The most notorious gangster of mid-century Phoenix was Gus Greenbaum, but most people only know the end of the story. Where, in 1958, he and his wife were cooking steaks at their Palmcroft home on Monte Vista Drive when hitmen killed both.
Greenbaum's body was found in a bedroom, nearly decapitated in having his throat slit. His wife Bess' throat was cut, too. She was on a sofa facing the fireplace in the living room, trussed from behind and badly beaten in the face with a heavy bottle. Police discovered her propped face-down on pillows, which prevented blood from dripping on the carpet. They also found evidence that the assassins stayed on that December evening and ate the steaks.
Phoenix as a back office to Las Vegas and second home for Chicago Outfit mobsters (Willie Bioff, the notorious movie-industry hustler and Mafia turncoat for example), is often traced to Greenbaum. But he was actually sent to Phoenix in 1928 to run illegal liquor and betting; the latter eventually became southwest hub of the Outfit's gambling wire service, the Trans-America Publishing and News Service (Western Union would have frowned on accepting illegal telegraphs). This proprietary circuit also gave the Outfit an edge in national bookmaking rackets over rivals in New York and Detroit.
Gambling wouldn't be legalized in Nevada until 1931. Las Vegas was a village on the Union Pacific's main line from Salt Lake City to Los Angeles, population little more than 5,000. Legalization came because Nevada, whose population was centered around Reno and Carson City, was losing people and economic power as its mines played out and were destroyed by falling demand from the Great Depression.
Gus Greenbaum, a protege of the infamous Meyer Lansky, was 34. In Phoenix, he found a city of almost 48,000 and wide open. Gambling and prostitution flourished, with city commissioners and detectives taking a cut. The police department was deeply corrupt. Rail connections to Chicago were plentiful on the Santa Fe and Southern Pacific. Before the end of Prohibition, liquor was plentiful, too, thanks to Al Capone. Rising local leaders such as the Goldwater and Rosenzweig brothers and contractor Del Webb befriended Greenbaum. No wonder the Outfit thought it was the ideal home for Trans-America.
Greenbaum was ordered by Chicago to manage some of its Vegas casinos and nightclubs in 1945. Gus didn't want to go. He loved Phoenix. According to journalist and author Dave Wagner, Greenbaum operated out of offices on the ninth floor of the Luhrs Tower with a private aerie on the top floor. Although Greenbaum eventually followed orders, he kept his family and home in Phoenix. When Siegel was killed for looting too much from the Flamingo and endangering its profitability, the syndicate put Greenbaum in charge. As John William Tuohy writes on the American Mafia site:
In the early forties, he was moved to Vegas where he took over the Flamingo after the Bugsy Siegel murder, and put the place in the black within the first six months of his management.
By 1950, Greenbaum was widely recognized as the driving force behind the success of the $50 million Tropicana as well as being known and respected in the underworld as a reliable source of information on Las Vegas real estate.
Greenbaum was an expert at "the skim," where the mob stole money from casino winnings before it could be recorded and taxed. "Unlike Siegel, Greenbaum was a professional, he was a man who could be trusted and depended upon." He ordered murders when necessary, such as on two syndicate soldiers who robbed a mob-controlled hotel.
For years, Greenbaum was the "go-to" turnaround expert for the Outfit in Las Vegas. But he burned out and wanted to retire to Phoenix. He turned down an offer to run the Riviera and receive an interest in the property. But when the Outfit murdered his sister-in-law, he knew he would not be allowed out so easily. He took the job.
He still kept a hand in Phoenix. Greenbaum had long been involved in politics behind the scenes, as a backer of the labor Democrats in the city. His rival was liquor baron, rancher and landowner Kemper Marley, head of the conservative "pinto" Democrats. Marley tried to move in on Greenbaum's off-track-betting wire while he was in Las Vegas. Greenbaum retaliated, including by ordering the murder of a rival in Chicago, and Marley lost his "book." In a changing Phoenix, Greenbaum also saw his friends Harry Rosenzweig and Barry Goldwater run as reformers for City Council as Republicans. Greenbaum gave generously to Rosenzweig ($10,000, which Rosenzweig concealed as $1,000 donations from 10 local Democrats) and became a Republican.
But the toll from the pressure was growing. He was torn between a desire to live fulltime in Phoenix and his love of the Las Vegas excitement — and being a big man in the town. His friend Bioff (also a pal and political backer of Barry's), who had testified against the mob but was seemingly rehabilitated by Greenbaum, was killed by a bomb in 1955. Greenbaum became both an alcoholic and a heroin addict. The Outfit began to question his reliability. This proved true when they found the master of the skim was skimming himself, and too much to be tolerated. Tuohy writes:
(Johnny) Roselli went out to Vegas and gave Greenbaum the order, he was to sell his share in the Riviera to one of the outfit's front men and leave town. Do that, he could live. All past transgressions forgiven.
But Greenbaum refused. "This town is in my blood, Johnny," he told Roselli and went right back to stealing from the skim.
Then Marshal Caifano, Chicago's enforcer in Vegas, was sent in to handle the problem.
The murders were never solved. Nor did they put a dent in Phoenix's growing underworld. By the late 1950s, the FBI estimated that Phoenix had more made men per capita then New York City.
My book, A Brief History of Phoenix, is available to buy or order at your local independent bookstore, or from Amazon.
Read more Phoenix history in Rogue's Phoenix 101 archive.