In February 1932, Rao was convicted of extorting payments from the owner of a Bronx bottling plant and was sentenced to prison. An inmate at the city penitentiary on Welfare Island (now called Roosevelt Island) during the 1930s, Rao and Edward Cleary reportedly controlled contraband and narcotics smuggling in the prison. Having negotiated a deal with the prison warden, Rao and his gang were sleeping on comfortable hospital beds instead of cots in the cells. Rao even kept homing pigeons in the hospital, using them to smuggle in narcotics and send out messages.