Dutch Schultz

When Flegenheimer began working at a neighborhood night club owned by a small-time mobster, he started robbing craps games before turning to burglary. Eventually he was caught breaking into an apartment and sent to the prison on Blackwell's Island (now called Roosevelt Island). Flegenheimer/Schultz's mugshot, aged 18, was published in the 2010 book New York City Gangland.[6] He proved to be such an unmanageable prisoner that he was transferred to a work farm in Westhampton, Long Island. After he was recaptured following an escape, he had an extra two months added to his sentence.[6]

Flegenheimer was released on parole on December 8, 1920, and went back to work at Schultz Trucking. With the enactment of the Volstead Act and the start of Prohibition in the United States, the shipping company began smuggling liquor and beer into New York City from Canada. This led Flegenheimer to start associating with known criminals. It was also during this time that Flegenheimer became better known as "Dutch" Schultz (Dutch is a corruption of "Deutsch"). Following a disagreement, he left Schultz Trucking and went to work for their Italian competitors.

In the mid 1920s, Schultz had begun work as a bouncer at the Hub Social Club, a small speakeasy in the Bronx owned by a gangster named Joey Noe. Noe was impressed with Schultz's ruthlessness and reputation for brutality when he lost his temper, and he made him a partner. Together they soon opened more illegal drinking joints around the Bronx. Using their own trucks to reduce high delivery costs, they brought in beer made by Frankie Dunn, a brewer in Union City, New Jersey. Schultz often rode shotgun to guard the trucks from hijackers.

Schultz and Noe soon had to deal with the brothers John and Joe Rock, who were already running a bootlegging operation in the Bronx. Initially the brothers refused to buy beer from Noe and Schultz, but eventually John, the elder brother, agreed to cooperate; however, his younger brother Joe refused. One night the Noe-Schultz gang kidnapped Joe, beat him and hung him by his thumbs from a meat hook. They then allegedly wrapped a gauze bandage smeared with discharge from a gonorrhea infection over his eyes.[7] His family reportedly paid $35,000 for his release. Shortly after his return, he went blind. From then on, the Noe-Schultz gang met little opposition as they expanded across the entire Bronx.[1] Bootlegging during Prohibition made Schultz very wealthy.[1]

The Noe-Schultz operation, which had begun to flourish in the Bronx, soon became the only gang able to rival the network of Italian crime syndicates that became the Mafia's Five Families.[1] When the gang expanded from the Bronx over to Manhattan's Upper West Side and the neighborhoods of Washington Heights, Yorkville and Harlem, they moved their headquarters from the Bronx to East 149th Street in Manhattan. However, this brazen move led to a bootleg war with New York's Irish Mob, led by Jack "Legs" Diamond.

In the early hours of October 16, 1928, Noe was shot several times outside the Chateau Madrid, a speakeasy at 231 West 54th.[8] Although seriously wounded, he managed to return fire. A blue Cadillac was seen hitting some parked cars and losing one of its doors before speeding away. When police found the car an hour later, they discovered the body of a Louis Weinberg (no relation to Schultz gang members Abraham "Bo" Weinberg and George Weinberg) in the back seat. Noe's wounds became infected and he died on November 21.[9] Schultz was left angry and distraught by the loss of his friend and mentor.

Retaliation started a few weeks later when Arnold Rothstein, a kingpin in the Jewish mob, was found fatally shot near the service entrance to the Park Central Hotel on November 6, 1928. Although George "Hump" McManus supposedly killed Rothstein over a bad gambling debt, Schultz is believed to have ordered the killing in retribution for Noe's death. This theory is supported by the fact that the first person McManus rang after the killing was Schultz's attorney, Dixie Davis. Schultz's trusted lieutenant, Bo Weinberg, then picked up McManus and drove him away from the murder scene. McManus was later cleared of the killing.

On October 12, 1930, Legs Diamond was shot and wounded at the Hotel Monticello on Manhattan's West Side. Two gunmen forced their way into Diamond's room and shot him five times before fleeing. Still in his pajamas, Diamond staggered into the hallway and collapsed. When asked later by the New York Police Commissioner how he managed to walk out of the room, Diamond said he drank two shots of whiskey first. Diamond was rushed to the Polyclinic Hospital in Manhattan, where he eventually recovered.[10] On December 30, 1930, Diamond was discharged from Polyclinic.[11] After recovery from his wounds, he left New York for a lengthy stay in Europe. During his absence, his gang was forced to leave the city. When he returned home, Diamond began carving out a new territory for himself in Albany. He was killed in a cheap Albany rooming house at 67 Dove Street by two gunmen in December 1931.[12]

Schultz also had to deal with internecine conflicts within his own gang. In 1930, one of Schultz's enforcers, Vincent Coll, demanded to be made an equal partner. This was because Schultz gang members received a flat salary instead of the customary percentage from the take—a unique arrangement compared to other major gangs in organized crime. When Schultz refused, Coll formed his own crew with the ultimate goal of murdering Schultz and taking over his territory. In the bloody gang war that followed, Coll lost his older brother Pete and earned the nickname "Mad Dog" from the press after a child was killed during a botched assassination attempt committed by his gang. In February 1932, Coll was lured into a trap. While he was taking a call in a drugstore phone booth, gunmen entered the store and machine-gunned him to death. The killers may have included Edward 'Fats' McCarthy and the brothers Bo and George Weinberg.

With the end of Prohibition, Dutch Schultz needed to find new sources of income. His answer came with Otto "Abbadabba" Berman and the Harlem numbers racket. The numbers racket, the forerunner of "Pick 3" lotteries, required players to choose three numbers, which were then derived from the last number before the decimal in the handle (total amount bet) taken daily at Belmont Park.[1] Berman was a middle-aged accountant and math whiz who helped Schultz fix this racket. In a matter of seconds, Berman could mentally calculate the minimum amount of money Schultz needed to bet at the track in order to alter the odds at the last minute. This strategy ensured that Schultz always controlled which numbers won, guaranteeing a larger number of losers in Harlem and a multimillion-dollar-a-month tax-free income for Schultz. Berman was reportedly paid $10,000 a week (the equivalent of $143,000 in 2016) for his valued insight.[13]

Along with the policy rackets, Schultz began extorting New York restaurant owners and workers. Schultz, working through a hulking gangster named Jules Modgilewsky, also known as Julie Martin, made deals with the leaders of Waiters Local 16 and Cafeteria Workers Local 302 to extort money by forcing restaurant owners to join the Metropolitan Restaurant & Cafeteria Owners Association, an employer association that Schultz had founded. Those who refused to join the Association were faced with exorbitant wage demands from the unions, followed by strikes and stink bomb attacks. The Metropolitan Association then stepped in to arrange a settlement of the strike with a sweetheart contract for low wages contingent on the employer joining the Association. Martin successfully extracted thousands of dollars of tributes and "dues" from the terrorized restaurant owners for Schultz.

During Schultz's tax trial (see below) he began to suspect that Martin was skimming from the shakedown operation; Schultz had recently discovered a $70,000 disparity in the books. On the evening of March 2, 1935, Schultz invited Martin to a meeting at the Harmony Hotel in Cohoes, New York. At the meeting, at which chief enforcer Bo Weinberg and mob lawyer Dixie Davis were also present, Martin belligerently denied Schultz's charges and began arguing with him. Both men were drinking heavily as the argument continued, and Schultz sucker-punched Martin. Finally, Martin admitted that he had taken $20,000, which he believed he was "entitled to" anyway. Dixie Davis related what happened next:

Dutch Schultz was ugly; he had been drinking and suddenly he had his gun out. Schultz wore his pistol under his vest, tucked inside his pants, right against his belly. One jerk at his vest and he had it in his hand. All in the same quick motion he swung it up, stuck it in Jules Martin's mouth and pulled the trigger. It was as simple and undramatic as that—just one quick motion of the hand. Dutch Schultz did that murder just as casually as if he were picking his teeth.[1]

As Martin contorted on the floor, Schultz apologized to Davis for killing someone in front of him. When Davis later read a newspaper story about Martin's murder, he was shocked to find out that the body was found on a snow bank with a dozen stab wounds to the chest. When Davis asked about this, Schultz replied, deadpan, "I cut his heart out."

In the early 1930s, U.S. Attorney Thomas Dewey had set his sights on convicting Schultz for non-payment of federal taxes. Schultz was indicted in New York in January 1933 and became a fugitive. (Dewey subsequently left the Justice Department, first for private practice, then as a state-appointed Special Prosecutor and D.A.) He surrendered in Albany, New York, in November 1934. This was part of Schultz's plan to have his trials moved from New York City to upstate. His first tax evasion trial, in Syracuse, ended in a hung jury, with many speculating he'd bribed the jurors. He would face retrial in Malone, New York.

With the case going to a second trial, Schultz quickly set about presenting himself to the townspeople of Malone as a country squire and good citizen. He donated cash to local businesses, gave toys to sick children, and performed other charitable deeds. The strategy worked, as he was acquitted of tax evasion in late summer 1935.[1][14] The mayor of New York, Fiorello La Guardia, was so outraged at the verdict that he issued an order that Schultz should be arrested on sight should he return to the city. As a result, Schultz was forced to relocate his base of operations across the Hudson River to Newark.

As the defense costs to fight his tax case mounted, Schultz had found it necessary to reduce the commission he paid to those running his policy rackets in order to bolster what he called the "Arthur Flegenheimer Defense Fund." That tactic angered the runners and the games' controllers, who, despite being threatened with violence for showing any dissent, hired a hall, held a mass protest meeting, and declared a strike of sorts. Very quickly the cash flow dried up, and Schultz was forced to back down, which permanently damaged the relationship between his gang and their associates.

Bo Weinberg, Schultz's chief lieutenant, was so concerned about the amount of money that Schultz was taking from the rackets to fund his legal defense that he sought advice from New Jersey mob boss Longy Zwillman, who put him in touch with the Sicilian-born gangster Charlie "Lucky" Luciano. The deal that Weinberg wanted was to retain a percentage and keep overall control of the Schultz gang. However, Luciano planned to break up the gang's rackets and territory among his own associates once Schultz was convicted of tax evasion. Believing that a guilty verdict was a foregone conclusion at the second trial, Luciano and his allies implemented their plan to take control. Their plan met little resistance because of the ongoing bad feelings over the attempted pay cuts and the support of Weinberg.[1]

However, after Schultz was acquitted, he quickly arranged a meeting with Luciano through The Commission to clarify the situation. Schultz even converted to Roman Catholicism to cozy up to Luciano.[1] Luciano placated Schultz with the explanation that they were just "looking after the shop" while he was away to ensure that everything ran smoothly and that full control of his rackets would be returned to Schultz once the heat died down.[1] Publicly, Schultz was forced to accept that version of events because of the ongoing attention from law enforcement agencies and Thomas Dewey, now a Special Prosecutor appointed by LaGuardia.[1] A month after his acquittal, his own chief lieutenant Bo Weinberg was never seen again after he had walked out of a midtown Manhattan nightclub.[15]

Schultz had proposed to the National Crime Syndicate, a confederation of mobsters, for Dewey to be murdered. Luciano argued that a Dewey assassination would precipitate a massive law enforcement crackdown. The Commission later voted unanimously against the proposal.[1] An enraged Schultz said he would kill Dewey anyway and walked out of the meeting.[16] The Murder, Inc. leader Albert Anastasia approached Luciano with information that Schultz had asked him to stake out Dewey's apartment building on Fifth Avenue. Upon hearing the news, the Commission held a discreet meeting to discuss the matter. After six hours of deliberations, the Commission ordered Louis Buchalter to eliminate "The Dutchman."[17]

Schultz was shot on October 23, 1935, while he was at the Palace Chop House restaurant at 12 East Park Street in Newark, New Jersey, with Otto Berman, his accountant; Abe Landau, his new chief lieutenant; and his personal bodyguard, Bernard "Lulu" Rosenkrantz.[1][18] While Schultz was in the bathroom, two Murder, Inc. hitmen named Charles "The Bug" Workman and Emanuel "Mendy" Weiss entered the establishment.

Workman and Weiss entered the back room of the restaurant, where they fired numerous times at the Schultz gang members. Berman collapsed immediately after he was shot. Landau's carotid artery was severed by a bullet passing through his neck, and Rosenkrantz was hit repeatedly at point-blank range. Nevertheless, despite their injuries, both gangsters rose to their feet, returned fire, and drove the assassins out of the restaurant. Weiss jumped into the getaway car and ordered the driver to abandon Workman. Landau chased Workman out of the bar and emptied his pistol at him but missed. After Workman had fled on foot, Landau finally collapsed onto a nearby trash can.[1]

Witnesses say Schultz staggered out of the bathroom, clutching his side, and sat at his table. He called for anyone who could hear him to get an ambulance. Rosenkrantz rose to his feet and demanded that the barman, who had hidden during the shootout, give him some change. Rosenkrantz called for an ambulance before he lost consciousness.

When the first ambulance arrived, medics determined Landau and Rosenkrantz were the most seriously wounded and needed to be taken immediately to Newark City Hospital. A second ambulance was called to take Schultz and Berman. Berman was unconscious, but Schultz was drifting in and out of lucidity, as police attempted to comfort him and get information. Because the medics had no pain relievers, Schultz was given brandy to relieve his suffering. When a second ambulance arrived from Newark City Hospital, Schultz, gave an intern in the ambulance $3,000 in cash because he thought he was dying and said that it was not going to do him any good where he was going. After surgery, when it looked as if Schultz might live, the intern was so worried that Schultz would come back for his cash that he handed in the money.[1] Landau and Rosenkrantz refused to say anything to the police until Schultz had given them permission after he had arrived in the second ambulance. Even then, they provided the police with only minimal information.

At 2:20 a.m., Otto Berman, the oldest and least physically fit of the four men, was the first to die. Abe Landau died of exsanguination at 6 a.m. When Rosenkrantz was taken into surgery, the surgeons were so incredulous that Rosenkrantz was still alive despite his blood loss and ballistic trauma that they were unsure of how to treat him. He eventually died from his injuries 29 hours after the shooting.[1]

Schultz was baptized and received the last rites from a Catholic priest at his request just before he went into surgery. Schultz lingered for almost one day, speaking in various states of lucidity with his wife, mother, a priest, police, and hospital staff, before he died of peritonitis on October 24, 1935.

Schultz was permitted interment in the Roman Catholic Gate of Heaven Cemetery in Hawthorne, Westchester County, New York, but at the request of his Orthodox Jewish mother, Schultz's body was draped with a talit, a traditional Jewish prayer shawl.[19]

In 1941, Charles Workman was convicted of killing Schultz.[20] The building that housed the Palace Chop House was torn down in 2008.[21]