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Posted at 12:50 PM ET, 04/15/2010

How the IRS took down Al Capone

By Washington Post editors

Al Capone ordered a special heavy pocket sewn into each of his custom-made suits -- the better to cut down on wear-and-tear from his revolver.

But it wasn’t the revolver that did in Capone. On a day much like today, it was the tax man who nabbed him, writes The Post's Mary Pat Flaherty on the Crime Scene blog.

For a man who declared no income, Capone threw an awful lot of money to tailors, realtors, hoteliers, cops, bootleggers, bookies, prostitutes and crooked politicians.

Capone's lavish spending and the Internal Revenue Service’s chronicling of its during the three-year investigation that eventually sent Capone to prison for tax evasion are laid out in a cache of documents posted without fanfare deep in the IRS Web site.

What better day to dust those record off than April 15?

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In a rare -- indeed, the IRS says, unique action -- the tax agency in 2008 released a number of its intelligence unit’s 1931 reports on the investigation into Capone and the Chicago mob.

Jonathan Eig, an author working on a book about Capone that is due out this month, had requested them under a federal open records law. The agency released them, citing their historical value and public interest.

But modern-day IRS legal teams also got one last score on Capone: Because Al never filed a tax return, his files didn’t earn the usual IRS confidentiality protection.

Capone arrived in Chicago a “punk hoodlum" in 1920 when guys were gangsters and dames were molls.

By the time he had risen through the ranks and taken a lead in murderous street wars, Capone had become Public Enemy No. 1 and the government's plan to dismantle his empire was sweeping in its ambitions: Wires were tapped and witnesses were kept under wraps to "sustain a criminal prosecution against Al Capone, thereby restoring to degree the respect for Federal Laws that has not been in evidence among the gangster class during the past few years."

Capone was "shrewd, there is not doubt, which, together with his native Italian secretiveness has made this case a most difficult one to handle," three IRS agents wrote to a supervisor in Chicago in a 1931 memo. They noted that Capone never had a bank account and only occasionally endorsed a check. He was a cash and carnage guy.

To make their case, they would need to track his income and businesses and to do that they needed evidence that came principally from witnesses. The important ones were all hostile to the government, inclined to perjury or so filled with fear of reprisals that they evaded, lied, left town and "did all in their power to prevent the government using them as witnesses."

The agents peeled back the layers, though.

A hotel room clerk recounted July 1928 when Capone and 15 or 20 men "came to secure rooms." But none of them "would consent to sign the hotel register." The clerk signed for them, registering Capone as George Phillips and giving him room 230. At another time with another clerk, Capone paid a $3,000 tab, pulling bills from a wad in his suit jacket for the tab to cover services and staffing during his fete for the September 1927 Tunney-Dempsey prize fight.

At a gambling house in Cicero, Illinois, a Capone clerk tells of the clothbound book recording income and payments and explained drolly that "on account of the illegal nature of this business, it was necessary to move from place to place in order to conduct the business without interference from law officers."

It also helped that Capone's gang bought off the locals: Notes on the take from those operations in 1925 and 1926 laid out the split, including "town officials" getting 20 percent and Capone double that to net him $257,339.55. (That was, the report duly notes, gross revenues.)

Photostats of records at Marshall Field and Company showed a raft of sales to Capone including 15 suits at $135 each ordered between May and October 1928 with notations from tailors that "special heavy pockets were made." As IRS agents inelegantly explained:"we learned that the reason of these heavy pockets was that revolvers were carried in them."

Capone favored union suits made of a special silk and graced his lady friends (or were they for his wife, Mae?) with beaded handbags. For his henchmen, 30 diamond studded belt buckles raised the image of business manager Jake "Greasy Thumb" Guzik, Frank "The Enforcer" Nitti, Murray "The Camel" Humphreys or older brother Ralph "Bottles" Capone blinding the speakeasy crowds.

The archive also reveal glitches in making the Capone case. An account book overlooked and only accidentally recovered among a stack of miscellaneous stored evidence. And there is the enduring lament of cubicle workers: send more office chairs.

In October 1931, Capone wasconvicted and then sentenced to 11 years in federal prison -- including Alcatraz in one move. He was released after seven years.

He owed $215,000 plus interest in back taxes.

By Washington Post editors  | April 15, 2010; 12:50 PM ET
Tags:  Al Capone, Chicago Outfit, Crime, Internal Revenue Service, Organized crime, Tax avoidance and tax evasion, United States  
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