Haunted By Spirits

Jack Baldwin, a salesman and supervisor at United Sales, testified at the 1948 federal trial that Eugene Hensley regularly instructed him to draw up false invoices, transfer scores of cases of liquor offsite and deliver premium whiskeys to selected black-market clients.

Baldwin testified he was ordered by Eugene Hensley in September 1946 to kick in a door at the United Sales' warehouse on North 19th Avenue and take five cases of scotch for a black-market sale to the Green Gables.

In other instances, Baldwin testified that he took as many as 50 cases of whiskey from the United Sales warehouse and stashed them on the back porch of his central Phoenix home for later delivery to black-market buyers.

"I can name you 20 deals like that," Baldwin testified.

When an order came in for black-market whiskey, Baldwin would fill the bill.

"Well, the Green Gables wanted 10 cases of Canadian Club and the only thing I would do is just send down and get it, that is all there was to it," Baldwin testified.

To cover the illegal black-market sales, Baldwin testified that false invoices were prepared showing the liquor sold in small quantities to retailers throughout Arizona.

"It would be scattered over the state for two and a half and three cases at a time," Baldwin stated.

"Why would you make invoices that did not show the true fact situation?" Assistant U.S. Attorney Thurman asked.

"The liquor went someplace else," Baldwin stated.

"Under whose direction did you make these invoices?"

"Gene Hensley," Baldwin replied.

"After these were made out, these particular invoices, what did you do with them?"

"I took them home, burned them usually," Baldwin stated.

Information from the false invoices prepared by the Hensleys' employees was provided to federal liquor regulators with the Alcohol Tax Unit at the U.S. Treasury Department. When investigators compared the information reported by the Hensleys and what was actually delivered to retailers, they discovered a huge discrepancy.

Sometimes the Hensleys sold liquor to unlicensed individuals who would transport up to 55 cases at a time to states including Oklahoma and Utah. Carl "Kid" Carter from Ogden, Utah, purchased dozens of cases of whiskey at a time, loaded them into a late-1930s sedan, covering the illicit cargo with a blanket before heading home, 600 miles north.

"Sometimes he [Carter] would give me the money, and sometimes he would give Gene the money," Baldwin testified.

Before the liquor was loaded in Carter's car, Baldwin stated the federal serial numbers would be cut off the cases. Carter didn't have a liquor license in Arizona or Utah.

"Do you know what prices were paid, say, by Kid Carter?" Thurman asked Baldwin. "... Would they pay more than the ceiling price?"

"Oh, yes," Baldwin testified.

Carter must have been a prodigious drinker. He testified that he did make black-market purchases but wasn't trying to make a financial killing.

"I drank a lot of it and gave a lot of it to my friends," he told the court.

"Didn't you sell some of it?" Thurman asked.

"No, sir."

Another United Sales employee, Howard Wesson, worked as a warehouseman and truck driver from 1942 through 1945.

Wesson testified that he occasionally loaded whiskey on the warehouse docks and removed the federal tax serial numbers at Gene Hensley's instructions.

"He just had it come off so there would be no trace of it, or something to that sort," Wesson stated. Wesson recalled loading 25 to 30 cases of liquor into Kid Carter's car and testified that Carter told him he had "doubled his money."

It wasn't unusual, Wesson testified, to leave cases of whiskey on the warehouse floor in the evening and return to work the next day to find the cases broken apart and the whiskey gone.

The heavy black-market sales made it difficult for employees to keep track of the liquor.

Richard Eckert, a United Sales warehouse foreman, told the jury, "I had some trouble keeping my records straight on it. I couldn't make my books balance on it sometimes."

Eckert, who worked at the warehouse from 1941 through 1945, testified that he told his bosses about the problem.

"I complained that I couldn't keep the records with the salesmen and owners and one thing and another coming in there and taking whiskey away and giving it away and one thing and another and not billing it out," Eckert stated.

While the bootlegging operation was in full swing, the Hensleys and Marley dissolved their partnerships and created two corporations in September 1946 -- United Sales Incorporated in Phoenix, and United Distributors Incorporated in Tucson. At the time of incorporation, Eugene Hensley, 32, was president of the companies, while James Hensley, 25, served as secretary. Kemper Marley, 39, was listed as vice president of both companies.

Despite Marley's title, federal prosecutors stated that Marley had purchased control of the companies in January 1946.

Over the years, Marley built the companies, which became United Liquors, into Arizona's largest wholesale liquor distributorship. Along with his vast land holdings, political, gambling and prostitution ties, Marley built a fortune worth more than $39.2 million by 1980.

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On February 26, 1953, James Hensley once again found himself charged with federal liquor crimes. This time, the government alleged that James Hensley and other officers of United Liquor Company and United Liquor Supply Company falsified records to reduce the company's tax bill.

On the opening day of the trial in federal court in Tucson, Judge James A. Walsh granted a motion by Hensley's attorney -- former Maricopa County Attorney Lynn Laney -- to dismiss all charges against Hensley and other individuals. The case continued against the two companies.

The government alleged the companies falsely stated that about 400 cases of whiskey were transferred from Tucson to Phoenix on December 30, 1950, and December 30, 1951, to avoid paying higher liquor taxes levied in Pima County, where Tucson is located. The government charged that the liquor never left the Tucson warehouses.