October 23rd, 1935, 10:15 p.m. The Palace Chop House, 12 East Park Street, Newark, New Jersey. Dutch Schultz was washing his hands in the men’s room when two gunmen in long overcoats walked through the front door. They didn’t speak. They didn’t hesitate. Charles the Bug Workman went left toward the bathroom.
Mendy Weiss leveled a shotgun at the back table. Three of Schulz’s most trusted men sat over plates of liver and onions. Otto Berman, Abe Blandau, Bernard Lulu Rosenrance. They never finished the meal. The first blast tore Burman across the chair. Landau emptied his revolver into the wall. Rosen Crrance, bleeding from multiple wounds, staggered to the phone and asked the operator for an ambulance like he was ordering a sandwich.
Workmen pushed open the bathroom door and fired one rusted 45 caliber round into Schulz’s gut. Mob legend says the slug had been dipped in garlic, an old superstition. They believed it caused infection. Garlic or not, the wound would do exactly that. This wasn’t a back alley hood. Arthur Flegenheimimer, the kid from the Bronx who renamed himself Dutch Schultz, was at that moment among the highest earning gangsters in the United States.
He controlled the Harlem numbers racket, the New York beer trade, the restaurant extortion rackets, and a private army of killers that operated from the Bronx to upstate New York. He had just walked away from the federal government in tax court. He had a war chest, the IRS estimated, in the tens of millions.
And he was one of the only mob bosses in American history that the National Crime Syndicate ever formally voted to murder. This is the story of how a German Jewish kid from a tenement on Bergen Avenue built one of the most profitable criminal empires of the prohibition era, declared war on a black numbers queen in Harlem, defied Lucky Luchiano in front of the entire commission and tried to assassinate a federal prosecutor named Thomas Dwey.
This is the real story behind the man the movie Hoodlm only partly showed. The bootleger, the killer, the boss who pushed the mafia so far they wrote his death warrant in writing. But here’s what the films never tell you. Dutch Schultz wasn’t killed because he was crazy. He was killed because he was right. And by the time the commission realized he was right, it was already too late.
Arthur Simon Flegenheimimer was born August 6th, 1901 in a cold water flat in the Bronx. German Jewish parents. Father Herman ran a saloon and worked as a plumber. His mother, Emma, was listed as divorced by the time Arthur was a boy. Herman had walked out. Arthur quit school in the eighth grade and went to work odd jobs, including hauling for a trucking outfit by day.
By night, he ran with a Bronx street crew. He picked up the nickname Dutch Schultz from an oldtime Bronx Tough whose reputation he admired. He kept it for life because, as he said, it was short enough to fit on a tombstone. He spent 17 months locked up for burglary, the only prison sentence he would ever serve. Walked out harder, walked out connected.
By 1928, Schultz was 26 years old, working as a bouncer at a small speak easy called the Hub Social Club. The owner was a quiet, broadshouldered gangster named Joey. No. No. He noticed something in Schultz. the other bouncers didn’t have. He didn’t just enforce. He thought ahead. No, he made him a full partner.
Together, they did something nobody else in New York was doing. They stopped being customers of the beer trade. They became the beer trade. They bought their own trucks, their own delivery routes. They forced every speak easy in the Bronx to buy Schultz beer or get burned out. Within a couple of years, they were grossing millions a year.
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Then came the war that made Dutch Schultz a legend. Jack Legs Diamond ran the bootleg trade out of Manhattan and he didn’t like Bronx kids musling into his territory. On the night of October 16th, 1928, Joey No was gunned down outside the Chateau Madrid on West 54th Street. Gunman in a car opened fire as he stepped out. Noi took rounds in the chest, the spine, and the hand.
He emptied his pistols into the car as it sped off. then collapsed. He hung on in a hospital bed for weeks. He died November 21st, 1928. Schultz didn’t grieve. He hunted. He inherited the whole operation as sole boss. He was 27 years old. He had no partner. He had no equal. Three years later, in December 1931, Legs Diamond himself was shot dead in an Albany rooming house.
A killing often pinned on Schultz, though it was never proven. By then, the Bronx beer empire was entirely his. Here’s the thing about Dutch Schultz that nobody in the press understood. He was cheap. Not careful, cheap. He wore the same brown suit for weeks at a time. He drove a beat up car. He hated automats. The other bosses laughed at him.
Luchiano said Schultz looked like a guy who delivered ice for a living. But behind that cheap suit was a brain that thought in spreadsheets. And the man who handled those spreadsheets was named Otto Berman. Otto Abadaba Berman, a soft-spoken accountant in wire- rimmed glasses with a slide rule in his breast pocket. Schultz paid Burman a reported $10,000 a week.
That’s roughly 230,000 a week in today’s money. To do what? To rig the Harlem numbers racket from the inside. You have to understand how the numbers worked. It was the people’s lottery. Black, Italian, Irish, Jewish, didn’t matter. You picked three digits. You bet a nickel. The winning number was pulled from the last three digits of the total daily handle at the racetrack.
The whole appeal was that nobody could rig it. The track handle was public. The numbers were printed in the morning paper until Abadaba Burman figured out how. In the final hour of betting each day, the racetrack handle was still loose enough to be moved. Burman would calculate which three-digit number had the least money bet on it.
Then, in the last minutes before the final race, he’d have Schultz’s runners place massive bets at the track, enough to shift the last three digits of the total handle to whatever number B wanted. The winning number came out. Almost nobody had played it. The house kept everything. Burman could do the math in his head in seconds. He never wrote it down.
This was the engine. This was the cash machine. By the early 30s, the Schultz Harlem numbers operation was estimated to clear somewhere between 12 and 20 million a year tax-free, untouchable. Except for one problem. Schultz didn’t invent the Harlem numbers racket. He stole it. Stephanie St. Clair. They called her Madame Queen.
Born on the French Caribbean island of Guadaloop, sources say either the 1880s or the late 1890s. She arrived in Harlem in 1912 with nothing. By the early 1920s, she was running her own policy bank with $10,000 in seed money. Within a few years, she was clearing a quarter million a year.
She employed her own runners, ran her operation from Edgecomb Avenue, and wrote public letters to the newspapers denouncing police corruption. She was one of the only black women in America running a multi-million dollar criminal enterprise, and she did it with absolute fearlessness. Schultz looked at Harlem in 1931 and saw money lying in the street. He sent his enforcers in.
They beat up runners. They burned policy banks. They told the black bankers two things. Pay Schultz a cut or die. Most of them paid. St. Clare did not. She went to the newspapers. She went to city hall. She paid for full page ads naming the cops on Schulz’s payroll. She testified before the Seabberry Commission, which was investigating police corruption in New York.
And her complaints helped expose corrupt officers, several of whom were disciplined or dismissed. Schultz responded the only way he knew how. He sent men to kill her. She survived multiple attempts. Once by hiding in a coal cellar. Once by walking into a precinct house and surrendering just to get protective custody. And then St.
Clare did something nobody expected. She recruited a quiet, sharp Harlem strongarm man named Ellsworth Bumpy Johnson. Sharp-dressed and self-taught, he read poetry, history, and philosophy, and could quote Shakespeare and the Bible from memory. Johnson became her enforcer, her lieutenant, and eventually her successor.
The bumpy Johnson that Hoodlam turned into Lawrence Fishburn’s character was a real, calculating, lethal operator who studied Schultz the way a chess player studies an opening. The war for Harlem ran from 1931 to 1933. More than 40 men died. Both sides used straight razors, sawed off shotguns and dynamite.
Bumpy Johnson hit Schultz’s policy banks. Schultz hit back. Bumpy ambushed Schultz’s collection runs. Schultz’s men killed Bumpy’s people. The Harlem police, half of them on Schultz’s payroll, looked the other way. But the public pressure kept building. The newspapers loved Madame Queen. They hated the cheap white gangster from the Bronx, musling into a black neighborhood.
By 1933, the heat was unbearable. And Schultz had a much bigger problem. The federal government had finally noticed him. His name was Thomas Dwey. Quiet, methodical, and absolutely incorruptible. In 1933, Dwey became United States Attorney for the Southern District of New York. He looked at Schultz’s tax returns. There weren’t any.
Millions a year going untaxed. The feds filed charges. Schultz went on the run for almost 2 years. He hid in upstate New York. He grew a beard. He moved between safe houses in Connecticut, Pittsburgh, and the Catskill Mountains. And during those years on the run, he did something that became one of the great unsolved mysteries of American crime.
He took roughly $7 million reportedly in cash, goldbacked thousand bills, diamonds, and uncashed Liberty bonds. He sealed them, the story goes, in a customuilt iron strong box, drove it somewhere into the woods around Phoenicia in the Catskills, and buried it. Only two men were said to know the location, Schulz and his bodyguard, Lulu Rosen Crrance.
By the end of 1935, both would be dead. Treasure hunters have been digging in the Catskills for nine decades. Estimates of the buried fortune today run from 50 to $150 million. Geoysicists have come with ground penetrating radar. Nobody has ever found it. In late 1934, after nearly 2 years as a fugitive, Schultz surrendered to face the tax charges.
His lawyer was the defense attorney Dixie Davis. The first trial in Syracuse ended in a hung jury. The retrial was moved to a small upstate town called Malone, New York, population 6,000. Far from the press, far from the city, far from the corruption Schultz was used to buying. What Schultz did next was either brilliant or insane, depending on who you ask.
He moved to Malone weeks before the trial. He picked up tabs in bars and restaurants. He attended mass at the Catholic church and spoke openly of converting. He sponsored a local Sandlot baseball team. He attended ball games with the mayor. He handed out toys to sick children at the local hospital. By the time the trial started, half the jury pool already knew him personally.
On August 1st, 1935, the Malone jury acquitted him. The judge, Frederick Bryant, openly insulted the verdict from the bench, telling the jurors their decision shook public confidence in the integrity of the law. It didn’t matter. Dutch Schultz had beaten the federal government. He walked out of that courthouse one of the most untouchable gangsters in America.
And that’s when his real problems began. Schultz returned to New York to discover that Lucky Luciano and the new national crime syndicate had reorganized everything while he was gone. Luciano had built the commission, the governing body of the Italian families with himself at the top. He had carved up the rackets. He had brought in Meer Lansky as financial brain, Albert Anastasia as enforcement, Lewis Lepka Bukalter running labor, and a centralized murder bureau later called Murder Incorporated.
Schultz was a beer baron in a world that had moved on from beer. Prohibition had ended in 1933. The future was gambling, labor, racketeering, and dope. And the future did not include a Jewish gangster from the Bronx running things his own way. Bo Weinberg was Schultz’s chief lieutenant, smart, loyal, the man who had run the operation while Schultz was on the run.
While Schultz was in hiding, Bo had reportedly been quietly negotiating with Luchiano about handing over Schultz’s territories. Schultz heard the rumors. One month after his acquitt in early September 1935, Bo Weinberg walked out of a Midtown Manhattan nightclub. He was never seen again. The story whispered on the docks for years was that Schultz personally drove a knife into Bose’s chest, then had him fitted with concrete and dropped off a pier into the East River.
The body never surfaced. This was the moment Luchiano realized what they were dealing with. Dutch Schultz did not respect the commission. He did not respect the territory agreements. He did not respect anyone. Then came Dwey again. By July 1935, Dwey had been appointed special prosecutor for organized crime in New York County. And he kept coming.
He had a new strategy. He stopped going after tax returns. He started going after restaurant extortion. Schultz controlled the New York restaurant racket through a front called the Metropolitan Restaurant and Cafeteria Association. Forced membership, forced payments. Dwey had witnesses lined up. He had wire taps.
He had a case that could put Schultz away for decades. Schultz did the math. 15 years, 20 years, 30 years. He was 34 years old. He wasn’t going to die in prison. He decided to kill Thomas Dwey. He went to the commission. October 1935. Lucky Luchiano, Lansky, Albert Anastasia, Joe Adonis, Veto Genevvesi, Lewis Lepki, Schultz made his case.
Dwey was a public threat. Dwey would eventually come for all of them. Schultz had already worked out the operation. Anastasia would handle the surveillance. The hit would happen outside Dwiey’s apartment building on Fifth Avenue in the early morning. Two shooters with silenced pistols. Dwey walked alone most mornings with no bodyguards.
It would take 90 seconds. Luchano refused. He said killing a federal prosecutor would bring down the kind of federal heat that would end all of them. He said, “The bigger the man you killed, the bigger the wave.” He said no. The commission voted it down. Schultz stood up. He looked at Lucky Luchiano and he said the words that killed him.
He said he was going to hit Dwey anyway and then he walked out of the room. Albert Anastasia got nervous. He’d been the one assigned to scout Dwiey’s apartment. If Schultz hit Dwey without commission approval, Anastasia was the most exposed man in the room. Anastasia went to Luchiano. He told him everything.
Schultz wasn’t bluffing. He had the scout reports. He had shooters lined up. he was going to do it. The commission met again. Hours of deliberation. The vote this time was about whether to kill one of their own to protect the entire syndicate. They voted yes. They voted to kill Dutch Schultz.
They gave the contract to Louis Lepa Bukalter and Murder Incorporated. The hit team was assembled fast. Charles the Bug Workman, the most ruthless killer in Brownsville. Emanuel Mendy Weiss, a Lepki loyalist. and a getaway driver remembered as Piggy generally identified as Seymour Shakar who would himself be murdered by Murder Incorporated not long after they followed Schultz for days.
Schultz had moved his operations to Newark because he believed New Jersey was outside Dwiey’s jurisdiction. He held nightly meetings at the Palace Chop House. He always sat at the same back table. The Murder Incorporated team mapped every angle. October 23rd, 1935. 10:15 p.m. Workman and Weiss walked through the front door of the palace chop house.
Workman peeled off toward the bathroom. He saw a man at the basin. He didn’t recognize him in the dim light. He fired one shot into the man’s lower abdomen. The slug, rumor has it, was rustcoated and garlic soaked to ensure infection. Then workman walked into the back room to help Weiss finish the others.
Weiss had already opened up on the table. Burman, Landau, and Rosenrance scrambled for their pistols. Burman caught a shotgun blast. Landau emptied his revolver, hitting nothing. Rosen Cray took bullets in the abdomen and somehow stayed conscious. The two killers turned and walked out. The whole thing took less than 2 minutes.
Workman, before leaving, doubled back to Rifle Schultz’s pockets for cash. By the time he walked out the door, the getaway car was gone. Piggy had panicked. Workman had to walk back toward New York alone in a bloody overcoat through the New Jersey marshes. He was paid for the job. He was eventually convicted in 1941 and sentenced to life in prison.
He served 23 years and was parrolled in 1964. Schultz didn’t die on the floor of the palace chop house. He staggered out of the bathroom holding his stomach and he sat down at a table near the bar. He was conscious when the police arrived. They took him to Newark City Hospital. His temperature climbed to 106°. Peritonitis, sepsis.
The infection had done its work. For the better part of a day, Dutch Schultz lay in that hospital bed and rambled in delirium. A police stenographer sat next to him and transcribed every word. The transcript runs over 2,000 words. It is one of the strangest documents in American criminal history. He talked about his mother.
He talked about a French Canadian girl. He talked about a man named Frenchie. He said, “Please, mother, you pick me up now.” He said, “A boy has never wept nor dashed a thousand kim.” He said, “Turn your back to me, please, Henry.” He said, “Oh, oh, dog biscuit.” None of it made sense.
None of it told them where the treasure was buried. He also asked for a priest and was baptized a Catholic on his deathbed. Dutch Schultz died on October 24th, 1935 at 8:35 p.m. He was 34 years old. Otto Berman died the same night. A Blandau and Lulu Rosen Crrance both died of their wounds within roughly a day. and Rosen CR never told anyone where the strong box was buried.
What happened next changed everything. Thomas Dwey, the prosecutor Schultz had tried to kill, used the publicity around Schultz’s death as a political launchpad. He took down Lucky Luchiano on prostitution charges. Within a year, he became governor of New York. He became the Republican nominee for president of the United States twice in 1944 and 1948.
The famous Dwey defeats Truman headline, the most wrong headline in newspaper history, was about the man Dutch Schultz had once put a contract on. Stephanie St. Clare, the Madame Queen of Harlem, lived another 34 years. She sent Schultz a telegram on his deathbed that read, “As ye sow, so shall ye reap.
The papers printed it.” She died in 1969. Bumpy Johnson took over Harlem and remained a dominant figure there for decades in and out of prison until his death from heart failure at Wells restaurant in 1968. Schultz never lasted 4 years in Harlem. Lucky Luchiano served about a decade in prison, was deported to Italy, and died of a heart attack in 1962 at the Naples airport.
Charles Wartman walked out of prison in 1964 and lived quietly in New Jersey, never giving a single interview. Lewis Lepka Bukalter became the only American mob boss ever executed by the United States government. He died in the electric chair at Sing Singh in 1944. The money was never found. The strong box in the Catskills is still out there if it ever existed.
Treasure hunters have searched for 90 years. The Phoenicia Woods are full of holes. Here is what this story tells us about organized crime in America. Dutch Schultz was not killed because he was a criminal. He was killed because he was an individualist. The commission Luchiano built ran on consensus, on discipline, on the slow accumulation of power across generations.
Schultz wanted to move fast. He wanted to kill the prosecutor. He wanted to keep Harlem. He wanted to operate without a boss. In 1928 that made him a king. By 1935 it made him a corpse. The American mafia survived for the next 70 years not because it produced more men like Dutch Schultz. It survived because it killed them.
And the men who killed Schultz, Luciano and Lansky and Lepki became the architects of organized crime in the modern world. They built something institutional. They built something that outlived them. Dutch Schultz built something that died the night he did. The palace chop house is gone. The Bronx tenement where Arthur Flegenheimimer was born is gone. The brewery is gone.
The numbers racket is gone. Absorbed into the state lotteryies. Even the Catskill treasure, if it exists, has been swallowed by the woods. What remains is a question. Was Dutch Schultz a visionary who tried to do what Luchiano was too cautious to do? Or was he just a violent, greedy man who picked the wrong fight at the wrong time? The mafia voted. They picked Luchiano.
The history books picked Luchiano, but Dwey kept coming for all of them, just like Schultz said he would. In the end, Dutch Schultz was right about everything except his ability to survive being right. If you found this story fascinating, hit subscribe. We drop a new mob documentary every week.
Disclaimer : This content may be created by AI for entertainment purposes. Any resemblance to real persons, events, or places is coincidental.
