In April, the gang settled at a lodge hideout called Little Bohemia Lodge, owned by Emil Wanatka, in the northern Wisconsin town of Manitowish Waters. The gang assured the owners that they would give no trouble, but they monitored the owners whenever they left or spoke on the phone. Emil's wife Nan and her brother managed to evade Baby Face Nelson, who was tailing them, and mailed a letter of warning to a U.S. Attorney's office in Chicago, which later contacted the FBI. Days later, a score of FBI agents led by Hugh Clegg and Melvin Purvis approached the lodge in the early morning hours. Two barking watchdogs announced their arrival, but the gang was so used to Nan Wanatka's dogs that they did not bother to inspect the disturbance. It was only after the FBI mistakenly gunned down a local resident and two innocent Civilian Conservation Corps workers as they were about to drive away in a car that the Dillinger gang were alerted to the presence of the FBI. Gunfire between the groups lasted only momentarily, but the whole gang managed to escape in various ways despite the FBI's efforts to surround and storm the lodge. Agent W. Carter Baum was shot dead by "Baby Face" Nelson during the gun battle. Barney G. Louis Boeding accompanied him during the robberies.
By the summer of 1934, Dillinger had dropped completely out of sight and the FBI had no solid leads to follow. He had, in fact, drifted into Chicago and went under the alias of Jimmy Lawrence, who was a petty criminal from Wisconsin who bore a close resemblance to the bank robber. Taking up a clerk job, he also found a new girlfriend named Polly Hamilton, who was unaware of his true identity. In a large metropolis like Chicago, Dillinger was able to lead an anonymous existence for a while. What Dillinger didn't realize was that the center of the FBI dragnet happened to be in Chicago. When the authorities found Dillinger's bloodied getaway car on a Chicago side street, they were positive that he was in the city.