The Dutchman was pulling in huge amounts of cash from his control of the restaurant unions and the numbers policy. His power was increasing and two opposing factions began to consider the way in which his power and use of violence could be curbed. Thomas Dewey was seeking legal means by which Schultz could be put away for an extended period of time and the Commission, tired of Schultz's increasing use of violence, both began to formulate plans to eliminate the Dutchman. Dewey had been successful in the prosecution of Waxey Gordon for charges of income tax evasion. Dewey handled the case himself in an attempt to gain public notice of his "crime-busting" activities. The public notice he received caused Dewey to seek new cases that would provoke continued public notice. The Dutchman seemed like the perfect person to zero in on. Schultz had not filed tax returns for 1929, 1930 and 1931 and the government claimed he owed them $92,000. In addition, he was facing up to forty-three years in prison and a fine of over $100,000.The Dutchman, aware of what happened to Gordon, felt it was in his best interest to simply disappear. The question for most people would be where to hide. But for the Dutchman the choice was simple, hide in plain sight.
Schultz would remain in hiding for the next twenty-two months. The New York City Police Department distributed 50,000 wanted posters worldwide for him. However, Schultz never left the greater New York area. During his months in hiding in broad daylight Schultz visited his wife Frances, had dinner and attended nightclubs. All of 1933 passed without law enforcement finding Schultz who was operating freely right under their noses. This was due to the fact that the mayor's office was still in control of Tammany Hall and Schultz was still making his payments to the politicians who were in control of the police and the political machine. LaGuardia, the newly elected anti-crime mayor, teamed with FBI Director J. Edgar Hoover to put pressure on finding Schultz. Hoover made the Dutchman his "undercover" Public Enemy No. 1. Schultz's first reaction was to send his legal team to Washington D. C. to negotiate a settlement. The reply was sent back to the Dutchman that he was no position to negotiate. Schultz's next move was to turn himself in. Schultz appeared before the United States Commissioner in Albany, New York "I'm Arthur Flegenheimer. I am under indictment in the Southern District of New York. I wish to surrender." With that short statement twenty-two months as a fugitive came to an end as the Dutchman gave himself up. Out on bail, Schultz kept himself busy by trying to improve his public image. When the trial began every effort was made to bring down Schultz. The government also had subpoenaed twenty witnesses, many of whom were reluctant to speak. Some of the witnesses that were subpoenaed went into hiding. Some just disappeared.
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