How School Dropout Built $100 Million Crime Empire

A smoky dance hall. A rowdy crowd talks in a mix of English and Italian as they knock back cocktails. A bouncer insults a female patron, her brother retaliates with a punch. Then he pulls out a knife and slashes the bouncer’s face, leaving 3 bloody gashes. The wounds heal, but the man’s left cheek will bear the evidence of the attack for the rest of his life. He hates the scar and attempts to shield his cheek in photographs. He especially hates the nickname the press gives him ‘Scar Face’.

Alphonse Capone was born on January 17, 1899, in Brooklyn, New York. His parents are immigrants from Angri, Italy. His father Gabriele, is a barber, and his mother Teresa a housewife. Capone is the 4th of 9 kids. There is always a hungry mouth to feed in the Capone household. Gabriele preaches the value of hard work and encourages independence in his children. Capone gets his first job around age 9 as a shoeshine boy. He often sets up near the docks along the Brooklyn Navy Yard to capture the business of sailors. Capone makes good pocket money but sees mobsters in flashy clothes working the local shopkeepers. He idolizes them. Capone’s big for his age. He runs with two kid gangs: South Brooklyn Rippers and Forty Thieves Juniors. The gangs roam their neighbourhood committing vandalism, petty crime and getting into rumbles with other young thugs. As he grows older, Capone joins the James Street Boys which is run by Johnny Torrio, a local mobster. Torrio takes Capone under his wing, and eventually, he becomes his lifelong mentor.

Capone sometimes does odd jobs for Torrio including delivering firearms and picking up bribes. He’s a restless student but has a clever mind and a knack for numbers. While attending 6th grade, he gets into an altercation with another student. A teacher tries to break up the fight and Capone slugs her. The authorities want to send him to a reform school, instead, he drops out entirely. Capone goes through a variety of odd jobs including working in a candy store, as a pin boy in a bowling alley, and as a labourer in an ammunition plant. He also plays semi-pro baseball alongside his older brother Ralph and makes money betting on games at the local pool hall. In his late teens, Capone joins the powerful Five Points gang. By this time, his mentor Torrio has relocated to Chicago, but he and Capone keep in touch. Torrio introduces him to his mob associate Frankie Yale.

Capone goes to work as a bouncer and bartender at the ‘Harvard Inn’ Frankie’s Coney Island bar. It’s here that Capone has the fateful altercation with Frank Galluccio and receives the wounds that lead to his most famous nickname. With Yale playing negotiator, Capone later makes up with Galluccio. Some years later, when Capone is a mob boss in Chicago, he gives Galluccio a job as one of his bodyguards, paying him a good salary of $100 a week. That’s around $1,660 a week in today’s money. Capone is always getting in and out of trouble. Among other incidents, he allegedly shoots the winner of a neighbourhood craps game and robs him of his winnings. The police investigate and take Capone into custody, but they have to let him go because no one will admit to witnessing the murder. In December of 1918 a few weeks after she gives birth to his son, Capone marries Mae Coughlin. Thinking of his new family, 19-year-old Capone decides to try to go straight. The Capones leave New York and head to Baltimore.

The change of heart and the family’s quick departure is likely caused by Capone trying to outrun someone looking for revenge. In Baltimore Capone takes a legitimate job as a bookkeeper for the Paramount Construction Company. For a couple of months, the family lives quietly and Capone learns a lot about how to do business. However, Capone’s father dies of a heart attack and he returns to New York for the funeral. Shortly thereafter Torrio invites Capone to manage a brothel for him in Chicago. Capone eagerly accepts; the good wages will allow him to provide not only for his wife and child but for his mother and sisters too. That’s one explanation for how Capone ends up in Chicago. The other possible story is that Capone assaults a member of a rival gang called the White Hand; for safety, Yale sends him to work for Torrio in Chicago. As the right-hand man of mobster ‘Big Jim’ Colosimo, Torri runs a successful racketeering and prostitution business. But trouble’s brewing, in 1920, the 18th Amendment goes into effect, prohibiting the manufacture and sale of alcohol. Sensing a lucrative opportunity, Torrio wants to go into bootlegging. However, Colosimo disagrees, he wants to stick to their current business. In May of 1920, Colosimo is ambushed and murdered. There are many different people with motives who possibly killed him, Capone is at the top of the list. It’s rumoured that Capone committed the shooting or brought in his former boss Yale to do the murder. Torrio quickly takes over Colosimo’s syndicate, expanding into bootlegging and gambling. He gives Capone a prominent role in his Chicago Outfit. A common bootleg racket goes like this: Ted opens a speakeasy *clear throat* uh I mean a cafe. In the front room he serves coffee, but knowing a secret password allows customers to enter a backroom where he serves liquor. His establishment gets a friendly visit from local businessman Capone and a few of his associates. Capone advises Ted that he should purchase alcohol from him and oh yeah, he also offers police insurance. He has a lot of friends in high places who let him know about raids ahead of time. Of course, Capone’s booze isn’t exactly cheap. Ted declines. He can make liquor cheaper.

Capone and his men pay another visit to Ted’s cafe. This time they smash out Ted’s windows and take a hatchet to his liquor kegs, destroying his business. Ted then makes the wise decision to purchase his liquor from Capone. If he didn’t, his family might be threatened or his cafe might be bombed. There are many shopkeepers like Ted all over Chicago, who per Capone’s good advice purchase their liquor from the Chicago Outfit. In many cases, proprietors need the Outfit’s permission to set up shop in the first place. The syndicate makes money hand over fist and Capone thrives. He moves his family-wife and son, along with his mother, younger brothers and sister to town. He buys a modest house in the middle-class South Side under his mother’s name. For the rest of his life, Capone never owns any property; it’s always purchased in someone else’s name and frequently paid for in cash, making it hard to trace. Torrio quickly promotes Capone to partner. Aside from bootlegging, prostitution and gambling Capone dabbles in being a boxing promoter. He quickly gains a reputation around town. He loves the nightlife, fast women, and cars, he’s boisterous and a sharp dresser. Most often Capone can be found wearing a well-fitting 3 pieces suit and a cream fedora.

Capone expects his men to also be well dressed. The local press notices Capone and begins to report on his activities. In addition to its main revenue, the Chicago Outfit also develops interests in legitimate businesses in the cleaning and dyeing industries. They spend a lot of time cultivating influence with receptive public officials, labour unions, and employee associations. Meanwhile, a rival outfit, the North Side Gang, run by Dean O’Banion dominates bootlegging on the North Side of Chicago and in the wealthy Gold Coast lakefront area. After several conflicts, the Chicago Outfit forms an uneasy alliance with the North Side gang. The agreement is that the gangs will respect each other’s territories and properties as well as share profit. In 1923, Chicago elects a reformist mayor who pledges to rid the city of corruption. As a result, Torrio and Capone move their base outside of Chicago city limits to suburban Cicero. Meanwhile, the truce between the Chicago Outfit and the North Side gang begins to unravel.

The Genna Brothers, a small gang run by six Sicilian-born brothers, who own the bootlegging territory of Little Italy begin encroaching on the North Side’s area. O'Banion complains to Torrio, who does nothing. To complicate matters further, a few of the candidates of the 1924 mayoral Cicero election make campaign pledges to root out the mob. On the day of the election, March 31, 1924, Capone sends his men out on an intimidation operation. They visit polling places, waving guns around to ensure voters chose the ‘right’ candidate. It gets out of hand, a few clashing voters are shot and killed. The authorities respond by sending out police and Capone’s brother Frank is brutally gunned down. A few months later in May, O'Banion manages to scam Torrio out of half a million dollars; in retaliation, Torri cuts the North Side gang out of profits. The gangs fight all summer. By the fall the Genna brothers have had enough and conspire with Torrio and Capone to kill O'Banion. A team of assassins ambush and kill O'Banion at his floral shop on November 10, 1924. His murder sparks a brutal five-year gang war between the North Side Gang and the Chicago Outfit with assaults, kidnappings and killings on both sides. In January of 1925, Torrio is shot several times as revenge by Hymie Weiss, the new leader of the North Side gang. Torrio survives the attempt on his life but ends up in jail for several months due to a setup by the North Side Gang. While in jail he retires and names 26-year-old Capone as his replacement. Despite Torrio’s advice to keep a low profile, Capone begins to live an even more luxurious and very public life.

He spends lavishly, always in cash so there’s no trail. He expands the Outfit’s business, even smuggling alcohol from Canada into Chicago. The press follows Capone’s every move and the public eats it up. Reporters even come from Europe to interview Capone; he’s larger than life. Some see him as a dissident or a rebel who gives the people what they want. Capone feels like he’s doing a “public service” for Chicagoans. He says “Ninety per cent of the people of Cook County drink and gamble and my offence has been to furnish them with those amusements.” The war between the North Side Gang and the Chicago Outfit heats up with vandalism and bombings. On a night in April of 1926, William McSwiggin, a prosecutor, is on a bar crawl in Cicero with two old friends. An assailant with a machine gun attacks the group outside the Pony Inn saloon and kills all 3 men. Capone had ordered the murder of McSwiggin’s friends, not realizing that he was going to be with them. As it turns out, McSwiggin had previously attempted to prosecute Capone for murder, so despite his murder being unintentional, it seems like retaliation. The public perception of Capone begins to sour.

McSwiggin’s murder becomes a symbol to the public of the inability of the authorities to reduce organized crime and stop the violence plaguing the city. Chicagoans clamour for justice. The police investigate the crime. They raid Capone’s businesses, and while they find no evidence that could help in charging him with McSwiggin’s murder, some of the documentation collected will later be evidence in an income-tax evasion case against him. Sensing the public mood, Capone calls for a “Peace Conference” among the city’s criminals. An agreement is reached to stop the violence. The truce only lasts 2 months. On September 20, 1926, Capone’s eating lunch on the first floor of the Hawthorne Inn, the Chicago Outfit’s Cicero headquarters. A car drives by spewing hundreds of bullets. Capone and his bodyguard hit the floor. The assault is over as quickly as it had begun. Once the gunfire ceases, Capone jumps up and runs to the door to see if he can get a look at the car as it drives off. Suddenly he notices something odd: despite all the bullets fired, there’s no damage to the restaurant. Realizing what’s happening, Capone’s bodyguard tackles him just as a convoy of seven Licolns driven by the North Side Gang pass by the Hawthorne Inn, shooting it to hell. The first drive-by was a decoy with blanks to lure Capone and his men out of the building.

Over a thousand rounds are fired, and no one is killed although some innocent bystanders are wounded. Capone publicly brags about his amazing escape. Three weeks later Capone has a hit squad gun down North Side leader Weiss, murdering him and wounding three of his lieutenants in front of the Holy Name Cathedral. Soon after that, Capone moves his headquarters to a lavish suite in the Metropole Hotel in downtown Chicago. He has cultivated relationships with several corrupt officials, including openly supporting William Hale Thompson in the 1927 Chicago mayor’s race. Thompson wins. He and other authorities under Capone’s thumb turn a blind eye to many of the Outfit’s activities. By 1929 the Chicago Outfit dominates the illegal liquor trade in Chicago. It’s estimated that they generate between $60-$100 million in revenue annually. That’s between $847 million-$1.5 billion in today’s money. Capone owns several properties around town and even a beachfront vacation home in Miami. However, none is in his name, because he’s concerned about security, perhaps even paranoid and also he wants nothing traced back to him.

After the deaths of various North Side Gang leaders, lieutenant Bugs Moran takes over and swears to end Capone. He hates him not only for the murder of his friends but also for the prostitution business Capone has created. Moran, a frequent churchgoer sees no problem with bootlegging, but draws the line at prostitution. A few times the Chicago Outfit tries to offer a profit-sharing deal with the North Side Gang, but Moran turns them down; he’s disgusted that some of the profits would come from flesh peddling. The North Side Gang continues to be a thorn in Capone’s side. Word on the street is that they’re specifically gunning for Capone’s top hitman, “Machine Gun” Jack McGurn. Capone and McGurn make a plan to strike first. The Chicago Outfit tricks Moran into thinking that he can buy a load of hijacked booze for cheap from some Detroit racketeers. On February 14, 1929, the booze is supposed to be delivered to the garage that serves as the North Side Gang’s headquarters. Moran oversleeps and is late for the meetup. He and two aides rush to the garage just in time to spot three men dressed as policemen and two others in plain clothes entering. Thinking it’s a police shakedown, Moran decides to wait until the authorities leave before going in. This decision saves his life.

Inside the garage, the fake cops line up the 7 men; 6 North Side gangsters and an innocent mechanic. They order them to turn and face the wall. Thinking that they are about to be arrested, the men obey. The fake cops shoot the 7 in their backs, gunning them down in cold blood, and firing over 70 rounds of ammunition. Police from Chicago’s 36th District quickly arrive and find a single North Side Gang member named Frank Gusenberg still alive; he’s been shot 14 times. In the few minutes before he becomes unconscious, the police attempt to question him, but he refuses to talk. Gusenberg dies a few hours later at a hospital, having never woken up. The murders which become known as the St. Valentine’s Day Massacre shocked the nation. From the start, many blame Capone. However, when the massacre occurred, Capone was out of town, staying at his house in Miami. Many others believe that Capone masterminded the plot. The authorities investigate a variety of theories and suspects to little avail. They cannot link Capone to the murders, he is never charged and the case is never solved. However, as part of the investigation into the murders, Capone is subpoenaed and called before a grand jury on March 12, 1929.

His lawyers formally file for postponement, submitting a physician’s affidavit which attests that Capone has been suffering from bronchial pneumonia and was temporarily confined to bed. Travel would be detrimental to his recovery. Capone’s appearance date before the grand jury is rescheduled for March 20. Meanwhile, the U.S. Attorney’s Office calls up the FBI. During the 1920s through the early 1930s, the FBI’s investigative jurisdiction is limited. The gang warfare occurring in Chicago isn’t within the Bureau’s investigative authority, however, when the US Attorney asks them to investigate if Capone has been sick or just attempting to dodge a subpoena, it puts Capone on their radar. The FBI quickly uncovers evidence that Capone went to a racetrack and participated in other social events when he was allegedly very sick in bed.

Capone finally appears before the federal grand jury on March 20th. As he’s leaving the courtroom after completing his testimony, he’s arrested for contempt of court, an offence for which the penalty could be one year in prison and a $1,000 fine. He posts a $5,000 bond and is released. Capone’s legal troubles are just starting. Several weeks later, he and his bodyguard are arrested in Philadelphia for carrying concealed deadly weapons. They are quickly sentenced to one year each. While he’s in jail, Capone can run syndicate operations with minimal disruption. He’s released in nine months for good behaviour on March 17, 1930. By now the Great Depression is in full swing. To clean up his image, Capone donates to charities and briefly sponsors a soup kitchen in Chicago that serves more than 2000 people a day.

However, his PR stunts don’t improve public sentiment. Perhaps it doesn’t matter; after the St. Valentine’s day massacre, the North Side Gang is in shambles, they never recover; many of the gangsters are absorbed into other gangs. Capone and the Chicago Outfit have won. However, in response to the St. Valentine’s Day Massacre, President Herbert Hoover orders the federal government to increase its investigation of Capone’s finances. In 1927 the US Supreme Court ruled that income gained on illegal activities was taxable which created a path to prosecute Capone and other prohibition-era criminals. Before this financial investigation, President Hoover had also created a plan for small teams of prohibition agents working under special US attorneys to target bootleggers. In 1930, the Attorney General finally implemented Hoover’s first plan, creating a small squad of prohibition agents to break up the Capone gang.

Twenty-seven-year-old Eliot Ness, a special agent with the Prohibition Bureau is chosen to lead the team. The squad is nicknamed the ‘Untouchables’ after several agents refuse large bribes from the Chicago Outfit. Over the next 2 years, the Untouchables raids the Chicago Outfits’ illegal bootlegging operations multiple times. In the first 6 months alone, the raids and destruction done by Ness's agents cost Capone about $2 million in lost income or over $34.3 million today’s money. The raids affect the syndicate’s bottom line and disrupt Capone's cash flow, depriving him of the income he needs to pay bribes and maintain graft. Members of the Outfit being protected from prosecution is central to the gang’s grip on the bootlegging business. Some claim that Capone sees Ness and his squad as a minor annoyance. He makes sure the prohibition agents get just enough info to regularly conduct raids which keeps them busy and away from the Outfit’s most important business activities. Others view Ness and his agents as vital to the plan to bring down Capone.

Interestingly, the legendary Elliot Ness of pop culture fame is a creation from a semi-fictional book about Ness’s career and several fictional TV shows and movies that followed. Ultimately, the evidence Ness and the Untouchables collects isn’t suitable; prosecutors decide they can’t win with it and halt the investigation. However, the tax evasion case against Capone continues to quietly build. In April of 1930, an investigation by the Intelligence Unit of the Bureau of Internal Revenue resulted in Al’s brother Ralph Capone being convicted of tax fraud. Then the feds focused even harder on Al, assigning Frank J. Wilson and several agents to investigate Capone. The team scrutinizes some 2 million documents covering 6 years of the Outfit’s income. They also interview bartenders, shopkeepers, and anyone around Chicago that may know something about Capone’s business dealings. The majority of the people questioned are too scared, and though Wilson promises protection, most refuse to snitch about their dealings with Capone. Wilson and his crew don’t give up.

They analyze phone records, and bank accounts, lean on informers, study handwriting, gleaning any information they can. Meanwhile, Capone just goes about his normal life. In April of 1930, Capone is arrested on vagrancy charges while visiting Miami Beach. The governor of Florida didn’t want him in the state and ordered the sheriffs to run him out. Capone also cops a perjury charge when he claims that Miami police refused him food and water and threatened to arrest his family. In July he was acquitted of the perjury charge after a three-day trial. In February of 1931, Capone is tried and convicted on the contempt of court charge. He’s sentenced to six months but is allowed to remain free while on appeal. His appeal on this charge is subsequently dismissed. In the spring of 1931, the Treasury Department finally moves forward with a tax evasion case against Capone. They present a mountain of evidence to the grand jury. Capone is indicted on 23 counts of tax evasion on over $250,000 of income from 1924 to 1929. He’s also indicted for five thousand counts of conspiracy to violate the Volstead Act, which is the law that governs prohibition.

The prosecution and Capone’s lawyer work out a deal, Capone will plead guilty to all charges and be recommended a 2+1⁄2-year sentence. On June 16, 1931, Al Capone pleads guilty to tax evasion and prohibition charges. He then boasts to the press that he’s struck a deal for a 2+1⁄2-year sentence. Capone’s bragging annoys James H. Wilkerson, the judge presiding over the trial. He informs Capone that he, the judge, is not bound by any deal. Capone then changes his plea to not guilty. The case ends up going to trial. In the fall of 1931 Capone’s convicted and sentenced to 11 years in prison. He’s also fined $50,000 and charged $7,692 for court costs, in addition to being billed $215,000 plus interest for back taxes. In all, the total he’s supposed to pay comes to just under $300,000 or about $5.6 million in today’s money. This is considered an astronomical price to pay for tax evasion; the government is making an example of Capone. Capone is sent to the U.S. Penitentiary in Atlanta and serves 2 years of his sentence.

After he’s caught bribing a guard, he’s sent to Alcatraz to serve out his remaining sentence. On November 16, 1939, 48-year-old Capone is released after having served just over 7 and 1⁄2 years and having paid all fines and back taxes. One of the main reasons for early release is that Capone is suffering from syphilis in the brain. Many years earlier he contracted syphilis while working as a bouncer in a brothel. Unfortunately, he never bothered to receive medical treatment and the disease quietly progressed, eventually causing his mental deterioration. Upon release, Capone enters a Baltimore hospital for treatment and then convalesces at his Florida home surrounded by family.

He never publicly returns to Chicago; in his childlike state, he’s not capable of managing gangland politics. Al Capone dies of a stroke and pneumonia on January 25, 1947. The Untouchables continue their raids on the Chicago Outfit's illegal liquor activities during and after Capone’s trial. Ultimately, their destruction costs the gang around $9 million in lost income, close to $170 million in today’s money. The Untouchables disband in 1932 and less than a year later the Twenty-first Amendment repealed Prohibition.