Supermob
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Hersh gained a rare glimpse into Korshak's personal moral code when he received a postpublication call from a young member of the Fixer's extended family. As best Hersh remembered it, this is what the relative related to him:
You missed the real story. Let me tell you about my uncle Sid: When I was about twelve or thirteen, we used to go to seders . . . Sidney would drive the kids. We'd all go for Passover seder and he would run the seder. Once, in the early sixties, I was in the backseat with one of Sidney's sons, who was about twelve or thirteen. I remember everyone was scared of Sidney. We were playing in the back of the Cadillac, and I went, "Eenie-meenie-miney-moe, catch a nigger by his toe." And Sidney stops the car and turns around and slapped me across the face. It's one of those things you never forget. Uncle Sidney said, "Don't ever talk about them that way. If you don't talk about them that way, they won't talk about us that way." So then, hours later, in the middle of the seder, there's a phone call, and Sidney's sister was very nervous because she was scared of Sidney. Uncle Sidney took the phone at the front of table and says, "Good. You got the goy, good."
Hersh later investigated the incident, learning that a sanitary-district official, a reformer in Stickney Township in Illinois, had been assassinated. Hersh concluded that Sidney had fingered him. "Couldn't get closer than that," Hersh said about the goy's murder. "After he had just given his niece a lesson in racial manners."
Incredibly, there was no discernible effect from the Hersh charges on Korshak's thriving business practice, with the stories only giving a momentary pause to some clients. Hilton Hotels made a cursory investigation to determine if they should sever their relationship with Korshak. E. Timothy Applegate, Hilton's longtime general counsel and Korshak's liaison at the company, was the man in charge of such things. "I am very suspicious of second- and thirdhand information, and so much of that series was based on it," Applegate said recently. "A prosecutor would say that there was no case there. But I went to Frank Johnson, a former reporter for the Reno newspaper, who had been chairman of the Nevada Gaming Control Board; he was a very upstanding guy without a crooked bone in his body. Frank knew a lot of FBI people in Vegas and he made his inquiries on Korshak and came back to me and said, 'There's no basis for doing anything.' I also called another board chairman, Phil Hannifin, and asked if we should be concerned. He said no."20
Likewise, the bombastic series failed to generate any real law enforcement interest in Korshak's doings. Two former Justice Department organized crime specialists told the press that they had explained their inaction to Hersh. "We don't have a shred of evidence against Mr. Korshak," they claimed to have said. "Otherwise, we'd have prosecuted him."21 Another Justice official tried to explain the problem this way: "If you're going to take on the Sid Korshaks, you're going to have to commit one hell of a lot to it. Maybe if we committed the whole federal Strike Force to it, we might be able to nail the guy. But there are four or five guys who are equally as important [in organized crime], so what are you going to do?"22
Marvin Rudnick, at the time an assistant state's attorney in St. Petersburg, Florida, was among those who shook their heads in awe—but he had his own theory, one that he shared with Johnny Rosselli, and which jibes with what is now known about Korshak's secret meetings with Las Vegas sheriff Ralph Lamb. "After Hersh laid it all out, nothing happened," Rudnick recently said. "It's hard to believe that Korshak survived all those years of scrutiny without there having been some alternate explanation. So there were only two possibilities: either Korshak was paying somebody off, or he was an informant. I lean towards the latter, because it's hard to believe that the entire FBI was manipulated by corrupt people. Who would be a better informant than Korshak? If you're involved in crime at a high level, there's an FBI agent who's going to try to get you to turn and make his career."23 And, as noted, years earlier, Korshak had not only been "flipping" for Ralph Lamb, but had fingered Mickey Cohen to the feds,
For the most part, Korshak gave the impression that the Hersh series, which would have devastated most people, merely rolled off his back. Hollywood screenwriter Tom Mankiewicz, who saw Sidney in the aftermath, remembered, "One day in Beverly Hills when Seymour Hersh was doing these articles, I ran into Sidney and I said, 'Boy, they are really raking you over the coals in the Times, aren't they?' He said, 'If any of that were true, Tom, I'd be in jail, wouldn't I?' "24 He was similarly dismissive with Del Coleman's ex, Jan Amory, telling her, "Honey, I put that up on my bulletin board. He ain't got nothing on me." Amory recently elaborated on Korshak's unfazed demeanor. "He didn't get depressed then or ever," Amory recalled. "But he was unhappy to be attacked by this guy—and the lies—and he vowed to fight it the rest of his life. On the other hand, he never said anything that would lead me to believe that he was telling me the whole story or none of the story. "25
There were, however, occasions when Korshak's bravado faltered. Hilton Hotels president Barron Hilton, a longtime Korshak client and pal, later recalled how Korshak "was quite depressed with the adverse publicity he had received," and that Hilton subsequently wrote Korshak "a note of sympathy." 26 According to "Marty," a close friend of Marshall Korshak's, the Times series did indeed affect brother Sidney. "I used to enjoy stopping by to see Marshall in his law office," said the friend. "And one day while I was sitting there, Marshall was very upset because Seymour Hersh was doing his series about Sidney. I told Marshall, 'Don't worry. It doesn't mean anything. It will all be used to paper birdcages.' Marshall said, 'You got to tell Sidney' 'What?' 'You got to tell Sidney he's got nothing to worry about.' Now I can't believe this, but he dialed Sidney in Beverly Hills, or wherever he was hanging out, and said, 'Sidney, my friend Marty here knows everything there is to know about the media. And he says that you got nothing to worry about by the series in the New York Times.' Then he said to me, 'Sidney wants to talk to you.' Now I can't believe this—here is Sidney, who an outsider would think would be the most confident man in the world, never lacking in confidence, Sidney is going to talk to me to have his confidence built up. This gives you an insight to the psychology. I get on the phone—what the hell am I going to say? Run for the hills? So I told him, 'Sidney, you got nothing to worry about. It's a nothing. It's a nothing.' He said, 'Oh, God, Marty, I'm so happy to hear that. That's really reassuring.' "27
Marty added that the most devastating quote in the series was the infamous Willie Bioff testimony of 1943, reported by Velie in 1950, in which he referred to Korshak as "our man in Hollywood."
"That was the magic sentence," said Marty. "But for every person that turned away from Sidney for that quote, fifteen admired him. That quote is what made Sidney." Supermob patriarch Jake Arvey weighed in on this subject, telling the Chicago Sun-Times, "It was a lie in 1950 and it's a lie today. The article was written by a man who wanted to smear Sidney Korshak, who is a friend of mine, as was his father. We are social friends, and he has never controlled me, and I have never controlled him."28
In Beverly Hills, the Korshaks' friends rallied around the beleaguered couple, paying close attention to Bee, who seemed more upset about the Hersh articles than her husband. On July 3, just days after the series ran, Sid and Bee attended Lew and Edie Wasserman's fortieth wedding anniversary party, wherein Edie took Bee aside to ask, "How are you doing, honey?" As Wasserman friend and "surrogate daughter" Wendy Goldberg explained, "Edie will go to any length to protect her friends. She will fight for you to the end."29 Also at the gathering, Lew took Sidney aside and consoled his friend, making a point of being seen embracing Korshak as he got up to leave.30 Two months later, during a Democratic fund-raiser at the Wasser-mans' attended by the likes of U.S. senators Alan Cranston and John Tun-ney, billionaire Armand Hammer, producer Norman Lear, DNC national chairman Robert Strauss, Representative Andrew Young of Georgia, and studio honchos Barry Diller (Paramount) and David Begelman (Columbia), Lew personally introduced Sidney to presidential candidate Jimmy Carter. The Democratic front-runner later told W magazine that he had met Wasserman w
hile still governor of Georgia, and that Wasserman's friends played a key role in his campaign. "When [Wasserman] let his friends know he had confidence in me, it was extremely helpful," Carter said.31
Korshak soon went back to business as usual: in 1976, the FBI received information that Korshak had made arrangements for excessive union featherbedding on the set of Paramount's recent production of The Great Gatsby, filmed in Newport, Rhode Island.32 While the investigation yielded no charges, one possible reason is that the Bureau was more focused on simultaneous allegations about Korshak on the West Coast.
In 1976, Korshak was believed to have been involved in labor racketeering regarding the luxury liner Queen Mary, berthed in Long Beach, California. After receiving a windfall from its share of the Tidelands Oil agreement with the State of California, Long Beach had purchased the ship from the Cunard Line in 1967 for $3.4 million for use as a tourist attraction. When the ship's renovation budget skyrocketed from a predicted $8 million to $80 million, a city audit disclosed numerous questionable expenditures, including huge fees to none other than the ubiquitous Sidney Korshak.
When the FBI joined the investigation, it developed "numerous sources" that cited corruption of appointed and elected Long Beach officials; the Bureau believed that State Lands Commission members were being "paid off in the form of political contributions to continue their support of the QueenMary project."33 According to the FBI, Korshak had been paid $25,000 to $35,000 to help his and Reagan's friend Alfred Bloomingdale (president of Diners Club) secure a labor contract with the mob-infested Hotel and Restaurant Culinary Union, which would be cheaper, thanks to sweetheart contracts, than siding with the Marine Cooks and Stewards Union. In addition to Diners Club, long-standing Korshak client Hyatt, which was slated to operate a four-hundred-room hotel on board, was to join Diners as the principal commercial lessees of the Queen Mary.
According to an informant who participated in the Korshak dealings, meetings on the Queen Mary issue were held in Korshak's ABC Booking office, which one FBI witness described as "very elaborate, but poorly illuminated . . . Korshak's desk contained a pile of telephone messages which had obviously gone unanswered by Korshak for some period of time." Other meetings took place at the Chalon home, which the witness described as "very pretentious."34 One FBI report noted, "Payoffs were made by unidentified representatives of Diner's Inc. to Sidney R Korshak to insure labor peace and guarantee 'sweetheart' contracts."35 Sources reported that Korshak flew to Las Vegas, where he received his payment.36
Despite a two-year RICO investigation, Korshak emerged unscathed as usual.37
In St. Petersburg, Florida, new assistant state's attorney Marvin Rudnick clipped the Hersh series out of the paper and attached it to the side of his refrigerator, where it remained for over a decade, when the expose would become an inspiration for Rudnick's own investigation of the machinations of Korshak's pal at MCA, Lew Wasserman.38 Meanwhile in southern Florida, grislier business was afoot.
On August 7, 1976, Johnny Rosselli's chainsawed, decomposed corpse was found in a fifty-five-gallon oil drum floating in the Florida Keys. He had recently been testifying for the Senate about the Chicago mob's ties to the Castro assassination plots of the Kennedy administration. In Hollywood, insiders saw the triple murders of Giancana, Rosselli, and Hoffa as a watershed time for Korshak.
That Korshak's social circle and client base did not exactly rise up in faux disapprobation over the Hersh charges may well have been due to the fact that so many of them, also with tainted Chicago roots, dared not risk having their own dirty laundry be given a public airing. But that was not to be the case, as the Times quickly followed up with a business-section report on the Hyatt Hotel chain, owned by Korshak's former Supermob neighbors at 134 N. LaSalle Street the Pritzker family. On August 29, 1976, in an article entitled HYATT'S KINGDOM OF ROOMS, by Times L.A. Bureau chief Robert Lind-sey, the paper described not only the sixty-five hotels controlled by the company, but also its "asset management" approach, and, most important, its dealings with the Teamsters Pension Fund and Sidney Korshak. In a sidebar entitled HYATT, KORSHAK, LAS VEGAS AND THE TEAMSTERS, Lindsey pointed out that Korshak had told the SEC in 1970 that he worked for the Pritzkers, drawing the inference that he likely arranged their Vegas Teamster loans.39
Two weeks later, the Times received a four-paragraph letter from Hyatt chairman Jay Pritzker that pointed out what he believed were sundry discrepancies, and closed with the following:
The brief accompanying article was unfair to Sidney Korshak and to Hyatt. The headline leads the reader to assume that there is some relationship among the four, while none exists in fact. Mr. Korshak was not involved in any way with Hyatt's acquisition of hotels in Nevada or in any other of the negotiations with the Teamsters Union or its pension fund.
/Signed/ Jay Pritzker40
The Pritzker Paper Trail
It wasn't just the Teamster connections that put fear into the hearts of those connected to Korshak. Like Parvin-Dohrmann, Bernie Cornfeld's IOS, and the Bluhdorn-Sindona nexus, many of their closeted skeletons involved tax evasion via offshore shelters. Many of those with creative tax strategies were, again, connected to Sid Korshak's clients and former LaSalle neighbors the Pritzkers.
By the midseventies, the Pritzker empire was awash in profit, the most recent success coming from Nevada casino investments. Between 1959 and 1975, the Pritzkers had obtained $54.4 million in Teamster loans for their hotels, undoubtedly (although impossible to prove) with the aid of Korshak. When they cast their sights on gambling lucre, they again turned to Korshak. As Korshak himself told the SEC back in 1970, "It is possible that Hyatt Hotels talked to me about the possibility of making an acquisition in Nevada." Thus, in 1972, under their Elsinore banner, the Pritzkers joined the Vegas party when they bought the Four Queens in "Glitter Gulch" and King's Castle with Teamsters Pension Fund loans (obtained at a 4 percent discount, saving Hyatt $8 million).41 In return, the Teamsters bought $30 million in Hyatt stock. Sources reported that Donald Pritzker had met with Korshak friend and client Moe Dalitz in Honolulu on May 14, 1972, to discuss the Four Queens loan.42
Castle Bank
It was around this time, the early seventies, that IRS agents like Andy Furfaro noticed that the Pritzkers' billion-dollar Hyatt chain was paying no taxes. It turned out that the Pritzkers were the largest depositors in one of the most notorious offshore tax havens ever devised, The Castle Bank of the Bahamas, which was nothing less than an intersection of the Supermob, known gangsters, pop stars, a U.S. president, and the covert branch of the CIA—all of whom had good reason to hide their money from Uncle Sam.
Bahamian and Cayman Islands banks have long been valued by those wishing to hide their money because those nations absolutely refuse to cooperate with U.S. law enforcement. Bank expert and author Penny Lernoux wrote of the main advantage of the Caribbean banks: "Relying on a strict code of banking secrecy that makes Swiss banks look like blabbermouths, hundreds of banks have set up operations in the Caribbean."43 To further guarantee its clients' anonymity, Castle had arranged for Miami National Bank, which was controlled by Lansky associates, to accept the deposits, then transfer the deposit list to Castle with no names attached—only code numbers.
Agent Furfaro was among those frustrated by the government's inability to follow the money trail. "The money was getting out of the country through Western Union," Furfaro recently said. "But we weren't allowed to follow it. And the foreign banks wouldn't let us in. We had reports that money was also being shipped in railroad cars and containers placed on ships. There was so much money that they would just weigh it instead of count it."44 A 1979 Ford Foundation study on offshore banking concluded that the "flow of criminal and tax evasion money" into the Bahamas alone was "up to $20 billion annually."45 Indeed, the statistics are incredible: one Caribbean bank for every six hundred residents.
Castle, merely a variation of Hollywood's Dutch Sandwich, was the brainchild of longtime CIA "front organization"
mastermind Paul Helli-well, who had come up through the ranks to become a senior officer in the CIA's predecessor, the Office of Strategic Services (OSS). As the Cold War intensified, the CIA, in its zealous desire to defeat Communism, relied on people like Helliwell to set up "brass plate" operations that allowed the CIA to launder funds to be used for propping up heroin-dealing—but anticommunist—warlords and dictators.46
In 1964, Helliwell joined forces with Morris Kleinman of Moe Dalitz's Mayfield Road Gang, Pritzker Chicago tax attorney (and Hyatt board member) Burton Kanter, and Pritzker law firm partner (and Teamsters Pension Fund trustee) Stanford Clinton to establish the Castle Bank, where foreigners could set up trust accounts that were the key to both personal and commercial tax avoidance: since the trusts were, for U.S. tax purposes, foreign citizens, they owed no taxes to the U.S. government. The added beauty of the Castle setup was that the actual deposits never had to be delivered to the bank, which was a fake depository for money that the client could use anywhere in the world.
In the midseventies, as the result of a narcotics-trafficking prosecution, the IRS mounted Operation Tradewinds (later Project Haven), an all-out investigation of Castle, referring to the probe as potentially the single biggest tax-evasion case in U.S. history. Despite the inability to serve warrants in the Bahamas, wily IRS agent Richard Jaffe and detective Sybil Kennedy obtained a list of the bank's depositors,* which included the Pritzkers, Detroit land developer Arnold Aronoff, Playboy's Hugh Hefner, Penthouse's Robert Guccione, rock band Creedence Clearwater Revival, Korshak pal and actor Tony Curtis, and the Mayfield's Moe Dalitz, Morris Kleinman, and Sam Tucker. Other Castle memos included a list of Vegas racketeers such as the Stardust's Yale Cohen (an associate of the Outfit's Anthony Spilotro), Nicholas "Peanuts" Donolfo (a Giancana underling), and Jimmy "the Weasel" Fratianno, who were all doing business with Castle.47 It is not certain how many of these investors may have been directed to Castle by Sid Korshak, but one longtime friend of Hefner's recently stated that the Playboy sachem, for one, mentioned that Sidney had tipped him to the bank.48