In 1972 the establishment's founder, Umberto Ianniello, opened the restaurant at 129 Mulberry Street (at the northwest corner of Mulberry and Hester Streets). The restaurant was both the hangout of Umberto's son, reputed Mafia leader Matthew ("Matty the Horse") Ianniello and (according to Judge Edward Weinfeld of the Federal District Court in Manhattan) secretly owned by Matthew.
Two months after opening on April 7, 1972, New York gangster Joe Gallo was shot and killed at the eatery.His party of family and friends (including his daughter, wife, and bodyguard) had stopped for an early morning snack after celebrating his 43rd birthday at the Copacabana. A rival gangster spotted him and sent in hitmen shortly after Gallo was seated at a butcher block table in a back corner. After sustaining five shots, Gallo stumbled out into the street and died.
Matthew was at the cash register that night but fled to the kitchen and missed the entire attack; he later claimed no prior knowledge of the attack and was not charged in relation to it. As The Nevada Daily Mail reported: "the proprietor dove into the kitchen and lay on the tile floor with his hands over his eyes as soon as Sonny Pinto and two out-of-town torpedoes known only as Cisco and Benny came in the side door blasting. The next thing he knew, Pete "The Greek" Diopoulis, a Gallo bodyguard, was pushing a gun in his face and pulling the trigger but only clicks came out because it had been emptied trying to save Joey."
In 1986, Judge Weinfeld sentenced Matthew Ianniello to six years in prison on a racketeering charge that involved skimming over $2 million from bars and restaurants (including Umberto's Clam House, the Peppermint Lounge, and a topless bar called the Mardi Gras, all in Manhattan), secretly owned by Matthew; his business partner Benjamin Cohen of North Hills, L.I.; and seven associates.
Between 1986 until 1994, the Federal Government oversaw the restaurant's financial operations and daily operations, after trial evidence led them to believe that income was being skimmed. In 1994, with the restaurant suffering increasing losses, the establishment's control was turned over to the current owner, Matthew's younger brother, Robert Ianniello, who is listed as the restaurant's principal owner.
In 1999, the restaurant was closed due to lack of funds and the building was sold, but quickly reopened in May 2000 to a new location just a few spots north of the original site (from 129 to 132 Mulberry Street). Today, the space formerly occupied by Umberto Clam House is occupied by Italian restaurant Da Gennaro.