S2/E5: Dutch Schultz

 

Listen here: https://www.podbean.com/media/share/pb-r6mu4-78c851

 The gangster era of the 1920’s and 30’s is often portrayed as a romantic and glamorous period in American history. With Hollywood stars like James Cagney, Robert De Niro, Warren Beatty, and Johnny Depp portraying the colorful characters of the day, it’s no wonder that the ugly reality of the criminal underworld is seldom examined.

 

This is the story of Dutch Schultz.

August 6, 1902

 

Arthur Simon Flegenheimer was born to German-Jewish immigrants Herman and Emma Flegenheimer in the Yorkville neighborhood of upper Manhattan, New York. His parents were hard workers that made the trip from Europe with the hope of making a better life in America. But when they arrived,  they discovered a harsh reality of an oppressive poverty and crowded tenements.  The family quickly moved to the Bergen and Webster Avenue neighborhood in the south Bronx. There, they raised Arthur and his younger sister, Helen.

 

Arthur attended Public School #12. He was of average intelligence, but his determination and diligence more than made up for it. Like many children in the area at the time, Arthur often seeked an escape from his bland home life. He took to the streets and hung out with a group of like-minded youth colloquially called the Bergen Gang. Despite the name, they were basically a group of rabble rousers killing time by smoking, playing pool and committing petty acts of thievery.   

1916

For reasons that are lost to history, Herman abandoned his family. Emma was desperate for whatever work she could find, but it wasn’t enough. Fourteen year-old Arthur dropped out of school and began working odd jobs to help his beloved mother make ends meet. He was a roofer, sold subway transfers on the street and worked in a print shop. But after making a pittance for his hard work,  it didn’t take long for him to discover that a certain oft-repeated idiom had been a lie. As it turned out- crime did pay.

 

He started frequenting the Criterion Club in Times Square, where he met, and befriended career criminal  Marcel Poffo. While in reality, Poffo was a low level gangster, Arthur was awe struck by his new mentor. Poffo always had money and was seemingly fearless. This was a stark contrast to the poor, downtrodden working class in the area.  In an effort to impress his new idol, Arthur held up crap games that refused to pay Poffo. He continued to build his criminal resume by leading his Bergen gang cohorts in an escalation of their illicit deeds.

 

Arthur was quickly gaining his own reputation as a tough guy. Police began keeping an eye on him. .

 

August, 1917

The United States entered into World War 1. In an effort to manage wartime supplies, the US Food Administration was created. President Woodrow Wilson had appointed future president Herbert Hoover as the head of the administration.

Around the same time, a resolution containing the language of what would become the 18th amendment was passed by the Senate. This would not prohibit alcohol consumption outright, but made the production, transport, and sale of alcohol illegal.

November 18, 1918

While waiting for the ratification of the 18th amendment, Congress passed the temporary Wartime Prohibition Act. The sale of adult beverages having an alcohol content greater than 1.28% was banned.  

 

January 1919

The 18th amendment was ratified. It worked at first:  alcohol consumption was down 30 percent, arrest rates for drunkenness fell and prices for illegal alcohol soared high enough to prevent the average worker from buying it.  

October 1919

The Volstead act was enacted to enforce the 18th amendment. The legislation detailed penalties and narrowed the language of the amendment to benefit law enforcement.

 

December 12, 1919

Arthur Flegenheimer had his first run in with the law. He was just 17 years-old when he was arrested for burglarizing a Bronx apartment. During his arrest and booking he used an alias for the first time; Charles Harmon. He was sentenced to 17 months at Blackwell’s Island- a prison in the middle of the East River reputed for it’s brutality. It proved a poor deterrent for Arthur. He was such an unruly prisoner that he was transferred to an even worse prison- Westhampton Farms. He escaped just a few hours after the transfer, but was quickly apprehended and had an additional two months added to his sentence.

1920

Freed from prison and back on the streets with the Bergen Gang, Arthur was given the nickname “Dutch Schultz” by one of his comrades. . How did a Jewish boy of German descent receive this sobriquet?. The name was appropriated from a particularly violent local gangster that had been a member of the notorious Frog Hollows Gang. It was assumed that the original Dutch Schultz wouldn’t mind the borrowing of his name as he was probably dead or in prison. Besides,  Arthur was quoted as saying “Flegenheimer was too long a name for headlines”.  Arthur considered himself one of the toughest guys around. He would spend the rest of his life proving it.

By the mid 1920’s, prohibition was in full swing. While it was resented by working class drinkers, the legislative act was a blessing for gangsters with black market connections. One such example was Arnold Rothstein, perhaps the biggest gangster of the pre-prohibition era. He became a central supplier of illegal liquor in New York City. Dutch Schultz initially played a small part in Rothstein’s bootlegging racket, driving the trucks that delivered alcohol to speakeasies- secret bars that sold booze on the sly.

 

This time was a learning experience for Schultz, and he soaked in every facet of the business. He was also socializing with other entry-level members of Rothstein’s operation, including a young thug named Salvatore Lucania, better known as Charles “Lucky” Luciano. Schultz and Luciano shared an ambition to rise in the ranks and make names for themselves. Despite this, both were wary of each other and kept their relationship formal. Their paths would continue to mirror the other- both men became part of the Jack “Legs” Diamond gang…another rung in the ladder to the top.

 

1925

 

Schultz moved his way up from a truck driver to tending bar at the Hub Social Club, run by Joey Noe. As far as speakeasies go, it was towards the bottom of the barrell. It was located in a tenement building. But it was a start.

 

Schultz not only slung drinks, but was the peacemaker when the clientele became unruly. This was almost a full time job in and of itself. Tensions were high amongst the rough customers. The fact that Noe was serving low quality alcohol didn’t help matters. But Schultz bolstered his tough guy reputation when he stepped in. Aided by his trusty baseball bat, customers knew better than to push their luck with the Dutchman. Normally a quick temper and penchant for violence would not be seen positive job qualifications, but in Schultz’s case, it gained him respect and helped him ascend through the ranks.

 

1928

Joey Noe and Dutch Schultz went into business together. They opened a chain of speakeasies around the Bronx and started selling beer to other speakeasy owners. Noe and Schultz put their profits back into the business, buying their own trucks and expanding their territory. They went from bar to bar, using intimidation tactics to grow their client base. Usually, their strategy worked flawlessly, but there was the occasional resistance.

 

Joe and John Rock were Irish brothers in the bootlegging business. John quickly acquiesced to Schultz and Noe when they strong-armed him, but Joe wasn’t having it. When Joe refused their quote unquote offer, Schultz and Noe decided to make an example out of him.

 

Thugs were sent to kidnap Rock and take him to an unspecified, unoccupied building. There, they hung him on meat hooks by his thumbs, and beat him mercilessly. To add insult to injury, they wrapped a gauze bandage around his head and eyes. The gauze had been soaked in the discharge of a gonorrhoeal sore. I’m sorry. That’s two episodes in a row. I promise you the next one won’t have disgusting bandages in it.

 

Joe Rock was then held for ransom. His family raised the $35,000 demanded by Schultz and Noe and Joe was released. He never fully recovered from his ordeal. In fact, he went blind shortly afterwards.

 

After these multiple criminal acts, Schultz faced no repercussions and was richer and more respected amongst his peers than ever before. He had one take away: Might Makes Right.

 

Schultz and Noe continued to expand their business. They bought more beer trucks and surrounded themselves with tough criminals such as Abe and George Weinberg, Fats McCarthy and Schultz’s  childhood friends Fatty Walsh and a man that would one day become the Dutchman’s enemy- Vincent Coll.

 

The demand was so high that the Dutchman and Noe began buying beer from other illegal brewers such as Owen Madden. Madden was an infamous gangster better known as Owney the Killer. The fact that such a well respected, high profile name was willing to work with Schultz and Noe was a huge boon to their own stature in the  bootleg trade.

 

They began supplying beer throughout the Manhattan area, including Washington Heights and Harlem.  Business was so good that they moved headquarters from the Bronx to Manhattan. This was a bold move, as they were no encroaching on their former gang boss Legs Diamond’s territory. Diamond wasn’t happy, but Schultz and Noe had amassed a small army of seasoned criminals and were headquartered in a veritable fortress. No, Diamond wasn’t happy….but he wasn’t stupid, either.

 

October 15, 1928

Dutch Schultz was known as an unlikeable man. Cold and calculating, with few friends. In fact, his only real friend was said to have been his business partner, Joey Noe. The two had spent a night carousing at the Swanee Club in Harlem. The Club was neutral turf for gangsters- a place to relax and have a good time after checking your paranoia at the door. Nevertheless, Schultz and Noe made it a habit to wear a bulletproof vest under their evening wear. This night had been no exception.

 

Upon leaving the club, Schultz went back to work, but Noe hadn’t had his fill yet. He left the Swanee and headed straight to the Chateau Madrid, a nightclub on West 54th Street. It was around 7AM when a blue Cadillac slowly approached the entrance to the club. Noe was standing outside and became suspicious. He saw a glint of something in the car window, but before he could react, a barrage of bullets had cut through his bulletproof vest and tore into his body.

 

Laying on the now bloody sidewalk, and clinging onto life, Noe had the presence of mind to draw his pistol and fire several shots at the car as it drove off. The Cadillac swerved into a parked car. It continued to drive off and witnesses lost sight of it.

 

An hour later, Police were called to investigate a damaged blue Cadillac. When they arrived, they found the lifeless body of of Louis Weinberg- a member of the Legs Diamond gang. Amazingly, Noe had found his target and exacted immediate revenge. But there would be little satisfaction for Noe. He died three weeks later from his wounds. Following the gangster code, Noe never talked to police about his assassin or any association with Legs Diamond.

 

Schultz was left without a partner. He had also lost his one true friend. Though already considered to be cold and ruthless, any shred of compassion Dutch Schultz may have possessed was now gone. He made the decision to carry on alone. He didn’t trust anyone else enough to partner with them. It didn’t slow him down. In fact, the Dutchman continued his climb through the underworld. Schultz came to be known as the Beer Baron of New York, but few people outside of the Big Apple knew his name. That would soon change.

 

February 1930

Joe “the Boss” Masseria and Salvatore Maranzano entered into a power struggle that would come to be known as the Castellammarese War. The winner would be the capo di tutti capi, or “boss of all bosses” of the entire Mafia. The gangsters of New York were divided into two factions, whether or not they actually held any allegiance to Masseria or Maranzano.

 

Like Schultz, Lucky Luciano had been working his way through the ranks of the mob. He had strong connections to Joe Masseria. Since Schultz had been an associate of Luciano, he was considered an enemy of Maranzano by default. In reality, the Dutchman had no allegiance and was happy to put his efforts into his business while Masseria and Maranzano went to war.

January 24 1931

Dutch Schultz and one of his lieutenants, Marty Krompier, were dining and imbibing at the Club Abbey on West 54th street. They were joined by a business associate named Larry Carney and two unnamed women. The women came and went. Schultz may not have even bothered to learn their names. They sat at a corner table where they were soon joined by Rene Bonnie, one of the  nightclub entertainers.  

 

Krompier and Bonnie were waltzing on the dancefloor when another woman interrupted and began talking to Bonnie. It soon became an argument in which Krompier, Schultz and Carney became involved. The woman had accompanied Charles, Chink Sherman to the club that night. Sherman was one of Waxey Gordon’s men. Gordon was a rival bootlegger, so when Sherman and his associates entered the argument, tensions were higher than they might otherwise be.

 

The verbal argument quickly became violent, with tables being overturned, bottles flying, and chairs being swung. Schultz himself had hit Sherman over the head with one such chair, and as Sherman was laying on the floor, Krompier used a shard of glass to stab him. Sherman was then slashed in the face with a broken beer bottle. Gun shots rang out. It was one of Sherman’s men. Schultz and his crew ran out of the club. They didn’t escape unscathed. The Dutchman had taken a bullet to the shoulder.

 

Schultz and company were long gone by the time police arrived. Again, adhering to the gangster code, Sherman refused to name his attacker to police.. Despite this, Schultz was considered the prime suspect. He was paraded in front of a group of witnesses, but not a single person identified him as the assailant.

 

Later that year, Schultz associate and former childhood friend, Vincent, “Mad Dog” Coll had been charged with violating the Sullivan Law, which made carrying a concealed weapon illegal. In an uncharacteristic move, Schultz reluctantly paid Colls’ $10,000 bail.  

 

While awaiting trial, Coll, a foot soldier in the Schultz gang,  requested a promotion to full partner to fill the void left by Noe.  He was incensed when Schultz denied him. As a former peer of the Dutchman’s, Coll felt he was owed. The Mad Dog cursed his boss out and swore to make a name for himself on his own before storming out.

 

Schultz didn’t take the challenge to his authority lightly. While he was contemplating the proper plan of action to deal with Coll, Schultz got the news that Coll had been a no-show for his court date. The court forfeited the bail, meaning Schultz was responsible for paying it. $10,000 in 1931 is the equivalent  to nearly $150,000 in 2017. As you can imagine, Schultz was furious. In fact, he saw it as a declaration of war.

 

April 15

The Castellammarese War came to an end when Lucky Luciano made a decisive move. He invited his boss, Masseria to an Italian restaurant on Coney Island. While dining, Luciano excused himself to the bathroom. As soon as the washroom door closed, the front door opened in a burst of violence. Luciano’s men came in shooting. Masseria never stood a chance.

 

Salvatore Maranzano had become the boss of all bosses.

 

May 30

 

Schultz gave the order for Vincent’s brother, Peter Coll, to be killed, for no other reason that to send Vincent a message. The murderous act was carried out, and, as planned, Vincent Coll was devastated, but he would soon go on the offensive.

 

June

Vincent Coll hijacked several of Schultz’s beer trucks, but he was just getting started. Coll then started picking off Schultz’s men one by one. He had killed four of the gang before long.

 

As the new Boss of All Bosses, Maranzano was settled in and ready to start cleaning house. He formulated a kill list, with Lucky Luciano and his lieutenant Vito Genovese earning the top spot. The other names on the list were Joe Adonis, Frank Costello and Dutch Schultz.

 

Vincent Coll was contracted by Maranzano to execute his kill list. Coll was more than happy to lend his services.

 

Dutch Schultz seemed unworried about Maranzano and Coll. He was more concerned about growing his business and his social status. But his growing public profile was precisely the problem when he moved into a swanky apartment on Fifth Avenue in Manhattan. He used the alias Russell Jones,  but an anonymous caller alerted police that he was in fact, the now notorious Beer Baron.

 

June 18th

Acting on the anonymous tip, two plainclothes policemen were sent to stake the building out. Detectives Julius Salke and Stephen DiRosa positioned themselves on a park bench across the street, with a view of Schultz’s ninth floor apartment window. They did little to hide their intentions. Schultz looked out his window in the early morning hours and noticed the strange men sitting on the bench. They were looking directly at him through binoculars.

 

It was nearly 6 AM when Schultz, accompanied by Danny Iamascia and two other associates, confronted the detectives. When asked for an explanation, the detectives told the truth and let Schultz know he was under police surveillance. Iamascia wasn’t buying it. He pegged the two men for rival assassins. Paranoid and agitated, Iamascia began threatening DiRosa and Salke. When Detective DiRosa drew his revolver, Iamascia drew his pistol. DiRosa fired, and struck Iamascia in the stomach.

 

Schultz fled, and ran into Central Park,but he wouldn’t get far. The Dutchman pulled out his .38 calibre revolver as he ran. Just then, a gunshot rang out, followed by Detective Salke ordering Schultz to surrender. Schultz knew he was beat. He stopped running and dropped his gun. He realized these weren’t Maranzano’s hitmen. Salke had him dead to rights, and Schultz was still breathing.  

 

As he approached the detectives  with his hands held high, Schultz explained that he was being followed by mobsters and that he feared for his life. He even asked for their protection. He was ignored.

 

Schultz then employed a different strategy and offered each of the detectives $50,000 and an upscale home. They just had to let him go. Somewhat surprisingly, the high priced bribe didn’t work. After dropping a critically injured Iamascia off at Mount Sinai hospital, the detectives took Schultz to the police station, where he was charged with felonious assault and carrying a concealed weapon.

 

After being warned of the consequences if he didn’t appear in court, Schultz was released on bail.

 

Danny Iamascia died the next day from his wounds.

 

July

Dutch Schultz’s trial was short- he easily beat the charges when the jury said the state couldn’t prove he aimed his gun in the direction of the detectives. As for the concealed carry charge, Schultz produced a licence to carry.

July 28th

Vincent Coll had kept a low profile during the trial. No longer.  New York City was in the grip of a deadly heat wave. This sweltering day would be the backdrop to Coll’s most heinous act.

 

The Helmar Social Club in East Harlem was a popular hang out spot for one of the Dutchman’s associates, Joey Rao. Coll knew this. He and four of his men packed into the same car and slowly drove down East 107th Street. The sidewalks were crowded with children trying to beat the heat. In the era before air conditioning, it was actually hotter to stay inside. Coll and his cronies approached the entrance of the club, where they saw Rao standing outside. The car slowed down and out of their windows popped out a .45 automatic and a shotgun.

 

Before anyone could react, the sound of gunfire filled the air and was soon mixed with the screams of the children that had innocently been playing on the street. After the car sped off, a flustered, but unhurt Joey Rao stood up and observed his surroundings. On the street lied five children that had been caught in the barrage of bullets. Five year old Michael Vengalli died the next day from his wounds. The other four all survived.

 

In these days, it was common for gangsters to literally get away with murder, because witnesses were afraid to talk to police. In this case, however, a brave eyewitness named George Brecht identified Vincent Coll and his croney, Frank Giordano.

 

The public was outraged and called for Coll’s head. The press was just as merciless and  labeled him The Baby Killer.

 

Coll was now on the run as a nationwide manhunt was underway. He dyed his blonde hair black and grew a moustache. He went into hiding, but found little refuge. Even his fellow gangsters were appalled by what he had done.

 

September

Salvatore Maranzano made a surprise move and invited Lucky Luciano and Vito Genovese to a meeting in his Park Avenue office. Luciano wasn’t stupid. He suspected an ambush, and he was right- . Vincent Coll had been contracted to show up during the meeting and assassinate Luciano and Genovese.

 

Prior to the scheduled meeting, a group of police officers showed up to question Maranzano. When they entered his office, they drew their guns and shot the boss of all bosses at close range. To ensure his death, they then stabbed him and slit his throat. The Policemen had actually been Luciano’s men dressed in bought uniforms.

 

Luciano quickly filled the power vacuum,  but he had a much more ambitious goal than the localized mob structure Maranzano envisioned. Luciano wanted to create a national regulatory body that would span the entire United States. Along with infamous mob accountant, Meyer Lansky, Luciano created the Commission. The newly formed governing body of the American Mafia was chaired by Luciano and consisted of six other family bosses: Vincent Mangano, Tommy Gagliano, Joseph Bonanno, Joe Profaci, Al Capone and Stefano Magaddino.

 

The Commission favored conformity. Dutch Schultz was anything but a conformist. He was far too impulsive and independent to earn a seat in the inner circle.

 

October 4

Vincent Coll had powerful enemies. The new boss of all bosses, Lucky Luciano and Dutch Schultz had both targeted him for death. Perhaps luckily for Coll, the police found him first. Acting on a tip, they arrested Coll at the Bronx hotel in which he had been hiding out.  Coll and the other two gunmen, Frank Giordano and Patsy Dugan, were indicted the next day on murder charges for killing 5 year-old Michael Vengalli.

December

The three gunmen were represented by one of New York’s best defense attorneys, Samuel Leibowitz. Despite being placed at the scene of the crime by eyewitness George Brecht, Coll claimed he was miles away at the time was being framed. Leibowitz discredited Brecht’s credibility and all three men were acquitted. Michael Vengalli and his grieving family never had legal justice…but Coll was a marked man.

 

February 1932

Dutch Schultz was informed that Coll was going to be attending a card game in a house in the North Bronx. He sent four gunmen to the house to take his enemy out. When Schultz’s men burst into the downstairs room they found the card game. They opened fire and killed all three players sitting round the table. They left as quickly as they had come. As it turned out, Vincent Coll was not among the dead. Once again, he was late to the game. This time it saved his life. It was only a  brief respite.

 

Just days later, Schultz found out Coll was staying at the Cornish Arms Hotel and that he was too paranoid to use his hotel phone. The Dutchman was tipped off that Coll would be using the pay phone in the nearby pharmacy around midnight. The information was good. Coll left the apartment at 12:30 with a bodyguard.

 

The two entered the pharmacy and Coll made his phone call. Outside, a limousine pulled up to the pharmacy. Two of the men entered the pharmacy while the driver waited outside. One of the men was holding a thompson submachine gun in plain sight. As they approached Coll, the Mad Dog spotted them and yelled for his bodyguard. It was a futile effort. His bodyguard was calmly walking out of the pharmacy, having been paid off by Schultz for his inside information. Coll was shot at least 15 times and was killed instantly.

 

With the end of prohibition in sight, mobsters were forced to branch their business interests out. Most of them went from bootlegging to prostitution and drugs. Schultz, ever the black sheep, decided to focus on the Harlem-based numbers racket. Policy slips with three digit numbers were sold to gamblers in the hopes of winning big. The illicit lottery was a very popular game in the time of the Great Depression. It didn’t cost much to play and the risk was low.

 

Schultz proceeded to strong arm individual numbers operators into his protection racket. He met opposition in the form of the Policy Queen of Harlem- Stephanie St. Clair.

 

St. Clair was from the French colony of Martinique in the Caribbean. One of just a few women in leadership positions in the New York City crime circles, she was tough, smart and defiant. She was personally worth about half a million dollars– what would amount to over $8 million in 2017. Her operation was too tempting for Schultz to ignore. He increased pressure and used the same strong arm tactics he had employed successfully with so many others.

 

The Policy Queen was not going to roll over easily. St. Clair tried several unsuccessful attempts to rid herself of Schultz’s influence before finally running ads in local newspapers that detailed the political corruption that helped line Schultz’s pockets. The plan backfired when St.Clair herself was arrested in retribution for revealing civic misconduct.

 

In the few months that she spent in jail, Schultz had taken over her operation. But instead of pushing St. Clair out completely, he allowed her to continue running it. St. Clair was not grateful. She would hold a grudge against Schultz until his death.

 

The Numbers racket was more profitable than Schultz had even imagined, but still, he had more ambitious goals. He brought in a math wizard named Otto Berman, who formulated a plan to fix the odds. Each day, Berman went to the race tracks and mathematically determined the winning horse’s paycheck. He placed last minute bets that skewed the number to ensure they didn’t match heavily played policy numbers. This meant a much bigger profit margin for Schultz…and ultimately for Berman. Schultz had been so happy with his work that he paid Berman a $10,000 a week salary.

 

Not being one to rest on his laurels, Schultz entered into other unique business ventures, including the restaurant industry. He appointed his lieutenant, Jules Martin, to take over various unions in the Hotel and Restaurant Employees International Alliance. Once he had accomplished this, he and Schultz started the Metropolitan Restaurant and Cafeteria Owners Association. Outwardly, the Association represented the interests of it’s members- restaurateurs. In reality, it was a way for the Schultz gang to extort money from it’s members in the form of “dues”.

 

Everything seemed to be going Schultz’s way. Enter Thomas Dewey- a very ambitious and incorruptible lawyer that was quickly moving up the ranks.

 

1933

Dewey had been the head of a federal grand jury investigating Dutch Schultz for tax fraud. It was determined that Schultz hadn’t filed his tax returns for 1929, 30 and 31. Based on his estimated income in those three years, Dewey deduced that Schultz owed the government over $92,000. If he was found guilty, Schultz would not only  have to pay the back taxes,  but potentially faced a hefty fine and up to 43 years in prison.

January 25

Schultz was indicted for tax evasion. He wasn’t willing to pay and he didn’t like his chances in court, so he went into hiding. Well, kind of. Despite over 50,000 wanted posters for his arrest, Schultz didn’t really keep a low profile. He continued to travel from Manhattan to Harlem and frequented various nightclubs and restaurants. There were few people that would even entertain the idea of turning the Beer Baron in. Schultz was connected with several politicians, most notably Jimmy Hines- one of the most powerful leaders of the infamously corrupt Tammany Hall.

 

While avoiding trial, the Volstead Act was modified by newly elected president Franklin Roosevelt. The modification made it legal to consume beer. The huge revenue stream for Schultz soon dried up completely.

 

December 1933

The Volstead Act was voided completely. Around the same time, the newly elected mayor of  New York City vowed to tackle organized crime in the city, and targeted specific gangsters, including Dutch Schultz. The mayor’s name was Fiorello Henry LaGuardia. Dewey and LaGuardia combined to put an immense amount of pressure on Schultz.

 

Late 1934

Mayor LaGuardia, FBI head J Edgar Hoover and President Roosevelt’s Secretary of the Treasury, Henry Morgenthau compared notes and agreed that they held a common interest. Hoover agreed to make Dutch Schultz Public Enemy Number One.

 

Schultz felt the pressure and sent his lawyers to Washington DC to negotiate a settlement for his back taxes. . When word reached Morgenthau, he rebuked all offers, saying “my office doesn’t do business with criminals.”

 

November 28, 1934

Dutch Schultz turned himself in. He spent weeks in jail while awaiting his bail to be reduced.

 

1935

While Schultz was distracted by his legal troubles, he suspected his lieutenant Jules Martin had embezzled $70,000 in the Metropolitan Restaurant and Cafeteria Owner’s Association funds. When confronted, Martin initially denied the allegations, but Schultz didn’t buy it. He punched Martin in the face. The unexpected violence seemed to clarify the gravity of the situation. Martin immediately conceded that he had stolen some money from Schultz, but said it was only $20,000. The amount didn’t really matter. Schultz stood over Martin, pulled out his automatic pistol and and put it in Martin’s mouth. If Martin thought this was just a threat…he was wrong.

 

April 16

Schultz’s tax evasion trial began in Syracuse New York. Twenty two of the prosecution’s witnesses disappeared before the beginning of the proceedings. One witness showed up but asked to leave the courtroom for a break while waiting to be called to the stand. He was granted a short break, but after leaving the courtroom,  he never returned. Witnesses who did make it to the stand seemed to suddenly suffer memory loss or had invoked their fifth amendment right to remain silent.

 

In the end, the trial ended in a hung jury.  Schultz wasn’t off the hook yet. Since the jury hadn’t delivered a verdict, a retrial was ordered by Federal Judge Frederick Bryant. It was scheduled to take place in the small town of Malone, New York, where Schultz’s notoriety and influence wasn’t as effective. At least, that was the idea.

 

June 1935

Thomas Dewey was appointed as special prosecutor by New York Governor Herbert Lehman. Dewey immediately began putting together an investigation into Schultz’s involvement in the numbers racket.

 

July

 

Dutch Schultz began trying to win over the residents of Malone in the days leading up to his second trial. For once, his cheap clothes worked in his favor. He was seen by the working class community as more of an average man than the other gangsters of the era. His mingling amongst the townspeople was noticed by Judge Bryant, who revoked his bail and put Schultz in jail while awaiting trial.

 

The prosecution presented essentially the same case as in Syracuse, but Schultz had a different Defensive strategy. This time he claimed he was a simple business man that fell victim to bad legal advice. The jury members were apparently sympathetic to Schultz’s plight and on August 1, voted 9 to 3 for an acquittal. Judge Bryant had them deliberate again because he required a unanimous decision. They came back the next day with a 12 to zero vote. Dutch Schultz was found not guilty. The courtroom erupted in a mix of cheers and jeers

 

Judge Bryant was furious at both the verdict and the commotion that ensued after the reading. He turned to the jurors and said …

 

“You have labored long and no doubt have given careful consideration to this case. Before I discharge you, I will have to say that your verdict is such that it shakes the confidence of law-abiding people in integrity and truth.

 

It will be apparent to all who have followed the evidence in this case that you reached a verdict based not on the evidence, but on some other reason. You will have to go home with the satisfaction, it if is satisfaction, that you have rendered a blow against law enforcement and given aid and encouragement to people who would flout the law. In all probability, they will commend you. I cannot.”

 

After the trial, Mayor Laguardia expressed his disgust and announced that Dutch Schultz was not welcome in his town. Schultz told reporters that he would be returning to New York City soon. He didn’t. With two other legal cases against him brewing, and the close attention of Laguardia and Dewey,  he knew it was wise to stay out of the city. Instead, he moved to Bridgeport, Connecticut.

 

While out of the city, his business was being operated by his lieutenants.  Nearly everyone in the mob world was sure that it was only a matter of time before Schultz ended up in prison. Even long time loyalist Bo Weinberg foresaw Schultz’s downfall. His boss was in a different state, the business had already been crumbling, and other mobsters were circling the territory like vultures in anticipation.

 

Weinberg told top New Jersey mobster Abner Zwillman about the uncertainty of Schultz’s empire. Zwillman in turn, arranged a meeting between himself, Weinberg and Lucky Luciano. Weinberg revealed insider information about Schultz’s business to Luciano in exchange for a cut of future profits.

 

Luciano called for a meeting of the Commission’s inner circle at the Waldorf Tower. They were Joe Adonis, Meyer Lansky, Frank Costello, Vito Genovese, Louis Buchalter and Thomas Lucchese. They discussed Weinberg’s deal and planned to divide Schultz’s empire among the seven of them.

 

Word of Weinberg’s treachery reached Schultz. The infuriated Dutchman arranged for Weinberg to be intercepted after one of his now regular meetings with Zwillman. Some say he was strangled to death by Schultz. Others say he was beaten senseless and given concrete boots before being dropped into the East River. Nobody knows the true fate of Bo Weinberg, but his body was never recovered. The Commission’s plans were put on hold after Weinberg’s demise.

 

Two weeks later, Schultz made the move from Connecticut to New Jersey.

 

Facing more legal troubles for tax evasion, Schultz was still a fugitive in New York. So he set up shop at the Palace Chop House restaurant in Newark New Jersey. There, he conducted business meetings, issued orders and gave interviews to reporters. He had hoped to be portrayed in the media as more of a victim of circumstances than a criminal. When asked about his ongoing legal woes, Schultz said “They’re after me now because some puny individuals in the government services can’t stand up and take a licking like a man. By licking, I mean they can’t swallow that I was acquitted once and another jury disagreed on exactly the same charges they’ve got against me now”.

 

But under the facade was a bloodthirsty man. Schultz harbored a strong animosity toward Thomas Dewey for targeting him. He wanted Dewey dead. Word spread that Schultz had put a $25,000 bounty on Dewey’s head.

 

Albert Anastasia would go on to become one of the biggest figures in the American Mafia and Cosa Nostra, eventually co-founding murder Inc. and becoming the boss of the Gambino crime family. But in 1935, he was one of the best hitmen money could buy. Schultz enlisted Anastasia to stake out Thomas Dewey’s daily routine to see if his murder would be feasible.  After the special prosecutor got wind of it, he hired two bodyguards.

 

Despite the protection, Anastasia formulated a plan after having observed Dewey make daily phone calls in a nearby pharmacy. He would conceal a pistol with a silencer and enter the pharmacy before Dewey, pretending to be a customer. With his bodyguards looking for trouble outside, Dewey would be a sitting duck in the phone booth. Once he was killed, Anastasia would kill whoever else happened to be in the pharmacy. There would be no witnesses.

 

The plan was presented to the Commission by Schultz and Anastasia. It was seriously considered, but when it was debated and ultimately shot down, Schultz erupted. He stood up and declared that if the Commission wouldn’t sanction the hit, he would do it himself. Between this outburst and his following indiscretions, Schultz had made a grave error.

 

The Commission conducted another meeting. This time, the pendulum had swung, and it was Schultz’s fate that was being decided.

 

October 23, 1935

6PM


Dutch Schultz, accompanied by associates and bodyguards Abe Landau and Lulu Rosenkrantz, entered the Palace Chop House for a working dinner. The restaurant was mostly empty, with just a few drinkers and staff occupying the building. Business was conducted in the backroom, with the wall to Schultz’s back. Otto Berman joined the men and the four were quickly absorbed in their conversation. They didn’t even notice when the few other customers left.  

 

After their meals were served, eaten and cleared, business resumed. At 10:15, Chop House co-owner Jacob Friedman took note of the two new customers that entered. His suspicions were immediately raised when he noticed they wore unbuttoned top coats and glowering expressions. Friedman was right to be alarmed. The two men were Charlie the Bug Workman and Mendy Weiss- members of Louis Buchalter’s gang. Friedman took cover behind the bar while the two thugs walked towards the back room. Workman and Weiss looked into the room and saw only three men at the table. Schultz wasn’t there. Assuming the Dutchman was in the washroom, Workman told Weiss to cover the other three while he checked. The remaining trio at the table were unaware of the danger lurking behind the corner.

 

Workman drew his .45 automatic pistol and stormed the washroom. He opened fire on Schultz. . When the sound of gunfire was heard by Schultz’s men, they drew their guns, but were too late. Weiss was armed with a double barrelled shotgun. Early doubles were outfitted with a trigger for each barrell. Weiss squeezed both triggers as he cut down Landau and Rosenkrantz. Berman was less of a threat, as he was unarmed. Nevertheless, Weiss fired on him as well.

 

Workman rushed back out to help his partner. He shot each of the three men with his second gun- a .38 caliber revolver. With the three men incapacitated, Workman returned to Schultz, who was badly wounded, but alive. He had been shot through the left side. The single bullet had passed through his large intestines, gallbladder and liver. His spleen and stomach were perforated. He was in shock and didn’t even acknowledge the gunman standing over him.

 

Meanwhile, Weiss was getting antsy. The gunfire was extremely loud. Police had to have been called by now, and Workman was taking way too long. He made a split decision and ran from the Chop House into the waiting getaway car.

 

Perhaps assuming Schultz’s wounds were mortal, Workman turned around and returned to the backroom. Seeing that his partner had abandoned him, Workman spewed a string of obscenities while running from the restaurant.

 

Abe Landau managed to stumble to his feet and made his way out of the Chop House. He fired wildly, trying to exact revenge on Workman, but he was far too badly injured to shoot straight. With his pistol emptied, Landau collapsed onto a garbage can. Inside, Schultz had somehow managed to make his way out of the washroom. He clutched his wound and mumbled that he needed a doctor. He managed to take a seat at a table before falling face first onto it.

 

All four men had somehow managed to stay alive long enough for police to arrive. They were taken to Newark City Hospital, where they were kept under guard.

 

October 24

 

While Schultz and his men fought for their lives, his empire was being dismantled by opportunistic gang bosses.

 

Schultz underwent surgery, but his injuries were severe and peritonitis – inflammation of the abdominal wall membrane- had set in. Penicillin had been discovered at this time but wasn’t commonly used until the late 1940’s. This meant certain death for Schultz, and he knew it. He called for a priest. In the final hours of his life, he converted to catholicism, was baptized and give his last rites.

 

Five hours after the shooting, Otto Berman was the first to die. A few hours later, Abe Landau succumbed to his wounds. Schultz and Rosenkrantz were hanging on, but barely. Word of the massacre had spread quickly. Schultz received a telegram at the hospital from the Policy Queen of Harlem, Stephanie St. Clair. It read “As ye sew, so shall ye reap.”

 

His condition quickly deteriorated. After rambling incoherently for hours, he fell into a coma at 6PM. Dutch Schultz was pronounced dead at  8:35PM. He was 33 years old.

 

Lulu Rosenkrantz died the following day.

 

October 28

Schultz was buried at the Gate of Heaven cemetery in Hawthorne, New York.  

 

Thomas Dewey would go on to become the Governor of New York and was eventually chosen as the Republican Party’s candidate in the 1944 and 1948 presidential elections. He lost to incumbent Franklin Roosevelt and Harry Truman, respectively.

 

The Commission remained a major power in the mafia underworld and despite having it’s last official meeting in 1985, is believed to still exist today.

 

Lucky Luciano, Meyer Lansky and Vito Genovese— well, those are stories for a later time.

SOURCES

https://www.biography.com/people/dutch-schultz-236042

https://www.haaretz.com/jewish/this-day-in-jewish-history/1.746711

“Dutch Schultz” History Channel Biography

“True Crime: The Mafia” by Nicky Martinez

http://www.history.com/topics/prohibition

https://en.wikipedia.org/wiki/Eighteenth_Amendment_to_the_United_States_Constitution

https://www.britannica.com/topic/Volstead-Act

https://www.archives.gov/education/lessons/volstead-act

https://en.wikipedia.org/wiki/Volstead_Act

“American Gangsters Then and Now: An Encyclopedia”  by Nate Hendley

“Dutch Schultz: The Brazen Beer Baron of New York” by Nate Hendley

SOURCES

https://www.biography.com/people/dutch-schultz-236042

https://www.haaretz.com/jewish/this-day-in-jewish-history/1.746711

“Dutch Schultz” History Channel Biography

“True Crime: The Mafia” by Nicky Martinez

http://www.history.com/topics/prohibition

https://en.wikipedia.org/wiki/Eighteenth_Amendment_to_the_United_States_Constitution

https://www.britannica.com/topic/Volstead-Act

https://www.archives.gov/education/lessons/volstead-act

https://en.wikipedia.org/wiki/Volstead_Act

“American Gangsters Then and Now: An Encyclopedia”  by Nate Hendley

“Dutch Schultz: The Brazen Beer Baron of New York” by Nate Hendley

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