Why Did the U.S. Navy Make a Secret Pact With the Mafia During World War II?

Lucky Luciano at the Excelsior Hotel, Rome, in 1948. Remo Nassi. Public domain.

Why Did the U.S. Navy Make a Secret Pact With the Mafia During World War II?

Meet the spies of Project Underworld.

In the opening months of 1942, German U-boats pushed Allied supply lines to the breaking point. In the month of January, Axis submarines claimed over 20 Allied vessels including a tanker just 60 miles off the coast of Long Island. How could German submarines operate at such long ranges along the nation’s coastline? The U.S. Office of Naval Intelligence (ONI) reasoned that freebooting American fishing vessels were resupplying these marauding subs somewhere off the coast of Long Island. But why?

The Navy hypothesized that these fishermen were either ex-rumrunners put out of business by the end of Prohibition or a massive conspiracy of enemy agents nestled within the port of New York. The task of uncovering the plot fell to 40-year naval veteran Captain Roscoe MacFall, chief intelligence officer of the Third Naval District, a region that encompassed New York, New Jersey, and Connecticut.

The captain needed to act quickly, for the Allied war effort was struck a $5 million blow on February 9, 1942. At 2:30 pm fire engines wailed and thousands of workers scrambled through dense smoke to Manhattan’s Pier 88. On that tragic day, a suspicious inferno devoured the French-built superliner Normandie.

Amid the toxic fog, fireboats dumped hundreds of thousands of gallons of water onto the conflagration. The strategy proved disastrous, for the excess water pitched the groaning ship into a 30-degree list that panicked stunned onlookers.

The loss of the Normandie represented a catastrophic defeat for American forces. Seized from the Vichy French and renamed the Lafayette, the militarized mega-liner was as big as she was fast. Capable of carrying 10,000 troops, the blue-ribbon vessel could traverse the Atlantic in only four days time.

The Navy suspected Nazi foul play. MacFall put little stock in official FBI investigations that suggested an erratic spark from a worker’s blowtorch ignited the blaze. The loss of the vessel was not only a physical defeat but also a symbolic one that highlighted a weakness in America’s strongest port.

Turning to the Mob to Hunt Saboteurs

From this strategic point, men, arms, and munitions would be shuttled to the front lines. To starve out the British, German Admiral Karl Dönitz, commander of the Kriegsmarine U-boat arm, calculated that U-boats needed to sink 800,000 tons of Allied shipping a month. Current losses at that point exceeded 650,000 tons a month. If enemy agents provided enough assistance to paralyze this lifeline, the war would be over.

Plainclothes Navy operatives descended upon the New York docks seeking information. With their best Jimmy Cagney impersonations, Ivy League-educated naval officers crept into the raucous haunts frequented by longshoremen.

The stevedores met the agents with a threatening brick wall of silence. The officers were incapable of understanding the lawless tight-lipped culture of the docks. On the wrong side of the law for most of their lives, some of the ship workers mistrusted anyone in uniform, whether they were naval officers or meter maids. To make matters worse, mob-controlled longshoremen regularly doled out gaff beatings to inquisitive cops and reporters.

Only the American Mafia claimed an utter dominance of the docks. ONI Warrant Officer Maurice Kelly remembered, “Union officials and people in illegal operations along the waterfront had as much influence with conditions on the docks as the shipping people themselves, and, in many cases, more.” The Navy wanted the Mafia’s help, but what would be the ramifications of turning to an organization predicated on murder, extortion, and drug dealing?

Time was running out for MacFall as the Navy moralized over the implications of enlisting the mob. Between February and May, Nazi torpedoes sent more than 100 ships to the bottom, and the death toll was rising fast. The easy pickings inspired the Kriegsmarine to christen the first six months of the war the “Happy Time.”

Director of Naval Intelligence, Rear Admiral Carl Espe, later reminisced, “The outcome of the war appeared extremely grave. In addition, there was the most serious concern over possible sabotage in the ports. It was necessary to use every possible means to prevent and forestall sabotage….” Someone on the docks was feeding the Nazis information, and only the mob had the power to hunt down the guilty party.

The Sicilian Mafia’s Grudge Against Mussolini

ONI held strong reservations over an alliance with the Mafia. Could Italian criminals even be trusted? Judging by the example set by master of intrigue, Vito Genovese, probably not.

After fleeing to Italy to avoid a murder prosecution in 1937, Genovese grew close to Mussolini by befriending his son-in-law and foreign minister, Count Galeazzo Ciano. The shrewd Genovese courted Mussolini by donating $250,000 for the construction of a Fascist party building.

The hoodlum grew so cozy with Il Duce that he soon dispatched his hitmen to assassinate New York newspaperman Carlo Tresca, a vocal critic of the Italian regime. For his work, Mussolini awarded Genovese the Commendatore del Re, the highest civilian honor in Italy, but Genovese was as apolitical as he was amoral. Capable of shifting like a feather on the political winds, the wily mobster held a reputation for double-crossing friends with impunity. The gangster felt no affinity for the fascist dictator and saw him only as a means to an end.

After weeks of intensive research, MacFall discovered that Genovese was an anomaly. The Mafia represented the most antifascist organization in the world. Under Mussolini’s savage purges, Sicilian mafiosi were bombed, machine-gunned, and arrested in droves. Many of the founding fathers of the American Mafia had fled their homeland because of the attacks.

Project Underworld

Time had run out for the Navy. On March 7, 1942, Captain MacFall met with New York District Attorney Frank Hogan to discuss striking a deal with organized crime. Hogan in turn put the captain in contact with the head of the New York Rackets Bureau, Murray Gurfein.

What followed the meeting was one of the most unusual episodes of the war, and it remained a secret until 1977, when author Rodney Campbell uncovered the classified 1954 Herlands investigative report while organizing Governor Thomas E. Dewey’s archives. The 101-page report summarized over 3,000 pages of testimony that detailed the Navy’s involvement in what was dubbed “Project Underworld.”

MacFall assigned the day-to-day operations to Commander Charles Radcliffe Haffenden, the debonair swashbuckling leader of ONI’s B-3 investigative unit. Commander Haffenden’s style did not end with his personality. Project Underworld would be run from a series of posh suites in the Times Square Astor Hotel.

Around him the commander assembled a dedicated team of colorful agents, many of them Italian-Americans versed in the Sicilian dialects spoken by the underworld. Among these men were Lieutenant Anthony Marsloe, a man fluent in Italian, Spanish, and French; Lieutenant Joseph Treglia, a former bootlegger now in charge of breaking and entering operations; and Lieutenant Paul Alfieri, a safecracker.

Recruiting Crime Lord Joe Socks

On March 25, Hogan and Gurfein offered Haffenden his first contact in organized crime. The team suggested the czar of Manhattan’s Fulton Fish Market, Joseph “Socks” Lanza. A made member of the Luciano crime family, the hulking 200-pound Mafia bulldozer earned his handle socking anyone who disagreed with his edicts. His criminal history stretched back to 1917 with arrests for homicide, burglary, conspiracy, and extortion.

The beefy fishmonger’s resume in the Federal Bureau of Narcotics International Offenders’ Black Book added, “A powerful and feared member of the Mafia in NYC. Has been one of the most accomplished terrorists in connection with labor racketeering in the lower east side Fulton Fish Market area.” Socks’s clammy grip over the United Seafood Workers Union stretched from Maine to Florida.

With a simple nod of his massive head, an entire fishing fleet would dump its catch to inflate market prices. For companies that failed to bribe the racketeer, their fish were left on the docks to rot. Those who continued to disobey orders faced beatings, arson, and death.

If anyone was capable of ferreting out sailors supplying Nazi submarines, it was Joe Socks, but how could the Navy approach a man bound by the oath of omerta? Haffenden knew a Navy officer stood little chance of penetrating the lawless fish market. Rather than walk through Lanza’s front door, he chose a surreptitious route and phoned the mobster’s attorney, Joseph Guerin, to set up a clandestine meeting.

Lanza needed to be careful. The hoodlum was currently on trial for extortion. Just meeting with a naval officer and a member of the district attorney’s office could earn the mafiosi a pair of cement shoes and a one-way ticket to the bottom of the East River.

During the meeting, Gurfein pleaded with Lanza. He begged, “It’s a matter of great urgency. Many of our ships are being sunk along the Atlantic coast. We suspect German U-boats are being refueled and getting fresh supplies off our coast …You can find out how and where the submarines are being refueled.” Surprisingly, the gangster jumped at the opportunity.

The district attorney’s office had wire-tapped the mobster’s phones to ensure his loyalty. To their horror, the bugs recorded conversations detailing Navy-inspired mayhem that included assaults, break-ins, and possible murders.