Follow the Leader (1944)

Muggs and Glimpy, two East Side Kids in the army, return to their neighborhood, supposedly on furlough; actually, Muggs has been honorably discharged with a physical defect, but he tells no one of this. Danny, another East Side kid, is in jail because a large amount of medical supplies have been stolen from the warehouse where he works. Muggs see Spider, a new member of the gang, flashing a large amount of money around, and Muggs shrewdly turns toughie, boasting that he has a dishonorable discharge because of thievery. This leads Spider to confide in Muggs that he is the one who has been aiding in the theft of supplies from the warehouse, and he gets paid for the loot by Larry, operator of a nightclub where Muggs' sister, Milly, is an entertainer. Fingers, a henchman for Larry, kills Spider when he learns that Muggs has been let in on the operation. The police then suspect Muggs of killing Spider.