Following the death of Jacob "Little Augie" Orgen, Diamond went to work overseeing bootleg alcohol sales in downtown Manhattan. That brought him into conflict with Dutch Schultz, who wanted to move beyond his base in Harlem. He also ran into trouble with other gangs in the city. On July 14, 1929, in the New York Broadway Hotsy Totsy Club (partially owned by Diamond), Diamond and fellow gang member Charles Entratta shot three drunken brawlers in the club; two (William Cassidy and Simon Walker) were killed and one (Peter Cassidy) was severely wounded. The club's bartender, three waiters, and the hat check girl "vanished" (one of them was found shot dead in New Jersey). Diamond was not charged, but he was forced to close the club.