Part 14 (2/2)

As the story comes to me, Attell went to see you in your camp at Stroudsburg. After a lengthy conference with you he raced back to Philadelphia with your pure and innocent manager, Billy Gibson. And then Attell hurried along and had a meeting with Hoff.

As I understand it, Hoff is something of a political power in Philadelphia. He is supposed to be a rather mighty figure in boxing affairs, and the old saying goes that ”Whatever 'Boo Boo' wants-well, that's what 'Boo Boo' gets. ”

Attell, the tool for the gambling clique; ”Boo Boo” Hoff, the political and boxing power in Philadelphia; and Gibson, your manager, had various meetings, all secret. And then you arrived in Philadelphia for the next chapter in the story finds you in a meeting with Hoff and Gibson-one that lasted until about 6 on the fight night.

Since then I learned that some sort of written contract was entered into involving Hoff, Gibson and yourself. Stories about it differ considerably. But the doc.u.ment itself has been made public. It strikes me as a strange doc.u.ment-one that puzzles the public as it puzzles me, and it is one that I think should be explained.

The contract stated, in substance, that Gibson borrowed $20,000 from Hoff and that Gibson agreed to pay back the $20,000 and nothing else-if you did not win the fight. But it contains a peculiar clause to the effect that if you won the fight Gibson was to pay back Hoff the $20,000 and, as a sort of bonus or something like that, that you were to give Hoff 20 percent of all your earnings as champion. You signed as a party to the agreement.

Can't we all have a little explanation about this?

You knew that if you won the t.i.tle it would be worth at least $1,000,000 to you. Why were you agreeable to paying Hoff approximately $200,000 bonus for a loan of $20,000? What could Hoff do to help you on to victory that would be worth $200,000?

I think that you did make some explanation to the public like this, as regards the agreement: ”Gibson needed $20,000 to put through some real estate deal in New York and borrowed $20,000 from Hoffthat's all there was to it.”

It always has seemed to me very strange that Gibson, with your sanction would have to borrow $20,000 from Hoff on fight night and agree to give Hoff about $200,000 possible when it would have been a simple matter for you or Gibson to borrow the money from Tex Rickard without a bonus agreement.

Reporters at Tunney's Cedar Crest Country Club training camp, demanded answers. They got pure Tunney in response. ”I will not dignify these charges with a denial,” he sniffed. ”I have more important things to do. I am currently reading Of Human Bondage and I am going to return promptly to Mr. Maugham's excellent work.”

The press didn't care about Somerset Maugham. They asked again. ”Utter trash,” Tunney replied. ”At best, a cheap appeal for public sympathy. I have asked my attorney, Mr. Dudley Field Malone, to review these false allegations to see if they are actionable.”

Tunney finally did answer, issuing his own written statement. It didn't go much beyond his original responses: An open letter to Jack Dempsey: My Dear Dempsey: Your open letter to me has been brought to my attention.

My reaction is to ignore it and its evident trash completely.

However, I cannot resist saying that I consider it a cheap appeal for public sympathy.

Do you think this is sportsmanlike?

Gene Tunney P.S.-I might add that I wrote this letter myself.

In boxing fists beat words. After Dempsey and Tunney entered the ring in Chicago's ma.s.sive Soldier Field, the public forgot any controversy surrounding their Philadelphia bout. And when Soldier Field produced the immortal ”long count,” fans lost all interest in the original fightand in what Messrs. Attell and Rothstein might have pulled off.

Dempsey possessed more energy than in their first fight, but Tunney easily maintained control for six rounds. In the seventh, Dempsey connected with a brutal left hook to the chin. As Tunney crumpled, Jack landed four more punches to his head. Referee Dave Barry (a late addition, replacing a Capone-favored referee) counted to ”six” over Tunney, before noticing Dempsey hadn't retreated to a neutral corner as required by newly adopted Illinois Boxing Commission rules. Barry should have resumed counting at ”seven.” He began at ”one.” His infamous ”long count” allowed the battered Tunney eighteen seconds before getting up from the canvas and kept him in the fight.

Something little noticed-but equally suspicious-happened in the next round. A refreshed Tunney landed a glancing blow that knocked the off-balance Dempsey to the canvas. The Mana.s.sa Mauler jumped to his feet at Barry's count of ”one.” But Barry shouldn't have been counting at all. Gene Tunney was not in a neutral corner.

Who, indeed, could remember what had happened in Philadelphia? That was all so tame.

Or so it appeared. Years later, Abe Attell confided details of the two Dempsey-Tunney fights to famed ”fight doctor” Ferdie Pachecho. He told of Hoff's interest in Tunney and of Capone's in Dempsey. The Chicago gangland boss loved Jack Dempsey. Scarface even rea.s.sured Jack he'd do whatever he could to a.s.sist the Mana.s.sa Mauler regain his t.i.tle. Dempsey didn't want that kind of ”help,” and had the courage to tell him so. Capone backed down. Even Al Capone backed down from Jack Dempsey.

”In those days,” Attell informed Pacheco, ”the mob boys took over cities as their territories. The Italians had Chicago; the Jews had Philly and some parts of Detroit.” Then Attell a.s.sumed the air of one revealing a great secret, that he was conveying what really happened in those two t.i.tanic fights: ”What you had was this, Doc: It was the Italians against the Jews. The Jews won!”

Yes. One, in particular, took home $500,000.

A. R. knew more about boxing than he let on in court, and the boxing world knew quite a bit about him. In the fall of 1928 former New York American reporter Gene Fowler was doing publicity work for Tex Rickard. One day Rickard sat in his Madison Square Garden office, in a chair made of cattle horns, musing about the dangers of the stock market. Fowler wanted to know why he didn't get out.

”Because I'm a gambler, that's why,” Rickard shot back. ”I play percentages, but I'm not a sure-thing gambler, like Arnold Rothstein. That ain't gambling, and it ain't adventure. I'm the kind of a gambler who gambles, and don't look to a 'fix' to win. You know something? Rothstein is going to get hisself killed.”

Fowler asked if Tex had inside information.

”Yes and no,” Rickard responded. ”You don't need inside information down where I come from. A real gambler like me, a feller who likes it like some fellers love booze or women, and not just because it's a marked-card deal or a fix, well, we got hunches, and we play 'em. I knew all the time up in Alaska I'd never get shot. Me? I play percentage, but no fixing.”

Fowler kept asking what Rickard really knew, but Tex kept bobbing and weaving like the fighters he managed. Finally he got more specific. ”It's my guess that Rothstein will be shot before the year is out,” he ended the conversation. ”He's been askin' for it. They tell me he's been mighty slow lately makin' good on some big losses in the floatin' card games.”

Rickard's prophecy would soon come true.

And when it did, A. R.'s private papers revealed a secret. Among the people hiding the dead man's a.s.sets were his wife, his mistress, his office functionaries, and his Broadway henchmen. Only one name came as a real surprise: ”William Gibson of No. 505 Fifth Avenue.”

Billy Gibson ... Gene Tunney's manager.

CHAPTER 17 * ”I'm Not a Gambler”

ARNOLD ROTHSTEIN COULD EASILY HAVE walked away from gambling and loan-sharking and entered the world of legitimate business. In 1912 he was offered a $25,000-per year position as a stockbroker. He said no. Not that he ever wished to leave the demimonde of gambling. Not that he ever considered $25,000 a year enough money.

A. R. claimed that gamblers got a fairer shake in casinos than anybody did on Wall Street-and he wasn't necessarily wrong. Wall Street could be as crooked as any Bowery stuss parlor or Broadway floating c.r.a.p game. Disreputable brokers-often career con menpeddled worthless stocks, manipulated prices, and swindled millions from investors. Regulatory oversight barely existed. The federal government occasionally prosecuted brokers for mail fraud, but that was about it. Investors relied on local and state officials for protection. On Wall Street, that meant Tammany district attorneys and Tammanyinfluenced governors.

As Arnold Rothstein would say, ”G.o.d help them.”

Wall Street scams often involved mining stock. Gold. Silver. Copper. Platinum. It didn't matter. Mining was an ideal cover for fraud. There might be a fortune underground. There might not. Who knew? With manufacturing or s.h.i.+pping, you either had a factory or a s.h.i.+p, or you didn't. Either you had merchandise or cargo or pa.s.sengers, or you didn't. With mining, there might be rich veins of gold underground-or there might not. You didn't know until you put your money down.

Some of Arnold Rothstein's best friends-strike that, his closest a.s.sociates, he didn't have, or want, friends-operated their own fraudulent brokerage houses. George Graham Rice. Charles Stoneham. Edward Markel Fuller. W. Frank McGee. Dandy Phil Kastel. If stock fraud was your line of work, it paid to know people like Rothstein, who could provide the necessary connections at Tammany Hall.

As the twentieth century began, an uneducated little Lower East Side hoodlum named Jacob Simon Herzig left Elmira Reformatory. Renaming himself George Graham Rice, he soon invented the racing tip sheet: but after a quarter-million-dollar miscalculation at a New Orleans track, Rice switched to peddling fraudulent mining stock. He again went to prison. In 1914, seemingly reformed, he penned his memoir, My Adventures with Your Money, warning investors: You are a member of a race of gamblers. The instinct to speculate dominates you. You feel that you simply must take a chance. You can't win, yet you are going to speculate and continue to speculate-and to lose. Lotteries, faro, roulette, and horse race betting being illegal, you play the stock game. In the stock game the cards (quotations or market fluctuations) are shuffled and riffled and stacked behind your back, after the dealer (the manipulator) knows on what side you have placed your bet, and you haven't got a chance. When you and your brother gamblers are long of stocks in thinly margined accounts with brokers, the market is manipulated down, and when you are short of them, the prices are manipulated up.

Going straight didn't interest Rice, for in many ways he resembled A. R. ”Rice was unquestionably born with an extraordinary intellect,” noted one history of 1920s stock fraud. ”With it he had imagination, a colossal nerve and an irrepressible ego. He was inspired not so much by ambition, and the desire for money as he was to prove that he, George Graham Rice, could accomplish anything he chose.”

Thus, Arnold Rothstein and George Graham Rice maintained a warm relations.h.i.+p, with A. R. spending a great deal of time with Rice (”a very interesting and unusual man, a brilliant and fascinating conversationalist” in Carolyn Rothstein's words) and his equally shady attorneys.

But Rice and Rothstein did more than talk shop at the Cafe Madrid and various Broadway haunts. The Big Bankroll viewed Rice as a distinguished elder statesman in the art of fleecing suckers. And, putting sentiment aside, he saw him as a new source of profits and provided him with advice-and cash-to finance his operations. He also served as Rice's landlord, renting him a floor of his 28-30 West 57th Street office building. Later, when business boomed, Rice rented a whole loft building on East 17th Street from A. R. ”I remember,” wrote Carolyn Rothstein, ”his outgoing mail was taken from his offices in great burlap bags.”

Rice's incoming mail also arrived in great burlap bags, filled with cash and checks, for by the early 1920s George Graham Rice had returned to bilking investors. His The Iconoclast became America's largest-circulation financial paper, cautioning readers about other crooks and ranting against Wall Street's legitimate firms. Rice was merely bad-mouthing compet.i.tion, but Iconoclast readers saw him as their defender, a truthteller, unafraid of special interests. With credibility established, The Iconoclast moved in for the kill, s.h.i.+lling blatantly for Rice's Columbia Emerald Company. When Columbia Emerald collapsed, Rice's disciples invested in The Iconoclast's next big tip: Idaho Copper. ”Sell any stock you own,” the paper shouted in April 1926. ”and Buy IDAHO COPPER. We know what this language means AND WE MEAN IT.”

Rice's empire collapsed when a disgruntled henchman exposed his operations. For over a year afterward, the con man evaded process servers by holing up in Manhattan's Hotel Chatham. When his chiropodist refused to make house calls, Rice left the building-and walked into a four-year sentence in Atlanta.

John Jacob ”Jake the Barber” Factor (Iakow Factrowitz) was a Polish-born conman, who might also have gone straight-straight into his half-brother Max Factor's successful cosmetics business. Jake Factor moved from barbering to stock fraud to selling worthless real estate in the Florida land boom of the early 1920s. In 1923 A. R. loaned Factor $50,000 to bankroll his latest scheme-what would turn out to be Europe's largest stock swindle. Operating out of England, Factor started by promising investors guaranteed interest rates of between 7 and 12 percent at a time, when most banks paid between 1 and 3 percent. Factor actually kept his promise-until he had lured enough suckers into his trap. He then returned to stateside, with $1.5 million in investors' cash in his pockets. His dupes were too embarra.s.sed to press charges.

One would think that Factor wouldn't dare return to England. He did-in 1925-once more bankrolled by Rothstein. He now began by selling investors a legitimate stock, Simplex, at $4 per share. He then had a dummy brokerage firm buy up their shares at $6 each. He repeated the process with Edison-Bell stock. His customers-who rarely saw anything beyond paper profits-thought Factor a financial genius and rushed to plunge more money into whatever he recommended. What he recommended were two worthless African mining stock, Vulcan Mines and Rhodesian Border Minerals. A. R. met his death before Factor closed up shop again-and left England for Chicago with another $8 million.

The Rice and Factor episodes, however, were mere bagatelles compared to Arnold Rothstein's major activities within the tangled, predatory world of the bucketshops.

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