The Bluegrass Conspiracy

by Sally Denton

  Amid the conjecture that often bordered on the absurd, a phrase was repeated frequently around the state: The stupidest thing John Y. ever did was to hire Neil Welch. The second stupidest thing John Y. ever did was to fire Neil Welch.

  Using the Metts/May tape as evidence, a federal grand jury seated in Lexington launched a probe into the fund-raising habits of Brown’s 1979 gubernatorial campaign. Brown’s administration was thrown into total disarray when three of his cabinet members were subpoenaed. Fending off reporters and critics, Brown circled his wagons and tried to salvage his fast-dwindling presidential expectations.

  Little did Brown know that one week later any semblance of national credibility would disappear, as federal drug agents descended en masse on the home of his best friend, Jimmy Lambert.

  CHAPTER NINETEEN

  More than a dozen FBI agents surrounded the ivory, ranch-style residence on Old Dobbin Road that had long been Mecca to Lexington’s jet-setting partygoers. Simultaneously, agents were raiding Jimmy Lambert’s cabin in Boonesboro, and the home of Arnold Kirkpatrick—an officer of Spendthrift, one of the most famous Thoroughbred racehorse farms in the Bluegrass. Lambert himself was nowhere to be found, having fled to Europe after reportedly being tipped off about the undercover investigation.

  Operating on a hint from someone in the FBI, Ralph had parked his car early that morning near Mount Tabor Road, where he had a bird’s-eye view of Lambert’s. Nothing happened for several hours. Then, in the early afternoon, Ralph recognized the swarm of unmarked, antennaed FBI cars heading in tandem toward Old Dobbin Road. He reached for the quarter he had placed on the dashboard, and stepped out of his car. The WKYT reporter answered Ralph’s call on the first ring, having expected such a call for weeks.

  “You better get on over here,” Ralph told the reporter. “Lambert’s going down right now.”

  By the time the television van arrived on the scene, there was no sign of Ralph. The camera crew shot an hour’s worth of footage of undercover G-men carrying cartons and trash bags of evidence out of the house. The search and seizure continued all afternoon, but the feds refused to comment about the contents of the cartons.

  That evening, Ralph poured himself a bourbon-and-Seven in the den of his sister Thelma’s colonial mansion. He was anxious to watch the six o’clock news, knowing that the station would air the first of a multipart series about the yearlong probe into narcotics, weapons, and gambling. He knew that the story, which linked the governor to Jimmy Lambert, had been “in the can” for the past several weeks— thanks partially to his role as a news source.

  Ralph was but one of thousands of viewers who watched with awe as details of the Lexington millionaire’s secret life were unveiled. Among the items and documents that rolled across the television screen were internal Criminal Justice Department memoranda signed by Neil Welch; Lambert’s telephone toll records that reflected calls to Brown and First Lady Phyllis George; flight records that revealed Lambert had accompanied Brown on a state-owned helicopter to the racetrack; Lambert’s personal address book, which referred to Brown and his wife as Magoo and P. G. Magoo; confidential FBI reports stating that Lambert had been the target of a prostitution, corruption, murder, extortion, and narcotics investigation since 1979; and information about Lambert’s initial refusal to take a polygraph in connection with the disappearance and death of Rebecca Moore.

  Also shown was a check stub indicating a payment from Lambert to Brown referencing “partnership interest in Trumps”—the Cincinnati nightclub in which John Y. Brown had denied involvement. That stub would prompt the IRS to question why Brown had never declared the asset as income. Brown countered that he had loaned Lambert thirty thousand dollars to buy the club. But Trumps’ landlords contradicted Brown’s claims, and said they considered Brown to be the owner and responsible party for any debts incurred by the business.

  Ralph watched the explosive broadcast with a mixture of satisfaction and yearning. In a small way he felt vindicated by the imminent arrest of Lambert and the devastating embarrassment of John V.

  Brown, Jr. But still, he had a hunger for more. He wondered if he had the stamina and patience to await what he believed would be the inevitable demise of Drew Thornton and Henry Vance.

  The raids on Lambert’s houses threw John Y. Brown, Jr., into a quandary. Though Lambert remained in Europe, it was but a matter of time before he would be indicted on criminal charges.

  At a hastily called press conference, similar to the one a week earlier at which he had announced Welch’s firing, Brown again lashed out against the television station—WKYT. “I think what has happened in Lexington makes [the movie] Absence of Malice look like Puffball.” Brown defended his twenty-five-year friendship with Lambert, and claimed never to have seen “Jimmy do anything illegal.” Brown stated further that he had never even seen cocaine. Questioned by reporters about rumors that Lambert was the governor’s bookie, Brown responded: “Jimmy likes to bet on everything. He bets on everything that walks, talks, or wiggles. Everything but wrestling matches. So you can use your own imagination if Jimmy and I ever bet each other.”

  Fortunately for Brown, neither the Lexington Herald-Leader nor the Louisville Courier-Journal, the state’s two most influential daily newspapers, attached any significance to the Lambert raid. Except for reporting on the initial raid, neither followed up with any in-depth stories; the problem then, for both Brown and Lambert, appeared to be the reports on WKYT. A subsidiary corporation of Kentucky Central Bank and Kentucky Central Insurance Company, WKYT fell under the cloak of state-regulated industries—and, therefore, particularly susceptible to political pressure.

  Lexington’s nobility was also united in its disapproval of such “investigative-type journalism.” Though it is said that no official social register exists, it is no secret that those of high descent control the state—the invisible names etched on the nonexistent register.

  Lexington’s aristocrats, rising to Lambert’s defense, snubbed federal prosecutors and their wives. The posh country clubs and service organizations known for their snobbishness blackballed anyone associated with the government’s side of the probe. None of the enclaves is more exclusive than the Idle Hour Country Club, whose restrictive policies are discussed in hushed tones, so as to avoid publicity about the racist and anti-Semitic policies that are still pervasive a quarter of a century after the passage of civil rights legislation. With Idle Hour as the unchallenged benchmark, other organizations followed suit. So the families of federal agents faced censure from a host of social events.

  In a state where politicians are often considered bought-and-paidfor puppets, holding public office has never guaranteed social stature. But Brown’s daddy had been somebody, so the governor made the grade.

  Though Jimmy Lambert was an outsider, he had taken cover under the wing of a member—namely, John Y. Brown, Jr. Perquisites from such sponsorship thereby extended to him. Ralph Ross knew that a social novitiate in Lexington would remain indebted to his protective squire for life. “He owes me,” is a phrase heard more than once around Lexington as bluebloods coveted the newcomers whom they take credit for “introducing around.” Such introductions are priceless, as the guardian tacitly vouches for the outsider’s credentials. Breaches of such relationships were rare, and for that reason Ralph knew that Lambert would never turn against Brown. Ralph had told his friends in the FBI that they would be wasting their time if they waited for Lambert to implicate the governor in order to save his own skin.

  Horsewoman and socialite Anita Madden was one of the first to crusade against the raw deal Lambert was getting from the government. Draped in a royal blue jogging suit, her brassy mane drenched by the pouring rain and her pale face stained by running mascara, she formed a one-woman picket line at the entrance to WKYT’s television studios. Protesting the news stories broadcast about her “good friends, Lambert, Kirkpatrick, and Brown,” Mrs. Madden
carried signs that read: ‘Trial By TV” and “Presence of Malice.”

  The Herald published letters to the editor that reflected a deep-felt sympathy for, and protectiveness of, Lambert and Brown.

  “Lambert Due an Apology,” said one letter. “Other than defamation of character, emotional strain on family members, intrusion of privacy (legally or not), possible ruination of political ambitions of a close friend, Gov. John Y. Brown, Jr., and generally just enraging Jim Lambert and friends, the FBI has accomplished little in its investigation and has created an unfortunate situation.

  “Because the news media—television, radio, newspapers and magazines—contributed to the unfounded innuendos against Lambert, I feel they owe him an apology when this is all over. Knowing this probably will not happen and would not be enough to undo the harm that has been done to his family, close friends, and Jimmy himself, I want to say to him: ‘Remember, life will always love you.’”

  Even the “news” stories were often slanted in support of Lambert. One profile of the prominent businessman began, “He’s a laid-back guy who likes to sip beer and listen to Willie Nelson records. He loves children and buys Christmas presents every year for orphans at the Bluegrass Boys’ Ranch… Jimmy Lambert: drug figure or victim of innuendo spawned by a scurrilous federal fishing expedition?”

  Society columnists turned Lambert into a folk hero. When the FBI, in accordance with the law, notified forty individuals that their conversations had been bugged, the following appeared in the paper: “The disclosure that there allegedly is a list of ‘40 prominent Kentuckians’ who may be subpoenaed in connection with a federal investigation of a well-known Lexington nightclub owner has caused mixed emotions in the class-conscious Bluegrass. On the one hand, nobody wants the inconvenience of going before the grand jury. On the other hand, nobody wants to be left off any list marked prominent. Obviously it would help if these prominent figures had a way of identifying each other. May we suggest a new bumper sticker for Lexington? ‘Honk If You’ve Been To Jimmy Lambert’s House.’”

  Laudatory references to Lambert’s contributions to charitable organizations appeared in the newspaper. “Not many people know this,” one article said, “but for the past eight years the Library Lounge…has donated all the bartenders, napkins, cups and setups and coordinated buying the liquor for…the fund-raising event for Cardinal Hill Hospital…The person who gets all the credit for the Library’s generosity is the owner, Jimmy Lambert.”

  By Derby time—the first Saturday in May—the momentum in support of Lambert and against WKYT was at its peak. The Lambert drug investigation disappeared from the pages of the newspapers, and WKYT ordered its reporter to stop covering the story. Lambert was still “vacationing” in Italy, and the U.S. attorney’s office was conspicuously silent about the progress of the case, sparking supposition that the judicial system was succumbing to political and social pressure.

  Brown’s reputation appeared to remain intact, despite the guilt-byassociation insinuations. He and his wife continued their lives as though Jimmy Lambert’s problems were unrelated to them. They moved from Cave Hill—their posh racehorse farm—into the recently restored governor’s mansion located in Frankfort. When the driveway at the mansion was being paved, Phyllis is said to have made inquiries about the dimensions of the driveway at the White House for the sake of comparison. To a casual observer, life seemed to be as it should be for the regal first family. State workers busily planted five thousand blooming tulips the first lady had ordered to line the entrance to her new home, and two hundred state troopers were on hand to chauffeur the Browns’ guests to and from Derby festivities—including the annual gala held at Hamburg Place hosted by their good friend Anita Madden.

  So distraught was Anita over Lambert’s predicament that her fans had feared that she would not host her annual shindig. But tradition must have gotten the better of her, for she appeared in top form on Derby Day 1983. Wearing a daffodil-colored, transparent Suzy Creamcheese creation, Anita distributed two hundred Derby tickets to her guests. Some of her more famous admirers, such as Dennis Cole and Connie Stevens, milled through the crowd trying to determine which of the fifteen limousines, five luxury vans, and three buses would transport them from Hamburg Place to Churchill Downs.

  The Browns exuded the aura of royalty throughout the Derby season, and announced that their toddler son—Lincoln Tyler George-Brown—would soon have a sibling. During their tenure in the state house, Phyllis had been more visible than her husband. She had orchestrated the purchase of Kentucky crafts by Bloomingdales in New York; published a book called the I Love America Diet; convinced Neiman Marcus in Beverly Hills to sell quilts made in the mountains of the Bluegrass State; hosted Derby parties attended by Andy Warhol, Kenny Rogers, Armand Hammer, and Barbara Walters; enticed Hollywood studios to film movies in Kentucky; and had won the hearts of constituents when she claimed to have sung “My Old Kentucky Home” at the exact moment that her son was born.

  Seemingly undaunted by the continuing rumors that the Lambert probe would “blow the lid off Lexington,” Brown kept his presidential aspirations on track. He was frequently mentioned in national newspapers as an attractive candidate, and the couple launched an international “sell-Kentucky” program that served as a Brown-for-President springboard. Full-page, four-color advertisements in national magazines, paid for by the state Commerce Cabinet, promoted KENTUCKY & COMPANY—THE STATE THAT’S RUN LIKE A BUSINESS. But Brown was counting on the much-ballyhooed Democratic telethon that he had coordinated to guarantee him even more exposure. As chairman of a successful telethon, Brown hoped to be propelled into the limelight as a serious national contender. He had been working for more than a year on the scheduled seventeen-hour, $6 million extravaganza, and had raised the $1.5 million in seed money from Kentucky Democrats. Brown, with help from his wife, had arranged for the appearance of television and movie stars, and scheduled a coast-to-coast series of rock concerts for the event. The show, ironically dubbed “Vigil for America,” was to be nationally broadcast live from the Hollywood Bowl and Madison Square Garden.

  On June 13, 1983, Ralph drove to the Hyatt in downtown Lexington to buy a New York Times. From the hilltop vantagepoint of the glitzy hotel, Ralph thought Lexington’s main drag looked the way he imagined boomtown Houston had before it went bust. All the charming old buildings, Victorian and pre-Civil War, were being bulldozed and replaced by twenty-story concrete and glass towers. Billboards offering space for lease and “build-to-suit” dotted every corner. Ralph was naturally suspicious about all the “new money” pouring into town.

  He turned his car into the driveway of the hotel and left it idling while he ran into the gift shop to pick up a paper. Ralph knew that Times reporter Wendell Rawls, Jr., a Pulitzer Prize winner, was working on a story about Brown’s links to people involved with illegal drugs and gambling. Rawls had interviewed Ralph and it was obvious that Rawls grasped the magnitude of the story. There, on the front page, was the story Ralph thought would devastate Brown, for it was in New York that Brown intended to raise money for his national campaign. LEADING KENTUCKIANS LINKED TO DRUG AND BETTING INQUIRY, read the headline. For the first time, the debacles of the Brown administration were delineated for a national audience: The Lambert raids and the connections between the governor and Lambert; the fact that Lambert was a courier for Brown, carrying hundreds of thousands of dollars from Las Vegas back to Kentucky; the arrest and conviction of Ralph Ross; the firing of Neil Welch; and the demotion and transfer of Don Powers. “Some investigators,” the story said, “have said Kentucky has a history of thwarted investigations of prominent people and have expressed fears that ‘political pressures’ would stunt this one.”

  Brown downplayed his relationship with Lambert to the Times, claiming he had only seen his friend “three, four, five times a year.” The governor was apparently unaware that state phone records contradicted him, revealing that Brown had ca
lled Lambert on a weekly, often daily, basis throughout his tenure, and that state police assigned to guard the governor’s private residence had noted Lambert’s regular visits.

  But the most volcanic and damaging aspect of the lengthy article was the reference to a federal grand jury in Miami that was investigating Brown for withdrawing $1.3 million in cash from a Florida bank. The incident had been reported nine months earlier in the Miami Herald, but had received little attention in Brown’s home state. The Lexington Herald had carried the story, but had not followed up with any substantive stories about the status of the probe.

  On an unspecified number of occasions, in 1981 and 1982, Brown had sent couriers to the All American Bank of Miami to retrieve several hundred thousand dollars in cash from the tiny institution. At least twice, Brown went to the bank after closing hours to retrieve brown paper sacks containing tightly bound one-hundred-dollar bills. The grand jury was investigating the deposits—ranging from $300,000 to $785,000—which had been wire-transferred from Kentucky financial institutions, and then picked up in cash by Brown.

  The withdrawals were the subject of Operation Greenback—a cash-tracking effort of the IRS, DEA, and Customs—which was probing the laundering of money used in illegal drug smuggling. The All American Bank had failed to report Brown’s deposits and withdrawals, as required by federal law, which had set off alarm bells to the federal task force. Meanwhile, employees of a second Florida bank that was used by Brown—Great American Bank of Dade County— were indicted for laundering $96 million in proceeds from narcotics trafficking.

  When the cash withdrawals were first reported, Brown had called the investigation a political “dirty trick” spawned by the Republicans because of Brown’s potential presidential candidacy. After complaining of harassment to then-Vice President George Bush, Brown told reporters he was assured by Bush that the investigation had come to a halt. Brown deflected difficult questions by claiming the public’s right to know did not extend to his private life. Facing mild inquiry by Kentucky reporters, Brown contended, once again, that his personal financial affairs were nobody’s business and put it off on Phyllis, joking that his wife maintained an expensive lifestyle. “You know you can’t take a trip overseas, not with Phyllis anyway, without getting into large amounts. I think a cheap trip with Phyllis would be fifty thousand dollars.” Apparently satisfied with Brown’s jocular response, the Kentucky press corps politely dropped the matter.