Prohibition Gangsters: The Rise and Fall of a Bad Generation

Chapter 8. Pay Your Taxes

128 $ Manley Sullivan was thirty-nine years old in 1921, a hard-working resident of Charleston, South Carolina. He sometimes sold cars and tractors, but his basic line of work was selling bootleg liquor to his fellow Carolinians. His 1921 estimated income for that activity was ten thousand dollars, handsome annual earnings for that era.Under the Federal RevenueAct of 1921,anybody who earned at least one thousand dollars a year (or two thousand dollars for a married couple) had to submit a tax form and pay a portion of their income. Sullivan failed to do that, and the District Court accordingly found him guilty of tax evasion. But Sullivan’s lawyers took their case to the Circuit Court of Appeals. Their argument was based on the Fifth Amendment to the Constitution, which states that “no person . . . shall be compelled in any criminal case to be a witness against himself.” The lawyers argued that if Sullivan were to submit a tax return stating that his income had come from violating the Volstead Act he would be incriminating himself big time. The appeals court agreed with that interpretation and added some Deep Southern sass by stating that Sullivan’s acquittal was timely because “the legislative branch of the government, by innumerable laws, is steadily encroaching upon the individual liberties of the citizens of this country.” The U.S. Department of Justice disagreed with the decision of the appeals court and decided to fight back. In 1927 the case made its way to the U.S. Supreme Court. The government’s position was handled by a c h a p t e r 8 Pay Your Taxes Pay Your Taxes 129 remarkable woman, Assistant U.S. Attorney General Mabel Walker Willebrandt , whose authority extended to the enforcement of the Volstead Act and federal taxation, subjects not likely to endear her to a large percentage of the citizenry of the United States. In the Sullivan case, she argued before the Supreme Court that bootlegger Sullivan’s Fifth Amendment defense was wrong on the grounds that it would have dire consequences for the nation. “The far-reaching effect of such a ruling upon the collection of taxes is apparent without argument. In effect, the Government’s right to collect its taxes would be at the mercy of the law-breaker.” The court agreed with Willebrandt. In his majority opinion, the esteemed eighty-sixyear -old associate justice and Civil War veteran Oliver Wendell Holmes ruled that the Fifth Amendment had been stretched too far in this case and that an unlawful business should pay taxes just like a lawful enterprise.1 Therewaslittlementionof thecaseinthepress,andtherulingdidn’tseem to bother Sullivan very much. He remained a man about town in Charleston , where in later years he competed in boat races and ran a boxing ring.2 But his losing case provided the federal government with an enormously effective new weapon. Through bribery, intimidation, and lack of evidence, Prohibition gangsters had repeatedly been able to avoid murder convictions in the courts, but prosecutors, now armed with the Sullivan decision, had the power to put gangsters behind bars. In essence, the prosecution had only to prove two points to juries: the defendant (a) had earned money and (b) had not paid taxes on that money. This was the federal government ’s weapon of choice to bring down top mobsters. Three examples are Al Capone, Waxey Gordon, and Abner “Longie” Zwillman. Al Capone In 1929, the newly elected president of the United States, Herbert Hoover, committed himself and his government to bring down Capone. Hoover was inaugurated on March 4, less than four weeks after the Saint Valentine ’s Day massacre, and he devoted a portion of his inaugural address to 130 The Fall the crime problem. He warned his listeners that there had been a “dangerous expansion in the criminal elements who have found enlarged opportunities in dealing in illegal liquor,” and Hoover went on to say “to those of criminal mind there can be no appeal but vigorous enforcement of the law. . . . Their activities must be stopped.”3 Later that month Hoover met with a delegation of business leaders who were members of the Chicago Crime Commission, a private organization of civic-minded executives. The CCC members informed the president about how gangsters had gone unchecked in the Windy City. Hoover recalled later, “they gave me chapter and verse for their statement that Chicago was in the...