par Two Montrealers, Sam Bronfman and his brother Allan, sought by Royal Canadian Mounted Police as alleged members of a huge $5,000,000 Canadian liquor smuggling ring, announced last night from Ottawa that they were prepared to return to Montreal and surrender.
– Gazette, Thursday, Dec. 13, 1934
Return they did, together with their two other brothers, Harry and Abraham. And so began what Bronfman family chronicler Peter C. Newman calls »the legal battle of their lives. »
The charges were fallout from Prohibition in the United States, the »noble experiment » that had ended the year before as something of an ignoble failure. True, drinking did decline for a time after Prohibition’s debut in 1920. But soon the law of unintended consequences was felt.
Illegal bars flourished; in 1925, there were said to be 100,000 speakeasies in New York City alone. Organized crime moved in where above-board manufacturers and distributors had been forced out. Gangs fought with each other and with the police, and thousands died. So did thousands of drinkers, victims of haphazardly distilled bathtub booze.
Entrepreneurs like the Bronfmans could supply American drinkers with what legitimate industry south of the border could not. While booze imports into the United States were illegal, exports from Canada, at least for most of the Prohibition era, were under no sanction by Ottawa. So enthusiastic was rum-running from Canada that the country’s trade balance showed a significant improvement.
In response to mounting pressure from Washington, however, Parliament in 1930 finally banned booze exports to « countries under prohibition. » Enter the French islands of St. Pierre and Miquelon, just south of Newfoundland. Nothing in the law prevented the Bronfmans from shipping their booze there, and if it then made its way to the U.S., that was no concern of Ottawa. What did concern Ottawa, however, was the suspicion some of this exported booze was being smuggled not to the States but back to Canada free of customs and excise levies.
On Dec. 17, 1934, the Bronfman brothers and a brother-in-law, Barney Aaron, were formally arrested, fingerprinted by the RCMP and released on bail of $100,000 each. Company officials scrambled to explain the charges were against the named individuals and had nothing to do with the Bronfmans’ Distillers Corp.-Seagrams. Also accused in the five-count indictment were 56 lower-level associates in the alleged conspiracy. The U.S. government was on hand, determined to recoup unpaid taxes on booze entering the States.
As the preliminary inquiry was about to get under way, on Jan. 11, one court official moaned to The Gazette, »We’ve got a seating problem on our hands. By the time we get (everyone) into No. 2 courtroom, there won’t be any room left for the judge. »
The accused had to be packed into the public benches down one side of the courtroom. The prosecution got the usual lawyers’ desks in front, leaving the defence team, which would eventually grow to an even dozen, in the seats normally reserved for the press. The reporters, doubtless to the wry satisfaction of some, were consigned to the jury box.
The Crown argued the Bronfmans had conspired »to violate the statutes of a friendly country, » which, as Aimé Geoffrion riposted for the defence, rather missed the target.
»It would be fantastic, » he said, »for the courts of the province of Quebec to administer the laws of the United States. » He defied the Crown to prove documents from the Bank of Montreal showing the transfer of more than $3 million from the Bronfmans’ shipping concern in St. Pierre to a family trust, Brintcan, amounted to evidence of smuggling.
This would prove the crux of the case, for when the RCMP had earlier raided the Peel St. castle, no documents could be found to back up the story suggested by the bank documents. Where had the Brintcan material gone? According to a Price Waterhouse auditor, it had been in the charge of David Costley, Brintcan’s secretary-treasurer, but a search of his Oxford Ave. house in N.D.G. revealed nothing there, either.
Louis Minsk, a truck driver working for the Bronfmans, testified the previous August he had delivered a load of six burlap bags to Costley’s home. Costley was in the truck’s passenger seat, and carried the bags into his cellar when they arrived. »It was packages of some sort, » Minsk said, »that sounded like bundles of paper to me. » This was tantalizing stuff, but Judge Jules Desmarais was not persuaded.
As the inquiry wore on, the Crown dropped three of the five counts and in March it withdrew its charges against most of the small fry. That left just the Bronfmans and four others, and three months later Judge Desmarais threw the case against them out of court.
Newman records two fascinating postscripts.
First, the morning after the inquiry ended, the RCMP, persuaded the judge was altogether too sympathetic to the Bronfmans, subpoenaed his bank records and got access to his safe-deposit box. No evidence of malfeasance was found. Desmarais later became chairman of the Quebec Liquor Commission.
Second, David Costley began drinking heavily. When he suffered a debilitating concussion after the bus he was riding on collided with a streetcar, he, nonetheless, was kept on the Bronfman payroll.
On Sept. 8, 1942, he left home to attend a baseball game. The following day, his body was found floating in the St. Lawrence. There was speculation he had been pushed from the Victoria Bridge, and his wife was not allowed to view his body.
»It was a heavily guarded situation, » she later told a friend, « and I still think it had something to do with David burning those papers in his basement. »
