Atherton Report Exposes San Francisco Police Corruption

Date March 17, 1937

Edwin Atherton, a private investigator commissioned to investigate possible corruption and graft in the San Francisco Police Department, found that police officers were key figures in moblike shakedowns of prostitution houses and gambling halls. The soon-to-be- revealed scandal led to extorted earnings of about one million dollars each year for the corrupt officers and their superiors.

Locale San Francisco, California

Key Figures

• Edwin Atherton (1896-1944), former U.S. foreign service officer and agent with the U.S. Bureau of Investigation
• Matthew A. Brady (1876-1952), San Francisco district attorney, 1919-1943
• Peter McDonough (1872-1947), San Francisco bail bondsman
• Tom McDonough (fl. 1930’s), San Francisco bail bondsman

Summary of Event

When John Lewis, a young tax collector, made an offhand remark about taxing the unreported income of officers with the San Francisco Police Department (SFPD), he had no idea his remark would end up as front-page news. In no time, the San Francisco County Board of Supervisors asked the San Francisco district attorney, Matthew A. Brady, to investigate Lewis’s claim. In 1935, Brady hired Los Angeles-based Edwin Atherton, a retired U.S. foreign service officer and agent with the U.S. Bureau of Investigation (later the Federal Bureau of Investigation), to conduct the inquiry.

Following a sixteen-month investigation, Atherton’s seventy-two-page report described by some as a cold, matter-of-fact document lacking moral fervor explained how the officers of the SFPD charged prostitution houses and gambling establishments “fees” that added up to approximately one million dollars annually. As a result of the investigation, hundreds of officers were reassigned; three captains, three lieutenants, and one sergeant were fired; and several patrol officers were relieved of their duties. Five officers were indicted but were never convicted in a court of law.

Atherton began his investigation in November, 1935, and his report was released to the public on March 17, 1937. The district attorney instructed him to conduct a top-to-bottom inquiry of the SFPD to look for police graft and corruption, directing him to gather evidence that could lead to the firing and, if necessary, prosecution of any officers involved in such corruption. While it was expected that Atherton would find some corruption within the police department, the extent and seriousness of the illegal activities was much greater than originally believed.

Atherton began his investigation by examining the location of prostitution houses. He found that of the 135 known houses, the majority were located in three police districts. One area had so many houses of prostitution that residents were forced to place signs on their homes to indicate their house was a private residence rather than a business establishment. After interviewing persons connected to these establishments, many who agreed to speak “off the record” only, he found that each house of prostitution was required to pay officers a fee upon opening and a monthly fee thereafter. Atherton also found that officers were extorting money from hotels that were renting rooms to high-end call girls. The estimated income from these extorted fees was about $325,000 per year. The money was distributed among captains, superior officers, and officers who were responsible for those police beats. The funds were divided according to the number of houses of prostitution within a police beat.

Atherton also learned that many of the San Francisco police officers were working with organized-crime brothers Peter and Tom McDonough, bail bondsman by trade who were involved in racketeering, prostitution, and gambling. Atherton discovered that the police were not only cooperating with the brothers in charging the prostitution houses but also accepting money for information about raids on establishments run by the brothers. The police would call the McDonoughs and tip them about a pending raid. With this knowledge, house employees would help to make the raid appear legitimate; however, all of the real assets and money would be taken away before the raid. The police tips also allowed for the prearrangement of bail, so arrested employees would not have to spend time in jail. The McDonoughs owned the deeply corrupt and highly profitable bail-bond company McDonough Bros., which was later implicated in the scandal. Atherton found that without the brothers, the corruption involving the houses of prostitution would not have been possible, at least not to the same extent.

Police officers also were involved in payoffs with the towing industry. An officer would work a car accident and call a certain garage for a tow truck. The garage would pay the officer $2.50 and the garage would pass the charge on to the customer. Some garages, however, would try to outsmart the officers by using a police scanner to arrive at an accident before the police and stake claim. The officers, though, because they were “the law,” could easily persuade accident victims to use the police-recommended towing service, thus ensuring the receipt of payoff fees.

In addition to the organized criminal activities, police officers also were willing participants in petty graft. They willingly accepted free meals, drinks, and tickets to sporting events. Some would get free medical and dental services and clothes. Some officers interviewed by Atherton stated that failing to participate would lead to their ostracism by fellow officers. Alternatively, officers would protect each other in case of trouble.

The release of the Atherton Report was followed immediately by attempts to clean up the SFPD. First, the department had to weed out the corrupt officers and their superiors. Although criminal charges were pursued wherever possible, officers most often were reassigned or were dismissed for conduct unbecoming. Interestingly, the Atherton Report included the claim that police departments can never be entirely free from corruption. It added, however, that corruption could be curtailed somewhat if certain crimes, such as gambling or prostitution, were legalized. Atherton defended this proposal for legalization by also suggesting that regulating these crimes could lead to increased state revenue through taxes, improved health conditions for prostitutes (and, thus, their johns), and a decrease in support for organized crime. As expected, these radical suggestions were met with fierce resistance. Several clergy, however, unexpectedly supported the recommendation.

Impact

The Atherton Report had two principal effects. First, it aired the dirty laundry of a corrupt SFPD. Police officers commanded little respect from the community after the report’s release, and the department as a whole took an emotional beating from the general public. It took years before San Franciscans could once again trust their police officers, especially those on the beat.

The Atherton Report also led to a new California law requiring the licensing of bail-bond companies. The corruption would not have worked without the McDonough brothers and their bail-bond company.

Bibliography

Adams, Charles F. The Magnificent Rogues of San Francisco: A Gallery of Fakers and Frauds, Rascals and Robber Barons, Scoundrels and Scalawags. Palo Alto, Calif.: Pacific Books, 1998. A collection of biographical sketches and histories of some of the most notorious individuals who lived, worked, or played in San Francisco.

Asbury, Herbert. The Barbary Coast: An Informal History of the San Francisco Underworld. New York: Thunder’s Mouth Press, 2002. A history of the criminal underworld of San Francisco, beginning with the gold rush. Provides historical context for corruption scandals.

Barnes, Merritt. “Fountainhead of Corruption: Peter P. McDonough, Boss of San Francisco’s Underworld.” California History 58, no. 2 (1979). A journal article that examines the criminal activities of Peter McDonough, called the “fountainhead of corruption” by Edwin Atherton.

Starr, Kevin. The Dream Endures: California Enters the 1940’s. New York: Oxford University Press, 2002. California’s official state historian explores the state’s history beginning after the Great Depression in this fifth volume in a multivolume series, already considered a classic.