L.A. Noir: The Struggle for the Soul of America's Most Seductive City

For the next five hours, Mickey put on a remarkable show. One month earlier in Chicago, Harry “The Muscle” Russell, the Chicago Outfit’s Florida representative, had flustered the Kefauver Committee by citing the Fifth Amendment (which protects against self-incrimination) as a justification for refusing to answer any questions from the committee. Mickey had no such hesitation. Speaking easily, almost casually, without notes and rarely pausing to consult attorneys Sam Rummel and Vernon Ferguson, Cohen denied every allegation thrown at him:

“I ain’t never muscled no one in my life.”

“I ain’t never offered no policeman a bribe.”

“I never pistol-whipped anyone.”

“I ain’t never been with no prostitute.”

“I never had no part of a fix.”

“I never strong-armed nobody in my life.”

It was a bravura recitation of lies. But there was one issue Mickey couldn’t wish away—his income.

Other Mob bosses had carefully constructed front companies or bought in to legitimate businesses in order to account for their large incomes. Frank Costello, the so-called prime minister of the underworld, insisted that he was merely a semiretired real estate investor. Jack Dragna claimed that he was a vineyard owner and banana importer. Aside from a few desultory investments (in grocery stores and a women’s shoulder-pad manufacturer), Mickey had not. Even Michael’s Haberdashery had never made much pretense of being a going concern. Instead, Mickey maintained that he was just a former bookmaker who now earned a modest living from gambling. But he lived like a pasha in a $120,000 house in Brentwood and purchased new Cadillacs every year for himself and his wife (to say nothing of his $15,000 armored car).

Anyone who bothered to do a quick back-of-the-envelope calculation could see that there was something suspicious about such lavish expenditures. The problem was squaring such spending with the era’s high income tax rates. In 1950, a taxpayer who earned $100,000 could expect to hand nearly $60,000 of that to the federal government and another $5,000 to the state of California, leaving about $35,000 for himself. Double that hypothetical income to $200,000, and the taxpayer was left with a mere $50,000 in after-tax income. Yet by his own acknowledgment, Mickey had spent more than $200,000 on his house and about $30,000 on Cadillacs. Investigators also estimated that Cohen kept roughly eighteen men on his payroll; at his declared pay rate of “$75 to $100 a week,” that added another $85,000 or so to his expenses. In order to generate, say, $125,000 in legitimate after-tax income, Mickey would had to have paid taxes on a declared yearly income of nearly a million dollars. He wasn’t even close. Instead, the tax returns he had filed with the Bureau of Internal Revenue in the late 1940s reported annual incomes as low as $6,000 a year—just twice the national average income.

This should have led the Bureau of Internal Revenue to take a closer look at Mickey’s finances, as it had done nearly two decades earlier in the case of Al Capone. Yet remarkably, as Warren Olney noted in the final report of the Special Crime Study Commission—a report that came out the same month that Senator Kefauver was interrogating Mickey Cohen in Los Angeles—“there has never been a racketeer, hoodlum, or gangster of first rank importance convicted of income tax fraud in California.” Nor, according to comments made by Treasury Department officials at a conference on organized crime in the spring of 1949, were any such cases in the works. Local Bureau of Internal Revenue agents had actually tried to start an investigation several years earlier. But after their superiors discovered the probe, they’d been detailed to other assignments.

The Kefauver Committee had no intention of letting Mickey off so lightly. During their questioning, committee members homed in on Mickey’s massive expenditures and minimal income. Grudgingly, Cohen admitted to a $40,000 home (far less than its actual value) with $48,000 worth of home furnishings. That still left a gap of $210,000 in unaccounted-for income. When pressed about the discrepancy by chief counsel Rudolph Halley, Cohen replied that over the past four years, he had borrowed about $300,000, most of which, he added, had been spent on lawyers’ fees as a result of the constant “harassment from the LAPD.”

Halley asked if there were any notes or collateral that could document these loans.

Mickey said there were not. People had lent him money, Cohen continued, because “they just happen to like me.”

“How do you maintain that kind of credit?” Sen. Charles Tobey of New Hampshire asked.

Mickey cracked his first smile. “It’s getting very weak, Senator.”

The audience chuckled. By the end of the week, the investigators were gone. When a reporter asked Cohen what he thought of the experience, Mickey cracked, “All them congressional committees are a joke, a gimmick for the furtherance of a politician.” Bill Parker worried him much more.