TREASURY DEPARTMENT INTERNAL REVENUE SERVICE
INTELLIGENCE UNIT Washington (Named Division) SI-7085-F
December 21, 1933. Chief, Intelligence Unit, Bureau of Internal Revenue, Washington, D. C.
In re: Alphonse Capone, Lexington Hotel, 2300 Michigan Boulevard, Chicago, Ill.
The above numbered case relates to the evasion of income taxes by Alphonse Capone, Lexington Hotel, 2300 Michigan Boulevard,Chicago, Illinois, for the years 1924 to 1929, inclusive. The case is based on a special report of Special Agent in Charge A.P. Madden dated October 15, 1928, and was jacketed and referred to the Chicago Division on October 18, 1928. On May 19, 1930, the case was referred to me and I was ordered by you to proceed to Chicago to conduct the investigation under your direction. Special Agents Nels Tessem of the Chicago Division, M.F. Malone of the Washington Division, James N. Sullivan of the New York Division and Revenue Agents C. Hodgins of the Chicago Division, H.N. Clagett and J.C. Westrich of the Brooklyn Division, were assigned to cooperate with me throughout the investigation. Special Agents C.L. Clarke and Joe J. Brown of the Florida Division also cooperated during part of the investigation and other agents were celled upon from time to time to assist on the case. During the investigation of this case it became necessary that we make concurrent investigation of evasion of taxes by other principals in the Capone organization and evidence was secured which resulted in the conviction or pleas of guilty of Jack Guzik, Sam Guzik, Fraak Nitto, T.J. Druggan and Frank A. Lake. An indictment was secured against Louis Lipschultz, a member of the organizatlon and a brother in law of Jack Guzik. The investigation was made at Chicago, Illinoi , Leavenworth, Kansas, St. Louis, Missouri, Miami, Florida, New York, Washington, D.C., and other points from May 23, 1930 to October 30, 1931.
There is submitted herewith as Exhibit No. 1, a copy of the report of Revenue Agents Hodgins, Clagett and Westrich dated July 8, 1931, in which they recommended tax and penalties as follows: