The smart money was on Alex Osborne to head up the enlarged Bay and Richmond, which overnight would become one of the biggest and most profitable of the CIBC’s 1,600 branches. Osborne’s career had been exemplary; he confided to friends that he would one day like to be president of the bank. He was a bit rough around the edges for the top ranks — too quick to tell people what he really thought of them — but his skills and diligence were unquestioned. He would relish the challenge of overseeing the merger and turning the combined branch into a thriving concern. Here was another feather for his cap.
Harry Buckle, on the other hand, thought the merger ill-advised. He had audited City Hall in the 1950s and, when he returned a quarter-century later, found some of the same women at the branch. It would be a terrible disruption in their lives, to say nothing of his own. Buckle was from the old school. Though the Imperial Bank had merged with the Bank of Commerce two decades earlier, he still thought of himself as an Imperial man. He had never learned computers. He had a reliable senior assistant in John Galbraith, good rapport with his customers, and an array of handsome accounts, from Windfields Farm to Peoples Jewellers. An avid golfer, he was invited each year to Alan Eagleson’s tournament and got to play with Marcel Dionne, the hockey star, whose investment account Eagleson maintained at the branch. Buckle had a home in Burlington, around the lake, to which he planned to retire. He was comfortably ensconced in what he’d thought would be his last posting.
When word came that Buckle had been appointed to head up the merged branch and Osborne transferred to Lawrence and Keele — an important branch in a terrible mess — the employees at Bay and Richmond were shocked and disappointed. Osborne had instilled pride, and it manifested itself in mild contempt for the employees across the street. They didn’t know the meaning of work. The assistant managers had so little on their plates they chatted for half an hour at a stretch. Harry Buckle sometimes nodded off at his desk after lunch at the National Club.
No one was more disappointed than Molony. He was losing his mentor and his status as favourite son. He helped organize the goodbye roast for Osborne, and gave a speech no one else could have got away with, taking liberties with Osborne’s life story (Osborne was sensitive about his immigrant background) and lacing his remarks with innuendo (“and then he met his lovely wife Nora — ‘No’ for short”). Harry Buckle dropped by to pay his respects, then slipped out. He preferred to socialize outside bank circles. Besides, this party had nothing to do with him. Sixty people were saying farewell to a boss whom — whether they all liked him or not — they obviously admired and respected.
The merger went smoothly, as mergers go. Still, there was mass confusion. People worked long hours of overtime and came in on Saturdays. Nobody was quite sure where things were. Incoming cheques, for example — it might be days before they could be located. There was friction among staff members. They may all have been under the same roof, but they thought of themselves as City Hall people or Bay and Richmond people. Harry Buckle found it a nightmare. He had to rely heavily on his assistants. John Galbraith had come over as senior assistant, but most of the others were Bay and Richmond people. Buckle didn’t have the proper controls, and he had to acquaint himself with a new set of accounts. The combined total — 1,500 or so — meant he was lucky to review them once in a blue moon. Rumour had it the branch would be audited after the merger, so the new manager would start with a clean slate. The audit had to be postponed while things got sorted out. Quarters were cramped and chaotic. The atmosphere was one of frenzied work amid near confusion. For Buckle the move had been a promotion, but if he’d known what he was in for he would have told downtown what they could do with their appointment.
It didn’t take Molony long to make up his mind about Harry Buckle. He was no Alex Osborne. Still, Molony was not unhappy to have a less rigorous boss. The merger meant a review of security and inspection of existing accounts; if he survived the transition, though, he stood a better chance of recouping his losses under Buckle than he would have under Osborne. Buckle wasn’t the type to throw a writeup on your desk and say, “Who’s this?” He was more likely to pull out snapshots of his curling buddies, or the fish he’d landed on his holiday.
Buckle at first was equally cool on Molony. He didn’t really understand why Osborne thought so highly of him. Molony was bright, certainly, with a good command of the language. He attended all the functions and coached the girls’ softball team. Everyone liked him: you didn’t hear a bad word from staff or customers. He arrived early and stayed late.
But he didn’t have the experience. John Galbraith, by contrast, had worked in Blyth, Ontario, for a year, then Dublin, Ontario, then Bloor and Church in Toronto, three years in the Bahamas, a year at University and Dundas, three years as a credit officer at Commerce Court, two years as assistant manager at Yonge and Eglinton, a year at Bay and Gerrard, and two years as assistant manager at Dundas and Victoria before moving to City Hall as Buckle’s senior assistant. Molony had joined Bay and Richmond as a credit officer; two years later he was an assistant manager. He applied himself, no question, but he had his finger in so many damn pies and took so many calls and saw so many people he was always late with his work. Documentation was on its way, this or that was “to follow,” the report would be in tomorrow.
“Brian, if you’re behind,” Buckle said one day, “maybe we should assign some of your accounts to someone else.”
Molony didn’t object, just squinted through his glasses, considering. “If you don’t mind,” he said, “I’d prefer to keep them myself.”
Molony had begun flying to Philadelphia and taking the shuttle van to Atlantic City two or three times a month. On an early trip he asked a credit executive if Caesars would reimburse his plane ticket. That was done in Las Vegas, he was told, but not in Atlantic City. “We have a very strict Casino Control Commission here in New Jersey.” Before long his action had become substantial enough that the casino not only paid for his flights but also comped his “RFB” — room, food, and beverage bills — while he was at Caesars.
One Saturday morning Molony drove out to Pearson International Airport in Toronto with more than $120,000 U.S. cash in his pockets. Passing through customs was always a trial. Anything over $5,000 had to be declared. He worried that his bag might be searched but figured they’d need a good reason to search him bodily, so he always carried the money in his pockets. Usually the questions were routine, and usually the customs officer was a man. This time he handed his ticket to the one female officer on duty. A stocky, broad-cheeked, grey-haired woman, she studied him intently and wanted to know everything — citizenship, occupation, destination, how long he’d be away, whether he’d booked a hotel, how much money he had, how often he travelled to the U.S., whether he’d be conducting business. He said he was going to the Meadowlands — a racetrack in New Jersey — to look at a standardbred investment. She spoke to one of the other guards. He glanced at Molony and said something that made the woman smile. For an awful moment Molony was sure he’d be searched. But when the woman returned she merely looked for his name in a big black book, then waved him through.
That was it for women customs officers.
Molony was at the drinking fountain, trying to pull himself together, when he felt a tap on his shoulder. A branch customer in the mortgage business, Michael Wynston, said hello and introduced his wife. They were obviously headed somewhere sunny. The Philadelphia flight continued on to Florida. They could have been on the same plane.
“So, Brian, where you headed?”
“Philadelphia,” said Molony. “Visiting my aunt. She’s getting on in years and hasn’t been well lately. My parents couldn’t get away, so I’m going as the family representative.”
Wynston was so impressed he told his business partner, who also knew Molony from the bank. “Isn’t that a fine young man? I tell you, that boy’s got moral fibre. Who else would do that? Would you take the weekend to go see your sick aunt in Philadelphia?”
&nb
sp; As Molony’s trips to Atlantic City grew more frequent, so did his lunch-hour visits to Richardson Securities. He found it useful to purchase bearer bonds, paying for them with a bank draft and immediately selling them back to the bank. At Richardson’s he was assumed to be acting for a group of investors — his account was in the name “Brian Molony in Trust.” At Bay and Richmond he was assumed to be acting on the instructions of a customer who wished to apply the proceeds from the sale of the bonds against an outstanding loan. In this way he was able to take funds from one fictitious account and use them to pay down another. The brokerage firm provided him with an efficient way of juggling money.
Before long all the fraudulent accounts were overloaded. He’d tacked so much onto the Brydson U.S.-dollar loan he didn’t dare add more — indeed, he had to reduce it before it attracted attention. If he was going to win enough to retire the bad loans he needed a new source of funds and more flexibility. The problem became acute after a wretched weekend in Atlantic City and a losing streak at the track. He was stone broke; he owed Epstein, Beck, Colizzi, and a fourth man; he had no idea where the money might come from.
Leo Sherman? Not Leo Sherman. No.
Unable to find a solution, he invented one. He created the documentation for a loan to a nonexistent gentleman named Roger Oskaner and began placing orders for cash parcels on Oskaner’s behalf. Oskaner also paid for the bank drafts with which Molony purchased U.S. cash from Friedberg’s — casino money. When the Oskaner loan got too high, Molony bought bearer bonds from Richardson Securities, paid for by Brydson, and used the proceeds to get Oskaner back down to his supposed limit.
Molony’s broker at Richardson’s was a middle-aged, bespectacled history buff named Jim Surgey. Ever since Molony first opened an account, Surgey had been impressed by him. Some clients weren’t the sort of people you’d go out of your way to have a meal with, but Brian was an exemplary fellow embarked on what promised to be a fine career. A bright, pleasant, responsible young man.
Surgey was delighted when Brian resumed his activity at Richardson’s. If he seemed to be dealing in substantial sums, well, he was acting for a group of investors — they wanted to do this, they’d decided to do that. Evidently they wanted short-term security that offered the chance of appreciation and was available for immediate delivery. Lots of investors did. Government bonds were liquid and secure. Brian was the bearer. If he was unusually young to be shouldering such financial responsibility, well, his knowledge of the bond market was certainly sound. He studied balance sheets and knew how to read them. Presumably he had access to the CIBC’s research facilities. At the bank he must have been highly regarded — he would never have been promoted at his age had he not been quality material. Surgey had been in the Navy at eighteen, and you saw lots of people in their twenties in positions of power.
When Molony began turning over hundreds of thousands of dollars a week, Surgey did ask, in avuncular fashion, “Sure you’re not getting in over your head?” A friendly expression of concern — it would never even cross your mind … You deal with a good many clients over the years and learn it’s better, if there’s any question, to have nothing to do with them. You don’t want to send a fat commission walking out the door, but it’s not worth getting into anything that might be shady. There are lots of brokers out there. If a client gives you a funny feeling, let him find another one.
Brian was not that sort. Not pushy, or flashy, or full of promises. Not a promoter. On the contrary, he was quiet, sensible, and informed. Nor was he a cold fish like some bankers. He had a sound mind and a sharp wit. He came from a good family. Surgey knew people at St. Michael’s who thought the world of Dr. Molony — fine surgeon, involved in charitable work, past president of the Otolaryngological Society, and so forth. Brian’s documentation was always in order. And he was meticulous in meeting his obligations, not one of those people who say, “I’ll have the cheque tomorrow,” then don’t show.
One afternoon Surgey had to track him down in Owen Sound, north of Toronto, where Molony was attending the opening of a plaza the bank had helped finance. A stock he had shorted had jumped in value: Surgey informed him he had to cover his position immediately. Next morning, when Surgey dropped by the branch, Molony had a draft for $60,000, just as he’d promised. No, there was nothing about him to create even a scintilla of doubt. He wasn’t merely a client who aroused no suspicion, he was as active, well-financed, and conscientious an investor as any broker could hope for.
One Saturday afternoon, Molony was signing a marker in the dice pit at Caesars in Atlantic City when a fresh-faced man in his early thirties introduced himself. He had curly brown hair, glasses, and manicured nails, and wore a flannel suit, striped shirt, and silk tie.
“Brian, Michael Neustadter. Anything we can do for you, please let me know.”
Molony kept a low profile in the casino, revealing nothing about himself, but his cash deposits and repeated losses were buying attention. Michael Neustadter was director of casino credit at Caesars, an important position he had come by through paternalism. His family was well known in Atlantic City. His father, Milton Neustadter, had once been an owner of Steel Pier and was one of the principals in Jemm Co., the company that built the Howard Johnson’s on the Boardwalk in the late 1960s. When Michael graduated from Temple University in business administration, he took over management of the motor hotel.
In the 1970s Jemm was enthusiastic in support of casino gambling, contributing financially to the cause. The first company to file application to operate a casino in Atlantic City was Resorts International. Resorts opened its doors on Memorial Day in 1978. It was overrun. Gamblers crushed around the blackjack tables, five deep, betting on other players’ hands. Some people wet their pants rather than relinquish their seats. It was clear there was a fortune to be made, and other companies scrambled to get in on the action. Playboy Enterprises intended to build a casino near Convention Hall; Bally, the world’s biggest maker of slot machines, had leased the Marlborough-Blenheim Hotel; Penthouse planned to build on the site of the old Mayflower Hotel. Gaming interests were investing enormous sums to get in on the booty.
Jemm cut a sweetheart deal with Caesars World, the company that owned Caesars Palace in Las Vegas and Caesars Tahoe in Stateline, Nevada, as well as honeymoon resorts in the Poconos. Caesars leased the Boardwalk property and, instead of building from scratch, used the existing, 425-room motor hotel as the basis of a complex that included a 527-room hotel, eight bars and restaurants, and 48,630-square-foot casino. In addition to substantial rent, Jemm received 19.3 per cent of net profits. Milton Neustadter and Sonny Goldberg, the operating investors in Jemm, got offices and titles and handsome salaries for performing duties that were, in the words of Milton Neustadter, “practically whatever we want them to be.” Their sons, Michael Neustadter and Roy Goldberg (brothers-in-law, Neustadter having married Goldberg’s sister), were also hired by Caesars. Michael was given a five-year contract. He began as general manager of the hotel, but soon moved over to the casino side and ended up in charge of casino credit. Roy Goldberg ended up in charge of casino marketing. Jemm thus had fingers on the two critical pulse points of the new casino.
Most key casino employees at Caesars had come east from Nevada. They had spent years working their way up in the industry. In Michael Neustadter they had a boss who had never dealt blackjack and wouldn’t have recognized marked cards if they’d been spray-painted. Neustadter worked hard; he was good at his job; he was liked by the dealers because he took the trouble to tell them about the high rollers. But his family had money enough that he didn’t need to work at all. He’d sailed in on his old man’s coattails, hadn’t paid his dues. Many of his colleagues resented him, which made him all the more determined to show them he was capable.
As director of casino credit, Neustadter was responsible for ensuring that Caesars issued credit in compliance with the New Jersey Casino Control Commission regulations. That job description demands interpretation, since the cr
edit extended by a casino is unlike the credit extended by any other business. In the conventional arrangement, you receive goods or services in return for your promise to pay over time. If the product happens to be money, as in a bank loan, you are ordinarily asked for collateral. Such credit is regulated by government, which limits the interest that can be charged and includes provisions for default. The provider of credit assumes the burden of risk. The provider, after all, stands to profit from the relationship. Sears doesn’t want to have to repossess its bedroom suite; it wants your money. Sears must be astute in its judgement of your ability and willingness to repay or it will suffer. It has an implicit obligation to ensure you don’t obtain credit beyond your capacity to repay; you, in turn, have an implicit obligation not to apply for credit beyond your means. The provider of credit ordinarily goes to some lengths to make sure you’re not overly indebting yourself — Sears looks carefully at your credit history, net worth, and debt-service ratio. As anyone knows who’s been turned down by a bank, obtaining credit is not always a simple matter. Credit, any banker will tell you, is a privilege and not a right.
At a casino, however, you can easily establish a “credit line.” When you apply for credit, the casino checks where you bank and where you work. It pays much less attention to those factors other creditors scrutinize so closely — your net worth, outstanding debts, and so forth. If you already have credit at any other casino, it will show up at Central Credit Bureau in Las Vegas, which feeds information to all the casinos in Nevada and New Jersey. You’ll routinely be granted the same credit line at the new casino. (Try that at Sears, or your bank.) Michael Campanara, a New Jersey security guard who earned $16,000 a year, had no trouble getting credit totalling $115,000 at several Atlantic City casinos.
The casino needn’t put you through a stringent investigation because the marker you sign when you’re given chips is not a loan agreement but a postdated cheque. It includes your assurance that you have funds in the account to cover the cheque. In return for “credit,” you’re providing not a promissory note but a negotiable instrument. For this instrument you get no real consideration in the legal sense. The casino won’t even cash your cheque, only give you chips for it. The chips have value only in that particular casino. If you take more than $500 in chips and try to cash them, you’ll be asked if you have outstanding markers. If you have, and you say you don’t, you’ve committed fraud under New Jersey law.
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