By 1931, Luciano was chafing under the Marazano’s leadership. The time had come to have him dealt with. Using his connections to Meyer Lansky, Luciano hired four Jewish gunmen to visit Marazano’s office and gun him down. With Marazano’s death, Luciano took control over the Mafia. But unlike earlier bosses, he took a more hands-off approach to management. He encouraged other mafia families to make decisions collectively and avoid war by resolving disputes by negotiation instead of violence. In many ways, Luciano’s leadership set the stage for the development of the modern Mafia.
Things were good for Luciano for a time. He was making huge amounts of illegal money, and in spite of all their efforts, the police couldn’t seem to do anything about it. His nickname, “Lucky,” is often said to have been a reference to the fact that he seemed to be able to avoid prison time no matter how many times he was charged with a crime. In fact, this is probably not the case. No one is sure where he got his nickname. It might actually just be derived from the American pronunciation of “Luciano.” But the story does demonstrate how easily he seemed to be able to avoid justice.
Unfortunately for Luciano, that changed in 1936 when Special Prosecutor Thomas Dewey organized a massive raid on Luciano’s brothels. By setting the bails of Luciano’s associates whom he arrested higher than they could pay, he convinced many to testify against their boss in exchange for release. With the evidence, the charges stuck, and Luciano was sentenced to more than 30 years in prison. He continued running his family from jail as he appealed the sentence. But after the appeal was finally denied by the Supreme Court, he stepped down. It seemed as though Luciano might die in prison.
But then the US joined WWII. And the government was suddenly willing to look at some “non-traditional” strategies if it meant victory. One of the things that concerned them the most was the idea that the Italians or Germans might try to sneak spies into New York City through the ports or that the labor unions on the dock might suddenly strike, bringing the operation of the ports to a halt. Knowing that the Mafia had long controlled the unions and the docks themselves, they began reaching out to known organized crime figures for help, including Luciano.
Whether or not the idea was a good one or even really necessary is a matter of some dispute. But there are some reasons that it would have seemed so to the government at the time. In 1942, a French ship, the Normandie, was being refitted in New York to serve as a troop transport craft when it suddenly caught fire. Given the atmosphere, it was reported that the fire was the work of German spies. Although ironically, a Mafia boss later claimed to have organized it. The truth, of course, is that the fire was probably an accident. Still, it made important people nervous, and “Operation Underworld” was born.