After his release from prison in 1916, Frank Castiglia began working with
Ciro "The Artichoke King" Terranova, a powerful East Harlem mafioso. Terranova was the underboss of the
Morello crime family of Manhattan and the leader of the 107th Street gang. Frank became the member of a gang that controlled gambling and loansharking in one part of Manhattan and a section the
Bronx. His associates included well known mafiosi such as
Michael "Trigger Mike" Coppola, Joseph "Joe the Baker" Catania Jr. and
Stefano "Steve" LaSalle. Frank became known for his smarts and toughness, always rising to the occasion when handed a job to do.
While working for the Terranova gang, Castiglia met and then teamed up with
Charles "Lucky" Luciano then known as Salvatore Lucania, the Sicilian leader of Manhattan's
Lower East Side gang. The two Italians hit it off immediately. Together with other young Italians such as
Vito Genovese and
Gaetano "Tommy" Lucchese, and Jewish associates
Meyer Lansky and
Benjamin "Bugsy" Siegel, the gang became involved in robbery, theft, extortion, gambling and narcotics. The Lucania-Castiglia-Lansky alliance prospered and with the passage of
Prohibition in 1919, the gang went into bootlegging.
The success of the young Italians let them branch out and make business deals with the leading Jewish and Irish criminals of the era, including
Arnold "The Brain" Rothstein, Arthur "Dutch Schultz" Flegenheimer, Owney "The Killer" Madden and
William "Big Bill" Dwyer. Rothstein became a mentor to Castiglia, Luciano, Lansky and Seigel while they conducted bootlegging business with Bronx beer baron Schultz. In 1922, Castiglia, Luciano, and their closest Italian associates joined the Sicilian mafia crime family led by
Giuseppe "Joe the Boss" Masseria a top Italian underworld boss. By 1924, Frank Castiglia had become a close associate of
Hell's Kitchen's Irish crime bosses Dwyer and Madden. Frank became deeply involved in their rumrunning operations, known as "The Combine,". This move motivated Castiglia to change his last name to the more Irish sounding "Costello".
In 1926, Combine boss Bill Dwyer was convicted of bribing a
Coast Guard official and was sentenced to two years in jail. After Dwyer was imprisoned, Costello took over the Combine's operations with Owney Madden. This caused friction between Madden and top Dwyer lieutenant,
Charles "Vannie" Higgins. Higgins, referred to as Brooklyn's "Last Irish Crime Boss," believed he should be running the Combine, not Costello. Thus, the "Manhattan Beer Wars" began between Higgins on one side, and Costello, Madden, and Schultz on the other. At this particular time, Schultz was also having problems with gangsters
Jack "Legs" Diamond and
Vincent "Mad Dog" Coll. With Higgins' help, these two hoodlums had begun to rival Schultz and his partners. Eventually, the Costello-Madden-Schultz alliance was destroyed by New York's
underworld.
In spite of losing the gang war, Frank continued to be a very influential gangster throughout the 1920s. Frank kept close associates Luciano, Lansky and Seigel involved in most of his gambling rackets, which included punch cards, slot machines, bookmaking and floating casinos. Frank eventually became known as the "Prime Minister of the Underworld" for his cultivation of associations and business relationships with New York's criminals, politicians, businessmen, judges, and police officials. As he followed the "Big Three" ideology of mixing crime, business and politics, Costello's underworld influence grew. His fellow gangsters considered Frank to be an important link between the
Mafia and the politicians of
Tammany Hall, New York's Democratic Party organization. This relationship gave Costello and his associates, including Luciano, the opportunity to buy the favors of politicians, judges, district attorneys, cops, city officials and whoever else they needed to bribe in order to freely run their criminal operations.
In 1927, Costello, Luciano, and former Chicago gangster
John "Johnny the Fox" Torrio organized a group of top East Coast
rumrunners into a large bootlegging operation. This gang was able to pool their Canadian and European liquor sources, maximize profits, minimize overhead, and gain a leg over their competition. It was known as the "Big Seven Group", the first concrete move in organizing the American underworld into a national crime syndicate. In May, 1929 Costello, Luciano, Torrio, Lansky, and
Atlantic City /
South Jersey crime boss,
Enoch "Nucky" Johnson hosted a crime convention in Atlantic City, New Jersey. This convention included the members of the "Big Seven Group" and the top crime leaders from across the nation. This was the first true underworld meeting and the biggest step in forming a
National Crime Syndicate that would control criminal operations, dictate policy, enforce rules, and have maintain authority in the national underworld. Joe Masseria and
Salvatore Maranzano were not invited because their Old World ideology and philosophy ran counter to the convention's goals.