Formed in the 1890s, the Valley Gang was based in Chicago's Bloody Maxwell section on 15th Street, specializing in pickpocketing and armed robbery. By 1900 the gang had become a leading force in the Chicago underworld, later rivaling Ragen's Colts, hired out for illegal activities ranging from labor slugging to murder for hire. During the mid-1910s, the gang was led by Paddy "The Bear" Ryan, who, operating from his South Halstead Street saloon, would control most of Bloody Maxwell by Prohibition, until his murder by rival Walter "Runt" Quinlan, in 1920.
After Walter Quinlan's death by Ryan's son Paddy "The Fox" Ryan, Jr., the gang was led by Frankie Lake and Terry Druggan who soon began bootlegging operations as the "Druggan-Lake Gang". Soon becoming successful distributors the gang, with partner Joseph Stenson, owned several breweries by the early 1920s using its wealth to gain political influence and police protection. In 1924, Lake and Druggan were each sentenced to one year in Cook County Jail. However, while serving their sentences, they were allowed to leave the prison regularly due to support from politicians such as 20th Ward alderman Morris Eller and bribes of $20,000 to Sheriff Peter Hoffman and prison Warden Wesley Westbrook. After a report by the Chicago American, Hoffman was fined $2,500 and sentenced to one-month imprisonment and Westbrook was sentenced to four-months imprisonment.
The gang was soon noticed by Al Capone, due in part to the scandal, and upon their release in 1925 following the bootleg wars an alliance was formed between the gang and the Chicago Outfit, agreeing to give Capone 40% of their income in exchange for protection with Ragen's Colts gunmen under Danny Stanton who included William "Gunner" McPadden, Hughey "Stubby" McGovern, Raymond Cassidy, and Frank "Dutch" Carpenter (although many of these men would be killed during the bootleg wars). With the conviction of Druggan and Lake for tax evasion in 1932 the gang would eventually become absorbed into the organization by the end of Prohibition. Serving as the Chicago crime syndicate's leading enforcers many of the gang members, including Terry Druggan, retired extremely wealthy.
- Sifakis, Carl. The Mafia Encyclopedia: Second Edition. New York, Checkmark Books, 1999