Allan May, Crime Historian
Allan May is an organized crime historian, writer and lecturer. He also writes a monthly column for the Cleveland Plain Dealer. Contact him at AllanMay@AmericanMafia.com.
The Wexler / Gordon Story
The Fall of Waxey Gordon
By Allan May
With the spectacular conviction achieved in Chicago against Al Capone, the special agents of the Intelligence Unit of the IRS were reassigned to New York to begin the same process on East Coast bootleggers Waxey Gordon and Dutch Schultz. For two years, six investigators worked full time collecting evidence that would stand up in court on Gordon. During the final six months, a half dozen lawyers and twelve IRS agents formed the task force against Gordon.
While Gordon prepared himself for the onslaught of government agents, he was also fighting another battle. The newspapers claimed that the trio of Gordon, Greenberg, and Hassell had killed those that got in the way of establishing their lucrative bootleg business. Local bootleggers James “Bugs” Donovan and Frank Dunn were part of this slaughter. With Gordon now facing legal problems his enemies struck back. The New York Times stated that it was a North Jersey gang, made up of the “remnants of the one deposed” by the Gordon gang, that made its move.
Gordon later testified, in April 1933, he and Greenberg and Hassell were meeting at the Elizabeth Carteret Hotel in Elizabeth, New Jersey. Gordon testified that he heard “sort of like a rattle of dishes out in the hall.” When he went to investigate, he saw “some of the men that worked for Mr. Hassell and Mr. Greenberg running along the hall.” He claims the men told him “they just shot Max and Jimmy.” Gordon, however, said he was unable to identify any of the men in the hallway that day. In Mark Stuart’s biography of Abner “Longy” Zwillman, “Gangster #2,” he claims gunmen sent by Dutch Schultz did the shooting and that Gordon escaped by jumping out a window.
After the shooting Gordon hid out at a hunting lodge he owned in Sullivan County, New York. Gordon kept two bodyguards on hand, there was a speedboat docked by the lakeside, and he kept a pistol under his pillow. He stayed there until May 1933 when government agents tracked him down and brought him back to be charged with income tax evasion.
It took a tremendous effort to prepare for the indictment against Gordon. Dewey outlined in his book some of the tasks the agents had to perform:
Agents needed to find out, “For example, who sold the beer barrels to the Gordon breweries? Who sold the malt? Who sold the fleet of trucks the Gordon organization used for distribution? Who sold the oil, the gasoline, the tires, the brewing machinery, the cooperage coating, the air compressors, the cleaning compounds, the kettles and pipes, the hops, the yeast, the repair parts for the trucks, and the materials for repairing beer barrels, the heads, shooks, and rivets? Who installed the piping and the electrical equipment?”
“How were all these goods and services paid for, and in whose names had delivery been taken? What did the sellers’ books show about the checks and who had signed them? On what banks had the checks been drawn?”
Dewey claims in several instances the agents were in a foot race to get to the company records and banks before Gordon’s men did. Often they lost. The agents investigated companies and found that accounting entries had been re-written where they involved Gordon. There were times when agents went into New Jersey banks and were told to sit and wait. Soon Gordon’s men would show up and withdraw all of the money from his account and remove any evidence of ownership of the account. One time agents were arrested in a Hoboken bank by the local police. They were held until Gordon’s men arrived and carried off the records.
One of the Gordon employees the agents were looking for was Samuel Guroch who had opened a number of bank accounts under fictitious names. Guroch had been issued a subpoena to appear for questioning and ignored it. In June 1932, agents tracked him down and he was held in jail for contempt. His hearing was set for the following morning. In the middle of the night, Frank J. Pfaff, a United States Commissioner, arrived at the jail and fixed the bail for Guroch at $500. Guroch promptly posted the bail, walked out, and was never seen by the investigators again.
Although Gordon never opened a bank account in his own name, he was careless at times and endorsed checks with his name or the name on the dummy account that had been set up. Dewey would claim that the handwriting expert assigned to the case “did more than any other single factor to tie the whole case together.”
Gordon battled back though and perhaps the most intriguing part of his fight involved New York’s corrupt Democratic machine Tammany Hall. The district attorney of New York County, “the perennially inactive” Thomas C. T. Crain, announced that he was initiating an investigation of Gordon. After a few weeks he gave up stating publicly there were no witnesses brave enough to testify against Gordon. Dewey states that this incident created one of the darkest days of the investigation as a number of witnesses that the prosecution had lined up suddenly forgot everything they had to say.
Dewey’s men persevered and after two years of questioning over 1,000 witnesses, reviewing 200 bank accounts, tracing toll slips of more than 100,000 phone calls, and sitting through several thousand hours of grand jury examination, Gordon was indicted for attempting to evade payment of federal income taxes. The indictment at trial time claims he had an unreported net income of $1,338,000 for 1930, and $1,026,000 for 1931. Agents arrested him at his hideout, a summer cottage at White Lake in the Catskill Mountains.
The trial was set to begin on November 20, 1933. Dewey had one more hurdle to clear though. With the recent election of reform Mayor Fiorello La Guardia, United States Attorney George Z. Medalie, set to prosecute the case, resigned on November 1. This pushed Dewey to the forefront of handling the case for the government.
When the trial opened, Dewey introduced the Gordon empire to the jury. He presented information on the two breweries, washhouses for the barrels, drops for the delivery and concealment of the beer, the barrels, a vehicle repair garage, five offices, two houses, several hotel suites, and sixty Mack trucks. After nine days, 131 witnesses, and over 900 exhibits, Dewey rested his case. It was now up to Gordon to prove how he acquired all this with a net income of $8,100 that he claimed for 1930.
Gordon’s attorney tried to convince the jury that the business had been owned and operated by the now deceased Greenberg and Hassell. Any wealth Gordon had accumulated had been given to him by the two men. An insurance man the defense called to prove that Gordon was actually a poor man, turned into a disaster as Dewey produced several memos sent to the insurance company which showed Gordon’s heavy investments in several hotels.
The final defense witness was Gordon himself. His testimony on the stand proved to be pathetic as he claimed to be “lured” into the beer business, and “lured” into investing in the hotels by Greenberg and Hassell. When presented with the paper work for a building loan where he signed one personal guarantee for $1 million and another for $795,000, his answer was simply that it was “just a favor” for Max Greenberg. Gordon testified that none of the brewery employees worked for him, instead they worked for “Max and Jimmy.”
Gordon tried to convince the jury that what he did he did for his family, but he floundered terribly under the young prosecutor’s acute cross-examination. At one point, Dewey’s assistants suggested he close his examination because Gordon, “looking physically sick,” would gain sympathy from the jury while under this much pressure.
The case went to the jury on December 1, 1933 at 3:34 p.m. It took them just 51 minutes to reach a verdict. Back in the courtroom the jury foreman announced, “We find the defendant guilty on the first count, the second count, the third count and the fourth count.” The newspapers reported “Gordon’s jaw sagged and his dark eyes (were) fixed in hatred on the men in the jury box as their verdict was pronounced.” Seated behind Gordon was his wife Leah who cried openly as the verdict was read.
The judge fined Gordon a total of $80,000 and sentenced him to ten years in the federal penitentiary in Atlanta. Judge Frank J. Coleman was so impressed with Dewey’s handling of the case that he told reporters:
“It is my firm conviction that never in this court or any other has such fine work been done for the government. If ever again I hear the criticism that there are no longer enthusiastic and able young men in the government service, I shall refer the speaker to this case.”
In addition to his conviction and jail sentence, Gordon suffered a personal tragedy as well. Over the years Gordon had tried to shield his family from his criminal activities. The veil of respectability was shattered however, but his indictment. His wife, Leah, the daughter of a rabbi, endured much shame. Gordon’s oldest son, Theodore, was in his first year of pre-med. at the University of North Carolina. Gordon was proud of his son and often boasted about him. His son remained in New York with his mother throughout the trial, but returned to school after the verdict was announced. Gordon’s brother, Nathan Wexler, called Theodore and urged him to return to New York a few days later to plead to the judge and Dewey for a reduction in sentence for his father, and for Gordon to be freed on bail while an appeal was pending. On the way back to New York, a friend driving Theodore, feel asleep at the wheel on snow and sleet covered roads and crashed. Theodore was killed.
In 1940, Gordon was released from Leavenworth Penitentiary after serving seven years. Upon leaving he declared, “Waxey Gordon is dead. From now on it’s Irving Wexler salesman.” He traveled to San Francisco during the summer of 1941. At the time it was reported that he still owed the government $2.5 million in back taxes. When San Francisco police officers found him registered at an expensive hotel, he told them that he had come West to begin anew and was selling a “revolutionary type of cleaning fluid.” Although he had over $400 in cash on him, the police arrested him for vagrancy. He posted $10 bail and left town.
If Gordon became a salesman, he wasn’t an honest one. When America began sugar rationing during World War II, Gordon was caught selling 10,000 pounds of it to an illegal distillery. He was convicted and served a year in jail.
Gordon got heavily involved in the drug trade and by 1950 the Narcotics Bureau had a pretty big file on him. In December 1950, the bureau used ex-convict Morris Lipsius to befriend Gordon and set him up for what would be his final arrest. After two successful drug transactions Gordon was nailed on August 2, 1951 by federal agents for selling heroin. Gordon was not just facing a sentence for heading a narcotics ring that was believed to have international connections, but as a four-time offender to the “Baumes Law.” Gordon was found guilty and sentenced on December 13 from twenty-five years to life by New York Court of General Sessions Judge Francis L. Valente. During the sentencing, Valente told the court:
“Since his (Gordon’s) first act of lawlessness forty-six years ago, his contempt for authority manifested by progressively more serious criminality, has been like a malignant cancer, weakening the dignity and good order of the community.”
Turning to Gordon the judge lambasted him with:
“You have demonstrated repeatedly that there is no crime or racket to which you would not resort in order to make a dollar. Your latest and most dastardly offense is typical of your hostility, and it should ring down the curtain on your parasitical and lawless life.”
Gordon was taken to Sing Sing first, but on March 8, 1952 was transferred to Attica. On April 10, he was charged in another federal indictment for participating in a coast-to-coast heroin racket. A warrant for his arrest was issued in San Francisco and he was transferred to California on May 21 to be arraigned. Gordon pled not guilty to two counts of narcotics trafficking. He was one of 23 people indicted in the nationwide narcotics case. Ten had pleaded guilty, and two were still fugitives. The trial, with the remaining ten people was set to begin on August 18. Gordon was being held in the San Francisco County Jail, but was soon transferred to the federal facility on Alcatraz. Gordon, who had been ill for sometime, was confined to the prison hospital. On the afternoon of June 24, 1952, Gordon was sitting in a chair speaking to a physician when he suffered a massive heart attack and died.
Assistant United States Attorney Joseph Karesh, who announced Gordon’s death, surprised many by stating that Gordon was expected to be a government witness against the other defendants. If Gordon had worked out a deal to reduce his own sentence by this action, the government wasn’t saying.
Copyright A. R. May 1999