Feature Articles

October, 2010
Al Capone's Income Tax Trial

      By Mike La Sorte, Professor Emeritus

Mike La Sorte is a professor emeritus (SUNY) and writes extensively on a variety of subjects.

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     Art Madden, a special investigator for the Bureau of Internal (later the IRS), was assigned to Chicago in the early 1920s by the Dept. of the Treasury to hunt down tax cheats. He spent time with Capone: the most colorful of mobsters became his professional duty and amateur hobby. This what he observed as quoted in "Get Capone" by Jonathan Eig (2010): "Al is a Fathead. [In Italian "capone" means big head, or as a figure of speech, pigheadedness.] He is one mobster who doesn't care about money. He wants to be the Big Guy, and if he can take bows he doesn't care much who gets the cash; just as long as he can bet on horses, buy the horrible junk he calls clothes, and collect jewelry. He likes women, but they don't cost him a nickel. He gives them the night off. He is sensitive about that source of income [a reference to Al's four brothels]. Capone does not kill anymore. He brings in thugs to do it for him. He'll laugh a lot with anybody sober, but he will knock you flat just for fun when he is drinking. He's the boss, make no mistake about that, but he listens to advice; particularly from lawyers. He has many friends in the police force."

     The Fathead's organization, known as "the outfit" (lower case), was more a collection of entrepreneurs with interlocking partnerships than an organized mob. There was no hierarchy or set of rules. According to Chicago journalist Robert Hardy Andrews, "�it was a confederation of utterly conscienceless dictators bound by two things: their total distrust of each other, which was totally justified, and their adaptation of Benjamin Franklin's maxim that hanging together is preferable to hanging separately. Always, just below, there were thrusters reaching up for more of the loot." Capone's associates bought their booze and slot machines from "the outfit," and bought their protection and turned in a portion of the profits to "the outfit."

     Snorky (Al's nickname) was a publicity hound and was attracted to the limelight. He got cozy with the Chicago Press people, who savored the excitement and uncertainties of organized crime, especially when covering the ever-accessible and quotable, smiling and loquacious racketeer, who always had at his fingertip an appropriate quip. Capone was a reporter's dream. One of his better bons mots: "If I were guilty of all the newspapers accuse me of, I would be afraid of myself."

     But Mr. Congeniality was getting too much notice. There were bigger bootleggers in the 1920s than Capone. His mistake was to conduct his business openly calling too much attention to himself. He admitted as much, and bragged about his connections. Unlike his compatriots who kept a low profile, he became an international celebrity and the leading symbol of Chicago's corruption in high places and rampant lawlessness. The authorities had plenty of incentive to bring him down. Dubbed the overlord of Chicago's underworld, once the Feds sniffed him out he was to be dogged to his dying day. Big Al had made himself a leading symbol of the dangers of gangsterism, a threat not native to American life and values but rather an import (or so they said). "The real Americans are not gangsters. Recent immigrants and the first generation of Jews and Italians are the chief offenders, with the Jews furnishing the brains and the Italians the brawn." (Frank J. Loesch, president of the Chicago Crime Commission, 1930)

     Capone often contended that what he was doing was giving to the public services and goods that it desired. Many of that generation had only contempt for the Prohibition legislation, which led to ignoring the law at all levels of society. People like Capone were not seen as evil but as business men. Consider this statement by Kenneth Allsop ("The Bootleggers," 1961): "I couldn't look upon the gangs of the Prohibition period as criminals. The people of Chicago wanted booze, gambling, and women, and the Capone organization was a public utility supplying the customers with what they wanted. It couldn't have operated one hour without the public's consent�.The big civic leaders and industrial moguls would get up at a meeting and denounce corruption--and then go back to the office to argue with their bootleggers about the quality of the last delivery of liquor." "Washington, D.C. Bootleggers must file income tax returns, the Supreme Court of the United States held today." (Chicago Tribune, May 17, 1927)

     The case against Capone became the most important income tax investigation in American history, setting many legal precedents. The plan was to get him on income-tax liability thereby neutralizing him permanently.

     Could the feds make the charges stick? There had to be enough convincing evidence to build a bulletproof case to make sure he didn't slip through the noose.

     The Feds got busy building contempt charges against Capone. They knew that he had never paid taxes but did not know how much he should have paid. A case against him for tax delinquency would be challenging. Al did not leave a paper trail like his brother Ralph, the gambler, who was to be jailed for income-tax fraud.

     Capone had no checking account. No property in his name. No record of purchased or sold real estate. No brokerage accounts. No canceled checks. What he had was a big wad of bills in his pocket

     But a chink in armor was discovered. Three accounting ledges were found that showed payments from a gambling house in Cicero, taken during a police raid in 1926. The paper trail led to the man himself. When several of Capone's men (under charges themselves) decided to save their skins by turning state's evidence against their chief the noose tightened.

     On June 5, 1931, the government announced the indictment of Alphonse Capone on charges of income-tax evasion. The indictment stated that the mob mogul had earned over one million dollars between 1924 and 1925. Moreover, that his tax liability was $215,000 on those earnings. The charges carried a maximum penalty of thirty-two years in prison and $80,000 in fines. Capone posted $5000 on a $50,000 bail to remain free. A second indictment, seven days later, charged that he was the boss of a conspiracy to violate Prohibition laws, which carried a lesser punishment.

     Capone and his lawyers had little reason to maneuver; they knew it was end game. On June 16, 1931, the defendant plead guilty to three charges: (a) "attempt to evade or defeat your income taxes for 1924"; (b) doing same "for the years 1925, 1926, 1927, 1928, 1929, and with failure to file returns for the years 1928 and 1929"; (c) "Indictment 23,256 charges you with conspiracy to violate the National Prohibition Act."

     Judge Wilkerson decided to put aside the guilty plea and set the trial date for October fifth. (That decision, it was said, came directly from President Hoover's White House.) When rumors surfaced that Capone was planting one or more friends on the jury, Wilkerson countered by taking his list of prospective jurors and swapping it with another judge's.

     The prosecutor Dwight Green held that "Capone raked in huge profits from gambling houses, brothels, speakeasies�lived a life of luxury�instead of paying taxes, he dissipated, concealed, and covered up those assets and money."

     Over the days of the trial the prosecutors established that the defendant was a lavish spender and showed proof of his liberal acquisition habits. One witness noted that he had a roll of bills "that could choke a horse" (a common phrase of the day).

     At 10:50 p.m. on October 17th the jury after some eight hours of deliberation reached its decision. Found guilty on several counts, Capone faced a maximum sentence of seventeen years--five years for each of three felonies and one year each for two misdemeanors, and a maximum fine of $50,000.

     A week later Judge Wilkerson announced the sentence, which would be the stiffest ever handed down in a tax case: "�the aggregate sentence of the defendant is eleven years in the penitentiary and fines aggregating $50,000."

     Capone left the courtroom, trailing behind, "Well, so long. Goodbye." He entered Cook County jail where a crowd of reporters awaited. "It was a blow to the belt. But what can you expect when the whole community is prejudiced against you."

     Capone's appeal to the Supreme Court was declined on May 2, 1932. The next day he was headed for the Atlanta Penitentiary. "Well, I'm on my way to do eleven years. I've got to do it, that's all�they'll find that sending me away won't help Chicago much."

     At the prison in Georgia a psychological exam found him normal in every way. No psychotic symptoms. IQ 95. A Wasserman test was positive for "nervous system syphilis" (tertiary syphilis). Capone recalled that in 1921 he noticed a lesion on his penis; he was twenty-two years of age. (A syphilis infection can eventually result in dementia, paralysis and gradual blindness.) Although treatment was started the prognosis in that era for third-stage syphilis was not good.

     Because of the mobster's continued notoriety the decision was made to transfer him to the new federal maximum-security prison on Alcatraz Island in the middle of San Francisco Bay. On August 19, 1934, he and forty-two other high profile inmates were loaded on a secure train and sent west. The "Rock," the government was quick to advertise, was meant to be the "toughest slammer in the land" suited for incorrigibles.

     As the disease attacked his central nervous system, Capone's well being began a gradual decline. His emotional state deteriorated as the slide into dementia slowly progressed. In 1938, the doctors tried an experimental cure that had gained some popularity. The malaria virus was injected in the hopeless cases. The attempt failed and almost killed the patient. (Malaria, by causing a high fever, might, it was conjectured, kill the syphilis spirochete bacteria, thus halting the progress of the disease: better malaria than syphilis.)

     On January 9, 1939, his felony sentence completed, Capone was transferred to the Federal Correctional Institution at Terminal Island, Los Angeles, to serve out a one-year term for his misdemeanor convictions.

     Freed from confinement on the 16th of November, his family took charge, taking him to the Union Memorial Hospital in Baltimore for treatment by an eminent syphilis specialist. His case deemed hopeless, Capone retired to his Palm Island, Florida, home. In 1940, the court ruled that he still owed $265,877 in back taxes. He never paid a cent.

     The poster boy for American gangsterism had many visitors. One ex-crime partner summed up his condition: "Nutty as a fruitcake."

     On January 19, 1947, Capone fell into a coma and on the 25th death claimed him at age 48. On February 4th Brooklyn-born, second-generation Italian American, one of nine children of immigrant parents from the village of Angri, region of Campania, near Mount Vesuvius, Alphonse Capone (1899-1947) was laid to rest, between his father and brother, at Mount Olivet Cemetery, on Chicago's South Side. His remains were later relocated to a Mount Carmel Cemetery plot in the western suburb of Hillside. The site receives yearly a multitude of the curious.

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