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Allan May, Crime HistorianCrime Historian -Allan May

Allan May is an organized crime historian, writer and lecturer. He also writes a monthly column for the Cleveland Plain Dealer.

Perfecting the Number Two Spot

By Allan May
     Phillip Kastel had no illusions of becoming a top mobster in the country. However, he chose to hitch his wagon behind two of the most successful crime bosses of all time; Arnold Rothstein and Frank Costello.

     "Kastel was born and raised, like many Jewish hoodlums, on the Lower East Side of Manhattan. Some say Kastel went to Canada during Phillip KastelWorld War I to avoid having to serve his country. Whatever the reason, he wound up in Montreal where he operated a nightclub for a short time. After his return, Kastel and his first wife, Daisy, were arrested for swindling a wealthy businessman from New Jersey. In 1919, when the case went to trial, Rothstein�s attorney, William J. Fallon, known as the �Great Mouthpiece,� successfully defended Kastel. The close relationship between Kastel and Rothstein lasted until 1928, when the latter was murdered.

     Kastel�s interests with Rothstein involved Wall Street. Rothstein had only invested money in the stock market once, but much of his bankroll came from his involvement in the ownership and protection of Wall Street operations known as �bucket shops.� A bucket shop was a legal brokerage firm and while many operated within the law, others did not. In the illicit operations, proprietors stole from their clients, cheated them, and misused their money; these were the bucket shops Rothstein and Kastel were associated with. Here Rothstein acted as a �lobbyist and public relations man for the bucketing industry.� In addition, he served the shady operators as a bondsman and fixer.

     In 1921, Kastel was involved with Dillon and Company, a brokerage firm. The firm went under with losses in excess of $300,000. Authorities investigated and prosecuted Kastel for this failure. After three trials he was found guilty and sentenced in 1926 to three years in the Atlanta Penitentiary.

     In the early 1920s, Rothstein was tutoring another New York City criminal on the rise, Frank Costello. Rothstein helped finance Costello when he and his brother got started in rum running shortly after Prohibition began. Rothstein eventually introduced Kastel to Costello.

     As early as 1928 Costello realized that prohibition had been a failed experiment and would eventually be repealed. In anticipation of this he began a search for a new source of income. He decided on the �one-armed bandits� - slot machines. Costello meticulously set about establishing his new slot machine business by 1) obtaining New York City as his exclusive territory from the Mills Novelty Company, the manufacturer of the slot machines; 2) he promised the right people a piece of the action; 3) he set up a system to payoff the police and politicians; and 4) he recruited his own army of collectors, salesmen, servicemen, and even his own police force to track down any machines that were stolen. His chief business partner was Kastel. The partnership placed 5,000 nickel slot machines in New York City bars, restaurants, and candy stores.

     Costello�s greatest stroke of genius was a gimmick he invented to get around the city�s anti-gambling laws. Every machine was set up to deliver a package of mints each time a nickel was deposited in the slot machine and the handle pulled. If a player came up with three cherries, for instance, then in addition to the mints, the machine would drop out slugs that could be used for replays or be redeemed for cash from the storeowner where the slot machine was placed. To service the mints Costello started the Triangle Mint Company. Frank covered all of the bases.

     When Prohibition came to an end, Costello and Kastel formed Alliance Distributors, which was granted the exclusive distribution of King�s Ransom and House of Lords Scotch in the United States by London�s William Whitely Company. A few years later, the pair tried to purchase the Whitely firm using Irving Haim, a former bootlegger, and William Helis, a millionaire sportsman, as front men. Costello endorsed a note for $325,000 for Kastel to use as a down payment. When the Whitely Company realized who was behind the purchase, they backed away. After Costello withdrew, the deal went through with Kastel remaining in the ownership picture. In the early 1950s, this incident was discussed before the Kefauver Committee. Counsel hammered away at Costello to admit he had been involved in the purchase.

     �Are you telling me,� said Kefauver, �that signing the $325,000 note was purely an accommodation?�

     �That�s right, Senator,� replied Costello.

     �Why don�t you speak up and say, �Certainly, I signed the note. I had a deal with Kastel,�� prompted Counsel Rudolph Halley.

     Costello angrily responded, losing both his grammar and his temper, �You ain�t gonna put no words in my mouth. I gave you your answer.�

     On December 31, 1933 the new reform mayor of New York, Fiorello LaGuardia, was sworn in. Moments after his swearing in he picked up the telephone and ordered the arrest of Lucky Luciano on whatever charges the police department could dream up. LaGuardia went after the gangsters with a vengeance stating in a radio address to the city in his high-pitched squeaky voice, �Let�s drive the bums out of town.� LaGuardia�s next move was a search and destroy mission on Costello�s slot machines, which he executed with a media frenzy gusto, personally swinging the sledgehammer for the newsreels. Costello quickly gathered up his remaining slot machines and put them into storage.

     In early 1935, Costello was able to get his slot machines out of mothballs after reaching an agreement with Louisiana Governor Huey P. Long. Kastel moved to New Orleans to oversee the placement, service, and collections of the machines with Frank�s in-laws the four Geigerman brothers. Kastel, who operated out of the Roosevelt Hotel, worked with James Brocatto (alias James �Diamond Jim� Moran) an ex-boxer and one-time bodyguard of Huey Long. Brocatto, who reported to New Orleans Family boss Sam �Silver Dollar Sam� Carolla, took Kastel around the city to find the best locations for the slot machines to be placed. Soon, 1,000 of the slot machines were installed through out the New Orleans business district where they were said to have become a smash hit. The Costello-Kastel partnership set up the Bayou Novelty Company to run the operation, and incorporated it under a charter that earmarked a percentage of the profits for charity. One of the officers of the company was Jake Lansky, Meyer�s younger brother. After Huey Long was assassinated a public outcry began over the slot machines and police were forced to seize them. Again Costello found a solution to the problem by rigging the machines to deliver mints. The Louisiana Mint Company was founded and the slot machines, now under the Pelican Novelty Company, became legal again.

     By 1940, with the slot machines turning a tremendous profit, CostelloCarlos Marcello was ready to expand. The West Bank was one of the first spots that was looked at. Kastel was impressed with the success there of the Jefferson Music Company, which was run by Carlos Marcello. Over the years, Marcello had gained a reputation as ruthless collector and had been charged with a variety of crimes, but was able to avoid prosecution.

     Kastel and Marcello had a meeting and agreed that Jefferson Music would install and operate 250 of the slot machines and would keep two-thirds of the profits. Costello, Kastel and Meyer Lansky were so impressed with Marcello�s efforts that in 1944 they brought him in as a partner when they opened the Beverly Club, a plush gambling den, in Jefferson Parish.

     In 1944, Kastel was involved in an incident that would turn into a public embarrassment for Costello. At the Hotel New Yorker, near Pennsylvania Station, Kastel handed Costello two envelopes containing $27,200. The money was the profits from their New Orleans� operations. Costello, absentmindedly, left the envelopes in a taxicab. The honest cab driver turned the money over to the police and Costello had to sue the city to force them to return the money. The loss of the money, and the effort to retrieve it, generated front-page stories. The government already had a suit pending against Costello for unpaid taxes. When the State Supreme Court ruled that the money should be returned, the government deducted what they felt they were due and gave Costello the balance, a mere $2,913.

     Over the years, Kastel was described as a debonair dresser, polished in appearance, and well mannered. From this he was given the nickname �Dandy Phil.� Kastel was a popular figure in New Orleans and was able to mingle in �polite society� despite his second marriage to Margie Dennis, a local prostitute.

     Perhaps the influence and stature Kastel had gained in the underworld was best seen in December 1946, when he was invited to attend the Havana Conference at the Hotel Nacional in Cuba. In his book �The Last Testament of Lucky Luciano,� Luciano states that Kastel was the only �high ranking delegate� to attend, other than Meyer Lansky, who was a non-Italian.

     In the late 1950s, Kastel became a principal investor in the Conquistador, a firm that owned the Tropicana Hotel in Las Vegas. When the Nevada Gaming Control Board found out about his involvement, he was forced to relinquish his interests.

     After the assassination attempt on Costello in May 1957, Kastel�s power, and his health, began to wane. His operations were soon taken over by the Marcello Crime Family. By the early 1960s, Kastel was in failing health. He had already lost the sight in one eye and was slowly losing sight in the other. He seldom left his plush apartment at he Claiborn Towers on Canal Street and by 1962 was being attended by a private nurse. On August 16, the nurse heard a gunshot and found Kastel in his bedroom slumped over dead in a chair. In a note left behind for his wife, the 68-year-old Kastel, who was suffering from abdominal cancer, expressed fear of his impending total blindness. Kastel, the man who had always been content with being second in command, had removed the fear by putting a bullet in his head.

Copyright A. R. May 1999

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