In 1931, after the deaths of Masseria and Maranzano, Lucky Luciano became the boss of what would become his own crime family. Vito Genovese became his deputy and Costello became his advisers, an important function within the Mafia clan. Costello was a prominent figure in the criminal underworld, earning large sums of money by becoming the head of the gambling industry. In 1936 Lucky Luciano was arrested for exploiting and aiding and abetting prostitution and sentenced to serve a prison sentence of at least thirty years. At first he tried to run his mafia family directly from prison. He later promoted his deputy Vito Genovese to the role of boss. In 1937 Vito Genovese was suspected of a murder and therefore was forced to return to Italy and take refuge in Naples. At that point Luciano named Costello as the new boss of his crime family.

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