The FBI officially declared the existence of the Mafia in 1958 but more than two decades earlier in 1935 a former Army intelligence officer specifically warned the Bureau that the mob families in the cities throughout the United States were governed by a national syndicate based in Brooklyn, NY. The national syndicate at issue likely was the Mafia Commission established in 1931 by Lucky Luciano, and J. Edgar Hoover was personally apprised of its existence in a pair of "personal and confidential" letters from the Special Agent in Charge of the New York Field Office which are contained in Al Capone's FBI files. Inexplicably, the Director refused to authorize his men to further investigate it.
Al Capone was convicted on federal tax evasion charges in 1931 and sentenced to ten years in prison, and in 1935 Major Charles E. Russell, a former officer within the intelligence unit of the Army in Europe during World War I, advised the FBI's New York Field Office that the imprisoned gangster's Chicago operations now were being run out of Brooklyn, NY by a national syndicate which further took a cut from mob rackets in all other cities.
R. Whitley, the Special Agent in Charge at the New York Field Office, relayed Major Russell's revelations directly to J. Edgar Hoover in a “personal and confidential” letter dated August 3, 1935:
Major Russell stated that the headquarters of the Al Capone syndicate have been shifted from Chicago to Brooklyn, and that the entire racket syndicate field, including vice, gambling, liquor and various other lines, is now controlled and directed by a man named Vito and two men named Totto of Brooklyn. They have associated with them many notorious racketeers, including "Dutch" Schultz, and the three men are the heads of the syndicate. At their headquarters they have a group of young men, none of whom appear to be over twenty-four years of age, who are professional killers and whose activities are limited to performing that function for the syndicate. They have numerous henchmen, including young lawyers, doctors, and various other men of the professional type, as well as the usual gangster type. They receive a "cut" from all the racketeer operations from Chicago to the east coast and from Boston to below Philadelphia.
Of particular concern to the FBI was Major Russell's claim that this governing board was seeking to infiltrate the Department of Justice for counterintelligence purposes, and Whitely advises Hoover in the August 3 letter: "he [Major Russell] stated that he was told by these underworld characters that they have available men who can meet all the requirements for appointment to a position in the Department."
In a second "personal and confidential" letter dated September 10, 1935 Whitely further advises Hoover that "the present headquarters of the so-called Capone Syndicate, controlling racketeering in the Middle West and East, is located in Brooklyn, N.Y., near the Brooklyn Navy Yard." More specifically:
He [Major Russell] made a rough diagram showing the Lane Democratic Club on York Street, and stated that this is a hangout for some of the minor members of the organization; that two of the so-called "big shots" live on York Street; one of them, known to him as "Mike," lives on the same side of the street as the Lane Democratic Club is located and a block or so south, while another one, known to him as "Charlie," lives on the opposite side of the street some distance north of the location of the Lane Democratic Club. The Lane Democratic Club is located at about the middle of the block, and according to Major Russell, the actual headquarters of the Syndicate is located in the premises occupied by an ice cream parlor on either one of the two streets between which the Lane Democratic Club is located and at the corner of the street east of Sands Street and parallel thereto. * * * Major Russell also stated that a favorite hangout for these people is in a grill or cafe, the name of which is the "Seashell" or some similar name.
The FBI visited the locations described by Major Russell, and surmised that the ice cream place to which he referred was Nassau Ice Cream Parlor at the corner of Gold and Nassau streets, and the eatery was the Sea Grill at the corner of North Elliott Street and Flushing Avenue.
The purpose of the national syndicate was to allocate territories and resolve disputes according to Major Russell as Whitely relayed to Hoover in the September 10 letter:
As to the operations of these people, Major Russell stated that as far as he knows, these men do not themselves participate in any activities such as handling "hot" bonds or jewelry or operating any vice or gambling establishments. They do, however, completely control the so-called "protection" racket. They have divided the entire Middle West and East into districts, and the City of New York is also divided into districts, and the people operating in the various criminal activities in these districts do so with the permission of the Syndicate and in accordance with the dictates of the Syndicate. Disputes between various operators of illegal activities in the districts, or disputes between contiguous districts are settled by this Syndicate, and practically daily meetings are held by the heads of the Syndicate in the premises in which the above-mentioned ice cream parlor is located. It is impossible to operate any of the profitable rackets without the sanction of this Syndicate, and the revenue of the Syndicate is derived from the cut which it takes on all revenue from such activities.
The operational description provided by Major Russell for this national syndicate sounds spot on like the Mafia Commission created only years earlier by Lucky Luciano after the 1931 hits on Joe Masseria and Salvatore Maranzano which ended the Castellammarese War. The "Vito" to whom Major Russell refers may be Vito Genovese who in 1935 was the underboss to Luciano, and the two "Tottos" may be brothers Generoso Del Duca (1896-1960) and Pasquale Del Duca (1890-1964), both nicknamed "Toto" or "Toddo," who were Genovese family members out of South Brooklyn. Generoso was a capo who died of a heart attack in the arms of Frank Sinatra after a night of clubbing in Miami, FL with the crooner and Joseph "Joe Fish" Fischetti who was a first cousin of Al Capone and worked alongside the Chicago gangster.
The credibility of Major Russell's claims is underscored by his allegation that the Chicago operations were run by this national syndicate out of Brooklyn. Johnny Torrio -- Capone's predecessor and mentor in Chicago -- in fact had returned to New York after the Capone trial, and was one of the principal advocates to Luciano for the Mafia Commission.
Major Russell may not have been quite right on all of his underlying facts in describing the Mafia Commission but it's clear he was onto the more fundamental truth of its existence, and may have been the first to so advise the FBI.
Whitely concluded his September 10 letter to Hoover by stating that "no further investigation is being undertaken with reference to the activities of the Syndicate described by Major Russell, pending receipt of instructions from the Bureau." And no further instructions ever were forthcoming from the Director on the matter, and this missed opportunity to nip the Mafia in the bud perhaps constitutes the FBI's biggest intelligence failure in its otherwise storied history.