In the early 1920s, Lepke joined an East Side mob headed by “Little Augie” Orgen. But while most of the underworld scrambled to satisfy the country’s unquenchable thirst for bootleg whiskey, Lepke convinced Little Augie that it was safer, smarter and more profitable to specialize in labor racketeering and in selling “protection” to businessmen.
If an employer was having trouble with strikers, Lepke would see to it that the recalcitrant workers were beaten up by his goons and that peace was restored at no increase in wages. If union leaders were having trouble with rank-and-file members, Lepke’s strong-arm squad would bring the rebels back into line with beatings and threats against the men’s families.
Other mobs sold such services on a flat-fee basis. But not Lepke. When his men were hired to put down a union revolt, they remained as members and then slowly muscled their way into the management of the union. The members’ dues were increased to pay for the services rendered.
Businessmen who hired Lepke’s strike-breaking services were ordered to buy the protection on a continuing basis. If they refused, a bomb would be hurled through a window to wreck a plant or a shop. Acid would be thrown onto merchandise, or someone’s face would be splashed with acid as he walked from his place of business to his home.
Those who capitulated—and most of them did—soon found Lepke’s men demanding a voice in management, even to the dictation of contracts (from which they received a kickback) and the placement of a man in the business office to keep a check on the money.
Little Augie was pleased with Lepke’s organizing brilliance and the profits that were rolling in. But the word got around that he didn’t like Lepke’s growing strength in the organization, where he was known as “The Judge” and “Judge Louis.”
Little Augie’s irritation was short-lived. On October 16, 1927, as he stood in a doorway at 103 Norfolk Street talking with his young bodyguard, a sedan suddenly swerved to the curb. A voice called, “Hey, Little Augie!” As the gang chief turned, a burst of machinegun fire cut him down. His wounded bodyguard was identified by police as John Diamond—later to become better known as Jack “Legs” Diamond.
The underworld hummed with the story that Little Augie had fallen victim to Lepke’s ambition. On the basis of an informer’s tip, police picked up Lepke, “Gurrah Jake” Shapiro and “Little Hymie” Holtz and charged them with murder. But no one could prove anything and the case soon was dropped.
With Little Augie out of the way, Lepke set to work to consolidate his empire. He moved more solidly into the leather, baking, garment, fur and transportation industries. At the peak of his power, Lepke personally directed some 250 criminal operations. He rode about New York in a limousine with a liveried chauffeur. He had a staff of 300 men looking after his affairs, plus an assortment of accountants, bookkeepers, gunmen, strong-arm men, and experts in such matters as acid-throwing.
He also put murder on a cash-and-carry basis. If a member of the mob became careless or talked too much, he was executed summarily. Dangerous witnesses were ordered to leave the state under the threat of death—and if they refused to obey, they were killed.