During the Prohibition era of the 1920s and 1930s Kelly worked as a bootlegger for himself as well as a colleague. After a short time, and several run-ins with the local Memphis police, he decided to leave town and head west with his girlfriend. To protect his family and escape law enforcement officers, he changed his name to George R. Kelly. He continued to commit smaller crimes and bootlegging. He was arrested in Tulsa, Oklahoma, for smuggling liquor onto an Indian Reservation in 1928 and sentenced for three years to Leavenworth Penitentiary, Kansas beginning February 11th, 1928. He was reportedly a model inmate and was released early.
An investigation disclosed that after 56 days on the run, the Kellys were staying at the residence of J.C. Tichenor in Memphis. Special Agents from Birmingham, Alabama, headed by Special Agent in Charge, William Rorer, were immediately dispatched to Memphis on the orders of J. Edgar Hoover, where, in the early morning hours of September 26th, 1933 a raid was conducted, led by agent Rorer and Memphis police officers Sergeant William Raney and officer Thomas Waterson. George and Kathryn Kelly were taken into custody. Caught without a weapon, George Kelly supposedly cried, “Don’t shoot, G-Men! Don’t shoot, G-Men!”, as he surrendered to FBI Agents. The term (which had applied to all federal investigators, meaning simply 'Government Men') became synonymous with FBI Agents.
Reports of the raid, however, indicate that George Kelly came to the door, dropped his pistol and said, “Okay, boys, I’ve been waiting for you all night.” Recent research revealed a 1933 newspaper interview with one of the federal agents at the arrest. He reported that, upon their arrest, Kathryn Kelly put her arms around George and said, “These G-men will never leave us alone.” The FBI used the G-Man story to build its reputation. The arrest of the Kelly’s was overshadowed by the escape of ten inmates, including all of the members of the future Dillinger gang, from the penitentiary in Michigan City, Indiana that same night.
In October 1933, George and Kathryn Kelly were convicted and sentenced to life imprisonment. The trial was held at the Post Office, Courthouse and Federal Office Building in Oklahoma City. Kathryn Kelly had all charges dropped and was released in 1958 from prison in Cincinnati.
The kidnapping of Urschel and the two trials that resulted were historic in several ways. They were: 1) the first federal criminal trials in the United States in which moving cameras were allowed to film; 2) the first kidnapping trials after the passage of the so-called Lindberg Law, which made kidnapping a federal crime; 3) the first major case solved by J. Edgar Hoover’s FBI. And 4) the first prosecution in which defendants were transported by airplane.
Machine Gun Kelly spent his remaining 22 years in prison. During his time at the famed Alcatraz Prison he got the nickname “Pop Gun Kelly“. This was in reference, according to a former prisoner, to the fact that Kelly was a model prisoner and was nowhere near the tough, brutal gangster his wife made him out to be. He spent 17 years on Alcatraz, working in the prison industries, and boasting of and exaggerating his past escapades to other inmates, and was quietly transferred back to Leavenworth in 1951. He died of a heart attack at Leavenworth on July 18, 1954, his 59th birthday, and is buried at Cottondale Texas Cemetery with a small headstone marked “George B. Kelley 1954“.
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