October 23rd, 1935, 10:15 in the evening, the Palace Chop House, 12 East Park Street, Newark, New Jersey. The restaurant was quiet. Dutch Schultz and three of his associates, his accountant Otto Abbadabba Berman, bodyguard Bernard Lulu Rosenkrantz, and Lieutenant Abe Landau were gathered around a back table covered in ledger sheets.
They were doing what Schultz did every night, running the numbers, tracking the rackets, managing an organization that, at its peak, had been generating an estimated $20 million a year in revenues from a city that was in the depths of the Great Depression. Schultz had stepped away from the table. He was in the bathroom.
Two men entered through the front door of the restaurant, Mendy Weiss and Charles “The Bug” Workman, both of them professionals. Both of them from the enforcement arm of the National Crime Syndicate that the newspapers would eventually call Murder Incorporated. Weiss went to the back table and opened fire on the three men still sitting there.
Workman pushed open the bathroom door and fired once with a .45 caliber pistol. The bullet entered Dutch Schultz’s left side. It nicked his stomach. It was not immediately fatal. Schultz staggered out of the bathroom. He made it to a chair at the table. The restaurant was already chaos. His bodyguard Rosenkrantz, shot multiple times, had somehow managed to draw his own weapon, and was firing at Workman as he fled through the back of the building. Landau was dying.
Berman was dying. Schultz was bleeding through his shirt, clutching the table, alive, but not for long. He was taken to Newark City Hospital. He lasted 22 hours. During those 22 hours, as the infection from the bullet’s nick to his stomach spread through his body and his temperature climbed and his lucidity came and went like a radio signal in bad weather, Dutch Schultz spoke.
He spoke to the detectives sitting beside his hospital bed. He spoke to a police stenographer named F. J. Long, who wrote down every word. He said things that have fascinated linguists and writers and mob historians for 90 years, the boss himself. I showed him, boss. Did you hear him meet me? An appointment appeal stuck. All right, mother.
Who shot me? No one. Oh, mama, I can’t go through with it. Please. He asked for a priest. He was baptized as a Roman Catholic at his bedside. A man who had lived as nothing remotely resembling a Catholic dying as one. He died at 8:40 in the morning on October 24th, 1935. He was 33 years old. And somewhere in the Catskill Mountains in a special airtight and waterproof safe that he had buried before his death to protect against exactly this kind of ending, $7 million in cash and bonds sat waiting.
Equivalent to $164 million in today’s money. Nobody has found it in 90 years. If you are watching this for the first time, subscribe right now and drop a comment telling us which state you are watching from New York, Texas, California, Florida, anywhere in the country. Hit subscribe, drop your state, then let us get into this because this is not just a story about a mob boss’s violent end.
It is the story of how the most ruthless, most volatile, most uncontrollable figure in the history of New York organized crime managed to make himself so dangerous to everyone around him, including the people who were supposed to be on his side, that the only solution anyone could agree on was to kill him. Dutch Schultz did not get destroyed by law enforcement.
He got destroyed by the mob that he belonged to. Because the mob at a specific meeting in a specific room in 1935 looked at Dutch Schultz and concluded that he was simply too dangerous to be allowed to continue living. This is the story of Arthur Flegenheimer, the man the world knew as Dutch Schultz. The Bronx in the 1900s was a world of immigrant communities stacked on top of each other in tenement buildings, competing for the same jobs and the same spaces and the same economic territory in a city that offered enormous
opportunity to some people and almost none to others. German Jews, Irish, Italians. Each community with its own internal hierarchy, its own informal governance structures, and its own relationships with the criminal organizations that had been growing alongside the legitimate economy of the city since the last century.
Arthur Simon Flegenheimer was born August 6th, 1901 to Herman and Emma Flegenheimer, German Jewish immigrants who had married in Manhattan the previous year. He had a younger sister, Helen, born 3 years later. The family lived in the working-class immigrant neighborhoods of the Bronx and later the East Side of Manhattan in the dense urban poverty that was the specific material reality of early 20th century immigrant New York. His father abandoned the family.
The exact timing is disputed across different accounts. Some say Arthur was eight, some say 14. One source claims Herman Flagenheimer was already listed as absent from the family in the 1910 census when Arthur was eight or nine years old. What is consistent across all accounts is the abandonment and its effect.
Arthur Flagenheimer grew up without a father in a household where his mother had to take in laundry to keep the family alive. He spent the rest of his life, by multiple accounts, in denial about it, refusing to acknowledge or discuss his father’s departure. The wound was real and it was permanent and it drove him in ways he never articulated.
He left school in the eighth grade. He worked as a feeder and pressman for the Clark Loose Leaf Company. He worked at American Express. He worked other menial jobs around the Bronx that paid barely enough to support his mother and sister. The honest work did not hold him. The neighborhood did. At 17, he was caught burglarizing an apartment.
He was sent to Blackwell’s Island, the correctional facility on an island in the East River that housed petty criminals and adult offenders in conditions that were explicitly punitive. He was an incorrigible inmate, transferred repeatedly within the facility. He served 17 months. When he walked out, he was 18 years old and he had just completed the only prison sentence he would ever serve across a career that included bootlegging, extortion, gambling, the management of a $20 million criminal operation, and by various accounts, an
unknown number of murders. 17 months for all of it. That was the only time the law held him. He also walked out with a new name. His friends gave it to him, Dutch Schultz, after a street fighter from an earlier generation of New York gangs who had been especially known for his brutality.
The name was a gift and a challenge simultaneously. A name given for the qualities it already implied, brutality, toughness, a specific and particular willingness to use violence that his friends had apparently already observed in him and wanted to honor with the inheritance of someone else’s reputation. Arthur Flegenheimer accepted the name.
He became Dutch Schultz and then he spent the next 15 years proving that the name was not an accident. The 1920s belonged to prohibition and prohibition belonged to the people who understood what it actually meant. The 18th Amendment to the United States Constitution, ratified in January of 1920, did not reduce the American public’s desire for alcohol.
It eliminated the legal means of satisfying that desire and created a vacuum that the criminal economy filled immediately and with extraordinary efficiency. The men who could produce alcohol, transport it and sell it to the establishments that served it, were suddenly operating in one of the most profitable markets in American history.
With the additional advantage that the product was illegal and therefore impossible for legitimate competitors to sell. Joey Noe was Irish-American, one of the few genuine partnerships across ethnic lines in the early New York bootlegging world. He owned a small speak easy called the Hub Social Club in the Bronx and he had the connections and the ambition to expand.
He took in young Dutch Schultz as a partner and the two of them built a beer operation that supplied Bronx speakeasies and eventually Manhattan clubs with what Schultz’s organization labeled needle beer, a product that may or may not have been as good as its advertising suggested, but that was consistently available in an era when consistency of supply was more valuable than quality of product.
They were brutal competitors. This is the word that multiple accounts use about the early Schultz operation, not smart, not efficient, brutal. They kidnapped a rival bootlegger named Joe Rock who had been encroaching on their territory. They hung him by his thumbs. They beat him. They allegedly wrapped a bandage soaked in gonorrhea discharge around his eyes.
Joe Rock went blind. He was found and returned to his family in the condition they had left him in. The message was received by every other bootlegger in the Bronx. This was the signature of how Dutch Schultz operated, not calculated intimidation, not the surgical application of violence to specific strategic targets, something raw and more comprehensive than that.
He wanted people to be afraid of him in a way that went beyond calculation. He wanted the fear to be visceral. The Joe Rock kidnapping was not designed to send a business message. It was designed to produce a specific emotional response in everyone who heard about it, terror, not concern, not wariness, not professional respect, terror. He achieved it.
Joey No was shot by a rival gangster in October of 1928 and died a month later. Schultz absorbed the operation and kept building. He went to war with Jack Legs Diamond, one of the most feared bootleggers in New York, a man who had survived so many assassination attempts that the press had taken to calling him Clay Pigeon.
The war produced bodies on both sides. Diamond survived the war. He was eventually shot to death in his Albany rooming house in December of 1931, most likely by men working for Schultz, while he was sleeping off a night of drinking. He was shot three times in the head. He did not survive that particular attempt.
He also went to war with Vincent Mad Dog Coll. Coll had been one of Schultz’s enforcers. He was Irish-born, violent, and had the specific recklessness of a young man who had not yet been taught what consequences felt like. He decided he wanted to be a partner rather than an employee. He told Schultz this. Schultz told him no.
Schultz’s operation paid its people a flat salary rather than the customary percentage of the rackets, which meant Schultz’s men made less than the industry standard, but Schultz’s profits were substantially higher. Coll wanted the percentage. Schultz said no. Coll left and formed his own crew. He declared war on Schultz.
He began kidnapping the relatives of mob figures for ransom, a tactic that violated every informal code of the organized crime world of that era, and that turned virtually every major criminal organization in New York against him. Simultaneously, and on July 28th, 1932, one of Coll’s botched assassination attempts on a Schultz associate went catastrophically wrong, and five children playing in the street in East Harlem were hit by stray bullets.
A 5-year-old boy named Michael Vengalli died. The press covered it with the kind of fury that concentrated law enforcement attention and public outrage simultaneously. Coll became public enemy number one almost overnight. The headline writers called him Mad Dog. In February of 1932, Coll was in a drugstore phone booth on West 23rd Street in Manhattan making a call.
Gunmen entered the store and fired submachine guns through the glass. Coll died in the phone booth. The killers were almost certainly associated with Schultz. By the end of prohibition, Dutch Schultz had survived Joe Rock, Legs Diamond, Mad Dog Coll, and the general violence of the New York bootlegging wars. He had built an operation that stretched across the Bronx and into Manhattan.
He had a reputation that had been earned through specific and documented acts of brutality rather than through rumor or exaggeration. And then prohibition ended. January 17th, 1933, the 21st Amendment was ratified and the manufacture and sale of alcohol became legal again in the United States. For the bootleggers who had built empires on the illegal alcohol trade, this was not a crisis.
It was an inconvenience. They simply redirected their organizational capacity toward whatever the next most profitable illegal activity was. For Dutch Schultz, that activity was already running alongside his bootlegging operation. It was called policy, the numbers racket. And it was the thing that turned Dutch Schultz from a successful Bronx bootlegger into something considerably more important and considerably more dangerous.
The numbers racket was the great democratic lottery of depression era New York. For a penny, a nickel, a dime amounts that even the unemployed and the destitute could manage, a player could bet on a three-digit number. With the winning number determined each day by a formula connected to the results of horse races at a designated track, the odds of winning were 599 to 1 against.
The payout was 600 to 1 in favor. The house edge was enormous, and in the poverty-stricken neighborhoods of Harlem in 1931, the operation was pulling in an estimated $35,000 every single day. The numbers racket in Harlem had been built and run primarily by black operators, independent policy bankers, who had developed the business over years and who understood their communities’ gambling habits in ways that outside operators could not match.
The most famous of these was Stephanie St. Clair, known as Madame Queen, who had built a substantial policy empire in Harlem and who was not interested in sharing it with a white gangster from the Bronx. Schultz muscled in anyway. He used violence and threats to force the policy bankers to pay him tribute or sell to him outright.
He brought in his organization to enforce collections and to ensure that nobody operated in Harlem without his knowledge and his cut. Madame St. Clair resisted. She fought. She contacted law enforcement. She published newspaper ads exposing corrupt police who were protecting Schultz. Eventually, Schultz’s weight was simply too much and she was forced to accommodate him.
But Schultz was not content with merely taking a percentage. He brought in a man who transformed the operation. Otto Abbadabba Berman was a mathematical savant. His nickname came from an invented onomatopoeia for mathematical genius, abbadabba, a sound suggesting rapid mental calculation of impossible complexity.
Berman’s specific gift was the ability to calculate rapidly and accurately which numbers in the policy game were being bet on most heavily on any given day. By knowing which numbers were popular, the operation could manipulate the formula used to determine the winning number, steering the outcome toward numbers that fewer bettors had chosen, dramatically reducing the payout liability.
The manipulation was simple in theory and complex in execution. On busy betting days, Berman would collect the morning’s wagering data, calculate the distribution of bets, and then contact the racetrack to feed a specific amount of money into a specific betting pool to adjust the totals that determined the winning policy number. He did this in the minutes between the close of policy betting and the announcement of the day’s racing results.
The window was narrow, the math was extraordinary, and the results were financially transformative. With Berman’s manipulation, Schultz’s revenues from the policy racket climbed toward an estimated $20 per year. Thomas Dewey, when he later investigated Schultz’s operation, estimated that the gang was making that amount across all its activities combined: the policy, the restaurant extortion, the loan sharking, everything together.
$20 a year during the Great Depression, when the average American worker was making less than $1,000 annually. 1933 also brought Thomas Dewey. Dewey was not yet the famous prosecutor he would become. He was an ambitious young federal attorney who understood that high-profile criminal convictions were the path to political advancement and who had identified Dutch Schultz as a high-profile target.
The approach was the same approach that had already destroyed Al Capone. Not murder, not racketeering, but tax evasion. Schultz had been making tens of millions of dollars from illegal activities. He had not been paying taxes on any of it. The federal government did not need to prove the crimes.
It needed to prove the income and the failure to report it. Schultz went on the run. He lived underground for over a year while federal indictments piled up against him. During this period, with Schultz unavailable and seemingly finished, the syndicate, the national organized crime structure that Luciano and others had been building moved in.
They told Bo Weinberg, Schultz’s chief lieutenant and most trusted killer, that Schultz’s operations needed to come under syndicate control. Weinberg, who believed Schultz would never beat the tax rap, did not resist. Lepke Buchalter took over the restaurant extortion. Lucky Luciano took over the Harlem policy rackets.
The empire Schultz had built was carved up between his own allies while he was hiding. Then he beat the tax charges. His lawyer got the first trial moved to Syracuse, where Schultz embarked on a calculated public relations campaign giving interviews, being charming, presenting himself as an ordinary businessman who had been unfairly persecuted. The jury hung.
There was a second trial moved to the small upstate town of Malone. Schultz sent gifts to hospitalized children in Malone. He spent thousands on parties for local residents. He befriended the townspeople with the specific and calculated charm of a man who understood that 12 ordinary citizens from a small town in upstate New York were looking at him the same way they looked at anyone, as a person rather than as a headline.
He won an acquittal. He came back to New York and found his empire in ruins. Luciano had the numbers, Lepke had the restaurants. Weinberg had cooperated in the transfer of power. The men who were supposed to be his lieutenants had handed his operation to his rivals the moment he appeared to be finished. He confronted Weinberg.
The confrontation took place at a meeting where Schultz’s lawyer Dixie Davis was also present. According to Davis’s account, Schultz was drinking and Weinberg was drinking and the argument escalated until Schultz sucker punched Weinberg and stood over him while he was on the floor. Shortly afterward, a body appeared in a snowbank.
It had a dozen stab wounds to the chest. When Davis asked Schultz about it, Schultz said with complete calm, “I cut his heart out.” Bo Weinberg reportedly rests at the bottom of the East River in a cement overcoat. Schultz arranged the disposal. The man who had handled some of the most important killings of the 19 20s and 30s, who had helped arrange the deaths of Legs Diamond and possibly Mad Dog Cole, was himself disposed of by the man he had betrayed.
Dutch Schultz had come back. But coming back was not enough to fix what had been broken. By 1935, Schultz’s position in the New York underworld had deteriorated significantly. Luciano had not returned the policy rackets. The restaurant extortion operation had been reorganized under Lepke’s control. Schultz was operating out of Newark, New Jersey, having been effectively exiled from his primary base in New York City by the combination of law enforcement pressure and the syndicate’s territorial claims on his operations.
He was running reduced rackets with Longy’s Willman’s permission. He was not broke, but he was diminished. And Thomas Dewey was coming at him again. This time on restaurant extortion charges. Another federal prosecution. Another possibility of prison. Another existential threat from the same man who had already taken years of his life and forced him underground.
Schultz went to the commission. The commission, the governing body of the American Mafia that Luciano had established, consisting of the bosses of the major American crime families, was a structure designed to manage exactly these kinds of situations. It was the forum where disputes were resolved, territories were allocated, and major decisions affecting the organization as a whole were made.
Schultz went before it and made his argument. He wanted permission to kill Thomas Dewey. The meeting that followed was one of the most consequential in the history of American organized crime. Schultz sat before the men who ran the New York families, Luciano, Lepke, Anastasia, others, and made his case. Dewey was a threat to his operation specifically and to organized crime generally.
Eliminating him would solve the immediate prosecution problem. Some members were sympathetic. Albert Anastasia, who was rarely opposed to violence as a solution to problems, thought the hit was doable. He had already had one of Murder Incorporated’s operatives track Dewey’s morning routine and confirmed that the hit could be carried out.
Dewey was a creature of habit. He made the same journey to his office every morning at the same time. The opportunity existed. The commission voted against it. Lepke Buchalter made the decisive argument. If we knock him off, even the federals will jump on the rackets. We’ll be chased out of the country. Dewey’s mandate was limited.
He could pursue the New York rackets, but no further. Killing him would remove those limits and bring every federal law enforcement resource in the country down on organized crime nationally. The downside of the Dewey murder was not just the immediate investigation. It was the destruction of the entire national criminal enterprise that the commission existed to protect.
Schultz was furious. I still say he ought to be hit. If nobody else is going to do it, I’m going to hit him myself. He told the commission that Dewey would be dead within 48 hours. He stormed out of the meeting. Lepke watched him go. Then he said, “This is no good. The Dutchman is just daffy enough to do it.
” Lepke moved that for the sake of the syndicate Dutch Schultz should die. The motion carried. The organization that Schultz had been part of, had fought for, had paid tribute to, had sought permission from that organization, voted to kill him. Not because he was a criminal, because he was too much of a criminal, because his specific and volatile brand of ruthlessness had become a threat not to their enemies, but to themselves.
Killing the prosecutor would have been Dutch Schultz’s decision. The commission made a different decision. It killed Dutch Schultz, instead. Lepke contacted Mendy Weiss and Charlie “the Bug” Workman, Murder Incorporated’s best available operators. Both professionals, both capable of the specific kind of controlled violence that the job required.
The operation was planned for the Palace Chop House in Newark. Schultz had been using the restaurant as his informal headquarters, meeting his associates there regularly to manage the reduced operations he was running in New Jersey. On the night of October 23rd, 1935, Schultz was at the Palace Chop House with his accountant Berman, his bodyguard Rosenkrantz, and his lieutenant Landau.
Ledger sheets were spread across the back table. The evening’s business was being conducted. At 10:15 in the evening, Weiss and Workman came through the front door. Weiss went to the back table and opened fire. Workman pushed open the bathroom door and found Schultz inside and shot him once with a .45 caliber pistol.
The bullet entered his left side, nicking his stomach, a wound that would produce a lethal infection over the following hours, but that was not immediately fatal. Rosenkrantz, shot multiple times, somehow managed to draw his weapon and pursue Workman as he fled through the kitchen. He wounded Workman in the hand.
He did not stop him from escaping. Rosenkrantz himself died from his wounds within hours. Berman died. Landau died. All four men in the Palace Chop House that night were shot. Schultz was the last to die. He was taken to Newark City Hospital. He lingered through the night and into the following afternoon. A police stenographer sat beside his bed and recorded whatever he said.
What he said has been the subject of literary analysis, psychiatric speculation, and genuine fascination for 90 years. He moved between lucidity and delirium, between coherent statements and utterly disconnected fragments. He asked for his mother. He said, “Oh mama, I can’t go through with it, please.” He said the boss himself.
He said, “Who shot me?” and then answered his own question, “No one.” He asked for a priest and was baptized as a Roman Catholic by a priest who came to his bedside. The writer William S. Burroughs was so fascinated by the Schultz deathbed transcripts that he made them the subject of a novel.
He described the transcripts as the last great flowering of the American language. That is perhaps extravagant, but the transcripts are genuinely strange, the mind of a specific person shaped by a specific life coming apart in specific ways that are not like any other document in the record of American organized crime. At 8:40 in the morning on October 24th, 1935, Arthur Flegenheimer died.
He was 33 years old. The suspects in his murder were known to law enforcement almost immediately. Charlie “the Bug” Workman was eventually arrested. He spent over 20 years in prison and was paroled. He ended his days as a garment salesman in New York City. The man who shot Dutch Schultz became a garment salesman.
Mendy Weiss was eventually executed in the electric chair at Sing Sing Prison in 1944 for an unrelated murder incorporated killing. He did not go quietly. He shouted from the chair that he was innocent of the crime for which he was being executed. He was not innocent of killing Dutch Schultz, but the charge that killed him was something else.
After Schultz’s death, investigation of his estate produced a mystery that has lasted 90 years. He was estimated to be worth $7 million at the time of his death. No trace of the money was ever found. He had, in the months before he was killed, commissioned the construction of a special airtight and waterproof safe.
He had placed $7 million in cash and bonds inside it. He had buried it somewhere in the Catskill Mountains outside the town of Phoenicia, New York. He had told his driver, Marty Krompier, where it was. Krompier was shot in a New York barber shop the night Schultz was killed in Newark, probably by someone who knew exactly why Krompier needed to be silenced.
Krompier survived. He never disclosed the location of the safe. He died in 1964, taking the information with him. The $7 million, equivalent to $164 million in today’s money, remains buried somewhere in the Catskills. People have been searching for it for 90 years. There are organized expeditions. There are competing theories about the precise location.
There is a small industry of speculation and amateur treasure hunting built around the question of where Arthur Flegenheimer buried his money before the men he had threatened decided to shoot him in a bathroom. Nobody has found it.
