Part 1

Kefauver Committee
Interim Report #3
May 1, 1951

U.S. Senate Special Committee
to Investigate Organized Crime
in Interstate Commerce

1. Organized criminal gangs operating in interstate commerce are firmly entrenched in our large cities in the operation of many different gambling enterprises such as bookmaking, policy, slot machines, as well as in other rackets such as the sale and distribution of narcotics and commercialized prostitution. They are the survivors of the murderous underworld wars of the prohibition era. After the repeal of the prohibition laws, these groups and syndicates shifted their major criminal activities to gambling. However, many of the crime syndicates continued to take an interest in other rackets such as narcotics, prostitution, labor and business racketeering, black marketing, etc.

2. Criminal syndicates in this country make tremendous profits and are due primarily to the ability of such gangs and syndicates to secure monopolies in the illegal operations in which they are engaged. These monopolies are secured by persuasion, intimidation, violence, and murder. The committee found in some cities that law-enforcement officials aided and protected gangsters and racketeers to maintain their monopolistic position in particular rackets. Mobsters who attempted to compete with these entrenched criminal groups found that they and their followers were being subjected to arrest and prosecution while protected gang operations were left untouched.

3. Crime is on a syndicated basis to a substantial extent in many cities. The two major crime syndicates in this country are the Accardo-Guzik-Fischetti syndicate, whose headquarters are Chicago; and the Costello-Adonis-Lansky syndicate based on New York. Evidence of the operations of the Accardo-Guzik-Fischetti syndicate was found by the committee in such places as Chicago, Kansas City, Dallas, Miami, Las Vegas, Nev., and the west coast. Evidence of the Costello-Adonis-Lansky operations was found in New York City, Saratoga, Bergen County, N. J., New Orleans, Miami, Las Vegas, the west coast, and Havana, Cuba. These syndicates, as well as other criminal gangs throughout the country, enter profitable relation-ships with each other. There is also a close personal, financial, and social relationship between top-level mobsters in different areas of the country.

4. There is a sinister criminal organization known as the Mafia operating throughout the country with ties in other nations, in the opinion of the committee. The Mafia is the direct descendant of a criminal organization of the same name originating in the island of Sicily. In this country, the Mafia has also been known as the Black Hand and the Unione Siciliano. The membership of the Mafia today is not confined to persons of Sicilian origin. The Mafia is a loose-knit organization specializing in the sale and distribution of narcotics, the conduct of various gambling enterprises, prostitution, and other rackets based on extortion and violence. The Mafia is the binder which ties together the two major criminal syndicates as well as numerous other criminal groups throughout the country. The power of the Mafia is based on a ruthless enforcement of its edicts and its own law of vengeance, to which have been creditably attributed literally hundreds of murders throughout the country.

5. Despite known arrest records and well-documented criminal reputations, the leading hoodlums in the country remain, for the most part, immune from prosecution and punishment, although underlings of their gangs may, on occasion, be prosecuted and punished. This quasi-immunity of top-level mobsters can be ascribed to what is popularly known as the "fix." The fix is not always the direct payment of money to law-enforcement officials, although the committee has run across considerable evidence of such bribery. The fix may also come about through the acquisition of political power by contributions to political organizations or otherwise, by creating economic ties with apparently respectable and reputable businessmen and lawyers, and by buying public good will through charitable contributions and press relations.

6. Gambling profits are the principal support of big-time racketeering and gangsterism. These profits provide the financial resources whereby ordinary criminals are converted into big-time racketeers, political bosses, pseudo businessmen, and. alleged philanthropists. Thus, the $2 horse bettor and the 5-cent numbers player are not only suckers because they are gambling against hopeless odds, but they also provide the moneys which enable underworld characters to undermine our institutions. The legalization of gambling would not terminate the widespread predatory activities of criminal gangs and syndicates. The history of legalized gambling in Nevada and in other parts of the country gives no assurance that mobsters and racketeers can be converted into responsible businessmen through the simple process of obtaining State and local licenses for their gambling enterprises. Gambling, moreover, historically has been associated with cheating and corruption. The committee has not seen any workable proposal for controlled gambling which would eliminate the gangsters or the corruption.

7. Rapid transmission of racing information and gambling information about other sporting events is indispensable to big-time book-making operations. This information is presently being provided by a monopoly operated by the Continental Press Service. The Continental Press Service, at critical times and in crucial places where monopoly of bookmaking is at stake, yields to the domination and control of the Accardo-Guzik-Fischetti crime syndicate, to which it is beholden for its own monopoly in the wire-service field. The wire service is so vital to large bookmakers that they are compelled to pay what the traffic will bear to the Continental Press Service. This makes it possible for the Accardo-Guzik-Fischetti crime syndicate to participate in the profits of bookmaking-operations throughout the country.

8. The backbone of the wire service which provides gambling information to bookmakers is the leased wires of the Western Union Telegraph Co. This company, in many parts of the country has not been fully cooperative with law-enforcement officials who have been trying to suppress organized criminal rackets which make use of telegraph facilities. By permitting its facilities to be used by book-makers, Western Union has given aid and comfort to those engaged in violation of gambling laws. In some cases, Western Union officials and employees actually participated in bookmaking conspiracies by accepting bets and transmitting them to bookmakers. It should be noted that during the latter months of the committee's investigation, Western Union has taken steps to prevent this practice and has been more cooperative with the committee. In many areas, of which New York is a notable example, the telephone companies have cooperated fully with law-enforcement officials. However, in still other areas, telephone companies have been much less cooperative. Local legislation is apparently necessary in many States to require telephone company officials to refuse facilities and remove existing facilities of suspected bookmakers and to call to the attention of local law-enforcement officials the use of telephone facilities by bookmakers.

9. Crime is largely a local problem. It must be attacked primarily at the local level, with supplementary aid, where appropriate, from State and Federal authorities. The conduct of various forms of gambling enterprises, houses of prostitution, the distribution of narcotics, the use of intimidation, violence, and murder to achieve gang objectives are all violations of State laws. The public must insist upon local and State law-enforcement agencies meeting this challenge, and must not be deceived by the aura of romanticism and respectability, deliberately cultivated by the communities' top mobsters.

10. The Federal Government has the basic responsibility of helping the States and local governments in eliminating the interstate activities and interstate aspects of organized crime, and in facilitating exchange of information with appropriate safeguards between the Federal Government and local and State law-enforcement agencies as well as between law-enforcement agencies in the various States. The task of dealing with organized crime is so great that the public must insist upon the fullest measure of cooperation between law-enforcement agencies at all levels of Government without buck-passing. The committee feels that it has fully demonstrated the need for such cooperation. The time for action has arrived.

11. Wide-open gambling operations and racketeering conditions are supported by out-and-out corruption in many places. The wide-open conditions which were found in these localities can easily be cleaned up by vigorous law enforcement. This has been demonstrated in the past in many different communities and has received added demonstration during the life of our committee. The outstanding example is Saratoga, N. Y., which ran wide-open through the racing season of 1949 but was closed down tight in 1950.

12. Venal public officials have had the effrontery to testify before the committee that they were elected on "liberal" platforms calling for wide-open towns. The committee believes that these officials were put in office by gamblers and with gamblers' money, and that in the few cases where the public was convinced that gambling is good business, this myth was deliberately propagated by the paid publicists of the gambling interests. In many wide-open communities so-called political leaders and law-enforcement officials have staged efforts of civic-minded citizens to combat such wide-open conditions and the crime and corruption that they entailed.

13. The Treasury of the United States has been defrauded of huge sums of money in tax revenues by racketeers and gangsters engaged in organized criminal activities. Huge sums in cash handled by racketeers and gangsters are not reflected in their income tax returns. Income tax returns filed with the Federal Government have been inadequate since, as a rule, they contained no listing of the sources of income nor any itemization of the expenses. Gangsters and racketeers, moreover, do not keep books and records from which it might be possible to check tax returns.

14. Mobsters and racketeers have been assisted by some tax accountants and tax lawyers in defrauding the Government. These accountants and lawyers have prepared and defended income tax returns which they knew to be inadequate. At the very least, those who are guilty of such practices could be convicted of a misdemeanor and sent to jail for a year for every year in which they have failed to comply with the law. The Bureau of Internal Revenue states that it has, to the best of its ability, considering its limited manpower, been investigating these returns. It states further that when it pursues the case of one of these individuals, it prefers to set up against him a case of criminal tax evasion which is a felony, rather than the lesser offense of failing to keep proper books and records, which is a misdemeanor. Despite this, the committee believes that the Bureau of Internal Revenue could, and should, make more frequent use of the sanctions provided for failure to keep proper books and records than it has heretofore. In any event, the Bureau of Internal Revenue should insist on adequate returns and proper books. While the great majority of agents of the Bureau of Internal Revenue are honest and efficient, there have been relatively few instances in different parts of the country of lack of vigorous and effective action to collect income taxes from gangsters and racketeers.

15. A major question of legal ethics has arisen in that there are a number of lawyers in different parts of the country whose relations to organized criminal gangs and individual mobsters pass the line of reasonable representation. Such lawyers become true "mouthpieces" for the mob. In individual cases, they have become integral parts of the criminal conspiracy of their clients.

16. Evidence of the infiltration by organized criminals into legitimate business has been found, particularly in connection with the sale and distribution of liquor, real-estate operations, night clubs, hotels, automobile agencies, restaurants, taverns, cigarette-vending companies, juke-box concerns, laundries, the manufacture of clothing, and the transmission of racing and sport news. In some areas of legitimate activity, the committee has found evidence of the use by gangsters of the same methods of intimidation and violence as are used to secure monopolies in criminal enterprise. Gangster infiltration into business also aggravates the possibility of black markets during a period of national emergency such as we are now experiencing. Racketeers also have used labor unions as fronts to enable them to exploit legitimate businessmen.

17. In some instances legitimate businessmen have aided the interests of the underworld by awarding lucrative contracts to gangsters and mobsters in return for help in handling employees, defeating attempts at organization, and in breaking strikes. And the committee has had testimony showing that unions are used in the aid of racketeers and gangsters, particularly on the New York water front.

The committee has received many recommendations for controlling organized crime and improving the enforcement of the criminal law and the administration of criminal justice. Those recommendations have been received from a variety of sources: from public officials, experts on law enforcement, lawyers, accountants, and interested laymen. They all have been given careful attention.

The committee is convinced that there is no single panacea for the widespread social, economic, and political evils that have been uncovered in the many cities in which it has made investigations and held hearings. The committee feels, nevertheless, that while organized crime cannot be completely eliminated from our society, this is no reason for defeatism, for vigorous law enforcement can control organized crime to the point where it is no longer a menace to our institutions.

Any program for controlling organized crime must take into account the fundamental nature of our governmental system. The enforcement of the criminal law is primarily a State and local responsibility. While channels of interstate communication and interstate commerce may be used by organized criminal gangs and syndicates, their activities are in large measure violations of local criminal statutes. When criminal gangs and syndicates engage in bookmaking operations, operate gambling casinos or slot machines, engage in policy operations, peddle narcotics, operate houses of prostitution, use intimidation or violence to secure monopoly in any area of commercial activity, commit assaults and murder to eliminate competition, they are guilty of violating State laws and it is upon State and local prosecuting agencies, police and courts, that the major responsibility for the detection, apprehension, prosecution, and punishment of offenders rests. The crisis of law enforcement which has been uncovered by the committee is basically a State and a local crisis. The Federal Government does not have responsibility for the widespread gambling and vice conditions it has found in such places as the Miami area; the parishes outside of New Orleans; the Covington-Newport areas of Kentucky; Bergen County, N. J:; several counties in California, Illinois, and Saratoga, N.Y. The responsibility is basically one that must be shared by local and State agencies of law enforcement, as well as by the citizens of the various communities who tolerated such conditions. Nor can a remedy for these conditions be found merely by shrugging off local and State responsibility and declaring that only the Federal Government can do the job of cleaning up wide-open conditions. As J. Edgar Hoover pointed out in his statement to this committee, "The Federal Government can never be a satisfactory substitute for local self-government in the enforcement field." The Federal Government, moreover, can do relatively little to assist local citizens and officials in the removal of local law-enforcement officials who have accepted money from gangsters and racketeers or who have actually participated in criminal operations. The Federal Government can do little about the influence which gangsters and racketeering elements exert upon local political organizations. The Federal Government can do even less about the inefficiency and ineffectiveness of local law-enforcement agencies. Nor can the Federal Government correct the diffusion of responsibility and the "buck passing" which take place between independent law-enforcement agencies operating in the same county or, in the same metropolitan area. Finally, the Federal Government can do nothing to correct the misguided leniency of State and local judges who impose small fines or short jail sentences in racketeering situations. While the Federal police and prosecuting agencies cannot be substituted for State and local law enforcement in dealing with organized crime, the Federal Government still has a major and vital responsibility in this field. The Federal Government must provide leadership and guidance in the struggle against organized crime, for the criminal gangs and syndicates have Nation-wide ramifications. It should establish additional techniques to provide maximum co-ordination in law-enforcement agencies to insure complete efficiency. It must help work out techniques for securing better interstate cooperation in dealing with crime. In addition, the Federal Government is under certain positive obligations to use powers presently available to it against organized criminal gangs. It is the responsibility of the Federal Government to see that the channels of interstate commerce, transportation, communication, and the United States mails are not used to facilitate the operations of organized criminal gangs and syndicates. It is up to the Federal Government to see that gangsters and racketeers are stripped of as much of their ill-gotten gains as possible through vigorous enforcement of the income-tax laws. Only the Federal Government can take affirmative action to rid our shores of alien criminals who have become members of predatory criminal groups. Finally, the Federal Government has the responsibility for revision of existing statutes where legal technicalities are permitting the guilty to escape just punishment. It is with the aforementioned goals in mind that the following recommendations are formulated:

I. The Congress through a continuation of this committee should for a further limited period continue to check on organized crime in inter-state commerce. The basic function of the committee should be to scrutinize the efforts made by the Federal agencies to suppress inter-state criminal operations, and particularly the racket squads described in later recommendations. It will also follow up the legislative recommendations made in this report.

The committee should receive periodic reports from the racket squads recommended to be established in the Justice and Treasury Departments. It should continuously scrutinize the effectiveness of these squads. It should also take steps to facilitate greater cooperation between Federal and State law enforcement agencies. The committee should use its subpena power to hold hearings from time to time concerning crime situations in which there is a great public interest, or which should be called to the attention of the public.

However, it should be clearly understood at the outset that the continued committee should have as its prime function the task of pursuing its legislative inquiries and program and of stimulating law enforcement officials to direct action against criminals rather than the exposition of situations which can only give cumulative support to the now overwhelming evidence that there is a serious organized crime problem which must be met.

II. A racket squad should be organized in the Justice Department.

The function of this racket squad, which might appropriately be placed in the Criminal Division of the Department, must be to clean the country of racketeers, gangsters, and organized criminal gangs by utilizing any lawful means available, including:

(a) Prosecution for Federal crimes;

(b) On-the-spot racket grand jury investigations and inquiries; these, as suggested by the Attorney General, should be held in each judicial district at least once each year;

(c) Gathering and correlating information about gangsters and criminals from all sources, both Federal, State and local;

(d) Stimulating local prosecutions by turning information concerning local criminal situations over to State and local authorities for action. Of course, in such cases proper caution must be exercised to avoid turning information over to corrupt officials or to officials who would use it for political advantages;

(e) Turning information on criminals and gang activities over to specific Federal agencies such as Immigration and Naturalization, Customs and the tax-collecting authorities, for action thereon;

(f) Reporting to this Senate committee and its successor as well as other appropriate committees.

In this connection, it should be observed that the Department of Justice has had such a squad functioning on a limited scale since 1947, under the able direction of Special Assistant Attorney General Max H. Goldschein. The committee urgently recommends that the size of this squad be increased.

III. Appropriate legislation should be enacted to set up an independent Federal Crime Commission in the executive branch of the Government.

This Commission should be appointed by the President with the advice and consent of the Senate. It should be composed of three members, all of whom are prominent citizens and not otherwise members or employees of the Federal Government. It should be organized promptly and be ready to function on September 1, 1951, the date set for the expiration of authority of this committee.

The Commission should hear witnesses and hold hearings from time to time, but should not have the power of subpena. In such cases as the Commission may find it necessary to subpena witnesses, or to hear them under oath, it should apply either to the Senate Committee on Interstate and Foreign Commerce, which by virtue of Senate Resolution 129 succeeds to the functions of this committee, or in the alternative, it may apply to any other appropriate committee of the Congress which has jurisdiction over the subject matter when it deems it desirable to have hearings. The hearings, in such instances, will be held by the appropriate committees.

The functions of the Federal Crime Commission should be--

1. The continuing study and surveillance of operations of interstate criminal organizations throughout the country.

2. Reports on such criminal activities at periodic intervals to the Interstate and Foreign Commerce Committee of the United States Senate.

3. To make recommendations for hearings to the Interstate and Foreign Commerce Committee of the United States Senate or any other appropriate committee in cases in which the Inter-state and Foreign Commerce Committee may not be the most appropriate, for more intensive investigation requiring the testimony of witnesses under oath.

4. The maintenance of liaison between Federal investigative and law-enforcement agencies and crime commissions at the State and local levels with the dissemination to the latter of information respecting criminal operations as may be required in the public interest.

5. Suggestion and encouragement of legislation designed to expedite, facilitate, and encourage better and more intensive law enforcement at all levels of government.

6. The initiation and development of appropriate social study relating to crime, its punishment, and law enforcement.

7. The maintenance of files and records as a national clearing - house of information respecting criminal activities in interstate commerce to be made available, to properly authorized individuals and groups, subject to suitable security measures, but not to conflict with the interests of any presently established Federal, State, or local law enforcement agency.

Recommendation III is concurred in by all members of the committee except Senator Alexander Wiley who, while appreciating some of the advantages which might be achieved under a Federal Crime Commission, believes that the possible abuses of such a new agency require his opposition to the proposal. It is Senator Wiley's contention that the Commission could conceivably result in (a) the basis for a national-type police force which is contrary to America's tradition and which has been vigorously opposed by all outstanding Federal law enforcement agencies; (b) unnecessary harassment and interference with Federal investigative agencies; (c) an unnecessary and costly superstructure imposed upon the present operating agencies; (d) dissipation of the function on the part of the legislative branch. Senator Wiley believes that voluntary cooperation among Federal investigation agencies can achieve most of the objectives which the committee majority believes can only be obtained by a Federal Crime Commission. This is the only point on which Senator Wiley dissents from his agreement with this unanimous report. The committee notes at this point that there has been no previous dissent by any member on any major point of policy.

IV. The establishment of the Special Fraud Squad by the Bureau of Internal Revenue of the Treasury Department is one of the most effective and useful steps taken to collect taxes from the criminal element. The committee applaud the Department for this act and recommends that it be supported with necessary appropriation and that it work in close cooperation with the special racket squad if set up by the Department of Justice as is recommended by the commit-tee. The Bureau of Internal Revenue should maintain on a current and continuing basis a list of known gangsters, racketeers, gambler, and criminals whose income-tax returns should receive special attention by a squad of trained experts. Procedures leading to Prosecution should be streamlined and speeded up.

In our second interim report, we noted that "The Federal Government is being defrauded of many millions of dollars - perhaps running into hundreds of millions - of tax revenues by the mobsters engaged in organized criminal activities" (p. 31); and also that "It is apparent that many, if not all, of the returns submitted for the gamblers and gangsters are fraudulent and that the Government is losing huge sums in tax revenues from the illegal ventures run by them.” (p. 32).

Under these circumstances, it becomes absolutely vital for the Federal Government to enact new legislation and to modify and strengthen existing administrative procedures and regulations so that gangsters, racketeers, gamblers, and other persons engaged in illegitimate enterprises shall be compelled to turn over as much of their ill-gotten gains as possible to the Government in the form of income taxes. Money is the key to power in the underworld. It buys protection for illegitimate enterprises and enables underworld characters to buy up legitimate business and to claim respectability by contributions to worthy causes. The large financial resources at the disposal of criminal gangs and syndicates make such gangs and syndicates a serious menace to our institutions. The Federal Government must make every effort to reach these resources and curb the power of organized crime. Accordingly, we recommend that the Bureau of Internal Revenue should set up and maintain a list of known gamblers, gangsters, racketeers, and other criminals whose income-tax returns must be given special attention. A similar list is already in existence and was submitted to this committee by the Department of Justice. This list should be supplemented by names furnished by all Federal law-enforcement agencies, by the racket squads of the Justice and Treasury Departments, and by names solicited from the leading State and local law enforcement agencies throughout the country. The committee notes with strong approval the notice of the Treasury Department of April 30, that the tax returns of 2,500 leading gangsters are being given special attention by the Bureau of Internal Revenue.

The mere existence of a known criminal list in the Bureau of Internal Revenue is not enough. Special attention must be given to the tax returns submitted by the persons on this list. Thus, their returns cannot be left for examination by routine procedures. The Bureau of Internal Revenue has organized a special racket squad of picked men known as the Special Frauds section whose function would be to subject the tax returns of known criminals to close scrutiny and investigation. These men will be familiar with the accounting methods, techniques, and procedures of the Bureau, and they should also have familiarity with the modus operandi of gangsters, racketeers, gamblers, and other offenders. Since income-tax men are not expected to know the habits and methods of criminals, training for the Bureau of Internal Revenue squad might be arranged with such Federal agencies as the FBI, the Narcotics Bureau, and other law-enforcement agencies of the Government.

It is obvious to anyone familiar with income-tax prosecutions that the procedures presently employed by the Department of Justice and the Bureau of Internal Revenue are entirely too laborious and time consuming. Many complex steps are necessary before an income-tax prosecution is finally decided upon. The committee urges the Bureau of Internal Revenue to make a study with a view to simplifying its procedures in connection with the processing of prosecutions for income-tax frauds. Swift prosecution and punishment are deterrents to crime in the tax field as much as anywhere else.

V. The Bureau of Internal Revenue should enforce the regulations which require taxpayers to keep adequate books and records of income and expenses, against the gamblers, gangsters, and racketeers who are continually flouting them. Violation should be made a felony.

The committee has been continually hampered in the course of its inquiry into the activities of known criminals and their political and official allies, by the failure of these individuals to keep and maintain books and records of their income and expenses. Though they may handle moneys running into hundreds of thousands of dollars, they have not felt it necessary to keep books and records which explain the nature, source, and amount of the moneys they receive, nor the nature and extent of their disbursements. Income-tax returns in most instances merely give gross figures of income and expenses without explanation of the nature of these steps. A typical attitude of gamblers toward the maintenance of records is found in the testimony of one successful gambler who calmly informed the committee that although he kept no records of his gambling activities during the year, he was able to keep a running balance in his head. At the end of the year, he entered the final balance in his return. It is true that the present regulations of the Bureau of Internal Revenue require tax-payers (except wage earners and farmers) to keep such permanent books of account or records as are sufficient to establish the amount of the gross income and the deductions (Regulation 111, see. 2954-1).

While honest businessmen comply with this regulation, hoodlums, venal officials, some politicians with underworld affiliations, do not. Nevertheless, the Bureau of Internal Revenue has not utilized this regulation to its full potentialities. The committee feels that the obligation to keep adequate books and records of account should bind not only honest businessmen but also those who profit from crime. Willful failure to comply with this obligation should subject the offender to prosecution and punishment. At present, such failure is a misdemeanor. The law should be amended to make it a felony. The regulations should also require that these books and records be kept for a sufficiently long period (e. g., 7 years) and not be destroyed as soon as income-tax returns are submitted.

VI. Gambling casinos should be required to maintain daily records of money won and lost to be filed with the Bureau of Internal Revenue. They also should be required to maintain such additional records as shall be prescribed by the Bureau. Officials of the Bureau of Internal Revenue should have access to the premises of gambling casinos and to their books and records at all times. Where the casino is operating illegally, in addition to the aforementioned obligations, the operators of the casino should be required to keep records of all bets and wagers.

The cash returns from gambling casinos are fantastic in amount. There is also, at the present time, no way in which the tax returns filed with the Bureau of Internal Revenue by the proprietors of these casinos can be adequately checked. The committee feels that one way of placing gambling casinos under control is to require them to keep daily returns to be filed with the Bureau of Internal Revenue and maintain prescribed books and records. These returns and the books and records should be checked frequently by visits from responsible revenue officials. Only through some such means can the Government obtain its proper share of the moneys which pass through the hands of proprietors of gambling casinos. In order to maintain even a closer check upon the operations of. the illegal gambling casinos, the committee recommends that such casinos be compelled to keep a record of all wagering and betting transactions which take place within its walls. They should also be subject to the obligation to maintain daily records for the Bureau of Internal Revenue and the obligation to permit inspection of premises and inspection of books and records at all times.

The committee is well aware that these provisions may well put illegal gambling casinos out of business.

VII. The law and the regulations of the Bureau of Internal Revenue should be amended so that no wagering losses, expenses, or disbursements of any kind, including salaries, rent, protection. money, etc., incurred in or as a result of illegal gambling shall be deductible for income-tax purposes.

Under present income-tax law and regulations, criminals and racketeers in computing their incomes for tax purposes are permitted to deduct from their gross incomes the operating expenses and wagering losses of their illegitimate gambling enterprises.

In the opinion of the committee, this is not only incongruous but highly undesirable.

If organized professional gambling is to be stopped by any Federal enactment, this recommendation is best calculated to do so.

Even under present tax law (title 26, sec. 23h) there is some recognition of this principle. Gambling profits are taxable but gambling losses are not deductible when they exceed the winnings. The present law primarily hits the amateur gambler and the little man. The suggested revision would hit the big professional gambler.

VIII. The transmission of gambling information across State lines by telegraph, telephone, radio, television, or other means of communication or communication facility should be regulated so as to outlaw any service devoted to a substantial extent to providing information used in illegal gambling.

Information is vital to large-scale bookmaking operations. The elimination of wire service to bookmakers is therefore of such importance that a practical law must be devised to effect this end. The need is all he more essential because such wire service to bookmakers is now in the hands of Continental Press Service which enjoys an almost complete monopoly of this activity insofar as it exists on a Nation-wide scale. The committee points out elsewhere in this report that the control over the wire service exercised by the Chicago crime syndicate has made it possible for this crime syndicate and others to organize bookmaking operations throughout the country and to participate in their profits.

The need for such suppressive legislation was pointed out by the Senate Committee on Interstate and legislation Commerce in its excellent and well-considered report on the bill to prohibit the transmission of gambling information (S. 3358, 81st Cong.). This conclusion was also reached by the mayors, State attorneys general, and other State and local law-enforcement officials who attended the Attorney General's conference on organized crime in Washington on February 15, 1950, and who adopted the following resolution:

Be it resolved, That this conference go on record as favoring Federal legislation making interstate use of telephone, telegraph, or radio facilities for dissemination of horse-race results for illegal gambling purposes a Federal crime. Such a law would not be designed to prohibit dissemination of sports information through the generally accepted press associations and newspapers.

The committee is now working on a specific bill for the purpose of accomplishing these ends, and at the same time, minimizing disadvantages which may incidentally accrue to those who are engaged in the wholly lawful dissemination of news. To the extent that they may unavoidably cause incidental inconveniences to such persons engaged in wholly lawful operations, the committee desires to suggest and urge that these disadvantages be accepted as inevitable and necessary in order to accomplish a very important public purpose. It is believed that the specific legislation will hold any such disadvantages to an absolute minimum.

In general, the committee has in mind a proposal which would require all persons engaged in the dissemination of any information concerning horse-racing or dog-racing events or betting information on any other sporting event by means of interstate or foreign communication to receive a license solely for these purposes from the Federal Communications Commission.

It is proposed that such licenses shall be freely granted to any applicant unless the Commission establishes that the granting of such application would not be in the public interest; that the applicant is not of good moral character, or that the information will intentionally be disseminated directly or indirectly to any substantial number of persons who would utilize it primarily to facilitate gambling activities or other activities in violation of the laws of the various States.

No one seeking a license shall be able to evade responsibility for the ultimate use of the information provided by him merely because the ultimate user or any number of intermediate subscribers are independent legal entities. If an applicant seeking a license has failed to obtain available information concerning the use to which the information is put, the burden shall be on him to show proper intent. Licenses may be revoked for the same reasons for which they are denied.

Every common carrier or other supplier of information concerning racing and sporting events should be required to maintain a list of its terminal points and drops, both for receiving and sending. The address of such terminal point shall be noted, together with the name of file person or persons operating such terminal facility. Such lists should be open to inspection by appropriate local, State, and Federal law-enforcement agencies.

The committee has given consideration to the added burden which this proposal would place on the Federal Communications Commission. But it feels that this Commission is well equipped to handle the problem, particularly if it is enabled to employ the necessary but small number of additional personnel, and if it receives full cooperation from this committee, from the successor to this committee, from the various executive departments and from the proposed Federal Crime Commission.

The committee has given consideration to proposals that all dissemination of betting information in interstate commerce be declared illegal, but has rejected this proposal at least for the present in the hope that the elimination of racing-wire service primarily for gambling will effect the desired result, with the minimum disruption of legitimate news dissemination activities. The committee has also considered various proposals relating to delay in furnishing information concerning horse and dog races and other sporting events and believes proposals set forth here will accomplish the result without the inconveniences and difficulties attendant upon such alternative proposals.

The committee intends to propose in the legislation to be submitted that the operation of such a wire service without the requisite license suggested shall be made a felony.

IX. The internal revenue laws and regulations should be amended so as to require any person- who has been engaged in an illegitimate business netting in excess of $,500 a year for any of 5 years previously, to file a net-worth statement of all his assets, along with his income-tax returns.

The necessity for a net-worth statement in. connection with checking upon the income-tax returns of persons engaged in criminal activities was clearly stated by Assistant Attorney General Caudle in his statement to the committee:

Cases involving racketeers are difficult to prove. Gamblers and gangsters do not keep books to show their receipt of income. Therefore, it is usually necessary for the Government to rely on their year-by-year increases in net worth and their known expenditures. To make this type proof stick in court we must establish a beginning point from which to figure annual increases in wealth. And because these characters must hide their activities it is always difficult and sometimes impossible to establish a starting net worth which excludes the possibility of other hidden wealth.

In order to facilitate a check upon the income-tax returns of known criminals and racketeers, the committee recommends that they be required to file net-worth statements so that this essential beginning point for investigation will be available to the Government.

X. The transmission of bets or wagers, or the transmission of moneys in, payment of bets or wagers, across State lines by telegraph, telephone, or any other facilities of interstate communication, or the United States mails, should be prohibited.

Large bookmaking operations cannot be carried on without using facilities of interstate commerce and interstate communication. The Ericksons, Carroll-Mooneys, Rosenbaums, Gizzos, S. & G. Syndicates, and the Mickey Cohens all do a considerable lay-off business with each other as well as with other bookmakers throughout the country. All this business is carried on by telephone and telegraph. In addition bets in large volume are also laid off by telephone or telegraph at the tracks, thus depressing pari-mutuel odds and robbing legitimate bettors of their fair shares of the winnings. We have also seen that in the S. J. Rich Co. situation in St. Louis, the facilities of a telegraph company were actually used to receive bets and money from bettors, as well as to pay off bettors.

The Federal Government should not permit interstate communication facilities or the mails to carry on bookmaking and gambling operations. It may be argued that the prohibition of all use of interstate communication facilities or the mails to place bets or send money for wagers will throw an unreasonable burden on Federal law enforcement agencies. Thousands of small bets are made over the telephone to bookmakers. However, the Federal Government should leave the elimination of these transactions to State and local officials. It should concern itself only with the larger bookmaking operations, where the link to organized crime is more clearly apparent.

XI. The prohibition against the transportation of slot machines in interstate commerce should be extended to include other gambling devices which are susceptible of gangster or racketeer control, such as punchboards, roulette wheels, etc.

The passage of the bill to prohibit the interstate transportation of slot machines was a blow to racketeering interests. The underworld has drawn great profits from slot machines for years. In the past, the manufacture of such machines was concentrated in the Chicago area, and the machines were distributed throughout the country. The recent statute makes a crime the transportation of a slot machine into a State where the operation of such machines is illegal. However, slot machines are not the only gambling devices from which gangsters and racketeers draw substantial profits. The lowly punchboard has attained the proportions of a major racketeering enterprise in many sections of the country. The committee has had before it evidence that the sale and distribution of punchboards are pushed by methods similar to those used in connection with slot machines. Since this is so, then, just as slot machines are barred from interstate commerce, so punchboards should likewise be barred. Other gambling devices, such as roulette wheels, might similarly be barred from interstate commerce because they too are used by racketeering interests in illegitimate gambling operations.

XII. The penalties against the illegal sale, distribution, and smuggling of narcotic drugs should be substantially increased.

We have seen that there has been a serious increase in the narcotics traffic, particularly among teen-agers. One of the ways to curb that traffic is through the imposition of severe penalties. Mr. Harry Anslinger, Commissioner of Narcotics, testified before this committee that-

The average prison sentence meted out in the Federal courts is 18 months. Short sentences do not deter. In districts where we get good sentences the traffic does not flourish. * * * Both the League of Nations and the United Nations have recommended more severe sentences as one of the best methods to suppress the traffic.

In many countries that has been very effective.

There should be a minimum sentence for the second offense. The commercialized transaction, the peddler, the smuggler, those who traffic in narcotics, on the second offense if there were a minimum sentence of 5 years without probation or parole, I think it would just about dry up the traffic.

In the light of this testimony, Congress should pass legislation to provide for increased penalties for drug peddlers and others engaged in the commercialized aspects of the drug traffic. Mandatory penalties of imprisonment of at least 5 years should be provided for second offenders. Such legislation is now pending in the House of Representatives where it is receiving the careful consideration of the Committee on Ways and Means.

XIII. The immigration laws should be amended to facilitate deportation of criminal and other undesirable aliens. To this end, the committee recommends the adoption of the legislative proposal heretofore recommended by the Commissioner r of Immigration and contained in section 241 of S. 716 (82d Cong.), now pending before the Senate Judiciary Committee.

Some of the criminals who occupy key positions in criminal gangs and syndicates are alien-born. Some came into this country illegally. Some have never been naturalized. Others obtained naturalization certificates by concealing their criminal activities.

XIV. The Immigration Act of February 5, 1917, should be amended to provide punishment for smuggling, concealing, or harboring aliens not entitled by law to enter or reside in the United States.

Legislation to this effect has been proposed by the Department of Justice and is endorsed by the committee. This legislation (H. R. 2793) is intended to overcome the decision of the United States Supreme Court in the case of U.S. v. Evans (333 U. S. 483) which is authority for the statement that there is no provision of law under which a person may be punished for committing any of the acts mentioned.

XV. The Attorney General should be authorized to revoke suspensions of deportation and to make such revocation ground for the cancellation of certificates of naturalization - toted aliens who have succeeded in getting their immigration status recognized but who are later found to be ineligible for such relief.

A bill to make this proposal effective is also pending with the House Committee on the Judiciary (H. R. 2258) and is endorsed by the committee and recommended for passage.

XVI. The personnel of Federal law-enforcement agencies should be materially increased. Consideration should be given to eliminating inequities in the salaries of law-enforcement officers, many of whom are woefully underpaid for the duties they perform and the risks they undertake.

In its interim report, the committee drew attention to the fact that Federal law-enforcement agencies were seriously undermanned, and recommended that increased appropriations be granted to such agencies. This action becomes particularly necessary because of the new duties which are thrust upon these agencies in connection with the struggle against organized crime.

One of our most important law-enforcement agencies, the Bureau of Narcotics, operates today with an appropriation which is the same as or even less than appropriations granted it 20 years ago. The Bureau has only about 180 agents to cover the entire country at a time when narcotics violations are on the increase. The Bureau of Internal Revenue, as of May 31, 1950, had a total of 3,416 suspected tax-fraud cases either under or scheduled for investigation, with a total backlog of 9,110 cases under consideration. Many of these cases involve gangsters and racketeers. The size of the staff seriously limits the Bureau in following up and prosecuting these cases. The United States Secret Service, which investigates counterfeiting and forgery cases, is way behind in its case load, with but 18 agents in its New York office to handle a backlog of over 3,000 cases.

Similar circumstances confront the Federal Bureau of Investigation, which is now called upon to perform much of the investigative work associated with the Nation's internal security. This phase of its work, all-important as it is, should not be permitted to impair the crime-investigative aspects of the Bureau's functions through lack of manpower.

Under these circumstances the committee therefore recommends that investigative and enforcement staffs of the Government's law-enforcement should be materially increased. This is particularly vital in connection with the Bureau of Narcotics. Consideration should also be given by the appropriate committees of Congress to increasing the pay of Federal law-enforcement agents to a point which will be commensurate with their responsibilities.

It should be borne in mind that higher salaries for persons engaged in law enforcement will not necessarily result in a drain on the Treasury. Better law enforcement will bring increased revenues to the Government through collection of taxes which are undoubtedly now being avoided by the underworld.

Spending of more money to compensate enforcement employees adequately will mean that reduced tribute will be paid to racketeers and gangsters by persons who unknowingly depend on gangster-infiltrated businesses for the purchase of commodities or services in their own communities. It is indeed a fact, well established by testimony before this committee, that where crime has enabled the gangster to infiltrate into legitimate business the average consumer has to pay increased costs, as witness the water-front rackets, through which millions of dollars in tribute are exacted by the racketeer - all of which ultimately comes out of the pocket of the consumer.

XVII. The existing Federal law with respect to perjury should be tightened; the committee endorses H. R. 2280 (82d Cong.) and recommends its passage.

Under existing Federal law, a person may not be convicted of perjury for making contradictory statements under oath unless the indictment charges and the prosecution proves which of the statements is false. Under the rules of proof in perjury cases, for a conviction to be had, the falsity of the statement made under oath must be established by the testimony of two independent witnesses or by one witness and corroborating circumstances.

The committee favors a revision of the law to provide that perjury shall consist of giving under oath or affirmation, within a period of 3 years, willful contradictory statements on a material matter, either in proceedings before a grand jury or during the trial of a case; and such perjury could be established by proof of the willful giving or making of such contradictory statements without proving which one is false. The Attorney General has vigorously recommended this bill.

XVIII. The Attorney General of the United States should be given authority to grant immunity from prosecution to witnesses whose testimony may be essential to an inquiry conducted by a grand jury, or in the course of a trial or of a congressional investigation.

The fifth amendment to the Constitution provides that no person "shall be compelled in any criminal case to be a witness against himself." The courts have construed this to mean that a person may remain silent if it appears that a criminal charge, however remote, may be made against him on account of any matters concerning which he is questioned.

In the light of the history of the constitutional provision, it is clear that the granting of immunity from prosecution would present a means of obtaining needed testimony from one who might otherwise hide behind the constitutional protection against self-incrimination. If any witness, benefited by immunity, refused to testify, he could then be punished for contempt; or if he committed perjury in his testimony he could be convicted and punished. This power should, of course, be exercised only with the greatest caution, and only upon the written permission of the Attorney General after he has cleared the granting of immunity with other Federal agencies which might have an interest in the matter.

XIX. The committee favors the passage of legislation providing for constructive service by publication or otherwise upon a witness whose testimony is desired who evades personal service upon him.

Because of its experience with recalcitrant witnesses who evaded service of subpenas willfully and with obvious intent to hinder and delay the committee's investigation, the committee believes that legislation is necessary to compel the presence of evasive witnesses; hence the foregoing recommendation.

This would give congressional committees the same right to perfect service of subpenas upon witnesses as is now provided for in the Federal code for the appearance of witnesses required to appear before Federal courts.

Once construction service has been obtained, the witness would be subjected to punishment for contempt as contrasted with the present situation where the witness may be arrested and held for appearance but not punished for contempt.

XX. The committee favors passage of the legislation, recommended by the Alcohol Tax Unit of the Treasury Department to prevent racketeering elements from entering the liquor industry and to eliminate any now in it. The committee also favors passage of legislation which will extend the same Federal protection to local option States as is now extended to the wholly dry States against the illicit transportation of liquor into the dry areas.

With respect to the question of racketeering elements in the distribution of liquor there are now pending in the Congress bills S. 22 and H. R. 137, which were introduced by Senator McCarran and Congressman King and which heretofore have in previous sessions been sponsored by them and other Members of Congress. The bills as they now stand require the annual renewal of basic permits to the liquor industry. The committee is of the opinion that annual renewal may impose too much of a burden upon the industry and the Alcohol Tax Unit, and the committee recommends that the proposed requirement be relaxed to the extent of requiring renewal biennially. The Committee is also well aware of objections to the bill by the whole-sale end of the liquor industry, which has made the point that such a bill would seriously impair the industry's ability to obtain credit. However, the committee believes that the problem of racketeering elements in the liquor industry is sufficiently serious to justify the passage of the basic permit sections of this legislation with the change noted above, and the committee is also of the opinion that the industry is overfearful of the effect it will have upon its ability to obtain credit.

In recommending to the committee the passage of this bill, the Alcohol Tax Unit, through its representatives, has pointed out that .many of the racketeering elements now in the industry are blanketed under the original post-repeal legislation with the result that the only effective means of eliminating them would be such new legislation.

The committee does believe that the licenses of some individuals might be revoked on a positive determination that they are not persons of good moral character who would hold licenses against the public's interest. However, the committee is aware of the practical problem involved and therefore feels that the Alcohol Tax Unit must receive the support of the Congress if it is to perform its functions effectively. The committee takes no position on features of this legislation other than the ones specified above.

The bootlegging of liquor into dry and local option States has become a very serious problem because of the great volume of such illicit traffic. Many racketeers with connections in other illegal activities are engaged in this traffic. It has proven extremely lucrative, and is a substantial source of income to organized criminals. Moreover, it is a very vicious influence in the States affected. To cope with this evil the committee is recommending that the Bureau of Internal Revenue take steps to require better identification of applicants for special tax stamps required of retail and wholesale liquor dealers.

While this will aid local law enforcement officers identifying the traffickers in illicit liquor, it does not provide a complete solution to the problem. Accordingly, the committee recommends the adoption of the bill introduced by Congressman Camp, House bill 1278, which would extend the same Federal protection to local option States as is now extended under Federal law to the wholly dry States.

Under this amendment the local option States would still be able to control the local traffic within their borders and to determine whether or not they want Federal assistance in preventing illicit shipments of liquor into dry areas. Even the Camp bill would not bring a complete solution to the problem. However, with additional enforcement personnel, plus a vigorous effort to identify all applicants for special tax stamps, it is believed that much can be accomplished. It is true that the cost of investigation of applicants for special tax stamps cannot be paid out of the $27.50 fee, but the public policy question involved is so great that this should not be too serious a consideration.

XXI. The committee recommends that the present Federal regulation and application forms which require a listing of individual owners, partners, and holders of Alcohol Tax Unit permits, be amended, so that, in addition to the present requirements, the names of all beneficial owners will be stated: also that the application forms require the disclosure of all previous arrests and convictions. A report should be fled with the Alcohol Tax Unit of every change in such interests or in management as such, occurs.

On November 8, 1950, the committee called an advisory meeting of the liquor and beverage industry, representatives of the Alcohol Tax Unit, and others interested to meet with the committee. An advisory committee was formed of which Carroll E. Mealey, Deputy Commissioner, Alcohol Tax Unit, was named as chairman. This committee made an extended study of the problems of the industry with particular reference to weeding out racketeers and other undesirable elements. The representatives of the industry and the Commissioner did not come to an agreement on all pertinent matters under discussion. However, the industry and the Alcohol Tax Unit agreed that the foregoing recommendation would be one beneficial in preventing infiltration by racketeers into the industry, particularly at the wholesale level. They joined in this recommendation and it is highly recommended by the committee.

XXII. The committee recommends that the Interstate Commerce Commission be required by law to consider the moral fitness of applications for certificates of necessity and convenience as one of the standards in acting upon applications for such certificates or transfers of certificates.

The transportation industry, including interstate transit systems, is especially vital to the economy and security of the Nation. The committee does not by this recommendation imply that there has been a substantial infiltration by racketeers into the industry. There have, however, been some incursions, and in view of the fact that the economy of the country depends upon a competitive and completely gangster-free management of this vital segment of business, the committee feels that every means should be used to weed out the criminals and prevent them from obtaining a further foothold.

In the section of this report dealing with racketeer infiltration of legitimate business, the committee has noted the intrusion of persons into the industry who could not be expected to have the public interest in mind. Situations in New Jersey and Michigan which have been investigated by the committee show the necessity for this recommendation. There are indications that possible competitors are fearful of filing applications for competitive permits where the territory is being served by a gangster-permeated company.

The statute and regulations should require a listing under oath of officers, directors, and principal stockholders of companies and corporations making application for permits. The committee aware of the difficulties in enforcement, but believes that the public interest necessitates such action.

The committee is giving further consideration to and expects in a later report to deal with the problem of revocation of existing permits where it has been shown to the Interstate Commerce Commission that the holders of such permits do not have the requisite moral fitness.

Where the foregoing recommendations call for new legislation, it will be drafted and submitted to the Senate by members of the committee at the earliest possible time.

The Special Senate Committee To Investigate Organized Crime in Interstate Commerce had its genesis in Senate Resolution 202, which was submitted on January 5, 1950, by Senator Estes Kefauver, Democrat, Tennessee, who subsequently became chairman of the committee. The resolution was referred to the Committee on the Judiciary, and upon being reported by the chairman of that committee on February 27, 1950, was referred to the Committee on Rules and Administration.

It was reported out of the Rules Committee on March 23, 1950, and on May 3, 1950, was considered and agreed to by the Senate.

A week later the President of the Senate appointed a committee consisting of the author of the resolution, Senator Kefauver, Senator Herbert R. O'Conor, Democrat, Maryland; Senator Lester C. Hunt, Democrat, Wyoming; Senator Alexander Wiley, Republican, Wisconsin, and Senator Charles W. Tobey, Republican, New Hampshire.

The function of the committee was to make a full and complete study and investigation to determine whether organized crime utilizes the facilities of interstate commerce or whether it operates otherwise through the avenues of interstate commerce to promote any transactions which violate Federal law or the law of the State in which such transactions might occur.

The committee was also charged with an investigation of the manner and extent of such criminal operations if it found these actually to be taking place and with the identification of the persons, firms, or corporations involved.

A third responsibility which was charged to the committee was the determination as to whether such interstate criminal operations were developing corrupting influences in violation of the Federal law or the laws of any State. For purposes of the resolution there was included in the area to be covered the District of Columbia, the respective Territories, and all possessions of the United States.

The committee was originally intended by resolution to submit a report to the Senate not later than February 28, 1951, as to its findings with such recommendations as might be deemed advisable. The authority conferred by the resolution was to have terminated on March 31, 1951, but both dates were extended, the date for the report to May 1, 1951, and the date for the committee's expiration to September 1, 1951.

The committee held hearings in pursuance of its charge in 14 cities. They included Washington, D.C.; Tampa, Fla.; Miami, Fla.; New York City; Cleveland, Ohio; St. Louis, Mo.; Kansas City, Mo.; New Orleans, La.; Chicago, Ill.; Detroit, Mich.; Philadelphia, Pa.; Las Vegas, Nev.; Los Angeles, Calif., and San Francisco, Calif.

In all, it heard testimony from more than 600 witnesses. Many of these were high officials of the Federal, State, and city governments in various areas visited by the committee. The record of testimony covers thousands of pages of printed matter and constitutes one of the most valuable documents of its kind ever assembled. This record has for the most part been put into print and has been made available to law enforcement officials and public authorities all over the country for their guidance and information. The balance of the record is being printed for publication, and with the extension of the life of the committee, will also be sent to parties in interest upon completion.

At the outset of its report, the committee desires to acknowledge with its deepest appreciation the immense cooperation it has received from countless sources in the execution of its commission.

The vast record it has compiled from testimony taken in 14 cities, which presented facts relative to conditions in most of the States of the Union, amply bespeaks the immensity and complexity of the task. The task has been performed within a short space of time, with a limited personnel which, although small in number, was able and zealous. The committee operated under a modest budget, considering the enormity of the assignment.

Not only was this cooperation most helpful but it was stimulating and encouraging because it indicated unquestionably to the committee and its staff that the people of the Nation, and particularly in those cities visited by the committee, were awakening to the menace of organized crime and were looking to this committee for guidance in an effort to cope with the problem.

From the very first day of its organization the committee received communications from individuals and organizations throughout the Nation offering information for investigation and, where this was not available, tendering moral support for the committee's undertaking.

This tide of communications, which started as a modest flow, swelled into a veritable flood as the committee's activities approached a crescendo in its New York hearings. The thousands of letters and telegrams directed to the committee were augmented by similar thou-sands addressed to individual Senators and Representatives.

Again, the tenor of these communications was most heartening to the committee and its staff and although an attempt has been made by the committee to acknowledge receipt of these letters and telegrams, a word of thanks to the senders is herewith expressed.

To catalog the individuals, organizations; local, State and Federal agencies to which the committee is indebted for valuable assistance is virtually impossible.

Many public-spirited citizens gave liberally of their time and knowledge of local and national criminal operations to provide information to the committee and in numerous cases to appear as witnesses before it. It is significant of the high civic-mindedness that prompted the appearance of many individuals before this committee that a great many waived their rights to witness fees and reimbursement for travel expense. The committee also commends the numerous witnesses who, at personal risk of gangland retribution, testified in open or executive sessions.

One of the greatest aids in ferreting out the activities of the underworld was provided to the committee by the President of the United States, in his Executive order making available not only pertinent income-tax returns of individuals under investigation as interstate criminals or having associations with such individuals, but calling on the respective Government departments and bureaus to make available to this committee their files and knowledge. It must be apparent that the President's order was most effective and was probably the greatest single weapon at the committee's disposal. Particularly, because of the trust in the committee implied by the President in his order, the committee has attempted to use its power impartially and judicially and has tried scrupulously at all times to protect and guard the rights of all persons involved.

The vast files and limitless experience of the various Federal enforcement and investigative agencies proved fertile sources for many phases of this committee's inquiry. Among the agencies in this group whose cooperation was of great help should be named the Department of Justice, including the Federal Bureau of Investigation, the Immigration and Naturalization Service; the Attorney General, his assistants and United States attorneys; the Treasury Department, including the Bureau of Internal Revenue, the Customs Bureau, the Alcohol Tax Unit, the Secret Service, and particularly the Bureau of Narcotics, the Post Office Department and such other agencies the committee called on for assistance.

In naming the various Government agencies mention should also be made of the contribution to the committee's investigation by Hon. James V. Bennett, Director of United States Prisons.

Most encouraging and helpful to the work of the committee in its travels around the country was the volunteered cooperation of countless numbers of individuals who offered to make themselves available for any service the committee desired.

To these public-spirited citizens, the committee acknowledges their assistance with deep appreciation.

Outstanding in the ranks of those whose volunteer efforts added inestimably to the committee's successful operation was Mr. Julius N. Cahn, executive assistant to Senator Alexander Wiley of Wisconsin, a member of the committee. Mr. Cahn's innumerable helpful suggestions were always welcome. Through the kind cooperation of Senator Wiley, his assistant attended many sessions of the committee both in Washington and in the field and thus became very familiar with the background and detailed activities of the group. Mr. Cahn was, therefore, in an excellent position to help with sound advice in formulating decisions in the public interest as situations arose. The committee therefore takes this occasion to voice its thanks to him.

Also of great assistance in many varied ways during this inquiry were Mr. A. J. Bourbon, administrative assistant to Senator Herbert R. O'Conor, of Maryland, and Mr. Charles Neese, administrative assistant to Senator Kefauver, the Chairman. To both these gentlemen go the committee's thanks.

The staffs of other members of the committee were also called upon in many instances and always responded eagerly. George Green, of the Senate Judiciary Committee, and Mrs. Vivian Lynn, formerly of the Senate District of Columbia Committee, have materially aided the committee.

An expression of appreciation should be recorded for the cooperation and assistance of the Commission on Organized Crime of the American Bar Association, of which former Secretary of War Robert P. Patterson is chairman.

All members of the Commission actively participated in the program. Through them, the American Bar has rendered a tremendous service to the committee. The Commission members included: Walter P. Armstrong, Jr., Memphis, Tenn.; Howard L. Barkdull, Cleveland, Ohio; Arthur J. Freund, St: Louis, Mo.; Phillip S. Habermann, Madison, Wis.; Laurance M. Hyde, Jefferson City, Mo.; and Chief Judge Bolitha J. Laws, Washington, D.C.

On several occasions it has made available the talent and wide experience of Judge Morris Ploscowe, of New York City, executive director of the Commission, who has been of outstanding service in the preparation of the committee's reports, as noted elsewhere herein.

Throughout the country where hearings were held by the committee facilities were made available for holding these sessions by the judges of the United States district courts, to whom gratitude is freely acknowledged, as well as to the various Federal district attorneys and members of their staffs who also facilitated the holding of hearings by providing office space and in many cases stenographic assistance.

Service of subpenas was expedited by United States marshals and their assistants, to whom thanks are due. Building custodians and their staffs frequently had to work overtime by reason of the protracted sessions of the committee that sometimes continued into the night. These are only a few of the many in Federal service who helped in facilitating these hearings. State and local officials, from governors of States and mayors of cities, down to policemen on their beats went out of their ordinary paths to be of assistance to the committee. Crime commissions composed of citizens, like those in Greater Miami, Chicago, St. Louis, and the State of California, provided dossiers on local crime conditions which advanced the starting point of committee investigators. Special thanks are expressed to Daniel Sullivan of the Greater Miami Crime Commission and Virgil Peterson of the Chicago Crime Commission and their officers and staffs. The work of these two crime committees through their courageous officers and most able directors is outstanding and serves as a splendid example for other voluntary crime commissions.

Another source from which the committee received splendid cooperation in its investigative activities was the American Telephone & Telegraph Co., and its affiliates whose help is herewith gratefully acknowledged.

One of the most effective means of establishing whether a hoodlum in one State had affiliations or associations with a fellow-gangster in another State was by tracing telephone calls. This called for the expenditure of much manpower and time by the American Telephone & Telegraph Co., and it should here be recorded that all this tremendous research was conducted at the sole expense of the telephone companies.

The committee regards as invaluably helpful the splendid direct and indirect aid and support given by the mass media of public information of the United States in the committee's work.

It is doubtful indeed if the activities of any similar governmental group has received such widespread coverage as was given to the hearings and reports of this committee.

Newspapers were particularly helpful because in their own particular locales they have, over the years, amassed archives of information about crime, all of which were freely made available to the committee. The crime reporters of many great newspapers have been of invaluable assistance to the committee. The willingness and courage of the press in printing full information on the activities of gangsters, criminals, ad their political protectors have achieved many notable results in improved law enforcement. At times, the committee was helped by the constructive criticism of some of the local press. It is noteworthy that many of the country's foremost journalistic specialists in crime news were assigned by their respective publications to travel the length and breadth of the Nation with the committee to cover its hearings. The committee regrets that some inconvenience has been caused the press because of the difficult circumstances under which the committee has had to operate.

Magazines, too, should be credited with independently researching the subject of interstate crime operations and with furnishing committee investigators many fruitful leads that helped to round out the picture of organized crime in the United States.

The committee subscribes most heartily to the statement of J. Edgar Hoover, Director of the Federal Bureau of Investigation, that if there were in every town in the United States a crusading newspaper which, without fear or favor, would turn the spotlight of pitiless publicity on corruption, gambling, and vice in its area, major progress would have been made toward cleaning up that particular community.

Testimony before this committee was carried into millions of American homes by wireless, first by radio and toward the closing stages via the newest electronic communications device - television.

The committee recognizes that a major part of the credit for the vital impact of this committee's most recent hearings on the public was due to the televising of the sessions. Never, prior to that time, had a congressional hearing received such a public airing or viewing, nor before such a huge audience. It has been estimated that the hearings in New York were watched by upward of 30,000,000 persons.

These telecasts, in the opinion of the committee, have had a most salutary effect in awakening the public to the menace of organized racketeering that now confronts our national life. For the first time the public was able to see and hear the notorious hoodlums to whom it was, in one form or another, paying tribute, to determine for itself whether or not these men are wholesome influences in public affairs, and whether they should be permitted to wax even more powerful than they are now.

Television can undoubtedly be a tremendous power for good; as a means of public education it is superb. But its employment involves serious consideration of many new factors. One of these is the possible invasion of the rights of privacy - a claim which was raised by several witnesses who refused to have their faces screened although they did not object to the broadcast of their voices over wireless radio. This broad legal question has already been the subject of considerable learned debate; there will undoubtedly be more before a final adjudication is made by the courts.

It should be noted that two of the committee's witnesses, Morris Kleinman and Louis Rothkopf, raised this issue of privacy and the alleged onerousness of the conditions under which they were asked to testify - conditions which included the presence of microphones, news-reel cameras, television cameras and still photographers - to all of which they objected. These individuals were cited for contempt for refusing to reply to pertinent questions at a properly constituted hearing of the committee. It was strongly felt by the committee that their stated ground for refusal to testify was actually a subterfuge for a more cogent reason.

In addition to the legal implications, our committee sees in television a medium which raises whole new or intensified issues of public policy insofar as the screening of congressional activities is concerned. It is for that reason that the committee feels that a code of congressional procedure should be worked out so as, among other things, to insure the continuing dignity and maximum effectiveness of legislative proceedings which might be televised as well as to preserve the constitutional rights of citizens. Nevertheless, our committee commends the television industry which devoted so much time at considerable cost to our committee's proceedings.

The dignified and restrained handling of the television broadcasts of the hearings by the respective stations and networks involved and their personnel, speaks most highly for the public spirit of this relatively new medium and for its judicious approach to a new problem.

Through the motion-picture newsreels, millions of American theater-goers were able to follow the committee's activities in all parts of the country. The newsreels were particularly cooperative in New York City where limited space in the hearing room necessitated a pooling arrangement under which two or three cameramen made the pictures which were then made available to all film companies on an equal basis.

One innovation that marked the newsreel coverage of this committee's hearings was the release of a film nearly an hour long that graphically depicted the highlights of the entire series of hearings and was seen by an audience estimated in the millions.

Finally, the committee, speaking for the Senate and the American people whose servant and representative it is, acknowledges with deep gratitude and respect the contribution of every member of the committee staff to this most notable result.

Seldom, if ever before, has a congressional committee been favored with such a splendid group, working as a team with but one objective in mind. Dispassionately and intelligently this group attacked one of the most complex and widespread fronts and drove wedges of information into it that enabled the committee to throw light on it not only from the front but from the rear, and even from underground whence more than a few witnesses came to testify to the evil prevalence of Nation-wide crime.

The sparking genius behind this excellent staff deserves the commendation not only of the Senate but the entire Nation - the committee's chief counsel, Rudolph Halley, of New York. From the very inception of our committee, Mr. Halley displayed the keenest of insight into the nature of the problem, and an indefatigable energy that overcame the limitation of time imposed on the committee prior to its extension of authority. In a spirit of sacrifice of his own personal comfort and aggrandizement, Mr. Halley relentlessly and tirelessly pursued his course against the most feared under-world gangs in America.

How well he earned the plaudits of the Senate and the public is now, through television, a familiar story. This record would be incomplete, however, without a final accolade bestowed on him, and this expression of merit: "Well done!"

The enactment of the aforementioned recommendations will do a great deal to break up criminal gangs and syndicates and make considerably more difficult the use by organized crime of the facilities of interstate commerce and interstate communication. The committee, however, has stressed above that if organized crime is to be brought under control, State and local law-enforcement agencies must do their part.

The violations of criminal statutes committed by the members of criminal gangs and syndicates are, for the most part, violations of State laws. In order that State and local law-enforcement machinery and procedures be strengthened and become more effective in dealing with organized crime, the committee makes the following suggestions of a broad nature, believing they may be helpful and in the public interest and in conformity with the letter and spirit of Senate Resolution 202.

I. A committee might well be appointed in each State to make a thorough-going investigation of the problem of organized crime

The fact that so many of the conditions which breed organized crime are beyond the reach of Federal authority makes it absolutely vital that the various States institute sweeping inquiries into organized criminal conditions within their borders. The able reports and recommendations of the special crime study commissions appointed by Governor Warren in California indicate how effective such inquiries can be in formulating State and local policies in dealing with organized crime. Noteworthy State action has been taken in Ohio and Illinois by Governors Lausche and Stevenson. It should be noted that the disclosures resulting from our hearings in New York prompted the appointment by Governor Dewey of a five-man crime commission to investigate and act against racketeers and "the links between organized crime and units of State government in New York State." The action of these and of other Governors should be emulated in other States.

II. Grand jury investigations could well be instituted in every community in which wide-open gambling and racketeering conditions exist, so that local responsibility for such conditions can be fixed and determined.

The grand jury is the traditional organ of law enforcement charged with the responsibility of uncovering corruption in Government and misfeasance and nonfeasance in office of public officials. Under adequate leadership grand juries can do a great deal to help local communities clean house. Steps should be taken in each State so that grand jury attention can be focused upon local conditions that contribute to organized crime. In order for grand jury inquiries to be effective, they must be freed from such hampering restrictions as are found in the Illinois laws, which limit the terms of grand juries to 30 days.

III. It might be advantageous for each State to institute a survey of its law-enforcement agencies with a view toward bringing about greater cooperation between agencies, greater centralization of responsibility for lax enforcement of the criminal law, and greater efficiency.

The committee has been impressed by the failure of independent local units of law enforcement to work together harmoniously to eliminate gambling and racketeering conditions from their communities. In metropolitan areas, there usually are large numbers of independent city, town, and village police forces which work together or refuse to cooperate, as they please. The sheriff of the county operates independently of other law-enforcement agencies and frequently pursues law-enforcement policies which are diametrically opposed to theirs. The district attorney, or the State's attorney, sometimes works with and sometimes against both the police and the sheriff. Exactly who is responsible for what in the law-enforcement field is frequently a matter of conjecture and dispute. The very organization of law-enforcement agencies in local communities makes it difficult to fix responsibility for widespread violations of the criminal law. This necessarily leads to "buck passing" and evasion of responsibility.

The committee cannot find the answers to the problems which local organization of law enforcement presents with the data presently available. The patterns of local law enforcement are deeply embedded in the constitutions and laws of the several States. They were evolved at a time when conditions of life were much simpler and when crime conditions were not as complex as they are today. They require thorough overhauling, and a thorough re-examination in the light of what is required to combat present-day syndicated and organized crime. The several States cannot hope to control jet-plane criminality by the horse-and-buggy methods evolved in the early nineteenth century.

Any survey of State and local law-enforcement agencies must consider such problems as:

1. The combination of small independent local police forces into larger regional units which will be adequately staffed and equipped to make criminal investigations and to deal with organized crime.

2. The elimination of the law-enforcement responsibilities of the sheriff's office.

3. The more adequate policing of rural areas by State police units.

4. The closer integration of local police forces and local police activities with the work and efforts of State police units.

5. The provision of better methods of recruiting and training local and state police officials.

6. The provision of higher standards of pay for persons engaged in local law-enforcement work.

7. The elimination of the traditional coroner's office and substitution of adequately staffed and equipped medical examiner's offices.

8. A clearer definition of the function and the responsibilities of the local prosecutor in connection with the investigation of criminal cases.

9. The steps necessary to secure greater stability of tenure and greater professionalization in the local prosecutor's office.

10. The provision of a greater degree of centralized control of the work of local prosecutors, either through the Attorney General or the Governor's office.

11. The tightening of legal provisions concerning the removal of lax and faithless law-enforcement officials, who fail to carry out their sworn duties.

12. More law enforcement officials should be brought under civil service regulations; in some places these regulations should be revised in order to facilitate the separation from the service of corrupt and/or inefficient e enforcement officials.

Surveys of State law-enforcement agencies which come up with answers to such problems will make vital contributions to the improvement of methods of dealing with organized crime.

IV. Organization of rackets and special purpose squads in each State with sufficient manpower and authority to make investigations and arrests in connection with organized criminal activities would be helpful. Such squads are particularly desirable on both the State and local levels, in connection with the suppression of narcotics traffic.

State surveys which would provide data for fundamental changes in law-enforcement organizations, will take a long time. In the meantime, the State governments must take the initiative in dealing with the immediate problems presented by organized crime.

The need for State law-enforcement activity is particularly acute in the suppression of the illicit sale and distribution of narcotics. In narcotics there has been, as we have seen, a tremendous upsurge in activity. A great deal of narcotics drugs are presently being sold to our "teen-age" youth, resulting in their consequent demoralization. Energetic methods are necessary to combat the drug traffic. A well-trained squad of men operating throughout the State who are thoroughly familiar with the methods of narcotics peddlers and who will cooperate closely with the Federal Narcotics Bureau, could do a great deal to stem this vicious traffic which lives from the slow murder of its customers. Similar squads might also be organized in the larger cities to cooperate with State officials and with the Federal Government.

Racket squads would also be very valuable in other fields of criminal activity in which organized criminal gangs are presently engaged. Where local enforcement breaks down in connection with gambling operations, for example, conditions can be materially improved by State police squads acting under the direct authority of a vigorous governor.

V. Each State would do well to analyze the provisions of its criminal law and its sentencing practices so as to make certain that deterrent sentences are imposed upon offenders engaged in criminal activities connected with organized crime.

Organized criminal activities cannot be controlled by the imposition of small fines. Yet this is the normal technique for dealing with such racketeering activities as bookmaking and the numbers, or policy game. Persons convicted of taking bets and engaging in bookmaking operations and persons who collect policy numbers arc usually punished only by small fines. This has absolutely no deterrent effect upon key individuals who control the rackets or upon the small fry who are normally brought before our courts. The fine is looked upon merely as an expense of doing business and is usually paid by the banker of the policy game or the backer of the bookmaker. A fine may be called for in connection with a conviction for the first time of a violation of the gambling laws. But certainly second and subsequent convictions should be more severely dealt with. Such severity is vital if mobsters who run the bookmaking and policy rackets are to be controlled. When subordinates in the racket understand that they are exposing themselves to prison sentences and that their employers cannot absorb penalties imposed upon them, they will be less likely to engage in illegal activities. Similarly, more drastic penalties appear to be indicated in connection with the violation of State narcotics laws. It is the considered opinion of the Federal Bureau of Narcotics that drug peddlers can only be controlled by drastic penalties. Surely the harm that these individuals do to others clearly warrants such action.

Here again, the committee can make only the general recommendation that each State review its criminal penalties and the sentencing procedures used by its judges. If these follow the pattern which has been indicated above, then a revision so as to provide more deterrent penalties would appear to be indicated.

VI. Each State should consider legislation making it possible to deprive any establishment of its license which permits gambling games or gambling operations on its premises.

Local and State licenses are required from many different types of establishments, hotels, night clubs, taverns, restaurants, candy stores, etc. Racketeers frequently use such establishments as locations for slot machines, punchboards, and other gambling games or conduct other types of gambling operations, such as bookmaking or the collection of policy numbers on these premises. In Minnesota, Wisconsin, and Iowa, statutes have been enacted which make it possible to strip such establishments of their license to do business if they are permitting gambling operations to be conducted on their premises. The committee commends such statutes to the attention of other States. If a businessman knows that he may lose his license if he permits a violation of the gambling laws to take place in an establishment that he operates, he is less likely to listen to the racketeer who is seeking to use his establishment as a base for enterprises that violate the law.

VII. A citizen crime commission charged with the duty of observing the activities of local law-enforcement agencies and with the duty of observing and reporting on local crime conditions would be helpful in each large community

Public apathy has in large measure been responsible for many of the conditions disclosed by the committee. This apathy is due in large part to a lack of knowledge of crime conditions on the part of the citizens living in the cities visited by the committee. Even where some knowledge was present, the leadership to do something about malodorous crime conditions was frequently lacking. The function of a local crime commission is to provide both knowledge and guidance. Its task is to expose pitilessly the racketeers who grow fat on crime and their allies in law enforcement and in political organizations. Local crime commissions have contributed considerably to more effective methods dealing with crime in such cities as Chicago and Miami and have pointed the way to the kind of public service that such organizations can render. The committee notes with approval the organization of the Greater New York Crime Committee in New York City. Similar organizations should be set up in every metropolitan area.

The principal activity of organized criminal groups in the Miami area at the time of the committee hearings was gambling. Card games, dice games, numbers games, roulette and other gambling wheels operated in establishments varying from the well-appointed air-conditioned casinos set up for the purpose, to night clubs and restaurants and private rooms in various hotels. Bookmaking operated out of newsstands, cigar stands or elaborate horse rooms, in most hotels, and even from specially fitted cabanas on the beach.

Bookmaking was largely in the hands of local residents with long experience in the field. The gambling casinos and games, on the other hand, were almost wholly owned and operated by the racketeers and criminals from all over the country who had made the area their gathering place, and several Miami hotels, their headquarters.

At one time 52 more or less elaborate gambling casinos operated in Broward County alone. At the time of the hearings, the principal casinos operated by the out-of-town gangsters and racketeers were the Greenacres, the Club Boheme, the Island Club, and the Club Collins. The Greenacres and the Club Boheme were operated by a group including Frank Erickson of New York, Joe Adonis and the Lansky brothers of New York, and Mert Wertheimer of Detroit. In Greenacres, William Bischoff (Lefty Clark) and Joseph Massei operated a crap game.

Erickson, his agents and associates, made the Wofford Hotel their headquarters. The hotel was operated by a former New York lawyer, Abe Allenberg, brought to Florida to represent Erickson in his race-track interests, and set up in the hotel business with money provided by Erickson. Allenberg's partners in this venture included the notorious gangsters Anthony Carfano from New York and John Angersola from Cleveland.

Allenberg testified that crap and card games for high stakes were conducted in upstairs rooms by racketeering associates of his partners. Erickson's agents lived in the hotel, while they conducted his large-scale illegal lay-off and come-back betting operations and used the banking facilities of the hotel for cashing checks tendered in payment of lost wagers on horse races.

Two other nearby hotels, the Grand and the Sands Hotel, served as headquarters for the Detroit, Philadelphia, and Cleveland mobs.

The operations of the gambling casinos showed tremendous profits. The net reported income from the Greenacres-Club Boheme combination, totaled $348,821.48 in 1948, and $599,073.44 in 1949. In addition, the cash operation of the single crap table yielded $222,050.47 in reported income for the 1949 season.

Testimony disclosed that the largest organized bookmaking operation in the Miami area was conducted by the S. and G. Syndicate, a group of five local bookmakers who, until 1944 had operated independently. In 1944, they agreed to eliminate competition among themselves and make the financing of other bookmakers their business. By 1948, this business, according to its own books, controlled concessions at 200 hotels and grossed over $26,500,000 in bets. The Federal Government, investigating the individual returns of the partners, has contended that even on the basis of the reported gross, the net reported income of $466,504 is substantially below the true income.

On the basis of the reported gross bets, and the mathematically established minimum net return used at the pari-mutuel tracks, the committee calculated that the net profit for the members of the syndicate must have been over $2,000,000. Other observers of the Florida bookmaking scene put the S. and G. gross income at between $30,000,000 and $40,000,000 and its net income at between $4,000,000 and $8,000,000 a year.

The S. and G. Syndicate maintained an executive office, with Edward Rosenbaum as the active manager, where the daily collections from bookmakers were received, their records kept and the periodic accountings made. At an elaborate penthouse office atop a midtown hotel, telephone connections to all parts of the country from California to New Jersey and from New Orleans to New York, made it possible to keep a constant check on bets at the Nation's important race tracks. Here, the up-to-the-minute racing news coming in over the wire service was received. At branch offices throughout Miami Beach, S. and G. received information from their bookies and the bookies in turn could receive information from the wire service.

200 BOOKIES DEALT WITH S. AND G.

Just under 200 bookies dealt with the S. and G. Every bookie made his own arrangements with a hotel for permission to take bets on its premises, and paid for the concession and necessary employees out of his own pocket. As bets were placed, the bookie would telephone them in to an S. and G. branch office, and at the end of each day he either deposited his winnings with the S. and G. office, or had them picked up by a collector. On the rare occasions when his losses exceeded his winnings, he picked up cash from the S. and G. to make his payoffs. At the end of the month or the season, depending on individual arrangements, the bookie and the S. and G. made a 50-50 division of the profits from the operation. However, certain expenses of operation - an agreed-upon portion of the rent for the concession, which might range from $3,000 to $50,000 a year, salaries of employees hired by the bookie, and fines levied on the bookie - were deducted from the profit before the division of profit was made. But after the division, from his own half of the profits, the bookie paid the syndicate upward of $75 a week for the racing news service, and another $50 to $75 a week for operating expenses. The partners denied the contention of one bookie, that the money for operating expenses was "ice" or protection money, that independent bookies understood that they would be raided, while bookies belonging to the S. and G. were not. But the committee established that the S. and G. suffered little from police interference. The attorney for the syndicate admitted that from 1944 to 1950 the syndicate bookies had suffered no greater indignity than fines; that they never received a jail sentence, and that as soon as their fines were paid, they went back into business. Two members of the syndicate, Levitt and Salvey, admitted to a record of arrests years back. The former, despite several convictions, had never been to jail. The latter had never even gone to trial. Both admitted to the offenses of bookmaking, with which they had been charged.

It was also apparent that the S. and G. syndicate members enjoyed cordial relationships with members of the city government and law-enforcement agencies. Their attorney admitted he had been influential in getting a former law associate selected as a judge. In their numerous and extremely profitable real estate transactions, members of the S. and G. were represented by the city attorney, who was later expected to oppose for the city a change in the rezoning law which would have more than tripled the profits of the S. and G. members on their holdings in one of the most valuable sections of the beach. One partner, Salvey, inactive in the actual syndicate operation almost from the time of its formation in 1944, admitted to business relationships with William Burbridge, an influential city councilman, which had been extremely profitable to Burbridge.[1] A former police chief and a sheriff gave testimony indicating that the syndicate attorney was friendly enough with someone in the department so that he could be present at any raid of a syndicate book or a horse room or casino in which its members had an interest, or could appear on the scene almost immediately thereafter. There was evidence, too, that the syndicate made an effort to present a fair face to the community; records of donations to religious charities, to Boy Scout and Red Cross chapters, to hospitals, to firemen's and policemen's associations were shown.

Until 1949, the syndicate members with their local contacts had been able relatively well to protect themselves from outside incursions. Erickson, and a local independent gambler named John O'Rourke, had managed to get the gambling concession at the Boca Raton, and at the Roney Plaza, at the seasonal rentals of $22,000 and $45,000, respectively. Both had previously been operated by S. and G. concessionnaires. But Erickson was soon forced to give up his concession. Meyer Schine, owner of the hotel, testified that Pat Perdue, the Miami Beach one-man vice squad, urged him to give the concession to the S. and G. When he refused, the Roney Plaza was raided by Perdue with great attendant publicity, and forced to discontinue gambling, in contrast to the usual discreet raids which ended in a fine and the resumption of gambling.

The following season, the Roney Plaza gambling concession was operated by an S. and G. member bookie.

In 1949, the S. and G. suddenly acquired a sixth partner, a Chicago resident, Harry Russell, whose connections with the Capone group are clearly established. The original members of the syndicate, questioned about Russell, stuck to a consistent story: they had heard he was attempting to take over concessions in Miami hotels owned by Chicago men, and further, they understood that he knew a great deal about baseball pools, into which they intended to expand. But they had made no similar approaches to any other competitors, nor could they show any baseball operations in their records after Russell became a partner. They claimed that they knew nothing of Russell's Chicago connections. One of the members insisted that he had first approached Russell about the partnership.

Just prior to Russell's entry into the partnership, the S. and G. had been subject to pressure from two sides. In January of 1949, shortly after the election of Gov. Fuller Warren, a special investigator named W. O. Crosby appointed by the Governor presented himself to the sheriff of Dade County and asked for help in raiding gambling establishments. In their testimony, neither Sheriff Sullivan nor Crosby could recall raids on any but S. and G. bookies. Crosby admitted that he knew Russell and had seen and become friendly with him in Miami during the period of the raids. Crosby had also seen and talked to William H. Johnston, a Chicago and Florida race track owner, a. long-time associate of the Capone gang, and a friend of Russell. There is more than a casual connection between the fact that Johnston contributed $100,000 to Governor Warren's campaign fund and the fact that Crosby raided only S. and G. locations with the knowledge of Russell.

At about the same time, the Continental Press Service, which is controlled by the Capone gang, cut S. and G. off from the wire service, without which no large-scale bookmaking enterprise can dare to do business. When S. and G. attempted to get the news service from other bookmakers in Florida, service was cut off throughout the State. For some unexplained reason, though the syndicate found it could get the news from its bookie contacts in New Orleans, it did not do so. The lack of wire service compelled the syndicate to shut down operations for about 2 weeks. Service was resumed and the raids from Crosby miraculously ceased when Russell was taken in as a full partner of the S. and G. syndicate. He was said to have paid $20,000 for his share in the $26,000,000-a-year business. But a few months later, the S. and G. partners bought a boat owned by Tony Accardo, an associate of Russell and the alleged leader of the Capone gang, for just exactly $20,000. Further evidence that the Capone mob merely muscled into the lucrative S. and G. syndicate using Russell as a pawn is had from the fact that the 1949 tax returns for the partnership of Accardo and Guzik show a loss of $7,240 attributed to the operations of S. and G.

No business on the scale of the S. and G. Syndicate and the various gambling casinos, operated by notorious gamblers, could be run under cover. In fact, the business was run openly in violation of Florida laws, with the full knowledge of the community. Grand juries in 1944 and 1947 had no trouble in finding evidence of operations. A 1949 jury reported:

We could not see any purpose in repeating the work of our predecessor juries to discover officially and at great length that crime and corruption do exist here (p.736). Conditions have apparently not changed since the writing of the 1944 grand jury report (p. 737). There is present in our community a large number of individuals of unsavory reputation. These persons are criminals of national stature (p. 736). All forms of gambling are flourishing, the 1949 jury found, and there appeared to be little effort to curb them, although they were being carried on right under the eyes of the police (p. 737).

Daniel P. Sullivan, director of the Greater Miami Crime Commission, set before the committee a detailed statement as to the gambling and bookmaking operations, the criminal records and backgrounds, the infiltration of these criminals into legitimate businesses in Florida, and their out-of-State connections. The crime commission and the Law Enforcement League of Dade County, had both called the attention of the sheriff of the county to the open and notorious gambling operations. These activities went on, not only with public knowledge,, but with a considerable amount of public acquiescence. In the words of the director of the crime commission:

There is quite a large group of people that think that gambling is an asset in placing a dollar bet, and the average person does not realize the ramifications of what happens when it becomes highly organized and operated by syndicates.

Attorney General Ervin also called attention to the segment of public opinion which believes it is impossible to stop gambling, and that in any event it is good for business. Certain public officials with a demonstrated antipathy to law enforcement supported this viewpoint; the sheriff of Broward County flatly stated that he had been. elected because he was known to have a liberal point of view, that he favored a wide-open town; the sheriff of Dade County observed that $20,000,000 legal gambling at the tracks creates an atmosphere so favorable to gambling that the illegal off-track gambling is hard to stop.

The laxity of public officials in the face of this situation was described by the officials themselves. Sheriff Walter Clark of Broward County admitted that he knew the gambling places operating in his area. He had eaten in some of them at charity affairs, though he had never seen gambling there except when he went on raids. Raids were conducted only on complaint. He never checked up to see whether operations were resumed. Former Police Chief Short admitted that he had said he would have nothing to do with gambling. He left the job entirely to one detective, Pat Perdue. Sheriff Sullivan admitted that although Florida has a statute compelling visitors with a felony record to register upon entering the State, he had no idea whether the notorious criminals in his area, of whose background and presence he was completely aware, had complied with the law. Nor had he ever made any attempt to prosecute them for conspiracy to violate the laws of Florida.

The attempts of public-spirited citizens to remedy conditions were blocked by obstructive tactics of law-enforcement officials who took advantage of every technicality to avoid action within the State. When the Greater Miami Crime Commission offered the full facilities of its organization to Sheriff Sullivan in closing down the gambling casinos, Sullivan countered with a long brief to show that sheriffs had no responsibility for the repression of gambling, and with another describing the rigid restrictions of the law of search and seizure which would hamper him in obtaining evidence of gambling operations.

Honest law-enforcement officials ran into the same obstructive tactics. Since it was felt that the elected officials would not undertake to get evidence of gambling that would stand up in court, Judge Stanley Milledge acted under the statutory provision and appointed an "elisor" to get such evidence. The efforts of the elisors so appointed were hampered by the local police who appeared on the premises while a raid was in progress, and interfered with the work of the elisors. After arrests were made, an action was brought with the approval of the sheriff, contending that the elisor warrant was illegal. .

Where law-enforcement agencies took any action, it was apt to be for the protection of racketeers or the elimination of their rivals. The efforts of Pat Perdue to drive competitors of the S. and G. Syndicate out of business, and of Crosby to use the local sheriff's office for raids on the S. and G. but on no other bookies or gambling joints has already been mentioned. The prompt appearance of the mouthpiece of the S. and G. Syndicate during the Crosby raids leads to the suspicion that someone from the sheriff's office was tipping him off. Sheriff Clark admitted deputizing the guards who ran the armored trucks in which Broward County gamblers kept their bank rolls overnight. Three former deputy sheriffs in Sullivan's office stated that they were instructed to refrain from making arrests for bookmaking. One of them was discharged, after making inquiries about a bookmaking establishment which happened to be run by a relative of the deputy.

In the opinion of many witnesses, criminals from all over the Nation were able to act freely in the Miami area because the concentration of economic power they brought in from outside, enabled them to control local government and corrupt substantial portions of the community. "The profit motive in this thing is tremendous," said Attorney General Ervin, "and they naturally have to protect their investment; and, if they can bribe or buy anybody, they naturally will do it." Book-making and gambling, he stated, were dominated by syndicates including men so big that they can bribe and influence public officials.

Considerable evidence of direct bribes to law-enforcement officials was presented to the committee. Where no direct bribes could be traced, there was the unmistakable evidence of wealth of public officials acquired during their terms of office. Sheriff Sullivan's assets increased during his 5-year term from $2,500, which, was his net worth as given in a bank loan, to well over $70,000. This apparently does not include $26,000 which Sullivan and his wife sent to members of Mrs. Sullivan's family in Maryland. His deputy, whose purchase of a new Cadillac in 1949 caused Sullivan a certain amount of uneasiness, retired after 4 years to a farm for which he paid $26,000, although his salary was never more than $4,200 a year. Both Sullivan and his deputy distrusted banks, and testified to keeping large amounts of cash in their homes in a tin box, an old fishing box, or in a blanket. Melvin Richard, a young councilman who had kept up an effective opposition to the machinations of the S. and G. Syndicate, and who was largely responsible for revealing their members' close connections with the city government, testified that immediately after his election he was offered a share in the profits of the punchboard games in the area, if he would refrain from interfering with their operations.

Sheriff Clark, of Broward County, made a very large fortune by participating in the profits of gambling ventures, and as a partner in the Broward Novelty Co., which operated an illegal bolita and slot-machine business. The gross income of this company from 1945 to 1947 was more than $1,000,000.

In Florida, illegal gains from gambling and bookmaking, including funds rightfully due the Federal Government in taxes, were largely invested in homes, hotels, and other real estate. Like the local members of the S. and G., the visiting gamblers and bookmakers from Detroit and Chicago, and Cleveland and New York owned large expanses of property in Miami Beach and nearby sections of Florida. For years, Capone maintained a vast estate, and his successors and associates from other areas followed his example in buying elaborate homes for themselves and their families in the area. It has already been pointed out that the hotels which operated as headquarters for these gangsters and as locations for their gambling games, were owned and operated by the gangsters or their associates. There was also testimony that the racket element had an interest in a wired-music organizations whose chief stockholder was the operator of the Club Collins, one of the gambling casinos.

But the director of the Greater Miami Crime Commission, under questioning by Senator Hunt, estimated that a large proportion of the money made in gambling and bookmaking in Broward County and elsewhere was not invested or spent in Miami, but siphoned out of Florida by the visiting racketeers. It therefore represented not a boon to business, but a net loss to the Florida community.

The committee cannot understand and strongly condemns the reinstatement by Gov. Fuller Warren, of Florida, of Sheriff James Sullivan without a full and public investigation of all the facts brought out by this committee and by the Dade County grand jury

The committee held hearings in Washington and in Kansas City, Mo., to study the extent and interstate implications of organized crime in Kansas City. In the conduct of its hearings, the committee was greatly aided by the Federal law enforcement agents in Kansas City, and by the Kansas City Crime Commission. In addition, the committee had the benefit of the findings of the Federal grand jury which held extensive hearings in Kansas City in 1949 and 1950. In the course of its executive and public hearings, the committee heard a total of 48 witnesses, including Gov. Forrest Smith, and representatives of the law enforcement agencies of Kansas City as well as a number of the city's known gamblers and racketeers.

The committee's investigations indicated that while bootlegging and narcotics peddling still exist on a small scale in Kansas City, the vigilance of the Federal alcohol tax investigators and the investigators for the Federal Bureau of Narcotics has greatly reduced such violations from previously bad conditions. The committee found that there were a number of gambling houses operating in and around Kansas City and that, with the end of prohibition and the dissolution a decade later of the organized narcotics racket in Kansas City, the majority of the city's racketeers had concentrated their energies on gambling or activities relating to gambling.

As in other cities, a number of Kansas City racketeers have entered into legitimate business, sometimes as a front for gambling activities, but in, other cases, purely for the revenue that can be secured from combining otherwise legitimate enterprises with hoodlum methods to make sales and maintain monopolies. The committee found evidence of criminal infiltration and hoodlum tactics in the wholesale and retail liquor business, in the distribution of juke boxes and pinball machines, in the operation of a Kansas City bakery, and the operation of the horse race wire service. The problem of infiltration of legitimate business by criminals and racketeers is discussed at length elsewhere

The Federal grand jury investigating crime in Kansas City, Mo., found that the gambling business had, in years past, grossed more than $34,000,000 a year.

Until his violent death in April 1950, Charles Binaggio was generally conceded to be one of the central figures in Kansas City gambling circles. Binaggio occupied a dual position in Kansas City. In addition to his extensive gambling activities, he was the leader of the First Ward Democratic Club, and it was generally conceded that he could control an important segment of the Democratic vote in the city. Binaggio and Charles Garrotte (who was murdered with Binaggio), Anthony Gizzo, and Thomas Lococo were among the racketeers who dominated Kansas City gambling. The testimony before the committee indicated that these men and their close associates, most of whom had criminal records, had an interest in most of the gambling carried on in the city. Binaggio held a one-fourth interest in Coates House, a bookmaking establishment which in the year 1948 made a net profit of $100,000. He was associated with Gizzo and s