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.

A Lookout System For Finding U-Boats

The next morning Lanza called his longtime associate Benjamin Espy, a former bootlegger who had served time in Lewisburg Penitentiary. Together the team questioned ship suppliers and demanded that any unusual purchases of food or fuel be reported to them.

The two gangsters moved onto the vessels themselves and set up a network of fishermen to keep an eye out for submarines. The fish racket bosses’ success startled the men of the B-3 investigative unit. Sensing the Mafia’s influential grip, Haffenden requested union cards to infiltrate his agents on long-range fishing vessels.

Socks responded by providing valuable cards used for no-show payoff jobs. The agents of the B-3 investigative unit roved far and wide under the protective wing of La Cosa Nostra. They sailed aboard mackerel fleets bound for Maine, Florida, and Newfoundland. Shockingly, these fleets served as the first line of U.S. defense against submarines.

Captain MacFall later recounted, “Some of the larger fishing fleets had their own ship-to-ship and ship-to-shore telephones, including codes used to guide the ships of one fleet to places where the catch was good … Naval Intelligence worked out a confidential cooperative agreement and code with them as a part of the submarine lookout system.” Lanza and Espy even traveled on their own “fishing” missions, recruiting informants as they went.

Joe Socks also provided cover for much more sensitive missions. Lieutenant Joseph Treglia, leader of B-3’s breaking-and-entry teams, wanted agents placed within several Manhattan buildings and a foreign consul’s office. The teams obtained entry through Lanza’s connections with the buildings’ superintendents and the Elevator Operator Union.

The units consisted of 11 men and included a lock expert, a letter opener, a photographer armed with a miniature camera, and a radio- equipped security detachment. These black-bag jobs helped uncover several German espionage rings across the nation.

Dealing With Subversive Union Leaders

There was no doubt that Socks enjoyed playing his role of secret agent as much as Commander Haffenden enjoyed playing the role of mob boss. In one instance, the commander received word that Harry Bridges, a subversive West Coast union leader, was headed to New York to stir the union pot.

Wiretaps revealed a startling conversation between Haffenden and Lanza. “How about that Brooklyn Bridge thing?” the commander asked in reference to the union leader. “I don’t want any trouble on the waterfront during the crucial times,” Haffenden continued.

“You won’t have any. I’ll see to that,” Lanza quipped.

A goon squad later caught up with Bridges in a popular dance hall. A savage beating sent the union organizer home without a peep. Pleased with the power his acolyte wielded, Haffenden pushed the beefy fishmonger’s connections to the limit, and the gangster eventually reached the ceiling of his power.

Lucky Luciano on Ice

The Luciano family revered Lanza, but the fish racketeer annoyed the other four crime families. To secure Brooklyn’s docks the Navy needed the approval of Albert Anastasia, a bloodthirsty figure known as the High Lord Executioner.

Socks balked at the prospect of facing Anastasia’s explosive temper and legendary trigger finger. Furthermore, Lanza lacked the influence to cross the ethnic divide. Irish gangsters controlled the Hell’s Kitchen slums surrounding the Hudson River piers and railway terminals. To organize the West Side docks, the Navy required the cooperation of Irish tough, Joseph Ryan, president of the International Longshoremen’s Association.

According to Lanza, there was only one man capable of “snapping the whip in the entire underworld.” That man was New York’s imprisoned emperor of vice, Lucky Luciano.

Born Salvatore Luciana just outside of Palermo, on the island of Sicily, the thin, almost frail, Charlie Lucky clawed his way to the top of the criminal world in little more than three decades. A prison psychiatrist later analyzed him as a highly intelligent, aggressive, egocentric, and antisocial type. Lucky earned his nickname in 1929 after surviving a brutal torture at the hands of a rival bootlegging gang. Left for dead, Luciano crawled to freedom and earned his moniker, but the beating left him permanently disfigured.

The Mafia leader rose to prominence during the 1930-1931 Castellammarese Mafia War after Luciano double-crossed two bosses and became the top Mafia don in the United States. After the Castellammarese War, Charlie Lucky overreached himself with a bold takeover of all Manhattan whorehouses. The scheme landed the hoodlum a 30- to 50-year prison rap courtesy of Thomas E. Dewey.

After the conviction, Luciano wasted away in the frigid recesses of New York’s Dannemora Prison on the Canadian border. The sentence put the crime boss on ice, literally. The distance from the city effectively severed Lucky’s communication with his mob.

Making Contact With Luciano

Haffenden needed Lucky but had no idea how to contact him. As in the case of Socks Lanza, the district attorney suggested that the Navy approach the imprisoned gangster’s attorney, Moses Polakoff. The lawyer bluntly stated that he no longer had any dealings with Luciano, but he knew of one man who had the exiled boss’s undying devotion. That man was Jewish racketeer Meyer “The Little Man” Lansky.

Unlike the Mafia, the Navy never questioned The Little Man’s patriotism. A staunch Zionist, Lansky’s hoodlums battled American Nazis in Manhattan’s streets long before the declaration of war. Lansky later recalled, “We got there that evening and found several hundred people dressed in their brown shirts. The stage was decorated with a swastika and pictures of Hitler … We attacked them in the hall and threw some of them out the windows. There were fistfights all over the place.” Extremely patriotic, the Jewish mob busted up Nazi meetings and offices all over the city.

Dannemora Prison’s remoteness posed another obstacle. The war effort could never be coordinated at such a distance. While Polakoff and Gurfein worked with Lansky, Haffenden moved to transfer Luciano.

The Navy proceeded with caution, for if the other four crime families caught wind of an unexpected prison reassignment, they might suspect Luciano had cooperated with the authorities. With this situation in mind, an ONI officer approached New York State Corrections Commissioner John A. Lyons with a letter detailing Project Underworld and a scheme to relocate Luciano and several decoy inmates to Albany’s Great Meadow Prison.

Lyons agreed to the arrangement, and the agent burned the letter. On May 12, 1942, Luciano and eight other convicts headed to Great Meadow as nine new prisoners filled their vacancies at Dannemora. Shortly thereafter, Lansky and Polakoff traveled to the penitentiary, and Lucky reportedly exclaimed, “What the hell are you doing here!” Lansky outlined Project Underworld, but Luciano worried about many variables.

First, the Navy offered no sentence reduction for the gangster’s crimes. Second, as an illegal alien the mobster faced deportation. If word of his alliance leaked out, a fascist lynching was sure to follow his homecoming. Despite these realities, Luciano’s control over his crime family was slowly slipping away. The freedom provided by the proposal offered the perfect cover for the boss to confer with his top lieutenants and regain his power.

Bringing the Waterfront Under Control

On June 4, Lansky, Polakoff, and Socks Lanza traveled to Great Meadow to plan their strategy. The meeting was a proud moment for Socks when Luciano gave the fish boss permission to “use his name” on the streets. Lansky oversaw the entire operation, serving as Lucky’s eyes, ears, and mouth on the outside. Luciano’s acting boss, political fixer Frank Costello, assured him that the family backed Socks on every step.

Within days, the underworld fell in line. First to join the alliance was the president of the International Longshoremen’s Association, Joseph Ryan, and his brutal enforcer Johnny “Cockeye” Dunn. A murderous cross-eyed fiend, Dunn would one day die in the electric chair. Next to throw in was the High Lord Executioner himself, Albert Anastasia. With Anastasia’s backing, no one could refuse the mob’s offers.

Longshoremen’s Association tough Jerry Sullivan later testified, “Lansky was solving the problem for the Navy on the waterfront by the visible deployment of some of the most ruthless gangsters in the city. It was expected that the mere appearance of these men on the piers would serve as a deterrent, a warning to cooperate with the United States war effort or face the consequences.” Throughout 1942 and 1943, mob heavies came and went from the Navy’s elegant Astor Hotel suites, relaying orders and carrying out missions.

Haffenden then controlled a mercenary shadow army stocked with street brawlers, thumb breakers, murderers, smugglers, and international kingpins. Legs and arms were occasionally broken, and, gangsters being gangsters, the hoods often got a little carried away.

When Commander Haffenden sent Cockeye Dunn to investigate two suspected German agents, the Irish hoodlum took the men for a gangland one-way ride. Wiretaps recorded Dunn’s chilling report, “They’ll never bother us again.” The Navy frowned upon unauthorized killings, but it was impossible to keep a mad dog like Dunn in check.

Meanwhile, the visiting list at Great Meadow read like a copy of Who’s Who in American Crime. The autographs of Meyer Lansky, Bugsy Segal, Frank Costello, and Joe Adonis all graced the guestbook. Under the Mafia’s watchful gaze, not a single act of sabotage, labor strike, or suspicious fire occurred for the rest of the war.