People suspect that Gatsby makes most of his money as a bootlegger, but he isn’t positively identified as such until the big scene in New York when he and Tom quarrel over Daisy. Tom has been investigating Gatsby and has learned some facts about him which he uses to try to destroy Daisy’s illusions. The most significant accusations are on page 133 in my edition of the novel.
“I found out what your ‘drug-stores’ were.” He turned to us and spoke rapidly. “He and this Wolfsheim bought up a lot of side-street drug-stores here and in Chicago and sold grain alcohol over the counter. That’s one of his little stunts. I picked him for a bootlegger the first time I saw him, and I wasn’t wrong.”
Gatsby doesn’t deny Tom’s accusation. Obviously Tom has gathered too much damaging information about him, and the more Tom talks the worse it seems to everyone present . Tom has found out that Gatsby, with Wolfsheim and others, is involved in other illegal activities.
The fact that Gatsby had bootlegging operations in the gangster-ridden city of Chicago makes him seem especially corrupt, because that city was known for mobster rule, criminals like Al Capone, and frequent murders.
Rumors of Gatsby's being a bootlegger circulate with partygoers in Chapter Four while indications that Jay Gatsby may be involved in criminal activity are suggested in Chapter Five, and then confirmed by Tom Buchanan in Chapter Seven.
In Chapter Four, gossip among some of Gatsby's guests depicts him as a German spy during the war, and there are whispers about his being a bootlegger who killed a man that discovered that he is a nephew to von Hindenburg.
In Chapter Five, in reciprocation for Nick's having arranged his meeting with Daisy at Nick's cottage, Gatsby offers Nick a business opportunity:
"....I carry on a little business on the side, a sort of sideline, you understand. And I thought that if you don't make very much....you might pick up a nice bunch of money. It happens to be a rather confidential sort of thing." (5)
Then, in Chapter Six, Tom Buchanan accompanies Daisy to one of Gatsby's parties. He wonders aloud about Gatsby:
"Who is this Gatsby anyhow?...Some big bootlegger?" (6)
For, after observing and listening to the guests, Tom realizes that they are not the types who come to East Egg. In the 1920s, men who quickly and mysteriously acquired fortunes were frequently suspected of illegal activity.
Further, after suspecting Gatsby's motives regarding Daisy, Tom does some investigating of Gatsby's past. Then, in Chapter Seven, Tom accuses Gatsby,
"I found out what your 'drug-stores' were....You're one of that bunch that hangs around with Meyer Wolfsheim...." (7)
As he turns to Nick and Jordan and Daisy, Tom adds,
"He and this Wolfsheim bought up a lot of side-street drug-stores here and in Chicago and sold grain alcohol over the counter....I picked him for a bootlegger the first time I saw him, and I wasn't far wrong."(7)
"What about it?" Gatsby politely responds as he does not try to display any emotion. Instead, he turns on Tom,
"I guess your friend Walter Chase wasn't too proud to come in on it." (7)
Tom responds that Gatsby betrayed Walter, but Gatsby counters by saying that Walter was glad to "Pick up some money."
In another attack on Gatsby's character, Tom points to Walter's having been able, also, to have had Gatsby arrested for violating certain betting laws if it had not been for Wolfsheim's threats of violence that Walter is even now too afraid to mention.
It is found at the bottom of page 114, chapter 6. The quote is, "Who is this Gatsby anyhow?" demanded Tom suddenly. "Some big bootlegger?"