How An Accountant Helped Catch The World’s Most Infamous Gangster

Posted on Monday, December 5, 2022 by Lydia SinclairNo comments

One of the world’s most notorious organised crime bosses, who controlled almost every criminal activity in the city of Chicago with seeming impunity, was finally caught, arrested and imprisoned thanks to the work of tax accountants.

It is a story so commonly recited not only in accountancy recruitment circles but in popular culture, and seems so outwardly ridiculous that some believed it to be an urban myth.

However, the story of Al Capone, the inspiration for Scarface and thousands of other gangsters both real and fictional, and especially how he got caught by his own poor bookkeeping is a story about the importance and power of forensic accountancy to find the truth through cold, hard numbers.


A Brief History Of Scarface

Al Capone was a gangster who, whilst involved in pretty much every kind of illegal activity in 1920s Chicago you could think of, from gambling, protection rackets, drug trafficking, bribery, money laundering, robbery and even murder, he was perhaps most famous for bootlegging.

During the Prohibition era, he helped to smuggle spirits into the United States as well as set up illegal breweries, with the Police well aware of the crimes being committed but with a mix of intimidation tactics and an inability to prove decisively that Mr Capone was committing any crimes.

This was in spite of him famously saying that he was satisfying a “public demand” and being so famous that he was a national celebrity concerned with his public image even as he was arranging bombings, drive-by shootings and the St Valentine’s Day Massacre.

Police tried everything to ensure he went to prison, trying to charge him with every sort of crime they could definitively tie him to.

His claims of being too ill to appear in court were charged was contempt of court. He received a year for carrying a concealed weapon. He was even charged with vagrancy when visiting Miami Beach and then later charged with perjury after claiming the police tried to starve him.

There was one option, and it came from a rather unexpected Catch-22 legal decision.


Illegal Money Must Be Legally Taxed

In 1927, the trial of bootlegger Manley Sullivan had reached the Supreme Court. The initial ruling that he had to file taxes for the money he earned committing a crime was overturned as it was considered to be self-incrimination, protected by the fifth amendment.

This was overturned again by the Supreme Court in a landmark decision that would take down not only Mr Capone but several other infamous criminals of the era.

Whilst the FBI struggled to link him significantly enough to any other major crime and scored newspaper headlines in the process, George Johnson, a tax lawyer that later became US District Attorney, would start his forensic accountancy work to actually bring Mr Capone down.

Ralph Capone, Mr Capone’s brother was tried for tax evasion in 1930, which made Mr Capone fear the same would happen to him, which led to him making the mistake that would get him imprisoned.

His lawyer would start to work at regularising Mr Capone’s tax position, but in doing so admitted that there were huge amounts of unaccounted-for income, ultimately leading to his arrest and 11-year imprisonment, after which his empire crumbled along with his health.

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