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

He was receptive to Los Angeles for another reason as well. The same year that Siegel made his first visit to the city, Congress repealed the Twentieth Amendment, ending national Prohibition. This was something the Syndicate had long feared. What happened next, though, caught Siegel and his associates off guard. Almost overnight they became wealthy—and quasi-legitimate businessmen. Underground distribution networks could become legal liquor distributorships. The Syndicate steamers loaded with booze suddenly had a future as legal importers. Speakeasies like the 21 Club and the Stork that had once operated behind barred doors with lookout holes now hung out Welcome signs. Siegel and Lansky’s car and truck rental company on Cannon Street, originally a front for bootlegging, was now a successful business in its own right. Siegel quickly became a partner in one of the biggest liquor distributorships in New York City.

Siegel’s lifestyle reflected his success. In the midst of the Depression, Siegel had an apartment at Broadway and 85th and a suite at the Waldorf-Astoria, as well as a house in Scarsdale for his wife and kids. Wealth and the possibility of legitimacy had a profound psychological effect on Siegel and his associates. “Viewed from their luxurious apartments and ducal estates, jail houses became utterly repugnant,” wrote newspaper columnist Florabel Muir, who’d observed Siegel’s career as a hoodlum since the early 1920s.

“Caution, fathered by the urge to preserve and enjoy their vast fortunes, overtook them,” she continued, adding, “There is nothing like a million dollars to bring about a conservative point of view.”

Los Angeles offered the chance for a new start. If a Lower East Side tough-turned-speakeasy-“hoofer” like George Raft could transform himself into a movie star there, then perhaps a former gangster could transform himself into a gentleman of leisure. And so in 1934 Siegel moved his wife, his two daughters, and the family German shepherd to Beverly Hills and promptly set out to join the movie colony elite. He rented a luxurious house on McCarthy Drive in Beverly Hills that had once been the home of opera star Lawrence Tibbett. He enrolled his two daughters in an elite private school and an exclusive riding academy. He became a member of the Hill-crest Country Club, the social center of the film colony. He shed his New York City gangster attire (hard-shelled derby hat, fur-trimmed coats, rakish lapels) in favor of two-hundred-dollar sports coats and cashmere slacks. He took as his mistress the most flamboyant hostess in Hollywood, Dorothy di Frasso, a New York leather goods heiress married to an Italian count. Unfortunately, Siegel then ran into a problem—an embarrassing one. He got taken—for a million dollars.

At the end of Prohibition, Siegel had about $2 million in cash. Unfortunately, he then invested much of it in the stock market. In short order, Siegel had cut his fortune in half.

“If I had kept that million,” Siegel later mused to a friend, “I’d have been out of the rackets right then. But I took a big licking, and I couldn’t go legitimate.” Instead, he went back to what he knew best: organized crime. Los Angeles, which Siegel had once viewed as a playground, was now an opportunity.

      BUGSY’S PALS back East were delighted by his decision to organize the West Coast. From Lansky and Luciano’s perspective, California was a backwater—an embarrassment, really. The Combination’s power had dwindled. McAfee and Gans controlled little more than prostitution and slots in the downtown core. Yet L.A.’s top Italian crime boss, Jack Dragna, had failed to step up, particularly when it came to asserting authority over fast-growing areas like the Sunset Strip. Located in unincorporated territory outside of the city of Los Angeles (and the reach of the LAPD), the Strip was the perfect vice center. But Dragna hadn’t established even a proper casino. “Jack wasn’t pulling the counties or the political picture together,” Cohen would say later. “There was no combination; everyone was acting independently.” Siegel would change that. Top New York mob boss “Lucky” Luciano contacted Dragna personally with the news that Siegel was taking change “for the good of us all.”

Dragna took the news poorly. It hardly mattered. Dragna had important connections back East himself (according to Cohen, he was related to Tommy “Three-Finger Brown” Lucchese), but Siegel was a peer of the realm, an equal to anyone in the Syndicate. Mickey Cohen would later describe him as “one of the six tops … right up with Capone.” Dragna stepped aside. Others were not so deferential.