Monday, January 19, 2009

Johnny Torrio and Al Capone's Accounts Receivable Department

The Torrio-Capone Outfit could have been entirely rolled up in 1924, if not for some behind-the-scenes legal wrangling and judicial payoffs.

After Chicago mayor William "Decent" Dever, the "dry" Democrat, shut down Capone's headquarters at the Four Deuces, the gang moved all their accounting operations to the second floor of a nondescript brick shopping center on the northwest corner of 22nd and Michigan, at 2146 S. Michigan. The photo above shows the location today (taken from the perspective of Michigan Ave.); see below for a newspaper photo of the scene at the time of Capone's residence (taken from the perspective of 22nd St.).

The shopping center was busy most of the time, and featured restaurants, offices, and dry goods, so for awhile, no one noticed the unusual activities in the physician's office on the second floor, where hung a sign reading "Dr. Frank Ryan" (some accounts claim the sign used Capone's favorite pseudonym, A. Brown, but this seems unlikely, given the gang's expertise at discretion) . A peak inside Dr. Ryan's office revealed an ordinary waiting room, furnished with various vials of medicines.

But beyond the waiting room were file cabinets upon file cabinets, containing the gang's accounts receivable records. There, Jake "Greasy Thumb" Guzik, the Outfit's chief accountant, kept ledgers detailing the assets, income and trade secrets of the largest bootlegging and prostitution ring in the world.

When Chicago police raided the doctor's office in April, 1924, and arrested Guzik, Frank Nitti, and Johnny Patton (the latter two were top lieutenants in the gang), they found ledgers showing major beer customers, locations of all speakeasies under Torrio-Capone control, details of the gang's liquor supply chain from Canada and the Carribean, corporate control documents for breweries owned and operated, and detailed T-charts for the suburban brothels in Stickney and Burnham. Embarrassingly, they also uncovered a list of police officers and federal agents receiving hush money.

The incredible findings were enough to shut down Torrio and Capone for good. As Mayor Dever told the newspapers, "We've got the goods now." Not only Chicago and Cook County authorities, but the Bureau of Investigation and the IRS in Washington prepared to examine the seized documents. William McSwiggin, the county attorney, was ready to empanel a grand jury.

Capone's men worked furiously behind the scenes. In Judge Howard Hayes, they found their man. Shortly after the raid, he summoned all seized records to his courtroom. The following day, without notifying McSwiggin, he returned all of these documents to Capone's attorneys, on the basis that the police had no search warrant for the accounting records, only for illegal liquor. A few weeks later, he dismissed all charges against the arrested men.

McSwiggin and the feds were infuriated at being outmaneuvered by Capone and undercut by Judge Hayes, but Capone remained a free man until 1931. After the raid, he relocated his headquarters to the Hotel Metropole across 22nd street.

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