Read Fortune's Formula Online

Authors: William Poundstone

Tags: #Business & Economics, #Investments & Securities, #General, #Stocks, #Games, #Gambling, #History, #United States, #20th Century

Fortune's Formula (5 page)

Emmanuel Kimmel
 

E
MMANUEL
K
IMMEL INHABITED
a different America from that of Claude Shannon. Kimmel must have been born around 1898—even his son isn’t sure of the exact year. One unconfirmable story has it that the young “Manny” Kimmel was kidnapped on board a ship and never saw his parents again. He jumped ship in the Orient and found work on a cattle boat, shoveling steaming piles of manure into the tropic sea. Somehow Kimmel made his way back to the States. He spent his late youth on Prince Street in the Jewish section of Newark. There he befriended “Der Langer.”

Der Langer (“the Tall One”) stood about six feet two. He towered like a god over Kimmel and most of the Eastern European immigrants. The community regarded him almost as a god. Occasionally bands of Irish kids would harass the merchants on Prince Street, upsetting pushcarts and swiping yarmulkes as trophies. When that happened, people would call for Der Langer. Der Langer and his gang would appear on the scene within minutes and beat up the Irish kids.

As Der Langer matured, he moved in broader circles of business where people did not always speak good Yiddish. He shortened his boyhood nickname to “Longy”—Abner “Longy” Zwillman.

From what he saw of America, Zwillman concluded that there were two ways to make real money. One was politics, and the other was gambling. Zwillman decided to go into gambling. Manny Kimmel followed him.

Their business was the numbers or policy racket, a form of illegal gambling that flourished before state lotteries existed. Customers bet pocket change on a three-digit number. Each day, one of the 1,000 possible three-digit numbers came up. A lucky bettor who picked correctly got back 600 times his or her wager. Zwillman and company’s cut was $400 out of every $1,000 wagered.

At that time, the daily number was chosen by the number operation itself—more or less randomly. An associate of Zwillman’s named “Doc” Stacher observed that the less random the numbers, the more profit the operation might make. In 1919, on Stacher’s suggestion, Zwillman instituted a new procedure. After gathering all the day’s bets, his crew would determine which number had the least money riding on it.
That
became the winning number.

On those terms, turning a profit was easy. The hard part was dealing with rival mobs and the law. Zwillman was considered a master at both. A minor thug named Leo Kaplus began roughing up Zwillman’s numbers runners. He was given a warning. Kaplus responded that he’d kick Zwillman in the balls to teach him a lesson.

Zwillman insisted on handling the insult personally. He tracked Kaplus to a Newark bar and shot him once in the testicles.

Kaplus was rushed to the emergency room at Beth Israel Hospital. A surgeon removed the bullet. Then one of Zwillman’s men showed up and demanded the bullet for evidence. The doctor handed it over. The gangster
did
need the bullet for evidence, as it was the only thing connecting Zwillman to the shooting.

In 1920 the U.S. Congress handed Zwillman and Kimmel a bigger moneymaker than the numbers racket. It was the Volstead Act, prohibiting the sale of alcohol. Zwillman turned bootlegger, and Kimmel, who owned garages in Newark, leased them to Zwillman for storing the contraband. It was estimated that Zwillman’s crew imported 40 percent of all the liquor brought into the United States from Canada during Prohibition. Zwillman made at least $20 million off this trade in the next decade. He did not pay taxes.

This bootlegging wealth earned Zwillman the tag “the New Jersey Al Capone.” That must have rankled. Brutal as he was, there was a side to Zwillman lacking in Capone. Zwillman was a connoisseur of art, books, and opera. He dressed soberly and made a point of driving American-built Chryslers and Buicks, not the latest models.

Readers of gossip columns knew Zwillman as the sugar daddy of actress Jean Harlow. It was Zwillman who lent or bribed Columbia Pictures’ Harry Cohn a reported $500,000 to secure a two-picture deal for the then-unknown Harlow. Harlow went on to play a gangster’s moll in
Public Enemy
(1931). Zwillman adored the platinum blonde for the rest of her short life. He grieved as Jeanette MacDonald and Nelson Eddy sang “Oh, Sweet Mystery of Life” at her funeral.

 

 

Manny Kimmel shared some of Zwillman’s business sense. He saw that cars were becoming popular with the middle and working classes. In Newark, these people lived in apartments or row houses with neither garage nor space for adding one. Kimmel therefore invested in garages and parking lots.

The story goes that Kimmel was once in a high-stakes game of craps. His opponent ran out of money and put up a parking lot he owned as collateral. He must not have made his point. Kimmel ended up owning the parking lot, on Kinney Street in Newark. Over time, Kimmel acquired other parking lots, finding them a perfect front for gambling operations.

Gambling was Kimmel’s vocation and avocation. He moved into bookmaking, a cash business requiring careful money management. Kimmel sometimes mortgaged the parking lots when he needed quick money to pay off bets. He was famous as a proposition man. He would bet on anything, at any time, as long as the odds were to his liking. Kimmel taught himself calculus, trigonometry, and probability theory, or said he had. Within his brain was a combination of street smarts and autodidact book learning that could swiftly analyze propositions. He memorized sucker bets. One of his favorites was betting that two people in a group would have the same birthday. Kimmel’s victims would take even money. Kimmel knew he had an edge whenever there were more than twenty-two people.

Kimmel’s edge was not always strictly mathematical and not always strictly ethical. He would place two sugar cubes on a lunch counter and bet on which a buzzing fly would land on first. The trick was to doctor one cube with a drop of DDT and bet on the other cube.

Italian mobsters had long operated illegal gambling houses in Manhattan and Brooklyn. They paid off New York cops as a business expense. In the late 1920s, New York City cracked down on gambling. It became clear that bribery would no longer work. The Italians contemplated moving the casinos across the Hudson to New Jersey.

New Jersey gangster Willie Moretti recommended that the Italians go into business with Longy Zwillman. Moretti knew that Zwillman’s control of New Jersey politicians would be invaluable. Moretti brokered a meeting between Zwillman and a group that included Lucky Luciano and Joe Adonis. They agreed to become partners in a string of New Jersey casinos.

The plan required a way of getting customers from New York to the casinos and back. For that, Joe Adonis ran a limousine service. The New York terminus was a place where people could come and go at all hours without being noticed: Manny Kimmel’s parking lot at Broadway and Fifty-first Street.

 

 

Zwillman foresaw that Prohibition wouldn’t last. He believed that businessmen such as himself ought to plan for a future beyond bootlegging. He spoke of creating a trade organization along the lines of the National Association of Manufacturers. They would split the territory, stop fighting among themselves, and plan their next move.

To this end, Zwillman organized a national convention of crime in Atlantic City. It began on May 14, 1929. It was supposed to take place at the Breakers, a hotel known for renting only to WASPs. Reservations were made under suitable pseudonyms. Every major crime figure from Al Capone to Dutch Schultz showed up. When the Breakers staff recognized the notorious men checking in, they announced that all the hotel’s rooms were taken. The mobsters rented a caravan of limousines and went to the nearby Ritz.

This meeting marked the start of the Combination—or as the press sometimes called it, “Murder, Inc.” The Combination patterned itself after an American corporation, down to having a board of directors. The most powerful figures were the “Big Six”—Zwillman in New Jersey, Lucky Luciano, Meyer Lansky, Frank Costello, and Joe Adonis in New York, and Ben Siegel on the West Coast.

Zwillman’s message at the Atlantic City convention was to
go legitimate
. Organized crime needed to diversify, to invest its profits in legitimate businesses. It would be a way of hedging their bets against the end of Prohibition. It would also make mobsters less vulnerable to prosecution. They would have some legitimate income to report on their taxes.

The flow of mob money into small legal businesses was already happening. In 1930 investigators reported that racketeers had taken over fifty industries and commodities in New York City. They included furriers, laundries, kosher chickens, tailors, construction, funeral parlors, parking lots, miniature golf courses, artichokes, and grapes. Once the racketeers controlled a particular industry, they could raise prices. It was capitalism without competition.

Zwillman himself came to own or control two steel companies, a couple of small motion picture production companies, the GMC truck dealership for Newark, the Hudson & Manhattan Railroad (this would later be bought by the Port Authority and renamed PATH), and companies involved in cigarette vending machines, jukeboxes, and apartment laundry machines. Zwillman was a major investor in Ben Siegel’s Flamingo and other Las Vegas casinos; also in Manhattan’s Sherry Netherlands hotel and in sumptuous illegal casinos in places like Miami Beach and Saratoga. He had slot machines hidden in back rooms. These were popular with children, and Zwillman’s mob made sure the youngsters had little stools to help them reach the handles. Zwillman was said to have an interest in Moe Annenberg’s General News Bureau. Possibly Zwillman’s most peculiar investment was another type of wire service entirely. It was a company that ran wires to wealthy subscribers’ homes. The wires carried opera and other soothing music. The firm prospered only when it offered its service for stores, offices, and elevators. In 1954 the Chicago Crime Commission concluded that the Muzak Corporation was controlled by the notorious Longy Zwillman. Zwillman said he was merely a stockholder.

 

 

During Prohibition, someone hijacked a shipment of Haig & Haig scotch whiskey outside Brockton, Massachusetts. The scotch belonged to Joseph Kennedy. Kennedy had made his first fortune through insider trading and his second through bootlegging. Kennedy believed there was only one person capable of the heist—his archrival, Longy Zwillman.

Kennedy “said he’d get Longy if it was the last thing he did,” according to one of Zwillman’s partners. To his dying day, Zwillman swore he knew nothing about the missing scotch.

With the logic of a narcissist, Zwillman blamed much of his subsequent troubles with the U.S. government on this old grudge. Kennedy pushed his sons into political careers. One of them, Robert, was a minor Senate aide assisting in the Kefauver hearings. Zwillman told friends that Bobby Kennedy was settling a score for the old man.

The Senate hearings were only the beginning. The post-Kefauver wave of enforcement put the squeeze on Zwillman’s numbers racket, floating card games, casinos, and slot machines. On June 10, 1952, the IRS sent letters to Zwillman, Costello, Adonis, and the late Willie Moretti. The agency was investigating their income taxes. Zwillman had been smart enough to report a share of his more legitimate income. Even so, U.S. Attorney Grover Richman filed nearly a million dollars’ worth of tax liens against Zwillman and family. Richman was trying to freeze Zwillman’s assets, and thus put him out of business, while the IRS built its case against him. Zwillman’s attorneys complained that the government was punishing their client before a trial.

In 1954 Joe Adonis went on trial for racketeering. Adonis was not his original name. He felt he was too good-looking for the commonplace name (Joseph Doto) he had been born with. After the verdict, Adonis decided he was too good-looking for prison. He chose to be deported to Italy. That left the Zwillman mob with one less powerful ally in New York.

A few years later, they lost Frank Costello. This came about partly as a consequence of an old insult. At one meeting of the Combination, Costello ran over a list of criminals to be brought into the organization. Most of the names were Jewish. Vito Genovese complained that Costello was trying to bring in a bunch of “hebes.”

This was within earshot of Zwillman and Meyer Lansky. Genovese was Luciano’s employee; it was his place to silence him. Instead Costello spoke up. “Take it easy, Don Vitone,” he reportedly said, “you’re nothing but a fucking foreigner yourself.” He meant that Genovese was from Naples, not Sicily. “Don Vitone” was also an insult. Genovese was
not
a don; he was just there to carry Luciano’s coat.

Genovese never forgot the incident. In 1957 Genovese put out a contract on Costello’s life. On May 2 an obese gunman extracted himself from a double-parked Cadillac and ambushed Costello in the foyer of his apartment building, the Majestic at Seventy-second Street and Central Park West. “This is for you, Frank!” the hitman said as he pulled the trigger.

Costello took the bullet, nonfatally. He also took the hint. He opted for early retirement. This consolidated the power of Vito Genovese, who did not like Jews.

After the Central Park West shooting, doctors at Roosevelt Hospital dressed Costello’s superficial head wound as police rummaged through his personal effects. In one pocket of Costello’s suit they found a handwritten note giving “gross casino wins as of 4/27/57” for the Tropicana Hotel, Las Vegas. That hotel’s gambling license had been issued to supposedly legitimate businessmen with no ties to organized crime. Costello told police he had no idea how the note had ended up in his pocket.

Zwillman came to trial on tax charges in 1956. IRS agents had made a painstaking analysis of Zwillman’s expenditures. They were able to show that he spent far more than the income he reported.

Zwillman’s attorney advanced the theory that his client was supplementing his lifestyle by dipping into a cash hoard of bootlegging profits. This cash was now beyond the statute of limitations.

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