Concurrently, a delicate, drug-related national security situation had developed in Vietnam. During the war, Iran, with the knowledge of its American financial advisors, had shipped tons of opium to the Vichy French in Saigon. Pressed by Anslinger, France in June 1946 pledged to disengage – but after the Viet Minh launched their insurgency a few months later, France, with America’s tacit approval, continued to trade opium to help finance its counterinsurgency.
Helping to manage public perceptions in this regard was former ambassador to France and Russia William C. Bullitt. One of several diplomats linked to smuggling in the post-war era, Bullitt journeyed to the Far East as a reporter for China Lobby activist Henry Luce.10 A feature article Bullitt subsequently wrote for Life Magazine slammed Truman for not supporting the Nationalists and provided the Republicans with the enduring “Truman lost China” theme which they used to bash the Democrats. Bullitt, meanwhile, was dining regularly in Paris with Vietnam’s playboy Emperor Bao Dai, an opium smoker who relied on opium profits to finance his decadent regime.
In secret the government rationalized its protection of the drug-smuggling Nationalists by insisting that any consequent health problems were confined to the Far East. But by mid-1947, Kuomintang narcotics were reaching America through Mexico. The Mafia was involved, as was Bugsy Siegel through his ill-fated love affair with curvaceous mob courier and courtesan Virginia Hill. Described by Anslinger as a “prominent narcotics figure,” Siegel in 1947 was the subject of an FBN conspiracy case that included all the usual suspects: Lucky Luciano, Joe Adonis, Frank Costello, Meyer Lansky, and Chicago’s Charlie Fischetti.11
The Siegel drug conspiracy had its inception in 1939 when, at Meyer Lansky’s request, Virginia Hill moved to Mexico and seduced a number of Mexico’s “top politicians, army officers, diplomats, and police officials.”12
Hill soon came to own a nightclub in Nuevo Laredo, and started making frequent trips to Mexico City with Dr. Margaret Chung, an honorary member of the Hip Sing T’ong and the attending physician to the Flying Tigers – the private airline formed under China Lobby luminary General Claire Chennault to fly supplies to the Nationalists in Kunming, the city John Service described as infused with OSS agents and opium. More to the point, as investigative journalist Ed Reid reported in The Mistress and the Mafia, the FBN knew that Dr. Chung was “in the narcotic traffic in San Francisco.”13
Chung took large cash payments from Siegel and Hill and delivered packages to Hill in New Orleans, Las Vegas, New York, and Chicago. These deals involved Kuomintang narcotics, and yet, despite the fact that the FBN agents “kept her under constant surveillance for years,” they “were never able to make a case against her.”14
Why not? Because she was protected, of course. Admiral Chester A. Nimitz was just one of her many influential friends in Washington. And unlike Bugsy Siegel, she wasn’t making waves; although where, exactly, Siegel went wrong is open to debate. By most accounts he was murdered by the Mafia for squandering mob money on the Flamingo Hotel. But FBN Agent Joe Bell – George White’s replacement as district supervisor in Chicago – advanced a more plausible theory: that Siegel’s murder “paved the way to complete control of illegal narcotics distribution in California by the Mafia.”15
Bell was alluding to a drug smuggling operation Lansky had initiated in Mexico in 1944 under Harold “Happy” Meltzer. Described as “the man who most feared Bugsy’s grab at Mexico,” Meltzer based his operation in Laredo, directly across the border from Hill’s nightclub, and moved drugs to the Dragna organization in California. Meltzer was an associate of John Ormento, the Lucchese family’s link to Mafia boss Joe Civello in Dallas, and he worked with the Mexican consul in Washington, who located suppliers and bribed border guards. Bankrolled by Lansky and Harry Stromberg in Philadelphia, Meltzer traveled regularly between Mexico City, Cuba, Hong Kong, and Japan. He was also a professional hit man, and in December 1960 the CIA would ask him to join an assassination team – a sinister overture that suggests that his connection to the espionage Establishment dated back to the Luciano Project, along with Lansky’s and Siegel’s.16
Meltzer’s proximity to Virginia Hill in Laredo also strongly suggests that he was a recipient of Dr. Chung’s Kuomintang narcotics. And if that was the case, Siegel may not have been murdered by the Mafia, but by agents of the US government, because his grab for control of the Mexican connection threatened to expose Dr. Chung’s protected Kuomintang operation. Even the way Siegel was murdered – by two rifle shots to the head – has been characterized as very “ungangsterlike.”17
Protecting the Mexican connection was business as usual for the espionage Establishment, and when Siegel was killed in her house on 15 June 1947, Virginia Hill was already in France setting up an import agency that would exploit this most important gateway for moving narcotics to the Mafia in America. Again, there is convincing evidence that the secret government was aiding and protecting Hill in this endeavor: her passport was stolen while she was in France, and yet despite her ties to organized crime, the State Department quickly provided her with a new one.
In August, Hill traveled to Miami to deposit a large sum of cash in the National Bank of Mexico and then retreated with Dr. Chung to Mexico City, where in early 1949 she re-established her contacts. Hill then traveled to Europe to confer with Lucky Luciano – Lansky’s partner in a new operation that relied on French Corsicans (many with intelligence connections) and clandestine labs producing high quality heroin in France and Sicily.
Why would the government protect notorious drug traffickers in this manner? Peter Dale Scott theorizes that it preferred “organized crime to disorganized crime or radicalism.”18 And by mid-1947 there was more at stake than the fate of the Nationalist Chinese; there was the fate of Israel too, and several gangsters from the Luciano Project, including Lansky, were actively involved in arms and drug smuggling in the Middle East. As the New York Times reported on 28 November 1948, the new state of Israel was combating “widespread narcotic smuggling” by “a small number of hardened criminals” who had slipped in and still practiced the black-market arts that had kept them alive during the war.
As John Service had reported three years earlier, and as Anslinger knew was still the case, the Nationalist regime was totally dependent on illicit narcotics. According to a 14 July 1947 State Department report, Nationalist forces were, at that moment, “selling opium in a desperate attempt to pay troops still fighting the Communists.”19 He also knew that Kuomintang opium and narcotics were reaching Mexico. In a 15 November 1946 report to Anslinger, New Orleans District Supervisor Terry A. Talent reported that, “Many Chinese of authority and substance gain their means from this illicit trade,” and that, “In a recent Kuomintang Convention in Mexico City a wide solicitation of funds for the future operation of the opium trade was noted.” Talent listed the major Chinese traffickers by name.20
However, reports emanating from Mexico avoided any mention of the Mafia–Kuomintang connection. For example, in February 1947, Treasury Attaché Dolor DeLagrave, a former OSS officer, reported from Mexico City that three major drug rings existed, but he made no mention of Virginia Hill’s connections, Albert Spitzer and Alfred C. Blumenthal.21 Though these connections were revealed to Senator Estes Kefauver, and even though Anslinger knew that Spitzer and Blumenthal were Lansky’s associates, and that large opium shipments were coming out of Mexico “under police escort,” there was no follow-up by the FBN.22 In 1948 the FBN would declare that Mexico was the source of half the illicit drugs in America – but nothing was done about it.
Nothing was done, because the drug trade enabled the Central Intelligence Agency (CIA), which was created in 1947, to destabilize the Mexican government by pitting officials of the central government in Mexico City against warlords in the northern border region. Just as the CIA was pleased to see drug-addicted officials compromise the Cuban government, it was also glad when Captain Rafael Chavarri, founder of Mexico’s version of the CIA, the Federal Security Direc
torate (DFS), formed relations with Mexican drug smuggler Jorge Moreno Chauvet. According to Professor Scott, at this point the CIA “became enmeshed in the drug intrigues and protection of the DFS.”23 By 1950, Chauvet was receiving narcotics from the new Lansky–Luciano French connection;* and the mob-connected, former mayor of New York, William O’Dwyer, was the US ambassador to Mexico.
CONFLUENCE: DETROIT, THE CIA, AND THE ITALIAN MAFIA
While the FBN focused on corrupt officials in Mexico, the Mafia was moving high-grade heroin through Canada to Detroit, where George White arrived in June 1947 as district supervisor following Ralph Oyler’s death in March. Oyler’s fatal heart attack came just a few weeks after Detroit was identified in the 25 February 1947 Detroit Times as a “key city” in a new dope ring established by Lucky Luciano. Anslinger was quoted as saying that after Luciano’s arrival in Havana the FBN had discovered a Mafia scheme to make Tampa and New Orleans “the new main ports of entry for a gargantuan flood of illicit dope.” Anslinger added that the Mafia had “obtained a vast dope hoard through looters in the last chaotic weeks of the European and Asiatic wars.”24
Anslinger’s revelations, and the situation in Detroit, are two more examples of the FBN’s inability to neutralize the Mafia in the late 1940s. One reason was the FBN’s reduced strength – but there was a more sinister reason as well. According to Paul Newey, an FBN agent in Detroit from 1943 until 1948, “We were restricted from taking cases that concerned the Mafia before the US grand jury unless the US Attorney cleared it with the Attorney General in Washington, DC. This, to me, was a method of putting the ‘fix’ sub rosa for political purposes.”
From the ports of Marseilles and Hong Kong, to the streets of America’s cities, political considerations shaped the drug trade, and during Oyler’s twelve-year tenure as district supervisor in Detroit, the agents under his command were focused on making politically correct cases against pot smokers, Black heroin addicts, and Chinese opium dens. The Mafia, which controlled importation and distribution, was not a concern, and George White’s arrival as acting district supervisor failed to signal a shift in policy. Characteristically, White’s primary function in Detroit was to bring the FBN good press. “The FBI had hired a Public Relations man,” Newey explains, “but Anslinger didn’t have enough money to do likewise, so he relied on White to get the Bureau publicity.”
White, as ever, was glad to oblige, and posed, a mere month after his arrival in town, with a Tommy gun in one hand and an opium pipe in the other for the 27 July 1947 Detroit Free Press. Throughout 1946 and 1947, White also continued to experiment with “a speech inducement drug that could be administered orally in alcohol or by insertion in crystal form into a cigarette.”25 Thus his pursuit of publicity, and his activities on behalf of the espionage Establishment, occupied more of his time than investigating the Mafia in Detroit at a critical point following the war.
Meanwhile, as Anslinger had revealed, Detroit drug smugglers were receiving narcotics from Santo Trafficante in Tampa, via New Orleans. The connection was established in December 1945 when Costello and Lansky opened the Beverley Club in New Orleans under the supervision of Sam Carolla and Frank Coppola. Originally a member of the Luciano family, Coppola moved to Detroit in the late 1930s and enjoyed political protection there after he joined forces with Jimmy Hoffa and the Teamsters to kick the Congress of Industrial Organizations out of town in 1941. Coppola was godfather to Hoffa’s foster son, and Hoffa protected Coppola’s narcotics receivers in Detroit, John Priziola and Raffaele Quasarano, “by assigning them to Teamsters Local 985.”26
From Hoffa’s headquarters in Detroit, the Teamsters facilitated the Mafia’s national drug distribution system. After being received from overseas sources, Frank Coppola’s narcotics were transported to Joe Civello in Dallas and Frank Livorsi in New York by John Ormento’s trucking company. Family ties were the key to success; Livorsi’s in-laws included Ormento and brothers John and Frank Dioguardia, who controlled Teamsters locals in New York and Florida with their uncle, James Plumeri, a ranking member of the Lucchese family.
Another advantage was political control at the local level, through which the Mafia was able to seamlessly maintain its national drug distribution network even though the federal government deported dozens of Mafiosi in the post-war years. Case in point: New Orleans boss Sam Carolla was deported to Sicily in May 1947, and Frank Coppola was deported to Italy in January 1948, at which point the New Orleans operation passed to Tunisian-born Carlos Marcello. But drug operations proceeded apace, for like his predecessors, Marcello was protected at home; although FBN agents had arrested him in 1938 for possession of 23 pounds of pot, while he was known to be running one of the “major narcotics rings in the New Orleans area,” Louisiana Governor O. K. Allen arbitrarily reduced his sentence, and within nine short months Marcello was back on the streets.27
Deportation didn’t cramp Carolla’s or Coppola’s style, either. For many years Coppola had made frequent trips to Europe to purchase narcotics, and he and Carolla merely re-established their base of operations in Sicily, where they continued working with the ranking Sicilian narcotic traffickers, the Badalamentis and the Grecos. It is even likely that Carolla and Coppola, as a result of their Luciano Project and anti-communist activities, were part of what Professor Scott describes as “a post-war intelligence-mafia collaboration” that exploited “international drug traffickers for covert purposes.”28
The foundation for this symbiotic relationship was laid by the OSS during the war, when it placed Mafiosi in positions of political importance in Sicily and Italy and helped forge their alliance with the Christian Democrats. Involved in this criminal conspiracy were remnants of Mussolini’s secret police force (the OVRA); the Italian Masonic Order, P-2; the Vatican’s intelligence service; and the CIA, through William Donovan’s World Commerce Corporation (WCC). Formed in 1947 with the financial backing of the Rockefellers, WCC was a private sector version of the Marshall Plan, investing primarily in munitions and strategic materials. Based in Panama and composed largely of former OSS officers, WCC has been described as a cross between “an import-export combine and a commercially oriented espionage network.”29
One covert and commercial use to which international drug traffickers were put was as a tool in the suppression of communists and labor organizers. In May 1947, for example, Mafioso Salvatore Giuliano and his gang killed eight people and wounded thirty-three in a Sicilian village that had voted for the Communist Party’s candidates in elections held four days before. Frank Coppola, from his base in nearby Partinico, reportedly provided Giuliano with the bombs and guns, and was himself “allegedly financed by former OSS chief William Donovan.”30
“Coppola was the controller behind the scenes, the maker of Sicilian and Roman deputies,” author Gaia Servadio says in Mafiosi, and “the deus ex machina of the Salvatore Giuliano saga.”31
By 1948, the CIA was so influential in Italy that the leader of its Communist Party, Palmiro Togliatti, charged the US with subverting Italy’s national elections. He also charged that reporter Michael Stern (who had glorified Giuliano in a series of articles for True Magazine in 1947) was a spy for William Donovan and China Lobby Senator Carl Mundt, one of Anslinger’s strongest backers. That implies that Anslinger knew everything about the alleged “post-war intelligence-mafia collaboration” that exploited “international drug traffickers for covert purposes.”32
THE PEOPLE’S REPUBLIC VS. TAIWAN
US government support for drug smugglers as a function of national security moved with the Kuomintang to Taiwan in October 1949, when the People’s Republic of China (PRC) was established. At American insistence, the Nationalists were recognized by the UN as China’s legitimate government. Meanwhile, under the direction of the CIA, drug smuggler General Li Mi and the Nationalists’ 93rd Division crossed into Burma and, with the assistance of CIA assets in Vietnam, Laos, and Thailand, began launching covert paramilitary operations against mainland China. To bolster the CIA
’s covert actions, China Lobby Senator Pat McCarran in February 1949 requested $1.5 million in aid to the Kuomintang, and in April Senator Knowland began attacking KMT critics in the State Department. Determined to prevent the UN from admitting the PRC, the China Lobby launched a massive propaganda campaign based largely on Anslinger’s allegations that the PRC was the source of all the illicit dope that reached Japan, the Philippines, and Hong Kong – despite the 23 July 1949 seizure reported by the New York Times at Hong Kong’s Kaituk airfield of 22 pounds of heroin that had emanated from a CIA-supplied Kuomintang outpost in Kunming.
Anslinger pulled his weight in many ways: in 1950, when the PRC announced its desire to sell 500 tons of opium on the open market, he refused to allow New York Quinine and Chemical Works to import samples. His stated reason was to prevent the PRC from acquiring the staggering sum of foreign currency the sale would have generated. Anslinger said that he was afraid the PRC would use the money to buy weapons to support communist insurgencies worldwide. But the refusal served an insidious ulterior purpose as well, for by forcing the PRC to sell its opium on the black market – or by creating the impression that it was doing so – Anslinger was able to sustain a black propaganda campaign against the emerging communist nation.
To protect Taiwan from the PRC, the China Lobby raised nearly $5 million of private money, which the CIA used to purchase General Chennault’s fleet of planes and convert them into the CIA’s first proprietary air force, Civil Air Transport (CAT). Working with Chennault were William Peers, the CIA station chief in Taipei (a former commander of the OSS’s opium-dispensing Detachment 101), and Desmond Fitzgerald, the CIA’s deputy for Asian affairs. Like Peers, Fitzgerald was no stranger to opium: as a liaison officer to Nationalist troops fighting the Japanese during the war, he had “enjoyed the exotic life of the bush, smoking opium with Burmese chieftains.”33
The Strength of the Wolf Page 11