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Gangsters In Our Own Back Yard
'Little Mexico'   a.k.a. Newport, KY     
Bryan Meade

His name was George Remus. While not well remembered today, Remus was a prominent figure in the 1920's, that period of American history known as "The Prohibition Era." Indirectly Remus was responsible for Newport, Kentucky, becoming famous as "Little Mexico," known for its nightlife and illegal gambling activities.

A view of York Street in Newport looking north towards Cincinnati in a town affectionately referred to as “Little Mexico.”

Remus began his career as a law student in Chicago. Never one to pass up an opportunity, he used his education to find a loophole to use the prohibition law to his advantage. This "loophole" would bring him more money in a three months period of time than some people would be fortunate enough to earn in a lifetime. Because whiskey was legal for medicinal purposes, Remus knew that by establishing drug companies this would provide him the legal right to warehouse whiskey. He moved from Chicago to Cincinnati, Ohio, one of the nations largest distillery regions. Thanks to George, the greater Cincinnati region would enjoy some of the best contraband available.

Rumor had it that George bribed federal agents to guard the bonded whiskey at his warehouses. Remus extracted the whiskey from the barrels and replaced it with water so that when federal inspectors checked the warehouses, all the barrels would be full. Soon his operations expanded to the bordering states of Indiana and Kentucky. His reputation for providing the best whiskey in the Midwest earned him the title, "King of the Bootleggers." Sales were so immense that Remus had twelve lieutenants who managed procurement, distribution and public affairs, better known as bribery. Shipments were sent out by car, truck, and even full boxcar loads. Bank deposits revealed that within one three months period, Remus deposited $2,700,000. His net worth was estimated at $70,000,000. He built a mansion in Price Hill in Cincinnati known as the "Marble Palace."

But this lifestyle of the rich and famous was not to endure. Remus had created a monster. He estimated that during his heyday he had spent over $20,000,000 in bribes. He was quoted as saying, "Men have tried to corner the wheat market only to learn there is too much wheat in the world. I tried to corner the graft market, but there isn't enough money in the world to buy up all the public officials who demand their share of the graft." Eventually, Remus was shut down by a few honest federal agents who couldn't be bought. He as well as his twelve lieutenants went to prison.

Most people acknowledge Bugsy Siegal as the founder of the Las Vegas casino, but in his own way Remus, Prohibition, and the money Remus gained through his illegal activities helped to found the Las Vegas casino and put the small town of Newport, Kentucky, on the map and in the headlines. During and after Prohibition, it was estimated that there were over 30,000 speakeasies in Cincinnati and Newport. On some days the smoke from the "alky cookers" along the Licking River would block sunlight from downtown Cincinnati. Little Newport was becoming a town of storefronts, bookmakers, and bust out joints. The term "bust out joint" was used for illegal backroom gaming parlors from which a patron rarely left with any money and at times was lucky to leave with his life.

By the time most of Remus' lieutenants were getting out of prison, Prohibition was near its end. These men were used to fast money and not shy of skirting the law to get it. During the early 1930's, Frankfort, the capital of Kentucky, paid little heed and had little interest in the northern border of its state. Law enforcement in this stepchild area of the state was as lax and corrupt as that of Tijuana, Mexico. Wanted felons could be seen regularly in broad daylight in Newport, and thus Newport earned the nickname of "Little Mexico."

Newport was a prime target for illegal activities. She was to fall under the influence of one of Remus' brightest protégés. Peter Schmidt had learned well from Remus, and he was every bit the opportunist that his old boss had been. He started his adult working life driving a one horse delivery cart which led to his driving loaded liquor trucks for Remus. It was said of Schmidt that "he was a man of vision with the soul of a miser." Apparently, Schmidt, rather than spending his money extravagantly as Remus had been want to do, practiced his role as a miser and stowed his money away. After his release from prison, Schmidt had money to invest, and Newport would become his star investment.

As soon as he was released from prison, Schmidt purchased a three story hotel at 928 Monmouth Street and named it the Glenn Hotel after his son. Mobsters such as Bob Zwick were known to have lived there, and Zwick was regularly seen standing around in the lobby with a submachine gun. Another mobster who regularly stayed at the Glenn Hotel was David Jerus, also known as "Jew Bates." Jerus had taken part in the St. Valentine's Day Massacre in Chicago.

But Schmidt had bigger dreams than just running a hotel for wanted felons. He recognized the gaming potential in this town. However, all dreams were put on hold when federal agents raided his home on Kentucky Drive only to find Schmidt's 1,000 gallon a day still in full operation. Even though Prohibition had ended, many of the locals had grown accustomed to the home brew and didn't want to buy the expensive legal brands. So Schmidt went back to prison for another five years.

While Peter Schmidt was sitting in his cell, the superintendent under whom he had worked during the Remus years had also decided to set up shop in Newport. His name was Buck Brady, and he had purchased the Bluegrass Inn located in South Newport. Shortly thereafter, Brady converted the building into a casino and renamed it the Primrose. It was considered one of the finest casinos in the city. The year was 1932.

One year later, Peter Schmidt was released, and he returned to his hotel to find that gambling was what the city had turned its eye to. Schmidt renamed the hotel the Glenn Rendezvous and converted the lobby and back rooms into a casino.

Despite several attempts at being pushed out of town, Peter Schmidt always came back. The Coconut Grove Restaurant now occupies this building on Fifth St. in Newport.

By this time the Cleveland Syndicate had gotten word as to the happenings in Newport. The Syndicate had already moved into Cincinnati by purchasing the Coney Island Race Track and renaming it River Downs, which still stands today. The Syndicate began pressuring clubs and casino owners to sell out and employed two of George Remus' lieutenants, Red Masterson and Sam Shrader, to accomplish their goal. Red Masterson soon became known as "The Enforcer" by the locals.

By 1934 the Syndicate was actively running many of the book joints and preparing to open the Yorkshire Club at 518 York Street. In their attempts to rid themselves of all competition, they found that Buck Brady and Peter Schmidt had no intention of selling their clubs, so the Syndicate turned to harassment. Two mobsters working for the Syndicate would regularly pay visits to the Glenn Rendezvous, not so much as a threat, but rather as an acknowledgment of Schmidt's disrespect for them. The mobsters were known to walk in the lobby and urinate on the floor. This became known as "ding-donging." The harassment continued until 1935 when Schmidt closed the Rendezvous. He had quietly taken his lumps and said nothing. Instead of retaliating, he purchased the Old Kaintuck Castle in Southgate, south of Newport. A new era of Newport's history was about to begin when Schmidt converted the Castle into the Beverly Hills Club and opened in 1935.

After the opening of the Beverly Hills Club in 1935, a charter member of the Cleveland Syndicate named Moe Dalitz visited the club and was impressed enough to set the wheels in motion for its acquisition. But Peter Schmidt had realized his dream and no price would buy it from him. By 1936 the Syndicate had enough of Schmidt. On February 3, the club mysteriously burned to the ground killing a five year old niece of the caretakers. The night of the fire, a citizen of Newport witnessed Red Masterson purchasing a can of gasoline. Red reportedly was to have said that the onlooker should read the morning's paper to find out what the fuel was needed for. The actual arsonist was said to have been Dave White-field, who also had frequently harassed Schmidt. But this fire was not going to go unnoticed. The good citizens demanded justice in the name of the little dead girl. So in needing a scapegoat, the Syndicate turned over Whitefield, and after a very speedy trial, he was sent to prison. Red Masterson, for his silence, was rewarded with control and part ownership of the Merchants Club located at 15 E. 4th Street.

In 1937 the Beverly Hills reopened as the Beverly Hills Country Club. Governors of several states attended the grand opening and declared it to be the finest facility in all the nation. Soon after, the Syndicate stepped up the pressure on the club. Only two months went by before the bankroll was robbed and the harassment of ding-donging continued. It was in 1940 that Peter Schmidt walked away from the Beverly Hills. He practically gave it to the Syndicate for little or no money and promised to leave the casino profession.

The Syndicate was far from through in their acquisitions. They had turned their eyes across the Licking River and toward Kenton County. A dinner club with a plush casino was doing major business with the convention crowds from Cincinnati and was also doing major damage to the income of the Beverly Hills Club. The Lookout House was situated on a hill in Fort Wright, which viewed Cincinnati through a deep valley. Its owner was yet another lieutenant of George Remus. Jimmy Brink had quietly watched the Syndicate engulf all the profitable gaming joints and probably knew he was next. So when they came calling, Brink had no intention of fighting them. He accepted $125,000 cash and 10% ownership in both the Lookout House and the Beverly Hills Country Club. In actuality, Brink realized a bigger profit from this deal and became a bigger wheel in the business of entertainment.

The Lookout House in Fort Wright will play an important part in syndicate activities beginning around 1940.

The Syndicate was now operating a bi-county business. By shutting down competitors and buying up the bigger clubs, they had a hold on what was to become the biggest venture of organized crime.

There was clever management in the convention crowd arena too. Whenever the Kenton County grand jury went into session, the Lookout House closed for "repairs," and vice versa was true with the Campbell County jury and the Beverly Hills Club.

Inside the Lookout House, March 1952.

At this time there were over 20 clubs in Newport and over two-thirds of them were Syndicate controlled. The largest Syndicate clubs were the Yorkshire and the Flamingo. The Flamingo Club, located at 633 York Street, was run by the three Levinson brothers who were actually Syndicate members. Louie Levinson probably was the best known of the three brothers. He, unlike most of his counterparts, was a heavy gambler and enjoyed all night poker habits. There are two stories about how Louis obtained his nickname. The first is that as a young boy and school drop out, Louie had a number of paper routes. On some occasions he would not come home at night so that he might get a jump on the morning edition. It is said that his mother called him "Sleep-out Louie." The second story is that during marathon poker games, he would sit or sleep out a couple of hands only to wake up with the energy of a man with eight hours bed rest. The Yorkshire was located at 578 York Street. It was also a Syndicate Club and considered to be the largest book making operation in town. Both the Flamingo and the Yorkshire closed in the late 1950s. Only the Yorkshire building remains today.

The Flamingo club on York Street was one of nearly twenty casinos at the height of gaming in Newport.

Remember Buck Brady? He wasn't immune to the Syndicate's harassment during all this time. Red Masterson, operating from the Merchants Club, was given strict orders to encourage Brady to sell the Primrose Club. The Primrose was definitely hurting the Flamingo and the Yorkshire. Brady knew the Syndicate was going to take his club by deed or by fire, so he set out to stop this hostile takeover. On August 5, 1946, Buck Brady waited for Masterson to leave his Merchants Club casino. When Masterson walked out and got into his new Cadillac, Brady caught up with him in the next block. A voice called out, "Hi, Red." When Red instinctively raised his hand, gun fire rang out from Brady's car into Masterson's. Both cars wrecked and Brady fled, only to be found soon after hiding in an outhouse. Red Masterson lived, and Brady witnessed exactly what he had tried so desperately to avoid. He lost his casino when the Syndicate offered him his life for the deed.

The Primrose was renamed the Latin Quarter and quickly became the entertainment hot spot in Newport. It offered dining, dancing, and a casino to individuals not quite wealthy enough to visit the Beverly Hills Country Club. Today the Latin Quarter building operates as Bobby Mackey's Country Dance Bar.

Remember Peter Schmidt and his promise to leave the gaming industry forever? He lied! He returned to the Glenn Rendezvous in 1943 after walking away from the Beverly Hills Country Club. The Syndicate continued to pressure him into selling until he finally gave in. In 1951 the Syndicate paid an undisclosed amount for both the building and another promise from Schmidt to leave the gaming industry. The Glenn Rendezvous was renamed the Tropicana and run by Syndicate mobster Peter “Tito” Carinci. The Tropicana was destroyed by fire in 1962.

Schmidt played a deceitful game. He had promised to leave the gaming industry when he left the Beverly Hills. He lied then and lied again later when he left the Rendezvous. Peter Schmidt took the Syndicate's money and constructed the Glenn Schmidt Club, a modern bowling facility with a basement casino. When law enforcement began to come down on illegal gambling, Schmidt built a separate building next to the bowling alley to use as a casino. It was named the Playtorium. Both buildings stand today on 5th Street between York and Monmouth and are operating as The Syndicate dinner club.

A post card from the Beverly Hills Country Club.

Cincinnati was the hotbed of conventioneers because of Newport's night life. But like George Remus, not all that is good can last, when others call it bad. A group of clergymen, mostly from Campbell County, formed a Reformers Party. In doing so, they were able from their pulpits, to put pressure on their congregations to bring an end to this corrupt business of gaming. On February 12, 1961, a "United Sunday" was declared in area churches. All participating clergy preached on the results of living amongst the sin of gambling. Within four days, the Campbell County grand jury released a reverse propaganda statement declaring that, "A community in many ways chooses its way of life as do individuals. Its choice is reflected in the voice of the electorate." But the people didn't buy that argument, knowing that indictment after indictment for corruption never stuck in Campbell County. Witness-es disappeared, lost their memories, or juries turned a blind eye toward the evidence.

So the clergy took a thirty-one page document with 500 signatures to the governor and demanded an end to the gambling in their state. The Reform Party also placed a former Cleveland Brown football player on the ballot for Campbell County Sheriff. George Ratterman had played professional ball for ten years and had earned a law degree in night school. In his acceptance speech as the party's nominee, Ratterman declared that he would never accept one corrupt dime nor be influenced by cheap threats. Ratterman received a standing ovation from everyone in the audience with the exception of Red Masterson.

The Syndicate realized that Ratterman was a real threat and must be eliminated to save their clubs, and a plan was put into motion. Two Syndicate members, including Tropicana owner, Tito Carinci, contacted Ratterman to discuss closing their clubs in Newport. Ratterman met them in a Cincinnati hotel bar where he was unknowingly drugged. The two syndicate members placed him into a car and delivered him to a room in the Tropicana Hotel. Awaiting Ratterman was a show-girl named April Flowers who was to be found in bed with him when a prearranged police raid would find Ratterman and obtain pictures of him in a compromising position with a woman other than his wife.

George Ratterman

By morning this event was national news. Having already made bond, Ratterman called a press conference and started by saying, "A funny thing happened to me yesterday on the way home from the office," and then continued to tell how he was drugged and that this entire affair had been a Syndicate setup. This only led the Reform Party to new heights of conviction. During Ratterman's trial, testimony implicated official corruption, and the governor was forced into action by using the State Police, FBI and IRS to close down the gaming halls.

Tito Carinci and April Flowers at the trial of George Ratterman.

The reign of the Syndicate in Newport and Northern Kentucky, which started in the thirties, reached its peak by the late 1950s. By that time the Syndicate practically owned Newport. Their clubs included the Latin Quarter, Yorkshire, Flamingo, Tropicana, Mer-chants Club and the Stardust. The names Stardust and Tropicana are still recognizable having resurfaced in Vegas in the early 1960s, for by 1961 nearly all these clubs were closed and many of the Syndicate members who were not ensnarled in court actions left for Las Vegas.

Unfortunately, most of the participants actually in-volved in the operations of these clubs have passed on and have left little written history behind. Due to the Syndicate's influence, the local news media covered very little of Newport's gaming industry. If it were not for Louisville Courier Journal reporter Hank Messick, his books Razzle Dazzle and The Syndicate Wife, which provided much of the information in this article, and the "Casino Chip and Gaming Tokens Collectors Club," few would remember that Newport was ever known as "Little Mexico" and that Northern Kentucky, and not Las Vegas, reigned as the heart of America's passion for night life and gambling.

Memorabilia collectors own many of the last remnants of this by gone era.

 


This story originally ran in The Northern Kentucky version of Better Living Magazine in February 2003.

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Bryan Meade is a Certified Residential Appraiser who is active in many church and community activities and resides in Fort Wright, KY with his wife and two sons. He would love to hear from memorabilia collectors and can be reached at bmeade@fuse.net.


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