Supermob

by Gus Russo

  With the Schenley agreement in hand, there was optimism that Korshak could resolve the situation with all the state's growers if they would enlist him as Schenley had done. Korshak was referred to as "the Disney of the bargaining table, there was so much magic in his touch."27 Dan Swinton, the labor reporter for the Los Angeles Herald-Examiner, who described Kor­shak as "a man who seldom stops long enough in one place to get a wrinkle in his suit," wrote at the time that "Korshak may be the man to move mountains. He may turn out to be the hole card that Cesar Chavez and his followers didn't know they had—and it could win the pot of gold." Swinton added that Korshak showed "sincere emotion—that he felt deep sympathy for the needs and objectives of farm workers."28

  What neither Chavez nor his workers could know was that Korshak and his Outfit associates had a history of helping unions get recognized, only to then take them over from within to put the sweetheart-contract game into play. It wTas the old gambit perfected by Humphreys with the IATSE takeover and repeated throughout the forties and fifties. A decade later, Chavez would see the other shoe drop.

  Korshak's 1966 U.S. passport application (State Department records)

  On September 6, 1966, Sid Korshak, Al Hart, Harry Karl, and Harvey Sil­bert sponsored a $100-per-plate dinner at the Beverly Hilton Hotel in honor of John "Jake the Barber" Factor, celebrating his proclamation as the Humanitarian of the Year by the World Jewish Congress.29 That fall, according to passport records, the Korshaks celebrated another successful year with a six-week tour of England, France, and Italy. The only bump in the road that year was the Nevada Resort Association's dropping of Korshak as its labor counsel because the contracts he had negotiated were "overgenerous."30

  Reagan Ascending

  By this time, Korshak's Bistro table neighbor Ronald Reagan, who was now a Republican (having switched after Bobby Kennedy's investigation of MCA), had attracted the support of some of California's most influential and conservative Republicans. Over a year after Reagan delivered a seminal nationwide speech on behalf of Republican presidential candidate Barry Goldwater on October 27, 1964, these men coalesced into Reagan's "Kitchen Cabinet" and together devised the financing and political strategy necessary to propel their man, and their interests, to the front of the political stage. The founder of the Kitchen Cabinet was wealthy Los Angeles Ford dealer Holmes P. Tuttle. He was joined by Joseph Coors, president of Coors Brewing Co; A. C. Rubel, chairman of Union Oil; Henry Salva-tori, oil developer; Justin Dart, of Dart-Kraft and Rexall Drugstores; Leonard Firestone, of Firestone Tire and Rubber; Alfred Bloomingdale, whose Diner's Club employed the services of Sid Korshak; Paul Ziffren's friend and future law partner William French Smith; and Taft Schrieber, the VP of MCA.

  The Cabinet, which met weekly at the Bistro31 and in other private clubs in Los Angeles and San Francisco, first hired California consulting firm Spencer-Roberts & Associates to supervise the selling of Reagan* Bill Roberts, the co-owner of the spinmeisters, candidly described the challenge: "We had to overcome three things—Reagan's inexperience, the actor bit, and his lack of knowledge of state government."32 In the age of televised charisma, lack of knowledge was trumped by telegenic veneer. And Ronald Reagan, the movies' quintessential "good guy," had magnetism to spare. (Korshak, who thought Reagan was not yet ready for the post, bet a Hillcrest member $5,000 against $6,000 that Reagan would lose to Korshak's other pal Pat Brown.)33

  But regardless of the gubernatorial election outcome, the Supermob was covered, having long-standing ties to both candidates. In fact, Stein and Wasserman's MCA supported both in this election. Producer Henry Denker recalled that Wasserman, like Korshak, supported Brown, while Stein not only backed Reagan, but was also his chief personal fund-raiser, and Stein's VP Taft Schreiber was the campaign manager.

  "That was Stein's idea," Denker remembered recently. "Taft was the Republican and Lew was the Democrat. That way they had both camps covered and they gave equally to both sides, and everybody knew that."34 Denker elaborated on the arrangement: "MCA was divided into two groups. There was a Democratic group and a Republican group. They always wanted to have a hand in the White House, no matter which party was there. When Reagan was doing the General Electric show, somebody came up with the idea that he would promote GE to the plants, make visits. These appearances were very successful. They saw how the workers loved him, and somebody at MCA said, 'Hey, he could be governor of the state.' In show business you go with what's working—that's an old maxim. When Taft died in 1976, Reagan was taken over by Wasserman."35

  On November 6, 1966, Democrat-turned-Republican Ronald Reagan became governor of California, defeating incumbent Republican-turnedDemocrat Pat Brown by one million votes. Ironically, the predominantly Democratic state had fared so well financially under Brown that the erstwhile blue-collar Democrats became more fiscally conservative and shifted to the traditional Republican anti-big-government and antitax philosophies. ^

  Governor Ronald Reagan (Library of Congress)

  Becoming governor did not seem to affect Reagan's penchant for dissembling. Before his inauguration, Reagan was required to undergo a comprehensive background check by the FBI, since he would have access to UC's nuclear research data. On the FBI form, Reagan lied about his membership in left-wing ("commie") organizations in the forties. When he filed the report with the Atomic Energy Commission, Hoover let the lie stand, even though he knew better.

  The FBI boss had a good reason for not outing Ronnie: as governor, Reagan continued his secret commie informant role with the Bureau. In 1998, after a seventeen-year legal battle with the FBI, the San Prancisco Chronicle received two hundred thousand pages detailing the sordid history of Reagan and the FBI.* Among other revelations, it was learned that Governor Reagan offered to employ "psychological warfare" and other methods to rid the liberal UC Berkeley campus not only of its free speech activists, but of its president, Clark Kerr, who Reagan and Hoover had decided was "too liberal."

  In 1966, Kerr had been president of the university for eight years, and Hoover and Reagan feared commies would plant spies on the campus, then the largest research university and a key defense contractor. As a candidate, Reagan had pledged to remove Kerr, and Hoover took the unprecedented step of offering the Bureau's services to the candidate. Now with Governor Reagan's complicity, the Bureau began compiling "dirty secrets" files on the university's six-thousand-member faculty. After his January 1967 swearing-in, Reagan was burned in effigy at Berkeley when his plans to slash the school's budget were leaked. On January 16, Reagan had a secret meeting with the FBI and asked for subversive data on Kerr, whom he blamed for the budget leaks. On January 20, Reagan attended the university's first Board of Regents meeting wherein Kerr was fired by a 14-8 vote (13 were needed).36

  Reagan's new position likewise failed to diminish his conflicted relationship with MCA. One month after his election, Reagan sold 236 of his 290 acres in Malibu Canyon to Fox for $1.9 million—$8,178 an acre—even though Fox's experts appraised the craggy, useless terrain at $944,000. Reagan had purchased the parcel for $225 an acre twelve years earlier. William French Smith, Reagan's attorney (and Paul Ziffren's friend and future law partner at Gibson, Dunn and Crutcher), oversaw the sale for the Reagan Trust, which had been set up by MCA's Stein and Schreiber. (Later, as president, Reagan would appoint Smith his attorney general.)

  "I could not have run for office unless I sold the ranch," Reagan admitted to biographer Lou Cannon. When queried about the sale fourteen years later, Fox real estate unit president Judith Frank said there were no records that would indicate why Fox made such a poor purchase. "Maybe management decided they owed Reagan a favor," she said. "Who knows? Who cares?" At the time, the Zanuck family, a prominent supporter of Reagan's political career, controlled Fox.

  With Jules Stein acting as trustee for Reagan on the deal, Reagan used the remaining fifty-four acres as collateral on a down payment for other land he wanted worth $346,950 in Riverside, with the proviso that he had to buy back the fift
y-four acres if the purchaser could not sell it within a year. When this actually happened, Stein came to Reagan's rescue and purchased the property for $165,000. Stein also set Reagan up with Oppenheimer Industries, a Kansas City-based cattle-breeding facility that Stein owned and used as a tax dodge. When Reagan's tax records were leaked to the press, they showed that he had used Oppenheimer to avoid paying state taxes.37 A top California State official who investigated the case said in 1976, "We came away with the feeling that Twentieth Century-Fox was a pawn in the deal. We figured that Reagan's gang had actually put up the money." The official concluded that the purpose of the bailout was to bolster Reagan's finances so that he would be free to run for president after his gubernatorial term expired. In fact, Fox appears to have been in collusion with Stein's MCA in its effort to boost Reagan's political future.

  Soon after the 1966 sale, MCA's Universal Studios hired Fox's Richard Zanuck as its new president, and one year after the sale, Reagan appointed former Fox executive assistant to the president Harry Sokolov to the chairmanship of the State Parks and Recreation Board. One year later, Governor Reagan signed a controversial tax bill that gave Fox and other studios a tax break that saved Fox $250,000 per year. In 1974, Reagan's last year in office, the circle was completed when the state bought Fox's 236 acres back for use as parkland.

  While Reagan settled in to the California statehouse, another Korshak associate, Jimmy Hoffa, was getting ready to inhabit "the big house," having just about exhausted his appeals for convictions in the Florida kickback scheme and subsequent jury tampering. With two concurrent thirteen-year sentences facing him, Hoffa made some last-minute pension-fund loan decisions, one of which went against the advice of Sid Korshak.

  In 1966, Hoffa and Allen Dorfman were asked to approve a $20 million pension-fund loan to hotel magnate Jay Sarno for the building of Las Vegas' most garish paean to gambling yet, the seven-hundred-room Caesars Palace Hotel and Casino.*" But Sid Korshak worried that the loan would only add to Hoffa's woes. According to the FBI, Korshak "advised Hoffa not to make any loans from the Central States, Southeast, and Southwest Areas Pension Fund to the operators of Caesar's Palace in Las Vegas . . . that he, Hoffa, already had made too many loans to Las Vegas gambling interests . . . that if the Teamsters membership ever found out about Hoffa's handling and misuse of the pension funds, he, Hoffa, would never get out of jail."38 Obviously Korshak knew what the Bureau knew—that the Caesars grand strategy had long been in the planning and that its putative owner would be just another in a long series of front men used by the Chicago Outfit and its partners. An informant later told the FBI that the deal to cut up the Caesars skim was arrived at in October of 1965 at a Palm Springs house rented by two Las Vegas showgirls. In what came to be known as the Palm Springs Apalachin,^ mob bosses from around the country, including Joe Accardo, Longy Zwillman, and Jimmy Alo, had arrived to work out the details.

  One witness recently recalled sitting with Korshak and Abe Teitelbaum in the penthouse suite of Morris Schenker's Dunes Hotel, where they assuaged Schenker's fears of competition from Caesars, which was going up directly across the Strip from the Dunes. (Schenker, a Russian-Jewish immigrant to St. Louis, was Hoffa's longtime attorney and a man, like Korshak, under lifelong scrutiny by authorities.)

  After Hoffa proceeded with the Caesars loan, Korshak nonetheless became its labor adviser. But eventually he was able to convince the Chicago Outfit to significantly lower its profile in Sin City. And they were able to do it at the great expense of an old Korshak foe, aviation pioneer Howard Hughes.

  Howard' s End — Hu hes in Vegas

  Tm not a paranoid deranged millionaire. Goddamnit, Tm a billionaire.

  HOWARD HUGHES

  The prosecution of Hoffa and the oppressive Vegas wiretaps were fully appreciated by not only Korshak's Supermob, but by the underworld alike. In Florida, Vincent "Jimmy Blue Eyes" Alo advised his Las Vegas partner Meyer Lansky to sell out. "Let's take the money and have a quiet life," Alo said to his lifelong friend. Sid Korshak's Chicago partners took a similar tack, but with a critical distinction. In 1967, with Jimmy Hoffa packing for "college" (and Allen Dorfman not far behind), Joe Batters Accardo and Sid Korshak devised a temporary solution to the public relations hit the gangs were taking. They instructed Johnny Rosselli to keep an eye out for squeaky-clean suckers with deep pockets, and then start unloading the gang's holdings, with one key proviso: the Chicago Outfit would manage the casinos.

  "Timing is everything" goes the aphorism, and Accardo's timing could not have been more fortuitous. One year earlier, on Thanksgiving Eve, 1966, Korshak's RKO nemesis, Howard Hughes—the "billionaire kook," as he was known to the mob—moved into the penthouse suite of Dalitz's Desert Inn Hotel. Hughes, a total recluse, liked the habitat so much that he refused to leave on checkout day, much to the rancorous objection of the hotel's other pampered high rollers.

  "Tell them to go to hell," Hughes ordered his aides after the hotel managers attempted to evict him.

  Now, in 1967, Hughes played right into Rosselli's hands when he employed his tried-and-true tactic of buying out an adversary. As fate would have it, Hughes, the sole owner of Hughes Tool Company, had just sold his stock in Trans World Airlines for $546 million and it was burning a hole in his pajama pocket. Thus, the famous agoraphobe felt it easier to buy the Desert Inn than to move out and instructed his key staff to work out the details. Chicago's good fortune did not end there, for Hughes's right-hand man was Robert Maheu, coincidentally a great and good friend of Rosselli's since the early sixties when they'd tried to help the Kennedy administration murder Cuba's Fidel Castro.

  Bob Maheu instinctively turned to his old assassination chum Rosselli to get the ball rolling. "I told Mr. Hughes that I thought I had found a person fitting the background that he had requested me to seek," Maheu later testified in court, "a person who had connections with certain people of perhaps unsavory background." In his autobiography, Maheu admitted, "Johnny smoothed the way." Using the skills that later earned him the sobriquet The Mafia's Kissinger, Rosselli spent three months convincing the disparate partners to agree to the Hughes buyout. From the perspective of Rosselli and his skimming cohorts, there could not exist a better dupe than Hughes. Who better to victimize than a man who would never surface to testify in court? For his diplomatic legerdemain, Rosselli was paid a $50,000 "finder's fee."

  Thus, like Wilbur Clark, Hughes became merely the newest pawn in the Vegas underworld's front-man motif. Years later, Maheu told Chicago investigator Jack Clarke, "Johnny told me who to hire to run the casinos and pit crews." Journalist Sergio Lalli divined what had happened when he wrote, "The mob went about its business as usual." Historians Roger Morris and Sally Denton called the sale nothing more than "a classic Las Vegas shell game." And Johnny Rosselli himself told Jimmy Fratianno, "The whole thing was a Syndicate scam . . . We roped Hughes into buying the Desert Inn." Fittingly, Hughes took over on April Fools' Day, 1967, for a purchase price of $13.2 million. It was just one month before Hoffa went off to Lewisburg.

  Shortly thereafter, the hoods sold their newest sucker the Frontier ($23 million, April 1967), Sands ($23 million, July 1967), Castaways ($3.3 million, October 1967), Landmark (1969, $17.3 million), Silver Slipper ($5.4 million, April 1968), and Harold's Club in Reno ($10.5 million)—total price tag, $82.5 million. By the time Hughes caught on and pulled up stakes four years later, again on a Thanksgiving Eve, the billionaire had been relieved of yet another $50 million via the skim. Sidney Korshak, known for his thin skin, must have been sporting a Cheshire grin at the prospect of watching his RKO foe being robbed blind during Vegas' "Hughes era." One former Las Vegas intelligence chief was quoted as saying about the continued skimming, "We knew the Mob was somehow involved because the same Mob people who ran the casinos before Hughes bought them ran them right after, and these people would not have run a skim of that magnitude without orders from the top. And we knew that the money had disappeared, but we could never find out where it had
gone."39 In a move that had to bring a collective smile to the faces of the hoods, Hughes hired, of all people, Moe Dalitz to investigate where all his profit was going.

  Of course, Sidney Korshak was also involved in the Hughes purchase negotiations—in fact he initiated them, as he admitted to the Securities and Exchange Commission three years later. He further testified that Hughes had also wanted to buy the Stardust, but was prevented from doing so by the Justice Department. According to Korshak, after Hughes had purchased six hotels already, "I guess the Justice Department was afraid he was going to buy all of Nevada."40

  One month after suckering Hughes, Korshak dealt with another Las Vegas adversary, Edward Nicholas Becker, the former publicity director for Gus Greenbaum at the Riviera, and later private investigator. In the latter role, Becker was making the mistake of crossing Sidney Korshak, who was still busied with protecting his Vegas associates.