Bugsy Siegel

by Michael Shnayerson

  Out-of-towners, whether they lost or won at the tables, left early that night and the two opening nights that followed. What choice did they have? They needed rooms for the night, and they weren’t going to find them at the unfinished Flamingo. Instead, they took rooms at other casinos, and spent the rest of their gambling cash there. The El Rancho and Last Frontier, just north on Route 91, did especially well, welcoming overnighters for $5 a room and gently separating them from their money before they fell into bed.

  One of the Flamingo’s few losers that night was George Raft who, after making the three-hundred-mile car trip for his old friend, saw $65,000 melt away in a game of chemin de fer. He came back for the second opening night, December 27, and drew up a chair, set on winning it all back. To his shock and hurt, Siegel refused to let him play. “I stuck my neck out and drove up here from L.A. because you begged me to,” Raft said. “I dropped sixty-five G’s last night, and I’m entitled to another shot.” Siegel glared at the other players. “If anybody deals a hand to Raft,” he reportedly said, “this game’s closed for the night.” Perhaps by then, Siegel had his own men working the game, and didn’t want to see his old friend lose again. Or maybe he didn’t want to see Raft’s luck change and burn a deeper hole in the Flamingo’s losses from that first night. With Siegel, it was hard to tell.16

  Buoyed by gushing coverage from columnists and paid flacks, the Flamingo did better—much better—on its third and final opening night of December 28. The West Coast storms had passed, and a number of Hollywood figures flew up after all. Vaudevillian Jessel played master of ceremonies, and the other first-night entertainers were back. Some of their numbers, and Jessel’s patter, were broadcast on national radio.17

  A dashing Siegel presided over his kingdom with a queenly Hill on his arm. An FBI memo reported that she arrived on each of the three opening nights with an entirely different hair color and style: platinum blond on the first night, jet black on the second, and finally a return to her naturally red hair on the third. So relayed the earnest FBI agents. Walter Winchell reported that the Flamingo in those first three nights drew twenty-eight thousand people.18

  The Flamingo was certainly a spectacle. But as a business, it was a bust. The house kept losing, as much as $300,000 in its first two weeks.19 Corrupt croupiers or not, Siegel had just tried to do too much himself. “Siegel had been unbearably autocratic about every activity in the hotel,” suggested his hard-boiled biographer Dean Jennings. “He was so emotionally involved in his beautiful but soulless castle in the desert that he had lost perspective. . . . He tried to supervise the kitchen crew, hire the big name entertainers, appoint the pit bosses, choose the décor for the hotel rooms, and personally approve every employee. He simply could not stay in the background, nor was he able to clear his reputation as a gangster with a vile temper. He came there as Bugsy Siegel. He remained Bugsy Siegel.”20

  As Siegel was staging his opening nights, an ominous group was meeting thousands of miles away in Havana, Cuba. Lucky Luciano had called this meeting of family leaders, in the Hotel Nacional, soon to be owned by the Syndicate, to address key business matters. Siegel wasn’t invited, a slight that no one in the underworld took as a coincidence. The meeting, after all, was to a large extent about him.

  A lot had happened to Luciano since his sentencing in 1936 to thirty years in prison for running a prostitution ring. When the USS Lafayette—formerly the French ocean liner Normandie—just refurbished and sitting at anchor, caught fire and sank, U.S. Navy authorities suspected German sabotage and solicited Luciano’s help: no one was better able to suss out spies malingering on the docks, or, for that matter, to control the dockworkers, who were militating to go on strike. Luciano had proven helpful in those regards. He had played another secret role in helping the allies take Sicily with an amphibious campaign in 1943. Luciano had put them in touch with the Sicilian mafia, who wanted Mussolini gone as much as the Allies did. The mafia supplied maps of the harbors and coastline, as well as maps through minefields laid by the Fascists. The locals also led the way to Mussolini’s Italian naval command, hidden in a villa nearby.21

  Luciano agreed to help U.S. forces with no guarantee that he would regain his freedom. Yet his help was so significant that with the war’s conclusion Thomas E. Dewey, now governor of New York, personally pardoned Luciano in January of 1946. The pardon wasn’t absolute: Luciano’s freedom would involve deportation to his native Sicily. Still, it was a lot better than thirty or forty more years in Dannemora prison. A month later, Luciano was transported to Ellis Island and put aboard the Laura Keene for his one-way passage.

  The night before his departure, Luciano was reportedly toasted aboard the boat by his old compadres, including Siegel. “We were all there,” recalled Lansky associate Doc Stacher. “It was like old times. . . . Maybe the only shadow on the celebration was the coolness between Bugsy and Joe Adonis. Bugsy had taken over Joe’s former girlfriend . . . as his number one mistress. Bugsy was really in love with Virginia, the first time in his life he had fallen so hard. And Virginia was crazy about him, though she’d had a lot of lovers before, including several of our guys.”22

  When the ship churned out from the New York waterfront the next day, bound for Genoa, Luciano was aboard, accompanied, according to Stacher, by a special detail of U.S. government agents.23

  Officially, Luciano remained the Syndicate’s leader even after his deportation. But the capo di tutti i capi was too canny to think he could maintain control from across an ocean without making an appearance now and again. The Havana Conference, as it came to be called, was the perfect venue. The crime families could meet easily and legally there; they could stay in the Hotel Nacional, overlooking the sea. Havana was also a port Luciano could reach by boat and plane without crossing into U.S. territorial waters. And so Luciano could use the occasion to reaffirm his power in the Syndicate.

  That Christmas week, a formidable group of mobsters gathered in Havana. Among them were Santo Trafficante Jr., Frank Costello, Albert Anastasia, Vito Genovese, and Meyer Lansky. No one ever revealed exactly what transpired in those rooms, but the gist came, decades later, from Lansky’s right-hand man Stacher, the garrulous gangster who spoke with Lansky’s blessing to his Israeli biographers.24

  The most important order of business at the Havana Conference was to shore up Luciano’s status, permanent resident as he was now of Sicily, and that was certainly achieved. By accepting the traditional envelopes of cash from all in the room, Luciano confirmed his power as titular head of the major families. Anything more explicit was unnecessary: Luciano was fully backed by Lansky, and everyone knew what that meant.25

  Narcotics were also discussed at the meeting, specifically whether and how to develop the heroin market. The different families, it was decreed, could handle drugs in their own ways without undercutting each other, a short-lived fiat.

  Then came the most painful subject of the conference: Ben Siegel and the Flamingo. Many in the room had invested in the Flamingo at Lansky’s bidding. They had heard rumors about runaway costs. Now, to their shock and dismay, Lansky confirmed that the Flamingo’s budget had gone from $1 million to $6 million. Lansky reassured them that the profits would soon be rolling in, but the leaders were dubious, and not at all happy to know they were in business with Virginia Hill. More than one participant believed Hill was guilty of more than reckless spending. She had been skimming the enterprise, some said, and making trips to Zürich, where she had stashed half a million dollars or more in a Swiss bank account. Mickey Cohen’s biographer, Tere Tereba, suggested that Hill had also taken a long-term lease on a Zürich apartment.26 Some thought Siegel was in on the skim. What else could account for the $5 million in construction overruns? By now, the Syndicate surely knew that Siegel had sold shares of Nevada Projects Corporation stock two or three times over, so that as one historian notes, “people who thought they owned ten percent found out they only owned a half of one percent.”27

  “This sort of behavi
or meant only one thing in the underworld,” Stacher later explained. “Bugsy was going to be hit. Everyone knew that, too, but [Meyer] did all he could to save his friend. He begged the men to be patient. . . . It was the first time I ever heard Meyer become so emotional. He pleaded with everybody there to remember the great services that Bugsy had performed for all of them. They looked at him stony-faced, without saying a word.”28

  Frank Sinatra had come to the Nacional to sing on Christmas Eve, the highlight of the holiday gathering, and the gangsters gathered in pride to hear him. Halfway through the evening, Stacher later recalled, Luciano took Lansky aside. “Meyer, I know your feelings for Bugsy,” Luciano allegedly told him. “I know you love him as much as you love your own brother, even your sons. But Meyer, this is business and Bugsy has broken our rules. He’s taking our money and stashing it away in Switzerland. He is betraying us. He is cheating us. He knows it and you know it.

  “If you don’t have the heart to do it, Meyer, I will have to order the execution myself.”29

  Back in Sicily, according to one newspaper report, Luciano made his sentiments just as clear to Siegel. “Lucky made three long-distance calls to Bugsy in Las Vegas. He told him in no uncertain language.” Unless Siegel began to generate windfall profits, he would not survive the next year. According to the article, Siegel replied that he knew what he was doing, and the Syndicate would be grateful soon enough.30

  On the Flamingo’s stage, the Xavier Cugat band played a holdover two-week run in early January, along with headline singer Lena Horne. Beneath the glamour lay desperation and a growing sense of doom. Siegel went from one game to the next, looking for shady croupiers and card-counting bettors. He found a few, and tossed them out, but the magnitude of his gaming losses remained a mystery.31

  Added pressure came from the town’s other casinos. They had let the Flamingo have its opening nights. Now they weighed in with marquee entertainment names of their own, forcing Siegel to pay as much as $25,000 a week to compete.32 Lena Horne brought down the house, as did Abbott and Costello, and a smattering of Hollywood stars came to hear them—­Wallace Beery, Van Heflin, Gary Cooper, and more—but at a cost. For Horne, extracting top pay was about more than money. Upon her arrival in Vegas, she was relegated to the black section of town, which had no running water or sewage system. “Bugsy relented and allowed her to stay near the casino in a cabana, though every morning the maids burned her bed linens.”33 Horne took her revenge in cold cash.

  The other great, unrelenting cost was construction. The hotel’s ninety-three guest rooms remained unfinished. One estimate put their furnishing at $3,500 a room, roughly $325,000 in all. And still, as yet, only a small fraction of the Flamingo’s guests could stay the night.

  Again and again, Virginia Hill urged Siegel to bring in a hotel manager from New York. But he couldn’t bring himself to delegate. Better to sell it, he told her, but his East Coast partners wanted to see him turn a profit first, and a sizable one at that.

  Between the lovers, tensions grew. One day, Hill was in the penthouse suite, reading a copy of Time magazine in which Siegel was pictured. Why, Siegel asked, was she reading that rag?

  “I’ll read what I damn well like,” Hill replied.

  Siegel knocked the magazine from her hand and gave her a shove. “She was on her feet like a cat, clutching her left shoe like an ice pick, and the long sharp spiked heel cut a deep gash in Siegel’s neck,” Dean Jennings reported. “She hit him again and again, until blood ran down over his eyes.” Before Siegel could wipe his face clean, Hill was in a taxi to the airport, taking the first flight to L.A. “She knew him well enough to stay away until his anger cooled,” Jennings wrote, “and a full week passed before he saw her again.”34

  Day by day, the crowds at the Flamingo dwindled. Siegel felt the victim of a campaign from the other casinos, sure the competition was painting him as a violent murderer, one who might pull out a gun at the slightest provocation. Much of the muttering, in fact, was done by the FBI, as A. E. Ostholthoff and his special agents interviewed local informants and passed rumors from one to the next. Yet for all of Siegel’s reckless spending and terrible management, the FBI found no hard evidence of any crime committed.

  Ostholthoff had his suspicions. He felt sure Siegel had bribed CPA commissioners to keep the Flamingo from being shut down, and possibly bribed Senator McCarran as well. But where was the proof? The straight-arrow agent referred liberally in his memos to Siegel’s and Hill’s rampant drug trafficking with Mexican wholesalers. He said Siegel was the biggest drug dealer on the West Coast. Yet the agents had no proof of that, either. There was not one credible witness, not one border interception, not one buyer who could say that Ben Siegel was his dealer.

  On January 16, 1947, Ostholthoff was forced to acknowledge a bitter truth. “I reluctantly concur in the attached recommendation that the Bureau at this time discontinue all active investigation of ‘Bugsy’ Siegel, including the maintenance of technical and physical surveillance.”

  Ostholthoff told J. Edgar Hoover that since the previous July, the Bureau had expended some one thousand agent days of investigation effort in coverage of Siegel and his activities without developing “a scintilla of evidence” of any activities in violation of federal statutes within the Bureau’s jurisdiction.35

  Siegel still faced a thicket of issues, but the FBI, to his pleasant surprise, was no longer one of them.

  By the end of January, Siegel made a painful decision. He would temporarily close the Flamingo and fix what remained undone, starting with the hotel’s guest bedrooms.

  Hill, plagued by allergies in the desert, took the Flamingo’s closing as a chance to spend time in L.A. She rented a Moorish-­style mansion in Beverly Hills at 810 North Linden Drive from her friend Juan Romero, an art dealer who also owned Falcon Lair, the late matinee idol Rudolph Valentino’s home, where Hill and Siegel had enjoyed a few trysts.

  Siegel and Hill were still tightly bound, enough that Hill gave Siegel a solid-gold key to the front door of the house on Linden. But she was sick of the casino and Siegel’s deepening financial straits.

  So desperate were Siegel’s finances, and so widely known, that one of his few true friends, Countess di Frasso, made an extraordinary effort to help. The romance between them was long over, but the countess remained devoted to him, bristling at anyone who called him Bugsy. Now she went so far as to offer to pawn some of her jewelry for him. It would bring $50,000, she said.

  “You’re a real sweetie, Dottie,” Siegel told her, “but I don’t need it now.”

  “Don’t try to fool me, Ben,” she said. “Everybody knows you’ve been losing your shirt.”

  “We’re coming out of it now,” Siegel insisted, “we’re doing okay.”36

  If the story was true, it was a graceful moment on Siegel’s part. He knew how little impact $50,000 would have on his finances; why squander his old friend’s jewels? He felt no such tug of conscience with George Raft, however. Once again, the price of friendship for Raft proved dear. Siegel asked for a loan of $100,000 from the actor’s annuity fund, with no collateral. Reluctantly, Raft complied. He had to know he would never see that money again. As Siegel’s debts mounted during the shutdown, he went back to Raft and asked that the actor buy $65,000 in Flamingo stock. Again, Raft obliged his friend. Raft must have been unaware that Siegel had sold at least 150 percent of the stock: the certificate he gave Raft wasn’t worth the paper it was printed on.37

  By one account, both Meyer Lansky and Frank Costello helped get the Flamingo’s guest rooms finished in time for the March 1 reopening.38 Certainly they had incentive enough to see the place succeed. Perhaps, too, both were still rooting for Siegel: if he could just turn the place around, the Syndicate might relent.

  The Flamingo’s closing stung Siegel’s creditors, Del Webb chief among them. Siegel was able to keep him working by wangling a $350,000 loan from an Arizona bank.39 Most if not all of that money went to Del Webb to finish the hotel. No o
ne expected it to get the Flamingo into the black.

  The doors opened once more, as announced, on March 1. Once again, Siegel was there to greet arriving guests, including those checking in for the night. Some rooms still lacked rugs and draperies, and some beds needed making. Not more than an hour before, Siegel had asked his hotel manager whether all the bed sheets had been turned down. The manager lied and said yes, then slid away to lead a swat team of staffers from room to room, turning every sheet down.40

  The Andrews Sisters sang that night to a full house, and the roulette wheels spun and spun. Still the losses grew. By mid-March, Siegel was forced to sign a “notice of completion” allowing creditors to file liens on the property. One of Del Webb’s liens alone came in at $1,057,000.21. Webb said that to date, he had been paid only $2.5 million of the $3.6 million he was owed. As a goodwill gesture, Siegel wrote Webb two checks totaling $150,000. Both bounced.41

  Webb was one of Siegel’s tormentors, Billy Wilkerson another. Having decided in December to buy out Wilkerson’s shares and cut all ties with him, Siegel now had to sit with Wilkerson’s lawyer and agree on what Wilkerson’s 48 percent of the Flamingo was worth. Greg Bautzer, Wilkerson’s lawyer, wasn’t in on these negotiations: he felt, after the confrontation in December, that both he and Wilkerson should stay as far away from Siegel as possible. Instead, Wilkerson’s partner, Tom Seward, did the negotiating by phone from L.A.