Biographies & Memoirs

9.

Wire Wars

In 1942, while Boris Kostelanetz was still trying to compel Bioff, Browne, and Circella to cooperate, an unrelated but equally substantial Outfit endeavor was finally beginning to bear fruit in Los Angeles. In July of that year, the Outfit’s West Coast representative, Johnny Rosselli, was playing hardball with an Outfit adversary named Russell Brophy. Rosselli, Jack Dragna, and Ben Siegel of New York had recently set up the Commission’s wire operation, the Trans-America News Service, in L.A. They tried to pressure Russell Brophy of the dominant Continental Press into a partnership. He refused. A week later two thugs showed up at his ninth-floor office. “We tore that fucking office apart,” one of the hoods later admitted to a reporter. “In fact, we busted Brophy’s head open pretty good because he got out of line a little bit. But actually, the instructions were to knock him in pretty good anyway.”

The gang’s strong-arm tactics worked in L.A., but for the next four years in Chicago, Brophy’s father-in-law, as well as Continental owner James Ragen, continued to oppose Outfit muscle in that key city. In 1946, when Mooney Giancana and his rackets were being absorbed into the Outfit, and Paul Ricca et al. were cooling their heels in prison, James Ragen was paid a visit by Curly Humphreys and Jake Guzik, who had come to inform him that the Outfit had lost its patience. The confrontation brought to a climax decades of warring over the lucrative race-wire business. The acts of brinkmanship by Joe, Curly, Johnny, and the rest were in direct proportion to the importance of the race-wire business.

The History of the Race Wire

The onset of horse-race betting in ninteenth-century Europe instigated a rivalry between illegal offtrack bet-takers (bookies) and the upperworld racing establishment. After a period in which racing was banished, the tracks resurfaced both abroad and in the United State, with powerful new weapons aimed at driving the bookies out of business: antibookmaking legislation and the parimutuel machine.

Convinced of the allure of race betting, the equine-owning elite first utilized their influence to have bookmaking outlawed. Once the game was centralized on-site at the tracks, the owners, much like their underworld counterparts, sought to rig the system in their favor. They were facilitated in this effort by the recent invention of the parimutuel system. Invented in the 1870s in France by Pierre Oiler, the Paris Mutuels is a ciphering apparatus that constantly recalculates the relative amounts bet on each horse, continually changing the odds, so that the bettors are betting against each other, not the track. Before the odds are reset, however, the parimutuel machine subtracts both the owners’ take and the state’s tax cut off the top, guaranteeing their profit (the upperworld’s precursor of the underworld’s Las Vegas skim). The state-regulated machines also offer a powerful incentive to the bettor, given that there is less chance that the state will fix a race, since their profit is in place regardless of the outcome. (In America, the machines are sold by the American Totalizator Company.)

Just when it seemed that the upperworld had the bookies on the ropes, another invention leveled the playing field once again. This breakthrough was known as the race wire. It allowed the offtrack handbook operators to obtain the same instant results as the state-sanctioned parimutuel machines, while preserving the convenience and accessibility of the numbers runners for the bettor. In addition, the allure of forming a personal relationship with a bookie was more attractive than feeding a machine. It was such an instant and powerful profit-maker that gangs like the Outfit never abandoned their goal of controlling it.

Invented in 1900 by John Payne, a Western Union worker in Cincinnati, Ohio, the race wire utilized fixed telegraph wires to transmit, in coded form, the names of riders, track conditions, scratches, and, most important, results. In many cases an on-site spotter would signal the information, by telephone or semaphore, to a cohort who had leased long-distance lines from either Western Union or AT&T. From there the valuable intelligence was sent to whichever bookies paid for it. As previously noted, the information garnered from the wire was priceless to all concerned (see chapter 4). The instant transmittal of track information was so crucial that no nonsubscribing handbook operator could compete with those that did. Not surprisingly, Chicago was the largest handbook center in America, with so many cops on the take that an underworld joke soon emerged: It was harder to rob a handbook than a bank, since more cops frequented their bookie parlors than their financial institutions.

Soon after Payne announced his breakthrough, Jacob “Mont” Tennes, who had inherited Mike McDonald’s gambling empire, purchased the Chicago franchise from Payne for $9,000 per month. Windy City handbook operators in turn paid 50 percent of their profits to Tennes’ wire service. With thousands of bookies subscribing to the service, and Tennes’ in-pocket politician, alderman Johnny Rogers, keeping the official wolves at bay, the Chicago franchise was soon generating $25,000 a month in profits. Tennes solidified his position by personally bribing officials such as Mayor Fred Busse and Chief of Police George Shippey. In the next mayoral contest, Tennes secured Carter Harrison’s mayoral election.

But Tennes’ greed took hold, giving him dreams of having the national rights to the race-wire nest egg all to himself. In 1910, after bombing John Payne into retirement, Tennes organized the General News Bureau. With this development, Tennes became the acknowledged offtrack gambling czar in the United States and Canada. Tennes was so attuned to the gambling world that he learned before the infamous 1919 World Series that New York gambler Arnold Rothstein had paid eight Chicago players to throw the contest to the Cincinnati Reds.1

The Annenberg Years

In 1927, after the gang battles that forced Johnny Torrio to leave Chicago, Tennes announced that he was getting out of a business he could no longer protect in a city under siege. In a watershed event, a newspaper circulation manager and tip-sheet operator named Moses Annenberg bought 48 percent from the retiring Tennes. After enlisting Capone’s sluggers to oust the other major General News shareholder, Jack Lynch, Annenberg set about creating a legend all his own.

Born in Prussia in 1878, Annenberg in 1885 came to Chicago, where his father owned a small grocery store in the Patch. “Moe” earned his first paycheck as a messenger for Western Union, a position that would offer valuable insights for his future ventures. During the early part of the century, young Moe was hired by William Randolph Hearst to be his “general” in the newspaper circulation wars. Pre-World War I Chicago had eight metropolitan newspapers, and circulation not only meant sales, it meant fighting pitched battles to ensure the papers were delivered at all. In the no-holds-barred contest, newsstands were smashed, delivery trucks bombed, carriers beaten, and papers stolen and thrown into Lake Michigan. Interestingly, Moe sided with Hearst’s American,while his brother Max Annenberg commanded the troops of Colonel Robert McCormick’s Chicago Tribune, where he assumed the post of circulation director. Since Hearst was the new kid on the block, his men had to fight especially hard to gain a toehold. Moe Annenberg himself was not above the fray, often joining barroom brawls in the service of his appreciative employer.

The Annenbergs’ need of circulation-war soldiers first introduced them to the efficiencies offered by the gangsters. In the powerful and heated Annenberg sibling rivalry, the brothers emulated Mont Tennes and utilized the talents of well-connected sluggers to gain the upper hand. In the 1920s, Max turned to the Torrio-Capone Syndicate, while Moe enlisted North Siders such as Bugs Moran and Deanie O’Banion, and future union thugs such as Mossy Enright, who went on to nurture the professional life of motion-picture-union strong-arm Tommy Maloy. In fact, it was the circulation wars that initially divided up the city along the geographical battle lines that would soon prevail in the Beer Wars of 1925. In one instance, Max Annenberg asked for Capone’s help in preventing a strike by the paper’s drivers’ union. Capone later said, “Them circulation fights was murder. They knifed each other like hell. . . And who do you think settled all them strikes and fights? Me, I’m the guy that settled all their strikes and all their circulation raids.” When Capone delivered for the Tribune, Colonel McCormick himself met with Al to thank him. “You know you’re famous, like Babe Ruth,” said the Colonel. “We can’t help printing things about you, but I will see that the Tribune gives you a square deal.”

For years, Moe Annenberg maintained a sideline operation to his newspaper endeavors, since the corner newsstand operators he controlled doubled as bet-takers. As Jake Guzik told syndicated writer Lester Velie, “Almost every newsboy, bartender, and cigar-stand keeper has become a bookie.” Patrons armed with scratch sheets or the Racing Form typically bought their morning paper, then made their wager. When the afternoon-paper delivery truck arrived with the latest edition, the driver, often a gang member, picked up the bets and delivered them to the circulation manager, who split the profits between the winners and Annenberg, who himself rarely placed a bet. Annenberg soon began publishing his own racing newspaper, the Daily Racing Form, purchased in 1922 for $400,000. With his profits, Annenberg purchased the Wisconsin News and his crown jewel, the Philadelphia Inquirer. Hearst also brought him to New York to publish Hearst’s New York Daily Mirror, competitor of the New York Daily News, which employed Max Annenberg as circulation director. While in New York, Annenberg employed the slugging services of Lucky Luciano, much as he had done in Chicago. Luciano later said, “I used to think of the Mirror as my paper. I always thought of Annenberg as my kind of guy.”

In 1926 Annenberg quit Hearst, the hard-copy magnate having come to appreciate the value of selling electronic, high-speed race information, either to gamblers or bookies or both. One year later he purchased 48 percent of the retiring Tennes’ General News Bureau. Having settled his differences with Capone, Annenberg enlisted the services of Al’s Syndicate, in this case to relay results from inside the track to a nearby telegrapher. It was widely reported that Moe Annenberg attended the May 1929 mob convention in Atlantic City, where he was approached on the boardwalk by Al Capone, who tried to form a partnership. Instead, Annenberg established the Nationwide News Service, in collusion with the New York gangsters, choosing again to use Capone’s forces merely as hired hands. After Capone was sent to prison, Annenberg’s alliance with the new Outfit was strengthened. Over the next few years, Annenberg depended on the Outfit’s muscle to harass his competition; in return for their services, the gang’s bookies received the wire service free of charge. For years, the Outfit wras beholden to Annenberg’s wire service, coveting the lucrative operation for themselves, and lying in wait for the opportunity to grab it.

On January 2, 1935, Annenberg paid $750,000 to buy out a Nationwide minority owner who had previously rebuffed such offers. On the same day, according to an affidavit found after his death, Annenberg’s operations manager and longtime buddy James Ragen couriered $100,000 in $100 bills to Frank Nitti for the gang’s help in convincing the shareholder to sell. It has never been determined exactly what methods were employed, but it remains a strong possibility that the master negotiator Curly Humphreys counseled the gang from his “college dorm” at Leavenworth. Despite their symbiotic relationship with Annenberg, the Outfit never abandoned their aspiration of controlling the race wire outright. And while the underworld jockeyed for position, their corporate partners were granted a free ride directly to the bank.

The Upperworld’s Stake in the Wire Service

Much as the upperworld attempted to control horse-race betting by combining restrictive legislation with its parimutuel system, it simultaneously profited from the nascent illegal wire operation. When John Payne devised the race-wire encoding system, of necessity he leased the long-distance wires of Western Union Telegraph Company for $2 million per year to transmit the vital data. In the first decade of the twentieth century, under pressure from reformers, Western Union gave up its lucrative, albeit indirect, arrangement with the nation’s gangster bookies. The fledgling telephone company AT&T was more than happy to fill the void. The breadth of the operation eventually encompassed some sixteen thousand miles of leased wire to three hundred handbook areas around the country. In 1935, the Nationwide service alone paid AT&T $500,000, becoming its fifth-largest client.

Federal investigators had little luck in breaking up the Tennes-AT&T collusion, or the Trust as the operation was called. Tennes could now afford to retain the best legal counsel with which to keep the courts at bay. Thus when Tennes and AT&T were brought before an investigative tribunal in 1916, they were represented by Clarence Darrow. The probe, which resulted from pressure brought by a newspaper probe, was stalled into oblivion by Darrow’s legal machinations. Judge Kenesaw Mountain Landis, the first commissioner of baseball, excoriated Tennes and AT&T, calling them a corrupter of youth, whose profits were “covered with dirt and slime because young men are being made criminals.” But all the fire and brimstone was to no avail, since Judge Landis wras no match for the upperworld gangsters of AT&T and the legal bombast of Clarence Darrow. Alson Smith, in his book Syndicate City, described the proceedings: “The investigation finally came to nothing when the Illinois Bell Telephone Company refused to cooperate on the grounds that interstate transmission of sporting news was not a crime and that local gambling was not within the jurisdiction of the Federal court.”

However, by the midthirties, after three decades of sharing its bookie-derived profits with its shareholders, AT&T felt sufficient pressure from the FCC to abandon the race wire. By this time, Western Union was in such dire financial straits that it was more than willing to jump back into the game. With its transmission lines in great disrepair since their construction six decades earlier, and with the advent of air mail, Western Union was in a financial free fall, and desperate for a cash influx. But another factor appeared to sound the death knell for the company. According to a 1939 FCC report, “the financial condition of Western Union is definitely unfavorable . . . Probably the most important factor contributing to these conditions is the development of competing forms of communication.” In other words, the telephone.

Alexander Graham Bell’s invention had by now so proliferated that fewer Americans than ever were reliant on the telegraph for fast communication. To make matters worse, in 1937 the Department of Justice had filed charges against Western Union, alleging violations of the Sherman Anti-Trust Act. Stockholders feared the utility was about to come under increased federal supervision as a result of its monopolistic practices. A Senate report on the telegraph industry in 1939 summed up the situation, pointing out that Western Union profits in 1938 were down $38,529,000, or 31.1 percent, since 1926. Thus, when the race-wire gangsters came calling, Western Union gratefully accepted the deal. Years later, a congressional committee chaired by Senator Ernest McFarland uncovered an internal Western Union memorandum from the company’s vice president urging his board “to pursue expeditious handling” of the race-wire business, noting that the corporation could expect to earn over $30,000 per month in much needed profits.

Like AT&T before it, Western Union could not be bothered to cooperate with government investigators. In one of its few swipes at corporate white-collar crime, the Senate’s 1951 Kefauver Committee described the company’s hubris:

The backbone of the wire service which provides gambling information to bookmakers is the leased lines of the Western Union Telegraph Company. This company, in many parts of the country, has not been fully cooperative with law-enforcement officials who have been trying to suppress organized criminal rackets which make use of telegraph facilities. By permitting its facilities to be used by bookmakers, Western Union has given aid and comfort to those engaged in violation of gambling laws. In some cases, Western Union officials and employees actually participated in bookmaking conspiracies by accepting bets and transmitting them to bookmakers.

Appearing before McFarland’s committee, the heads of both AT&T and Western Union played dumb, attempting to convince the probers that they had no inkling of who leased their lines or for what purpose. An exchange between the committee and Western Union’s Assistant Vice President Walter Semingsen was typical and revealing. McFarland’s interrogation of Semingsen is worth reprinting at length, so revelatory it is about the upperworld’s attitude toward, and involvement in, the propagation of organized crime. The ludicrous back-and-forth comprises dozens of pages of testimony, with exchanges that presaged both the self-serving responses of the jukebox manufacturers, and the end-of-century strained testimony by tobacco-company executives professing that nicotine is not addictive. At one point in the hearings, Senators Tobey and McFarland expressed disbelief when the company VP claimed to have no interest in what was being transmitted over the company’s wires:

Semingsen: “We have no way of knowing about illegal use of these facilities until the law-enforcement authorities so inform us.”

Tobey: “What do you think goes on? . . . The point is that these [wire] messages are their means of doing business and carry information on which the bets are based. Is that not correct?”

Semingsen: “I do not know.”

Tobey: “What do you think they are used for?”

Semingsen: “I have never been in any of the establishments, and I could not tell you personally.”

Senator McFarland then ticked off the names of dozens of “racing information” parlors in different states that leased the wires, asking, one by one, what Semingsen believed they did with the information. To each query Semingsen’s responses were similar: “I have not the slightest idea,” “I have no way of knowing,” “I have not the slightest idea how they make use of the information.” Tobey then began to lose his temper.

Tobey: “Do you know what the trouble is in this country? Nobody accepts responsibility . . . We know that these lines are being used for disseminating race track information. We know it is so; you know it is so. A child six years old knows that.”

Semingsen: “I disagree with you. We do not know it is so.”

Tobey: “Do you mean to stand there and say, under oath, that in your judgment you do not know that these leases are being used for disseminating race track information? . . . When you carry the information into the state where bookmaking is illegal, you become an accessory after the fact, do you not?”

Semingsen: “You are assuming that all these persons to whom we are leasing facilities are bookmakers.”

Tobey: “No; I do not assume that at all. I assume some of them are, and so do you . . . The moral law - the law of society - does not interest you a bit, as long as you get the revenue; is that right? . . . Western Union is a necessary cog when the Western Union is used to accept money from the bettor and transmit it to the bettee, through their offices, by accepting the money and paying out at the other end on the facts circumscribed in the telegram; is that right?”

Semingsen: “That is correct.”

Tobey: “I should think - and I say this without prejudice - that certainly makes Western Union a party to the illegal transaction of business, because in some states those things are illegal.”

Semingsen: “ . . . I do not know what the laws are.”

In the end, not one director or employee of Western Union or AT&T was ever charged with collusion in the bookmaking racket. The huge profits they reaped from illegal betting were somehow deemed beyond the law, whereas countless underworld bookies in the Outfit and other crime consortiums regularly faced the prospect of hard time.

In contrast to the free ride given to the white-collar criminals, Moe Annenberg felt the full weight of the government’s muscle. In 1935, the combative, omnipresent Elmer Irey focused his attention on Annenberg’s operation. Instead of investigating “the backbone of the wire service,” Western Union, its stockholders, or board of directors (such as Vincent Astor, Percy Rockefeller, Paul Warburg, William Truesdale, Donald Geddes, William Vanderbilt, W. A. Harriman, and Jay Cooke), Irey’s IRS chose to persecute the most recent immigrants, such as Annenberg, to have become millionaires. After all, Western Union’s founder, Ezra Cornell, had long ago legitimized his company when he endowed Cornell University. For Annenberg and the gangsters, this lack of prestige-purchasing turned out to be a key oversight.

After studying Annenberg’s books for a full five years, Irey’s men garnered enough evidence to indict Moe for $5.5 million in tax evasion. Also named was Annenberg’s son Walter, who had initially pleaded with Moe not to get into the wire business, but had eventually helped run the company. However, when Moe agreed to take the fall and pay an $8million fine (the largest personal tax fine to date), he negotiated his boy’s removal from the charge. Due to the diagnosis of a terminal brain tumor, Annenberg was released from prison after having served two years of a three-year sentence. He died at home on June 11, 1942. Since few large corporations could survive five years of such scrutiny, the question was begged, why did Irey target Annenberg in the first place? The answer appears to be twofold. First, Annenberg attained his wealth too quickly, and with the cooperation of Capone and the Outfit, infuriating old-money types, who promulgated the charade that they themselves would never engage in illegal activities. The nouveau riche have always been snubbed. After years of frustration in trying to prove that the wire operators knew about the hoods at the other end of their transmissions, the feds fell back on the dogs of the IRS.

In his decision, the presiding judge in Annenberg’s case delivered closing remarks that weakly attempted to explain why he could not vacate a jail sentence altogether. To do so, the judge said, would be to say to all businessmen, “you may organize your affairs in a network of corporations and avoid the payment of your just taxes, and when called to account by the Government for what you really owe, nothing worse will happen to you than to be compelled to pay what you would have paid long ago.” That sort of privilege, after all, was reserved for Western Union, AT&T, the Morgans, Rockefellers, Du Ponts, and assorted other robber barons.

Second, Annenberg had drawn the ire of the notoriously thin-skinned President Franklin Roosevelt. For months Annenberg had used the bully pulpit of his influential Philadelphia Inquirer to editorialize against what he perceived to be the shortcomings of FDR’s New Deal. Annenberg was not alone in concluding that, while FDR deserved praise for his success in jump-starting a flagging economy, many New Deal entitlement policies were destroying initiative and encouraging strikers to demand more concessions from the business world. Furthermore, Annenberg supported the Republican slate in Pennsylvania and rubbed FDR’s nose in it when the Republicans triumphed. PENNSYLVANIA HAS REPUDIATED THE NEW DEAL screamed the Inquirer’s headline.

In a paranoid style that would have impressed Richard Nixon three decades later, Roosevelt tasked his treasury secretary and attorney general with investigating the tax status of his enemies in the press. After attempting to instigate legislation that would label policy dissenters as criminals (Moe promptly called the move Hitler-like), Roosevelt’s senior aides stepped up their attack. Soon, Roosevelt met with Attorney General Homer Cummings to discuss tax delinquents, singling out Annenberg and demanding, “I want him in jail.” When Treasury Secretary Henry Morgenthau met Roosevelt for lunch, he asked the president if he could do anything for him. “Yes,” a seething Roosevelt replied. “I want Moe Annenberg for dinner.” To which Morgenthau replied, “You’re going to have him for breakfast - fried.”

Eventually, Roosevelt prevailed, thanks to Irey’s IRS. In discussing presidential abuse of the tax code, David Burnham, author of A Law Unto Itself: Power, Politics and the IRS, wrote, “President Franklin Delano Roosevelt may have been the champion abuser.” Under pressure from the feds, Nationwide was forced to cancel its contract with AT&T, which was itself attempting to escape prosecution from the previously noted FCC probe. In its desire to escape the FCC’s clutches, AT&T got out of the race-wire business altogether. Moe’s son Walter quickly struck up a deal with the struggling Western Union.

Democrats themselves quietly admitted that Annenberg’s prosecution was nothing short of a White House-directed vendetta. They knew that had Moe’s anti-New Deal editorials appeared in the Lubbock Avalanche, Roosevelt could have ignored them. But his adversary could not be granted a forum as visible as the Inquirer. As discovered by Annenberg’s biographer Christopher Ogden, even the IRS accountant who dissected Annenberg’s books knew the case was a sham. The accountant, William Hopewell, wrote to Walter Annenberg in 1981, “The tremendous injustice done to him has been on my mind - on and off - for years. I am sure your father was not guilty as charged.” Moe Annenberg concluded the obvious in an Inquirer editorial: He had been indicted because “it was important to the Democratic Party that I be destroyed prior to the 1940 elections.”

After his indictment on August 11, 1939, Moe Annenberg walked away from the Nationwide wire business in exchange for the government’s sparing of his son Walter. A mere five days after Nationwide ceased operations, Continental Press was established, allegedly after the new owner, Mickey McBride, paid Annenberg for his infrastructure. In short time, McBride sold Continental to James Ragen, who finessed the legalities of the wire business by selling his race information to distributors, not directly to illegal bookies. “Selling information is legal, [and] what the distributors did with it is none of my concern,” Ragen said, sounding remarkably like his upperworld counterparts at Western Union. When Congress investigated Continental in 1951, it was likewise not fooled by Ragen’s insouciance. It determined that Continental received wildly varying weekly fees from its distributors (from $500 to $10,000 per week), depending on how much “business” they did with the information. One congressional probe, the McFarland Committee, concluded: “The facts support the thesis that Continental today has a near monopoly in the transmission of racing news which ultimately reaches the bookmakers in the country. Continental does choose its distributors, assigns them exclusive territories, and charges them on the basis of size and amount of business done in such territory.”

A second federal inquiry added: “[Continental’s distributors] are nearly all dummies, set up to insulate the Continental Press Service against the charge that it deals directly with persons engaged in illegal operations.”

This then was the atmosphere when, in 1946, the Outfit got serious about its desire to control the underworld sector of the wire business. For years, Ragen, owner of Continental Press, had rebuffed Outfit attempts to work their way into his operation. Ragen later testified that he had once been approached by Frank Nitti, who told him, “If you come along with us, we will kill [owner] Annenberg in twenty-four hours.” Ragen refused, and Annenberg mollified the gang by paying them $1 million a year in protection fees. For years under Annenberg, Nationwide had coexisted in a delicate standoff with the Outfit, but now Nationwide’s descendant, Ragen’s Continental, began to view the Outfit as its enemy.

Eventually, Accardo and the Outfit, tired of waiting to take over Continental, formed their own service, Trans-America, with their Commission partners in New York. The new venture, referred to in Chicago as the Dago Wire Service, peddled wire information pirated from Ragen’s Continental Press. The Outfit also ordered their thousands of bookies to buy the pirated information from Trans-America. One noncompliant bookie, Harry “Red” Richmond, was gunned down in front of his own home. Gamblers loyal to Continental were ordered to get out of town. One who ignored the order, an ex-con named Frank Covilli, was shot to death in early 1946. The furious James Ragen understandably decided to revoke the Outfit’s no-fee status, prompting a bitter war of words with the gang’s accountant, Jake Guzik. Ragen requested a meeting to defuse the growing tension. Joe Accardo agreed and dispatched his master negotiator, Curly Humphreys. Accompanying Humphreys to the powwow in Jake Guzik’s Room 1837 in the Chicagoan Hotel were Guzik and the mobbed-up state senator Dan Serritella, who was also Guzik’s partner in a scratch-sheet operation.

Curly’s initial suggestion, that Ragen sell his Chicago franchise, the Midwest Wire, to the Outfit, was rejected by Ragen. As his last offer, Humphreys gave Ragen the option of giving the Outfit 40 percent of his profits. As Ragen later described: “I said to Humphreys, ’Why should you want to be a party in breaking up something that is supplying your books with news, and which if there was an alliance of any kind or deal, and Edgar Hoover found out about it, he would chop up the business?’ [Humphreys] went on to try and sell me that Hoover need not know7 anything about this. We argued for an hour.”

With Ragen’s continued refusal to fold, heated words were exchanged as the summit broke up.

Joe Accardo then declared war, ordering his army of bookmakers to stop using Ragen’s service. A now desperate Ragen turned to the politicians he had been paying off so handsomely for years. To his great dismay, Ragen was informed that the pols had a higher allegiance, and it was not to justice, but to the Outfit. It should have come as no surprise to the embattled wire king that Al Capone’s heirs practically owned City Hall, the mayor’s office included. Ragen wrote that he then realized that the Outfit “is as strong as the United States Army.”

Ragen next sought relief from the Cook County state’s attorney, William Touhy. One year later, county officials released details of their meeting. In a transcript comprising ten thousand words, over ninety-eight pages, it was finally learned what had transpired at the showdown with Humphreys and his associates. According to a congressional probe that later obtained the statement, Ragen said his life had been threatened, and he fully expected the threat to be carried out. “If he were killed,” the congressional report summarized, “he said the probable killers would be Accardo, Guzik, and Humphreys . . . it is corroborated in part by the testimony of Dan Serritella, Jake Guzik’s partner in [the Outfit’s] scratch sheet.” Ragen apparently did not believe that Touhy would do much more than the impotent City Hall officials. Ragen’s next move pushed the Outfit’s patience over the limit: he went to J. Edgar Hoover’s FBI.

Until James Ragen sauntered into the Chicago Field Office of the FBI, J. Edgar Hoover, whose jurisdiction forbade local crime investigations, had avoided delving into the murky world of organized crime. Convinced until this time that there was little hard evidence of interstate gangsterism, Hoover was content to chase bank robbers and “Commies.” Hoover was obsessed with success, and he knew that pursuing the shadowy connections of far-flung hoods could prove disastrous to the Bureau’s vaunted reputation: “We always get our man.” Now comes James Ragen, who described to the agents the national scope of his illegal race wire. Although Ragen himself admitted he had paid over $600,000 to pols over three years (nicknamed “the widows and orphans fund”), the agents were more interested in another aspect of his tale, namely Ragen’s charge that Al Capone’s heirs had also muscled into the game. It was now impossible for Hoover to ignore the obvious. It is not clear if the Bureau offered Ragen immunity for his cooperation, but it appears it did, since Hoover decreed the formation of a special investigation with a code name that gave away their focus: CAPGA. The name stood for “Capone Gang.”

Soon, Accardo, Humphreys, Guzik, and their buddies were being followed by agents from the G. More important, the agents succeeded in gaining access to the gang’s Morrison Hotel headquarters. There they tapped into the phone in the hotel’s barbershop that served as the hoods’ key link to the outside. This last affront pushed the hoods past the breaking point; they had had enough and needed to act fast. Meanwhile, the local police concluded that the threat against Ragen was serious and gave him twenty-four-hour protection. Ragen, however, soon hired his own bodyguards, but they were unable to prevent the inevitable. On April 29, 1946, Ragen found himself pursued in a fifteen-mile, sixty mile-per-hour car chase, which he was able to deflect only by heading straight for a suburban police station. It was to be a temporary reprieve.

On June 24, 1946, Ragen’s fatal prediction came true. On that day, under heavy police protection, Ragen was driving down State Street on the South Side during rush hour. With his protectors in a follow-up car, Ragen saw a hoary, tarpaulin-covered delivery truck pull alongside his vehicle. When the truck got close, the tarp was raised and the shotgunners underneath began firing from behind orange crates. Ragen’s trailing guards fired at the fleeing truck in vain. When the abandoned vehicle was later located, it was found to have been fortified with quarter-inch steel plates over its rear section.

Turning to their boss, the bodyguards found Ragen with serious wounds to his right arm and shoulder. Rushed into emergency surgery at Michael Reese Hospital, his blood was transfused ten times. Over the next few weeks, Ragen appeared to be recovering when, to everyone’s surprise, his kidneys, which had not been injured in the attack, began to fail. On August 8, Ragen again underwent emergency surgery. However, four days later he died. His autopsy revealed that his blood contained traces of the lethal chemical mercury. It was widely believed that Joe Accardo had gotten to someone on the hospital staff, bribing the employee to dose Ragen with the poison. Sergeant William Drury, a twenty-four-year veteran Chicago detective, spent months running down leads in the case, putting particular heat on Jake Guzik. The gang’s accountant, and chief palm-greaser, responded by putting his own spin on the case. “If I were to talk,” Guzik told all within earshot, “some of Chicago’s best citizens would go jumping out of windows.” When Drury hauled Guzik in for a lie-detector test, Drury’s boss, Outfit-friendly Police Commissioner John Prendergast, shook his head and said, “They won’t like it.” Thus it came as no real surprise when, for his efforts, Sergeant Drury was fired from the force for harassing Outfit members.

It was as clear as ever that Chicago’s infrastructure was corrupt from top to bottom. Ragen had done as much as he could to encourage authorities to clamp down on the Outfit, and he was killed in broad daylight for it - again without a suspect arrested. A Chicago News editorial asked its readers, “How do you like it, Chicagoans?” The scathing diatribe was noteworthy for its denunciation of the system as much as the gangs themselves: “[The Ragen murder] paints a sordid and depressing picture of what happens to a community when politicians consort with thieves and criminals; when a political machine allies itself with racketeers, when the racketeers, in fact, become the real power behind local government.”

Although indictments were returned against Outfit hitmen William Block, Lenny Patrick, and the gang’s Miami liaison Dave Yaras, the charges were dropped when the star witness backed out of the case. Soon, it was announced that Mickey McBride’s twenty-three-year-old son, Eddie, would run Continental. One month later, the Outfit closed down its Trans-America operation, fooling no one. During a 1951 Senate probe, McBride senior was asked: “Weren’t you afraid that your boy would be bumped off?” After he responded in the negative, this question was put to young Eddie: “You are a complete figurehead and dummy, is that right?” To which the young man candidly replied, “I guess you could put it that way if you wanted to.” The committee’s report concluded the obvious: “The Continental Press national horsetrack service is controlled by the Capone mob in Chicago.” The gang from Cicero, after a two-decade struggle, had finally attained its goal, and the rich rewards that followed.

A congressional investigation estimated that the combined take from all the nation’s bookies ran into the billions of dollars, and many experts believed the race wire to be the savior of organized crime after the repeal of prohibition. Len O’Connor, a Chicago newsman and political analyst, wrote that “the instantaneous transmission of information vital to illicit bookmaking was the nerve system of organized gambling, the foundation stone of syndicate crime.” In his 1975 book, Clout, O’Connor described the Outfit’s role in the national wire network: “The Chicago race wire was the nation’s bookmakers’ only available source of instantaneous information concerning all the betting opportunities currently existing at all the tracks, and, indeed, the cash flow of the bookie joints was significantly greater than that of the tracks.”

Dying along with James Ragen was Hoover’s short-lived interest in organized crime. With his key witness gone, Hoover lacked the enthusiasm to pursue the case. To make matters worse, orders came down from the executive branch to cease and desist, according to Hoover’s number two, Cartha DeLoach. “Then, quite suddenly, the attorney general, Tom Clark, told us to discontinue our operations,” DeLoach later wrote. It will be seen that Clark was understandably viewed in Chicago as Outfit-friendly. The CAPGA unit was thus disbanded until eleven years later, when events forced Hoover back into the investigation of organized crime. The decision to close the CAPGA case was a costly one, for it gave the Outfit a virtual free ride to expand its empire into domains as far removed as the Nevada desert and the White House. And they never relinquished their hooks into Hollywood, or their liaison, Sid Korshak.

Moe Annenberg’s son Walter went on to exponentially increase the value of the tattered business he’d inherited, founding such publications as TV Guide and Seventeen. In 1969, Walter was appointed U.S. ambassador to Great Britain by Richard Nixon. And in a manner that even eclipsed the rebirth of Jake Factor, W’alter devoted the second half of his life to philanthropy, establishing a foundation valued at over $3 billion. In 1991 alone, he gave away $1 billion; likewise in 1993. In his father’s honor, Walter endowed the prestigious M. L. Annenberg Schools of Communication at the University of Pennsylvania and the University of Southern California.

1. Tennes tried to warn Sox owner Charles Comiskey, who couldn’t do anything, since, if it was true, the revelation would destroy his franchise, which was built by underpaying his players by 50 per cent. Although Rothstein fixed the players’ 1921 trial, they were banned for life by the just installed first commissioner of baseball, Judge Kenesaw Mountain Landis.

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