April 14, 1960: A newspaper article said the Downtowner was hit with $6,598 in excise taxes (taxes on alcohol and tobacco) going back to 1957. Another $454 was owed by the Hotel Roosevelt, on top of $4,715 they had already owed. In 2023 dollars, that’s $67,000 for the Downtowner and $52,000 for the Hotel Roosevelt!
December 20, 1960: Alcohol and Tobacco Tax investigators stopped by the Downtowner and Gallagher’s to look over their books. No books were found. Tax law required that all businesses serving alcohol had to keep records of how much liquor they had and from where they were purchased. Not having these records on site was a possible misdemeanor, with a possible $10,000 fine. Three days later, a notice of deficiency was sent out and compliance ordered.
February 24, 1961: The FBI acquired a master key to get into an apartment where Balistrieri kept his ledgers (redacted, but presumably Jennie Alioto’s apartment). The key did not fit, indicating that someone other than the manager had changed the lock. I see nothing in the record that suggests any kind of warrant for this key. I suppose if it comes from the manager, it’s the manager who is legally at fault and not the FBI “breaking in.” This apartment also had two telephones that Balistrieri believed were “impregnable.” One was a “500 series” and the other a “302 G” through the Wisconsin Telephone Company.
March 7, 1961: Frank Balistrieri was served by the IRS, ordering him to produce the books for Ben-Kay and the Hotel Roosevelt on March 17.
March 17, 1961: Balistrieri showed up at the IRS office without accounting books. Through his attorney, he refused to make a statement. The IRS declined to do anything further at this time and let him go.
April 16, 1961: A telephone call was made from Steve DiSalvo’s residence to the residence of Nick and Antonette DeMark at 2129 Lasalle Street, Racine. Nick DeMark had been an IRS agent since 1938. (If not mentioned elsewhere, DeMark remained an IRS employee until the 1970s, so apparently no trouble came out of this.)
May 9, 1961: Frank Balistrieri went to the Milwaukee IRS office with his attorney and partial accounting books for Ben-Kay and Hotel Roosevelt. Most of the books were missing and Balistrieri claimed they burned up in a garage fire at 1634 North Jackson on June 4, 1960.
May 15, 1961: The IRS looked into the “tax record fire” and found no evidence that any accounting books were destroyed in a fire. They considered pursuing a perjury charge against Balistrieri.
An informant told the FBI on June 12, 1961 that the IRS was looking into Peter Balistrieri and whether he was evading personal or business taxes.
June 16, 1961: Judge Robert Tehan denied a motion from Peter Balistrieri to stop the IRS from questioning him about his taxes. Balistrieri said he couldn’t answer those questions because the IRS had taken his books.
September 8, 1961: A member of the IRS intelligence unit spoke with the Milwaukee FBI and told them his superior said he could have access to all the FBI’s surveillance on Frank Balistrieri. The Milwaukee FBI told the IRS agent that they had been informed to turn over anything of significance to the IRS and would provide full cooperation. The internal FBI report said they believed that there was nothing of significance to the IRS in their surveillance, and they would not be turning over any surveillance reports or logs. (I’m not sure how the IRS interpreted this encounter, but the FBI report suggests to me that they used some “weasel words” to suggest they were cooperating but weren’t actually going to do anything.)
September 25, 1961: In court, Judge Robert Tehan denied a motion from Peter Balistrieri to get his books back from the IRS. Tehan said “the tax assessment and collection powers of the government are to be rarely, if at any time, interfered with by the injunctive arm of the court.” Balistrieri argued that the records of the Tower tavern and the Pub (now Gallagher’s) were seized March 23 from accountant Marvin Topper and Peter had not seen them since. If charges were coming down, he could not defend himself without the records. Balistrieri’s attorney Eugene Koenen felt the time was excessive, but Tehan indicated that if charges came the records would be returned.
October 3, 1961: Through use of a hidden microphone and radio transmitter, the FBI learned that Balistrieri was in contact with IRS employee John Engler and was apparently trying to learn what was in their case file on him.
By October 5, 1961, if not sooner, the FBI suspected there were as may as four possible ways Frank Balistrieri could be getting “leaks” from the IRS on their investigation of him. They also recognized that if they investigated and handed their findings over to the IRS, that investigation could also be leaked. This only further tightened the security of sharing FBI intelligence with the IRS.
October 7, 1961: Special Agents John Holtzman and Albert Kneckrehm were at Gallagher’s Steak House at 829 North Third Street, and they witnessed Balistrieri come in around 9:30pm. He immediately pulled up a chair to a table with two middle-aged men, a middle-aged woman and a younger woman (none of whom were identified by the agents). He talked with them a short while, then went and talked to a waitress, and finally “busied himself” around the restaurant for 25 minutes. He conversed with the table a bit more and then went to go answer a telephone call. About 15 minutes later, they were joined by yet another middle-aged man. From about 11:00 to 11:30, Balistrieri spoke with one of the men while the others had left the table. At 1:30am, everyone left except Balistrieri. They departed in three cars — a light-colored 1956 Chevrolet coupe, a white 1962 Chevrolet Impala and a 1961 Chevrolet. These people were somehow connected to Frank’s tax problems, and ultimately this investigation led to a bribery charge(? Or investigation?). (One of the men was an IRS employee.)
By October 10, 1961, the IRS agent meeting with Balistrieri was identified. When confronted about this, the agent said the two had mutual friends. Balistrieri had asked him multiple times about how tax cases worked, and the agent only revealed information on the procedure, no specifics to any case.
October 21, 1961: An informant said Frank Balistrieri was “extremely worried” about his income tax case and considered trying to find out who the IRS used as their stenographer or typist to get some inside information.
December 14, 1961: The Milwaukee FBI office had still failed to access Jennie Alioto’s apartment. They were now discussing the idea of arresting Frank Balistrieri while he visited this apartment for some small charge like perjury. Then, while the agents were arresting him, they might see something in the room that would be enough to request a search warrant.
December 26, 1961: A hidden microphone picked up Jennie Alioto admitting to forging her sister Mary Oyda’s name to corporate documents for Frank Balistrieri. The FBI passed this information on to the IRS.