Supermob

by Gus Russo

  A Kennedy investment in the Tropicana would not be a unique casino interest for Joe Kennedy. Compelling evidence has surfaced in recent years that Kennedy, using a front, had also heavily invested in Lake Tahoe's Cal-Neva Lodge, where his co-owner was Chicago mob boss Sam Giancana, who was similarly fronted in his ownership by Frank Sinatra*79

  For appearances, the same man who fronted for the New York Commission's interest in Miami Beach's Fontainebleau Hotel, Ben Jaffe, also directed the Trop operation.

  All these operations had one executive in common: Sid Korshak, who was placed in the critical position of handling labor relations between the unions and the Vegas hotel owners, arranging favorable contracts for any establishment owned by the Outfit or their New York Commission peers. Korshak, known in Vegas as "the Chicago Juice," handled labor affairs for the Sands, the Desert Inn, the Riviera, the Stardust, the Trop, and others. During the boom years, Korshak prevented strikes from all corners of Sin City's workforce, including waiters, taxi hacks, entertainers, and casino employees. And of course, part and parcel with these activities were the backstabbing sweetheart deals for which Korshak was notorious in the Midwest. "Sid, as a consultant to casino owners, went to owners of casinos and told them how to defeat the unions and form company house unions," remembered Joe Long-meyer, a veteran Chicago labor organizer who fought pitched battles to try to free the Teamsters from their takeover by the Supermob and the underworld.80

  A top Hollywood agent recalled Sidney's tenure in Vegas, saying, "Whoever the front guys were, it was Sidney who ran Vegas. He kept it away from any significant labor disputes and he did the same thing for the motion picture industry. That was his great ability."81

  Occasionally, a labor problem would perplex even Korshak, such as an ongoing four-year dispute between unions and the Las Vegas Ramada Inn. In such intractable cases, Korshak placed a call to Abe Teitelbaum, asking him to come to the rescue. (The Chicago-based owner of Ramada, Marion Isbell Sr., had a long relationship with Teitelbaum.) In the Ramada dispute, Teitelbaum settled it with two phone calls, an intervention for which Teitel­baum, at that point in need of cash to settle with the IRS, sent a bill for $50,000. According to a source close to Teitelbaum, the hefty fee elicited a call from Korshak, who told his early mentor, "Hey, Abe, fifty thousand dollars is a lot for thirty minutes. That's really steep." It was an ironic statement from a man infamous for outlandish fees for his minimal intervention. However, an unfazed Teitelbaum replied, "It's not the thirty minutes. It's the fact that it took me thirty years to learn how to do it."

  Shecky Greene, the iconic Vegas comic credited with "saving the Riv,"* and who interestingly shared a common Lawndale origin with Korshak, remembered how Korshak carried power around his dominion. "He always walked like he had a broom up his ass," Greene recalled. "I had a cheap five-dollar watch around my neck one day, and Korshak, who usually fancied high-priced watches, said to me, 'I want that watch.' I gave it to him. Everything he saw he wanted. Another time, he said to me, 'You know why I don't care to see your show? It's because if I saw you in the old neighborhood, I'd beat the hell out of you.' "82

  To the employees of these hotels like Greene, Korshak was Mr. Big, the man who gave orders, not took them. Although Korshak was happy to foster the illusion, he knew the truth w7as far different—he was still Curly's vassal. Years later, when the FBI had succeeded in placing surveillance bugs in the Chicago mob's headquarters, they overheard Curly Humphreys berating Korshak for not responding quickly enough to an Outfit Las Vegas directive. In 1962, Korshak booked one of his singers, Dinah Shore, into a Vegas hotel not controlled by the Outfit, a move for which he was dressed down over the phone by Humphreys, and overheard by the FBI. Since 1961, Korshak had been booking Shore into the Desert Inn, supposedly obtaining a $1 million Vegas contract for the Southern songstress.83 After Curly complained to his Chicago peers that Korshak was "getting too big for his britches," he got Korshak on the line and let him have it.

  "Anything you want to do for yourself, Sidney, is okay," Curly explained. "But we made you up and we want you to take care of us first . . . Now we built you up pretty good, and we stood by you, but anything outside of [your] law business is us, and I don't want to hear you in anything else. Anytime we yell, you come running."84

  For the first three weeks, things proceeded swimmingly at the Trop. But on May 2, 1957, investor Frank Costello was caught holding a piece of paper describing the skim payouts, prompting the local Mormon-controlled banks to begin denying loans to questionable entrepreneurs.85 Likewise, the Mormon-controlled Gaming Control Board suddenly became even more stingy, and discriminatory, with its licensing approvals. Until this time, the gangster owners had financed much of their start-up costs with monies supplied by the Mormon-owned Bank of Las Vegas. Although they certainly had more than enough disposable income to afford the costs, the hoods' decision to go with a more traditional method served a more important function by not calling the attention of the IRS to their immense hidden nest egg. Luckily for the mob and Supermob, a new, well-endowed bank had just opened in Chicago, and it curiously seemed to prefer gangster clients.

  When Jimmy Hoffa assumed the presidency of the Teamsters in 1957, the mob was finally able to avail itself of the billion-dollar Teamsters Pension Fund cash cow. With Supermob functionaries like Sid Korshak handling the details, the hoods raided the fund and embarked on a five-year Vegas casino-building spree. But first, an emergency Teamster loan of sorts was made in 1959, when the Teamsters "purchased" the Indiana farm owned by Chicago boss Paul Ricca—this despite labor union ownership of property being illegal in Indiana. Hoffa later said that the property was to be converted into a school for Teamster business agents. At the time, Ricca was facing an IRS deadline for payment of tax penalties, so the Teamsters paid Ricca $150,000 for the spread, which was valued at only $85,000. In addition, the Riccas were permitted to live in the house free of charge for over a year.

  Not surprisingly, the first fund loan in Las Vegas went to Moe Dalitz, but what shocked observers was that the money was earmarked for construction of a hospital. On September 3, 1959, a new Las Vegas partnership recorded a deed of sale in Nevada's Clark County Courthouse for a desert tract consisting of hundreds of acres situated two miles southwest of the Strip. On the same day, papers were entered in Chicago to obtain a 6-percent-interest, $1 million loan from the pension fund, with Jimmy Hoffa and his fourteen trustees signing on as beneficiaries.

  The resultant hundred-bed Sunrise Hospital, a for-profit undertaking with built-in guarantees for the investors, would be but a prelude to an even bigger Sin City investment. The partnership chose as the hospital's president Mervyn Adelson, the transplanted son of a Beverly Hills grocer, and currently the "clean" owner of the Strip's Colonial House club (known locally as a magnet for Sin City hookers). Adelson had teamed up with local Realtor Irwin Molasky to build the much needed hospital, but, not unlike Wilbur Clark and Tony Cornero, the partnership came up short before they could realize their dream. Thus, like Clark, Cornero, and others, Adelson and Molasky turned to Moe Dalitz with his Chicago Teamster connections. "We ran out of money and had to take in some investors," Molasky explained to the Las Vegas Review-Journal.

  The hospital's success was guaranteed when Jimmy Hoffa decreed that the Teamsters and Culinary Unions' medical fund would only pay for treatment if the rank and file were treated at Sunrise. Thus, the new hospital saw an influx of thousands of "captive" patients. Irwin Molasky called it "an early form of managed care."86 The lucrative facility also boasted the Sunrise Hospital Pharmacy Inc., the Sunrise Hospital Clinical Laboratory, and the Sunrise Hospital X-ray Lab, the only one in the county. Adelson and Dalitz would later parlay their huge Sunrise profits, with the aid of thirty-one separate loans totaling $97 million from the Pension Fund, into the construction of the luxurious Rancho La Costa Resort in Carlsbad, California. Dalitz hired Wallace Groves, a Bahamas associate of Meyer Lansky's who had been convicted of mail fraud in 1941, to handle the r
esort's land sales*87The golf course and country club opened on July 1, 1965, with homes and condos welcoming new owners soon thereafter. The resort, which came to cost about $500 million, became a favorite vacation and meeting spot for Sid and Marshall Korshak, Dalitz, Hoffa, and hoods such as Chicago bosses Tony Accardo and Sam Giancana, Meyer Lansky, Joey "the Clown" Lom-bardo, and Tony and Salvatore Provenzano; Chicago's Johnny Rosselli and Allen Dorfman both lived at La Costa during its heyday.88 The preponderance of evidence prompted federal officials to refer to La Costa as "a playground for the mob." One FBI report alleged that La Costa "is used as a clearinghouse for bookie operations. The phones are used to receive incoming lay-off bets." Interestingly, Judge David Bazelon and Jake Arvey were also comped guests at the resort, according to the FBI.

  Adelson's share of the Las Vegas and La Costa profits were in turn utilized in 1966 to bankroll his Hollywood juggernaut, Lorimar Telepictures Productions, which produced television's Dallas and The Waltons series. ^ Adelson and Molasky would also make the original land bequest that endowed the University of Nevada at Las Vegas.

  But there was one other service the hospital provided, and this one was to the underworld. Ed Becker, the former public relations man for the Riviera Hotel, recently disclosed one of the hospital's most appealing hidden advantages. According to Becker, Accardo and associates used the hospital to fill the void left when their skim courier Virginia Hill fled to Europe to escape the IRS. "They would send a man out and he would be met at [Las Vegas'] McCarran Airport," Becker recently recalled. "He was put in an ambulance, driven to Sunrise Hospital, spend a few days there; [then] back in the ambulance, back to the airport, then back to Chicago. That's where the skim was going."89

  Sunrise Hospital remains a highly regarded Las Vegas moneymaker. The Sunrise Hospital Mediplex, one of the largest hospitals west of Chicago, with over three thousand beds and one thousand four hundred doctors on staff, was but a prelude to an even bigger moneymaker, the Paradise Development Company. Employing great foresight, the Sunrise partners began developing the adjacent land tract, with the kind assistance of $5 million in government-guaranteed Federal Housing Authority (FHA) loans. With names like Paradise Homes, Desert Palms, and Paradise Palms, the consortium's homes, in the $22,000-$42,000 range, sold by the hundreds. During one two-year stretch, the abodes were selling at a rate of one per day. Authors Roger Morris and Sally Denton wrote accurately, "The Paradise Development Company shaped the emerging commercial and residential map of the city."90 The company's profits would be used in the future to underwrite even more massive withdrawals from the Teamsters Pension Fund, the result of which transformed Las Vegas from a gambler's getaway into a vibrant Western city.

  By the time the Labor Department took over two decades later, the fund had loaned approximately $600 million to the mob nationwide, out of $1.2 billion in total loans made.91 Of those monies, $91 million went to Las Vegas between 1959 and 1961, and $300 million by the late seventies—one sixth of the fund's total assets. The money went for construction and/or improvements for the Stardust, Fremont, Desert Inn, the Dunes, Landmark, Four Queens, Aladdin, and later Circus Circus and Caesars Palace.

  But the obtuse, entangled documentation on the loans render a complete understanding impossible, and the loan ledgers were so poorly kept that the actuary brought in by the feds reported that making sense of them was "like starting from scratch to reconstruct a bank's books after there had been a fire." The Labor Department noted that the files on the nine hundred loans would stack up to over twenty-four stories high if piled atop one another. Interestingly, Teamsters expert Steven Brill noted, "Organized crime loans were not necessarily 'bad' loans."92 The true downside for the Teamsters rank and file stemmed from the lower interest rates given to Korshak's friends, often half the prime rate, as opposed to a point or two above it. The Labor Department estimated that this discrepancy amounted to $100 million in lost profit for the Teamsters.

  Since the underworld began to develop the town in the early fifties, the county's population has exploded from under fifty thousand to 1.5 million in 2005. Former Clark County sheriff Ralph Lamb succinctly summarized the importance of the underworld on the development of Las Vegas. "Don't forget this town owes something to these people," Lamb said. "Without them there wouldn't be a Las Vegas."

  '*Humphreys often visited St. Louis, Kansas City, Los Angeles, and Dallas, where he helped expand the gang's numbers racket; in Oklahoma, he was believed to have masterminded the flow of booze into that dry state; he made frequent trips to the nation's capital to visit with the "mob's congressman," Roland Libonati.

  *The others were the Northern, the Rainbow, the Big Four, the Railroad Club, and the Exchange Club.

  *Before forming his Mayfield Road Gang, Dalitz had been associated with Detroit's Purple Gang.

  *Among Dalitz's many holdings: Michigan Industrial Laundry Co. in Detroit and the Pioneer Linen Supply Co. in Cleveland, Colonial Laundry, Union Enterprise, Buckeye Catering Co., and percentages in the Reliance Steel Co. and the Detroit Steel Co. And there was Milco Sales, Dalitz Realty, Michigan Modern Land Co., Berdene Realty and the Liberty Ice Cream Co., River Downs Race Track, and the Coney Island Dog Track. Dalitz even owned a piece of the Chicago 8c Rock Island Railroad.

  *Other DI regulars over the years included Tex Beneke, Paula Kelly, Hal Dickinson and the Modernaires of Glenn Miller fame, Jimmy Durante, Sonny King, Danny Kaye, Peggy Lee, Tony Martin, The McGuire Sisters, Patti Page, Louis Prima & Keely Smith, Eddie Fisher, and The Ed Sullivan Show.

  *When the California Crime Control Commission issued its report in 1978, it listed Dalitz, as well as Sid Korshak, as "one of the top organized crime figures in California."

  *As one of Goldwater's first contributors when he ran for Congress (to the tune of $5,000), Nelson and his wife, Laurie, were among the senator's closest friends.

  *Other evidence suggests that Kennedy also had some involvement in the Flamingo and Dalitz's Desert Inn, according to Desert Inn former employee Annie Patterson. In two letters to Moe Dalitz, Patterson informed him that Joe Kennedy had told her of his close friendship with Meyer Lansky and how Lansky informed Kennedy that "he was not receiving his full share of the take [skim]." According to Patterson, this was the original reason for the wiretapping of the Desert Inn under Bobby Kennedy. (Letters from Patterson to Dalitz, 9-5-66, and 9-9-66, in National Archives, JFK Collection, Rec. #18010020-10133, airtel from SAC Las Vegas to director, 3-2-67, HSCA, FBI Investigative File, Box 21, Sec. 115)

  *The Riv's PR director Tony Zoppi credited the highly successful Starlight Lounge for supporting the resort, saying, "Shecky Greene was almost single-handedly responsible for keeping the hotel in business.'

  * According to a February 3, 1967, investigation by Life magazine, Groves controlled gambling in Freeport, Bahamas, and fronted three casinos for Lansky.

  †Other Lorimar credits include Eight Is Enough, Knots Landing, Family Matters, Til FlyAway, Falcon Crest, Sybil, and Alf—all for television. On the big screen, Lorimar produced Billy Budd, Being There, and An Officer and a Gentleman. Merv Adelson, briefly married to TV journalist Barbara Walters, recently merged Lorimar into Time Warner and placed his money in East-West Capital Associates, which invests in digital motion picture infrastructure.

  CHAPTER 10

  The Kingmakers: Paul, Lew, and Ronnie in California

  WITH KORSHAK, FACTOR, AND Dalitz shoring up the Supermob's interests in Las Vegas, Ziffren, Wasserman, and Reagan saw to it that California government would be well under control when the Vegas contingent eventually settled there. This meant attaining a vise grip over the state's political heart, and given the previously noted anarchy in California's party system, the takeover by the Chicago trust was accomplished practically overnight. All this would occur while Ziffren-Greenberg, Pritzker, Weingart, and Kirkeby-Hilton gobbled up hotels and commercial property, with Al Hart's City National Bank usually handling the monetary details.

  Although ideology and m
oney meant more than party alignment in California, Paul Ziffren was working to change that climate in favor of the Democrats. With the wealth and political connections that naturally accrued to major California real estate investors like Ziffren, he and his associates were able, ironically, to use the state's anemic party system to create strong parties—albeit with them in control. As the Supermob's hold on the state strengthened, it was not uncommon to find them in league with pols of both parties, many of whom would switch to the other party.

  Like Ziffren, other transplanted Midwesterners were throwing their weight around in California's political inner sanctums. Among them were Jules Stein and Lew Wasserman, who had long since relocated their Chicago MCA headquarters to Los Angeles—Stein had planned the move for decades, having sent his trusted VP Bernard Taft Schreiber westward in the twenties to open the market. Much as Korshak and Ziffren had aligned with the career of Pat Brown, Stein and Wasserman were about to increase the Supermob's virtual invincibility with their nurturing of another California political wannabe, Ronald Wilson Reagan.

  The C r e a t i o n of R o n a l d R e a g an

  "Ronnie" Reagan, as he was then known, had moved to California in the late thirties, after a stint as a sportscaster for WOC Radio in Iowa, bent on transforming his career from radio announcer to movie star. After Reagan's marriage to actress Jane Wyman, Stein and Wasserman guided his career at Warner Bros., where he made a string of B pictures. With titles such as Swing Your Lady, Cowboy from Brooklyn, Girls on Probation, and BrotherRat and a Baby, Reagan, who was once credited as Elvis Reagan, rightfully attained the moniker The Errol Flynn of the B's. MCA was always more adept at deal-making and solidifying power than it was at creating great art.