Nothing Gold Can Stay

Nature’s first green was gold,

Her hardest hue to hold.

Her early leaf’s a flower;

But only so an hour.

Then leaf subsides to leaf.

So Eden sank to grief,

So dawn goes down to day.

Nothing gold can stay.

-- Robert Frost

By 1930, the opium business was humming. The kinks in the complex distribution system had been worked out. Demand was higher than expected. Problems with the Fed seemed to be under control. Yamamoto’s perspective was that the Feds didn’t have their act together. In fact, their disorganization had allowed them to act quite brazenly. Officials were easily bribed; punishment seemed impossibility. Capone was a reliable partner, but, of course, one who could not be trusted. It was a transactional relationship that worked – not one with any trust of any kind.

That said, Yamamoto still had ambition to move a retail operation East to Chicago, New York, and Miami. But, he held back. First, the bloody shootout at the St. Louis warehouse a few years back still stung in his memory. He took the loss of men personally. Some were not only trusted colleagues but also friends. Second, he didn’t want to screw up the wholesale business arrangement he had with Capone. It was extremely profitable and growing. Finally, he knew that Capone had distaste for the opium business. He knew Capone, like himself, was bothered by the morality of opium and the devastating consequences it had on people’s lives. However, like Yamamoto, the money was too good. But, Yamamoto thought Capone would get out because of its dirtiness would eventually be so morally repugnant. Further, Yamamoto knew that Capone’s ultimate goal was to grow his gambling business. With the end of prohibition just around the corner, Capone continued his push into legalized gambling. Las Vegas was his destiny. Knowing Capone would likely exit opium and focus on gaming, Yamamoto would be patient. Then, he would make his move when the time was right.

However, something unexpected happened.

Enter Elmer Irey

Elmer Irey was a straight-laced Sunday school teacher and a US Post Office Inspector. In 1919, he was recruited to be the chief of the Intelligence Unit of the Internal Revenue Service and with the charter to clamp down on income tax evasion and root out bribery within the IRS. Among its earliest duties, the Intelligence Unit was given the unenviable task of policing the corrupt U.S. Prohibition Service. Between 1920 and 1927, the unit’s investigations resulted in the firing of more than 700 employees and the indictments of 256 others, including the top Prohibition official in the U.S. Treasury Department.

Irey was a humble man who avoided the spotlight. He focused on his work with a passion. That passion? Finding criminals and convicting them through use of the tax code.

“Irey was a beacon of light in a sea of self-interest and graft,” said Paul Camacho, former head of Internal Revenue Service (IRS) criminal investigations in Las Vegas and a retired special agent. “There was rampant cheating along with widespread collusion and graft-taking in government.”’

President Herbert Hoover was so impressed with Irey’s work that he was recruited to take down Public Enemy Number One – Al Capone.

Irey relished the opportunity.

Capone was under the watchful eye of the federal government since at least 1927. They wanted to end his illegal activities and “take him out.” J. Edgar Hoover, head of the FBI and his G-Men (notably Elliot Ness and the Untouchables) got most of the fame and glory for their work in doing so. They were viewed as machine gun toting, headline grabbing crime crusaders. (Their efforts were glamourized them in the 1960’s television series “The Untouchables.”) Through the Bureau of Prohibition, they targeted speakeasies, stills, and breweries. However, Capone’s illegal activities, as we now know, were far broader than illegal alcohol activities. Further, since the popularity of prohibition was waning, this would soon be a futile pursuit.

It was up to Irey. In the end it was the T-Men (“Treasury Men”) that took out Capone, not the G-Men. He was meticulous in evidence collecting, accounting, and the application of the tax code. Contrary to the high profile work of the G-Men that involved bloody shootouts and raids, Irey worked behind the scenes and was tight lipped about all his activities. On June 5, 1931 Capone was convicted of 22 counts of tax evasion based on the extensive work of the Irey and the T-Men. Capone was imprisoned in 1932 first in the Atlanta United States Penitentiary and then the Alcatraz Federal Penitentiary. Irey’s work ended Capone’s run as the most sought after crime boss in America – indeed “Public Enemy Number One.” (Capone was released in 1939 to a mental hospital due to failing health – neurosyphilis which lead to dementia. He died in 1947.) Building on their success in Chicago, they obtained 47 indictments inside New York City’s organized crime network. Evidence gathered by the unit led to the imprisonment of crime bosses including New York’s Charles “Lucky” Luciano, Kansas City’s Tom Pendergast and Atlantic City’s Enoch “Nucky” Johnson. Capone’s network of crime had been largely damaged and dismantled but it continued to operate, but in a disorganized state.

Power Vacuum

It seemed an ideal time for Yamamoto to expand the reach of the Toyo Club empire. Capone’s empire was in disarray. The retail drug business in the East was “open” with the exit of Capone. It was a perfect opportunity for Yamamoto to extend east. It was an opportunity that would not remain open long – it was still a business too lucrative for others to ignore.

Yamamoto did not pursue this. This was surprising to many. It was perhaps a $50 million/year opportunity (in today’s dollars, $10 billion). How could Yamamoto resist?

Certainly expanding East would be difficult. Further, just managing the wholesale business, if it ceded the retail business would be difficult, as it would have to build relationships with the new players filling the retail void. A “turf war” would be inevitable. It would be a messy and bloody conflict with what remained of the Capone Empire. Finally, Yamamoto’s moral objection to the dirty drug business weighed on him heavily, regardless of how lucrative the business was financially.

All most as fast as the opium business was built, Yamamoto dismantled it. In addition to closing down the wholesale business, he slowed the west coast retail drug business; He would no longer be the source of so much pain and suffering of drug addicts in the Japanese American community.

By 1932, the Toyo Club had largely exited the opium business.

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