Bill Roemer on Las Vegas Mobsters

Illinois Police & Sheriff’s News

A Place In the Sun:
Las Vegas…From Capo to Corporate

A gangster made grass grow in the desert – an oasis out of sand, brush, and nothingness. Dusty old highway 91 cut right through the heart of Las Vegas, a mean, miserable town on the periphery of civilization when New York-honed Bugsy Siegel was sent west in 1943 by Meyer Lansky and Frank Costello, the Prime Minister and the Chairman of the Board of “Big Apple” organized crime, respectively.

In the hot desert sun, the mob’s “advance man” drew up a bold and imaginative plan to lure the high rollers from the West Coast and great Southwest – a sin capitol on the scale of Havana, Cuba, the haven of eastern gamblers, crime bosses, and thrill seekers until Fidel Castro put an end to everyone’s good time by winning a revolution in the Winter of ‘59. Lansky, the financial genius of Charlie “Lucky” Luciano’s powerfully fluid New York City operation, traveled to Havana in 1938 to finalize a deal with Fulgencio Batista to assume control of gambling operations shortly after the U.S. Government backed-Cuban dictator seized the two casinos from the local military which had no idea of how to run this kind of business. The Cuban Army ran the casinos for nearly two years but the profits were not to Batista’s liking, so he invited his American friends down to his Caribbean hacienda to help straighten things out.

Under the astute Lansky’s tutelage, the Cuban gambling Mecca flourished like never before. The island nation became a most popular destination point for American cafe society, show biz stars, and high rollers who flocked to the majestic Hotel Nacional overlooking the entrance of Havana Harbor. Lansky built a casino inside the walls with the help of International Hotels, Inc. a Pan Am subsidiary, marking the first (but certainly not the last) time a legit corporation entered into a partnership with a fast-on-the-move mobster.

President Batista was a pompous, strutting martinet in the hip pocket of the New York City racketeers. He was a power-hungry feudal lord who kept his people in abject poverty while hoarding untold riches for his personal pleasure. And of course, Batista was more than happy to oblige Lansky in his plan to lure wealthy American tourists to Cuba as long as there was something in it for him.

The experience of operating Cuban casinos greatly aided the enterprising Lansky and Siegel when they went west and established similar gaming ventures in Las Vegas. The money earned in Cuba provided them with the seed money and means to do so.

The trick of the trade – the sine qua non – was the ability to skim the casino profits in the counting house. The technique was perfected in Havana in the 1930s and elevated to an art form by the time Siegel arrived in Vegas to sniff out new business ventures and try to capitalize on post-war land values which were rising by the day.

Gambling was legalized in Nevada in 1931, but it remained pretty much a local amusement appealing to itinerant cowboys and ranch hands who poured into Reno, the “Biggest Little City in the World,” on Friday nights for a weekend of carousing and hell raising in the local “buckets of blood.” In Vegas, the El Rancho and the Last Frontier catered to Army recruits from the nearby gunnery school. Strictly small time stuff.

It took Ben Siegel, backed by Lansky and Frank Costello’s financial where-with-all to build a casino with a touch of class – a place to gamble in a majestic setting with pretty showgirls, cocktail waitresses, plenty of gourmet food, and big-name entertainment. The Flamingo was the first world class Las Vegas resort built by the hoods of America. It was not to be the last.

The Siegel-inspired pleasure dome opened on December 26, 1946, but it was not the immediate success the impatient eastern “backers” hoped for. A torrential downpour ruined opening night, and triggered a run of bad luck for Benny “Don’t Call Me Bugsy” Siegel. His girlfriend, one Virginia Hill had been salting away mob money ear-marked for construction for some time, and her penchant for skimming ultimately cost Bugsy his life. Five bullets fired from a .30-.30 carbine ripped through Siegel as he read the paper in the living room of Virginia’s Beverly Hills home the night of June 20, 1947.

Within a matter of days the New York mobs seized control of the Flamingo and sent Siegel’s lonely love, Virginia Hill, on her merry way. Operating under the direction of Moe Sedway (one of the original partners listed in the “Nevada Project Corporation” which supplied Siegel with his funding), the Flamingo became an instant money maker and soon the high rollers across the country arrived to frolic in the dry desert air. Then a guy named Wilbur Clark who had a piece of the action down in Havana, began work on the Desert Inn about a half-mile north of Bugsy’s place on the same side of Highway 91. Right after that, the Thunderbird opened, and suddenly the mob controlled a lucrative semi-legit enterprise, at least by the standards and statutes set by the State of Nevada and the City of Las Vegas. The wolves were in the chicken coop.

In 1949 Moe Dalitz and his Mayfield Road Gang moved west to Vegas from Cleveland in order to drive out the unlucky Wilbur Clark. Clark had encountered serious financial troubles which idled construction crews laboring on his uncompleted Desert Inn.

Oddly enough, it wasn’t until after the Senate Kefauver Hearings of 1950 began focusing on the national organized crime network, did the Chicago guys enter the game – Las Vegas and the good times being the name.

In the 1930s Al Capone had a passing interest in Bill Graham’s Bank Club in Reno, but they failed to recognize the potential of Nevada gambling until the eyes of Tony Accardo opened to the possibilities of fast money and loose law enforcement out west.

Accardo’s lucky break came when a Los Angeles gambler named Tony Cornero began building the Stardust – located on old Highway 91, which by now was called Las Vegas Boulevard South, or more commonly, the “Strip.” Before the Stardust could open, Cornero died, and that event proved most fortuitous for Chicago. Murray Humphries, who was my special responsibility during the years I worked on the F.B.I.’s Top Hoodlum Program in Chicago, hired Jake Factor, brother of cosmetics tycoon Max Factor and an underworld “dabbler,” to “front” the Stardust for the Chicago Outfit guys.

It soon became quite clear to agents like myself that Chicago had reached an accommodation with Moe Dalitz and the New York families in order for them to run the Stardust (for the blue-collar, “dinner pail” gambler), the Desert Inn (serving the high-roller trade), and the Riviera. These were the three major hotel-casinos in the late 1950s and the deal that granted autonomy to the Chicago Outfit, we learned, was cut in early January 1961 when Dalitz and his partner Morris Kleinman came to Chicago to confer with Tony Accardo and Sam Giancana.

The next ten years was a period of remarkable growth and expansion for Las Vegas, and its Chicago benefactors. The Outfit added the Hacienda, the Sahara, and the Fremont (the biggest downtown casino) to its already sizable holdings, and if ever there were an adult playground blending glitz, glamour and sleaze into one appealing package, it was Las Vegas in the 1960s. Frank Sinatra and his fellow “Rat Pack” show-biz pals headlined the Stardust knowing fully well who they were working for. Complimentary rooms and free booze were liberally dispensed to vacationing Americans by the Outfit “hoteliers,” deeply engrossed in the lodging and hospitality business. Not even the murderous impulses of Tony “the Ant” Spilotro, a thug of the first order who dumped five of his victims in the desert in the early 1970s, failed to scare away the tourists who came to partake in the Vegas experience – a happening if you will.

The “change” in Las Vegas – the transfer of the hotel-casinos from mob ownership to corporate America was slow to occur. But once it started and continued to evolve, things would never be the same again in America’s gambling capitol. I suppose one can trace this whole metamorphosis to the arrival of the reclusive billionaire Howard Hughes and the influence he wielded over politico Paul Laxalt, then the Governor of Nevada.

Hughes’ point man in those days was Bob Matheu, who convinced the Governor that there might be a spot for him in the organization for Laxalt later on, if he could somehow convince Nevada legislators to overturn a state law barring public corporations from casino ownership.

In time, the law was changed to Howard Hughes’ wants and satisfaction after a battery of lobbyists including retired tax commissioner Robbins Cahill whose duty was to win passage of the casino act put the arm on the State Legislature. The strange and mysterious Hughes bought up six of the nicest hotels in Vegas from syndicate bosses. Moe Dalitz was a canny mobster, who agreed with the wiley Meyer Lansky that the glory days would soon be coming to an end. Change was down the road.

Dalitz sold the Desert Inn to Howard Hughes in 1967, thus paving the way for ambitious entrepreneurs cut out of the Hughes cloth, to over-run the town during the junk bond, merger and acquisition frenzy that consumed Wall Street in the 1980s.

Meyer Lansky realized a profit of just over $1 million dollars when his point man, Jack Entratter, peddled the Sands to Howard Hughes for $14.6 million in 1967. Lansky undoubtedly considered himself fortunate for cutting such a good deal, but the real money was yet to be made by pedigreed MBA’s from America’s prestigious schools of finance and business administration (Wall Street prepatory schools), who had a lot more on the ball when it came to structuring a corporation than the gangsters of yesteryear.

The value of prime Las Vegas real estate and the luxurious new hotels about to go up on the Strip soared in the next decade. The real suckers in this game of real estate high finance were the old time mob bosses whose split of the Hughes’ sale in the late 1960s, was mere pin money to a high roller like Akio Kashiwagi, who routinely dumped hundreds of thousands of dollars in a single night of gambling at the Dunes before he was hacked to death by Japanese yakusa in his native land some time later.

Steve Wynn, the son of a compulsive gambler who has a keen appreciation for the bottom line, replaced Dalitz, Benny Binion, and the muscle of a Spilotro as the Casino King of Vegas. He is the owner of Mirage Resorts, Inc., whose holdings include the Golden Nugget, the Mirage, and Treasure Island. His opposite counterpart in Atlantic City is Donald Trump who also subscribes to the gospel of junk bond financing. Wynn is on a mission. The mission is to “sanitize” Vegas and make money….lots and lots of money. Drive out the sin and sleaze in order to make the town attractive to vacationing mommys and daddies from mid-America who see nothing wrong with pushing their kids around in strollers on the Strip. Thus far he has succeeded – possibly beyond his own well thought out dreams. The glitter of the new Las Vegas epitomizes modern America.

Key federal prosecutions of leading mobsters from Chicago, Cleveland and Kansas City in the 1980s aided Wynn in ridding Vegas of the lingering gangster elements. Convictions stemming from the Department of Justice’ Operation Pendorf and Strawman I and II devastated mob rule in the 1980s – especially the Chicago influence.

Meanwhile, Wynn had already established a working relationship with junk bond king Michael Milken as vast amounts of capital to finance these casino ventures before Milken became the most famous (albeit richest) felon in American history. Together Wynn and Milken accomplished with the stroke of a Wall Street pen, what the mobsters of yesteryear finalized with a bullet and a gun.

It’s a booming business – a brilliant one of entrepreneurial skill – that is operated with greater savvy and sophistication than ever before. Fortunes are made and lost in less than a heartbeat, and the town the mobsters built has come a long way toward respectability. They have marketed and sold the total package of a “Ma and Pa” Disneyland as suitable entertainment for the whole family.

It would be exceedingly naive to believe that all of a sudden, in a decade or so, the town of Las Vegas is stripped clean of its criminal element. Because nowadays, it is almost impossible to tell just who the real crooks are, but one thing is for sure. The appeal is to Main Street America. Think of it as “Leave It To Beaver Strolls Down the Strip.” .

Bill Roemer, a former F.B.I. agent, a columnist for the I.P.S.N., and author of several books including Spilotro: The Chicago Mob’s Man Over Las Vegas, passed away in 1996.