Al Capone's tax trial and downfall

The St. Valentine's day massacre set forth in motion the Government's urgent task in bringing the criminal element down. Specifically Al Capone. The Stock market crash had left a lot of people poor and jobless. Soup kitchens were set up by churches and some even by none other than Al Capone. Although some stated that Al had merely used this as ploy for favorable press during the beginning of his legal woes, he nonetheless had helped many down and outs during his reign as Chicago crime Czar way before the 1929 crash. Paying for coal to heat their homes, Christmas baskets, medical bills and other personal favors were the norm for Capone. He grew up poor and knew what it was to be in need.

The corrupt Chicago police could not be counted on to bring in the hoodlums and make the charges stick. They would be paid off or threatened if they felt the inclination to testify. The law could not stick any murder rap on Al. The Valentine massacre turned up many clues by Chicago detectives and yet nothing ever came out of it. Capone's inner circle were well insulated. Capone owned nothing and thought he could not be linked financially to anything. His Florida home was under his wife's name, the Chicago home was under his mom and sister's name. Herbert Hoover After seeing the Capone name in constant headlines Herbert Hoover was to have said "Get that man Capone!".

What lead the Government to go after Al, was their successful prosecution of his brother Ralph, and the uncovering during Ralph's case of five bank accounts in Cicero. These were found at the Pinkert State Bank and were somehow related to Al, as Ralph was known as Al's personal money man.

Eliot Ness was the famous treasury agent who smashed some of Capone's brewery installations. Alot of people poo pooed his efforts, but although limited, they were there and in earnest. He was a opportunist somewhat. He did seek publicity. Who wouldn't? One must also realize that seeking this publicity could easily have gotten him killed. Eliot Ness racked up the prohibition charges against Capone and his gang, hoping to get him a sentence for some prison time. The Government thanked Ness, but decided to go with the income tax angle instead. The Government thought they could make these tax charges stick better and get a lengthier prison sentence than the prohibition violations. Ness was probably disappointed that he wasn't the one who got the big fish.

In later years, Eliot Ness met up with writer Oscar Fraley. Upon listening to his meager exploits connected with smashing the Capone gang, Fraley saw money to be made for him and Ness, so he polished up the story to what it has become known for the past 40 some years. Ness in need of money didn't mind. Unfortunately, he never saw it's success when he died of a heart attack before the release of the book called The Untouchables.

Eliot Ness and his Untouchables busted Capone run stills enough to put a dent in his financial situation. Capone needed lots of funds for his defense against the Government's tax beef.

The true heros who really brought down Capone and his ilk were the IRS, specifically, a man named Frank J. Wilson. His task was to ferret through all the documents he could find and weed out income linked directly to Capone and his gang. He worked many late hours in his tiny cramped Chicago office, until he stumbled upon a ledger belonging to the gang. It had been confiscated years ago during a raid at the Hawthorne Inn. Wilson along with Elmer Irey and others prepared all the paper trail necessary for prosecutor George E. Q. Johnson and associates to nail Capone's lid shut.

This victory would most certainly put feathers in all of their caps in order to gain higher positions such as judges etc... After all Capone was the biggest game there was and this would make big news! After rejecting Capone's offer of back tax payment that included a 2 year sentence for an admission of guilt, the trial of the 30's was on.

Al's calculated expenditures tallied up by the IRS intelligence Division. According to Washington's Chief of the Special Intelligence Unit, Bureau of Internal Revenue Elmer L. Irey, he had been given the authorization to investigate Al Capone's wealth as early as October 18,1928.

Besides having very important witnesses, the Government had infiltrated the Capone gang via the Lexington Hotel. Frank Wilson had placed an agent named Michael Malone in the Lexington Hotel and pretend he was an out of town gangster from Philadelphia who was on the lam for various crimes. He kept to himself, but slowly gained confidence when questioned by a few Capone gangsters at a friendly card game. All the bases were covered. He wore clothes and hats from Philadelphia clothing stores. Sent letters to friends there who returned specially written correspondance to him. He knew his letters would be opened by the Capone crew. He was Wilson's man inside and was the one who warned Wilson that there might be an assassination attempt on him and George E.Q. Johnson.

Michael Malone was a big strapping Irish descending American, but you couldn't tell by his looks. He had dark hair and a dark complexion, just right to play an Italian gangster. See below.

A blown up shot of Agent Michael Malone taken at exit of Capone tax trial (background at right of Capone). Malone infiltrated the Capone gang's Lexington Hotel headquarters posing as Philadelphia gangster Michael Lepito.

Born in New Jersey on October 21,1893, Michael Malone was the son of Irish natives Lawrence and Mary Malone. He was a World War 1 veteran before becoming a Special agent for the Internal revenue service dept. Growing up in Jersey, Malone had picked up fluent Yiddish, Italian and Greek. This made him perfect for infiltration, especially since his dark hair and complexion made him look European instead of his proud Irish heritage. One striking trait was his eyes, piercing and almost cat like. Michael had married a woman named Irene and together they had a child. Tragically, the child died. Irene and Michael later divorced. This was probably due to the tragic family loss and his indulgence with his secretive Goverment employment.

Malone had worked many high profile cases, such as the Sacco and Vanzetti case, Al Capone and Frank Nitti tax indictments, as well as on the Lindbergh kidnapping. Mike Malone made a court appearance as a witness for Ralph Capone's tax case in 1951. He had been working undercover at Ralph's Mercer Wisconsin hotel for a couple of weeks.

Malone later moved to Ramsey County, St. Paul, Minnesota and lived at 340 Cedar street. He had been a resident there for 24 years. Hospitalized, Michael Malone died on the 10th of November in 1960. It had been 10 days after the onset of a massive cerebral hemorrage. A week after his death, Michael F. Malone is interred at Arlington National Cemetary with full military honors. Truly a brave man.

Another important piece to bringing Al Capone down was an informant named Edward O'Hare. Originally from St. Louis, he was a lawyer and a business partner of Capone. He and Capone were owners of a dog track which raked in lots of money. O'Hare had once hoodwinked an inventor of the mechanical rabbit out of his patent which made the dogs run around the track. That alone brought him lots of money. O'Hare, it has to be stated did not turn informant against Capone for the good of mankind, but more for a favor he had obtained from the Government in exchange for his info.

Frank Wilson and the Government made a deal. It's not definite if Edward did this to get his son in Annapolis or simply to avoid his son getting kicked out of Annapolis for the senior O'Hare's association with Al Capone.

Al Capone was a celebrity, no doubt about it. There was talk that the Government had really went after Capone when Herbert Hoover was at a ball game at the same time as Capone and people cheered for Al and not Hoover. There was also talk that Capone had had a party that was so loud that it annoyed Hoover. Whichever the case may be, Al was going to prison no matter at what cost. Someone had to pay for gangsterism and Chicago's tarnished reputation. It would also show the common people, who were suffering and jobless, that their Government was on the job.

Capone was getting the impression as the tax case was preparing against him that he might be in bigger trouble than it had let on. His lawyers were telling him that he would no doubt do time. Upon wanting to meet up with Frank Wilson and Agent Ralph Herrick in order to pay up his back taxes, one of his lawyers, a Lawrence Mattingly, may have made things worse for the big boy.

The meeting took place on April 17,1930. Upon interrogation Capone had no answers for some hard questions of income, gambling debts, houses, clothes and various other expenditures. This made Capone really look kind of guilty. Not satisfied with Capone and his lawyers evasiveness, Wilson and the other interrogation officers decided the Government had a very strong case that would put Capone away for a very long time.

On June 16, 1931, Capone's lawyers had offered a deal of paying back taxes and a prison term of two years in Leavenworth Penitentiary in order to satisfy the Government. George E.Q. Johnson was at first complacent with this. He had figured any prison time would be a success compared to a jury's not guilty verdict. He also knew that Capone's men had been throwing their weight around to find out who the jury was and was beginning to intimidate witnesses. Some were trying to bribe some members of the jury.

On July 30th, Judge Wilkerson in open court told Capone and his lawyers that there would be NO bargaining in his court. Capone would have to take his guilty plea back and face trial by jury.

Feeling trapped, there was even mention by Johnson that Al's lawyers gave the Government a final payment offer of $4,000,000 for his $215,000 in delinquent back taxes.

Eddie O'Hare had contacted Wilson to tell him that the Capone crew had gotten wind of the chosen jury list. Incredulous Wilson asked O'Hare to name the first couple of names off that jury list. The matter was immediately brought up to Judge Wilkerson. Judge Wilkerson then chose each jury member from another panel on the opening day of Capone's trial to avoid tampering. Most in the jury were old men and farmers who never paid attention to Capone in the news.

On October 6, 1931, the opening day of the Capone trial, many female workers in the courts building tried to get a glimpse of Al Capone. Although a criminal, he was still considered somewhat of a big celebrity. Many people stopped every day to try and get a view of Al in court. Even Edward G. Robinson, the famous Hollywood actor stopped in to study Capone's mannerisms in order to play gangsters in movies. His character Rico in "Little Caesar" was based on Capone. Others weaseled their way in to try to get autographs. Al Capone was refusing to sign anything. He claimed that he had signed enough things that were now getting him in trouble.

Important witnesses for the prosecution was Fred Ries, who was employed as the gambling house's cashier by the Capone mob, along with Leslie Shumway who was a bookkeeper at the Hawthorne smoke shop during the years of 1924 -1926. Shumway's writing was identified in the 1924 ledger that was confiscated during a raid there in 1925. It covered bets and profits for the dates of May 1,1924 to April 30,1926. Wilson had stumbled across it by chance during one late evening at his office. The ledger showed payments made to Capone and others in the gang. These were gambling profits raked in from illegal activities.

This, along with other invoices and with the testimony of store clerks, got Al a one way trip to the big house. It was seized in a May of 1925 raid at 4818 West 22nd street by Reverend Hoover ( a Minister of Gospel) and his assembled vigilante anti-vice squad mostly comprised of regular citizens who were appalled at the lack of policing in Cicero. The ledger eventually ended up in Frank Wilson's hands.

Shumway was sent away under guard to California until the Capone tax trial was to begin. Fred Ries already had testified against Jake Guzik in another tax trial and was summoned again to testify against Capone. Fred Ries thought enough was enough and wanted to live, so he refused. Wilson knew that Ries had an aversion to filth, bugs and rodents so he devised a plan of putting Ries in such a setting to make him change his mind. Ries was placed in a bug infested fithy cell.

Fred Ries was immediately whisked away to South America until his turn to testify in court against Capone. Ries had already testified on other Capone gang members for their tax trials. Before the feds had caught up with Ries in St. Louis, the Capone crew had sent word to Ries for him to flee to Mexico in order to avoid being prosecuted by the Government. It was all likely that the Capone gang would have made Ries disappear, especially since they deduced that he had turned over goverment witness having already testified in other cases.

Witness after witness was paraded in front of the court. Bank cashiers, grocers, hotel clerks, shop keepers, Western Union cashiers, construction foremen all proving that Al Capone paid cash and big amounts of this cash for jewelry, cars, clothes, furniture,food, lodgings etc...

Western Union money transfer issued by Florida branch manager Katherine Gaines. She testified in court about these transfers and that Al had authorized various members of his entouragebe allowed to cash them on his behalf. This included his brothers and the Florida mansion caretakers. Miss Gaines identified various transfers amounting to a total of $31,800. Some were cashed by Capone, his brother and wife Mae. There were even transfers cashed by his servants. All these transfers were differentiated from the A. Costa ones cashed for him by Parker Henderson.

How could a man with no income buy and afford all these luxuries? Capone's lawyers tried to pin it on Capone's gambling habits. That didn't satisfy the court nor the jury.

Michael Ahern, Al capone and Albert Fink during Al's tax trial. Funny thing was that Michael Ahern and another Capone lawyer named Thomas Ahern, had also been lawyers forsome famous Northsiders such as O'Banion, Weiss and Dan Macarthy back in the early 1920's.

Shumway and Ries (bookeeper and cashier) pretty much nailed Capone's coffin lid shut when explaining how money made from gambling was ferreted into bank accounts under various names and all getting back to Capone and Guzik. Robert Barton, Guzik's Chauffeur was listed as cashing most of the money transfers and checks which were later funneled to Capone in Florida.

Florida hotel proprietior Parker Henderson, was questioned and testified that he had endorsed and cashed several Western Union transfers for Capone in Florida around the time of 1928. He had forged the name Albert Costa.

A photo of the famous diamond belt buckles Al had distributed like candies was shown to the public. Parker had received one as a gesture of friendship from Al Capone. Ries and Shumway explained and decoded most of the ledger.

They placed names at "The Ship" "The Subway" and other various locations in Cicero. The gambling operations were shifted from time to time in order to avoid raids and detection.

This was made known to the public on Oct.12,1931. This particular buckle was given to Parker Henderson, Florida hotel man who had befriended Al Capone and helped him acquire his 93 Palm Isle Miami home. Parker also had helped Capone cash checks and acquire hand guns.

When the money made it's way to Capone, it was almost all in cash. There was talk of many bags of cash in the Capone Florida mansion. Most was at the foot of Capone's bed.

The other sums were divided amoungst the gangsters and the rest put back into running mob operations. Capone was spending alot of money bribing officials to look the other way of his bootlegging and gambling operations. Eliot Ness was doing his part in smashing stills which cut off heavy income from the Capone gang. The Capone gang could no longer furnish huge bribes to the police and officials.

Probably the biggest mistake Capone made was to hire two criminal lawyers in Nash and Fink. They had no experience in tax matters. He would have done better with a tax expert, who could have proven that the statutes of limitation on some of the charges against Capone were now void.

Let's not forget Al's Florida home. Here's an invoice made out to Al capone from the A. Quint Company for flatware and jewelery for his Palm Isle estate.

At 10:51pm, Capone was at the Lexington hotel when he received word that the jury had come to a verdict. Capone grabbed his overcoat and made his way to court. At 11:10 he was seated in the courtroom. The judge asked the jury "Have you reached a verdict?" The jury foreman nodded and handed the baliff a paper that was then given to the court clerk.

This meant Capone was convicted of three felony tax evasion counts for 1925, 1926 and 1927 and two misdemeanor failure to file counts for the years 1928 and 1929.

Capone returned to court for sentencing on the 24th of October. Capone was sentenced to a total of 11 years in a federal penitentiary and fined $50,000 He was also ordered to pay the prosecutions court costs of $30,000.

A baliff handed Capone a liens (seizure) on his Florida property for non payment of taxes. Capone completely furious, lunged at the man whilst spewing expletives. Capone was held back by court guards and taken away to his Cook County cell.

There he was visited by friends and family. His mother brought food from home. Al played cards with firends and fellow inmates till his time and options ran out.

After almost a year of appeals and denials, Capone was finally whisked away from his Cook County jail cell and sent off to the Atlanta State Penitentiary. After various reports in the newspapers of favoritism and payoffs to other inmates the officials acted.

May 4,1932 Capone enroute to Atlanta Penitentiary via the "Dixie Flyer". Although covering up the handcuffs, he is manacled to a diminutive car thief named Vito Morici at right.

In August 1934, Capone was suddenly removed from his Atlanta cell and shipped off via train with other inmates to Alcatraz Island in San Francisco bay. In 1938, Capone was sent to Terminal Island for observation after a mental breakdown. Officially released from prison on November 16, 1939, he is then sent for treatment to a Baltimore hospital. In March of 1940, his family bring him back to the safety of his Florida Palm Isle retreat. He lives the rest of his life going in and out of a child like state. He dies on January 25,1947.

Capone makes an appearance accompanied with brother Ralph and his lawyer for a closed session with Government lawyers. They question his ability to pay back $201,347 still owed to the Government.

On November 8,1939, lawyer and once Capone business partner and informant Edward J. O'Hare is driving along Ogden Avenue near Talman Avenue when a car pulls up beside him. A man levels a shotgun at O'Hare's head and squeezes off two volleys. O'Hare's car continues on it's path and swerves into a pole near Rockwell street. He is killed instantly having been hit in the neck and head. The force of the impact on the pole causes O'Hare's limp body to lunge forward bending the steering wheel and column like a pretzel. His eyes and mouth are open, as if in shock.

Beside him is a loaded spanish .32 automatic and a poem on the shortness of life and it's comparison to the hands on a clock. Also in his possession are papers with a list of woman's names, a string of rosary beads and some religious medals.

O'Hare had once stated that his dealings with gangsters and hoodlums was a relatively safe affair, as long as one kept it strictly at a business level. He had known many a bootlegger during his years as an up and coming lawyer in St. Louis. He unfortunately crossed a line he certainly knew meant his doom.

Michael J. Ahern, part of Capone's team of lawyers dies of a heart attack in his home at 4536 North Mozart street on September 22,1943. He was 56 years old.

Albert Fink, one half of the lawyer team who defended Al Capone at his tax trial of 1931. Fink dies on March 25,1941 at his home in Tucson, Arizona.He was 67 and was previously suffering from poor health.

George E.Q. Johnson, United States district attorney who vigorously went after Capone for income tax charges and won dies on September 19,1949 of a brain hemorrhage in his home at 7327 Crandon Avenue. He was 75.

Frank J. Wilson, the man responsible for bringing down Capone through ledgers found accidently in his cramped Chicago office dies at Georgetown University Hospital on June 22,1970 at age 83.

Jacob I. Grossman, was one of the attorney's who prosecuted Al Capone in his tax trial and maintained to keep Al in prison for his appeals case dies March 1975 in St. Joseph's hospital at age 82.

Judge James H. Wilkerson, The judge who sentenced Al Capone to 11 years for income tax evasion dies of a heart attack in an Evanston Hospital on September 30,1948. He was 78.

"Mysterious Mike" Special agent Michael F. Malone, who infiltrated the Capone gang and fed information to Frank Wilson specifically as to when Capone money transfers were leaving the Lexington via Florida, dies on the 10th of November 1960 in Ramsey County, Minnesota. Malone had also been responible for sending Frank Nitti to Levenworth prison on Income tax charges.

The real unsung hero who cared about Chicago's reputation and took it upon himself to bring down the gangsters was Frank J. Loesch. He began the quiet movement against Capone to save his beloved Chicago's reputation.

The American Bar association revisted his income tax trial with lawyers and by modern standards of law, he was found not guilty. His defense back then centered on his gambling habits which found him no sympathy. Today his lawyers would have gotten him off by demanding that the Government prove specifically that he received any monies and that even if they could prove that he did, they would also have to show that he knowingly did not pay his income tax. In the 1920's, less than 10 percent of the people in the United States had to file returns.