News of Siegel’s arrival blew through Vegas like a desert sandstorm, stirring stories that might be true—or not. One was that when Siegel tried to open an account at a local bank, he was asked to take his business elsewhere. “A couple days later,” recalled a local, “he walks to the bank, a couple bodyguards with him, swaggers up to the window and says, ‘I want to make a deposit.’ He empties a suitcase with a million dollars out on the counter—and they took the money!”24
Louis Wiener Jr., a local lawyer, was immersed in documents at his office when his secretary announced a visitor. He recognized Siegel when the gangster came in, with his matinee good looks and a stomach so flat you could bounce quarters on it, as Wiener later put it. “I just bought into the Flamingo Hotel and I want to hire you to represent me,” Siegel declared. Wiener had once beaten him in a lawsuit, and Siegel hadn’t forgotten, or so the story went. Warily, Wiener said he would have to consult his partners before he could take Siegel on as a client. “I’ll tell you what,” Siegel said. “I’ll give you twenty-five thousand dollars a year as a retainer.” Wiener was stunned: that was the equivalent of about $500,000 today. “Sure,” he said weakly. “Why not?”25
Wiener found his new client meticulous. “He carried a pocket diary or notebook and he would ask me five, six, even ten questions a day, and I had to write him a separate answer for every question on my letterhead.” The reason he did that, Wiener said, was that he didn’t want any confusion later on. “I don’t ever want any question being raised about you being right or wrong,” said Siegel. “Nobody’s going to be able to say you gave me the wrong advice when you didn’t.” Only later did it occur to Wiener that Siegel wasn’t doing this to protect himself. He was doing it for Wiener. “I mean, he never said this but I think he was trying to protect me against criticism from his associates back east. He didn’t want me to ever be put on the spot, and ever be blamed.”
Siegel did have one eccentricity, his new lawyer learned. “He didn’t care what you charged him to go someplace or do something, but your expenses had to be exact. If you spent two dollars and seventy-six cents for something, he didn’t want you to charge him two eighty or two seventy-five; he wanted it to be two seventy-six.” This was not to say Siegel was frugal, far from it. “As a matter of fact,” Wiener recalled, “he used to get upset with me because I wouldn’t go to better places, to better hotels, take taxicabs, do this, do that. I could have charged him five hundred dollars a day for going to San Francisco and it wouldn’t have meant a thing, because that was what I thought I was worth. But if I went to Bernstein’s and I paid two dollars and seventy-six cents for something and it was really two dollars and forty-six cents he probably would have raised hell with me.”26
John Cahlan, the pioneering Vegas journalist, was still on the beat when Siegel came in to the Las Vegas Review-Journal to announce that he was building the Flamingo. Cahlan began to see Siegel at Lenny Schafer’s Health Club, and the two became fellow gym rats. Siegel was warm and gregarious, and of course dressed up nattily when his workout was done. “He was a perfect gentleman, a very good dresser, very immaculate,” though, as Cahlan noted, “he hated any blemish on his skin, he had to get rid of it.”27 It was an odd fixation for a man who left his shooting victims in dramatically blemished states.
“I got to know him quite well,” Cahlan added. “The fact of the matter is, I assisted him in getting his liquor license for the Flamingo.” It was a license Siegel almost failed to get, given his reputation, and one for which the liquor license board would be given a carload of beer by Lansky at Siegel’s request, prior to the board’s vote in favor of granting the license. But that was the least of Siegel’s problems.28
Within weeks, the relationship between Wilkerson and Siegel soured. Despite the agreement that Wilkerson make all creative decisions, Siegel started making his own, and undoing the legendary restauranteur’s. “Siegel did not know a bidet from a Bordeaux, much less marbles from Italy,” recalled Tom Seward. “Bill showed him everything.” As much as Siegel needed Wilkerson, he resented him. “As time went on,” wrote Wilkerson’s son, “the gangster’s respectful admiration disintegrated into an insane, all-consuming jealousy.”29
To Wilkerson’s amazement, Siegel started ordering the workmen around. Trucks rolled past the front gate, got their deliveries checked in by Siegel himself, then rolled out the back gates an hour or two later, to come through the front gates all over again. Siegel had no idea he was checking in his supply trucks twice, and so paying double or triple for those precious, postwar supplies.30
With Wilkerson more and more of a hindrance, Siegel announced a decision that made him the on-site boss. With Lansky’s blessing, he created the Nevada Projects Corporation, formalized on June 20, 1946, for the explicit purpose of building a hotel-casino according to Siegel’s vision, not Wilkerson’s. Lest there be any doubt, Siegel named himself president, with the others mere shareholders.
How many shares the other investors got was commensurate to some degree with how much money they kicked in, but not exactly. The Rothberg brothers together were awarded 245 shares, in recognition of their $1 million investment. Siegel was the largest individual owner, with 195 shares. Wilkerson was awarded 125 shares while Lansky got 100. The initial offering raised $500,000.31 This outcome was so pleasing that Siegel would sell shares again and again, shares that didn’t exist. As for Wilkerson, he was persuaded to sell half of the property after all, in exchange for an extra clump of stock. At least the new agreement kept him in charge of construction for the casino. The hotel would be Siegel’s domain. Within days, two separate teams of architects and builders were hard at work in two separate camps.
Utterly ignorant of hotel construction, Siegel began making disastrous mistakes. Wiener got a frantic call one day. His new client was apoplectic. The hotel’s structure had been roughed out, with its ninety-three guest rooms, and Siegel’s penthouse built atop it. Siegel had gone up to see it for the first time and nearly banged his head on a structural beam that ran across the ceiling. The architect and his crew were short enough that they could cross the room without running into the beam. So, as it happened, was Wiener. But not Siegel, or anyone else taller than five-foot-nine. “Tear that goddamn thing out of here,” Siegel shouted. The crew had to take the roof off, redesign it, and remove the low beam, Wiener recalled, at a cost of $22,500.32
Another calamity occurred with the kitchen. A massive industrial kitchen was put in, but the ovens took too much space. “If you turn around in here you’ll fry your ass,” Siegel declared. As a result, the kitchen’s walls had to be pushed out a critical foot or two, at a reported cost of $30,000.
The costliest mistake came with the boiler room, which proved too small for the units it had to accommodate. “I bet the concrete walls at the Flamingo must have been fourteen inches thick at least,” Wiener recalled. “When they went to put the boilers in, they couldn’t get them in because the rooms were too small and the hall too narrow. So they had to put the boiler room about 200 feet away, and build a structure around it.” That mistake cost $115,000.33
Despite Siegel’s agreement to stick to hotel construction, Wilkerson began noting Virginia Hill’s hand in the casino’s interiors. She picked out the oversized draperies that turned out to be fire hazards, and the lime-green and tomato-red tufted leather sofas and overstuffed chairs that simply looked gauche. Certainly she did nothing to encourage moderation.34
As a temporary residence, Siegel and Hill took the penthouse of the Last Frontier Hotel, just north on Route 91. From there they studied the Flamingo’s blueprints and held meetings. Once, architect Richard Stadelman arrived to find the two in bed. Told to draw up a chair, he saw they were covered by a single sheet, and utterly nude under it, reminiscent of Siegel’s barbershop style.35
Down the road at the construction site, a far grander penthouse suite was being built for the Flamingo’s royal couple, now that the offending beam had been removed. The décor was definitely Hi
ll’s: over the top. Siegel added his own, more practical touch: an escape route starting from the coat closet. “This led to a labyrinth of secret passageways and staircases,” explained Wilkerson’s son. “Although many of (the hotel’s) staircases led nowhere, if you knew the layout, it was possible to descend to the garage and a waiting getaway car in less than a minute.”36
The Nevada Projects Corporation could not have been floated a moment too soon. The money raised by its owners went right to Del Webb, Siegel’s handpicked builder for the hotel to pay down the huge construction bills of $436,100 in just three months. Already, Wilkerson’s back-of-the-envelope estimate of $1.2 million to build the Flamingo was looking not just unrealistic but absurd.
To no one’s surprise, Siegel’s marriage came to a formal end that summer. Ben and Esther had led separate lives for at least a year. Esther’s only joy was her daughters—Millicent a teenager now, Barbara nearly so—though both were difficult, hurt by their father’s all-too-frequent absence.
Esther knew about Virginia Hill. She had suffered any number of Siegel’s affairs, but sensed early on that Hill got to her husband as no other woman had. Esther had asked Meyer Lansky to do what he could to talk sense to his old friend, and Lansky had tried, going so far as to visit Joe Epstein in Chicago. Epstein told Lansky it was hopeless. “Once that girl is under your skin, it’s like a cancer. It’s incurable.” Lansky relayed the message to Esther, and added that he had seen Siegel and Hill together. “They’re like two teenagers in love,” Lansky told Siegel’s wife. “There’s nothing you can do about it.”37
Lansky’s advice was to threaten to sue for divorce and hope that that brought her husband around. Doc Stacher, Lansky’s right-hand man, said Esther did just that—to no avail. “Siegel showed not the slightest remorse. . . . Bugsy’s feelings for Virginia seemed to get stronger every day they were together.”38
Finally, in the spring of 1946, Esther went to Reno to file for a divorce and start the requisite six-week residency. The girls would divide their summer between an aunt in Los Angeles, Siegel’s sister Bessie, and at the Last Frontier with their father, lolling by the pool and riding horses as he held stormy meetings at the new project and gnashed his teeth at rising construction costs. If Esther Siegel ever said how she felt about letting her daughters spend the summer with their father’s inamorata, that sentiment was not publicly recorded.
Regretful as he was to break up his family, Siegel couldn’t imagine living without Hill. All he could do was atone for his sins, giving his wife the biggest settlement he could handle. He committed to $600 a week in alimony for life, plus hundreds more for child support. Meyer Lansky, divorcing at about the same time, persuaded Anna Citron to accept a mere $400 a month for alimony, with $300 a week for child support.39
Siegel not only paid child support: he bought his family a good-sized apartment on Central Park West in Manhattan. Esther got full custody, though Siegel could visit the girls whenever he liked.
Months later, Siegel would sheepishly ask his ex-wife for a loan of $45,000. Esther would lend him the money, only to learn, soon after, that her ex-husband would never be able to pay her back. Nor would he write her another weekly check for $600. But all that was in the future: on August 3, 1946, she knew only that her marriage of seventeen years was over, the papers signed that day.
Sure as he was that Virginia Hill was the love of his life, Siegel was stricken with a sense of guilt he’d never felt before. Esther was the very picture of the woman his parents had wanted him to marry: decent, honest, loyal, adoring, and a loving, responsible mother. She had been faithful to him in every way. Now she had suffered the pain of her divorce without any public show of bitterness. Loyalty was Siegel’s touchstone, always. He never hesitated to kill disloyal gangsters, but here was Esther, more loyal to him than anyone he’d ever known, and how did he repay her? By tearing their marriage apart.
The signatures on Ben and Esther Siegel’s divorce were barely dry when another drama erupted, this one a dire business threat. The federal government was studying the Flamingo’s architectural plans, and it didn’t like what it saw. Siegel had settled most of his problems with a gun. Now he found himself up against an adversary that was, in every sense, bulletproof. And what that adversary wanted was to close the Flamingo down.
9
His Every Red Cent at Risk
THE FIRST SIGN of trouble had come with a telegram dated April 23, 1946, from a new federal agency called the Civilian Production Administration. The CPA’s agenda was to help veterans build homes by steering scarce construction materials to them, and not to commercial, inessential new structures—like hotel-casinos in Las Vegas.1
In fact, the CPA had set national guidelines that went into effect on March 26. Any project not yet started by that date would be deemed in violation of the mandate. The Flamingo’s builders had ignored that edict. And so had come the telegram four weeks later, sent directly to the Flamingo, demanding an immediate halt to construction. The Flamingo consisted of several structures, the CPA declared, further violation of U.S. government rules. In this tender postwar economy, one was the limit.
Siegel’s lawyer Louis Wiener, eager to prove himself worthy of his generous retainer, had flown to Reno on April 29 to plead the Flamingo’s case with the CPA’s regional manager. He explained that the Flamingo had broken ground on December 4 of the previous year, when the shacks were razed. He argued that the project was one large, horseshoe-shaped building, as shown by a blueprint dated January 1946. He also noted that based on the county permit issued in January, the builders had spent $444,000 to date. How were they supposed to get that money back if the project was nixed?
The CPA manager in Reno listened with a sympathetic ear and gave the Flamingo’s builders written approval to forge ahead, pending a formal review that summer.2
The ruling pleased local authorities in Las Vegas eager to see a jobs-generating and tax-producing project go ahead. It certainly pleased U.S. Senator Pat McCarran, the recipient of weighty campaign contributions from Siegel and an unabashed supporter of mob-financed projects in Nevada.3 It infuriated a top FBI agent named A. E. Ostholthoff, who viewed the Flamingo as a rising monument to organized crime, and Siegel as a murderous affront to justice.
Ostholthoff was in close and frequent touch with his director, J. Edgar Hoover, the two of them communicating by memo in the terse, cryptic style Hoover had crafted over the years. Ostholthoff studied the telegram of April 23. He read CPA regional head E. S. Bender’s rationale for letting the Flamingo go ahead. He strongly suspected that Bender had been bribed. The builders had done no more than put sticks in the ground when the March 26 freeze order went into effect. And any fool could see there were at least three structures rising on the site. Ostholthoff was determined to shut down the Flamingo for operating under false auspices, and throw Siegel in jail while he was at it.
With Hoover’s blessing, Ostholthoff ordered full-scale surveillance of Siegel and the Flamingo, starting in July 1946. His team of ten full-time agents put a “technical” surveillance bug into penthouse suite 401 of the Last Frontier Hotel on Route 91, where Siegel and Virginia Hill were residing while the Flamingo rose nearby. The agents soon learned that Siegel was using a rear office above the boiler room at the nearby Las Vegas Club to conduct his business, with four phone lines. Those lines were put under surveillance, too.
The FBI agents stood out in Vegas like comic-book characters, with their buzz cuts, black suits, narrow black ties, and “yes, sir” “no, ma’am” speech. As a result, news of the bugging of Bugsy reached its quarry almost immediately. In teletypes to headquarters, Ostholthoff bemoaned the scarcity of useful information from the technicals. The gangsters’ boiler room talk was as terse and telegraphic as the FBI’s internal memos, and Siegel and Hill kept to small talk in their penthouse suite. If the bug there picked up snatches of their love life, the FBI agents made no mention of it in the updates now sent almost daily to the FBI’s top brass.
In a black-and-white photograph, A. E. Ostholthoff looks like a central-casting FBI agent, his dark hair neatly combed back, a patterned tie tightly knotted, his starched white shirt set off by a white handkerchief. Yet the head-and-shoulders shot shows a hint of swagger in his choice of a double-breasted dark suit with extra-wide stripes: a counterpart, almost a photographic negative, to Siegel with his own trademark suits.4 Officially, Ostholthoff was special agent in charge of the FBI office in Cincinnati. In fact, he was one of Hoover’s top men.
In his teletypes, Ostholthoff did his best to stir the director with lurid details about Siegel. “He has never engaged in honest toil,” Ostholthoff wrote, “and does not legitimately have available the large sum of money so far spent in the construction of the Flamingo Hotel.”5 Ostholthoff added that it was possible that Siegel was the kingpin narcotics distributor of the West, a charge the FBI would make often in the months to come. No evidence of trafficking would ever emerge, however.
As for Siegel’s consort, Virginia Hill was “a fabulous woman of mystery in L.A.,” Ostholthoff wrote, “who has unlimited funds at her disposal.” Hill, too, was deemed a likely trafficker.6 “Virginia Hill is said to be in constant touch with dope dealers in the L.A. area.” Again, no evidence arose. Also, Ostholthoff noted, “Virginia Hill wears daring clothes, smokes and drinks excessively, uses foul language, considerable make-up, spends money, and is promiscuous.”
Bugsy Siegel Page 13