Crime Library: Criminal Minds and Methods

Dutch Schultz: Beer Baron of the Bronx

Restaurant Rackets

While Schultz was making a fortune in the policy rackets, he conceived another moneymaking venture involving union racketeering in the restaurant industry.

Jules Martin
Jules Martin
In 1932, a Schultz lieutenant, Julius Modgilewsky, called Modgilewsky the Commissar, but better known as Jules Martin, opened a small greasy spoon diner as a front for gaining access to Local 16 of the Hotel & Restaurant Employees International Alliance. Local 16 handled the waiters in Manhattan north of Fourteenth Street. With the backing of Schultz, Martins employees ran for union offices, stuffing the ballot boxes in order to obtain the positions of president and secretary-treasurer. Their efforts were so effective that they received thirty-eight more votes than the entire membership of the union.

The next move was to take over Local 302. This time instead of supplying his own candidates, Martin and another Schultz associate, Sam Krantz, simply advised the unions leadership to join them, or else. The final step was to establish the Metropolitan Restaurant & Cafeteria Owners Association to sign restaurant and cafeteria owners and collect tribute from them. Martin handled this task himself, muscling the owners into signing certificates of membership stating that they were doing so of their own free will. Jack Dempsey, the former boxing champion and owner of the well known Dempseys restaurant, then located across the street from Madison Square Garden, was even photographed signing the agreement. Martin was so successful that he was able to move into the background of the association and let Krantz and another Schultz gang member, Louis Beitcher, run the operation.

No one realized that it was Schultz who was behind the scenes working through Martin to build the illegal enterprise. Restaurant owners were told that the waiters union was demanding a doubling of the wages, but this could be avoided if they joined and paid tribute to the association. One small cafeteria operator said he was forced to pay a $250 initiation fee and $30 annually in dues. In addition, he was told to pay $1,500 for association fees in order to avoid a threatened strike. Larger establishments were required to shell out initiation fees from $5,000 to $25,000 in addition to substantial annual dues.

One owner who refused to pay tribute to the association was Hyman Gross. Having already invested $100,000 in his new restaurant, Gross refused to give in to the Schultz mobsters. One night a stink bomb was dropped down the restaurants chimney and Gross was forced out of business losing his entire investment. The stink bombs the gangsters used were made of valerian or butyric acid. Once detonated, they created an offensive odor that permeated carpets, draperies, wood, even concrete and plumbing. The acid would ruin all the tables and fixtures causing replacement furniture to be purchased, and leaving the restaurant closed for months, if not permanently.

One of the key men in the association was Paul Coulcher, who had ballot-box-stuffed his way to secretary-treasurer of Local 16. He later became a recognized name in the labor movement.

In March 1935, while absorbed in a government tax case and forced to remain in the Albany area, Schultz called Martin and ordered him to bring $21,000 from the coffers of the association to him at once. Bo Weinberg and Dixie Davis accompanied Martin on the train ride. The men met Schultz at the Harmony Hotel in Cohoes, New York. Schultz grilled Martin about $70,000 that was missing from the restaurant associations bank accounts. Schultz suspected Martin of investing the money in a factory he owned in Elkhart, Indiana, which rebuilt taxicabs. With both men drinking heavily, Schultz emphasized his point by slugging Martin in the eye, after which the Commissar admitted to having removed only $20,000 from the accounts.

Davis was not accustomed to this part of the underworld witnessing the physical violence. He could hardly have anticipated what happened next, which Davis revealed years later:

Dutch Schultz was ugly; he had been drinking and suddenly he had his gun out. The Dutchman wore his pistol under his vest, tucked inside his pants, right against his belly. One jerk at his vest and he had it in his hand. All in the same quick motion he swung it up, stuck it in Jules Martins mouth and pulled the trigger.

 It was as simple and undramatic as that just one quick motion of the hand. The Dutchman did that murder just as casually as if he were picking his teeth.

Schultz apologized to Davis for his having to witness the brutal murder. Davis was further shocked when he read that Martins body was found in a snowdrift with twelve stab wounds in the chest. When questioned by Davis about this Schultz replied, I cut his heart out.

Although there was another version of events that night of the murder, author Paul Sann concluded, the Martin slaying was one of the very few that Dixie Davis did not charge up to Bo Weinberg. That had to count for something. Ironically, the other version had Bo Weinberg doing the killing.

Despite the fact that Martin was in the grave and Schultz would join him before the year was out, the restaurant racket was so successful that it continued to thrive until an investigation by Special Prosecutor Thomas E. Dewey resulted in the indictments of ten men. The trial, which began on January 18, 1937, lasted two and a half months with forty prosecution witnesses and sixty defense witnesses taking the stand. The jury took just six hours to return a verdict of all guilty on all counts. Among those handed jail sentences was Paul Coulcher who received from fifteen to twenty years.



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