The defendant received income in the form of cash, sometimes checks, and, on many occasions, wire transfers of money by Western Union. The defendant, Alphonse Capone, had never filed a return for the years covered by the indictment and had never paid any tax on any of the income earned during those years.
The foregoing facts were established by evidence largely circumstantial in character. The defendant had no bank accounts, kept no book records of activities, bought no property in his own name, and, with the exception of wire tranfers of money by Western Union and an occasional check, conducted all of his financial dealings with currency only. The evidence of the government, therefore, comes principally from the mouths of those who dealt either with the organization or with the defendant, and the entire situation is made clear only by piecing together many separate facts and circumstances, among which are included some admissions of income made by the defendant himself.
On June 16, 1931, the taxpayer appeared before Federal Judge James H. Wilkinson and pleaded guilty to all counts in each indictment. On August 1, 1931, the defendant was allowed to withdraw the pleas of guilty and the case was set for trial on October 6, 1931.
The income of the taxpayer was derived from gambling, houses of prostitution and bootlegging. He was referred to by his associates in the newspapers of this country and abroad as the "Colossus of Racketeers", "King of Gangdom" and the "Big Shot". Although his income was secured wholly through the illegal activities of a large organization of which he was the leader, his activities had not been seriously interfered with by city, county or state authorities. His immunity was explained by statements of members of his organization that all of their activities were protected on account of large graft payments made by them to insure the unmolested conduct of their various businesses.
One of the largest sources of income of the taxpayer was from gambling establishments in the City of Cicero, Illinois, a suburb of Chicago. Since the election in the spring of 1924 the Capone organization has operated in that city without serious interference. There is submitted herewith as Exhibit No. 5, a photostatic copy of the book in which the daily profits of the Hawthorne Smoke Shop, later known as The Ship and The Subway, a gambling establishment conducted by the taxpayer in Cicero, were kept. This place was first operated on May 1, 1924, and the business continued at various
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