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  He cheerfully approved Whitley’s first major policy change: to move Secret Service headquarters from the Treasury building in Washington to a tenement on Bleecker Street in Lower Manhattan. This suited the new Secret Service chief in two ways: it put distance between him and anyone in Congress or the Grant administration who might try to probe into what he and his men were doing; and it was closer to Cambridge, Massachusetts, where his wife, Catherine, now lived in a house she shared with their respective mothers.15

  The move made sense for the Secret Service, too: it placed the detective force in the heart of New York’s counterfeiting industry, an area bounded by Houston Street, Broadway, the Bowery, and Chatham Street. The shift could also be justified under new legislation, enacted by Congress in the last days of the Johnson administration, which added “frauds upon the government” to the list of crimes the Treasury Department could “detect” using appropriations previously devoted exclusively to counterfeiting. The net effect of that law was to give the Secret Service responsibility for smuggling and tax evasion—both rampant in the port of New York. One of Whitley’s successes in his first year as chief, in fact, was to break up a New York–based gang that specialized in removing used federal excise tax stamps from cigar boxes and wine bottles, reconditioning them, and selling them as new.16

  * * *

  Yet by the end of his first year in power, Whitley voiced frustration at his inability to make more progress against the Secret Service’s principal target: counterfeiting. “We are having some pretty tough times with the counterfeiters,” he acknowledged in a rambling, ambivalent report to Banfield on June 14, 1870, “notwithstanding I have but few men, there is good work going on. I have captured three men this week...but one of my men got a fearful beating, which gave me a setback, but the whole division is not yet dead.”

  In addition to the lack of personnel and violent resistance from the criminals themselves, Whitley blamed New York’s federal court, where, he claimed, “for money, justice can be bought either by wholesale or retail.” He tried, without success, to lobby for a special new court in New York dedicated just to his cases. Whitley sounded both angry and, uncharacteristically, depressed about the situation, though he vowed to overcome the obstacles. “I sometimes feel a little discouraged groping uselessly in the dark,” he wrote Banfield, “but I trust there is a glimmer of light ahead...coming into contact with these things daily stirs me up to constant action.”17

  Whitley’s fundamental problem—obtaining hard proof against the counterfeiters—was the same one that had bedeviled law enforcement since the days of rampant state banknote falsification. Counterfeiting, like gambling or prostitution, was a “consensual” crime. It harmed society, certainly. Yet the people who actually took part in it did so either voluntarily or unwittingly (in the case, say, of merchants who passed along fake bills thinking them genuine). They usually had neither opportunity nor incentive to report it to the police.

  Like the Ku Klux Klan in Columbus, Georgia, counterfeiting gangs operated according to a strict hierarchy, enforced by a code of silence. At the apex of a typical organization sat a financier, who did not get his hands dirty actually making “queer”—as phony bills were then known—but who recruited the experts who did, and advanced them funds to design and produce the needed engraving plates, ink, and paper. Wholesale dealers purchased the notes from these illicit partnerships, usually for about 10 or 15 percent of their face value. Then the wholesalers sold the queer to “shovers,” who scratched out a living exchanging the fake money for real goods or legitimate cash.

  It was a compartmentalized structure designed to protect the higher ranks. Whitley fully understood that “the most successful and efficient mode” of action against such a group would be to penetrate it and to make its component criminals “work against each other,” as he told Banfield in a June 16, 1870, letter. The way to do that, as he had learned firsthand in New Orleans, was to identify lower-level criminals, then coerce or persuade them to cooperate against their higher-ups. This, in turn, required associating with criminals, engaging in their factional disputes, selectively turning a blind eye to various misdeeds, and even paying shady characters for their cooperation, all of which could sully the federal government.

  In Whitley’s view, it was hopelessly naive to suppose that there was any alternative. “It is entirely impossible,” he wrote, “to reach criminals, especially counterfeiters, without using men themselves not above the taint of suspicion, and the best and most reliable information ever acquired relative to counterfeiting comes from the disaffected counterfeiters.” Through the skillful manipulation of informants and agents, Whitley promised, “strife can be kindled that is almost certain to end in the entire annihilation of the whole gang.”18

  He duly stipulated in a code of conduct he issued shortly after taking office that, in the Secret Service, “no person convicted of any crime could be made a ‘regular’ informer.” Yet this seeming prohibition left room for the occasional use of any crooks except for the small, unlucky minority proven guilty in a court of law.19

  The Secret Service chief shook off his depression and devised a plan to infiltrate counterfeiters. Its essential point was to create a Secret Service hierarchy through which to maintain interactions with the criminal class, but in a controlled manner, so as to prevent a repetition of the division’s mistakes under his predecessor. At the top of this pyramid, orchestrating everything, would be Hiram C. Whitley. At the bottom would be Secret Service infiltrators and informants, drawn from the back alleys, saloons, and jail cells of America. They would be paid ad hoc, according to the “value” of their information. Whitley specifically reassured Solicitor Banfield that these spies would not be formally commissioned or salaried by the Secret Service, “so that it may not appear that the government employ” them.

  The handling of underworld agents would be the job of the crucial middle cadre in Whitley’s scheme. Whitley had in mind “men of judgment and character with a taste and tact for a class of business which...requires the utmost caution as well as firmness,” as he explained to Banfield. Such men “are hard to find,” he advised; they would not work cheap. To recruit and pay them would require a bigger appropriation than the $100,000 that Congress had approved on President Johnson’s last day in office, and that Whitley had been obliged to stretch throughout his first year.20

  Whitley’s concept was unprecedented in American history: a permanent, semiclandestine national police bureaucracy, with its own system of ranks and promotions, and full autonomy to recruit, pay, and supervise informants within the civilian population. The Secret Service would be considerably smaller than the European detective and intelligence services, but its goals and methods would be similar.

  This innovation would undoubtedly have been fiercely debated if Solicitor Banfield ever put it before Congress, which may be why he never did. Banfield assented to Whitley’s concept, and backed the Secret Service’s request for more money, without telling Congress exactly why it was needed. On July 15, 1870, Congress approved a 25 percent increase in the Treasury Department appropriation that had always been construed, but never declared, to authorize the Secret Service. The bill specified only that the money be used for “detecting persons counterfeiting treasury notes, bonds, and other securities; and coins, and other frauds.”21

  * * *

  Freshly empowered, Whitley turned to assembling detectives with what he considered appropriate “judgment and character.”

  The Secret Service chief insisted publicly that, in contrast to the blatant patronage in the rest of the federal government, his force would be selected on merit, with partisan politics “out of the question.”22 In practice, he included no former Confederates or Southerners among his initial hires. Whitley could not risk bringing in anyone who was not unquestionably loyal to the United States government, much less who might harbor disagreements with the current administration. He favored Northerners, preferably
Union intelligence veterans with some Republican leanings, if they had any partisan inclination at all.

  Whitley’s choice to head the Secret Service’s San Francisco bureau, responsible for the vast territory of the West Coast, was Henry F. Finnegass, a deputy United States Marshal whom Whitley knew from their Civil War–era work together on General Butler’s detective force in New Orleans. In Chicago, he hired Thomas Lonergan, who, though not yet thirty years old, had compiled an impressive academic and military résumé. Educated at Notre Dame and West Point, he served in an Illinois regiment during the war—losing part of his right hand in combat—then worked for Allan Pinkerton’s private detective agency, before joining the staff of Chicago’s Republican newspaper.23

  Whitley would hire recent immigrants if they had some connection to the Union cause; in a detective, the ability to speak multiple languages and to adapt to different cultures were useful skills, he thought. Charles Anchisi was an Italian who had served as an officer of his native country’s army in foreign wars during the 1850s. He arrived in the United States in November 1861, and soon signed on as a spy for the War Department, operating as far south as Richmond.24 At the end of 1870, Whitley hired the police chief of Jersey City, New Jersey, Michael G. Bauer, who arrived in the United States from Germany in 1857. During the Civil War, Bauer served as an intelligence officer for a New Jersey regiment.25

  Charles Anchisi emigrated from Italy to the United States before the Civil War and became a Union spy. At the Secret Service under Hiram C. Whitley, he infiltrated counterfeiters in the Northeast. (Memoirs of the United States Secret Service)

  Whitley did not attempt to rebuild the Secret Service from scratch, however. Wisely, given the need to preserve institutional memory, he tried to retain those of William P. Wood’s veterans whose personalities and capabilities meshed well with his, and who had not committed egregious offenses during his predecessor’s time. Two holdovers would, in fact, gradually become Whitley’s closest confidants.

  The first of these was Ichabod C. Nettleship, a meticulously well-organized bureaucrat who had helped Wood assemble the federal government’s first files on counterfeiting suspects, an archive that Whitley would retain and, with Nettleship’s help, greatly expand. Nettleship immigrated to the United States at the age of eighteen from Nottingham, England, arriving at New York in 1851 with a silver half crown coin in his pocket—savings from years of his labor as a child in a silk factory.

  British-born Ichabod C. Nettleship started at the Secret Service under its first chief, William P. Wood, and stayed on to become Hiram C. Whitley’s most trusted lieutenant. (Memoirs of the United States Secret Service)

  Nettleship worked making saddles in Newark, New Jersey, until the Civil War broke out. He joined a New Jersey regiment, and eventually wound up on occupation duty in Union-held Alexandria, Virginia, just across the Potomac River from Washington. One of Nettleship’s officers proposed that they go into the counterfeiting business together, and he feigned agreement while secretly informing on the officer to the Treasury Department. With his superiors’ approval, Nettleship arranged to have the officer deliver him a supply of counterfeit bills, whereupon he arrested the man and turned him over to the military authorities. Impressed by this feat, Treasury officials asked the Army to let Nettleship join Wood’s new Secret Service Division.

  Whitley first met Nettleship at the Metropolitan Hotel, near the counterfeiting district at the corner of Prince Street and Broadway in Lower Manhattan, on June 25, 1869. He developed an instant appreciation for the potbellied Englishman’s genial disposition. Whitley soon made Nettleship assistant chief, with responsibility for managing day-to-day finances and personnel matters at the Bleecker Street headquarters.26

  Abner B. Newcomb had left the Secret Service in 1867 when Wood tried to frame him for taking a bribe to let a counterfeiter escape jail. Whitley reinstated Newcomb, earning his enduring gratitude and loyalty. Given Newcomb’s experience and strong Republican credentials, it is easy to see why Whitley thought he deserved a second chance. Born in 1833 to a wealthy Boston merchant and his teacher wife, he moved to Rockford, Illinois, in 1857, where he spent the next two years as editor of the Republican Party’s newspaper. Newcomb accepted the party’s nomination for the Illinois state legislature in 1859, but withdrew from the race when his wife became ill. The couple moved to New York, where, in 1860, he published an exposé of inhumane conditions in the city’s jails. As a sideline, he briefly worked undercover for the State Department, investigating the illegal transatlantic slave trade.

  During the Civil War, Newcomb became a spy for the United States Marshals. Posing as a pro-secession newspaper reporter, Newcomb infiltrated a smuggling ring that was moving Confederate letters and messages through Northern states to Canada, whence they could be shipped to Confederate agents in Europe via the postal system of Great Britain, which controlled Canada at the time. Newcomb also monitored passenger ships arriving in New York from abroad, to spot incoming Confederate spies and sympathizers, until the war ended and Wood brought him into the Secret Service.27

  Whitley eventually assembled a permanent crew of about twenty men; his ostensible boss Solicitor Banfield’s only contribution to their recruitment was his signature on the men’s commission papers. Whitley assigned the most capable and experienced members of his team as “chief operatives” in nine major cities: Boston, Chicago, Cincinnati, Detroit, Louisville, New Orleans, St. Louis, and San Francisco. In each branch office, the chief operative would be responsible for hiring an assistant, and for developing informants and agents within the counterfeiting gangs. Whitley granted them autonomy, subject only to his requirement that they account for every penny they spent—and describe every hour of their activity—in reports to him in New York. The remainder of the detectives worked directly under Whitley in New York.

  During the second half of 1870, Whitley’s force captured several notorious counterfeiters who had eluded the Secret Service under William P. Wood. Fred Biebusch, the dominant wholesale dealer of queer in the Midwest since prior to the Civil War, had been arrested dozens of times, but always beat the charges by bribing witnesses against him and—Whitley learned—paying off Wood’s detectives. Whitley arrested Biebusch’s top engraver in New York, far from Biebusch’s base in St. Louis, kept him isolated, and promised him leniency, in return for testifying against Biebusch. The engraver agreed to cooperate; on the strength of his evidence, Biebusch was convicted and sentenced to fifteen years in prison.28

  To hunt down Jim Boyd, a major New England coney distributor, Charles Anchisi and his assistant, fellow Italian immigrant Louis Del’Omo, toured the Northeast, posing as French-Canadian counterfeit dealers, until they contacted one of Boyd’s trusted retailers, who eventually led them to Boyd at his house in Canada. Anchisi and Del’Omo enticed Boyd to follow them to New York by promising to buy $5,000 worth of counterfeit greenbacks. The Secret Service arrested him there.29

  Though they did not realize it, with each of these skirmishes, Whitley and his men were drawing closer to a climactic confrontation with the man who secretly held sway over the most powerful and sophisticated counterfeiting ring on the East Coast.

  * * *

  On the evening of August 25, 1870, a crowd of New Yorkers gathered under a wooden shelter at the end of Tenth Street in Lower Manhattan, waiting to board the next steam-powered ferry boat across the East River to Greenpoint in Brooklyn. Amid the throng, a heavyset man with thick black eyebrows and a broad nose glanced nervously around him, taking advantage of his height, a couple of inches above six feet, to scan his surroundings.

  He saw nothing particularly suspicious. A white-collared clergyman milled about nearby, as did a man dressed in the scruffy garb of a mechanic, puffing on a clay pipe—and so inebriated he could barely stand. The heavyset man concluded it would be safe to proceed with the mission that had brought him to the ferry landing: to meet a young ex-con, known to him as Jake Buck, w
ho had arranged to buy $3,000 in counterfeit twenty-dollar bills, for the attractive price of $540 in genuine money.

  The heavyset man spotted Jake Buck, recognizable by the cigar he always smoked, and winked at him, the prearranged signal to consummate their transaction. He moved a few steps in Buck’s direction—whereupon the drunken mechanic and the clergyman tackled him, forced his hands behind his back, and locked a pair of iron handcuffs around his wrists.

  Both “Jake Buck” and the drunken mechanic were undercover Secret Service men, and the clergyman was their disguised chief, Hiram C. Whitley.

  The prisoner, Bill Gurney, a veteran distributor of counterfeit money, had been arrested a half dozen times by the Secret Service under William P. Wood, but always managed to beat the charges, due to a lack of evidence, legal technicalities, or outright bribery. This time, though, the detectives had trapped Gurney with $3,000 in counterfeit money bulging in his pocket.

  Gurney’s arrest culminated a weeks-long undercover operation, orchestrated by Whitley, in which a Secret Service man, posing as Jake Buck, had bought increasing amounts of coney, first from Gurney’s underlings, and then—once trust had been established—from Gurney himself. The bills were copies of a twenty-dollar note issued by the National Shoe and Leather Bank, a New York institution that received its federal charter in 1865. Whitley considered the fakes especially skillfully made, and therefore especially dangerous.

  Ever since they came on the market, he had been trying to determine the ultimate source of this unusually convincing queer. Now, with Bill Gurney in custody, he finally had his hands on someone who might know the secret, and who might divulge it under interrogation by the Secret Service chief.

  It didn’t take long. Locked up in Manhattan’s Ludlow Street Jail, unable to afford bail, which had been set at $20,000, and facing between five and fifteen years in prison, Gurney was desperate to cut a deal with Whitley for some sort of leniency.30