Luciano's legal appeals continued until October 10, 1938, when the U.S. Supreme Court refused to review his case. At this point, Luciano stepped down as family boss, and Costello formally replaced him.
The Japanese captured Wuhan on October 27, 1938, forcing the KMT to retreat to Chongqing (Chungking), but Chiang Kai-shek still refused to negotiate, saying he would only consider talks if Japan agreed to withdraw to the pre-1937 borders.