Boardwalk Gangster

The Real Lucky Luciano

Tim Newark

Thomas Dunne Books

Boardwalk Gangster
1
LUCKY IN NAZI GERMANY
Jack Diamond, thirty-four years old, successful owner of the Hotsy Totsy Club on Broadway in New York City, rested comfortably in the plush surroundings of a first-class passenger car on the Ostend-Vienna Express on the evening of September 1, 1930. He'd had a wine-fueled dinner and was chatting away to four other gentlemen attired in elegant suits. The next day they would be in Germany, but at midnight the express shuddered to a halt on the frontier at Aix-la-Chapelle. German police--armed with Luger nine-millimeter Parabellum pistols--clattered through the coaches and asked the Irish-American Diamond to accompany them. As he stepped onto the platform, Diamond glanced up at a poster--it showed a man in uniform with a Charlie Chaplin-style mustache and a swastika in the background.
The German police had little interest in Diamond's companions--at least three of who were Italian-Americans--and let them continue on their journey to Cologne. They took the New York club owner to the local police station and questionedhim. They asked him why he was in Germany. He explained that he was on holiday with his companions and because he suffered from stomach ailments he was going to visit one of their famous German spa towns. They asked him if he was the same Jack "Legs" Diamond, the notorious New York gangster. He said no. They then presented him with a set of fingerprints obtained from Berlin police headquarters belonging to the mobster. Even though they matched, Diamond insisted it was all a case of mistaken identity. The police checked his passport and saw that it was in order, including a stamped visa for entry to Germany.
Having arrested an American citizen, the German police were then unsure what to do next. The American embassy in Berlin said they had merely informed the German authorities of Diamond's presence on their territory but did not request his arrest or return to their country. Sensing the German police had little on him, Diamond began to get ratty and demanded to see the American consul in Cologne. After a second police interview, a local journalist was allowed to talk to him.
"It's all lies," he snarled at the reporter, clutching his abdomen. "The New York police pester me all the time. They arrested me twenty-two times in the last few years and always had to let me go for lack of evidence. I came to Europe to seek quiet. I want to go to Vichy and Wiesbaden to take the cure. My stomach is bothering me."
Unable to charge him or pass him on to another country because his visa was for Germany only, the police handed over the matter to their alien division. Doctors checked Diamond for any symptoms that required treatment at a German spa but could find nothing genuinely wrong with him. Deemed an undesirable by the Prussian minister of the interior, Diamond was accompanied by two detectives and put in a second-class compartment on a night express to Hamburg in northern Germany.
On September 6, Diamond was escorted onto the freighter Hannover. As a crowd of two hundred gathered on the dockside to see off the steamer, one man asked him how he liked Germany."I hate it," he growled. The ship had no passenger cabins, but one of the officers gave up his room for him. He would eat at the captain's mess. At the last moment, a German lawyer from Hamburg rushed on board. Calling himself Dr. Stork, he said he had been sent by Diamond's friends in the United States, but Diamond ignored him until he pronounced a special code word cabled to Diamond by his New York lawyer. Stork told him to go a particular hotel in Philadelphia when the ship docked and there he would find messages for him. Diamond instructed Stork to start an official complaint against the Prussian minister of the interior. As Diamond settled down to his sixteen-day voyage, he discovered he was to be accompanied by a cargo of several thousand canaries. The irony was not lost on him. Someone had certainly squawked about his mission to Germany.
When Diamond walked down the gangplank in Philadelphia, he was served with a warrant charging him with being a suspicious character. He was photographed and fingerprinted. "I wanted to go to Germany for my health," he insisted. "I've got a very bad stomach. But what happens? The newspapers up and hint I'm going to Europe to kill somebody." He wasn't concerned about facing the police but feared the reaction of his wife to a story printed in a German newspaper linking him to a blond German singer. He told customs officials that a Hamburg café had offered him $1,800 a month to perform in a cabaret for them. "It wasn't enough," he said.
So, if Diamond wasn't really going to Germany for his health or a cabaret job, what was he doing there in September 1930? An answer came just a month later. By then, Diamond had been shot while staying at the Hotel Monticello. He was relaxing in a luxury suite with his mistress, showgirl Kiki Roberts, when two gunmen burst in and shot him four times. Miraculously, he survived the assault, but in the following police investigation, an associate of Diamond, a bookmaker called Robert V. Miller, known as "Count Duval," admitted he had been sent by Diamond to Germany on a mission for him.
Miller was supposed to buy a consignment of rye whiskey for Diamond's nightclub and was to get 5 percent on the deal. Given traveling expenses of $500, he sailed on a separate ship than Diamond and when he heard his boss had been arrested in Germany, he aborted the trip. In Paris, he received a telegram from Diamond telling him to collect money owed him in London. Prohibition was still in force in New York and illicit liquor was at a premium, but it seemed a long way to go for a few crates of whiskey.
 
 
A stronger clue to the true purpose behind Diamond's ill-fated journey to Weimar Germany comes in the identity of his fellow travelers. Before the New York mobster had reached continental Europe, his White Star liner Baltic had docked at Queenstown harbor in Ireland. An enterprising local reporter checked the list of passengers on board and found that Diamond was accompanied by four friends. One was Charles Green, formerly known as Entratta; the other three were called Treager, Aricidiaco, and Lucania. That fourth man was Charles Lucania--a rising gangster who, just a few years later, would become infamous as Charles "Lucky" Luciano, boss of bosses of New York's underworld. Confirmation of Luciano's presence on this voyage came five years later when an FBI memorandum referred to "Charles Luciana" accompanying Jack Diamond to "Europe in the summer of 1930." The arrest of Diamond and the resulting publicity subsequently disrupted their plans, said the report--or did it?
In December 1931, an Italian-American drug dealer called August Del Grazio was arrested by German police in Hamburg. In his possession was an invoice for a shipment of 1,430 pounds of narcotics, but when they raced to the pier to wrench open the suspicious crates, they found nothing inside. The frustrated police feared the drugs were already on a ship bound for New York. The raid came as a result of their investigation into a drugsmuggler called "Afghan Moses." When the police searched Afghan Moses's home, they found receipts that led them to locate 550 pounds of narcotics hidden on a ship from Turkey. Del Grazio had been arrested as soon as he stepped off the Simplon Express from Venice via Cologne and southern Germany. When he was searched, papers linked him to Afghan Moses and an international narcotics smuggling ring.
When German detectives spoke to their colleagues in New York, they discovered that Del Grazio was from Manhattan's Lower East Side, where he was known as "Little Augie the Wop." He had been under observation ever since three tons of narcotics had been seized at Pier 84 at West Fifty-fourth Street, disguised in a shipment of woolen clothing.
Del Grazio was a longtime criminal who knew Lucky Luciano well enough to offer him help nineteen years later when the mobster was in prison. Federal narcotics agent George White testified to the Kefauver Committee inquiry that Del Grazio approached him on behalf of gangster mastermind Frank Costello with a deal to get Luciano out of jail.
In 1931, it seems likely that Del Grazio was completing a narcotics deal that had been set up by Luciano in Germany a year earlier. The Bureau of Narcotics report, quoted by the FBI, said "a conspiracy existed to smuggle narcotics from Europe into the United States" and had subsequently failed because of Diamond's arrest, but this was only partly right. Diamond's arrest had thrown his own personal part of the deal into disarray, but Luciano must have completed the deal in the shadows. Otherwise, why would Del Grazio--known well to Luciano and his associates--still be there a year later?
It seems remarkable that Charles "Lucky" Luciano should be walking the streets of Weimar Germany in 1930. At the same time, Adolf Hitler and his Nazi party were campaigning hard to win national elections, and on September 14 they won over six million votes, making them the second-largest political party in the country.
Luciano would have seen their election posters and anti-Semitic slogans everywhere. He might even have seen Nazi Brownshirts bullying Jewish citizens. He had grown up in a heavily Jewish populated district of New York and many of his closest friends and business partners were Jewish. Seeing German Nazis at close quarters gave him a bitter dislike for Hitler and his racist cause that would endure into World War II.
It is important to note that Luciano's business trip to Naziinfested Germany has not been mentioned before in any of the studies of the mobster and his career. It is not mentioned at all in The Last Testament of Lucky Luciano, the book that controversially claimed to be based on the firsthand recollections of his life. Even when Meyer Lansky, his closest lifelong criminal associate, related his memoirs to an Israeli journalist, he failed to mention Diamond and Luciano's journey to Germany. The reason for this is not altogether surprising. In later life, Luciano and Lansky were happy to talk about their profiteering during Prohibition and their shoot-outs with other gangsters, but they were certainly not going to admit to being at the heart of an international drug-smuggling network.
 
 
In 1930, dealing in illicit drugs was a relatively new criminal business. Heroin--the most infamous of narcotic drugs derived from morphine--was first manufactured in Germany in 1898 by Bayer Pharmaceutical as a cough medicine. Early users said it made them feel "heroic," and from that was born its commercial name. By the first decade of the twentieth century, heroin was marketed widely in the United States and attracted its first recreational users from the middle classes, but the habit soon spread to the less affluent, who became increasingly desperate to fund their next fix.
Tales of these "junkies"--so called because they sold anything, including junk metal, to raise money for heroin--stirred the government into action and they banned its use withoutprescription in 1914. "The most harmful form of opiate with which we have to deal is heroin," declared Dr. Charles B. Towns in 1915, an early campaigner against it. "Heroin is three times as strong as morphine in its action. It shows more quickly a deleterious effect upon the human system, the mental, moral and physical deterioration of its takers being more marked than in the case of any other form of opiate." In 1917, the New York Times ran a headline claiming there were three hundred thousand drug addicts in New York City--the majority of them from the prosperous middle classes. Two years later, doctors were banned from prescribing heroin altogether, but by then an underworld market in illegal drugs had already been established.
Charles Luciano's first and only prison sentence, until the mid-1930s, came about because of his involvement in dealing heroin in the Lower East Side in 1916, when he was just eighteen years old. In April 1924, a bill prohibiting the importation of crude opium for the purpose of manufacturing heroin was put before the House of Representatives in Washington, D.C. Sidney W. Brewster was the deputy warden of Hart Island prison in New York City, and he gave chilling testimony at the bill hearings.
"In 1910 or 1911 and up to four or five years ago in the underworld the drug chiefly used was morphine and cocaine, morphine being termed a necessary drug and cocaine a luxury," explained Brewster. In the last four or five years heroin has gradually succeeded morphine and to quite some extent cocaine. The reason for this is that heroin is approximately three times as powerful as morphine; and further, the addict in taking heroin gets some of the effects which he ordinarily would get from cocaine."
Brewster said that a cocktail of drugs was used by a variety of addicts from actors to gangsters to "jazz up" their lives, but he said there was a worrying trend for drugs being used during criminal acts.
"At the present time, in one of the most recent crimes ofviolence," said Brewster, "the Diamond case, in New York, which involved the robbing and murder of two bank messengers in broad daylight, two of the actual perpetrators of the crime were under the influence of heroin. In many cases the leaders of the various gangs of gunmen do not use narcotics themselves but when they send out members of the gang on a crime to commit murder or robbery they see that they are well charged before they go."
The jazzed-up robbers who killed the two bank employees in November 1923 were Barlow Morris Diamond and Joseph G. Diamond. They were no relations of Jack Diamond, but the crime made the headlines. Clearly, drug use among psychopathic criminals only enhanced their level of violence. In his testimony, Brewster quoted New York police records for 1923, saying there were approximately six thousand arrests in the city in connection with illegal drugs.
"The man who uses heroin is a potential murderer," said Brewster. "He loses all consciousness of moral responsibility, also fear of consequences."
Did Luciano use drugs himself? In later life, he admitted that as a teenager he smoked opium. "I used to hit the pipe joints in Chinatown when I was a kid, we all did," he recalled. An unlicensed dentist gave him his first smoke. "I liked it, the stuff did funny things to my head. But I'd never let it suck me under." He saw it more as a business opportunity.
In 1923, European government medical experts met in Paris to discuss the abuse of heroin. For them, it seemed to be largely an American problem. "If heroin is abused in America," said a British Ministry of Health report, "let Americans who like prohibition forbid it, but why should countries where heroin is not abused be put to all the trouble for the benefit of the United States." This narrow-minded view would be blown apart a few years later.
By the time Diamond and Luciano took their voyage to Germany, smuggling heroin and other narcotics had expandedinto an international business with enormous profits to be made. On March 17, 1930, one hundred U.S. customs agents boarded an ocean liner that had arrived from France. They had been tipped off that two thousand pounds of narcotics manufactured in Germany were on board. Shortly beforehand, a trunk-load of narcotics valued at $200,000 was seized on a New York pier after the arrival of the White Star liner Majestic. Later, before a grand jury, an English passenger explained that he had not recognized one of his heavy leather trunks deposited on the pier, despite it bearing his name. He left the trunk behind and customs agents became suspicious when another man claimed it.
The international network stretched from America to Germany to Turkey. Major-General T. W. Russell Pasha was commandant of the Cairo police and he was very well placed to observe the flow of the narcotics market. He reported back his findings to a League of Nations committee set up to investigate the global trade. Although countries suffering from the traffic tended to "think in grammes and kilogrammes" he explained, "the unit of calculation in the central European manufacturing countries when talking of narcotics is the metric ton."
Russell Pasha identified one illegal factory in Alsace in 1928 that had produced 4,349 kilograms of heroin--more than two and half times the legitimate requirement of the world population--and that was just one factory. Recently, his Central Narcotics Intelligence Bureau had broken up a gang of Polish smugglers operating out of Vienna who sourced narcotics from Austria, Switzerland, and France. These were then passed on through ports in Italy, Greece, and Turkey to end up in the drug dens of Alexandria, Egypt, servicing the needs of an estimated five hundred thousand addicts. One of the arrested dealers was an outwardly respectable doctor who claimed he was simply "engaged in making and selling something for which there was a world-wide demand. No visions of demented, tortured victims of his poison came ever to disturb him." The raw materials for this trade--opium--came mostly from Turkey, although factoriesin Istanbul were also responsible for shipping thousands of kilograms of heroin and morphine.
The United States established its own Federal Narcotics Control Board and Narcotics Division as a result of the Harrison Narcotic Act in 1914. In June 1930, these were combined to form the Federal Bureau of Narcotics (FBN), part of the U.S. treasury department. It was this agency that pointed the finger at Luciano and Diamond setting up a drug-smuggling network in Germany. They passed their information on to the FBI, who made the connection between Italian gangsters in New York and the drug business. Early on, they claimed that narcotics were arriving hidden in barrels of olive oil. Much of this came to the Lower East Side of Manhattan--the heart of the Italian immigrant community. This was the place where Charles Luciano began his criminal career as a teenage peddler of heroin.
BOARDWALK GANGSTER. Copyright © 2010 by Tim Newark. All rights reserved. For information, address St. Martin's Press, 175 Fifth Avenue, New York, N.Y. 10010.