A Bright and Guilty Place Page 6
Fitts also restructured the D.A.’s investigative unit. He brought in a friend, Lucien Wheeler, a one-time presidential bodyguard and former Los Angeles bureau chief of the Federal Bureau of Investigation (BOI, the predecessor of the FBI), to head up the show. Wheeler let go many of the incumbent staff and started to recruit a new team. Within weeks he had more than 3,100 applications on file for some thirty jobs.
Meanwhile, Leslie White had been wondering what to do with his life. One day at his aunt’s house in Hollywood, he was delighted to be visited by friends from Ventura County. They came in with long faces because the word back in Ventura had been that Leslie White was at death’s door. They were amazed to find him on his feet and hear him say he was itching to get back to work. One had heard about Buron Fitts’s new investigative unit and suggested, “Why not apply?”
Armed with letters of recommendation, White went again to the Hall of Justice, this time riding the elevator to the seventh floor and the D.A.’s office. He was young and green, but his experiences as a deputy in Ventura and during the St. Francis Dam disaster worked in his favor. He’d photographed and identified hundreds of corpses so was at least unfazed by the sight of death. He landed a job specializing in the gathering of material evidence. Police forensics was then in its infancy. Fingerprint classification, corpse temperature graphs to determine the time of death, and the comparison microscope for bullets were still relatively new techniques. In 1923 the forward-looking August Vollmer, then briefly head of the LAPD, had created America’s first crime lab. Now Fitts’s office would have one too. Leslie White would become, in his way, a pioneer and a crusader. “Politically Los Angeles was in a panic. The reformers were sweeping into every office, looting and pillaging the old system. Having reached the saturation point of corruption, the old regime had been driven from power and the ‘revolution’ was on,” as he later wrote. “I was for the ‘cause’ and loved a fight.”
Buron Fitts’s first big objective was the prosecution, not of some racketeer or notorious murderer, but the previous District Attorney, Asa “Ace” Keyes, the man who until recently had been Fitts’s boss. Behind this unlikely turn of events lay the most spectacular fraud in L.A.’s history. “The Julian Petroleum debacle, in which thirty thousand investors were milked out of untold millions of dollars, touched off the fuse which blew the politicians out of the limelight,” wrote Leslie White. “The grafters had been in power a long time and Los Angeles was in a bad state of affairs. The Julian Pete symbolized it all.”
The story began years earlier, in 1885, when Chauncey C. Julian, later to be known as “C.C.,” was born in Manitoba, Canada, the son of an impoverished farmer. As a boy he sold newspapers. As a young man he drove a milk wagon, clerked in a clothing store, sold jewelry and building supplies, worked in real estate, and in the oil fields of Texas worked as a rigger. In 1921 he arrived, penniless, in L.A. and started peddling stock in oil leases. His first promotion fizzled. Then he had a massive stroke of luck: on a four-acre lease he drilled five wells and all five came in, producing gushers. His first investors earned money, and he gained a following. Soon he was acquiring more leases, opening gas stations, and selling millions of dollars in stock. He had his own radio station and pilloried the big oil companies. He called his own gas “Defiance”—a nice touch.
Breezy as a door-to-door salesman, brandishing his fist or pointing his thumb and forefinger in the shape of a pistol, Julian had shrewd insight into the mind-set of the small American investor, confronting head-on the accusation that he was a con man. His daily press advertisements became a feature of city life. He told those who couldn’t afford to take a chance not to bother while urging the adventurous of spirit to plunge. “Come on, folks, you’ll never make a thin dime just lookin’ on. I’ve got a surefire winner this time, a thousand to one shot. We just can’t lose. We’re all out here in California where the gushers are and we just ought to clean up. Come on, folks, get aboard for the big ride,” he said. Or: “I’ve got a wonder coming up, folks. She’s not only warm, she’s ‘red hot’—right off the coals. How big? Oh, I don’t know—she looks like a hundred million dollars.”
Julian became for a couple of years as grand a celebrity as any in L.A. Reporters tracked his every step, gleeful when Chaplin decked him after a spat in the nightclub Café Petroushka or when he gave a Cadillac to a hatcheck girl. To continue doling out dividends, and to pay for his four homes and the gold-lined bathtub into which he plunged each morning, he kept issuing more and more stock, turning his original operation into a scheme of the sort recently made famous by Charles Ponzi. Ponzi, a smiling, skimmer-wearing, cane-wielding con man who ran a get-rich-quick scheme in Chicago, had promised that investors would double their money within three months. To fulfill this pledge, he only needed ever larger numbers of investors, and for a while they flocked forward. It was a classic pyramid scheme, earning Ponzi $2 million a week at one point, typical of the money-mania that swept America in the 1920s and seen more recently in the Bernard Madoff affair. But taking from Peter to pay Paul can’t last forever: Ponzi’s scheme collapsed and he was sent to jail.
Likewise, by 1925 C. C. Julian was in trouble. He bowed out, or was pushed out, handing over control of his companies to a group of businessmen, “nimble-witted magicians” according to the Times. They were led by S. C. Lewis, a lawyer from Texas, and his sidekick Jake Berman, alias Jack Bennett, “the boy Ponzi of the Pacific Coast,” “a two-name man as dangerous to a community’s state of mind as a two-gun man.”
Lewis and Berman kicked the Julian Pete into another gear, intent on fraud from the start. The swindlers stepped in, bought brokerage houses, and invited celebrities and rich investors (shakers and movers like Charlie Crawford) to form privileged “rings,” boosting the stock they then watered. Over four million shares were sold at a par value of $200 million. Punters were gullible, and besides, this was one of those times in American economic life when it was possible to buy into a scam and still make money—so long as you got out in time, or were on the inside.
Some 40,000 Angelenos—high and low, and almost everybody in between—invested in the Julian Pete. Local reporter Guy Finney wrote: “They knew their city was galloping along at dizzying speed. The easy money carnival spirit gripped them. They sang it from every real estate and stock peddling platform, in every glittering club and café, in banks and at newsstands … The dollar sign was on parade. Why marvel then that like epidemic measles among the young it spread from banker to broker to merchant to clerk to stenographer to scrubwoman to office boy, to the man who carried his dinner pail … The mass craving wanted its honey on the table while the banquet was on. It simply couldn’t await a soberer day.”
A single word explains this story of a city gone nuts: oil. In the 1920s L.A. was primarily an oil town. Oil derricks rose high in the middle of major boulevards while nodding donkeys dotted the hillsides. Thirteen hundred or so oil wells operated throughout the Los Angeles Basin, in places “as thick as holes in a pepper box,” producing scores of thousands of barrels a day, one-fifth of the world’s oil output at that time. Amazing.
A 1923 photo of Signal Hill in Long Beach shows hundreds of oil derricks bristling above a few blocks of California bungalows. Water, and the theft of water, allowed L.A. to grow, but oil was the bonanza. Oil promised swift and transforming wealth. Oil created Los Angeles as a plausible business hub and prompted the development of an industrial base that would later manufacture much of the world’s aircraft and automobile tires. Promoters ran bus trips to the oil fields where salesmen bore down bearing “sandwiches, cookies, and huge cups of coffee,” according to the Saturday Evening Post (in the central part of a 1923 series about the L.A. boom titled “Mad from Oil!”). It was the free chicken dinner school of finance. People bought oil stock because they saw derricks and wells and blowouts right there in their backyards. “It was like drilling for oil at Fifth Avenue and Forty-second Street in Manhattan,” said one Texas oil man. Lawns and parks and houses we
re constantly plowed up so new wells could go down. Homeowners banded together to sell their properties to big developers. When Upton Sinclair wrote his 1927 muckraking novel set in the city, he didn’t call it Movies!; he called it Oil! Nobody wanted to be bothered with memories of struggling, frugal days. “Little people were suddenly seized with the vision of becoming big people and were driven half-crazy with a mixture of greed and fear,” said Sinclair’s wife, May Craig, observing the madness. “We were right in the center of an oil cyclone.”
The Julian Pete grew and grew until on Friday, May 6, 1927, the inevitable happened. “This hapless May day … expressed by the nature of things in Los Angeles in the serenity of sunlit skies and outward peace … saw the Julian Petroleum stock mirage crumble to earth … saw one of the most spectacular and unreal promotional dreams ever fostered in the great, upclimbing Pacific Coast go into swift eclipse … saw frenzied stock gamblers, conscience-heavy bankers, wide-eyed, anxiety-driven business and professional men running around in fear … saw an explosion blast more than 40,000 stockholders who unwittingly had dumped their savings on the swindling bonfire,” wrote Guy Finney.
The great Los Angeles bubble had burst and trade in Julian Pete stock was suspended. Those 40,000 investors awoke to the realization that they’d been fleeced of $150 million; many of them had been ruined, and almost at once they raised angry cries for justice and revenge. What had happened? Who had done this? To District Attorney Asa Keyes fell the task of rounding up the fraudulent malefactors. Indictments against Lewis, Berman, and a host of others were issued by a grand jury in the summer of 1927. But when, after a succession of delays, judicial proceedings finally began in January 1928, Asa Keyes—shuffling, uncertain, apparently indifferent—recommended to the jury sitting in a courtroom in L.A.’s fancy new marbled Hall of Justice that charges against the accused be dropped. And so, amid chaotic scenes, the case of the People of California v. Lewis, Bennett, et al. collapsed.
Judge Doran (he also presided over the Marco trials) knew the result should have been different and expressed his surprise in scathing terms: “I feel that diligence on the part of District Attorney Keyes would have brought a different verdict,” he said. All hope of retribution against those who’d plundered the Julian Pete seemed to have been lost.
The verdict divided the city’s press. The Examiner seemed unconcerned, arguing that this was how the nitty-gritty of business sometimes worked and business, after all, was America’s lifeblood. The Times, on the other hand, had an axe to grind against Asa Keyes. Rumors had long persisted that, back in 1926, Keyes took a $30,000 payoff following the sensational disappearance of the evangelist Aimee McPherson. A pile of clothes was found on Ocean Park Beach in Santa Monica and for thirty-two sensation-packed days, the world wondered where she was. Several of her distraught followers killed themselves, and the city spent vast sums organizing a search. Then McPherson reappeared with a tale of having been kidnapped, although it soon came out that she’d been shacked up in a hotel with the man who was her radio operator and lover. “Her followers were kneeling in the sand, praying for her to come back walking on the water,” wrote reporter Adela Rogers St. Johns, the daughter of Earl Rogers. “Instead she came up in the desert in Arizona with a young man named Ormiston.” Asa Keyes brought McPherson to court and charged her with obstruction of justice then did an about-face and dropped proceedings. Now, for the Times, it seemed the same had happened again, this time within a situation that reached deeper; the Julian Pete swindle had touched most of the city’s population one way or another.
The Times got proof of Keyes’s corruption in the shape of a diary, a little black book that had been kept by Milton Pike, an assistant to a prominent downtown tailor named Ben Getzoff, whose shop at 609 Spring Street was near the courts and the business district. In his diary Pike had recorded the various comings and goings, and the shady transactions, that took place in the back of Getzoff’s shop, all of which he observed through an angled mirror. Prominent Julian Pete players had been frequent visitors, likewise Asa Keyes, “often half-lit” on the bootleg booze kept there. Pike alleged that he’d seen Keyes accept lavish gifts and bribes. At first Keyes denied the charges and refused to resign, but accumulating evidence forced his hand. Asa “Ace” Keyes, the Los Angeles District Attorney, a public servant of twenty-four years, had taken money and thrown the most important trial on his watch. Some were shocked, but many perplexed and faith-shaken Angelenos thought this outcome logical. “So pock-marked was this slimy business with fraud and faithlessness, so infiltrated with shuffling and trimming, with bad faith and treachery, money-juggling and moral back-sliding, that few citizens were greatly surprised at this dramatic turn,” wrote Guy Finney.
Enter Buron Fitts, elected with a mandate to get Keyes and clean house. Making Julian Pete prosecutions would become the holy grail of Fitts’s first term as D.A. In time he’d learn that the Julian Pete was an unending and unfathomable story. The scandal symbolized the crazy prosperity of the 1920s boom and presaged the despairing time that was to follow. Its consequences would ripple on and on, gaining force until they became bewildering for Fitts and, in the end, deadly for the likes of Charlie Crawford.
7
Our Detective Learns the Ropes
The trial of Asa Keyes, former District Attorney for the County of Los Angeles, gave Leslie White his first important assignment in his new job with the D.A.’s office. Jake Berman (aka Jack Bennett, the “two-name man”) and one of the leading Julian Pete conspirators, had turned state’s evidence in exchange for the immunity Buron Fitts granted him. As a result, Berman found his life under threat and White was to be his bodyguard. Forensics was nowhere on White’s agenda. As he later wrote, “When trapped by the reform administration, Berman sold his confederates down the river. In this wise, he gained his release and my particular task was to keep either his former friends or the thousands of victims from killing him.”
Jake Berman was twenty-eight, only a few years older than White, but the two men could not have been more different. Berman grew up in the Brooklyn ghetto, worked as a runner on Wall Street, and served time for fraud in a New Jersey prison. He’d arrived in L.A. with nothing but a suitcase and the friendship of S. C. Lewis. He had a round face and thinning hair, but his soulful brown eyes made him handsome as a gigolo. He sported silk neckties with a stick-pin bearing a diamond the size of a dime. He’d proven himself a master manipulator and salesman, capable of making ten suckers grow where previously there’d been only one. He’d thrown $20,000 parties with champagne and movie starlets on hand to gladden the hearts and soften the purse strings of big investors. In one sixteen-month period—January 1926 to April 1927—his bank transactions totaled $67 million. “Gossips say the boy wonder had $2 million in $10,000 bills in a body belt on his person,” wrote Lorin Baker in 1931. When Julian Pete crashed, Berman had eluded capture, fleeing to Europe on the ocean liner Berengeria, carrying $625,000 in that same chamois leather belt. He landed in England and outfoxed the Scotland Yard men sent to catch him. In time he returned to America of his own free will, traveling first class on another liner, the France, and surrendered to Buron Fitts in L.A. His soft-leathered shoes were natty and expensive, his suits cut from the finest cloth. He was a classic con man: people came to him in droves, wanting something for nothing; he gave them nothing but took plenty.
White and his partner, the more experienced Blayney Matthews, kept Berman holed up in an apartment house at Hollywood and Vine. Next door a nightclub dancer played jazz on the phonograph all day long. Berman tapped on a table, beating the rhythm. He was restless, irritated by this confinement, and kept ordering White to fetch him coffee and sandwiches. No doubt this rankled, as did Berman’s grinning certainty that he could manipulate the law with ease. He had bilked investors out of millions, yet he expected to walk away. “You’ll help me do it,” he told White.
“Berman was sleek and flashily groomed; he reminded me of a wharf rat that has just climbed out of the w
ater. He had brazen bulging eyes,” White wrote. “He was a bumptious Jew.”
An FBI report notes Berman’s “hebraic features,” and White’s remark to some extent reflects standard race prejudice for the era. It still sticks in the throat. Here was material for a comedy: the country boy, new to the city, boxed in a room guarding the life of a man he professes to despise but perhaps secretly envies—the smoothest of smooth urban operators. White earned $55 a week, not a bad wage at the time, but Berman had between two and three million dollars salted away in safe deposit boxes all over town. White hated Berman with a vengeance; Berman, when he noticed White at all, treated him with a mixture of arrogance and contempt, laughing in White’s face when White said he believed what politicians told him. “It’s all just a show. Wind to rope the suckers,” Berman said.
Jake Berman’s defection decided the fate of Asa Keyes. The trial’s result was never really at issue. First, the prosecution put Milton Pike on the stand. Pike ran through the allegations that had already been published and closed his testimony by reading his diary entry for July 28, 1928, the last day he worked for Ben Getzoff, when he saw Asa Keyes drive up to the tailor’s shop in a brand new Lincoln coupe. This prepared the way for star witness Jake Berman, “debonair and with a multitude of diamonds flashing on his fingers,” said the Examiner, who told how Keyes came to get that new Lincoln, and much more.
Keyes, acting through Getzoff, had put on the squeeze, first demanding $10,000 from Berman to cover gambling debts. Then Keyes wanted a gift for his house, a chaise lounge with fabric chosen from Brooks Brothers. Then a new car, a Chevrolet, for his daughter, “as it will please me and help the situation along.” Then the Lincoln, and an additional $10,000 so that Keyes could get the property he’d just bought in Beverly Hills out of escrow. One day Getzoff suggested that Berman might buy Keyes a set of golf clubs, and forced Berman to wait while he got Keyes on the phone—choosing makes, weights, and sizes. The clubs, inlaid with the initials “A.K.,” were then delivered in a splendid leather golf bag to Keyes’s home. All this suggests that the Roaring Twenties underworld as evoked by Damon Runyon corresponds more closely to the real thing than we might suppose. These “jungle-dwellers,” as Louis Adamic called them, had a sense of mischief about their greed.