Edward Donegan was an odd-job laborer in 1919, who, in 1920 became a millionaire within about four months through his bootlegging scheme.
During National Prohibition, beverage alcohol was prohibited but alcohol for medical and industrial purposes was legal. Wholesale alcohol dealers were legally permitted to obtain alcohol from distilleries and bonded warehouses with government permits. Beginning around September of 1920 the Prohibition Bureau imposed a rule designed to prevent the use of fraudulent permits. It required the distillery or warehouse to telegraph the permit number to the Bureau's director to verify its authenticity. No alcohol could be shipped without receipt of this verification.
All such requests were received by a clerk, Regina Sassone, whose responsibility it was to verify the numbers submitted and reply to the telegrams. Donegan, a married man with children, met Ms. Sassone in early 1920, charmed her, set her up in a hotel, and became her lover.
In his illegal scheme Edward Donegan sold fraudulent permits to bootleggers for $10 to $20 per case. Sassone would then falsely verify to the distilleries and warehouses that the permits were legitimate and the alcohol would be released to the bootleggers.
Donegan also used other techniques. When Sassone received a legitimate permit, she would delay her reply giving Donegan time to contact the distillery posing as a Prohibition Bureau official, explain the problem of bureaucratic red tape, and promise to cut that tape for a fee.
If Sassone received a forged permit not of Donegan's making, he would pose as a Prohibition official, threaten to arrest the presenter but then suggest a bribe for authenticating the fraudulent permit.
Edward Donegan operated his scheme for four months in late 1920, during which time he deposited $1,653,797 into his bank account.
Donegan's activities were discovered when he attempted to bribe Internal Revenue Service agents who called upon him in connection with another investigation. He attempted to bribe them with $6,500 and was arrested.
Charged with possession of stolen property with the intent to defraud the United States government, Edward Donegan was convicted and sentenced to a prison term of ten years. His appeal was argued by John W. Davis, former Democratic presidential candidate, but the conviction was upheld and Donegan was sent to prison.
Widespread bootlegging of often poisonous alcohol and many other problems were created by National Prohibition, which was overwhelmingly rejected by 74% of voters in the U.S.
Filed Under: Biography