by Gus Russo
The Franklin investing group named Julius Epstein as president of Deshler Hotel. Epstein also co-owned the Hollenden Hotel with slot king Nathan Weisenberg in Cleveland; the hotel was the headquarters for the Mayfield Road Gang (one member of the gang was Thomas McGinty, who operated Meyer Lansky's Nacional Casino in Havana). Epstein was also one of Greene's principal real estate agents in Chicago, and by the midfifties, Epstein and Greene controlled $85 million worth of property in Chicago, New York, and California, including dozens of Midwest shopping centers (American Shopping Centers Inc.) valued at over $65 million, and over eight thousand hotel rooms. Pritzker's law partner Stanford Clinton was listed as secretary of Deshler.
When the Franklin Corporation was dissolved on October 25, 1949, then federal judge Bazelon sold his Franklin/Deshler stock back to the tax-exempt Pritzker Foundation for $190,000. An insider to the deal told the FBI that Pritzker remarked, "You know, it's always the way when you give somebody something and when you want it back, they want a big price for it."11 The FBI concluded that any violations of the law that may have occurred involving the sale back to Pritzker were not within the jurisdiction of the Bureau but, nonetheless, deemed the buyback "suspicious."12 Ziffren sold his shares simultaneously for a tidy $25,000 profit.
But there was even more to the Deshler setup than the questionable partnership members and the $190,000 stock gift from Pritzker to Assistant Attorney General David Bazelon. Corporate records in Ohio show that the new Deshler Corporation sublet the premises of the hotel to the Hilton Hotel Corporation, of which Paul Ziffren's thirty-nine-year-old brother-in-law, Joseph Drown, was a vice president, it becoming the Deshler-Hilton—and Hilton opened up its own can of underworld worms.
The Supermob's rush to buy hotels as investment properties was officially on.
The Hilton Nexus
To understand why a Ziffren/Bazelon relationship with Hilton Hotels should have raised eyebrows, it is necessary to trace the origins of the Hilton empire. Hilton Hotels Inc. was created in 1946 when Paris Hilton's greatgrandfather Conrad Hilton merged with Arnold Kirkeby to form the new venture. At that time, fifty-nine-year-old New Mexico native Conrad Hilton had already established a chain of ten hotels, predominantly located in the Southwest.13 Hilton was anxious to expand eastward and internationally and thus agreed to a merger with another hotel scion, Arnold Kirkeby.
Arnold S. Kirkeby was born in Chicago in 1900. In 1928, he married Carlotta Maria Cuesta, the daughter of a wealthy Tampa, Florida, cigar maker. In Florida, he dabbled in real estate under the banner of the Chicago-Florida Realty Company, and his career in hostelry began with the formation of the National Cuba Hotel Corporation Inc. in the 1920s, incorporated in Delaware as the National Hotel of Cuba Corporation. In the mid-1930s, National Hotel of Cuba merged with Eastern mob boss and Cuban casino owner Meyer Lansky and opened an office on Flagler Street in Miami—Lansky later admitted his participation with Cuba National in his testimony before the 1951 Kefauver Committee investigating organized crime. Under the Kirkeby umbrella, Lansky, Frank Costello, and New Jersey boss Abner "Longy" Zwillman operated the Nacional, then the largest gambling casino in the world, in Havana. Meyer's brother Jake was the Nacional's floor manager.14
When he appeared before the Kefauver Committee in 1951, Jules Endler, a bar owner in Newark, New Jersey, admitted that he acted as a go-between in securing Longy Zwillman's interest in Kirkeby and the Nacional. As he told committee counsel Richard G. Moser, "Kirkeby called me and told me how many bonds I could have . . . and he gave Zwillman half of what I got . . . I invested ninety-two thousand dollars." (Endler also noted other partnerships he had entered into with Zwillman, such as a real estate venture—a former U.S. post office building worth $1.4 million—in Louisville, Kentucky; and Hollywood production deals with luminary partners such as Harry Cohn at Columbia, Fred Allen, Morrie Ryskind, Jack Benny, Sam Wood, Claudette Colbert, and Don Ameche, in which Zwillman held an 8 percent investment stake; and $41,000 invested in New York's Sherry Netherland Hotel, owned by Kirkeby.)15
Among the Chicago shareholders in Kirkeby was one Jules Stein, MCA founder.16 Other Hilton partners of record from Chicago were Blanche Greene and Shirley Greene, Arthur's wife and daughter, respectively. Of course, they were fronting for Arthur, much as Alex Greenberg's wife had fronted for him in the Hayward Hotel deal.17 Under this thin guise, Greene and Hilton acquired the Sir Francis Drake Hotel in San Francisco in 1944 and the Plaza Hotel on Vine Street in Hollywood. Jake Arvey's pal Colonel Henry Crown put up $3 million for Hilton to buy New York's Waldorf-Astoria.18 Crown ultimately owned 150,000 shares, or 8.7 percent of Hilton's stock. The FBI received information that Chicago Outfit boss Tony Accardo and underbosses Gus Alex and "Strongy" Ferrarro had obtained large blocks of the Hilton chain. According to an FBI report, "These individuals had apparently penetrated into the Hilton chain through Jake Arvey, Sidney Korshak and Henry Crown in the days when Hilton was starting to acquire numerous hotels."19
LAPD Intelligence files revealed that on April 16,1940, Arnold S. Kirkeby became president of Cuba National, and Ernest Ponterelli of the Capone Syndicate became VP (his brother Michael was said to be a high-ranking member of the Mafia's ruling clique, The Unione Siciliana).
With this 1950 document, Longy Zwillman became one of first hoods to secretly invest in Hollywood (Kefauver Committee investigative files, Library of Congress)
Predictably, Paul Ziffren became the attorney representing Hilton in L.A. and within three years handled approximately $1 million in transactions for the expanding corporation. Joseph Drown, another Chicago native, came to California in 1939 and acquired controlling interest in twenty-nine hundred acres above Sunset Boulevard, then called the Botanical Garden. It would later become known as Bel-Air and the Brentwood Estates. In 1944, the day his daughter was born, Drown partnered with his brother-in-law Ziffren and Conrad Hilton in acquiring the U.S. Grant Hotel in San Diego, as well as The San Diego Hotel, in partnership with no fewer than eight tenants of 134 N. LaSalle,* including future Supreme Court justice Arthur J. Goldberg and Seneca co-owner Benjamin Cohen. Sid Korshak's L.A. attorney pal Greg Bautzer was also involved. Drown went on to develop vast acreage in the Santa Monica Mountains and was also an owner of El Rancho Casino in Vegas with G. Sanford Adler, a known associate of mob boss Joseph "Doc" Stacher. With Johnny Rosselli, Drown also founded in 1947 the short-lived Beverly Club, a dining room and bar (with secret gambling in the back).
Eventually, Kirkeby Inc. obtained some of the crown jewels of hostelry: The Kenilworth, and Belle Aire, in Miami; Chicago's Drake, Stevens, and Palmer House hotels, and The Blackstone Restaurant; the Warwick, Gotham, Waldorf-Astoria, Roosevelt, Plaza, Astor, Hampshire House, and Sherry Netherland hotels in New York; the Nacional, which was openly run by Lansky in Cuba; in Los Angeles, The Sunset Towers, Beverly Wilshire, Hilton, and Town House on Wilshire Boulevard; and in the nation's capital, The Willard, Mayflower, and D.C. Hilton hotels.20 Not surprisingly, Hilton was, according to the Korshak brothers, the largest client (by room count) of their Chicago Hotel Association, a membership that rendered them virtually immune from union strikes.21
Police files in L.A. and Chicago point to many of the Kirkeby holdings in those cities as meeting spots for the underworld elite: Frank Costello maintained a suite on the thirty-seventh floor of the Waldorf in New York (where he was often seen with Joseph Kennedy); the Blackstone and Drake in Chicago were overrun with Outfit members; and Bugsy Siegel had an apartment in the Sunset Towers, where he was once busted for bookmaking. Don Wolfe, an author who grew up among the Beverly Hills elite, has vivid memories of Arnold Kirkeby's world. "My brother was a close friend of Buzz Kirkeby, Arnold's son," Wolfe recalled in 2005. "I used to go up to the mansion to swim in their tropical pool, which had a waterfall. Several times I'd see Bugsy and Virginia Hill there with Arnold. I later found out that Kirkeby used a lot of Syndicate money. Within a certain crowd in Beverly Hills it was common knowledge that the Kirkebys were swim
ming in mob money. 22
Indeed, that crowd included the FBI, which noted in its Bugsy Siegel file, "The Mafia operates through its New York headquarters, where Frank Costello and Joe Adonis, using Siegel as a front, have put themselves in the hotel business though Siegel and under the trade name of the Kirkeby Hotels."23
As an aside, the Kirkeby properties served as convenient places for assignations coordinated by others in the Supermob. LAPD intel files refer to Paul Ziffren delivering call girls to Tahoe gambler Mandel Agron at Kirkeby's Beverly Wilshire; Ziffren's name appeared in the "trick books" of a number of L.A. call girls (Carol Brandi, Paula McNeil, and Marilyn Anderson), according to LAPD files. Under Ziffren's phone number was printed the word "French."24 Various sources described Ziffren as a womanizer, one saying, "Paul had a lot of girlfriends around town who might sing for you." Another said that he "knew from Bonanno's mistress, a former prostitute who serviced Ziffren often, that the great Democrat led a secret life of diapered sexual infantilism."25
There were numerous Kirkeby subsidiaries as well, among them:
• Kirkeby Realty and Grant Realty, both of which employed Paul Ziffren's secretary Edith Cutrow as executive secretary, and which held over $4 million in assets.
• Kirkeby Ranch Corp. This time, Paul Ziffren's brother Leo's secretary, Jean Staley, was on board.
• The CVC Company, which, with a loan from Kirkeby, financed development of three hundred lots in Beverly Hills. Leo Ziffren handled the loan, which was negotiated by City National Bank of Beverly Hills, of which Arnold Kirkeby was a director, Sid Korshak a shareholder. City National's founder was none other than Chicago's Al Hart, who had parlayed his distillery profits into his new banking endeavor.
In July 1953, Kirkeby-National changed its name to Beverly Wilshire Hotel Corp., and by 1954 Kirkeby's Hilton Inc. would comprise twenty-eight hotels when it merged with Statler Hotels on October 1 of that year. By 1979 that number would explode to 185 domestic and 75 international facilities, and at century's end Hilton had a value of $6.2 billion. Arnold Kirkeby died on March 1, 1962, when the American Airlines flight he was on crashed into Jamaica Bay, New York*" His body was never recovered, and all ninety-five passengers perished, making the crash the greatest civilian U.S. air tragedy to that point.^'26
Conrad Hilton died of pneumonia in 1979 at age ninety-one.
Ziffren's investments in the Hayward, Deshler, Kirkeby-Hilton, and Franklin were just the beginning. A year before the attack on Pearl Harbor, a new corporation had appeared on the Los Angeles scene, a real estate holding company called Store Properties Inc., headquartered at 714 S. Hill Street in Los Angeles. Store's owner of record was one Sam Genis, a known associate of mob bosses Longy Zwillman, Doc Stacher, Frank Costello, Joey Adonis, and Meyer Lansky. Genis's criminal record showed that he had been arrested for bad checks in Florida, embezzlement in New York, and mail fraud and securities law violations in Georgia. When he died in a 1958 auto accident in L.A., his probate (which was handled by Paul Ziffren and Al Hart) revealed that he had started Store with a $93,000 loan from none other than Paul Ziffren. In 1947, Genis transferred half the stock in Store, worth $720,000, to Ziffren.
By 1957, Store Properties had bought thousands of acres of land in over three hundred transactions worth $20 million in Lcs Angeles alone. When Store's other California purchases are factored in (in San Bernardino, Fresno, Oakland, and San Francisco), the estimate approaches $100 million. Then there were the additional investments in such states as Arizona, Utah, Colorado, Oklahoma, Florida, Illinois, and New York. One of the properties in the Store umbrella, a plush motel in Phoenix, Arizona, was co-owned by Jake Arvey's chief Chicago protege, Arthur X. Elrod.27
But just as in the Hayward and Deshler deals, Ziffren's Store Properties venture was tied to the notorious Alex Greenberg, who, in so many words, informed the Kefauver Committee in 1951 that he was a "silent owner" of Store Properties. This was backed up by Kefauver Exhibit #70, which included Greenberg's tax returns and detailed his income from Store Properties. Those same records list among his income for 1947 $4,338.34 from his "Partnership with Paul Ziffren."28 Greenberg admitted that he was the actual owner of a square-block building at 333 E Street in San Bernardino, valued at $900,000. The trouble was, Greenberg's name appeared nowhere on the deed of trust involved. The "official" owner was Genis's and Ziffren's Store Properties. (See appendix C.)
Store also partnered with FDR's son James Roosevelt and San Francisco real estate mogul James Swig, who later became Pat Brown's statewide finance chairman in his successful California gubernatorial campaign.29
By 1948, Ziffren had placed his Store stock in his new wife Muriel's name (he had been introduced to her by Bazelon);30 likewise, Genis transferred his shares to his wife, Sayde.
Central to the Ziffren issue are the legal ramifications of forming a business with the full knowledge that one's partner's contribution was obtained through criminal activities or was being used to launder the lucre of organized crime. Andrew Furfaro, the former organized crime and corporate-corruption chief for the Western Division of the IRS, has no doubt about the culpability of such a "clean" entrepreneur. "If you have knowledge that the money was stolen or contraband, you're still liable," Furfaro said emphatically in 2004. "It's called aiding and abetting."31
It is impossible to know whether any or all of the above investments were the result of insider information from Bazelon's land office about the fiscal or proprietary health of the properties involved. But there is little doubt that the investments that followed bore the taint not only of underworld partnerships, but also of inside information that allowed the purchasers to profit off the misery of 120,000 innocents.
The December 7, 1941, attack on Pearl Harbor by the Japanese provided an inadvertent boost for the fortunes of the Supermob. The payoff was not immediate, taking three and a half years to transpire, but it was profound—a direct result of profiteering from the misery of thousands of wrongfully detained Americans.
The Rape of the Nisei
Imagine the tragic effect had the United States confined every American-born and foreign-born Muslim to a three-and-a-half-year imprisonment after the September 11, 2001, terrorist attacks on the country. Add to that horror the impact on these innocents had all their property, which had been earned over two generations, been seized and auctioned off for pennies on the dollar, much of it going to buyers with inside information about the choicest parcels. In 1942, this is exactly what happened to the nisei, or Japanese Americans, and the Supermob was the insider. Ironically, the process by which this largely Jewish cadre acquired Japanese property bore a resemblance to the Aryanization of Jewish property in Nazi Germany.
The first Japanese arrived in the United States in 1869, establishing the Wakamatsu Colony in Gold Hills, California. Although initially welcomed as a form of cheaper labor than even the irascible Chinese, they soon became pariahs when, through backbreaking hard work, they saved enough to purchase land, mostly in the form of farms, small hotels, and other commercial real estate; and what they couldn't buy, they leased for farming. Soon, the Japanese became a major economic force in the state: in 1940, the 535,000 acres of nisei farms, situated on the state's most fertile property, were worth $72 million plus $6 million in equipment; California's ninety-four thousand Japanese raised 41 percent of the state's staple "truck" crops, such as celery, carrots, onions, lettuce, and tomatoes.32 Other commercial real estate in downtown areas was valued in the millions, but would be worth much more in the near future as the city populations were unknowingly on the verge of a postwar explosion. The success of the Japanese in California brought out so much latent racism and xenophobia among the whites that in 1913 California passed the Alien Land Law, which prevented noncitizens from buying any more land.
The impressive ascendancy of the nisei came to a screeching halt almost immediately after the Pearl Harbor attack; within two hours, police were arresting everyone who looked Japanese in the L.A. district known as Litt
le Tokyo.33 The next day, the U.S. Treasury froze Japanese bank accounts and seized all Japanese-owned banks and businesses; two days after the attack, Japanese-language schools were closed. But the U.S. citizenry called for much more. Fueled by reports of "magic cables," intercepts of communications among Japanese diplomats that allegedly discussed the recruitment of nisei spies, the American paranoia, especially in California, reached a fever pitch.
Columnist Westbrook Pegler led the outcry in the national press, writing, "The Japanese in California should be under armed guard to the last man and woman right now—and to hell with habeas corpus."34 Syndicated Hearst sportswriter Henry McLemore wrote of the Japanese Americans, "Herd 'em up, pack 'em off and give them the inside room in the badlands. Let 'em be pinched, hurt, hungry and dead up against it . . . Personally, I hate the Japanese. And that goes for all of them."35
California's attorney general (and future governor and Supreme Court chief justice), Earl Warren, voiced the hysteria for California!! politicians in congressional testimony:
There is more potential danger among the group of Japanese who are born in this country than from the alien Japanese who were born in Japan. We believe that when we are dealing with the Caucasian race, we have methods that will test the loyalty of them, and we believe that we can, in dealing with the Germans and the Italians, arrive at some fairly sound conclusions because of our knowledge of the way they live in the community and have lived for many years. But when we deal with the Japanese, we are in an entirely different field and we cannot form any opinion that we believe to be sound . . . I believe, sir, that in time of war every citizen must give up some of his normal rights.36
