Much of it was based on publicly-available sources, like the 1963 testimony of mob turncoat Joseph Valachi, and the known biographies of prominent mob leaders, particularly Frank Costello. Like Don Corleone, Costello survived an assassination attempt and then retired. Interesting fact is that in addition to the failed 1957 assassination, someone blew up Costello's mausoleum in 1974 (he was already dead). In addition to the botched assassination, both Costello and Corleone moved to expansive estates on Long Island and enjoyed gardening. Unfortunately I don't know if Costello held audiences with his clients while holding a cat. Valachi gave details of the "five families" that dominated New York organized crime and revealed details about the rituals and inside working of mob life. Valachi's memoirs were published the year before The Godfather.

Puzo also based many of the small details in the book on odds and ends he observed. In my oral history collection Tales from the Pit, a pit boss at the Sands describes how the Don's famous "I'm going to make him an offer he can't refuse" was first said by casino manager Carl Cohen. Puzo heard the story (which involved Cohen settling down an irate David Janssen) and put the phrase into his book.

I'm in the early stages of writing a book about the Sands hotel, and am planning on including a chapter about Puzo and his time at the Sands, so in a few months I will have much more information on this.

On a related note, I have found The Godfather Notebook fascinating. It is Francis Ford Coppola's copy of Puzo's novels, with annotations. Gives a lot of insight into the transition from page to screen.