Colorado was one of 26 states that chose to enact prohibition beginning in 1916, but by 1920, it became the law of the land. Prohibition outlawed the manufacturing, distribution and sale of alcohol. Naturally, this created a black market, even in Glenwood Springs.
Prohibition effectively shut down the rowdy saloons, gambling halls and brothels along Seventh Street. But because people still wanted a drink and a card game, organized crime filtered in to fill the void with bootleg hooch and speakeasies. In 1929, Leland “Jack” Varain, who later went by the name Diamond Jack Alterie, operated in Glenwood Springs. His criminal record included kidnapping, homicide, burglary, and more. He was known to entertain high-ranking mobsters from his hometown of Chicago including notorious crime kingpin Al Capone. The gangsters would meet at the Hotel Colorado where a special front door awning was installed so that Diamond Jack, Al Capone and others could enter the hotel unnoticed by guests and the police. Diamond Jack also liked to stay at the Hotel Denver. In 1932, he is said to have shot two innocent salesmen through a closed hotel room door. One of the salesmen died as a result of the wound. A judge fined Jack $1,250 and asked him to leave the state.