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Thomas E. Dewey Defeats Dutch Schultz

Originally published by American History magazine. Published Online: June 12, 2006 
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In the 1920s and early 1930s, organized crime had its fingers in all sorts of rackets — infiltrating unions, running gambling rings, shaking down restaurant owners, and much more. The most effective, determined, and ruthless gangsters controlled business empires. They wielded power equal to almost any politician's and amassed fortunes that rivaled those of legitimate capitalists. Some gangsters became so famous they were known by their nicknames. There was 'Scarface Al Capone, Charles Lucky Luciano, Waxey Gordon, Benjamin Bugsy Siegel — and of course, Dutch Schultz.

His real name was Arthur Flegenheimer, but he called himself Dutch Schultz because it fit better into newspaper headlines. A cold-blooded killer with a hair-trigger temper, Schultz was running his own bootlegging organization by the mid-1920s. Before long he controlled nearly all the illegal beer distribution in the Bronx, earning at least half a million dollars annually from this activity alone.

Schultz's criminal activities eventually led to a federal indictment for tax evasion. The Dutchman managed to beat the rap in 1935, but New York state's special prosecutor, Thomas E. Dewey, refused to let him off the hook. Publicly, the Dutchman expressed little concern. If the feds couldn't get me, Schultz said, I guess this fellow Dewey can't do much. In private, however, it was a different story. Dewey's gotta go, he screamed to an associate. He has gotta be hit in the head.

Prohibition created opportunities for the criminal underworld, but after it ended in 1933 mobsters merely expanded into other arenas, often with the help and protection of political and law enforcement leaders. In New York City, for instance, James Hines of the city's Tammany political machine was one of many officials who ran interference for gangsters. This Hines was a district leader who controlled other district leaders and was so powerful he could order judges and police officials around, commented Dutch Schultz's lawyer, J. Richard Dixie Davis. More than once I sat late with Hines and Dutch Schultz in a mob night club as we plotted ways by which, with the Dutchman's mob and money, Hines might extend his power over still other districts and seize absolute control of Tammany and the whole city government.

By the early 1930s, several courageous prosecutors and government agents around the country had begun to chip away at the mobsters' criminal empires. Among the most prominent was New York City's Thomas E. Dewey. Born in Michigan in 1902, Dewey started his career as a Wall Street lawyer but soon gave it up to work as chief assistant to U.S. Attorney George Z. Medalie. Short in stature, dapper, with a dark moustache, irregular front teeth, and intense dark eyes, Dewey earned a reputation as a tireless investigator with an astonishing grasp of detail. One of Dewey's landmark cases was the prosecution of bootlegger Irving Wexler, a.k.a. Waxey Gordon. Getting the indictment required two and a half years examining 1,000 witnesses, 200 bank accounts, and several thousand hours of grand jury examination, and tracing of the toll slips of more than 100,000 telephone calls, Dewey recounted in his autobiography. The hard work paid off. In 1933 Gordon was sentenced to 10 years in a federal penitentiary. By then Medalie had retired, and Dewey was named his successor. He was only 31, the youngest U.S. attorney ever. But it was a temporary appointment, and once President Franklin Roosevelt, a Democrat, named his own choice to the position in 1934, the Republican Dewey returned to private life.

He did not remain there long. The following year New York's Governor Herbert Lehman appointed Dewey as a special prosecutor charged with breaking the hold racketeers had on Manhattan's civic life. Doing business with mobs was costing New York City residents half a billion dollars a year, and something had to be done to end the extortion. Some mob-friendly politicians used their positions to stall any real investigation of the rackets, but Dewey was zealous, honest, and ambitious. We are not to waste time on the small fry, he told his subordinates. It's important people in the underworld who will be the objects of the investigation.

The special prosecutor launched himself enthusiastically into the job. He found office space in the Woolworth Building, which offered plenty of exits for his informants to come and go without being easily observed. Dewey put together a crack team of lawyers, investigators, accountants, stenographers, and support staff, a fiercely loyal group that shared the chief's willingness to work all hours of the day and night. It couldn't have been too easy to live with guys like that, recalled one staff member. They were a competitive, tough bunch and Dewey, I think, is the only man I've ever met who could have kept that team of horses running harmoniously together. He could quell any uprising with one look, and he was tough enough himself so that nobody fooled around with him.

It was a crusade, and we were all young enough to be very ardent crusaders, remembered another of Dewey's lawyers. His determination and doggedness, the care with which he felt he was selecting his associates and the veil of high-level integrity that was constantly apparent throughout the investigation had a tremendous inspirational effect — because we were battling the whole, organized underworld in New York City, and we were the forces of decent living.

Dewey knew his crusade would earn him the enmity of the country's most successful mobsters. Still, most of the mob leaders appeared unconcerned. Bosses such as Luciano, Louis Lepke Buchalter, and Meyer Lansky knew that officials in New York City often looked the other way when it came to organized crime. Dewey knew that too. Local officials had thrown up plenty of roadblocks during his investigation of Waxey Gordon. Still, there was one gangster who saw the special prosecutor as a threat. Despite his tough words about this Dewey fellow, Dutch Schultz was showing signs of cracking.

Arthur Flegenheimer was the son of a Bronx saloonkeeper who deserted the family when the boy was 14. As his mother toiled at a series of dismal jobs to make ends meet, Arthur set off on a different course. He logged his first arrest, for burglary, at the age of 17. Once out of jail, Arthur, now calling himself Dutch Schultz after an earlier New York gangster, began moving up in the world of crime. During Prohibition Schultz's bootlegging operation made him the Beer Baron of the Bronx. He later started a $2 million-a-year restaurant shakedown business, controlled at least one labor union, and, perhaps most important of all, muscled his way to take control of the lucrative policy business in Harlem. Policy, better known as the numbers racket, was an illegal but popular gambling game. Players placed a bet on a three-digit number, with the day's winner determined by chance, most often by tying it to the results of horseraces at a local or out-of-town track. Even in the poverty-stricken, Depression-era Harlem of 1931, the policy racket brought in around $35,000 a day.

Nevertheless, controlling the numbers racket, even with a profit margin of up to 60 percent, was not enough for Schultz. With the invaluable help of a mathematical genius named Otto Abbadabba Berman, Schultz manipulated the winning digits so that less frequently played numbers won. The scam sent his revenues ever upward, perhaps as high as $20 million a year.

To keep his operation growing, Schultz relied on people such as Abe Bo Weinberg, a hit man implicated in the killings of rivals Jack Legs Diamond and Vincent Mad Dog Coll. On the legal front, Schultz received advice from Dixie Davis, who had no problem with dallying on the wrong side of the law. I suppose you might say I was polluting the stream of justice, Davis wrote for Collier's magazine in 1939, but that was something that had been done by experts long before I came along.

In that same magazine series, Davis recalled his first meeting with the Dutchman. His murderous reputation had led me to expect a ruffian, but he was not at all that way. He was a small but well-set man, with good features. The girls used to say he looked like Bing Crosby with his nose bashed in. With his mob, I was to learn, Schultz could be boisterous and noisy, and talk a rough thieves' argot, but this night he was polite, well-spoken, amiable.

Davis soon learned that the former Arthur Flegenheimer had big plans. Dutch Schultz was a man of vision, the lawyer wrote. I remember a time when he was reading about the Russian revolution and his eyes glistened as he told me how the Bolsheviks had taken over the gold from a government bank. 'Those guys are just like me,' he said. 'They're just a mob. If I'd been there with my mob I could have taken over, just like they did. But over here,' he added sadly, 'the time isn't ripe yet.'

Schultz loved power, but he loved money even more. You can insult Arthur's girl, spit in his face, push him around, and he'll laugh, said Davis. But don't steal a dollar from his accounts. If you do, you're dead.

Hitman Bo Weinberg was one man who learned the hard way. Weinberg had been a loyal killer for Schultz. He had even served time for contempt of court after he refused to testify when the Dutchman was first indicted for tax evasion. Yet when Schultz heard that Weinberg had tried to horn in on his territory, he had no qualms about eliminating Bo — doing the job himself, according to some accounts.

Dewey was behind the tax indictment, so Dutch decided to lay low until the aggressive young prosecutor returned to private life. Once Dewey was out of the picture, Schultz managed to beat the rap. His first trial, held in Syracuse during the spring of 1935, ended in a hung jury. For the second trial, which Davis helped get moved to the small northern town of Malone, New York, the gangster embarked on a public relations blitz. He befriended the townspeople, sent gifts to hospitalized children, spent thousands on parties for Malone's residents — and won an acquittal from the local jurors. It will be apparent to all who have followed the evidence in this case that you have reached a verdict based not on the evidence but on some other reason, sputtered the judge, accurately enough; but Dutch Schultz was a free man again.

Schultz left the courtroom in Malone that summer to find that his criminal empire was crumbling. He had never been popular among the mob leaders of New York — they found him too cold, too violent, and too unpredictable — and his fellow gangsters had moved in to divide his territory among them. Policy was the only major line of business that remained truly his. Schultz smarted, but he knew he was not powerful enough to take back what he had lost. Instead, he set out to try to rebuild his empire, using the numbers as a cornerstone.

Then Schulz learned that Dewey had set his sights on the numbers racket, a shift in strategy that Schultz perceived as a direct threat to him. Schultz also suspected that Dewey had it in for him personally. He was right. The Dutchman's acquittal had made headlines — and made the mobster Public Enemy Number One for the special prosecutor's office. As Dewey wrote in his autobiography, I regarded it as a matter of primary importance to get Dutch Schultz.

Schultz worried about Dewey for several days. Finally his paranoia and ruthlessness drove him to a deadly resolution. He would have Dewey killed.

The decision to hit Dewey was not Schultz's alone. By 1935, the top mobsters had formed a syndicate — a cartel of the underworld's most powerful criminals. Its members included Lucky Luciano, Meyer Lansky, Lepke Buchalter, Jacob Gurrah Shapiro, Frank Costello, and Vito Genovese. Protocol dictated that Schultz bring his proposal to the syndicate's board of directors. Members were divided over the plan. Mobsters often killed each other, but going after Dewey would be an act of unprecedented audacity that would bring the wrath of the authorities down on the mobs. In the end, the group delayed the decision, but began to lay the groundwork by appointing Albert Anastasia to outline a scheme for a potential execution. Anastasia's attention to detail had earned him the nickname the overlord of organized crime in his home borough of Brooklyn. He was also the man in charge of the syndicate's death squad, an organization later tagged Murder Inc.

Dewey knew his investigations might lead to personal repercussions, and he reluctantly accepted the services of at least one police bodyguard. After the syndicate meeting Dewey received several threatening telephone calls, and rumors spread that there was a $25,000 price on his head. Dewey did not back off, but he did take the news seriously, and he allowed the bodyguards to trail him closely. As he put it, ordinary hoodlums would be scared off by the detective … [and] the top gangsters would be too smart to tangle with such a well-protected man.

Anastasia moved carefully. He first hired a man — some accounts say he did the job himself — to study Dewey's morning routine. The spy watched the prosecutor's neighborhood in the company of a little boy who diverted suspicion by riding a velocipede, or tricycle, in front of Dewey's apartment building. Apparently neither Dewey nor his escort ever thought twice about the man and his supposed son.

On four consecutive mornings the doting father tailed Dewey. He learned that the special prosecutor left home each morning around 8:00 and headed to a nearby pharmacy to use the pay phone, so he wouldn't disturb his sleeping wife, and to avoid any possible taps on his home phone. While Dewey called his office from the drugstore, his security detail remained outside on the sidewalk.

The plot began to fall into place. The hitman would enter the drugstore before Dewey arrived. Once the unsuspecting prosecutor was in the phone booth, the murderer would shoot him, then kill the pharmacist to eliminate the only witness. By using a silencer, the killer would ensure that the bodyguards outside would hear nothing. Once finished, the shooter would calmly walk past the guards and around the corner to a waiting getaway car.

The plan appeared feasible, but Schultz made little headway with the syndicate leaders at an October meeting. Only garment-district racketeer Gurrah Shapiro sided with the Dutchman. The others believed that Dewey's murder would create more problems than it would solve. We will all burn if Dewey is knocked off, said Lepke. The easier solution was the tried-and-true technique of witness intimidation. We are bombproof when all the right people are out of the way, argued Lepke. We get them out of the way now — then the investigation collapses, too.

Schultz himself was a factor behind the board's reluctance. Many of the mobsters thought the Dutchman was a loose cannon. The murder of Bo Weinberg, well liked and respected among underworld members, had been a black mark against Dutch. Furthermore, the other mob leaders had designs on Schultz's business interests.

In the end, the syndicate refused to authorize the Dewey hit. Schultz was enraged. I still say he oughta be hit, he said. And if nobody else is gonna do it, I'm gonna hit him myself. With those words, Dutch Schultz signed his own death warrant. Lepke quickly dispatched two of his best operatives, Emanuel Mendy Weiss and Charlie the Bug Workman, to take care of the problem.

They did so with remarkable efficiency. On the evening of October 23, Workman and Weiss arrived at the Palace Chop House in Newark, New Jersey. Weiss stayed at the door to act as lookout, while Workman headed to the back, where an informer had told them they would find Schultz. Opening the door to the men's room, the killer saw a man at a urinal. He assumed the man was a bodyguard. Workman fired, and his victim fell to the ground.

Then Workman stepped out into the back room, where he found three of Schultz's henchmen — mathematical genius Abbadabba Berman and bodyguards Abe Landau and Bernard Lulu Rosenkrantz. Schultz was nowhere in sight. Methodically, Workman riddled the three gangsters with a hail of bullets as they futilely tried to shoot back. Still, Schultz was nowhere to be found and Workman began to worry until he realized that the man in the bathroom had been the Dutchman himself.

Schultz did not die immediately. He lingered for 22 hours, drifting in and out of lucidity, as police questioners at the hospital urged him to name his killer. When asked, Who shot you? Schultz answered first with a vague, The Boss himself, and then changed his answer to No one. The Dutchman continued to babble incoherently for several hours. On October 25, Schultz murmured, French-Canadian bean soup. I want to pay. Let them leave me alone, slipped into a coma, and died. He was 33 years old.

Dewey continued his crusade to loosen the mobs' grip on New York City. In 1936 he sent Luciano to prison for running a prostitution ring. Elected district attorney the next year, Dewey got a conviction for Tammany's Jimmy Hines. Gurrah and Lepke soon followed. Lepke, convicted of murder, became the highest-ranking mob boss to die in the electric chair. The masterminds of the underworld had spared Dewey's life, and the special prosecutor had repaid the gangsters by putting them in prison and breaking up their empires.

The plan to kill Dewey finally came to light in 1941, when a mob informer tipped off authorities to Charlie Workman's role in the affair. Workman was arrested, found guilty of murder, and sent to jail. After the story came out, Dewey denied any knowledge of the plot. He had heard vague threats, nothing more. I had no idea whether those stories were true, he wrote in his autobiography. They might have been just underworld gossip. Nor did Dewey admit to any awareness of the plot when Assistant District Attorney Burt Turkus described the details to him years later. Dewey sat motionless as Turkus filled him in, his face and body language betraying no reaction and no familiarity with the details.

Except, perhaps, just once. When I mentioned the baby on the velocipede, Turkus wrote afterwards in his book Murder, Inc., Dewey's eyes widened a fraction. It was a barely perceptible flicker….It gave me an idea, though, that he had recalled the tot — and its 'proud parent.' Whether Dewey remembered the child or not, it is a good bet that the story of Dewey's near-assassination is the only time the mob killed one of its own to protect an honest prosecutor.

This article was written by Stephen Currie and originally published in December 2002 issue of American History Magazine. For more great articles, subscribe to American History magazine today!

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