The 1930’s were a prosperous time for Luciano. With control of the commission he was able to increase his reach in illegal gambling, bootlegging, loan-sharking, and labor rackets. His reign was short lived however and in 1936 he was charged with prostitution after special prosecutor Thomas E. Dewey led a raid on 80 New York brothels where hundreds of women were arrested. Matters became worse when many of the women were offered a plea deal to testify against Luciano in exchange for no prison time. Luciano was convicted and sentenced to 30 – 50 years in prison. During his incarceration evidence was uncovered that implied Luciano profited from the ring, but did not play an active role in the business. Several madams stepped forward acknowledging they never had contact with Luciano and were unaware he was involved having worked with only low-level Mafioso.
Luciano continued to rule the family from prison. He placed his second in command Vito Genovese in charge on the street, but he fled to Italy after being indicted on murder charges. Luciano placed his consigliere Frank Costello as the new acting boss after Genovese’s departure.
The 1940’s provided relief for Luciano as the United States just entered World War II and the mafia still controlled the importing and exporting on the eastern sea board. The government feared German U boats and reportedly approached Luciano for help in securing the harbor in exchange for a lighter sentence. They also knew Luciano had strong ties in Italy, and with his help, could keep the United States Navel Intelligence abreast of any threats. In 1946 Luciano was finally released from prison and immediately deported to Italy. He would never set foot on U.S. soil again.
Later that same year, Lucky secretly left Italy and moved his operations to Cuba where long time friend Meyer Lansky was setting up casino and hotel operations. After Luciano’s arrival, Lansky called the bosses of the five families to a conference in Cuba where Luciano could discuss important issues. One of the main topics was whether or not to kill Bugsy Siegel who was placed in charge of building a casino in Las Vegas. Many of the bosses wanted him dead citing it was taking too long to complete the casino and receive their profit, but Lanksy convinced the others and Luciano to postpone the killing in hopes Siegel would complete the casino and deliver on their profits.
After the death of Siegal, Luciano was rewarded the title of Capo Di Tutti i Capi. All of the bosses agreed to the title but one. Vito Genovese wanted the title to himself. In an act of sabotage, it’s believed that Genovese betrayed Luciano and leaked his location to the United States government, who subsequently threatened Cuba’s government to hold medical drug shipments until Luciano moved back to Italy. Not wanting to jeopardize Lansky’s hotel and casino business, Luciano moved back to Italy in 1948.
Luciano maintained his Capo Di Tutti i Capi title but due to his deportation was not in position to fight for leadership of the Luciano family. Vito Genovese believed he should be the next boss of the family, however Luciano promoted Frank Costello. In 1957 Costello narrowly escaped a hit ordered by Genovese and subsequently stepped down as boss of the family leaving the position open to Genovese who renamed the family.
On January 26, 1962 Lucky Luciano died of a heart attack in the Naples airport on his way to meet with a movie producer who was interested in doing a movie about his life. Although he was never allowed on American sole after deportation, he was allowed back after death. His funeral was held in Queens where over 2000 mourners attended.