The Raid on Studio 54
Studio 54 first opened in April 1977 and became the most famous nightclub of all time. Its quick ascent was confounding because creators Steve Rubell and Ian Schrager were just two guys from Brooklyn in their early thirties. But they had talent. Steve’s contribution was simple: people loved him and always had. He was the most popular kid in grammar school, high school, and at Syracuse University, where he met Ian. He was short—about five foot five—and slight, weighing probably no more than 125 pounds. Stevie, as he was often called, spoke with a thick Brooklyn accent and frequently wore a goofy grin. He exuded charm and charisma. You simply felt good when you hung out with him. He had unstoppable confidence. He knew you were going to like him.
Ian was taller and much more powerfully built. Also from Brooklyn, his accent was somewhat more mainstream, with a slight speech impediment and a gruffer voice. He didn’t talk that much. Quiet and reserved, he listened. The girls loved him and along the way he had a series of attractive and talented girlfriends, including American fashion designer Norma Kamali. Ian was a lawyer with a precise and creative mind—he was the driving force behind the concept and design of the original Studio 54 and the renovation when I took over.
Regardless of the project at hand, Ian was the producer and Steve the director. Ian would always be the one working behind the scenes, watching everything, always mindful of the smallest details. Steve was the people person. Nobody enjoyed the party more than Steve the Schmoozer.
It was a winning combination.
It took Steve and Ian six weeks and less than $500,000 to transform the space into a nightclub. Richard Long and Alex Rosner designed the outrageous, bass-heavy, full-spectrum sound system. The extraordinary lighting effects were designed by Broadway-gurus Jules Fisher and Paul Marantz. The sound and lights worked together with unusual and ever-changing visual effects, such as the club’s famous moving backdrop depicting an illuminated Man in the Moon snorting cocaine from a silver spoon. It also had numerous theatrical drops and sets, each creating a revolving vibe to further stimulate the scene on the dance floor. But what really made Studio, as it was called by regulars, unlike any club in New York, or for that matter the world, was that on any given night, some of the most famous celebrities from film, theatre, music, art, fashion, politics, and sports could be found partying with abandon. Dancing alongside the world’s most recognizable people were an assortment of wildly dressed characters from all walks of life. It was the place to be at the height of the disco craze, capturing the attention of every major media outlet on the planet.
Then, suddenly, after only two and a half years, the party came to a crashing halt. The State of New York closed Studio 54 in February 1980 on the heels of the federal raid that led to Steve and Ian’s incarceration.
The beginning of the end of Steve and Ian’s Studio 54 era came about in November 1978. An article in New York magazine by financial writer Dan Dorfman quoted Steve as saying that profits at Studio 54 “were [so] astronomical, only the Mafia does better,” and that the club “is a cash business, and you have to worry about the IRS. I don’t want them to know about everything.” Unfortunately for Steve and Ian, these remarks got the attention of the head of Criminal Investigations for the IRS in New York City, who made a few phone calls that prompted an investigation led by United States Attorney Peter Sudler.
On December 14, 1978, Sudler got a federal judge to sign a search warrant and Studio 54 was raided. Upon arrival, his task force proceeded straight down to the basement and emptied out the metal safe where Steve and Ian hid their real books. They also found garbage bags full of cash inside holes and cracks in the walls and ceiling that amounted to more than a million dollars. Sudler knew exactly where to look because Steve, who everyone knew liked to brag, was known to have shown it to people.
According to newspaper reports, Ian walked in through the back door during the raid carrying a package of envelopes filled with baggies of cocaine, which were to be given as Christmas presents to key celebrity clients. Each one had a ribbon on it, along with cards addressed to such famous names as Calvin Klein, Bianca Jagger, Andy Warhol, Halston, and so on. Not realizing what was going on, Ian put the bundle on the floor so he could shake hands with Sudler. Once Ian no longer had personal possession of the cocaine, it was subject to search and seizure; Sudler called Drug Enforcement Agency agents and Ian was arrested on narcotics charges. These charges were in addition to the tax evasion charges levied by IRS agents, assisted by members of the NYPD. The authorities later found Steve in his Mercedes and he was taken into custody after the officers confiscated another $500,000 in cash from his trunk and apartment.
The federal case against Steve and Ian went to trial nearly a year later, in November of 1979. Their partner, Jack Dushey, retained his own attorney, and the three of them pled guilty to tax evasion. In exchange for a lighter sentence, Steve and Ian agreed to provide incriminating information against other nightclub owners who were known to be skimming profits. On January 18, 1980, they were sentenced to three years in federal prison, a harsher sentence because the judge believed they skimmed an inordinate amount of money. However, Steve and Ian’s attorney, Roy Cohn, well-known for brokering deals for high-profile mobsters, was able to get the drug charges dropped. He put forth the ingenious argument that there was so much “cut” in the cocaine that the actual quantity of cocaine was insufficient to break the law at that time.
I saw the New York Post story in the fall of 1979 reporting that Steve and Ian had plea-bargained and were going to jail. I remember immediately realizing the opportunity that lay before me. Having owned a number of hotels and restaurants in New York, I had had extensive dealings with the State Liquor Authority (SLA). I knew that it would be unlikely to renew Studio 54’s liquor license for Steve and Ian now that they were convicted felons. I also believed I had the experience, the right lawyers, and the spotless record to overcome the SLA’s objections to the liquor license being granted in my name.
I was right. After Steve and Ian went to jail, the license was not renewed when it expired on February 28, 1980, and the club shut down. Steve and Ian thought that they could keep it alive by appointing a celebrity board of directors to oversee operations, but that was completely unrealistic. There were some talks with Dick Clark and interest from Neil Bogart, the owner of Casablanca Records—but the liquor authorities quickly put the kibosh on those plans.
By that time, I was a known commodity to Steve and Ian. I had had several successful restaurants in the city as well as the Executive Hotel, and I had talked with them on and off about a Studio 54 franchise at the Virgin Isle Hotel, which I had acquired in 1978. My high school buddy Eric Rosenfeld’s law partner, Bobby Tannenhauser, had gone to Syracuse University with Steve and Ian, and I figured he was the perfect person to represent me and get the ball rolling.
The first negotiation to buy Studio 54 occurred on a visitor Sunday at the Metropolitan Correctional Center near Chinatown, where convicted felons in New York were held before being shipped off to federal prisons around the country to serve their time. It was a modern twelve-story building but was also a scary, dark place with slits in the concrete for windows and a long line of unhappy visitors waiting to see loved ones in jail. After several hours, Bobby and I were finally allowed past reception and up a secure elevator to meet with “The Boys” (as they were often referred to) and directed to a large visitor cell. Steve turned on his charisma and gregarious personality. Ian was removed and sullen. He had recently been disbarred of his license to practice law due to his conviction and, understandably, seemed none too happy about it.
Both Steve and Ian were eager to get things moving. Their major concern was making sure the club would reopen. Most of the discussion focused on my past ventures and the impact they would have on licensing. Once they felt comfortable with the fact that I had been licensed in the past with no infractions, we got down to negotiating how it would all work
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Toward the end of the hour-long visit, Bobby asked Ian if the Mafia might in some way “interfere” with our operation. It had been reported that Ian’s father, Louis Schrager, was an associate of Meyer Lansky, well-known to be the financial wizard for the Mob. In any case, Ian, who had a Goodfellas look, said, “Don’t worry. I’ll take care of it.”
A few days later I got a call from Roy Cohn’s secretary, asking me to meet him regarding Studio 54. Cohn was the infamous attorney who rose to stardom helping to convict Ethel and Julius Rosenberg of spying in 1951 and then aiding Senator Joseph McCarthy in his crusade against “suspected Communists” who were treated as “guilty until proven innocent” during the Red Scare of the 1950s. Reputations were ruined and lives were destroyed as a result of their campaign, better known as the “Blacklist.” By the time I met Roy Cohn, he had represented Donald Trump, publishing mogul Si Newhouse, Cardinal Francis Spellman, Andy Warhol, Calvin Klein, Mafia boss Carmine Galante, Barbara Walters, and countless others.
Like Steve, Cohn was short, slight, and had a prominent scar on his nose, which was reportedly from a botched nose job from his youth. He graduated from Columbia University Law School at nineteen and was shaking up the world from his office in Washington, DC by the time he was twenty-six. He was about fifty when I met him and, by then, dozens of nefarious deeds had been attributed to him. One was that he had arranged to make public Vice Presidential Candidate Thomas Eagleton’s medical records. When everyone found out that Senator Eagleton had been treated with electroshock therapy for depression, he was forced to drop out of the race. This scandal was a serious blow to George McGovern, who I had campaigned long and hard for in ’72, to the extent that I had earned a place on Richard Nixon’s “Enemies List.” Nevertheless, I liked Roy and was charmed by his friendliness. I wasn’t alone. Robert Sherrill wrote in the left-leaning magazine The Nation on August 9, 2009: “Large slices of the upper crust of New York and Washington snuggled up to him, laughed and entertained one another with stories about his crimes as though they were choice insiders’ jokes, and wrestled for the privilege of partying with Cohn and his crooked and perverse friends.” Ronald Reagan was one of Roy’s biggest fans in the end, endorsing Roy during his eventual disbarment proceedings while Reagan was president.
To the best of my knowledge, Roy arranged the final plea bargain for Steve and Ian, wherein they were forced to inform on other club operators. However, before that, he made a last-ditch attempt to get them off entirely by having them rat out Hamilton Jordan (Chief of Staff for Jimmy Carter) for allegedly snorting cocaine in the basement of Studio 54. Roy was deeply involved in Ronald Reagan’s presidential campaign in 1980 and was probably the source of this accusation becoming so well publicized and a very public embarrassment for Carter.
In any case, the attempt to discredit Hamilton Jordan didn’t help Steve and Ian. However, as a result of it, they were put into bulletproof glass cells for their own protection because their next attorney, Howard Squadron, was afraid of CIA retaliation against them in federal prison. Nevertheless, Roy was successful in damaging Carter’s administration, which was probably his aim to start with.
My meeting with Cohn took place in his impressive townhouse in the 1980s off Madison Avenue that served as both his home and workplace. Roy lounged at his desk wearing a bathrobe. Behind him a photograph of his old boss, Senator Joe McCarthy, was hanging on the wall. He called for his assistant to bring coffee for both of us. A very handsome young man wearing loose-fitting athletic shorts and a tight T-shirt revealing a muscular physique appeared. The young man put the coffee down and ran his hand across Roy’s back tenderly. Roy patted his butt affectionately and gave him a warm smile. As Le Jardin was one of my favorite clubs back in the mid-1970s, I had become familiar with and appreciated the gay community, especially in fashion and the world of dance and music. I felt flattered that Roy felt so comfortable in my presence.
Roy calmly and politely informed me, “If you pay a certain amount every month, there will be no problem.” I was being shaken down by the Mob through Ian and Steve’s attorney before any real business had taken place! I knew as well as everyone else that Roy had represented the Mafia in a number of cases, and this was one of the many instances where Roy was playing all sides of the table. It’s a rare person who can be associated with the Mob, Studio 54, and the Reagan administration all at the same time. Ultimately, we made a few payments to the designated person, but decided to stop a few months after opening, and fortunately nothing happened.
While all this was going on, I got a call from Studio 54’s former publicists, Michael and Ed Gifford, asking me to meet them one Sunday at their elegant townhouse. A married couple, they had a top PR firm and extensive contacts in the theater and entertainment industries. Ed had also been a television director for CBS and had actually worked in the Studio 54 space when it was a CBS Television studio named Studio 52. When Steve and Ian first met Michael and Ed and retained their services, they were struggling to figure out a name for this huge emporium they’d just taken on. Ed told me before he died that Michael suggested, “Why not call it Studio 54?” reasoning that the main entrance was on Fifty-Fourth Street.
The Giffords represented a number of my enterprises at that time including the Virgin Isle Hotel. We had become close friends and they had sent their daughter Muffin down to the island to work at my hotel. They begged me not to do business with Steve and Ian because they were “sinister criminals” who were outrageous in the way they defrauded the government. When I didn’t heed their advice, the Giffords resigned from all my establishments, just as they had resigned from Studio 54 after reading about what they considered the owners’ greed in the original indictment.
One of the people that Steve and Ian informed on, and who was subsequently indicted, was Maurice Brahms, the owner of the nightclubs Infinity, New York, and The Underground. It turned out that Maurice Brahms and his cousin John Addison had taught Steve and Ian the nightclub business when they were partners in a Boston club, 15 Lansdowne, several years earlier. Older than Steve and Ian, but also from Brooklyn, Maurice wore business suits and didn’t quite seem to fit in the club world. I remember meeting him for the first time in 1980 at a pre-opening night construction party of Bonds, his cavernous Times Square disco that proved unsuccessful soon after it opened. Brahms had heard I was negotiating to purchase Studio 54 and sought me out in a crowd of five thousand people wearing construction hard hats to ask if I was going through with the deal.
I responded, “Yes, provided I get the liquor license in my name.”
Brahms put his face close to mine in the midst of the crowd and, with burning eyes, he said quietly but menacingly, “If you go through with the deal, I will curse you, and my children and my children’s children will curse you, for the rest of your life.”
That was quite a scene—and though I tried to make light of it, I would be lying if I did not tell you that Brahms sent a chill up my spine. Though it would be several months before I finalized the purchase, I realized immediately that I was about to have a mortal enemy in the disco world, particularly once I heard that Brahms was incarcerated a few months later because of Steve and Ian’s information.
One day, Roy Cohn invited me to lunch upstairs at the 21 Club in New York to discuss strategy. In the middle of the entrée, Roy’s driver ran up to our table hysterically shouting that Charlie Brown, Roy’s Cavalier King Charles Spaniel, had jumped out of his red Eldorado convertible, which was parked outside, run down the street toward Sixth Avenue. Roy calmly asked the waiter to bring a phone to the table and then called the mayor’s office. By the time we exited the restaurant and quickly walked to Sixth Avenue, we found that five or six NYPD cars with sirens blaring had closed down the block. A few minutes later, a couple of beaming cops came walking up to us with Charlie Brown clutched in one of their arms saying, “Here’s your dog, Mr. Cohn.” It was an impressive demonstration of Roy’s power. Robert Sh
errill’s exposé in The Nation, quoted earlier, ends by saying, “the one true love in Roy Cohn’s life was his spaniel, Charlie Brown.” A short time after our lunch, Charlie Brown sired a litter and I was fortunate enough to be given one of the puppies, which I named Oliver. Over the years, every time I met Roy, he would ask “How is Oliver?”
Roy arranged for me to meet with Steve and Ian a second time at the same federal prison in Manhattan, where they were still being held while the authorities got all the information they needed from them. By that point, we only had a short window of time to conclude the deal before the boys would be moved to a facility in Alabama to finish out their sentences. Roy’s secretary called and instructed me to meet him on a Tuesday morning in front of the prison.
Roy pulled up in his red convertible with his driver dressed in black. This time it was a nonvisiting day, and I knew from my first visit that only lawyers were admitted. I asked Roy, “What’s going on?”
Roy handed me a business card that read “Mark Fleischman, Attorney at Law” and told me to show it to the administrative guard on my way in. This gambit seemed over the top as far as I was concerned. I looked at Roy as if to say, “Are you sure about this?”
In his glib fashion, Roy said, “If you want to own Studio 54, this is what you have to do.”
Like most everyone who dealt with Roy, I did what he told me to do. Steve and Ian’s protective custody meant they were in a glass cell. A series of glass doors, all opened and shut electronically by the guards, led into a large room with several transparent “cages.” I’m not normally claustrophobic, but this scene with multiple layers of bulletproof glass shutting behind me did a number on my psyche. As I walked down the aisle to their cell, I couldn’t believe my eyes when I saw Michele Sindona, a banker I had met ten years earlier, in the cell next door. I had read he was there for ordering the murder of the lawyer charged with liquidating banks when Sindona was laundering the Mafia’s heroin money. Suddenly, this jail seemed even more sinister. Several years later, Sindona was extradited to Italy and poisoned in his prison cell.
Inside Studio 54 Page 2