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.
courtesy of the Albuquerque Journal
Eugene Hensley, brother of James, photographed in
New Mexico in 1966 at his federal tax evasion trial.
Ilkka Uimonen
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"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.
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.
On the third day of the four-day trial, Kemper Marley -- owner of United Liquor and United Liquor Supply -- unexpectedly took the stand as a defense witness. Prosecutors successfully halted his testimony, claiming it was immaterial and irrelevant.
Defense attorneys argued that although the liquor was never transferred to Maricopa County, all taxes were nevertheless paid to Maricopa County, therefore nothing further was owed. Defense attorney Joseph Jenckes said the companies were simply trying to meet their tax obligations in the most practical way, according to an October 17, 1953, story in the Arizona Daily Star.
The next day, a jury acquitted the two companies on all 11 counts.
In December 1952, James Hensley joined his brother Eugene in the purchase of Ruidoso Racing Association in south central New Mexico. Prior to the purchase, Eugene Hensley operated a couple of nightclubs in Phoenix, including Hensley's Horseshoe Bar on Van Buren Street, with his first wife, Billy.
The New Mexico venture proved to be more trouble for the Hensley brothers, who became embroiled in a controversy with the New Mexico Racing Commission over hidden ownership.
The commission was concerned about the Hensley brothers' ties to Phoenix gambler Clarence E. "Teak" Baldwin (no relation to Jack Baldwin). The commission asked the New Mexico State Police to investigate in 1953.
According to a March 26, 1977, article in the Albuquerque Journal, the 1953 New Mexico State Police report stated that Teak Baldwin was a "bookmaker for leading tracks." According to the Journalarticle, the police report stated that the Hensleys' Arizona liquor business partner, Kemper Marley, "is reputed to be the financial backer for the bookies...."
The Journalstory appeared shortly after a group known as Investigative Reporters & Editors -- spurred to action by the murder of Don Bolles -- unleashed a series of 23 stories on organized crime, land fraud and political corruption in Arizona.
The Journalreported that the 1953 New Mexico State Police investigation stated that Marley "owned a wire service formerly operated in connection with bookmaking of the Al Capone gang."
The Journalalso reported that the state police report included a transcript of a phone conversation between an officer in Santa Fe and a Phoenix police officer who said, "... Our confidential files built up on Baldwin (and others) was loaned to some officials and never returned. We've never been able to locate them."
With the police report in hand, the New Mexico Racing Commission grilled the Hensley brothers in May 1953 about their ties to Baldwin. While the brothers were forthright in disclosing their liquor business ties with Marley and their subsequent federal felony convictions, they told the commission that Teak Baldwin had nothing to do with the track.
Eugene Hensley told the commission in May 1953 that Baldwin steered him to look at the track as a possible investment. Former commission chairman Tom Closson told the Hensleys "the commission would not have Baldwin connected in any way, shape or form down there [Ruidoso Downs]," the Journalreported.
The Hensleys denied that Baldwin had any interest in the track, the Journalreported.
But two years later, according to the Journal, records indicated that Baldwin actually had a one-third stock interest in the track with the Hensleys.
