Lake County was site of largest U.S. train robbery a century ago; ‘Unique for a number of reasons’

The Rondout train heist was the largest looted amount the United States had ever seen, and it still remains the largest, according to local historians, likely due to a number of security changes made to postal trains after the robbery.

One hundred years ago, a small, unincorporated Lake County community was propelled into the national headlines after it was the site of the largest train robbery in the U.S.

The community of Rondout, first formed around a railroad junction for the Milwaukee Road route – later the Canadian Pacific Railway in 1986. The railroad junction, the reason for the locality’s existence, became a notorious focal point of Lake County in 1924.

Late in the evening of June 12, 1924 – also the day former president George H.W. Bush was born – two bandits climbed into the engine tender of a railway post office train, forcing the engineer to stop the line near Rondout.

Four additional men were waiting there, where they rushed the train and forced the postal workers out of the car. The robbers took more than 50 pouches, containing nearly $3 million in cash and securities – the equivalent of more than $36 million in today’s dollars – according to the U.S. Postal Inspection Service.

Because the bandits were well-versed in the contents of the train and knew where, when and how to proceed without being caught, the Postal Inspection Service suspected the thieves had help from an inside source.

The investigation eventually pointed to William Fahy, a post office inspector. When the train was robbed on that summer evening in 1924, Fahy was the first inspector assigned to the job and examined each piece of evidence, according to investigators.

Eventually some of the other robbers pointed to Fahy as the “mastermind behind the attack,” the Postal Inspection Service said.

The Rondout train heist was the largest looted amount the United States had ever seen, and it still remains the largest, according to local historians, likely due to a number of security changes made to postal trains after the robbery.

Of the millions stolen from the Milwaukee Rail post office train, only about two-thirds was recovered during the investigation, and subsequent arrests and trials of the eight men involved in the heist, according to Bob Storozuk, curator of the Milwaukee Road Historical Association Museum.

Storozuk said many of the historical records on the robbery do not agree on the amount of stolen goods, or how much was recovered.

Ahead of a number of events planned in Lake County about the infamous crime, here is what is known, and still unknown about the largest U.S. train robbery:

Who were the train thieves?

According to the U.S. Postal Inspection Service, a known Chicago gangster, Dion (Dean) O’Banion, was the first to be questioned about the robbery. O’Brian pointed inspectors in the direction of an apartment in West Chicago, where a man wounded during the robbery was being cared for.

Inspectors found Willis (Willie) Newton, one of four brothers who made up the “Newton Boys” gang, at the apartment. James Murray, a well-known mob boss, visited Newton, as well as his brother Joe Newton, exposing their involvement to the inspectors. After the three were arrested, the rest of the gang quickly fell to law enforcement, the Inspection Service reported.

The gang members were later immortalized on the big screen in 1998 with the movie “The Newton Boys,” starring Matthew McConaughey, Skeet Ulrich and Ethan Hawke.

In March 1998, the Chicago Tribune wrote about the 20th-century crime drama. The movie, the Tribune reported, included interviews with the late Newton brothers, Willis and Joe, who were both “charmingly voluble old men both past 70.”

What remained suspicious to the investigators was the culprits’ lack of prior success in train robberies, according to the U.S. Postal Inspection Service.

“The Newton Boys and their accomplices were well-known bank robbers throughout the Midwest,” the Inspection Service stated. “Robbing a train of this magnitude was out of their realm of expertise.”

The convicted thieves with the longest sentences were sent to Leavenworth prison in Kansas, Storozuk said.

“The best part is the Milwaukee Road lent a car so that they were taken directly into the prison in this Milwaukee Road car,” Storozuk shared. “That was the last touch that the Milwaukee Road had with this robbery.”

How was William Fahy’s involvement uncovered?

While some records indicate the arrested robbers spilled the beans about Fahy’s involvement, Storozuk said the postal inspector also left a couple of clues for the inspection service.

One day before the train left Chicago, Fahy went to the train and asked the clerks a few questions about what was in the car and what type of protection the cars had, Storozuk said.

“(Fahy) asked a lot of questions that really didn’t make sense,” he said.

As the postal inspection service began to suspect Fahy’s involvement, Storozuk said they set a trap for Fahy, telling him that a certain train event was taking place. Fahy was caught either giving out the information or seeking more information, he said.

Fahy was found guilty of federal mail theft charges and sentenced to 25 years in prison.

“William J. Fahy is the only Postal Inspector convicted on federal mail theft charges,” stated the U.S. Postal Inspection Service. “The Rondout Train Robbery is often overlooked in Postal Inspection Service history, due to the collusion of a former Inspector. While no organization is immune from corruption, all Postal Inspection Service employees today are held to rigorous standards of conduct.”

What made the Rondout robbery unique?

The train robbed in Rondout was heading to Minneapolis and was strictly a mail and express train, with no passenger cars.

Storozuk said this particular train was destined for the Federal Reserve offices in seven or eight cities, and was carrying a significant amount of valuables – more cash and securities than other postal trains or passenger trains with postal cars.

Out in the less-developed areas of the country at the time, smaller railroads dominated and often had mail and baggage cars on a passenger train, according to the curator. Those cars were probably robbed more than anything else, he said.

“There probably were a couple of other mail and express trains that might have been robbed, but nothing to the degree of the dollar amount that this one had,” Storozuk said.

Historical records vary on exactly how much was stolen and then recovered in the Rondout robbery. Storozuk said the agreed amount stolen was about $3 million, and about two-thirds of the loot was recovered later.

“They say that there’s a million dollars in negotiable securities that were never recovered,” he said. “I have probably five or six different records and reports of that robbery over the years, practically none of the details agree. They’re all close.”

One record said 40 mailbags were taken, while another said more than 60 were stolen, Storozuk said. The curator suspects the higher number is correct because a significant number of mailbags recovered were labeled with numbers past 40.

“This (train robbery) was unique for a number of reasons,” he said. “It was also the last mail train robbery in the United States.”

What changes were made after the Rondout Robbery?

Following the Rondout robbery, the Postal Service and government increased security on railway post office trains and cars.

Nicole Stocker, education manager at the Lake County Forest Preserve District’s Dunn Museum, said after the Rondout robbery there were protocol changes for train security, requiring additional protection for valuable items.

Heavier armor plating was also added to some of the cars to make it more difficult for break-ins, according to Storozuk. For the first time, all Postal Service inspectors and employees started to carry guns after the major robbery, he said.

“Those two things probably discouraged attacks on trains that had mail and express,” Storozuk said. “After that, there might have been some small ones, but this was the last major (robbery).”

Why should people care about the anniversary of such an event?

Storozuk and Stocker said anyone who is interested in history, trains or true crime is likely to also take interest in this notorious incident.

“I don’t think people always realize that where they live and work is an exciting historical area,” Stocker said. “History also occurred right where you live. It’s important to understand how your community has developed, and see how all of this has added to the world we’re in today.”

The site of the robbery was marked in 1981 with a plaque on the north side of Illinois Route 176, just east of Interstate 94. Today, a sportsman’s club is located near where the postal train was stopped a century ago.

Both noted the infamous robbery instigated significant changes to security on railway postal offices.

Stocker said the Dunn Museum tells the story of the Rondout robbery within the larger context of the Prohibition Era, and other historical events from the period.

“Being in this area between Chicago and Milwaukee, there’s a lot of events related to Prohibition that took place here, whether it was the Fox Lake massacre to the Rondout Train Robbery, to a lot of other illegal transportation and sale of alcohol and related activities,” Stocker said.

On June 15, the Lake County Forest Preserve District is hosting an in-person and remote event with the Dunn Museum called, “Examining the Rondout Train Robbery 100 years later.”

The Lake Bluff History Museum is hosting an event about the heist at North Shore Distilling on June 12 called, “Distilling History: The Great Rondout Train Robbery.”

chilles@chicagotribune.com