Bootlegger’s Bounty: The Hidden Treasure of Gangster Dutch Schultz

A notorious gangster has been keeping treasure hunters busy for decades.
Dutch Schultz circa 1932.
Dutch Schultz circa 1932. / brandstaetter images/GettyImages

Dutch Schultz was about to die. But he wasn’t about to go quietly.

It was October 23, 1935, and Schultz’s career of criminal activity had caught up to him. Earlier that evening, he had been shot by rivals in the restroom of a restaurant in Newark, New Jersey. Now, the gangster was lingering on a hospital gurney, local police officers standing by to record his final thoughts.

Most of them were incomprehensible. “Oh, oh, dog biscuit, and when he is happy, he doesn’t get snappy,” Schultz moaned. “We don’t owe a nickel. Fold it! Instead, fold it against him. I am a pretty good pretzeler.”

Schultz’s nonsensical rambling came in torrents for the 24 hours he resisted death. Finally, he succumbed to his injuries. And while police tracked his killers, they were also hot on the trail of another mystery: A stash of millions in cash and jewels that Schultz had purportedly hidden somewhere in the New York Catskills. To the ears of some treasure seekers, a dying Schultz hadn’t merely been babbling: He had, consciously or not, been dropping clues as to the whereabouts of a $100 million fortune that had been built from booze, bullets, and blood.

Shot Caller

Dutch Schultz wasn’t really Dutch Schultz. He was born Arthur Flegenheimer in the Bronx in 1902. When Flegenheimer was still young, his father walked out on the family, leaving both a bitter taste and a need to provide for his mother and siblings.

Dutch Schultz is pictured
Dutch Schultz poses for a mugshot. / National Archives/GettyImages

Flegenheimer found prosperity as part of a New York street gang that he joined at the age of 14. By 17, he was arrested for burglary and sent off to do time. When he returned after 15 months, the squad gave him an honorific: They dubbed him “Dutch Schultz,” the name of an old-time enforcer used to identify particularly tough or qualified members. A jail stint had qualified him for the promotion.

Schultz’s life of crime dovetailed nicely with the emergence of bootlegging during Prohibition in the 1920s, which banned the making and sale of most alcohol. Outlaws could make a tidy profit distributing, selling, and serving illegal booze. It was a business arrangement few speakeasies and saloons could turn down: You could either partner with Schultz or risk a beating—if not worse. Most opted to cooperate.

When Prohibition ended in December 1933 and profits dwindled, Schultz pivoted to racketeering, running illegal lotteries and loaning money at exorbitant interest rates. These were not huge loans but instead small amounts of $5 or so made to working-class families that required $1 paid out in interest per week. As with bootlegging, certain territories in New York belonged to him and partner Joey Noe, and any encroaching was dealt with swiftly: One Schultz adversary was hung by his thumbs from a meat hook. Another he shot dead in a hotel in a manner that one witness described as “just as casually as if he were picking his teeth.” One estimate had Schultz responsible for the deaths of 136 people over a decade.

While Schultz could intimidate rival gangsters, he was less successful in scaring off the government. Future New York governor and presidential candidate Thomas Dewey—of “Dewey Defeats Truman” fame—was a prosecutor who wanted Schultz and pursued him aggressively. He hoped Schultz could be struck down in the same manner as notorious mobster Al Capone: By cornering him for tax evasion.

But in two trials, Schultz skated—once thanks to a hung jury and once after being acquitted, a possible result of jury tampering. While he was a free man, Schultz had nonetheless grown tired of Dewey’s pursuit and hoped to eliminate the problem. He turned to the “commission,” a recognized gangster tribunal that evaluated such requests. But the commission felt that killing Dewey would bring too much unwanted attention. Unknown to Schultz, their solution was to resolve the problem by killing Schultz instead. He would not only be a liability if sentenced to prison but was deemed reckless, even by gangster standards. (Another motive was that Schultz owed them money to the tune of $200,000, or around $4.5 million today.)

At roughly 10:20 p.m. on October 23, 1935, Schultz was relaxing at what had become his office and hangout spot: The Palace Chop House restaurant in Newark, New Jersey. As he was washing his hands in the restroom, several gunmen burst in and mowed down three of his associates. Schultz himself suffered a .45 gunshot wound while he was still in the bathroom.

Two of the three men died from their wounds. Taken to a hospital, Schultz hung on for nearly a day, though there were no major revelations to be heard. Instead, Schultz spouted ideas borne out of delirium: “Please leave me alone, Bugs, I was never a bad guy in my life. I’m not a rat,” he said at one point. “Augie, I always thought you were a rat but I did not think you would do this.”

Schultz also muttered something about Satan, which would later prove to be of great interest. It was not necessarily a concern about spirituality but an indication that Schultz had left something valuable behind.

Schultz Cashes Out

The Great Depression of the 1930s was a time of economic uncertainty. Cash and valuables were prized over holding savings at a bank that could fail, and plenty of people kept money on hand or stashed away in a confidential hiding spot.

Dutch Schultz is pictured
Dutch Schultz on his way to the morgue. / George Rinhart/GettyImages

Few, however, had the sort of stockpile of someone like Schultz, who was reportedly making as much as $20 million annually from his various criminal schemes. With his tax evasion trial looming, he was particularly keen on hiding assets. According to Schultz’s lawyer “Dixie” Davis, who spoke with Collier’s magazine in 1939, Schultz obtained a steel strongbox and stuffed it with as much cash, bonds, and diamonds as it could hold—perhaps $5 to $9 million, or up to $100 million today. Then, he and associate Bernard “Lulu” Rosenkrantz drove it to an area near Phoenicia, New York, where the two supposedly buried it near Esopus Creek. (Schultz’s bootlegging operation had run through the Catskills, making the area familiar to Schultz and his cronies.)

One of the earliest public mentions of the buried treasure came in 1972, when a self-professed treasure hunter named Tony Houston told a reporter for The Journal-News in White Plains, New York, that he had first heard of the story when he was a kid around the time of Schultz’s death.

“My father was a Newark cop and he was close to the person who took Schultz’s last statement as he lay dying,” Houston said. “Well, one of his revelations had to do with a box he buried near Phoenicia, New York.” The area, Houston said, was soon swarmed by cops, who stood “elbow-to-elbow” to try and find the money. Houston himself searched but came up empty, finding nothing beyond the door to a 1926 truck and parts of a still used to make moonshine.

That Schultz reputedly disclosed his hidden stash was, Houston said, the inciting incident for treasure seekers to descend upon Phoenicia in the decades following. A charming Catskills weekend getaway, Phoenicia was once the purview of Babe Ruth, who enjoyed trout fishing there. Once word of the treasure circulated, the population grew to include part-time metal detectorists.

One easy lead would have been Rosenkrantz, except he was one of those shot and killed by rival mobsters at the Palace Chop House; a rumored map to the treasure’s location disappeared from his possession before his death. That map was later said to have resurfaced, though if it was the genuine article, it would be disappointing: It points to a location now buried under highway.

Schultz was also said to have marked a tree near the bounty’s location with an X. That, too, has proved unfortunate: Treasure hunters have marked many trees in the area with an X in an effort to throw others off the trail.

Among Schultz’s ramblings was the warning “don’t let Satan draw you too fast.” That, some believe, is a reference to Devil’s Face, a rock outcropping in the area, or the Devil’s Tombstone, a large boulder.

While some take the search seriously, others treat it as more of a weekend getaway, arming themselves with metal detectors and few expectations beyond having a little bit of fun. In 1997, a Phoenicia librarian said it was not uncommon to have tourists wandering in asking for a map of the area. A man who kept returning to dig eventually had to be warned off: His trenches were actually making the nearby railroad tracks unstable.

Despite these attempts, not everyone is convinced there’s any treasure to be had. Allan May, a mafia historian, told the Los Angeles Times in 2005 that it made little sense for Schultz to have a large sum of money buried over 100 miles from his usual stomping grounds. Schultz, he said, could have probably found a better and more secure hiding place closer to home.

“I don’t think it makes any sense at all,” May said. “He certainly had other places he could have kept it than in the ground.”

If Schultz did leave treasure behind, it’s possible the Newark police there for his last words kept the most important ones—as well as the money—to themselves.

Schultz’s final thoughts at he expired left little clue. “French-Canadian bean soup,” he said. “I want to pay. Let them leave me alone.”

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