The Dark Side of Camelot

In 1931, no longer a movie magnate, Kennedy became a major contributor to and fund-raiser for Franklin D. Roosevelt’s first successful campaign for the presidency. Roosevelt astonished Washington and Wall Street in mid-1934 by naming Kennedy, who was notorious as a stock market manipulator, chairman of the Securities and Exchange Commission (SEC), a New Deal agency set up to reform and regulate the financial markets. FDR was said to have explained the perplexing choice by citing, with a laugh, an old saw—“It takes a thief to catch a thief.” There was a brief stint later as chairman of the Maritime Commission and a disastrous three years as U.S. ambassador to England, where by 1940 Kennedy’s isolationism and vocal skepticism about England’s ability to continue the war against Germany made him enormously unpopular abroad and at home. It was his last government post. Kennedy would spend the next twenty years shuttling between homes in Palm Beach, Florida, and Hyannis Port, Massachusetts, shepherding the careers of his nine photogenic children and making huge amounts of money in real estate and business. After his son’s election to the presidency, Joe Kennedy served as a one-man kitchen cabinet until his severe stroke in December 1961. He remained an invalid, able to comprehend but unable to speak, until his death in 1969. He had outlived his daughter Kathleen and three sons—Joe, Jack, and Bobby.

Joe Kennedy was, by all accounts, a brilliant corporate predator and an expert manipulator of both Wall Street and his fellow investors. What is missing from the published accounts, and the public record, is an appreciation of how Kennedy was also able to profit from his understanding of the corruption that made American big-city politics work, knowledge that he acquired at the side of his father-in-law, Honey Fitz.

The House Elections Committee files make clear that Kennedy, at a minimum, served as a money man during Fitzgerald’s campaign against Peter Tague; the committee generated evidence showing that Fitzgerald’s decision to challenge Tague, a fellow Democrat, had been mandated by party bosses in Boston after Tague, while in the Congress, would not cooperate in a series of corrupt and highly profitable real estate schemes involving the Fore River Shipyard. Tague testified that he refused to help Fitzgerald and his cronies buy land adjacent to Fore River which was scheduled to be a future site for a large federal housing project. At the time, Joe Kennedy was assistant general manager of the shipyard, and the questioning by committee investigators strongly suggested that they believed Kennedy was involved in the profit-taking. Making money illicitly may well have been essential to Kennedy’s early financial success—as important, perhaps, as his skill in Wall Street speculating.

As those who worked in politics with him came to understand, the seemingly straightforward Kennedy was, at best, extremely secretive and, at worst, an incessant liar on all matters involving his financial interests. Just how much money he made and how he made it always remained a secret, even from his wife and other members of the family, who learned never to ask questions. What is known, one biographer wrote, is that money began to “flood into the family” in the early 1920s, at the same time that federal agents, who knew nothing of Joe Kennedy, began to track huge shipments of illicit liquor into the United States, triggered by the insatiable American demand for liquor and the advent of Prohibition.

Kennedy was one of the first to seize a dominant position in the liquor importing business. He used medicinal permits to avoid the restrictions of Prohibition, gaining intimate knowledge of the industry that would place him ahead of his competitors for the legal trade when the moment arrived. He swept into London in the fall of 1933, when it was clear that Prohibition was about to end, and signed agreements making him the sole American distributor of two premium scotches and Gordon’s gin.* Kennedy established Somerset Importers Ltd., and operated it until its sudden sale, for $8 million, in 1946 (equivalent to about $55 million in 1997 dollars).

Kennedy’s rapid and highly profitable shift into the liquor importing business helped trigger what would become an unverified national rumor by the time his son entered the White House: that Joe Kennedy had been deeply involved in the bootleg liquor business since the first days of Prohibition—a business that was dominated by such organized crime leaders as New York’s Frank Costello, Newark’s Abner “Longy” Zwillman, and Chicago’s Al Capone. The rumors were made more plausible by Joe’s shipbuilding experience at Fore River during World War I—most bootleg liquor came to America by boat—and by the sheer number of Kennedy and Fitzgerald family members who had been in the liquor business before Prohibition began in 1920. Joe Kennedy’s father owned at least three taverns in Boston as well as a prosperous liquor importing business that handled shipments from Europe and South America. And two of Rose Kennedy’s uncles, younger brothers of Honey Fitz, remained active in the bootleg liquor business during Prohibition.

The difficulty in attempting to evaluate the many reports of Joe Kennedy’s participation in bootlegging is the remarkable lack of documentation in government files. The FBI, in the years since Joe Kennedy’s death, has released hundreds of pages of Kennedy files in response to Freedom of Information Act (FOIA) requests, but those files—a compilation of security reviews and fawning letters between Hoover and Kennedy—make no mention of any link between Joseph Kennedy, organized crime, and the bootlegging industry. Yet, in scores of interviews for this book over four years, former high-level government officials of the 1950s and 1960s, including Justice Department prosecutors, CIA operatives, and FBI agents, insisted that they knew that Joe Kennedy had been a prominent bootlegger during Prohibition. “I do know that he had associates in organized crime who respected him,” Cartha D. DeLoach, a deputy director of the FBI under J. Edgar Hoover, said in an interview for this book in 1997. But, added DeLoach, “I only knew him through Mr. Hoover. He had considerable experience in the bygone era of smuggling, and that’s how he made his fortune, according to Mr. Hoover.”

One uncontested fact is that Joe Kennedy, through his liquor importing activities, defied all the risks and all the gossip—a defiance his son Jack would emulate in later years—by doing retail liquor business with the most notorious organized crime families throughout the post-Prohibition 1930s and well into the 1940s.

The most direct assertion of Kennedy’s involvement in bootlegging came from Frank Costello, the most powerful Mafia boss of the 1940s and 1950s, who sought in his later years to cast himself as a successful businessman. In February 1973, at the age of eighty-two, Costello decided to begin telling his life story to Peter Maas, the prize-winning New York journalist. Ten days after he began, he suffered a heart seizure and died, before Maas could fully explore the Kennedy-Costello relationship. Maas later told the New York Times that Costello had confided that he and Kennedy had been “partners” in the bootleg liquor business during Prohibition—a partnership that began, Costello said, after Kennedy sought him out and asked for his help. In an interview for this book, Maas said that Costello specifically recalled arranging for the delivery by sea of bootleg scotch to a Cape Cod beach party celebrating the tenth reunion of Joe Kennedy’s Harvard class of 1912. “We were together in the liquor business,” Costello told Maas, adding that Kennedy was responsible for the shipping of liquor to the United States from abroad.

Similarly, in his 1983 memoir, A Man of Honor, Joseph Bonanno, the retired New York Mafia boss, said that Costello always told him, “and I have no reason to doubt it, that during Prohibition he and Joe Kennedy of Boston were partners in the liquor business.… I would sometimes go to Sag Harbor, Long Island, in the summer. This was one of the coves, so I was told, that the Kennedy people used to transport whiskey during Prohibition.”*

Some of Joe Kennedy’s hired hands—those silent men whose names were appropriated for Kennedy’s buying and selling of real estate and stock—also told me their secret stories about the Kennedy link to Costello. Harold E. Clancy of South Boston, one of the few Joe Kennedy employees still alive in the mid-1990s, said in an interview for this book that it was commonly supposed by the staff that Kennedy and Costello worked together during Prohibition. Kennedy “had trucks and he also had boats,” Clancy said. “I heard anecdotes, rumors, and stories of bringing Haig & Haig scotch from Canada to Cape Cod and to Carson’s Beach in South Boston.” Another senior Kennedy aide once told him, Clancy recalled, that Costello, who made big money in the early 1930s running slot machines in New York and New Orleans, once “tried to interest the ambassador [Kennedy] in buying into the company that made the machines, but he was too smart.” (The slot machines were manufactured in Chicago by a firm controlled by the Capone syndicate.)

Clancy was recruited by Kennedy for his personal staff in the late 1950s, after spending years as an investigative reporter and editor for the Boston Traveler. He told me that the more senior members of Kennedy’s staff would share cryptic stories of Kennedy’s derring-do. Many involved Kennedy’s willingness to stand up to organized crime shakedowns in the years after Prohibition, when he was heavily involved in the legitimate sale and shipping of liquor. Kennedy, for example, was said to have hired “people from Murder, Incorporated” to deal with gangster-led unions that were threatening labor trouble. “I knew,” Clancy told me, “that Joe had hired some very hard cases to deal with these gangsters who were in control of unions and giving him a hard time.” Clancy provided no further details.*

Yet another suggestion of an early Kennedy connection to bootlegging came from a 1996 interview with Q. Byrum Hurst, an attorney in Hot Springs, Arkansas, who for more than twenty years represented Owney Madden, the notorious gangster, until Madden’s death in 1965. Madden, born in England, had in his youth been a sadistic killer in New York City, but he emerged in the 1920s as a sophisticated racketeer who moved as an equal among the crooked politicians and major crime figures along the East Coast. He ended his career as a Hot Springs casino operator, whose facilities—never challenged by local police—were always available for criminal leaders needing a quiet retreat. “Owney and Joe Kennedy were partners in the bootleg business for a number of years,” said Hurst. “I discussed the Kennedy partnership with him many times.… Owney controlled all the nightclubs in New York then. He ran New York more than anyone in the 1920s, and Joe wanted the outlets for his liquor.” Hurst, who served in the Arkansas state senate for more than twenty years, added that Madden “told me he valued Kennedy’s business judgment. He recognized Kennedy’s brains.”

Another insider, Abraham Lincoln Marovitz of Chicago, who represented many leading organized crime figures before beginning a forty-year career as a local and federal court judge in Chicago, also insisted that Joe Kennedy had been a bootlegger. “I know about that era,” the ninety-two-year-old Marovitz said in an interview for this book. “I represented some people. Kennedy was bootlegging out there in New England, and he knew all these guys. He had mob connections. Kennedy couldn’t have operated the way he did without mob approval. They’d have knocked him off, too.” Marovitz, a longtime associate of legendary Chicago mayor Richard J. Daley, was appointed a U.S. district court judge in 1963 by President John F. Kennedy.

There is further anecdotal evidence alleging that Kennedy was trying to profit, as were scores of other bootleggers, in the huge shipments of illicit scotch and gin that were off-loaded from ships anchored off the beaches of Massachusetts south of Boston. The liquor would then be trucked in convoys via nearby Brockton to New York City, where it could fetch higher prices than in Boston. The arrival of the first of the so-called rum fleets in 1923 was extensively reported by leading newspapers, including the New York Times.

In 1985 a New Jersey journalist, Mark A. Stuart, an assistant editor of the Newark Record, published a biography of Longy Zwillman in which he described Joe Kennedy’s rage at Zwillman for Zwillman’s involvement, so Kennedy believed, in the hijacking of a truck convoy of Kennedy-financed bootleg whiskey in 1923. The Stuart biography quoted Joseph Reinfeld, Zwillman’s bootlegging partner, explaining that “I told Joe Kennedy that his shipment, the one that was hijacked outside of Brockton … couldn’t have been done by one of our people. I don’t think he believed me.… [Kennedy] said it must have been that punk kid Zwillman, making a deal to hijack his whiskey, … said he’d get Longy if it was the last thing he did.”*

A description of the hijacking that suggested that Reinfeld was right in denying involvement was provided by Meyer Lansky to three Israeli journalists, Dennis Eisenberg, Uri Dan, and Eli Landau. They published a sympathetic biography of Lansky in 1979, based in part on extensive interviews. Lansky was then living quietly in Israel and trying to avoid extradition to the United States. In a chapter entitled “The Feud with Joseph Kennedy,” Lansky and his longtime associate Joseph “Doc” Stacher claimed that their organization—and not Zwillman—was responsible for the hijacking, which they recalled as taking place four years later, in 1927. The subsequent shoot-out, they said, took the lives of eleven men. The whiskey had been shipped into New England from Ireland by Joe Kennedy, and Kennedy knew who was responsible for its diversion. “Kennedy lost a fortune in the hijack,” the three Israelis wrote, “and for months afterward he was beset by pleas for financial help from the widows and relatives of the killed guards who were supposed to protect the cargo.” Lansky and Stacher remained convinced, the Israeli authors wrote, that Kennedy “held his grudge” and passed on his hostility toward some organized crime bosses to his son Robert. “They were out to get us,” Lansky said at his retirement home in Tel Aviv.

The most significant and yet least-noticed account of hard evidence tying Kennedy to business dealings with crime figures can be found among the many thousands of pages of testimony on organized crime generated in the early 1950s by the famed Senate hearings chaired by Estes Kefauver, a Democrat of Tennessee. During scores of public hearings across the nation, Senate investigators and local police officials focused on, among other things, the influx of gambling and racketeering in the Miami area prior to and during World War II. One of the most important front men for organized crime in that era was Thomas J. Cassara, a lawyer from New London, Connecticut, who first came to the attention of law enforcement officials in the late 1930s, when he signed a lease as co-owner of the newly constructed Raleigh Hotel in Miami Beach, which was known to have been financed by organized crime families led by Capone’s successors in Chicago and Costello in New York. A few years later, just as World War II was breaking out in Europe, Cassara took over the leases of two nearby hotels, the Grand and the Wofford. Daniel P. Sullivan, a former FBI agent who became operating director of the Crime Commission of Greater Miami, told Kefauver’s Special Committee to Investigate Organized Crime in Interstate Commerce that the area around the Cassara-operated hotels in Miami Beach “became nationally known as a meeting place probably for more nationally known racketeers and gangsters than any one local area in the United States.” The Wofford Hotel, in particular, became the hotel of choice for the criminal elite, Sullivan testified, including Costello, Joey Adonis, Longy Zwillman, and many senior members of the Miami-based organization of Meyer Lansky. This was an era, Sullivan added, when America’s racketeers, hiding their ownership behind men such as Cassara, were pouring “difficult to trace” money into dozens of legitimate businesses, including hotels and nightclubs.

Cassara left Miami in 1941. By 1944, according to testimony before the Kefauver Committee, he was working full-time for Joe Kennedy’s Somerset Importers. The testimony came from Joseph Charles “Joey” Fusco, a former bootlegger and strong-arm man for Al Capone in Chicago. In October of 1950, Fusco was subpoenaed to testify at a closed-door hearing and asked, among other things, about his dealings with Cassara. Fusco replied unhesitatingly: “When he first came to Chicago, I think [it] was in 1944, he was working for Kennedy, the Somerset Import Company. He was their representative here. He used to call on the trade as a missionary man [sic], and that is when I first met Tom Cassara in Chicago. He came into our office and introduced himself. From then on we knew Tom Cassara’s working for Somerset in Chicago. Later on, he opened a company here called the Raleigh Distributing Company. He became one of the distributors with us. In other words, he came in and became a distributor for the Somerset line.” The reference to Kennedy’s company was fleeting, and although the committee understood who Fusco was talking about, Joseph P. Kennedy’s name does not appear in the index to the hearings. Journalists plowing through the voluminous transcripts did not link Kennedy to Cassara or Fusco, and thus the important Fusco reference to Joe Kennedy’s liquor importing business escaped public notice.*

In late January 1946, Cassara was shot in the head, gangland style, in front of a mob-dominated nightspot known as the Trade Winds on Chicago’s trendy Rush Street, an area dominated by nightclubs, bars, and restaurants in the infamous East Chicago Avenue police district, where the hoodlum “outfit” exercised near-total control over illegitimate—and legitimate—business activity. Chicago newspapers identified one of Cassara’s business partners as Rocco DeStefano, but did not report that DeStefano was a first cousin of Al Capone and Joey Fusco. Nor did the newspapers report that Cassara was an employee of Joe Kennedy’s liquor importing business. Cassara survived the bullet wound, the case remained unsolved, and newspaper attention quickly turned elsewhere. Cassara left the liquor distribution business and moved to Los Angeles, where he once again operated as a front man for organized crime families in New York and Chicago.

Joe Kennedy began negotiating his exit from the liquor business within months of the Cassara shooting. On July 31, 1946, he formally sold Somerset to a New York firm controlled in part by New Jersey gangster Longy Zwillman and his longtime Prohibition partner, Joseph Reinfeld.

With that sale, Kennedy cut his last known tie to the liquor business. But few businessmen had his understanding of the intricate relationship between politicians, unions, and organized crime in the major American cities after World War II. Joe Kennedy’s knowledge and contacts would play a major role in the 1960 presidential election, an election stolen, with the help of organized crime, from Richard Nixon.

In 1945 Kennedy bought the Merchandise Mart in Chicago, then the world’s largest building, located just north of the Chicago River, in the East Chicago Avenue police district, and joined the long list of businessmen making monthly payoffs to stay in business. The Mart was famed for its block-long speakeasy, which swung into operation shortly after the building opened in 1930, with no interference by the local police. “The free lunch was magnificent,” New York Times reporter Harrison E. Salisbury recalled in a memoir. “I never knew whether Old Joe owned the bar, but we thought he did and it made someone a lot of money.” One of Kennedy’s former employees, in interviews for this book, said he knew nothing of a Kennedy involvement in the Merchandise Mart speakeasy, but he did recall that Kennedy maintained ownership, at least into the late 1950s, of two old-fashioned Chicago saloons near the Mart that also were within the jurisdiction of the East Chicago Avenue police district.

The district was famed for having what senior police officials called “a solid set-up” of corruption. Organized crime controlled the bars, gambling, and prostitution that dominated the area’s economics, just as it did in Boston’s Fifth Ward. It was understood that any illicit business could operate without disruption, as long as two payoffs were made at the beginning of each month—one to the East Chicago Avenue police and one to the local ward committeeman, who represented Chicago’s Democratic political bosses. Journalist Sandy Smith, who in the 1980s became the chief investigative reporter for Time magazine in Washington, was assigned to East Chicago Avenue as a police reporter for the Chicago Tribune in 1946. “The mob was so strong,” Smith recalled in an interview for this book. “They had the police department and they had the politicians. If you paid at the beginning of the month, you had a month of immunity.”

Only one FBI document showed a direct link between organized crime figures and Kennedy’s liquor importing business, and it was not among the documents on Kennedy routinely released to journalists by the FBI. In this heavily censored document, part of a 1944 survey of “outstanding mobsters and racketeers” in the Miami area, the FBI reported that a gambler named Charlie Block was “the Southern representative of the Somerset Importers from New York City. He [Block] is known to be a big figure in the liquor industry.” The FBI document added that Somerset was owned by Joseph Kennedy. Block later operated one of Miami Beach’s most popular restaurants, the Park Avenue, in partnership with a professional gambler named Bert “Wingy” Grober, one of Joseph Kennedy’s close friends, who was also heavily involved in Mafia-controlled casinos in Las Vegas. Joe Kennedy’s love for Las Vegas, with its high life, beautiful women, and easy access to political cash, would be shared by his son Jack.

Joe Kennedy’s decision in 1946 to sell Somerset to Longy Zwillman and Joe Reinfeld and get out of the liquor business has been interpreted by some historians as a result of Jack Kennedy’s decision—made with his father’s strong encouragement—to run for Congress that year. “He had enjoyed thirteen profitable years,” wrote Richard J. Whalen, in The Founding Father, a bestselling 1964 biography of Joseph Kennedy, “but the whiskey trade was vaguely embarrassing and not at all in keeping with the public effect of dignity that Kennedy wished to achieve.” And yet Joe Kennedy continued to flaunt his liquor connection after his sons moved to Washington, routinely sending gifts of high-priced scotch to the aides and colleagues of his sons. “Even when Bobby was attorney general,” recalled Joseph F. Dolan, a top Kennedy deputy in the early 1960s, in a 1995 interview for this book, “every Christmas one of the black clerks would come around the Justice Department handing out bottles of Haig & Haig Pinch. If you got two bottles, the light shone on you.”

Joe Kennedy’s secret world also involved gambling. Harold Clancy, who began working for Kennedy in the late 1950s, recalled in an interview that Kennedy briefly considered buying into the mob-dominated company that manufactured the totalizer systems used by racetracks around the country to compute and transmit betting odds and race results. Kennedy decided against it. In 1943 he did buy 17 percent—a controlling interest—of the Hialeah Race Track in Miami, later selling it at a profit. Just how much and how seriously Kennedy gambled is not clear. His wife, Rose, in her memoir, wrote of visiting the track with her husband “a couple of times a week,” adding that she “seldom ventured” from the two-dollar window. Kennedy also was a regular at the roulette tables in Miami Beach casinos during and immediately after World War II.

Joe Kennedy certainly understood that there was big money to be made from racetracks and gambling. In the mid-1940s he made a strenuous, and secret, effort to buy the Suffolk Downs Race Track near Boston at a fraction of its true value. Kennedy didn’t get his way, but his hard-line tactics evoked the postwar tactics of organized crime families seeking to expand into legitimate businesses: threats, payoffs, and judicial corruption.