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The Banker Who Welshed, Arnold Rothstein



THE mystery of the life and death of Arnold Rothstein will probably never be solved, though his story starts conventionally enough-in gambling terms. Arnold's father was a successful cotton converter in New York and hoped that his son would, in time, step into his shoes. The boy was possessed of an inner drive that could not be contained within the confines of conventional business. Arnold Rothstein began gambling at an age when most boys are still happily shooting marbles.

Honest John Kelly and Richard Canfield shaped him, gave him a deep-rooted knowledge of the law of averages and a proper respect for playing fair at dice and cards (he often said crooked gamblers were fools). Though he won fantastic sums, no one ever caught Arnold Rothstein cheating. From Kelly and Canfield, too, he learned the social value of dressing well, carrying himself with calm and composure in public, and being soft of speech. Behind this veneer was a temperament ideally suited to his calling. He was keen and quick in action, had a tireless energy that allowed him to gamble all night and be fresh and bright in the morning, and he never touched liquor. His drive came from an overwhelming confidence in his intelligence, rendering him impatient of lesser minds, and a tigerish quality that made friends and confederates wary about dealing lightly with him.

At seventeen Rothstein was an old hand at stuss. He next fell in love with roulette, then dice and poker. Whenever he could he played the horses and he was no mean hand with the cue stick. In 1909, in a thirty-two-hour game against one Jack Conway, champion pool player of the Philadelphia Racquet Club, he won $4000 plus $6000 in side bets. He was reluctant to stop but the poolroom proprietor, John J. McGraw, maverick manager of the New York Giants, called off the match lest the men collapse.

Rothstein opened his first gambling house in 1910 on West Forty-sixth Street. The most notable evening in its short life was when "Bet-A-Million" Gates's son celebrated his return to Broadway after an appendicitis operation by dropping $40,000 at the roulette and faro tables. Like most gambling-house proprietors in the Tenderloin, Rothstein shut his place when the police got tough after the bumping off of Herman Rosenthal in 1912. Until public indignation died down he stayed in business by shifting his gambling operations from one hotel to another and patronized practically all the big floating crap games along the Great White Way.

The police learned in 1919 that a high-rolling crap game was going on in one of Rothstein's joints and raided it. Three cops were shot at and two wounded from behind a doorway and Rothstein, alleged to have thrown the slugs, was indicted on a charge of felonious assault. The case was later dismissed. Thereafter Rothstein stopped carrying a gun but hired bodyguards to protect him. That same year, when his name was linked to the World Series scandal by Ban Johnson, president of the American League, Rothstein threatened to sue Johnson. "My friends know," he said indignantly, "that I have never been connected with a crooked deal in my life, but I am heartily sick and tired of having my name dragged in on the slightest provocation whenever a scandal comes up." It is doubtful that his friends would have defended his honor so unreservedly. No one gave particular credence either to a statement two years later that he had done with gambling in favor of devoting himself to real estate and his racing stables.

Rothstein was celebrated and rubbed shoulders equally with the respectable and the criminal. At one time August Belmont ruled him off Belmont Race Track, but he was later reinstated. According to the gambler, he had paid Belmont a visit and convinced him that his big winnings were due to his having a good head on his shoulders and that his moral code was superior to many a businessman's.

"The majority of the human race are dubs and dumbbells," in Rothstein's philosophy. "They have rotten judgment and no brains, and when you have learned how to do things and how to size people up and dope out methods for yourself they jump to the conclusion that you are crooked."

Every big-time bettor in the East knew that he could place a bet on anything at any time with "The Brain," and Rothstein, as one-man depot for huge and diversified bets, could set the odds to suit himself by gambling both ways at various prices. To big businessmen, politicians, newspapermen, and people in the theater Arnold Rothstein was a man who gambled on sure things and they courted him for tips.

Rothstein cleaned up $500,000 on the first Dempsey-Tunney heavyweight championship fight, won $800,000 on the horse Sidereal when it came in as a last-minute entry at good odds at Aqueduct on July 4, 1921. He made money in financial deals and in real estate, owned two office buildings on West Fifty-seventh Street, a hotel on West Seventy-second, and subleased a thousand furnished apartments at a profit. The full magnitude of his operations, legal and illegal, was to emerge and take shape for the public after November 4, 1928.

A few minutes after eleven that night the police found Arnold Rathstein in a state of collapse in the Fifty-sixth Street service entrance of the Park Central Hotel. Despite his request for a doctor to attend him on the spot and send him home in a taxi, they took him to Polyclinic Hospital, where it was found that a bullet fired from a .38-caliber pistol had entered his abdomen. He had $6500 in his wallet.

At 2:15 Monday morning The Brain was given a transfusion and, though he was conscious, he refused to give any information beyond his name, age, and address. "I got nothing to say," he kept insisting. "Nothing. I won't talk about it."

Ace detectives from police headquarters and agents from the district attorney's office began to turn New York City upside down to find the person who had shot Rothstein. Within twenty-four hours they learned that he had lost $340,000 two weeks before in a record-breaking high-spade game and was said to have refused to pay $303,000 of it because he believed that he had been cheated.

As the police began unraveling the story, they found that it had begun months before. Rothstein's customary good luck had soured and he had ruinous evenings in a number of gambling houses and picked a number of losing horses to put his money on. Despite this he had been gambling with six men constantly since September in a series of houses, apartments, and hotel rooms rented by an operator of floating games named O'Reilly. They started by rolling dice, after a week switched to draw poker and then to stud. Early in October stud began to seem tame to these big-action boys and they started high spade, a game played by cutting a deck, the holder of the highest spade winning.

The last night he played in the apartment of ex-convict Jimmy Meehan, in the Congress apartment house on Fifty-fourth Street between Broadway and Seventh Avenue. At the game, besides Rothstein and Meehan, were two gamblers from the West Coast, Joe Bernstein and Nathan "Nigger Nate" Raymond, George McManus, a bookmaker, big-time gambler, and floating-game operator who was running the game that night, the brothers Meyer and Samuel Boston, who used a Wall Street address for their gambling and stock-market ventures, bookmaker Martin Bowe and Edward "Titanic" Thompson, who was called Titanic because when he gambled he played every dollar he owned and when he lost he sank like his namesake. "Nigger Nate" was a particularly unsavory character, involved in a disgraceful baseball bribery case on the Coast. That spring he married a film actress in an airplane over northern Mexico with Jack Dempsey and the Tijuana concessionaire, Gene Normile, as witnesses.

Rothstein started by winning $60,000, then dropped $340,000 to his pals. "I'll probably have to sell an apartment house to meet these losses," he said, "but I have this and that will help wipe out some of it."

"This" was $37,000 he laid on the table for the winners to split. "That's all I have," he explained, "You'll have to wait for the rest of it." He gave them IOUs for the rest, which they willingly accepted, and mentioned several million dollars' worth of collateral. "I'm Rothstein, that name ought to be good for the money."

When a week went by and Rothstein did not make good, the winners began hounding him in his customary haunts. He stalled them off by saying that he had overinvested in real estate, that he was not able to get a fair price if he sold any of his buildings at once, and that he was temporarily short of cash. As days passed they began to trail him around the clock. Restlessness turned to concern when Rothstein suddenly broadcast his suspicions that the game had been crooked and to announce that he would not pay off. Broadway laughed at the idea of Rothstein taken for a sucker, but not the gamblers he accused.

Harsh rumors began to circulate: a Chicago gang was said to have been hired to collect or, failing that, rub him out; he was reported to be marked for death at the earliest possible moment. Detectives picked up news that his death had been fixed for Saturday night, November 3, twenty-four hours before he was shot.

The police quoted Rothstein as saying, "I'm not going to give them a cent, and that goes for the gamblers and the gorillas. I can be found at Lindy's if they're looking for me." To show his contempt, he let his bodyguards go. On the night of November 4 he was at Lindy's.

He came in around 10:15, saw some friends, and sat down with them for coffee. Almost at once he was called to the telephone and came back to the table. "McManus wants me over at the Park Central," he told his friends, and left.

George McManus had lost $51,000 on the last night of play. As a friend of Rothstein and the other gamblers, he now undertook to get The Brain together with his "creditors" to give him one last chance to settle his losses. Apparently Rothstein refused again. At 11:07 a bellboy saw him, tottering and barely able to hold himself up against a wall, and called Lawrence Fallon, the house detective. Fallon sent for an ambulance and its doctor discovered the wound, pay-off for Rothstein's $303,000 welsh.

Just as the wounded man was being loaded into the ambulance, Patrolman William Davis, sent to check on the call for the ambulance, arrived riding on the running board of a cab. The taxi driver, Al Bender, had seen Davis hot-footing it and stopped him to show him a revolver. Bender had been driving slowly past the Seventh Avenue side of the hotel when the gun hit the pavement. It was a Colt Detective Special, which, despite a two-inch barrel, packed a deadly punch.

This weapon, so tiny it could be palmed, killed Rothstein. Except for one undischarged bullet, its chamber was empty. Five unexploded shells that the killer had ejected from the revolver before he tossed it away were found on the sidewalk. No dent indicated that the gun had been dropped from a height. Thinking that it might have been thrown from a car, detectives questioned Bender and he recalled that a sedan was just picking up speed ahead of him as he saw the revolver.

The trail led to the two-room hotel suite where Rothstein had gone -No. 349. Two days before, it had been reserved in the name of "George Richards." The gentleman showed up and registered, giving as his address Newark, New Jersey. He said that he would probably want the rooms till Sunday, moved in, and paid each morning for that day.

In No. 349 detectives found: two whisky flasks, one half full, a number of racing-form sheets, poker chips, glasses in various parts of the room, some of them used. On the back of a chair in one corner was a topcoat with George McNlanus's name on the label in its inside pocket.

"Nigger Nate" Raymond was the first of the suspects to be picked up. Two hours' grilling elicited evidence that corroborated certain police suspicions. Raymond, who had known Rothstein about ten years, heard on September 29 that a high-stake game was slated for Meehan's apartment and that Rothstein would be there. He maintained that he went into the game with $5000 in cash he had borrowed to play, lost it early in the game, and went out and borrowed $10,000 more. By the end of the night Rothstein owed him $219,000. He admitted having asked for it several times and said that he had seen Rothstein in front of Lindy's the night of November 3 and he had said, "I'll give you some of that money Monday." Raymond firmly denied having been at the Park Central, though he had heard that George McManus was.

Rothstein died at 10:15 Tuesday morning and an autopsy showed that the bullet was slanting downward, apparently fired by a person standing on his right as he sat, perhaps talking to someone in front of him. It was election day and, had he lived, he would have won $500,000 he had laid on Herbert Hoover, but his death voided his winnings and his losses.

On November 26 Detective Johnny Cordes received a telephone call from George McManus, who told him that he would give himself up if the detective came early next morning to a barbershop on upper Broadway. He was duly arrested and the police were chagrined to learn that while they had been hunting him he had been living in a Bronx apartment rented by the Dutch Schultz gang as a hideaway. On December 4 he was indicted for murder in the first degree along with "Gillie" Biller and two other men identified only as "John Doe" and "Richard Roe." They were said by the District Attorney to have been in No. 349 the night Rothstein was shot.

Justice Aaron J. Levy of the New York Supreme Court allowed McManus to go free on $50,000 bail. This was not usual practice under such an indictment and there were overtones of pressure by political boss James J. Hines. Nor was McManus fingerprinted, as required for all homicide suspects.

A year after his arrest McManus was brought to trial for the killing of Arnold Rothstein. The jury could not reach a decision, so a directed verdict for acquittal was placed before judge Charles C. Nott by McManus's lawyer, James D. C. Murray, on grounds that the evidence was inconclusive and weak. Minutes later McManus walked out of the courtroom a free man.

Several days after Rothstein's death, United States Attorney Charles H. Tuttle asked and was granted permission to examine the Rothmere papers, the Rothmere Realty Corporation, Mortgage Corporation, and Brokerage Company being three of Rothstein's many businesses. From these papers federal agents learned enough to seize millions of dollars' worth of narcotics and lay bare a hookup to major cities, including Boston, Chicago, Detroit, Philadelphia, and San Francisco. As a result they pulled two raids simultaneously on December 27, 1928, one in a New York City hotel, one in a Buffalo railroad station, and captured five million dollars' worth of dope. The next night they seized several millions more in Chicago and made a huge haul December 18 on a Jersey City pier. The trail led to France, Belgium, Italy, Holland, sources of cocaine, heroin, and morphine smuggled into the U.S. Rothstein was the financier ih this vast illegal trade.

An attorney engaged by Mrs. Rothstein asked District Attorney Joab H. Banton to take instant custody of all of Arnold Rothstein's files, ledgers, and personal account books lest many prominent people blow their brains out if their names were made public. Curiously enough, the district attorney waited until employees and other persons associated with Rothstein could examine the papers on the grounds that this was necessary to the management of Rothstein's legitimate businesses and to safeguard his estate. By the time Banton did take possession of the papers, ten or twelve other people had beaten him to the punch. According to Leo Katcher, he said, "There are more than 40,000 papers, but we believe that some of Rothstein's records might be missing."

Katcher commented that the D.A. was "one hundred and ten per cent right." Some papers were missing.

"Fats" Walsh, George UfEner, and "Lucky" Luciano went to Rothstein's office the day he died to collect all papers pertinent to the illicit drug trade.Quite unexpectedly the district attorney surrendered Rothstein's private papers to different persons asserting claims to the dead gambler's estate. When Tuttle objected and obtained a court order for federal authorities to intervene, his men could find no papers. Somehow they had all - a carload of them - vanished. Several days later Tammany district leader Nathan Burkan, one of the attorneys to whom Banton planned to release the papers, announced that he had found a few of the papers in safety deposit boxes. The amount was small but the contents startling.

Rothstein was a super-fence for expensive goods, especially jewelry. He was involved in a $300,000 robbery in 1922 when gunman Eugene Moran robbed Mrs. Hugo A. C. Schoelkopf. The night of the robbery Moran dropped the loot with a fence named John Mahan to turn over to Rothstein. The Brain sent it to dealers in different parts of the world. Mahan was arrested but assured soft treatment if he recovered the stolen gems. In three months they were rounded up through Rothstein, turned over to Mahan, and returned to Mrs. Schoelkopf.

Rothstein was also behind huge bond robberies, having at one time recovered and returned $25,000,000 worth in an agreement that gave him 10 per cent-of the bonds for himself. Big bucket shops and rumrunning were also among his operations. He guaranteed bail money that ran into millions over the years for hoodlums and gunmen, slick con men, and gamblers. Finally, his innocence was palpably disproved and justice was shown to be blind when it declared him guiltless in fixing the 1919 World Series.

The Partridge Club, which flourished before World War I in the Hotel Imperial, was ostensibly run by lawyer, sportsman, and man-about-town George Young Bauchle, but was actually just another of Rothstein's gambling houses. Supposedly select and private, for gentlemen only, the term "gentlemen" was given a wide and loose interpretation. Anybody could gamble who planked down the thirty-dollar entrance fee, which entitled him also to an excellent champagne dinner. The district attorney tried but failed to establish the fact that it was nothing more than a high-class gambling joint.The Park View Athletic Club on West Forty-eighth Street was a Rothstein business where trained personnel helped patrons build up their muscles. There were also private rooms where a man could strengthen his muscles by rattling and tossing dice and shuffling and dealing cards.

A number of Rothstein's gambling clubs were run in partnership with local politicians who kept the police from annoying the games. Often they were in the political clubhouses, with the gambling conducted by an outside proprietor who gave a share of the take to the political leader.

When the war ended and the immigrant Negroes, Latins, Irish, and Jews, in Jimmie Hines's llth Assembly District lost their jobs, they turned to him for help. For this he needed money and he got it by renting the top floor of his clubhouse to Arnold Rothstein for five hundred dollars a month plus a share of the house's take. It worked out fine all around.

Money was the seat of Rothstein's power. He acted as banker to the underworld, staking big-shot racketeers who could not go to banks for loans. Rothstein himself could borrow from the banks, with his real estate holdings and bonds as securities.

So explosive was even the small amount of material available that every official who took custody of the files arrived at the painful decision to withhold them from the public: too many careers and reputations would be endangered. Many people believe that most of the papers have never been destroyed and that someday they may be "found" and their contents revealed.

There were legitimate holdings. Rothstein owned hotels, apartments, night clubs, race horses, and backed Broadway plays. But he likewise owned judges and politicians, retained a body of expert lawyers, had many members of gangland on his payroll who looked to him for backing in rumrunning, narcotics vending, bond robberies, and such ventures. Among others associated with him were Owney Madden, Eddie and Frank Costello, Frankie Yale, Larry Fay, Waxey Gordon, Frankie Marlow, Philip "Dandy Phil" Kastel, Albert Anastasia, Irving "Little Itch" Halper, Thomas "Fats" Walsh, Robert Arthur "Dapper Dan" Tourbillion, George Uffner and Charles "Lucky" Luciano. Jack "Legs" Diamond and his brother Eddie, who led a mob of thieves, hijackers, narcotic peddlers, and gunmen, were also financed and "protected" by Rothstein. Rothstein took a shine to Legs soon after he graduated from being a sneak thief and petty larcenist and became a gun gorilla. Rothstein made Diamond his bodyguard and often lent him to big winners to take them home safely from his gambling joints. Stanley Walker says, "Did Legs take him home?" was the standing but grim jest at police head-quarters when a gambler was found bumped off, his pockets emptied.

Rothstein had, inevitably, many enemies who complicate and becloud the question: Who killed Arnold Rothstein? McManus was running the game that night and, as the "house," he was bound to keep the game on the level and see that debts were paid up. When Rothstein stalled the winners, it was up to him to see that they got their money. Dead, Rothstein could not pay. Some who professed to know claimed that the killing of Rothstein was a result of the bloody war between Legs Diamond and Dutch Schultz wherein members of the rival forces were liquidated by lead poisoning. Dutch, protected by Jimmy Hines, was thrusting into the Diamond mob's Manhattan territory. Hines and McManus were close friends and McManus was a member of Hines's political club.

The press clamored and the public waxed furious over the police department's wishy-washy handling of Rothstein's murder. However, the concensus up and down Broadway and in the political clubrooms was that the case was too dangerous and inconvenient, too deep in local politics, for the police to deal with.

Mayor Jimmy Walker removed Police Commissioner Joseph Warren and appointed Grover Whalen in his stead in an effort to appease the public. Whalen promptly opened an investigation at which a number of police officers and detectives were heard. Some were demoted and some fined for "dereliction of duty." That was all.

Rothstein was "King of the Gamblers," somehow romantic to the average man, even after the partial revelations of his private files. He would be remembered as both sinister and romantic after the hubbub died down. In time even that memory would fade and his history would be summed up in The World Almanac's "Memorable Dates" for 1928: "Arnold Rothstein, N.Y. gambler, died of shots Nov. 6; killer never found."



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