August Del Gracio: The Mobster and the Mind Control Experiment

A cop, a psychiatrist and a gangster walk into a bar…

Okay, not exactly the scenario, and there’s no punchline either but what happened in 1943 between three such characters is the stuff of vivid fictional espionage stories, yet in this case – absolutely non-fiction. This is a tale of dope, deception, conspiracy and high underworld spectacle. You’re about to meet the star of the show – August Del Gracio, aka Augie the Wop. Discover his relationship with, among other things, Lucky Luciano, the federal government’s secret ‘truth serum’ project, Nazis, and why he was truly one of the original international drug kingpins of the 20th Century.

An Offer They Couldn’t Refuse

It was spring, 1943, a time of great paranoia for a world at war. New York harbour had been viewed as a prime target for Axis forces; the US military well aware of the potential disaster if not protected properly. Only a year earlier, the SS Normandie caught fire while docked, inciting rampant conspiracy theories and concern. Then, in walks the bearer of a proposed solution to all the problems.

Augie Del Gracio had an offer for the United States government he hoped they couldn’t refuse. Claiming he was representing infamous mobsters Frank Costello, Meyer Lansky, the incarcerated Charles “Lucky” Luciano and all their respective attorneys, the recognised gangster proposed a deal that would, in theory, satisfy the government’s need to protect the harbour while simultaneously freeing one of America’s most infamous criminal overlords from a lengthy prison stay (for a conviction that historically sparks debate of its legitimacy).

The man who Augie specifically chose to present the deal was familiar to him. Colonel George H White, a former military man turned narcotics agent, who had recently received special training in Canada at the British spy school known as “Camp X.” The two men had met numerous times over the years as opposing players in theatre of drug warfare.

Del Gracio was one of the biggest traffickers of the time and White… he was a trusted agent of drug czar Harry J Anslinger. But nothing is ever as it seems; false pretence on both sides perhaps.

The passport of OSS agent George H White
The passport of OSS agent George H White

Smoke’ em if you got’ em

It was 2:00pm on May 27th when a man with jet black hair, hazel eyes, a couple permanent scars, average build of a five foot six stature – and well equipped with a trademark cocky smirk – arrived at White’s office, right on time. It was old foe August Del Gracio. Hands were shaken, seats were taken, and White gave the floor to Del Gracio.

“Frank [Costello] has a deep sense of patriotism,” Del Gracio began. “He hates the fascists.”

White continued listening to the gangster’s message, offering him a cigarette, which was accepted.

“You know who else hates their guts?” Augie rhetorically queried while taking a drag. “Luciano.”

“What’s he want, Augie?” countered White with half-hearted interest.

Del Gracio explained to White that if Charlie “Lucky” Luciano was paroled from prison, the mob would make sure the harbours were protected (organised crime controlled most of the docks) and additionally – Lucky would see to it the mafia in Sicily would assist any Allied invasion efforts.

All the while, White was closely observing Del Gracio’s mannerisms and speech. Ultimately, the agent cared less about what Del Gracio, Costello, Lansky or Luciano could or couldn’t offer the war effort. What he did want – to see if the laced cigarette he gave Augie would have any effect. At ten minutes after two, White gestured to Del Gracio the offer of another smoke. Again the gangster accepted.

“Lucky’s big stuff in this city,” continued Del Gracio, “What he says goes with the Italians, the Sicilian organizations.”

Augie Del Gracio’s demeanour began to visibly change following a few puffs of the second cigarette, and White was ready to move on quickly to the real information he sought. Abruptly changing course, White minced no words in his response to then-high August Del Gracio.

“As far as I’m concerned – Lucky can go to hell.”

The buzzing Del Gracio barely took notice to the sharp denial. Instead, he began talking about his role in the international drug game, Luciano’s role, and basically how the entire network operated. White wasn’t seeking this information per se, as at the core the experiment was simply to surreptitiously test another subject with a “Truth Drug” – but the information Del Gracio was spewing, well that would become music to Anslinger’s ears later.

1936 August Del Gracio, on left, Smirks in French Courtroom - with attorney
1936 August Del Gracio, on left, Smirks in French Courtroom – with attorney

An Authentic US Gangster

So who was this supposed ‘notorious New York Gangster’ as George White referenced him? Here’s the dossier:

August Del Gracio was born in Naples somewhere between 1893 and 1896 (documents back then were notoriously across the board and rarely definitively accurate on such specifics), the second of six brothers and arrived in the United States in 1910. His parents immigrated under the name “Del Gaizo” and Augie himself went by numerous aliases, including Dalla, Dellas, Del Grazio, Cohen, Augie the Wop and Delgracio. He grew up in Lower East Side Manhattan – among many of the future kings of crime – and was into trouble himself at an early age.

Like his contemporaries, he was learning the ropes during the reign of “Big Bankroll” Arnold Rothstein, mingled with Jack “Legs” Diamond’s gang, and had prescience for the future black market potential of opium and cocaine. From bootlegging to strong-arming, Augie then indeed dipped his toes into narcotics – an area of business that Rothstein schooled all the boys in.

Theft and assault dominated his early repertoire. In 1916, for example, he was indicted with eight men and one woman when an East side gang war altercation took the life of an innocent bystander. Short stints in jail, and plenty of free passes made for the gangster’s life to continue relatively unhampered though. He married Anna Walker in 1918, but wedding bells didn’t tone down the crime.

In fact, Del Gracio began upping the rap sheet ante, adding dope peddling to the mix. In 1922, a raid on the Douglas Hotel in New York revealed he was involved in a considerably large drug distribution network. However, unlike his brethren who graduated in the Rothstein elite trafficking crew to wholesale importation status, Del Gracio was still considered a street dealer. He transitioned though, began making trips across the Atlantic in the mid 1920s, steadily gaining a reputation in line with his peers.

The tide changed yet again, after the murder of Arnold Rothstein in 1928. All of ‘The Brain’s students took part in looting their mentor’s files, thus making off with information ranging from narcotics shipments to property leases. Although he had made a handful of trips to Europe in the 1920’s, Del Gracio’s full scale entrance onto the world stage of opium trafficking happened around 1930.

It was the same period when Lucky Luciano, Legs Diamond, George Uffner, ‘Yasha’ Katzenberg and others tried to maintain and re-establish drug and liquor supplies from the Far East and Europe; some with success, others not so much. Katzenberg and Del Gracio were the cream who rose to the top of that trade after Diamond and Luciano hit roadblocks and Uffner began transitioning to other endeavors. The two men spent much of the 1930s in France and Germany; both quickly became internationally recognised as drug lords, thereby earning spots on a list of “Drug Barons” the international community had figured were the top dogs.

A 1937 report on Del Gracio's arrest in France

“It has taken seven years to find the answer to the question: who are the drug lords of Europe?” a somewhat relieved Russell Pasha, head of Cairo’s narcotics bureau said in 1933, “But now my information is complete.”

Anti-drug entities from London, Berlin, Cairo, Rotterdam and Washington had finally, or so they thought, discovered the ‘who’ and ‘how’ all the opium and cocaine products were being sold, shipped and distributed. Del Gracio was on that list, having gone from number 46 to the top ten in a matter of just a few years. Police in numerous countries knew him.

Augie had been busted in Germany in 1931 when a ‘drugs hidden in machine parts’ deal went awry, but managed to skip Hamburg after fronting the 50,000 in bail. The arrest also revealed information on other major players from the European and Asian end – at the top being the Eliopoulos Brothers and the twin Ezra Brothers – Isaac and Juda (who were believed to have been Rothstein’s ‘west coast’ suppliers). Del Gracio, always the over-confident dealer, didn’t learn his lesson and made frequent trips to and from Europe, allegedly in league with New York’s Syndicate, run by big shots like Lucky Luciano, Bugsy Siegel, Louis Buchalter, Frank Costello and Meyer Lansky.

He was again nailed by French police in 1936, this time with tons of narcotics, and all the paperwork to go with it. Police in Paris called Del Gracio “An authentic US gangster” with good reason. The investigation and evidence on Augie provided further implications and alliances across the globe (Other ‘players’ identified in the gangland drama included a shadowy figure named Seya ‘Afghan’ Moses).

France turned Augie over the Nazis, where he was fined 4,000 marks and sentenced to two months in jail. The French weren’t the only ones working in collusion with their soon-to-be enemies; the Federal Bureau of Narcotics was in cooperation with Germany on many of the suspected drug cases, including Jack “Legs” Diamond’s arrest in 1930 and every instance where Del Gracio was apprehended.

Augie served his light sentence, paid the fine and returned to the United States. Once settled back in New York, he continued to operate as a drug lord, which kept him firmly in the sights of the Federal Bureau of Narcotics and its zealous leader Harry J Anslinger. It was, therefore, a tasty and ironic treat for the FBN boss to have one of his arch nemeses used as a guinea pig, but moreover – to have said test subject spew forth damming information against the most vilified American mob boss, Lucky Luciano, in the process.

Dr Winfred Overholser, Professor of Psychiatry at George Washington University and Director of St. Elizabeth’s Hospital in Washington D.C, who worked on mind control drugs from the OSS.
Dr Winfred Overholser, Professor of Psychiatry at George Washington University and Director of St. Elizabeth’s Hospital in Washington D.C, who worked on mind control drugs for the OSS.

Mind Control Madness

August Del Gracio was not the first test subject, but his unwitting participation provided two things: White realised two cigarettes were the perfect dose to render a subject quite freely- loquacious, and, of the several methods and chemical variations used – tetrahydrocannabinol acetate, derived from Indica, was the most effective.

This whole experiment in mind control began officially (yet quite secretly) in 1942. It was a project that involved the MIS (Military Intelligence Service) and the OSS (Office of Strategic Services – which took over the project by 1943), which further convened a committee to investigate the possibilities of truth serum concoctions, for use in the war effort. The committee was chaired by Dr Winfred Overholser, Professor of Psychiatry at George Washington University and Director of St Elizabeth’s Hospital in Washington, DC George White, upon becoming affiliated with the OSS, was schooled in the fine art of cannabis as a tool for eliciting information by Overholser himself.

Furthermore, Harry Anslinger, who was also on the committee, had his heart set on proving Lucky Luciano was the godfather of heroin dealing worldwide, and what Del Gracio told White – well, you can imagine the ‘natural high’ Anslinger must’ve felt at that moment.

August Del Gracio had no idea he was under the influence, but other test subjects, some United States military members among them, were volunteers in previous and later tests of the tetrahydrocannabinol acetate. Based on White’s test, the committee agreed that .02 grams of the acetate liquid, infused into cigarettes with a blunt tip syringe, proved to be the most effective delivery system (Overholser and White tested other variations of cannabis and methods to deliver ranging from soaked tissue to smokeless charcoal) Interestingly, White himself tried it on himself a few days prior to the Del Gracio experiment, stating in his notes it “knocked me out.” And on another occasion, it has been said he indulged to the point of aiming his revolver to the ceiling of a hotel room and blasting away.

In the end however, the ‘Devil’s weed’ as it was often called, didn’t hold much promise even after George White’s experiment results were submitted as positive and successful.

As many fans of international espionage know – the CIA, which formed in place of the OSS, took the science of mind-altering drugs to new heights with the experimentation of Lysergic acid diethylamide – LSD. But it was the WWII era frantic search for ways to one-up the enemy that kickstarted government use and testing of narcotics.

Also of note, the ‘Del Gracio’ interrogation, or meeting, was brought up during the Kefauver Hearings of the early 1950s. White testified to having met with the late mobster (Augie passed away a year prior to the hearings), discussed the offer in return for Luciano’s freedom (which was attained in 1946 under still-unclear circumstances), but he never mentioned the secret experiment. It wasn’t until 1977 that anyone realised what had actually been going on with regard to the cannabis laced cigarette ‘Truth Drug’ project during WWII.

The ‘truth’ was discovered in, of all places, a museum within a small California two-year college. White’s wife had donated most of his notes and documents to the school at some point after he passed away.

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