Past Corruption in New York City: Marcus, Tweed & Gross

New York City has a long and rich history of scandal and corruption. Here are three examples from favorite books that visit past scandals in complete and revealing detail.

The James Marcus Scandal: 1965-1968

The James Marcus story is told with a knowing, fluid and jaundiced style by Walter Goodman in A Percentage of the Take: A Classic Case of Big-City Corruption (Farrar, Strauss and Giroux) (1971). Marcus’s corruption brought down political leader Carmine DeSapio, New York City contractor Henry Fried, Mafia figures, union leaders and Consolidated Edison executives.

James Marcus had few successes in life. At age 35, his main path to advancement was his 1962 marriage to Lily Lodge, the daughter of John David Lodge, former governor of Connecticut and ambassador to Spain. In 1965 Marcus attached himself to the mayoral campaign of John V. Lindsay. In March 1966 Lindsay brought Marcus to City Hall and appointed him an assistant to the mayor charged with running the Department of Water Supply, Gas and Electricity. Lindsay, bedazzled my Marcus’s pedigree by marriage, did not know Marcus was broke and in debt. Marcus’s financial needs brought him under the influence of an experienced con man, Herbert Itkin.  Itkin earned his living brokering deals between corrupt labor union leaders who controlled union pension funds and marginal businessmen unable to get legitimate loans. Itkin had also ingratiated himself with the CIA, had an informer’s relationship with the FBI and, above all, was supremely street smart. Itkin met Marcus during Lindsay’s 1965 mayoral campaign and they became friends.

Under Itkin’s tutelage, Marcus, as head of the Department of Water Supply, Gas and Electricity, demanded kickbacks from contractors repairing water main breaks. But small water main contracts yielded small money.  Marcus needed $100,000 to free himself from the loan sharks who had loaned Marcus funds to meet his stock market debts.  Marcus’s opportunity came when his agency offered a million dollar emergency contract to clean New York City’s Jerome Park Reservoir in the Bronx. Sludge lying on the bottom of the 96-acre reservoir had gotten into New York City’s drinking water causing water in some areas of the City to appear dirty. The solution was to clean the sludge from the reservoir.

Marcus’s target was Henry Fried, the owner of S.T. Grand Co., a major contractor and probably the only local contractor capable of cleaning a reservoir as large as Jerome Park.  Marcus, under Itkin’s guidance, extorted a $40,000 kickback from Henry Fried, which was never fully paid due to Marcus’s ineptness and Fried’s superior sophistication in such matters.

Marcus and Itkin in 1967 developed a more involved kickback scheme involving Consolidated Edison. The utility wanted to add additional power lines to towers built on the City’s right-of-way for the aqueduct that carried water from upstate reservoirs to the City. Consolidated Edison faced an urgent need to bring additional upstate electric power to New York City to prevent another City-wide blackout as had happened in November 1966. Consolidated Edison needed a permit from Marcus’s Department of Water Supply, Gas and Electricity.

Marcus and Itkin’s plan was to squeeze Consolidated Edison by delaying the permit until Consolidated Edison agreed to award major construction contracts to S. T. Grand Co., the owner of which was Henry Fried, the same person who bribed Marcus for the Jerome Park Reservoir job.  Henry Fried would then kickback a percentage of the Consolidated Edison revenue to Marcus and Itkin.

Marcus and Itkin’s plan went nowhere until Carmine DeSapio joined the conspiracy and advised Marcus and Itkin how to properly manage the extortion conspiracy. DeSapio, sophisticated in such matters, advised Marcus and Itkin to disengage from the Mafia and union conspirators with whom they were working and permit him, DeSapio, a seasoned political operator, to handle the kickback negotiations with Consolidated Edison. They did, but the conspiracy fell apart short of success when Itkin and Marcus were outed by the F.B.I. as a result of another of their illegal deals.

Fried and DeSapio were convicted after a trial in federal court in Manhattan.  Both received jail sentences. Marcus pleaded guilty and served eleven months in prison. Itkin, who became a cooperating witness, succeeded in entering the federal witness protection program. Consolidated Edison got its permit, but the Lindsay Administration, now alerted to the value of the aqueduct permit, raised the franchise fee considerably, so much so, that it would have been cheaper for Consolidated Edison’s customers if Consolidated Edison had paid Marcus the bribe.

Boss Tweed: 1870-1871

Of the many books about Tweed, Kenneth D. Ackerman’s recent book, Boss Tweed, The Rise and Fall of the Corrupt Pol who Conceived the Soul of Modern New York (Carroll & Graff)(2005), provides a highly readable and gripping narrative.

Unlike James Marcus, William M. Tweed successfully served as a municipal official with major accomplishments. He enjoyed unparalleled popularity as an elected official and political boss, became rich by trading on his public office in accordance with the mores of the day, and did not need an Itkin to show him how.

Between 1868 and 1870 Boss Tweed was at the height of his power. He had engineered the election of Tammany faithful Joseph Hoffman as governor of New York State; the election of A. Oakey Hall as Mayor of New York City; and the election of enough members of the New York State Assembly and Senate to constitute a majority. Tweed then bribed the state legislature into enacting a new charter for the City of New York which restored to the City power over the City’s finances and other activities. Tweed’s popularity reached a crescendo as the public, including The New York Times, praised Tweed for ending State control of the City’s government. The new charter, however, placed near total control of City government in four officials known later as the Tweed Ring: Boss Tweed as commissioner of public works, A. Oakey Hall as the elected mayor, Richard Connolly as the appointed comptroller, and Peter B. Sweeny as commissioner of parks.

In April 1870, also at Tweed’s bidding, the State Legislature abolished the New York County Board of Supervisors which had been responsible for building a new county courthouse on Chambers Street. The legislature created a new Board of Audit to replace the Board of Supervisors. The new Board of Audit consisted of three people: A. Oakey Hall as mayor, Richard Connolly as appointed comptroller, and Boss Tweed as president of the old Board of Supervisors. The old Board of Supervisors had not paid many of the invoices for the work on the new county courthouse, invoices which totaled in the millions. These unpaid invoices were a huge opportunity for graft for the new Board of Audit. The Tweed Ring’s scheme to profit was simple: pad the contractors’ invoices by 50 percent or more. When the City paid the padded invoices the contractors kicked back the money to the Ring. The county courthouse, originally budgeted at $250,000, ultimately cost the City more than $6 million in padded invoices.

In 1871, when Tweed was still enjoying his celebrity as a result of the new charter, three important adversaries appeared. The New York Times started editorially attacking the Tweed Ring as corrupt; Harper’s Weekly began printing cartoons drawn by Thomas Nast attacking Tweed; and Tweed’s Democratic Party adversary Samuel J. Tilden began a campaign against Tweed. Harper’s and the Times attacked Tweed openly, while Tilden waited for his moment. The attacks continued through the first six months of 1871, but lacked impact because neither the Times nor Harpers had facts to support their attacks. No one had proof of the kickbacks.

A major crack in the Tweed Ring’s defenses occurred when a disgruntled Tammany politician, unhappy with his share of the spoils and carrying a grudge against Tweed, delivered to The New York Times a package of secretly obtained handwritten copies of the padded payment records from the comptroller’s office. On July 22, 1871, the Times began publishing the amounts paid and to whom they were paid. The Times headline read: “The Secret Accounts: Proofs of Undoubted Frauds Brought to Light.” The astonishingly padded payments paid by the Board of Audit created a pubic sensation. The amount paid bore no relation to the work performed.

The Tweed Ring members panicked after the Times published “The Secret Accounts” and the reformers became encouraged to act. The reformers went to court seeking to halt further payments and force a review of past payments. Judge George G. Barnard, a Tammany politician, found himself cornered and signed a court order on September 6, 1871 halting all payments by the City. Under the order the City could not even pay salaries to City workers, who were soon protesting and demanding payment of their salaries.

A burglary greatly heightened the drama. The New York Times possessed handwritten copies of the padded payment records, but the actual records remained locked in Comptroller Connelly’s office in the new court house. Sometime during the weekend of September 9-10, 1871, three burglars broke into the comptroller’s office in the new courthouse and stole the account records from 1869 -70, and nothing else! The burglars carried the paper records to the janitor’s apartment in the courthouse and burned them. Two weeks later the three burglars were identified and caught, but they never disclosed who they were working for when they stole the crucial records.

The public was now fully aroused, but no one had yet shown that any of the money from the padded payments had actually flowed to Tweed or a member of the Ring. With the pressure for answers building steadily Comptroller Connolly cracked.

Known as Slippery Dick, Comptroller Connolly, in order to save himself, sided secretly with the reformers. Connolly met at night with Samuel J. Tilden. Tilden, an ambitious upper-class lawyer and leader of the wealthy, professional “Swallowtail” wing of the Democratic Party, was a personal and political enemy of Tweed. Tilden had been waiting for an opportunity to overthrow Tweed.  With Connelly now available, Tilden conceived of a complex strategy that would injure Tweed and put Tilden in control of the City.

Tilden demanded that Connolly appoint Tilden’s former law partner and loyal reformer, Andrew Haswell Green, as deputy comptroller. Tilden did not want Connolly to resign because under the charter he could not be removed. With Comptroller Connolly a figure head but still in office, authority over the City’s money shifted to Tilden and to the newly appointed Deputy Comptroller Andrew Haswell Green.

Samuel J. Tilden then closed the loop on the padded invoices by recreating Tweed’s banking transactions. Tilden obtained the personal banking records of the Tweed Ring from the Broadway Bank. By analyzing Tweed’s bank deposit slips and checks, Tilden traced the checks paid by the City as published by the New York Times to the contractor’s bank accounts and then to deposits made into the accounts of the Ring members. Tilden gave his brilliantly prepared charts to The New York Times which, on October 26, 1871, began publishing the damaging proof that Tweed and the Tweed Ring had been paid off. Of the $5,710,913 paid by the City to the various contractors, Tilden showed that $932,858 ultimately ended up in Tweed’s bank account.

With Tilden’s evidence that the Tweed Ring had benefitted from the padded invoices, the Ring collapsed. Tweed was arrested on October 27, 1871 the day after the Times began publishing Tilden’s charts. In December 1873 a jury convicted Tweed of 204 counts of criminal misdemeanor. Tweed was sentenced to 12 year in prison. In December 1875 Tweed escaped to Cuba and then Spain. Tweed, recognizable as a result of Nast’s drawings, was recaptured and brought back to New York City and jailed.  Tweed, in hopes of release, testified openly for eleven days in 1877 before a committee of the New York City board of aldermen, but no release came. Tweed died in jail on April 12, 1878 at age 55.

Tweed was the only member of the Ring to go to prison.  A. Oakey Hall was tried three times; two hung juries and an acquittal after the third trial. Parks Commissioner Sweeny fled to Paris. He was not indicted and returned to New York City in 1886. Comptroller Connolly fled New York City and lived abroad until he died in 1899.

Harry Gross and William O’Dwyer: 1940 – 1951

Crime reporters Norton Mockridge and Robert H. Prall, in The Big Fix: graft and corruption in the world’s largest city (Henry Holt & Company)(1954), paint a full picture of the Harry Gross gambling empire and the clash between Mayor William O’Dwyer and his successor as Brooklyn District Attorney, Miles McDonald, over McDonald’s investigation into gambling. In the end hundreds of police officers were convicted, retired, demoted or resigned, and Mayor William O’Dwyer was forced to resign.

William O’Dwyer, Brooklyn District Attorney from 1939 to 1945, was born in Ireland in 1890, immigrated to the United States in 1910, worked as a laborer, and then as a New York City police officer while studying law at night at Fordham Law School. O’Dwyer was elected Brooklyn District Attorney in 1939. As District Attorney he made his reputation prosecuting Murder, Inc., a vicious shakedown, protection, and murder-for-hire organization that terrorized Brooklyn shop owners.

District Attorney O’Dwyer’s most prominent witness against Murder Inc. was Abe “Kid Twist” Reles, a Murder Inc. gangster who turned state’s witness. Reles was a marked man. District Attorney O’Dwyer placed Reles under custody at the Half Moon Hotel in Coney Island protected around the clock by a guard of six cops. On the morning of November 12, 1941, with five of the six cops present at their stations, Reles went out of the sixth floor window and fell to his death, taking with him any hope of convicting Murder Inc. members.

How Reles went through the window – jumped, thrown or slipped – was never settled. O’Dwyer claimed that Reles accidentally slipped to his death trying to escape, but Reles was in more danger free than protected, and had never tried to escape before. District Attorney O’Dwyer failed to investigate Reles’s death. This failure fueled O’Dwyer’s reputation as a reluctant prosecutor of major crime figures such as Joe Adonis, whose indictment O’Dwyer allowed to be dismissed, and Albert Anastasia a vicious criminal who had been one of the founders of Murder Inc.  Reles’s death meant that O’Dwyer never had to go to trial against Anastasia.

In 1945 William O’Dwyer was elected Mayor of the City of New York and Miles McDonald was elected Brooklyn’s District Attorney. McDonald was born in 1905, grew up in Brooklyn and graduated from Holy Cross. After college he worked at a law firm while attending night classes at Fordham Law School. He became an assistant D.A. in 1939 under Brooklyn District Attorney O’Dwyer. His work brought him to the attention of Brooklyn’s political leaders and in 1945 he was elected District Attorney when O’Dwyer became mayor.

Gambling was a huge concern in the 1940s. Bookies operated openly out of storefronts, drug stores, delicatessens, and street corners. Individual bookies were organized into syndicates and connected by telephones to central offices from which the boss managed the enterprise. These illegal activities occurred more or less in the open and were the source of systematic payoffs to police officers, including payoffs to officers of the highest ranks.

The kingpin of Brooklyn’s gambling empire was Harry Gross. Gross was born in 1916, quit school in the seventh grade and worked in small stores where he noticed how bets were made and learned how to make book. By 1940 he had opened his own bookie joints. Between 1942 and 1949 Gross had bookies operating out of 30 horse rooms and was the part owner of several night clubs and restaurants. He was paying $50,000 a month to police for protection, and regularly gave presents to as many as 200 police officers: suits, ties, hats, television sets and furs. Gross’s gambling empire at its height annually grossed $20 million, of which $1 million was paid to police officers for protection.

O’Dwyer, as Brooklyn District Attorney, had ignored gambling and the police corruption that protected it. The new District Attorney Miles McDonald made gambling a major target, but quickly found that the police would not cooperate. Mayor O’Dwyer was in control of the police department. When McDonald asked the police to check a bookie operation at a particular location, the police would investigate and report back that they could not find any gambling.

McDonald found a way to outflank the police department. He got the department to assign 29 rookie police officers who had just graduated from the Police Academy as investigators for the Brooklyn District Attorney’s office. McDonald wanted cops assigned to the District Attorney’s office who had not already been corrupted by the payoff system. With his rookies McDonald made significant arrests of local bookies.

McDonald’s success brought him into conflict with Mayor O’Dwyer. In the spring of 1950 McDonald raided a bookie establishment in Bay Ridge, Brooklyn. The bookies were indignant; they declared that they made regular payments to the police and were entitled to operate without being arrested. The bookies were convicted, but refused to identify the police officers they had paid. Captain John G. Flynn, the commander of the precinct in which the Bay Ridge bookies operated, was called to the grand jury and denied that he had received information that the bookie operation existed. Then, on July 16, 1950 Captain Flynn committed suicide. Mayor O’Dwyer seized upon the suicide to imply that Flynn had been hounded into taking his own life by McDonald’s gambling investigation. Mayor O’Dwyer attended Captain Flynn’s funeral and ordered 6,000 uniformed police officers to stand in formation for two hours at the funeral. In the press after the funeral O’Dwyer was quoted calling McDonald’s gambling investigations a “witch hunt.”

But Mayor O’Dwyer overplayed his hand. McDonald repeatedly made headlines on gambling and police corruption, and it was widely known that in 1941 O’Dwyer had had a meeting with Frank Costello, the crime boss. O’Dwyer, in addition, had been unable to refute fully an accusation that in 1949 while mayor he had taken $10,000 in cash from the Uniformed Firemen’s Association.

In the summer of 1950 Edward J. Flynn, the powerful Democratic Party boss of the Bronx, moved to oust Mayor O’Dwyer. Flynn knew that McDonald’s gambling investigations would continue to reveal corruption in Mayor O’Dwyer’s police department and that this would finish O’Dwyer as a political leader, and Flynn feared that O’Dwyer’s presence would hurt Senator Herbert Lehman who was up for reelection in 1950.

In July 1950 Flynn, who was also a national Democratic Committeeman, met with President Harry S. Truman. At the meeting President Truman agreed that if O’Dwyer resigned as mayor Truman would appoint O’Dwyer as ambassador to Mexico.  Flynn met with O’Dwyer in a late night meeting at Gracie Mansion. At the meeting O’Dwyer agreed to resign and accept the ambassadorship.

On August 14, 1950 the White House announced that New York City Mayor William O’Dwyer would resign as mayor and become ambassador to Mexico. The public was stunned. O’Dwyer explained to the surprised press that “my country’s needs are first and foremost in my mind,” and that “there was much critical work to be done,” as ambassador to Mexico. O’Dwyer left office two weeks later on August 31, 1950 after serving only eight months into his second term. Vincent R. Impellitteri, City Council President, became Acting Mayor and was elected Mayor in November 1950.

On August 15, 1950, the day after the announcement of Mayor O’Dwyer’s resignation, the Brooklyn grand jury investigating gambling filed a report. The grand jury demanded that O’Dwyer stop interfering with the gambling investigation, declared that O’Dwyer’s witch hunt charge was unfounded, and proclaimed McDonald’s investigation honest.

On September 15, 1950, two weeks after Mayor O’Dwyer left office, District Attorney McDonald’s efforts finally paid off; McDonald arrested Harry Gross, head of Brooklyn’s gambling syndicate. McDonald finally had a witness who could name top police officers on the take.

Gross testified in the grand jury which then indicted high level police officers. The trial of the first eighteen police officers indicted on Gross’s testimony began on September 10, 1951. At the conclusion of the second day of jury selection Gross, guarded by police, asked to visit his wife. During the home visit Gross slipped away and disappeared. Gross drove to New Jersey where, Mockridge and Prall report, Gross met with Meyer Lansky, the organized crime figure, and Willie Moretti, a New Jersey gangster. They gave Gross $60,000.  Gross then drove to Atlantic City where he was recognized, captured and returned to Brooklyn.

When Gross was taken back to the courtroom on September 18, 1951, he refused to testify. Gross shouted “I won’t answer any questions,” and “I ain’t coming back.” Judge Samuel Leibowitz held Gross in contempt of court, but, without Gross’s testimony, Judge Leibowitz was forced to dismiss the indictments against the eighteen police officers. Judge Leibowitz, famed as the defender of the Scottsboro Boys, cited Gross for contempt 60 times and sentenced him to twelve years in prison.

Gross never testified in a criminal trial, but did later testify in police department civil disciplinary trials. As a result of Gross’s testimony and McDonald’s investigation some fifty-two police officers were dismissed from the force and more than four hundred retired or resigned. Gross was released from prison in 1958 and moved to California where he was jailed on a manslaughter charge, released and then arrested again. He committed suicide in 1986.

Ambassador O’Dwyer testified before the Senate Crime Investigating Committee in March 1951, where he made a very poor witness, and also before grand juries in Manhattan and Brooklyn.  On May 1, 1951, the Senate Crime Investigating Committee, in a 195-page report, charged O’Dwyer with tolerating gambling, rackets, murders and police corruption. Manhattan District Attorney Frank Hogan asked O’Dwyer to return from Mexico and testify before a Manhattan grand jury. O’Dwyer refused and never testified.  O’Dwyer resigned as ambassador to Mexico in December 1952. He continued to live in Mexico until 1960, and died in New York City in 1964.

Miles McDonald was reelected Brooklyn District Attorney and in 1952 was elected a State Supreme Justice. In 1971, McDonald left the bench and became counsel to the law firm of Shea & Gould. He died in 1991 in Florida.

Ross Sandler is a Professor at New York Law School, and Director of the Center for New York City Law.