Part 35

Lepke’s mother called him “Lepkeleh,” the Jewish diminutive for “Little Louis,” and his friends shortened the nickname to Lepke. He was not a bad student in grade school. But he quit school after finishing the eighth grade and for a time worked as a delivery boy at $3 a week.

His father died when he was thirteen. The family broke up and scattered. The other ten children went on to become respectable, useful citizens. But not “Little Louis.” He rented a furnished room on the East Side and turned to crime. He organized raids on pushcart peddlers, stole from lofts, picked pockets, and lived by his wits. He was sent to the reformatory and to prison for short terms for larceny, but he always returned to the old life. He had ambitions to become a big shot in New York’s underworld.

In the early 1920s, Lepke joined an East Side mob headed by “Little Augie” Orgen. But while most of the underworld scrambled to satisfy the country’s unquenchable thirst for bootleg whiskey, Lepke convinced Little Augie that it was safer, smarter and more profitable to specialize in labor racketeering and in selling “protection” to businessmen.

If an employer was having trouble with strikers, Lepke would see to it that the recalcitrant workers were beaten up by his goons and that peace was restored at no increase in wages. If union leaders were having trouble with rank-and-file members, Lepke’s strong-arm squad would bring the rebels back into line with beatings and threats against the men’s families.

Other mobs sold such services on a flat-fee basis. But not Lepke. When his men were hired to put down a union revolt, they remained as members and then slowly muscled their way into the management of the union. The members’ dues were increased to pay for the services rendered.

Businessmen who hired Lepke’s strike-breaking services were ordered to buy the protection on a continuing basis. If they refused, a bomb would be hurled through a window to wreck a plant or a shop. Acid would be thrown onto merchandise, or someone’s face would be splashed with acid as he walked from his place of business to his home.

Those who capitulated--and most of them did--soon found Lepke’s men demanding a voice in management, even to the dictation of contracts (from which they received a kickback) and the placement of a man in the business office to keep a check on the money.

Little Augie was pleased with Lepke’s organizing brilliance and the profits that were rolling in. But the word got around that he didn’t like Lepke’s growing strength in the organization, where he was known as “The Judge” and “Judge Louis.”

Little Augie’s irritation was short-lived. On October 16, 1927, as he stood in a doorway at 103 Norfolk Street talking with his young bodyguard, a sedan suddenly swerved to the curb. A voice called, “Hey, Little Augie!” As the gang chief turned, a burst of machinegun fire cut him down. His wounded bodyguard was identified by police as John Diamond--later to become better known as Jack “Legs” Diamond.

The underworld hummed with the story that Little Augie had fallen victim to Lepke’s ambition. On the basis of an informer’s tip, police picked up Lepke, “Gurrah Jake” Shapiro and “Little Hymie” Holtz and charged them with murder. But no one could prove anything and the case soon was dropped.

With Little Augie out of the way, Lepke set to work to consolidate his empire. He moved more solidly into the leather, baking, garment, fur and transportation industries. At the peak of his power, Lepke personally directed some 250 criminal operations. He rode about New York in a limousine with a liveried chauffeur. He had a staff of 300 men looking after his affairs, plus an assortment of accountants, bookkeepers, gunmen, strong-arm men, and experts in such matters as acid-throwing.

He also put murder on a cash-and-carry basis. If a member of the mob became careless or talked too much, he was executed summarily. Dangerous witnesses were ordered to leave the state under the threat of death--and if they refused to obey, they were killed.

Oddly enough, even at the height of his power, Lepke was virtually an unknown in New York and throughout the country. While other hoodlums gained the headlines, Lepke remained in the shadows with few people realizing the extent of his empire, whose earnings have been estimated at more than $50 million a year. Nor was it known for twelve years--1927 until 1939--that Lepke alone had ordered the deaths of from sixty to eighty men whom he considered a threat to his own safety and prosperity.

By 1933, however, the operations of Lepke and other racketeers had aroused such popular indignation that the U.S. government moved against them. In November of that year a Federal grand jury indicted Lepke on two counts of violating the antitrust laws through his domination of the rabbit-fur-dressing industry. He was arrested and released on bail. He returned home to his wife and adopted son to continue operations as usual while the wheels of justice turned slowly.

It was during this period that another opportunity came to Lepke quite unexpectedly. Three hoodlums--Jack Katzenberg, Jake Lvovsky, and Sam Gross--were allied with other gangsters in the operation of an illicit chemical plant in Newark, New Jersey. The gang was smuggling opium into the country, taking it to the plant and extracting morphine from the opium, to be sold at wholesale across the country. This business was wiped out on February 25, 1935, when an explosion destroyed the chemical plant.

Katzenberg, Lvovsky, and Gross had found the narcotics business too profitable to give up. They began looking around for other ways to get back into the business, and they decided to talk the problem over with Lepke. A mutual friend brought them together in his apartment, where they discussed setting up an international organization which would obtain narcotics in Shanghai and smuggle them into the United States. The sale of narcotics was to be put on the same efficient basis as the sale of murder.

The major stumbling block to the plan was the U.S. Customs. It would be relatively simple to obtain heroin in Shanghai and to bring it as far as the port of New York. The problem was how to smuggle it past the Customs inspectors on a continuing basis that would guarantee a steady supply with a minimum risk.

Lepke was a firm believer in the adage that every man has his price--and he was certain he would have no difficulty in finding someone whose price was reasonable and who would cooperate with the syndicate. This direct approach had always worked in the past and Lepke had no reason to change tactics now.

One of Lepke’s first moves was to investigate the Customs procedures at the New York pier. He found that when vessels arrived at the Port of New York, the passengers’ baggage and trunks were brought to the pier for examination. And when they had been examined, a Customs inspector affixed a colored stamp on each piece of luggage. Once the stamps were affixed, the luggage could be removed from the pier and placed in a taxi or in a truck to be carted away.

Lepke saw that the stamps were the key to his problem. If he could find a Customs employee who would furnish him with the colored stickers, then a sticker could be affixed to a trunk or a suitcase containing narcotics and it would pass through Customs without an actual inspection.

Carefully, Lepke’s lieutenants made inquiries along the waterfront. At last they found their men, two guards who were willing--for a price of $1,000 a trip--to furnish Lepke and his men with the necessary stickers on the day that the narcotics carriers arrived. The price was cheaper than Lepke had expected.

With easy entry for the narcotics assured, Lepke arranged to obtain heroin from two Greek dealers in Shanghai.

This was the state of affairs when Jack Katzenberg made a trip to Brooklyn for a visit with his brother-in-law, Ben Schisoff, a balding, sad-eyed man with the face of a ferret. Ben and his wife Bella operated a Coney Island hot dog concession. They cleared about $1,500 to $2,000 in profit each season, enough to live on through the winter and to take care of the concession rental for the next season.

Katzenberg generously offered to send Ben on an all-expenses-paid trip around the world by luxury liner. All he asked in return was that Schisoff bring back two trunks from Shanghai. “You won’t even have to bother about looking after the trunks,” Katzenberg said, “because there’ll be somebody to do that for you. And when you get back I’ll have some money for you.”

Schisoff was confused. (At least that was the story he would tell Customs agents later.) Why would his brother-in-law suddenly wish to send him around the world with all expenses paid--and then give him money at the end of the trip? He knew his brother-in-law was in the rackets. He knew his reputation as a hoodlum. He also had heard all the rumors that Katzenberg was connected with the narcotics traffic even though he had managed to elude Federal officers. Schisoff told Katzenberg to give him a few days to think it over.

Schisoff finally sat down with his wife and said, “Listen, Bella, I want to go on a trip by myself. You go to Miami. You’ve worked hard and now you are entitled to share the money we have. I want to go alone. You know I am a nervous type of man and I want to go for a couple of months to recuperate. You can stay home or you can go to Miami or do whatever you please. How about it?”

But Bella was having none of this business of her husband taking a vacation alone. She loudly insisted that if he were going on a trip, then she was going with him. She wasn’t going to let him go gallivanting off by himself to get into God knows what sort of trouble. Her answer was “no!”

Schisoff reluctantly told Katzenberg that his sister insisted on going along. He expected his brother-in-law to call off the deal. But instead Katzenberg amiably agreed that both of them could go and that he would pay their expenses. And so on November 15, 1935, the couple boarded the SS President Lincoln in San Francisco and set sail that day on their voyage around the world by way of Shanghai.