The Capone Tax Trial

The case

The evidence that sent Al Capone to prison did not come from a gunfight or an informer's deathbed. Much of it came from a letter his own tax lawyer, Mattingly, had written to the Bureau of Internal Revenue in 1930, offering to settle up and conceding what Capone had earned in years for which he had never filed a return. Capone had wanted to stay out of the trouble that had just caught his brother Ralph. The letter did the opposite.

Federal interest in Capone sharpened after the St. Valentine's Day Massacre in February 1929, when a delegation of Chicago businessmen asked President Herbert Hoover for help and Hoover told his departments to concentrate on the man. Two lines of attack followed. Prohibition agents under Eliot Ness raided breweries and drew the headlines. The case that mattered was built quietly by the Treasury's Intelligence Unit under Elmer Irey, who sent the agent Frank J. Wilson to Chicago. A Supreme Court ruling of 1927, United States v. Sullivan, had already settled that illegal income was taxable. The difficulty was proving Capone had any income at all, since he kept almost nothing in his own name and was careful never to sign for anything.

Wilson's breakthrough was an old ledger from a gambling house in Cicero, with profits split among initials and a line recording money paid for 'Al'. With help from Edward O'Hare, a lawyer who ran a dog track with the Outfit and had secretly turned informant, Wilson traced the bookkeeper, Leslie Shumway, to a racetrack in Florida and persuaded him to testify. Another witness, Fred Ries, was kept out of harm's way in South America until he was needed, his trip paid for by the Chicago businessmen known as the Secret Six.

A grand jury indicted Capone in March 1931 for 1924 and again in June on twenty-two counts covering 1925 to 1929. On 16 June he pleaded guilty, expecting a sentence of two and a half years under a deal the prosecutors had approved. Judge James H. Wilkerson let it be known that he did not consider himself bound by any bargain, and on 30 July Capone withdrew his plea.

The trial opened in the Federal Building in Chicago on 6 October 1931. Tipped off that the Outfit had a list of the prospective jurors, Wilkerson swapped his entire panel with that of another judge on the morning the trial began, and kept the jury locked up at night. The prosecution, led by United States Attorney George E. Q. Johnson, put Shumway on the stand and read out the Mattingly letter over the defence's objection that a lawyer could not confess for his client. Then came a long list of the things Capone had paid for: furniture and suits, a Palm Island estate and its improvements, parties, telephone bills, meat by the week. A man who spent like that, the argument ran, had income.

The defence, led by Michael Ahern and Albert Fink, had prepared for a guilty plea and had little time to change course. Its main answer was that Capone had lost his money gambling, an argument with no force in tax law, since gambling losses can only be set against gambling winnings. On 17 October, after about nine hours, the jury acquitted him on the 1924 indictment and on most counts of the second, but found him guilty on five: three felonies of attempting to evade tax for 1925, 1926 and 1927, and two misdemeanours of failing to file returns for 1928 and 1929.

A week later Wilkerson imposed five years on each felony count and one year on each misdemeanour, arranged to total eleven years, with $50,000 in fines and the costs of prosecution. Capone went to the Cook County Jail while new lawyers appealed. The appeals failed, and in May 1932 he was taken to the federal penitentiary in Atlanta.