As a kid Ben, Meyer, and Charlie use to run craps games. One night during one of their games they had a visit from a Sergeant Hearn. When he opened the door to where they were running the game he was not to happy to see them gambling. So Meyer offered to let the Sergeant take a roll of the dice offering him great odd's.
Well of course he won, and walked away with $10.00, telling the boys the game was over for the night, but asked to be informed should they move the game else where. Well Ben was ticked off that he let the Sergeant win. So Ben went after the Sergeant follwed him into an alley and hit Hearn with a lead pipe, rolling him for the money he took from them and his gun.
The next day Ben asked Charlie and Meyer if they heard somebody wacked Hearn, they all said yeah and then he produced the money Hearn had got from them. They were surprised, Charlie said Ben was crazy as a bedbug but Meyer playfully pushing on his head said he had bugs in his head and continued with that then finally calling him Bugsy, they both laughed and he called him Bugsy Siegel. That is how it happened well according to Meyer Lanskey anyway.