The Arrogance of Power
Page 38
To overcome the fact that gambling was illegal in the Bahamas,1 Lansky had offered a two-million-dollar bribe to the chairman of the islands’ development board. A lawyer by profession, the chairman “refused,” only to accept approximately that sum in “legal fees” for arranging an exemption.2
Once the casino in Grand Bahama opened, a Justice Department informant reported, it was soon clear it was being managed mob-style:
MM T-2 advised that small, thin gold cigarette lighters having a false bottom in which a magnet is placed, are being used by croupiers to control the wheel. . . . These lighters are also used in the dice games. . . . The dice will be loaded. . . . “Dusty” Peters is in the counting room every hour, and when the bank gets low Peters issues orders to all dealers to start “taking” the players.
Soon, with two casinos flourishing, U.S. agents had begun trailing Dan (“Dusty”) Peters as he flew twice weekly from the Bahamas to Miami. On each trip he would proceed to a Miami Beach bank, deposit around three hundred thousand dollars, then meet with one of the Lansky brothers at the Fontainebleau. So much money was being generated by the businesses that by 1967 it was being mailed to the banks, parcel post, in cardboard beer cartons.
On Paradise Island, 150 miles across the ocean to the south, Huntington Hartford had been furious when he learned that gambling had been approved on Grand Bahama. His own resort being a financial disaster, he too had applied for a gambling license and a permit to bridge the channel between his island and Nassau. The islands’ corrupt development chief, however—the same man who had allowed the mob-backed casinos—had turned Hartford down.
A license to operate a casino on Paradise was finally approved in 1966, but only under new business arrangements that sidelined Hartford. The development chief gave the go-ahead only when Wallace Groves, a convicted swindler with links to the Lansky mob, was brought into the operation. He was to share the majority of the profits with a company run—and this is a very relevant factor in terms of the Nixon connection—by an American businessman named James Crosby.3 Crosby was also to build the bridge to the island, essential to get the gamblers to the casino.
A Georgetown University graduate and the son of a former U.S. deputy attorney general, Crosby seemed respectable enough when he moved into the Bahamas to start the operation that later became Resorts International, a hotel and casino empire. Careful examination, however, raises questions about his associations. While he saw to it that Groves was removed from the Paradise operation, Crosby did so only after Groves’s mob connection had been exposed in Life magazine. Meanwhile, he quietly pursued a real estate project with another Lansky man.4
Crosby’s career has been studied most thoroughly by Alan Block, a professor in the administration of justice at Pennsylvania State University.5 “The funds amassed to finance the Paradise Island ventures amounted to about $33 million,” Block concluded. “Of that sum at least 63 percent appeared to come from or through ‘funny money’ sources, some directly related to organized crime. . . .”
Even years later lawyers for New Jersey’s Gaming Enforcement Division would oppose the granting of a gambling license to Crosby and his company, citing “links with disreputable persons and organizations,” and specifically their record on Paradise Island.6
As the island changed hands in 1966, a Justice Department official had expressed his view in a now-celebrated memo. “The atmosphere,” he wrote, “seems ripe for a Lansky skim.” It certainly looked that way.
The first Paradise casino director was Eddie Cellini, who was eventually banned from the islands by the Bahamian government. Crosby’s company had transferred him to Florida by then, but again only after he had received adverse publicity. Company officials claimed Cellini was an innocent, vilified only because of his brother Dino, a known Lansky lieutenant. Yet Eddie Cellini had himself worked at two Lansky casinos in Cuba and been indicted during a gambling cleanup in Kentucky.
Six months after Nixon attended the Paradise casino opening, Lansky and Dino Cellini were indicted by the IRS for directing gambling junkets to the island. The first high-ranking mobster to break the Mafia’s code of silence, Vincent Teresa, testified that Lansky and Dino Cellini were involved with the Paradise casino as late as 1971. (It was Teresa who styled Paradise “Meyer’s Island.”7) An inspector at the Paradise casino and a former FBI agent specializing in casino crime said Lansky’s henchmen “still dictated” to Crosby’s people as late as 1973.
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Precisely when Nixon became involved with Crosby and the Caribbean gambling milieu is unclear, but he had featured in a Crosby promotion as early as 1960, when he was running for president and Crosby was promoting a new advertising technique. Crosby used a device called the Skyjector to project a mammoth picture of Nixon and a Pepsi bottle cap—in the unlikely company of French film star Brigitte Bardot—onto the side of a Manhattan skyscraper.
Lansky’s fixer in the Bahamas, Lou Chesler, contributed cash to the Nixon campaign that year and traveled with the candidate. The pilot who flew Nixon during the campaign went on to work for Chesler. As for Sy Alter, the Hartford aide who looked after Nixon on Paradise Island after the 1962 defeat, he was much more than a mere caretaker and had more than a passing acquaintance with both Nixon and Rebozo.
Frank Smith, a former career FBI agent sent to clean up the Bahamas casinos, described Alter as a “mob guy” linked “back to the Meyer Lansky group from the old days. . . . [He was] Eddie Cellini’s man.” Professor Block, the expert on Bahamas crime, has written that Alter “had a deserved reputation as a corrupter.”
Alter had met with Lansky, the month before Nixon’s arrival on Paradise, in connection with the efforts to get a license for a casino on the island. He was already in trouble in the United States at the time, for offenses that would one day lead officials to oppose his working in a casino. Cited for liquor law violations at a store he ran in New York, Alter tried to evade the charges by bribing officials, including a judge. He also attempted to get to U.S. Senator Jacob Javits of New York, in hopes of using Javits’s “political influence in the Republican Party.”
Far from distancing themselves from such a character, Nixon and Rebozo began a relationship with him. They visited him at his New York liquor store within weeks of the 1962 trip to Paradise Island and while he was still in trouble with the law. Alter saw Nixon in the years that followed, and Nixon took time to call him when he was in the hospital. Alter’s relationship with Rebozo became so close that Alter would be admitted to the Florida White House—the Nixon-Rebozo compound—at the height of Watergate.
At the Rebozo bank in Key Biscayne, where Alter conducted numerous transactions, he received special attention. “Alter is a friend of ours,” Rebozo told a senior aide. “Treat him well.”
Rebozo’s solicitude is understandable, both in terms of favors owed and concern about confidentiality. According to the former FBI agent Frank Smith, “both Rebozo and Nixon were in on the negotiations” for the Paradise Island casino license. If true, it was a dubious role for a man harboring presidential ambitions.
The Paradise Island connection was to provide crucial funds for Nixon’s successful White House run in 1968. Alter, who stayed on after the Crosby takeover of Paradise, took the initiative. “I knew a lot of people,” he recalled. “I felt I could introduce Nixon around. I talked to Crosby and I said, ‘I think this wouldn’t be a bad deal for you.’ I called Bebe and said, ‘Crosby may be interested in this campaign.’ We set up a meeting, and Crosby met with Bebe at Bebe’s place, after closing hours.”
Nixon himself then met Crosby, and the casino owner contributed one hundred thousand dollars to the 1968 campaign. At least as much, and perhaps more, came in from Crosby’s friends.8
Nixon found time that summer to return to Paradise Island to dine with his benefactor. He later attended a party on the Cosa Grande, a luxury yacht Crosby placed at the party’s disposal during the Republican National Convention.
During the presidency
Nixon would personally escort Crosby through the White House. The casino boss, meanwhile, announced that James Golden, who had served Nixon as special assistant and security chief, had joined his staff. Company insiders came to know Golden as “Nixon’s man.” Ehrlichman recalled “a lot of back and forth” in the Oval Office about helping Crosby’s company out, with Rebozo acting as go-between.
Rebozo and White House aides visited Paradise Island during the presidency, but Nixon apparently did not, on the advice of the Secret Service. “Presidents of the United States,” as Barron’s magazine tartly put it, “did not hang out at gambling spots.” Instead Nixon met with Crosby on another Bahamian island.9
In 1968, at the gala opening of the Paradise casino, Nixon remarked that the island “could be one of the most significant pieces of American investment abroad.” It may also have proved a lucrative source of income for him.
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“Nixon was a charming man, who—along with Jim Crosby—ended up giving me the shaft.” So claimed Huntington Hartford, who wound up years later suing Crosby for depriving him of his slice of Paradise. He sued, in particular, over the profits from the toll bridge linking the island to the mainland, and thereby hangs a mystery.
At $2 a crossing—an exorbitant charge at the time—the bridge was producing significant revenue. It paid for itself by 1969 and from then on brought in $1 million to $1.5 million a year. If one takes the lower figure it was generating, at today’s values—nearly $5 million.10
It later emerged that 80 percent of the shares in the bridge were held by a group made up of Crosby himself, a colleague linked to the Florida-based company Benguet Consolidated, and an Anglo-Canadian banking concern. The remaining 20 percent was owned by “a number of individuals,” represented by a Swiss bank.
Huntington Hartford said early on that he had “reason to believe” that one of those individuals was “a close friend of President Nixon.” Privately, he claimed knowledge of massive deposits Nixon had made in a Swiss bank. Crosby, for his part, denied that Nixon or Rebozo were hidden investors in the bridge but refused to identify the unnamed shareholders. Information now available suggests that Hartford’s claim was more than the wild allegation of a millionaire who believed he had been bilked.
Former FBI agent Frank Smith, who tied Nixon and Rebozo to the planning of the Paradise Casino, said they were also party to the negotiations over the bridge. As former special assistant to the president of Benguet, Smith was well placed to have such knowledge.
So was Allan Butler, founder of Butler’s Bank in Nassau and for some time a partner of rogue financier Robert Vesco. Vesco had reason to be familiar with the affairs of Paradise Island: He tried to buy it. One of the banks that owned the bridge, Butler said, was acting as nominee for Nixon, Rebozo, and a third party. Oral questions to the Nixon White House about these assertions met with flat denials, and a written inquiry went unanswered.11
An interviewer had better luck in 1987 with former Attorney General John Mitchell, who had been one of the former president’s closest associates. Asked if he knew of offshore holdings owned by Nixon, Mitchell said he was aware of only “whatever he received from his interest in the Paradise Island Bridge.” The astonished interviewer asked if he was joking, but Mitchell shook his head. “No,” he said slowly. “Nixon had the bridge.”
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The Nixon story is permeated with rumors of ill-gotten gains. Those who probed Watergate were bombarded with them. “We’re not talking about twenty a week,” recalled Carl Feldbaum, a Watergate Special Prosecution Force attorney. “We’re talking about twenty a day.” Even working around the clock, there was not enough time or money to follow up on everything. One such lead, a serious financial allegation, remained unresolved even though, as Feldbaum reported to his boss, it seemed to form “a sound basis for investigation.” Fresh research today has uncovered an extraordinary story.
It began on a balmy day in Florida, just weeks after Nixon’s 1969 inauguration, when the new president was cruising Biscayne Bay on Rebozo’s boat Cocolobo. Rebozo had told yacht club members he feared “someone would snap a picture while Nixon was aboard,” and the fear proved justified: Life photographer George Silk was hidden belowdecks on one of the boats in the harbor, his camera hidden in a sail bag.
As Nixon stepped ashore with several companions, Silk stood up and began taking pictures. Seconds later Secret Service agents came running with guns drawn. It was a frightening moment, the photographer recalled in 1997, but the result was a rare picture of Nixon in casual clothes—and perhaps something much more interesting, something Silk could not have guessed at.
Four years later, in June 1973, a Seattle Post-Intelligencer reporter named Michael Buckley received a phone tip about a precious metals dealer, David Silberman, whom the caller alleged to be “involved in large gold transactions with officials of the Committee to Re-elect the President and the White House.” Among Silberman’s papers, the caller claimed was “a Life magazine of February 21, 1969, that included several photographs . . . one of these showed Nixon, Rebozo and Silberman walking along a dock.”
Buckley investigated for months. Silberman, he learned, was a known smuggler moving gold and silver across the Canadian border. When tracked down, Silberman admitted having worked for politicians of both parties but denied knowing the president or Rebozo. Confronted with the Life photograph, he excused himself and went to the telephone. On his return Silberman said he had never seen the photograph in his life.
Then in his midthirties, Silberman was a commodities dealer by profession with his own company, American Metals Inc. Intimates knew that he lived on the fringe and delighted in taking risks, breaking the rules. Silberman’s wife would remember how he once laid a pile of gold bars out in the form of a pyramid on the kitchen table. His secretary was aware of her boss’s trips to Swiss banks, trips Silberman would not discuss in detail. His daughter later found a list of twenty-five Swiss bank account numbers among his things.
A number of Silberman’s associates, some with their own questionable backgrounds and hence reluctant to speak on the record, have spoken of his links to Las Vegas casinos and mobsters and to a Florida bank tied to Meyer Lansky.
Silberman’s wife, Elsie, meanwhile, believed her husband had “a code of integrity of his own.” “He was an enigma,” said secretary Dee Anne Hill. “Extremely intelligent, secretive, devious, yet possessing a social charisma and a gentle caring for people. Yet, naïve as I was, I felt I should always watch my back.” Seven years after Watergate, Silberman would be sent to prison for life, convicted of killing the female companion of a former local Republican official who claimed he had cheated him over a gold deal.
Silberman was himself a Republican, who decades later still spoke of Nixon with admiration. One associate, who counts a close relative of the former president as a friend, told the FBI that “Silberman was given a large amount of cash by [Nixon attorney and fund-raiser] Herbert Kalmbach, for conversion into gold certificates. . . .” Another said he learned, though not from Silberman directly, that Silberman had a “business relationship with Rebozo.”
Those once close to Silberman recall that he displayed two framed pictures. One, a signed photograph, showed him with Nixon at some unknown function. The other, which he put up behind the bar at his home with other collectibles, was a copy of the photograph taken at Key Biscayne in 1969 and published in Life. It clearly shows Nixon, wearing a windbreaker, with Rebozo at his side in black, walking along the dock. Behind them are three men, two in white polo shirts, one in an open-neck white shirt and dark blazer (see photograph number 37).
Two of Silberman’s friends, interviewed for this book, remembered his pointing out the photograph and saying casually that it had been taken at Key Biscayne and that he was one of the men behind Nixon. He did not elaborate, and one of the friends was not especially surprised. “He was open about some things,” said Jack Cassinetto, a former colleague, “and very secretive about others.”
Godfrey said that he was the man to the left rear of Nixon, that the man in the white to his right was fellow agent Bob Jameson, and—flatly—that the man in dark glasses and blazer was a third agent, Earl Moore. Reached at his home in Florida, Moore insisted that he was indeed the fellow in the blazer.
Yet Moore behaved oddly. Having first agreed to forward a photograph of himself taken during the same period, he abruptly changed his mind. Contacted again, he refused once more and hung up on the interviewer. Godfrey, for his part, had been unusually close to both Nixon and Rebozo. After retiring in 1974, he had visited the disgraced president at San Clemente and watched the Grand Prix with him at Long Beach. Rebozo even asked Godfrey to work for him. As late as 1994 Godfrey was a member of the February Group, an association of diehard Nixon loyalists.
The escutcheon of the Secret Service, rightly admired for its members’ courage and efficiency in the physical protection of presidents, was not uncontroversial during the Nixon presidency. Its best-known hero, Rufus Youngblood, decorated for valor during the Kennedy assassination, departed angrily accusing Nixon’s close aides of bending the service to their will “like Disneyland.” The service allowed itself to be used for political and private purposes, such as spying on Nixon rivals like Edward Kennedy and George McGovern, or surveilling his own brother Donald.
The New York Times would write of Nixon’s “perversion of the Secret Service” and of “troubling signs that the agency has come to put service to his person ahead of any tradition of public service.” Former White House deputy counsel Edward Morgan has claimed that Nixon tried to convert the Secret Service into his personal “secret police.” “I was concerned about it,” John Ehrlichman recalled. “The Secret Service turned the President down very seldom. They were very willing to please.”