Part 23

Pete Licavoli was among those sentenced to prison. The mob leader over the years had escaped conviction on charges ranging from sluggings to murders. But this time he pleaded guilty to bribing a Federal officer. He was fined $1,000 and sentenced to two years in Leavenworth prison.

While Fleishman was uncovering the evidence to convict Licavoli and the others in Detroit, another young agent--Chester A. Emerick--was making some interesting discoveries on the West Coast. A big, easy-going man, Emerick had developed sources which disclosed to him that much of the liquor bootlegged on the Pacific Coast was being shipped by a combine of Canadian liquor interests. Emerick learned that the Canadian liquor interests had formed the Pacific Forwarding Company of British Columbia to exploit the American liquor market. The company loaded its whiskey on ships at Vancouver for shipment ostensibly to Papeete, Tahiti. Once the liquor arrived in Tahiti, the Tahitian customs bond was cancelled and the shippers were not required to pay taxes on the liquor exported. Then the liquor was moved from Papeete to Rum Row off Southern California, off Long Beach and off the Washington coast. Rum Row was the nickname given by newspapers to the line of ships which stood at anchor in international waters, three miles offshore and just out of reach of U.S. maritime jurisdiction.

The Canadians did not merely bring the liquor to Rum Row. They had a well-organized force of salesmen operating in San Francisco, Los Angeles and Seattle, selling whiskey to bootleggers and guaranteeing delivery on a wholesale basis. The money collected by these salesmen was deposited in several banks along the Pacific Coast to the credit of the “Gulf Investment Company”--a company owned and controlled by the Canadian liquor interest. No one knows how many hundreds of millions of dollars in profit was realized by the Canadian conspiracy.

Emerick doggedly followed up the original leads obtained during prohibition and pressed for Federal action against the Canadian liquor dealers. In the spring of 1934--two years after the repeal of prohibition--two officers of the Canadian interests, Henry and George Reifel, arrived in Seattle. They were placed under arrest. The warrants had been issued secretly, and only four or five Customs officials knew of the action that had been taken. Service was obtained on warrants against the corporation which they represented, and a Federal action was brought in the District Court at Seattle, Washington. Before the case was concluded the Canadian interests had agreed to settle all liabilities by paying the U.S. government $3 million. This payment was accepted by the government and the case was closed.

There never were and perhaps there never will be again smuggling operations of such a magnitude as those which developed during the days of prohibition. Booze leaked across the borders from Canada and Mexico in streams. High-powered speedboats brought cases of liquor from supply ships riding at anchor in international waters. The Coast Guard and Customs were engaged at times in a shooting war with the rumrunners, and in the Detroit area alone, Customs had thirty speedboats engaged in around-the-clock blockade operations.

No authoritative study is available on how many ships and boats were engaged in rumrunning during the Twenties. But it was a formidable fleet, and there had been nothing quite like it since the blockade runners assembled their fleet to challenge the Union’s blockade of the South during the Civil War.

One of the largest hauls of bootleg alcohol made by Customs came in 1926 with the seizure of the freighter Cretan, which was found to be carrying more than 70,000 gallons of Belgian alcohol easily worth $4 million on the retail bootleg market.

The Cretan was purchased by a “front” man for a group of Philadelphia and New York racketeers. Early in 1926, the Cretan steamed to the Bay of Fundy, where it made a rendezvous with the British ship the Herald. The Herald’s cargo of alcohol, a total of seven hundred 100-gallon drums, was transferred to the hold of the Cretan. Then several tons of baled waste paper were piled on top of the drums to conceal them in case the ship was boarded by Coast Guard or Customs officers.

The Cretan headed for Philadelphia with its valuable cargo of 190-proof spirits, but the mobsters weren’t satisfied with the arrangements for unloading the cargo in Philadelphia. A message was sent to the Cretan’s captain ordering him to proceed to Boston and take on more baled waste paper. A decision would be made later on where to unload the alcohol.

The Cretan steamed into Boston harbor on schedule and tied up at an isolated pier. It began to take on more waste paper, with no one suspecting its true cargo. But a Customs officer observed several well-dressed men coming and going from the ship. He also noticed that two strange automobiles, both bearing New York license plates, were parked nearby. And he began to wonder what it was aboard the vessel that would bring the strangers all the way from New York to Boston--men who didn’t seem to be seafaring types.

He reported his suspicion to Deputy Collector of Customs Thomas F. Finnegan. Finnegan decided to send a special duty squad aboard the ship to determine the nature of the ship’s cargo. The squad boarded the Cretan but found they could not get into the holds. However, when they entered a coal bunker next to the holds, they detected the unmistakable odor of alcohol.

Finnegan ordered an immediate halt to the loading of waste paper. He posted guards at the gangway to prevent anyone from leaving the ship, and arranged for a lightering firm to unload the bales of waste paper from one hold. When the paper was removed, the drums of alcohol were uncovered. The Cretan and its cargo were forfeited to the government and sold at public auction. The alcohol was sold to drug companies which had Federal permits to dispense alcohol.

Some of the rumrunning craft were equipped with armor plate and bullet-proof glass around the pilot house area. They had underwater exhaust mufflers installed in order to slide silently through the water at night and evade the Coast Guard and Customs patrols. Most of them had two high-speed motors, each with a shaft and propeller. The conversion work on the boats was done by the rumrunners themselves or by small boat builders.

The Whatzis, operating out of Rhode Island, was believed to be the first rumrunning speedboat with four high-speed motors--two in tandem in each engine bed with a reduction gear between the motors. Each set of motors had one shaft and one propeller. This powerful craft was seized by the Coast Guard off the Massachusetts coast and later was inspected by several naval architects interested in its unusual power plant. Some insist to this day that the Whatzis was the craft that gave naval designers their idea for the rugged crash boats used at seaplane bases, and later for the PT boats which won renown in World War II.

The Twenties was a time of violence and turmoil for all the nation. And no agency of the government was more actively involved than the Customs Service, which, with other agencies, had the impossible task of trying to throw up a dike against the flow of illegal whiskey into the United States. Many good men tried, honestly and diligently, to enforce the law. But the great majority of the people simply didn’t want prohibition.

In this period, Customs developed a tough and experienced corps of law enforcement agents and supervisors who were to serve the country well in future years.

THE ENFORCERS

Customs now has 240 special agents who police the Atlantic, Pacific, and Gulf of Mexico coastlines and the borders between Mexico and Canada. Their work is supported by 487 Customs enforcement officers (port patrolmen) and 2,551 Customs inspectors and supervisors.

Pressures for a special investigative force to combat smuggling and fraud developed after the Civil War, when normal trade was resumed between the United States and other nations of the world. Violations of the Tariff Act and a loose morality in administrative offices became so flagrant in those postwar years that in May, 1870, Congress passed a law providing: “The Secretary of the Treasury may appoint special agents, not exceeding 53 in number, for the purpose of making examinations of the books, papers and accounts of Collectors and other officers of the Customs, and to be employed generally under the direction of the Secretary, in the prevention and detection of frauds on the Customs revenue....”

With this act, the Secretary of the Treasury gathered under his direction for the first time a special police force to combat smuggling and frauds.

The need for such a force actually dated back to the first days of the Republic. But over the years, the enforcement work had been handled by inspectors, guards and other untrained personnel. In 1922 Secretary of the Treasury Andrew W. Mellon transferred the Special Agency Service from his personal direction to the Customs Administration, which was then a division of the Treasury Department. In 1927, the Customs Division was given the status of a bureau by Congress, with direct control over its own investigative force.

This force now operates under a Division of Investigations, headed by the veteran enforcement officer Chester A. Emerick, former Collector of Internal Revenue in Tacoma, Washington, who joined the Customs Service in 1920. Emerick has the title of Deputy Commissioner, and he is responsible to the Commissioner of Customs in the operation of his division.

The responsibilities of the Customs agents were not clearly defined in the early days of their operation. But a clear directive was issued in 1933 to dispel any lingering doubts. This directive read: “(a) Customs agents shall be employed generally in the prevention and detection of frauds on the Customs revenue and all matters involving such frauds requiring investigation shall be referred to them. They shall investigate and report upon all matters brought to their attention by the Commissioner of Customs, Collectors, Appraisers, Comptrollers, and others relating to drawback, undervaluation, smuggling, personnel, Customs procedure, and any other Customs matters.

“(b) undivided responsibility for the investigation and reporting to the proper authority of all irregularities concerning any phase of Customs administration or misconduct on the part of Customs employees, by whatever means brought to its attention, rests with the Customs Agency Service. This injunction, however, is not to be construed as abridging or modifying the responsibility of the principal field officers to maintain discipline and efficiency in the Customs personnel. There shall be no differentiation in the treatment of chief administrative officers of Customs and their subordinates in the matter of investigating accusations of alleged official misconduct. Collectors and other chief officers of the Customs shall cooperate in making this policy effective.”

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Jerome Dolan is a handsome, black-haired young Irishman. It was, literally, a swift and embarrassing kick in the pants which started him on the road to becoming a Treasury agent.

It began for Dolan when he was a twelve-year-old living on Selby Avenue in the Lexington Parkway area of St. Paul, Minnesota. The street was a quiet, comfortable, tree-shaded thoroughfare lined with the homes of middle-income families. The Dolan home was near a shopping center and only a brisk walk from the neighborhood school.

There were playgrounds not far distant and vacant lots where youngsters could play baseball after school and during vacations. But in the perverse way of small boys, Dolan and his pals found it more fun to play ball on the streets, much to the annoyance of the residents and Officer “Red” Schwartz, who frequently cruised through the area in Patrol Car 309.