Denier of the Mafia
Hoover, the intrepid lawman, keeper of the national dish and dirt, did not have an exemplary record as an antagonist of the Mafia. In fact, he repeatedly denied that an organized crime network existed in the United States. His reason for this stubborn denial could have been his titanic ego. Conspiracy theorists may find more sinister reasons for his refusal to acknowledge the mob's existence. Whatever the reasons for his belief, it made Hoover either a willing or unintentional accomplice in the Mafia's rapid growth and increased influence on the American landscape.
The FBI originated in 1908. Called the Special Agents of the Department of Justice, the group was created by President Theodore Roosevelt and Attorney General Charles Bonaparte. Initially they investigated mainly financial crimes, but the list grew exponentially. After a few more name changes the agency officially became the Federal Bureau of Investigation in 1935.
It's All Politics
The theory that gives J. Edgar Hoover the benefit of the doubt is that he was afraid that corruption would spread through the bureau if his agents had close contact with the Mafia. The Mafia would not have become as powerful as it did if not for the greed of law enforcement officials at the local and state levels. Hoover's rationale may have been to steer clear of the Mafia's seductive allure and concentrate on his favorite pursuit, tracking down real and suspected communists. Skeptics suggest that Hoover focused on the easy targets to increase his crime-busting statistics, which would enhance his personal quest for acclaim and his ability to go to Congress to make the case for higher and higher funding for his bureau.
Some of the critics of Hoover's lack of conviction in going after the Mafia suggest that Hoover viewed the gangsters as ideological soul mates. The Mafia did not advocate the overthrow of the government and the American way of life. They were no threat to the status quo — in fact they thrived in the status quo. In some twisted way this could have mirrored Hoover's patriotic, anti-Communist stance.
It has been alleged that Hoover mingled with the Mafia. Supposedly, they were often at the same parties and social functions. Hoover loved gambling, especially on the horses, and this was a main source of the Mafia's income. Hoover was often at the racetrack with his pal Clyde Tolson. He was publicly seen betting at the $2 window, a seemingly innocuous pastime. But he had agents placing bets for him at the $100 window. It would have ruined his reputation as Mr. Law and Order if the public found out he was a high-stakes gambler.
While his track record on dealing with the Mafia is lackluster at best, Hoover was aggressive in his war against communism, called the “Red Menace” in those days. The FBI even published a pamphlet called Red Channels, which listed prominent men and women suspected of having communist affiliations.
Or were the stakes really that high? Hoover got his betting “tips” from the notorious syndicated columnist Walter Winchell, who in turn got them from Mafia boss Frank Costello. In other words, Hoover was, whether he knew it or not, betting on fixed races. Hence he was a big winner. If he did not know it then, he was being manipulated by the Mafia. If he did know about it then, Mr. FBI was engaging in behavior punishable by imprisonment.