Oddly enough, even at the height of his power, Lepke was virtually an unknown in New York and throughout the country. While other hoodlums gained the headlines, Lepke remained in the shadows with few people realizing the extent of his empire, whose earnings have been estimated at more than $50 million a year. Nor was it known for twelve years—1927 until 1939—that Lepke alone had ordered the deaths of from sixty to eighty men whom he considered a threat to his own safety and prosperity.
By 1933, however, the operations of Lepke and other racketeers had aroused such popular indignation that the U.S. government moved against them. In November of that year a Federal grand jury indicted Lepke on two counts of violating the antitrust laws through his domination of the rabbit-fur-dressing industry. He was arrested and released on bail. He returned home to his wife and adopted son to continue operations as usual while the wheels of justice turned slowly.
It was during this period that another opportunity came to Lepke quite unexpectedly. Three hoodlums—Jack Katzenberg, Jake Lvovsky, and Sam Gross—were allied with other gangsters in the operation of an illicit chemical plant in Newark, New Jersey. The gang was smuggling opium into the country, taking it to the plant and extracting morphine from the opium, to be sold at wholesale across the country. This business was wiped out on February 25, 1935, when an explosion destroyed the chemical plant.
Katzenberg, Lvovsky, and Gross had found the narcotics business too profitable to give up. They began looking around for other ways to get back into the business, and they decided to talk the problem over with Lepke. A mutual friend brought them together in his apartment, where they discussed setting up an international organization which would obtain narcotics in Shanghai and smuggle them into the United States. The sale of narcotics was to be put on the same efficient basis as the sale of murder.
The major stumbling block to the plan was the U.S. Customs. It would be relatively simple to obtain heroin in Shanghai and to bring it as far as the port of New York. The problem was how to smuggle it past the Customs inspectors on a continuing basis that would guarantee a steady supply with a minimum risk.
Lepke was a firm believer in the adage that every man has his price—and he was certain he would have no difficulty in finding someone whose price was reasonable and who would cooperate with the syndicate. This direct approach had always worked in the past and Lepke had no reason to change tactics now.
One of Lepke’s first moves was to investigate the Customs procedures at the New York pier. He found that when vessels arrived at the Port of New York, the passengers’ baggage and trunks were brought to the pier for examination. And when they had been examined, a Customs inspector affixed a colored stamp on each piece of luggage. Once the stamps were affixed, the luggage could be removed from the pier and placed in a taxi or in a truck to be carted away.
Lepke saw that the stamps were the key to his problem. If he could find a Customs employee who would furnish him with the colored stickers, then a sticker could be affixed to a trunk or a suitcase containing narcotics and it would pass through Customs without an actual inspection.
Carefully, Lepke’s lieutenants made inquiries along the waterfront. At last they found their men, two guards who were willing—for a price of $1,000 a trip—to furnish Lepke and his men with the necessary stickers on the day that the narcotics carriers arrived. The price was cheaper than Lepke had expected.
With easy entry for the narcotics assured, Lepke arranged to obtain heroin from two Greek dealers in Shanghai.