Al Capone was found guilty of tax evasion on this day in 1931

On this day in 1931, Al Capone was found guilty of tax evasion. The gangster, who allegedly bragged, “They can’t collect legal taxes on illegal money,” was sentenced to 11 years in prison for failing to file tax returns.

Humble beginnings

Alphonse Gabriel Capone was born in Brooklyn, New York, in 1899, the son of Italian immigrants. His parents, Gabriele Capone and Teresa Raiola, found working-class jobs and settled into their new lives. However, Capone had difficulty adapting and was expelled from school at the age of 14 for hitting a teacher.

After leaving school, Capone tried doing odd jobs, but nothing stuck. Capone eventually turned to a friend, Johnny “The Fox” Torrio, who was just starting to build an empire. Torrio would later be called “the father of American gangsterism” by Elmer Irey, the first head of the Internal Revenue Service (IRS) Enforcement Branch, now called the IRS Criminal Investigation Division, or IRS-CI.

Torrio introduced Capone to Frankie Yale – and his first real introduction to the underworld. Yale, which owned several clubs where customers could drink, gamble and pay for sex, gave Capone a job as a bouncer and bartender. While he was working, Capone, who was not known for his even temper, got into an argument. During the fight, he was cut three times with a knife across his left cheek, leaving a permanent scar and earning the nickname ‘Scarface’. Supposedly the fight was over a girl.

At the age of 18, Capone met and married Mae Coughlin. Shortly afterwards, the couple had their first child, Albert Francis “Sonny” Capone. Sonny’s birth gave Capone some time to think about living an honest life. The family moved to Baltimore, where Capone wanted to become an accountant and worked with the numbers on the right side of the law.

An offer he couldn’t refuse

But Capone couldn’t resist the lure of the gangster life. When Torrio asked Capone to move to Chicago to help run his mafia empire, it was an offer Capone couldn’t refuse.

The dark side quickly caught up with Torrio. In 1925, he narrowly survived an assassination attempt by rival gangsters Hymie “The Pole” Weiss, Vincent “The Schemer” Drucci and George “Bugs” Moran. After spending three weeks in the hospital and even more time in jail, Torrio wanted out. He decided to leave Chicago and hand over control of his empire to Capone.

(Weiss’ attack on Torrio did not go unnoticed. In 1926, Weiss and his bodyguard were shot in the street as they walked to fellow gangster Dion O’Banion’s flower shop on North State Street. The flower shop is gone, but Holy Name To the across the street the cathedral still stands; you can still see the bullet holes.)

Capone was naturally gifted at making money and quickly expanded the business. By the mid-1920s, he was reportedly taking home nearly $60 million annually ($1.1 billion in today’s dollars), and his wealth continued to grow, topping $100 million ($1.8 billion in today’s dollars). dollars).

US v. Sullivan

As Capone’s empire grew, so did his penchant for violence. The bodies piled up in Chicago, and most of them had Capone’s fingerprints all over them. However, the FBI was unable to bring charges of violence against Capone. But something that happened in 1927 – miles away from Chicago – would prove to be a turning point. On May 16, 1927, the U.S. Supreme Court ruled US v. Sullivan that “(g)receipts from the illicit trade in liquor subject to income tax would be taxable.” It was exactly the statement the FBI needed.

(Nice footnote: the judges noted in Sullivan“It is strongly urged that if charges were filed, the suspect would be entitled to deduct illegal expenses such as bribery. This by no means follows, but it will be time enough to consider the question of when a taxpayer has the audacity to raise this question.”)

“Buy Capone”

In 1928, finally fed up with the violence, Secretary of the Treasury Andrew W. Mellon called Irey and told him to simply “get Capone.”

Irey reportedly replied on behalf of the IRS-CI: “We will start working on it immediately.”

Valentine’s Day Massacre

Even while Irey was investigating Capone, the violence continued. The lawlessness culminated on February 14, 1929. Capone was in Miami at the time of the shooting, but was immediately blamed for what became known as the St. Valentine’s Day Massacre.

On the day of the murders, witnesses saw four men enter the garage; two of the men were dressed as police officers. The ‘officers’ ordered Moran’s gang to line up against the wall, where they were hit by a beam of machine gun and shotgun bullets: 70 rounds of ammunition were fired. All seven men inside died, most immediately.

One of the victims, alleged hitman Frank Gusenberg, survived long enough to tell police, “Nobody shot me.”

What caused the dispute? It was probably territory. Moran controlled the North Side of Chicago, while Capone controlled the South Side (referred to as “The Outfit”). At the time, the north, west, and south sides of the city were divided along the boundaries created by the Chicago River. The West Side was controlled by the Valley Gang, an Irish-American street gang that eventually formed an alliance with Capone.

Moran escaped the violence, but narrowly: he arrived too late and missed the shooting by minutes. A few days later he reportedly told reporters: “Only Capone kills this way.” It was a line so famous that it appeared in theaters.

Capone is said to have replied: “The only man who kills like this is Bugs Moran.”

There were no witnesses to tell the story, no evidence, and no one was ever prosecuted. However, the FBI believed Capone was responsible, and in 1930 Capone was dubbed ‘Public Enemy Number One’, a label he reportedly hated (his older brother, Ralph ‘Bottles’ Capone, would earn the title ‘Public Enemy Number Three’ ). ).

Capone became bolder and believed he was untouchable. He failed to respond to a subpoena to appear before a federal grand jury, claiming he had bronchial pneumonia and was required to be on bed rest.

He was arrested on contempt charges after prosecutors presented evidence that he had been gambling at the racetrack and cruising in the Bahamas. He was released on bail but was rearrested on concealed weapon charges and sentenced to prison at the Eastern State Penitentiary in Philadelphia, where he reportedly lived in luxury amid French furniture, plush carpets and a Victrola radio in his cell.

Federal tax case

During this time, the FBI quietly built a case against Capone. Despite his public and extravagant lifestyle, Capone had never filed a federal income tax return, claiming he had no taxable income. IRS Special Agent Frank Wilson and the Treasury Department’s “T-Men” tracked the money and gathered evidence that Capone had made millions of dollars from income that had never been taxed. It paid off: Capone was indicted on 22 counts of federal income tax evasion.

Capone wasn’t the only one charged. His brother Ralph, Jake “Greasy Thumb” Guzik, Frank Nitti and others were also charged. Capone bragged that he reached a plea deal that would have sent him to prison for only two years. The judge refused to accept the deal and the case went to trial.

Capone was found guilty on October 17, 1931. A week later, on October 24, 1931, he was sentenced to a then unprecedented prison sentence of eleven years. He was fined $50,000 ($1,058,057 in today’s dollars), charged court costs and ordered to pay back taxes of $215,000 (now $4,549,645).

He immediately appealed and was denied a rehearing.

Prison: From Atlanta to Alcatraz

Capone’s first prison stop after his conviction was Atlanta. Initially, he bribed prison officials to get what he wanted, just as he had done in Philadelphia. When officials discovered what he had done, he was punished by being transferred to Alcatraz, the formidable prison built on a small island off the coast of San Francisco, California. Alcatraz proved to be Capone’s downfall.

Alcatraz’s warden, James Aloysius Johnston, was not as easily swayed as the prison officials Capone had previously encountered. When Johnston asked Capone his name, the gangster reportedly replied, “You know who I am.” Johnston allegedly replied: “Here you are now known as AZ-85.”

Capone finally admitted, “Looks like Alcatraz got me licked.”

Capone spent more than four years at Alcatraz, where his duties included doing laundry (as most elementary school kids know, thanks to Gennifer Choldenko). During his sentence, his health eventually got the better of him: He had contracted syphilis years earlier and the disease worsened, leading to “intermittent mental disorders.”

In 1937 he appealed his sentence again, this time to the district court, arguing that his sentence had been inconsistent. The appeal was rejected.

Capone moved again in 1939 – this time to a psychiatric hospital to serve the remainder of his sentence before retiring to Florida. Before his death, his doctor determined that he had deteriorated to the point that he had the mental capabilities of a twelve-year-old. Capone, once America’s most feared man, died on January 25, 1947 at the age of 48.