who ordered that the mobster be released on a $5,000 bond. Madden financed the bond thereby getting Lucky released the same day he was arrested.
It didn’t last. After having issued a 90-count indictment against Lucky, Dewey blew his stack when he learned that the mobster had been released on a trivial $5,000 bail. He held a New York press conference to announce that he could not understand how any judge could set such a low bail. Dewey amplified his consternation by emphasizing with dismay that Luciano was probably America’s most notorious mobster. In telephone calls to Arkansas Governor Junius Futrell and the state’s Attorney General Carl Bailey, Dewey added that the New York prosecutors were holding Luciano’s top lieutenant on a $75,000 bond and were holding thirty men and eighty prostitutes as witnesses against Luciano.
Governor Futrell phoned Garrett the same day of the writ ruling and ordered that Luciano be brought back into custody. An astonished Garrett sent two deputies sheriff to tell the gangster that his bond was revoked and he must return to jail. Although an irate Luciano had no choice but to comply, Sheriff Jim Floyd tried to soften the blow. He told Lucky that he could use the sheriff’s office for phone calls and even let Gay visit her jailed boyfriend as often as she wanted. Meanwhile, Dewey told reporters that he had suggested a new bond of $200,000 and was putting one of his aides on a flight to Hot Springs that very night.
While a member of Dewey’s team hurried toward Hot Springs, Luciano’s top New York lawyer, Moses Polakoff, was also flying there. Meanwhile Hot Springs city attorney, Sonny Davies, joined Luciano’s local defense team. Davies was also a law partner in a firm that included Municipal Judge Verne Ledgerwood. Consequently, Luciano’s legal team asked for a hearing at Ledgerwood’s court that resulted in the mobster’s arrest for a lesser charge. They intended that the lesser charge would legally require that Lucky remain in Hot Springs thereby preventing his removal to New York.
When Arkansas State Attorney General Carl Bailey learned of the tactic he travelled to Hot Springs with state rangers to take Luciano to Little Rock, the state capital. After a Hot Springs judge ruled against Bailey, the Garland County sheriff took Luciano into custody. Bailey regrouped and arrived before sunup the next day with a dozen heavily armed state rangers. This time Luciano was taken to Little Rock under armed guard where he would later appear before a hearing to extradite him to New York.
Three days before the hearing Bailey was visited by a stranger who described himself only as “Charlie’s friend.” The visitor added that he understood Bailey wanted to become governor in the next election and suggested that a $50,000 campaign contribution might help. Bailey declined the implied bribe.
The Little Rock hearing was held on April 6, 1936 before Governor Futrell. After the testimony of several New York witnesses the governor ruled that Charlie’s guilt or innocence was not to be decided in Arkansas, but instead in New York. He explained that his only authority was to determine whether Luciano was in New York on the date of the offense specified in Dewey’s warrant. Announcing that witnesses answered the pertinent question decisively, the governor signed the extradition papers.
Since a federal court had been involved in moving the hearing to Little Rock, a federal judge—beyond the control of state officials—granted Charlie’s lawyers ten days to file an appeal. Luciano’s Little Rock attorney assumed that the ten-day deadline would end on 17 April, whereas it actually ended at midnight 16 April. In contrast, state Attorney General Bailey did not mistake the deadline. He asked that a passenger train scheduled to leave Little Rock for St. Louis at midnight be delayed until 12:05 AM so that a heavily guarded Luciano could be put on board. When a connecting train arrived in New York, Dewey greeted Luciano in the company of forty-eight police officers.
Luciano’s New York trial lasted about thirty days during May and June 1936. He denied any connection to the two underlings who managed the prostitution business. Unfortunately for him, Dewey had sixty-eight witnesses. Among them were employees of the Waldorf-Astoria who testified that they had seen Charlie in discussions with the two operational subordinates, noted earlier, in his hotel suite. Additionally, telephone records confirmed many conversations between Luciano and the underlings.
One of the prostitutes also testified that she had overhead incriminating conversations when her pimp took her to the hotel room. Another said she had been invited to spend time with Lucky in his bedroom on several occasions and overheard similar conversation prior to retiring to the bedroom. To undermine the gangster’s credibility, Dewey forced the obviously wealthy Luciano to admit that he could not explain why his annual tax returns from 1929 to 1935 never reported income of more than $22,500. Finally, the prosecutor forced Lucky to confess his long arrest record and history of association with other well-known gangsters.
Luciano was convicted on sixty-two counts of compulsory prostitution and sentenced to thirty to fifty years in state prison. Since he was not personally involved in overseeing the business, he was stunned by the verdict. His lawyers appealed the case. Despite the fact that three witnesses—including one of the prostitutes who claimed to have overheard incriminating conversations—recanted their testimony, the verdict stood. Dewey rebutted the retractions with evidence that they were perjuries, which Luciano minions obtained by intimidating drug-addicted witnesses. As a result, Lucky was first sent to Sing Sing and then the Clinton prison at Dannemora in upstate New York near the Canadian border. Criminals informally referred to the latter as Siberia.
Even in prison Luciano retained the status of a Mafia godfather. Although assigned to work in the prison laundry room, he got other prisoners to do his work in exchange for gifts. Other men were similarly bribed to clean his cell and perform all his other unpleasant chores. He spent most of his Dannemora time playing cards and strolling around the grounds as other prisoners sought audiences with him. He was still nominally in charge of his Mafia kingdom because, by tradition, a boss’s throne could only be relinquished by death or abdication.
Before entering prison, he delegated administrative authority for his Mob family to Frank Costello, who climbed the Mafia ladder via his True Mint Novelty Company, which was a slot machine enterprise hidden under the facade of a candy vending machine operation. Even though in prison, however, Luciano continued to hold ultimate authority.
Shortly after America entered World War II, federal authorities negotiated secretly with Luciano. They asked that he use his influence over the Longshoremen’s Union to prevent strikes as well as to detect and combat potential enemy sabotage missions along the waterfront. The unexplained sinking of the French passenger liner S.S. Normandie as it was being converted into a troop carrier at Manhattan’s pier 88 only a few months after the United States formally entered the war triggered the discussions.
Luciano agreed to help and tried to negotiate a sentence reduction. The following year he also volunteered to provide contacts in Italy in order to aid the Allied invasion of that country. Although his appeal for a sentence reduction was rejected in 1943, federal officials appreciated his attempts to assist the war effort. After the war ended then-Governor Dewey gave Luciano executive clemency on the condition that he agree to be deported, with the understanding that if he ever returned to the United States he would be treated as an escaped prisoner. On February 10, 1946 Lucky waved goodbye to New York and set sail for Sicily. It was the last time he would see the United States.
Although he never became the central antagonist in a television series like Al Capone in The Untouchables, Charles Luciano was as powerful a mobster as any who reached the top of the American underworld. It may be noted, for example, that Frank Costello remained subordinate to Luciano while the latter was in prison even though Costello inspired the Vito Corleone character in Mario Puzo’s, The Godfather. As shall be discussed, Hot Springs also figured-in to Costello’s biography.