Supermob
Page 16
Ben Weingart, 1950 (photographer unknown)
Almost immediately, the OAP came under suspicion of being an insider gravy train, prompting a Senate investigation of its methods. On March 7, 1948, the Chicago Tribune summarized the allegations Congress hoped to investigate:
At least a score of former New Dealers, close friends of the administration and former federal employees, have been put on the payrolls of the firms the United States operates or placed in strategic positions as directors. Some of them draw as much as $50 thousand a year. In half a dozen multimillion dollar corporations, former government workers and their political pals are in on the ground floor in anticipation of the time these firms are sold to private management . . . Some concerns, such as the $80 million General Aniline Film Corporation, are suffering from undercover jockeying of powerful political and financial groups which hope to get these lush properties when Uncle Sam puts them on the auction block . . . The alien property investigation will inquire into reports that law firms and lawyers with right connections have found a "paradise" in rich fees and costly litigation involving seized properties.66
As damning as these allegations were, they were far from representative of the worst secrets hidden behind the doors of the OAP.
Several of us would form a pool to buy up these properties, then we took care of him'* with a share.
ALEX LOUIS GREENBERG, DESCRIBING HIS REAL ESTATE MO67
The most troublesome aspect of the Warehouse deal was that seven years later, on March 14, 1955, Ziffren's name on the deed was replaced with that of David Bazelon, who now held 9.2 percent of the multimillion-dollar real estate holding company—with no record of any cash outlay.68 Interestingly, Bazelon's name was deleted from a number of official records, although it appears in some as early as 1948. Journalist and investigator Robert Goe wrote, "Title Insurance Trust officials have stated for the record that they knew of the Bazelon roles in the Warehouse Properties deal. Since their information is not reflected in their own reports to the City of Los Angeles, it may be that someone high in the Trust office has caused this knowledge to be removed from the files."69 Goe called it "a deliberate attempt to cover up the ownership of the property."
In August of 1959, the City of Los Angeles, reportedly due to the influence of Paul Ziffren, purchased the massive Warehouse Properties parcel for $1.1 million in furtherance of its Civic Center Master Plan. The Warehouse lot was situated in the center of a location earmarked for purchase by the federal government for the new $30 million Customs Building. Brother Leo Ziffren had also been seen massaging the deal in the office of the city's chief of the Bureau of Right of Way and Land.70 David Bazelon's cut was over $100,000. 71
It wasn't just Japanese property that was seized by the OAP then directed to the Supermob. Friends of Bazelon's profited off German seizures as well. In a purchase that was not divulged for other bidders, the Ziffren group relieved the Office of Alien Property of the Luxembourg-based Rohm Haas Chemical Corporation in Philadelphia for $40 a share, when it was worth $125. Their $1 million investment in 1948 was worth $40 million by 1954.
Since the purchase was not divulged to others, only the custodian, David Bazelon, would have known of it.72 Interestingly, one of Bazelon's and Ziffren's associates at Gottlieb, William J. Friedman, became the director of Rohm Haas after the purchase. The FBI in Los Angeles was informed years later that Jake Arvey and Sidney Korshak divided about $12 million worth of the Haas stock.73 When Custodian Bazelon appointed a friend's law firm to handle the legal aspects of one German seizure, Truman's Attorney General James Howard McGrath refused to pay their exorbitant bill, reportedly saying he "dare not approve the fee because the situation is so ticklish in the Department of Justice right now that he doesn't know what furor it might "74cause.
On May 16, 1957, Attorney General Herbert Brownell wrote Hoover asking him to investigate the Rohm Haas acquisition by a "Chicago group" and the possibility that Bazelon was paid off with the Warehouse Properties stock gift. "The Chicago group included Ziffren, Sidney Korshak . . . and Jacob Arvey, the well-known Chicago politician with whom Ziffren formerly shared a law office." After only two weeks, the FBI delivered its conclusion: Bazelon's OAP indeed controlled 70 percent of Rohm, while the group headed by his best friend, Paul Ziffren, held the remaining 30 percent. The Bureau, incredibly, was not asked to see if Ziffren's $40-per-share price was (as it appeared) well below the true value.
The FBI's conclusion to its inquiry was a tribute to bureaucratic buck-passing: "If by some arrangement or 'deal' this purchase was actually done, it would appear to have been a private transaction and does not fall within the scope of this inquiry."75 A top Wall Street stock analyst recently reviewed the FBI's file and translated the obtuse stockbroker jargon: "There is clearly the possibility of impropriety. Bazelon was in a position to know the true worth of the [Rohm] company and to influence whom they sold it to. The only way to know is if Bazelon did something to help Ziffren buy it for cheap—like telling the original owners, Tm going to fuck you if you don't sell to my friend for such and such a price.' . . . The FBI is saying, 'We had a very limited investigation.' Nobody asked them to go further. It was totally not a complete investigation. There were enough ways for them to get to the bottom of it, but they weren't asked to.76
"On October 21, 1949, David Bazelon became, at age forty, the youngest federal judge in history, appointed by President Truman to the most important circuit court in the United States, the Washington D.C. Court of Appeals.77 Bazelon's new posting was made as a "recess appointment," a presidential ploy often used to secure a controversial enlistment while potentially disapproving congressmen are on break.* It was believed by some that Arvey arranged the appointment as payback for his support of Truman in the 1948 election.78 Former secretary of the interior Harold L. Ickes, writing in the New Republic, called the appointment "deplorable" and showed great prescience when he advised, "Certainly the Senate would do well to investigate closely Bazelon's conduct of the Office of Alien Property." He added that he'd assumed that the Truman administration's appointment of Tom Clark to the Supreme Court was as bad as it would get, but he added regretfully that Bazelon's naming was an "all-time low." Ickes next wrote Truman in a last-ditch effort to sink the nomination, arguing, "I happen to know a good deal about Bazelon and I consider him to be thoroughly unfit for the job that he holds, to say nothing of a United States judgeship, either on the Court of Appeals or on the District Court."79 (Ickes was also a former Chicago newsman and outspoken opponent of political corruption and collusion with the Capone Syndicate.)
Los Angeles Mirror journalist and tireless researcher into the L.A. real estate purchases Art White summarized the importance of the expansionist decade:
During these years some hundreds of associates of Greenberg, Evans, and others of the Capone crime syndicate, and of Arvey and Ziffren, poured hundreds of millions of dollars into California. They bought real estate, including hotel chains through apparently unrelated corporations from San Diego to Sacramento. They invested in vast tracts of land, built or bought motels, giant office buildings, and other commercial properties. More importantly, they invaded the loan field, establishing banks and home loan institutions. By 1953, Ziffren and his associates had gained control of an enormous block of California's economy. They could finance political campaigns with the best of the native barons.80
When the FBI reviewed White's research into the extent of the relationship between the Capones and Ziffren, it concluded with a rare declaration vindicating White's conclusions: "The extraordinary success of this adventurer [Ziffren]—and by the same token his backers, who can be traced right into the Midwest and East Coast hoodlum world—has been proven anddocumented.81 (Author's italics.)
For a more detailed, but still partial, list of the properties acquired by the combine of Chicago's Supermob associates, see appendix A.
Along with Chicago's tainted money and mob-controlled unions now flooding the West came a need to manage the re
quisite labor and political issues that accompanied them. Who better for the role of underworld liaison to the upperworld than the suave Chicago attorney already comfortable with the Capones, and already schooled in the intricacies of labor "negotiating"? Who better than Sidney Roy Korshak?
*The others were Max Krauss, Minnie Krauss, Janet Krauss, Marion Krauss, Harry Fer-tig, and Samuel Berke.
*Kirkeby had been living in Bel-Air, California, in an estate built in 1938 and valued at $27 million, the most valuable single-family home in the world. It featured a silver vault, two 250-foot tunnels leading to the gardens, a 150-foot waterfall, gold-plated doorknobs, and a library with hidden bookshelves. From 1962 to 1971, the Kirkeby Estate on Bel-Air Road was the setting for the Beverly Hillbillies TV show. (Los Angeles Times, 2-9-86)
†Also perishing was Linda McCartney's mother, Mrs. Lee Eastman.
*Hoover launched the first salvo in 1952. Presidential candidate Dwight Eisenhower had made a deal with then governor Warren that if California's "favorite son" presidential candidate delivered the California delegation to Eisenhower at the Republican convention, President Eisenhower would nominate Warren to the Supreme Court at the next vacancy. Warren did as asked, and when Eisenhower nominated him in late 1953, Hoover gave a scathing background report to the Senate Judiciary Committee, which had to approve the nomination (the report dealt with a Warren love affair with a staffer). Committee chairman William Langer (R-North Dakota) was already bent on holding up the nomination as political blackmail against Eisenhower. (Langer wanted more say in Dakota patronage appointments. Langer had also received citizen complaints, one charging that Warren had permitted "organized crime to establish itself in California.") After three months of stalling by Langer, Warren was confirmed as chief justice on March 1, 1954. Nine years later, when Warren chaired the investigation into JFK's 1963 assassination, Hoover again had to vet the commissioners. He found what he felt were questionable right-wing associations of three of the Warren Commission staff nominees, but
Footnote cont'd
Warren had already announced their appointment publicly—too late for Hoover to have them pulled. Warren fired the last barb when he rejected the staff report on the FBI's performance and had one of the staff that Hoover had wished to reject (Norman Redlich) write a second version. Based on a 4-3 vote, this scathing report was incorporated into the Warren Report and noted that, had the Bureau been "an alert agency," Lee Harvey Oswald would have been put on a list of potential threats to the president. (Int. of FBI agent Jim Hosty, 7-22-03, who was given the details by Hoover; Hosty's book, AssignmentOswald, 136-38; Warren Report, U.S. Government Printing Office version, 443; Cray, Chief Justice; Time and Newsweek, 3-1-54)
*The ten "relocation centers" were built by the future king of the Las Vegas hotel builders, Del Webb.
* Elrod eventually bought his own ballroom, the Club Dorel (an anagram of his last name), which contained a fake wall that concealed a hidden room used as a casino and bookie parlor. When New York Commission partner Frank Costello's phone records for 1945 were obtained by authorities, they noted numerous calls to Elrod.
* Korshak often bragged about his friendship with Kentuckian Barkley, and the FBI noted that when the VP visited Chicago, he and Korshak were often seen at the Outfit-infested Chez Paree nightclub, where Barkley nonetheless refused to be photographed with Korshak. (FBI memo from DELETED to SAC, Chicago, 6-15-59, Korshak file)
*In the 1950s, Weingart founded the Weingart Foundation, which today has total assets of $490,350,000. The primary recipients of grants were to be the down-and-out people of skid row, where Weingart had made his fortune in alien real estate. The foundation helps underprivileged groups with education, youth programs, health and medicine, crisis intervention, disaster relief, and community programs. Weingart died in 1980.
*Him referred to Illinois state auditor Arthur Lueder, who, like Bazelon, gave Greenberg advance tips on real estate he had underappraised.
*The recess appointment was most recently utilized in 2005 by George W. Bush in his naming of firebrand John Bolton as U.S. representative to the United Nations.
CHAPTER 6
" Hell, That's What You Had to Do in Those Days to Gel By"
The future always looks good in the golden land, because no one remembers the past.
JOAN DIDION1
BY THE LATE FORTIES, the Supermob's takeover of the Golden State was well under way: Paul Ziffren had relocated his law practice from 134 N. LaSalle Street in Chicago to 9363 Wilshire Boulevard in Beverly Hills and, through pal David Bazelon, had helped his Chicago friends invest their profits in numerous tracts of West Coast land; Al Hart was a thriving California distiller, racetrack owner, and soon-to-be bank owner; Joe Glaser had moved his Associated Booking to L.A., and likewise, Jules Stein and Lew Wasserman (who had been elevated by Stein to MCA president in December 1946) opened their MCA headquarters there and absorbed the 250-client talent pool of the Zeppo Marx Agency when they purchased that Hollywood powerhouse; MCA client Ronald Reagan was now in Hollywood, a bad actor, but a better politician who was about to become president of the Screen Actors Guild (1947-52, 1959), where he would protect MCA's interests; Jake Factor was finally in prison, but would soon land in Las Vegas before settling in L.A., with his brother Max, as a prominent real estate investor and philanthropist; Philadelphian Walter Annenberg expanded his publishing empire and built his palatial 392-acre estate, Sunnylands, in Rancho Mirage, California, going on to become a key supporter of both Ronald Reagan's and Richard Nixon's political careers; and Hilton scion Arnold Kirkeby had landed in the tony Bel-Air enclave, where he built the most expensive private home in America.
Remaining behind in Chicago—although financially connected to California—were Jake Arvey, the Pritzkers, Henry Crown, Alex Greenberg, and Arthur Greene. Sidney Korshak was still dividing his time between the two outposts, due in large part to his advisory role with the Outfit, which was now trying to secure an unthinkable early release for its brethren incarcerated in the Hollywood extortion case.
By the late forties, Bioff, Browne, and Schenck had already been released from prison, but the rest were still cooling their heels in stir, while their confreres on the outside lobbied the Truman administration for an early release. According to Bureau of Prison records housed at the National Archives, Sidney Korshak visited Charlie Gioe in Leavenworth twenty-two times. Korshak was not Gioe's attorney of record, and it is widely assumed that he acted as an information conduit, updating Gioe on the negotiations with Truman's parole board. Korshak told the FBI that the visits were merely to update Gioe on the status of an Antioch, Illinois, real estate sale by Gioe's wife, whom Korshak was helping.
Among other services rendered, Korshak admitted that he solicited letters of character reference for Gioe and enlisted one of his law associates, Harry Ash, to agree to act as Gioe's parole supervisor. Since Ash was also Chicago's superintendent of crime prevention, he was considered by Korshak to be above reproach.2
After intense pressure applied to politically vulnerable President Truman and his parole board, the convicted Outfit felons were indeed released early (over the objections of prosecutors and prison wardens) on August 18, 1947, their terms cut by a third. The subsequent uproar led to a major congressional investigation and forced Harry Ash to resign his Chicago civic post.* Although the Hollywood extortion convictions gave the outward appearance of rescuing the movie business from the underworld, it actually distracted the public from a handoff to the more sophisticated Supermob, which would control huge segments of the business with remnants of the underworld. The new partnership was, like the Bioff gambit, mutually beneficial, especially when entertainers found themselves in the mob's crosshairs. Such was the case in November of 1947, when the nascent comedy team of Dean Martin and Jerry Lewis were appearing in Chicago at the Chez Paree. When on the road, the duo famously partook in the female temptations that presented themselves; however, when Martin and Lewis sought to make whoopee with
two lovelies that were already spoken for—by Joe Accardo's boys—they took their very lives in their hands.
"I got them out of Chicago about two steps ahead of Dean getting killed," recalled their agent, Abbey Greshler. "I did it with the help of Sidney Korshak. He's a very dear man, but some people say he's the mob's attorney. I never asked him that. You learn not to ask." It was to be one of countless rescues Korshak would perform over the years for celebrities who thought they could play ball with the boys in the big league.
It wasn't as if Martin and Lewis were naive as to whom they were entertaining. Lewis had first run afoul of a loudmouthed front-table thug when Lewis grabbed his shoulder and said, "Hey, pal, the show is up here!" The "pal," who turned out to be Outfit enforcer Charlie Fischetti, shot back "the look" and warned, "If you don't move away right now, I'll blow your fuckin' head off." When Lewis realized whom he had crossed, he apologized profusely. (For decades thereafter, the Fischetti family sent substantial checks each year to Lewis's muscular dystrophy telethon.)3