Debunking Arnold Rothstein

[CabriniGreen]

Feel free to analyze, nitpick, discuss, ect.....

“THE POLITICAL IMPACT OF THE ROTHSTEIN INVESTIGATION

Arnold Rothstein was a legend in his lifetime, worthy of the attention of literary giants – but the impact of his legacy transcended the lofty standards he set as the paragon of criminal etiquette. Indeed, the US Treasury Department’s investigation into his drug trafficking and distribution empire triggered a series of developments that in turn fostered national security and law enforcement policies and practices that endure into the twenty-first century.


At the law enforcement level, the Rothstein investigation revealed the staggering extent of illegal drug trafficking in the US. This revelation would lead to the reorganization of the Narcotics Division of the Internal Revenue Service’s incredibly corrupt Prohibition Unit (fondly referred to as “the Old PU”) and result in the creation of the Bureau of Narcotics in June 1930.
These bureaucratic developments began when certain documents were found at a realty company Rothstein used as a front for his illegal enterprises. The documents confirmed that Rothstein was financing an international drug cartel based in Holland.

They also revealed that the cartel had been supplying “primarily through trans-shipment points in Canada) millions of dollars’ worth of illicit drugs to American gangsters since 1925, when Rothstein’s emissaries first contacted a Chinese gang in Shanghai. Treasury Department narcotic agents, having confiscated the incriminating papers from reluctant police detectives, were certain that his murder was related to an ongoing struggle for control of the burgeoning underworld drug trade. They also felt that his papers would provide additional leads in several major narcotics investigations.
The Treasury agents were right. Although the police would never solve the murder case, Rothstein’s financial records did enable Treasury agents – operating independently of the police – to seize several million dollars’ worth of narcotics in early December 1928 and to establish a link between Rothstein and the narcotics, which had been legally manufactured in Europe, then diverted onto the black market and smuggled from France.

“While the law enforcement developments of the Rothstein investigation were significant, they were eclipsed by the resulting political fallout. The biggest impact “was felt in New York, where newspapers printed rumors that Rothstein had financial ties with the city’s most prominent public figures, including New York’s celebrated mayor, James John “Jimmy” Walker. More importantly, the New York Times reported that Rothstein had used a portion of his drug profits to finance communist-sponsored strikes in the city’s garment district. This was the first time in American history that politicians and policemen were linked with Bolsheviks and drug traffickers. In conjunction with charges that Democratic Party officials were on Rothstein’s payroll, the specter of sedition enabled Republican US Attorney Charles H. Tuttle to demand the immediate dismissal of all officials associated with Tammany Hall (the Democratic Party’s infamous headquarters in New York), including a number of judges.

“Two weeks after Tuttle’s explosive charges, Representative Stephen G. Porter (R-PA), Chairman of the Foreign Relations Committee, arrived in New York. Porter was the nation’s leading anti-narcotics crusader, and accompanying him was Colonel Levi G. Nutt, head of the Treasury Department’s “Narcotics Division.

In the 11 December New York Times, Porter was quoted as saying that he and Nutt had been tracking the Rothstein narcotics investigation since its inception several years before. Porter then escalated America’s war on drugs to international proportions by declaring that Rothstein’s records proved that “some” European companies that legally manufactured narcotic drugs were not abiding by agreements made at the Hague Opium Convention of 1912, “with the result that dope rings existed throughout the world.”3

Porter was a Prohibitionist and an Isolationist, and believed that America’s drug problem was caused by supply, not demand. For years he had wrangled with the colonial powers that ruled the League of Nations’ Opium Advisory Committee, and in 1925 he and the American delegation had stormed out of a meeting in protest over the Opium Bloc’s refusal to curb overproduction. But Porter was a crass opportunist too, and his interest in narcotic law enforcement, as we are told by historian William O. Walker III, “was not only on the humanitarian side, but also because it was “a good subject for publicity in the newspapers.”4


US Attorney Charles Tuttle had a partisan agenda too, and he and New York State’s most powerful Republican power brokers, Jacob Livingstone and Kingsland Macy, took immense pleasure in discrediting Mayor Jimmy Walker, forcing his resignation in September 1932, and paving the way for the election of Republican Fiorello H. LaGuardia in 1934.
The lessons of the Rothstein case were undeniable: first and foremost, politicians had discovered that the war on drugs could be exploited for promotional purposes; and secondly, the immensity of America’s drug habit had become a public issue that demanded immediate attention.

“ROTHSTEIN’S HEIRS APPARENT

In the weeks following Rothstein’s assassination, Treasury narcotic agents questioned material witnesses in the case, one of whom, Sidney Stajer, provided critical information about the organization’s international dimensions. Under arrest on another charge and unable to make bail, Stajer, “in exchange for his freedom, told investigators that he had gone to Europe in 1927, as Rothstein’s purchasing agent, to buy narcotics that had been diverted from pharmaceutical firms in Germany. Stajer also revealed that he had been in China, Formosa, and Hong Hong in 1925, establishing contacts and buying opium for Rothstein on the unregulated Far East market.


Treasury agents also questioned an uncooperative witness identified in the New York Times as Charles Luciano. A Sicilian immigrant (real name Salvatore Lucania), Luciano was being held in connection with an armed robbery.5 The federal agents knew that he had been a dope peddler since 1916, when he was arrested for possession of a small quantity of heroin, and that he and his partners – Frank Costello, Meyer Lansky, and Louis Buchalter – were the self-appointed heirs to Rothstein’s drug-trafficking operation.

They also knew that Luciano and associates had formed ties with America’s major new sources of narcotics: the Ezra brothers in China, and the Eliopoulos ring in Paris. By 1929, these two gangs were the primary exploiters of the economic forces that drove illicit drug manufacturing deeper underground and opened up the Far East as the main source “of narcotics in the wake of the Rothstein investigation.”


“Greek national and cosmopolitan conman whose father had been a diplomat in Turkey, Elie Eliopoulos launched his drug-smuggling operation in 1927, when he visited China and contacted Greek nationals involved in the opium trade. He arranged to ship raw opium to two complicit manufacturers in France, purchased police protection in Paris, and by May 1928 was selling diverted pharmaceutical grade narcotics to America’s major illegal drug distributors.

In 1930 he financed a clandestine laboratory in Turkey, and thereafter narcotics from Turkey and China were routed to Paul Ventura (alias Paul Carbone), the Corsican crime boss in Marseilles, and then forwarded by American Express to Parisian restaurateur Louis Lyon for packaging and shipment to America. In 1930 and 1931, on behalf of the Eliopoulos syndicate, Peruvian diplomat Carlos Fernandez Bacula made six trips to New York, each time carrying 250 kilograms of narcotics under the protection of his diplomatic passport.


“The Ezra brothers, Judah and Isaac, had a different pedigree and modus operandi. Their father had dominated the legitimate opium business in Shanghai prior to the First World War, and according to scholar Terry Parssinen, “once headed the city’s powerful Opium Combine.”7 Unlike the Eliopoulos brothers, the Ezras had a huge stockpile of opium and were making large profits in 1912, when the Hague Convention made it illegal to import opium from India into China.
Left to their own devices, the degenerate Ezra brothers squandered the family fortune and by the mid-1920s had decided to start trafficking in illicit drugs. Judah opened a silk-importing company as a front for smuggling narcotics from Europe to China. Then in 1931 he formed a wood oil-importing company in Shanghai and started shipping opium, cocaine, heroin, and morphine on Japanese freighters into San Francisco, where Isaac had rented a warehouse and had formed relations with Chinese and Italian distributors, including Mafioso “Black Tony” Parmiagni. An agent of Chiang Kai-shek’s Kuomintang Party, Ye Ching Ho (alias Paul Yip “was Ezra’s chief contact in China. With the blessings of Chiang’s Nationalist government, which relied on opium profits for its survival, Yip ran a morphine factory in the wicked, wide-open city of Shanghai.

[CabriniGreen]

I “THE CHINA CONNECTION, CORRUPTION, AND NATIONAL SECURITY

The Ezras had established their contacts prior to the Hague Convention, at a time when the Astors and relatives of the Roosevelts (Russell and Company in Boston) had increased their family fortunes by shipping opium from Turkey, Iran, and India to China. However, while most American shippers complied with the Hague Convention, many of Europe’s colonial powers felt no obligation to honor rules set by sanctimonious American moralists, and the Opium Bloc inserted loopholes in the agreement that allowed them to continue to legally trade opium in the Far East, alongside clandestine traffickers like the Ezras.
International drug control policy improved in 1928 with the creation of a Permanent Control Board “Board at the League of Nations. The purpose was to prevent diversions by having licit manufacturers of narcotics report to the Control Board. Further controls were established in 1931 when, with the League’s Limitation Agreement, European manufacturers agreed to stop overproducing narcotic drugs. But exceptions in the trade of opium remained. Great Britain in particular had relied on the opium trade to support its colonial empire since the eighteenth century. Under the aegis of preserving free trade, the British fought two Opium Wars in the nineteenth century, thus encouraging the spread of addiction throughout the Far East. So in the 1930s, Shanghai’s British, French, and international concessions were still the easiest places in the world to make banking and shipping arrangements for the opium trade. As Professor Parssinen notes, “By 1933, China and Japan had become the major exporters of opiates to the US illicit market, a position which they held throughout the decade.


Liquor, gambling, drugs, political corruption, international smuggling...

Rothsteins legacy...

[CabriniGreen]

“Rothstein, however, always played the odds, and the profit margin in trading illicit narcotics wasn’t wide enough until 1921, when the Supreme Court ruled that it was illegal for doctors to prescribe narcotic drugs to addicts. It was at this point, when the legitimate outlets vanished, that Rothstein cornered the wholesale black market. Using a procedure he had developed for smuggling liquor, he sent buyers to Europe and organized front companies for importation and distribution. By the mid-1920s he was in sole control of the lucrative black market in heroin, morphine, opium, and cocaine, and had set up a sophisticated system of political payoffs, extortion, and collusion with the same gangsters who would eventually kill him and divvy up the spoils of his vast underworld empire.
Yes, Rothstein was fatally flawed. Discretion was the cardinal rule of any criminal enterprise, yet in July 1926 he posted bond for two employees who had been “been arrested for smuggling a substantial quantity of narcotics from Germany. Rothstein likewise posted bail for drug runners arrested in 1927 and 1928. Alas, posting bond for his employees brought the attention of the press upon his business associates, and that indiscretion – plus the fact that his protégés felt it was unfair that one man should control all the rackets – cost him his life.[\B]


In the end the evil genius, who preyed upon human weakness, was destroyed by the folly of pride. On the evening of 4 November 1928, Rothstein was shot in the groin while in his room at New York’s swank Park Central Hotel. It was a terrible wound, intended to inflict maximum pain, and Rothstein died several days later amid much controversy and mystery. To this day his murder remains officially unsolved. However, many of his secrets were revealed as a result of his bookkeeper’s penchant for keeping accurate records.

[CabriniGreen]

Debunk away.....

[motorfab]

Interesting, thanks for sharing. The only point on which I can express myself is this one :

In 1930 he financed a clandestine laboratory in Turkey, and thereafter narcotics from Turkey and China were routed to Paul Ventura (alias Paul Carbone), the Corsican crime boss in Marseilles, and then forwarded by American Express to Parisian restaurateur Louis Lyon for packaging and shipment to America. In 1930 and 1931, on behalf of the Eliopoulos syndicate, Peruvian diplomat Carlos Fernandez Bacula made six trips to New York, each time carrying 250 kilograms of narcotics under the protection of his diplomatic passport.

While it is undeniable that Rothstein was involved in narcotics, I have my doubts that he financed a laboratory for Carbone. Even if it is not impossible that he financed part, it was above all a client and Carbone (and Spirito) had enough means to do it on his own. And above all he died in 1928, so impossible for 1930. On the other hand I think that he was one of the first to have heroin imported in mass to the USA. I believe it is in this thread where I say he sent Yasha Katzenberg to buy the product from factories when it was legal in Europe.

I have little information on Lyon, except that he had his hands in nacrotics, that he got caught for it in the 30s and that it seems that he was associated with Carbone.

If Lepke was well associated with A.R., it is interesting to note that his powder supplier was JP Stefani in Paris (although Marseille was involved in the shipments, it was mostly a port of entry, raw opium was processed at Paris and was then sent and shipped from the port of Le Havre).

François Spirito made several trips to N.Y. in the 1930s. I doubt it was for tourism. So I think he met guys like Buchalter. And above all he was Neapolitan, so I bet my shirt that he did business with the 5 Families.

[Grouchy Sinatra]

So, the thread is titled "Debunking Arnold Rothstein", and nobody actually debunks Arnold Rothstein? Just a bunch of people saying that they don't believe he was ever that powerful? It seems to me a lot of people just don't want to believe Rothstein was an influence on Luciano and his racketeering ambitions. I don't know why people are so adverse to this. How would it spoil anyone's view of the American mob if Luciano and the other founding fathers of the commission were influenced by Jewish gangsters? I mean it's pretty obvious they were.

[Antiliar]

So, the thread is titled "Debunking Arnold Rothstein", and nobody actually debunks Arnold Rothstein? Just a bunch of people saying that they don't believe he was ever that powerful? It seems to me a lot of people just don't want to believe Rothstein was an influence on Luciano and his racketeering ambitions. I don't know why people are so adverse to this. How would it spoil anyone's view of the American mob if Luciano and the other founding fathers of the commission were influenced by Jewish gangsters? I mean it's pretty obvious they were.

Your bias is showing. This question can only be answered by actual evidence, and there isn't much. There is a lot of myth and legend, and maybe you want to "print the legend," but that's not history. It might be fun to paint Rothstein as the George Soros of organized crime, funding every gangster and vice in early 20th century New York, and giving the big name mobsters their start, but the actual evidence just isn't there. A lot of the misinformation about Rothstein can be traced back to "The Last Testament of Lucky Luciano," which is essentially a hoax. So what are we left with? Contemporary newspaper articles, a biography written by his widow, and a legitimate quote from Luciano who said Rothstein was in debt to him. Mayer Lansky may have admitted that he knew him, but gave no details.

[Grouchy Sinatra]

What bias is that? There's a bias in believing Jewish gangsters influenced Lucky Luciano and his approach to the rackets? What's the bias in disbelieving it? What's the bias in starting a thread titled "Debunking Arnold Rothstein" and Rothstein never really is debunked?

It's as if you want video evidence of Rothstein and Luciano hanging out. Well the technology wasn't available yet. So I guess there's no proof ANY history happened before film cameras were invented.

The accounts of Luciano being influenced by Rothstein ARE evidence. Just like witness testimony in court is considered evidence. A lot of the conclusions here are based on the strength of cooperating witnesses. No video proof, in most cases no audio proof, no pics, just an informant saying so.

[Antiliar]

The accounts of Luciano being influenced by Rothstein ARE evidence. Just like witness testimony in court is considered evidence. A lot of the conclusions here are based on the strength of cooperating witnesses. No video proof, in most cases no audio proof, no pics, just an informant saying so.

What accounts? Aside from the hoax book I mentioned, what accounts?

[motorfab]

So, the thread is titled "Debunking Arnold Rothstein", and nobody actually debunks Arnold Rothstein? Just a bunch of people saying that they don't believe he was ever that powerful? It seems to me a lot of people just don't want to believe Rothstein was an influence on Luciano and his racketeering ambitions. I don't know why people are so adverse to this. How would it spoil anyone's view of the American mob if Luciano and the other founding fathers of the commission were influenced by Jewish gangsters? I mean it's pretty obvious they were.

Your bias is showing. This question can only be answered by actual evidence, and there isn't much. There is a lot of myth and legend, and maybe you want to "print the legend," but that's not history. It might be fun to paint Rothstein as the George Soros of organized crime, funding every gangster and vice in early 20th century New York, and giving the big name mobsters their start, but the actual evidence just isn't there. A lot of the misinformation about Rothstein can be traced back to "The Last Testament of Lucky Luciano," which is essentially a hoax. So what are we left with? Contemporary newspaper articles, a biography written by his widow, and a legitimate quote from Luciano who said Rothstein was in debt to him. Mayer Lansky may have admitted that he knew him, but gave no details.

Grouchy, Antiliar is right. I didn't do this thread to say that everything that is said about Rothstein was wrong, but just to understand what exactly this character's role was in the American underworld of the 20s and tried to figure out what is right and wrong. The only things I know about him for sure is that he was involved in gambling, bootlegging, and narcotics. We know that Luciano's so-called bio is almost entirely total bullshit and therefore misjudges most people. But if ever you have a contrary opinion compared to what some people say, please develop it.

[Grouchy Sinatra]

I still want to know what the "bias" is in arguing Arnold Rothstein was influential to Lucky Luciano, and how George Soros's name got brought into this. lol. Seriously Antiliar, how did you manage to make this discussion political? Why do you think it's political for one to discuss the Jewish gangster influence in the Italian mob? Please explain.

[Antiliar]

How about you name me some of those accounts you referred to?

As for Soros, there are Far-Right sites that blame Rothstein for creating organized crime so they can blame it on (who they see as) dastardly Jews. The fact is that Italian-American organized crime preexisted Rothstein by decades. Just like Soros undermines U.S. policy today, they see Rothstein as an early 20th century Soros.

[Grouchy Sinatra]

The far right is going to be the far right. Who takes them seriously? That being said, Italian gangsters were shaking down store owners in their own community before Jewish gangsters like Rothstein taught them the more lucrative rackets, which Jews certainly didn't invent. Irish and protestants were doing it before that.

[Antiliar]

The far right is going to be the far right. Who takes them seriously? That being said, Italian gangsters were shaking down store owners in their own community before Jewish gangsters like Rothstein taught them the more lucrative rackets, which Jews certainly didn't invent. Irish and protestants were doing it before that.

Still dodging my question I see...

Anyways, before Rothstein was anything the Sicilians in New York were involved in counterfeiting, real estate scams, import/export of lemons and vegetables, and a lot of them operated on a large scale. Many Sicilian-American Mafiosi were businessmen who invested in buying property. They definitely weren't small time. The Calabrians on the other hand were often into sex trafficking and prostitution. Both groups used extortion. But contrary to some myths, the Sicilians did work with other ethnic groups, including Irish and Jews, going back to the 1890s.

We also have photos of Italian mobsters going back to the 1880s. The ones of means always dressed well in suits and ties, and they knew how to act in public. Maybe Rothstein taught Luciano how to be more refined (although I'm still waiting for legitimate sources that say this), but he could have learned it from his politician friends. We don't know. If you read interviews of Luciano from the 1940s and 50s he always sounded like he came from the streets. His friend Lansky, on the other hand, came from a religious family, and undoubtedly learned manners from them.

[Grouchy Sinatra]

Interesting. Thanks.