Supermob

by Gus Russo

  Thanks to the Gaming Act, corporations seized the baton lustily, moving quickly, as one local historian put it, "to purifying the wages of sin." Overnight, upperworld bastions such as Hilton Hotels, MGM, Holiday Inn, The Ramada Inn Corporation, and impresarios such as Steve Wynn began their irreversible push to give Sin City a superficial veneer not unlike that of Disneyland—but at the heart of it all would remain gambling activities shamelessly rigged in the casino owners' favor.

  Thus, to take advantage of the new Gaming Act, Korshak et al. decided they needed to go corporate. As they had done with Moe Morton, the Korshak-Coleman-Levin trio devised a plan that involved partnering with another Chicago to Beverly Hills transplant named Albert Parvin. On the surface, Parvin ran a straitlaced corporation, Parvin-Dohrmann (P-D) Inc., which sold kitchen, hotel, and restaurant supplies and furnishings. P-D even maintained a charitable foundation (The Albert Parvin Foundation) that boasted a current Supreme Court associate justice (and former SEC chair­man), William O. Douglas, on its board. The public face of the Parvin charity involved large donations to both UCLA medical research and scholarships to Princeton and UCLA for students from third world countries.25 But other aspects of Parvin drew the interest not only of many in law enforcement, but also of Sid Korshak and others interested in new Supermob business opportunities.

  On April 15, 1970, Representative (and future president) Gerald Ford gave an impassioned speech calling for the impeachment of Douglas, in which he described the earliest allegations about the Parvin Foundation and its connections to hoods such as Meyer Lansky partner Bugsy Siegel. "Accounts vary as to whether it was funded with Flamingo Hotel stock," said Ford, "or with a first mortgage on the Flamingo taken under the terms of the sale. At any rate, the foundation was incorporated in New York and Mr. Justice Douglas assisted in setting it up." For his help, Douglas was given a lifetime position on the Parvin Foundation board and by 1968 had been paid over $100,000.*

  In fact, Albert Parvin acquired Siegel's Flamingo after Siegel was murdered in 1947, and when he sold it to Morris Lansburgh of Miami Beach in 1960, Meyer Lansky landed a $200,000 finder's fee, and it was assumed Lan­sky maintained some silent points in the casino.26 Over the years, Albert Parvin had been accused of being a front man for Lansky, having employed Edward Levinson, who had been identified as Lansky's bagman in Las Vegas. 27 After selling the Flamingo in 1960, P-D purchased the Freemont and Aladdin hotels, and it was reported that Parvin's Vegas interests contributed $28,000 per month to the foundation. But there was more.

  Still others have described the Parvin Foundation as a "pass-through" for funds of both the CIA and the underworld. Federal courts and Congress have divulged some of these links over the years, including contentions that at least some of Parvin's altruism may have involved setting up third world tax shelters for U.S. hoodlums.28 The company also showed special interest in countries where gambling concessions were up for grabs, such as Cuba and the Dominican Republic. In his speech, Ford noted that in 1963 Parvin began donating educational materials to the regime of the newly installed DR president, Juan Bosch, during a time when he was still mulling over who should be granted that country's casino gambling license. However, when the concession was granted to Nevada's Cliff Jones, Parvin disappeared. "When this happened," Ford said, "the further interest of the Albert Parvin Foundation in the Dominican Republic abruptly ceased. I am told that some of the educational-television equipment already delivered was simply abandoned in its original crates."

  In Beverly Hills, former Chicagoan Albert Parvin was well-known to former Chicagoan Sidney Korshak, who later testified to being his friend and fellow Hillcrest member.29 In fact, Korshak had owned stock in P-D since 1962, when it was called the Starrett Corporation. Parvin was also plugged into the Greg Bautzer nexus: Bautzer's partner Harvey Silbert, who operated the Riviera for Korshak, was also on the Parvin Foundation.30 Korshak and Silbert were both directors of Cedars-Sinai Hospital.31

  According to testimony, Parvin expressed to Korshak that he was tired of doing business in Vegas and was looking to get out. He was "weary of all the problems in Las Vegas," as one Korshak account put it. Once again, timing played into the fortunes of the Supermob. Since Vegas' recent passage of the Corporate Gaming Act predicted a corporate takeover of the industry, there appeared to be no way for the hoods to compete with Hughes and the rest—their era seemed to have passed. But if they were able to maintain a presence via the indiscreet P-D operation, the cash flow would remain intact.

  The Parvin-as-front theory gained traction in July 1968, when LAPD intel reported that Korshak, Dalitz, Dorfman, Lansky's Wallace Groves, and Mrs. Hoffa (standing in for imprisoned Jimmy) had met at La Costa, ostensibly to discuss the sale of the Stardust to P-D. Initially, Dalitz did not want to sell, but it was believed by law enforcement that he was ordered by Meyer Lansky to do so. For the record, Sid Korshak took the credit. In later SEC testimony, Korshak explained, "I told Mr. Dalitz that I thought in view of the fact that he was sick—he had related that to me—he was undergoing a series of tests, there was trouble with a kidney, I believe the other kidney was beginning to become infected too. Mr. Dalitz was past seventy, that he ought to give serious thought to selling the Stardust."32

  When Dalitz caved, it would be at least the third time that Korshak took a fee (a whopping $500,000) for helping the Stardust find an owner. Korshak was unabashedly proud of what many believed was an exorbitant fee. "I did an excellent job for the Parvin-Dohrmann Company," Korshak later said. "And my fee was a very inadequate one." He stated he based that assertion on the fact that the total sale price was $45 million.33

  Lastly, with Harvey Silbert's help, a deal was also quickly negotiated for P-D to purchase the Riviera. Don Winne, a Justice Department attorney assigned to the Strike Force, expressed the Bureau's fears about Korshak's plan in a 1970 memo that stated, "If allowed to escape unscathed, which so far it has, it will allow the Riviera to be allowed to capitalize their skim on the stock market."34

  In later SEC testimony, Korshak put a benign spin on the notorious Las Vegas hotel turnover rate: "There were half a dozen people talking to me at different times about possible acquisitions in Nevada. They would have been companies I was close to, probably represented. There was a period immediately following Mr. Howard Hughes's acquisitions where everybody became interested in making an acquisition in Nevada . . . Every day someone was interested in selling, buying, everybody—if business was good, I guess they would say it is fine; if business was bad, they would say, 'Why do I need it?' If there was an adverse newspaper story, people would say, 'I don't want it. I am going to get out of here. There is an onus on Vegas.' That might change two days later." Korshak also described how he consulted for G&W, Hilton, and Hyatt regarding Vegas acquisitions.35

  Sid Korshak's paycheck for his help in arranging the 1968 sale of the Stardust to Parvin-Dohrmann (SEC Parvin-Dohrmann Evidence File, Southern District Court of New York)

  All that was left was for Korshak and Coleman to buy controlling stock interest in Parvin-Dohrmann, and for that, Coleman had to come up with some serious cash. Thus, in August of 1968, Coleman sold his Seeburg stock to Commonwealth United for $9.6 million.36 With cash in hand, and while Albert Parvin took off for an extended African safari, Coleman and Korshak went to work. Before raiding Parvin's stock, the duo made certain their plan was foolproof by eliciting advance interest in Parvin with numerous money managers, including a new offshore company that specialized in investing the monies of millionaires at such a frantic pace that its collapse was all but inevitable. 37 On October 10, 1968, Coleman and Korshak began talking up the P-D stock to the Swiss-based investment company named Investors Overseas Services (IOS), a bold international mutual-fund investment house that just happened to have two Korshak friends on its board, former California governor Pat Brown and FDR's son James Roosevelt.

  IOS was the brainchild of former New Yorker Bernard (Benno) Cornfeld, interestingly, a friend of Korshak's great friend Ji
ll St. John. Because it was based offshore, IOS was free of regulation, and its investments were largely secret, although it was known to speculate in casinos worldwide. By the late sixties IOS managed $2.5 billion; however, chroniclers of the firm concluded that it was "so steeped in financial and intellectual dishonesty and directed so recklessly that it was absurd that it should have been entrusted with so much of other people's money."38

  Organized crime expert Hank Messick neatly summed up the IOS style: "The company bought stock for anonymous customers from public corporations which ran the casinos, and there was no way to tell if the purchaser was Meyer Lansky or Henry Ford II."39 Of those investments that were known, IOS held huge blocks of Resorts International and Caesars Palace, and Bernie Cornfeld also shared Lansky's skim courier Sylvain Ferdman. Cornfeld also shared Vicki Morgan with Ronnie Reagan's Kitchen Cabinet member Alfred Bloomingdale.*40 Lastly, Cornfeld was also known to be a guest at the mob getaway retreat, Acapulco Towers.41

  Cornfeld divided his time between a sumptuous chalet in Geneva and Douglas Fairbanks's former thirty-five-room mansion, Grayhall, in Beverly Hills. He always had girls around, including Victoria Principal, later of the hit series Dallas, who got a London court order against Cornfeld for roughing her up.

  IOS's James Roosevelt had a checkered professional career and was usually brought into companies solely for his name recognition. He had worked for Sam Goldwyn in 1938, but failed as a movie producer; he became friends with Chicago's Arthur Greene and invested in Store Properties with the notorious Alex Greenberg, Paul Ziffren, and Sam Genis; in the early fifties, he ran unsuccessfully for mayor of Los Angeles and then governor of California. It was Roosevelt who brought Pat Brown to the IOS board.42

  Since his 1966 gubernatorial loss to Reagan, Brown had been a partner at the prestigious L.A. law firm of Ball, Hunt, Hart, Brown, and Baerwitz. Once aboard Cornfeld's IOS, Brown in turn brought in his California treasurer of the Democratic Party, attorney Barry Sterling, as president of IOS Financial Holdings.43 Board member Dr. Pierre Rinfret made note of Brown's self-interest when he attempted to use the IOS to gain work for his law firm in other countries, such as Argentina. Over the objections of other IOS board members such as Rinfret, Brown also helped bring controversial financier Robert Vesco aboard IOS.44 Before he was finished, Vesco transferred about $500 million from the IOS fund into his personal accounts. He ultimately absconded and has been a fugitive from American justice ever since.*

  On October 11, 1968, Parvin signed the agreement to purchase the Stardust, pending approval of a license by the Gaming Commission, which meant that control of the company would not officially pass into Coleman's hands until the license was granted sometime in January 1969.

  On November 5, 1968, the nation went to the polls, electing "law and order" candidate Richard Nixon by a slim .7 percent of the vote over Democratic incumbent vice president Hubert Humphrey. At the time of the vote, a key issue was whether the opposing North and South Vietnamese would attend the scheduled Paris Peace Talks, a discussion that it was hoped would shorten a conflict that had already taken over thirty-eight thousand American and over one million Vietnamese lives. What the voters could not know at the time was that Nixon's camp had orchestrated events in such a way as to guarantee that the U.S. allies of the South Vietnamese delegation would decline to participate in the talks. That failure to appear guaranteed Nixon's electoral victory and prolonged the war by another five years and an additional 20,763 U.S. lives. Nixon's fix was known as the October Surprise, and the successful ploy would be revisited by Ronald Reagan's campaign trust twelve years later.* After the inauguration, according to Howard Hughes aide Robert Maheu, Hughes quickly sent Nixon an envelope containing $100,000 in cash. Congressional investigators such as Terry Lenzner believed the cash was given to guarantee Hughes favorable government treatment for his casino and airline businesses. At the time, Hughes needed federal approval for his desired takeover of Air West, and the payoff to Nixon guaranteed it."*" All told, over the years, Hughes had given Nixon at least $505,000 that is known.45 As Hughes told Maheu, "Bob, remember that there is no person in the world that I can't either buy or destroy."46

  On January 10, 1969, with everything in place, Coleman purchased 300,000 shares of Parvin-Dohrmann stock via five different brokers for $35 a share;47 Acapulco Towers partner Phil Levin bought 9 percent of Parvin's stock (129,000 shares), while Sidney Korshak purchased 10,000. Sidney also tipped off his brother and other friends to Parvin, as the stock was about to explode. Among those who took the advice, to the tune of a thousand shares apiece, were Marshall, Jill St. John, Eddie Torres (the manager of the Riviera), New York's Herzfeld brothers, and Harold Butler, president of Denny's Restaurants in California. Lesser investors were Korshak's Teamsters Pension Fund trustee liaison Donald Peters, William Bartholomay, president of the Atlanta Braves baseball team (in which Coleman was a stockholder), and Charlie Finley, owner of the Oakland Athletics baseball team. St. John later said she was first told of the Parvin investment when she and her soon-to-be-ex-husband, Jack Jones, dined with Sid and Bee Korshak and Coleman in October 1968 at New York's La Grenouille, a Korshak favorite.48

  At corporate headquarters, Korshak began to dominate Parvin-Dohrmann, to the extent that he attended board meetings from which the president of the company, William Scott, was excluded. "Coleman did not make a move without clearing it with Sid Korshak," a chairman of another company was quoted as saying. In addition, this businessman indicated, "When it came to a deal point, Del Coleman would excuse himself and call Korshak." Korshak even hired a new director for the company, Sol Cantor of New York.49

  Korshak and Coleman next sold 143,000 Parvin shares to Cornfeld's IOS and other investment firms, then took $4 million from that sale and reinvested it in Parvin stock to create a false appearance of investor interest—the stock rose from $68 to $150. 50

  After the Stardust deal was consummated in February 1969, Korshak and Coleman sprung a trap on Denny's president Harold Butler when they convinced him to merge with P-D. Within the agreement, Denny's was to purchase the Parvin-Dohrmann stock of Korshak and his friends for $150 a share. Soon, Korshak's friends began selling their shares of the company at the falsely inflated high rates. Marshall Korshak admitted parlaying his initial $35,000 investment into a $125,000 sale, for a fast $90,000 profit.51 What he didn't offer was that he was vacationing at the mob-frequented La Costa Resort when his brother Sidney had called to invite him into the investment group.52

  On May 5, 1969, before Sidney could sell off his ten thousand shares (for a profit of $1.1 million in less than a year), the SEC and American Stock Exchange, alarmed at the rapid rise in the price of the stock, intervened and halted trading, causing a devastating effect on the Parvin-Dohrmann stock. In addition, the SEC began to investigate Parvin-Dohrmann stockholders such as Jill St. John, Marshall Korshak, and fifteen other defendants. Korshak went into "fixer" mode and enlisted the help of Washington lawyer Nathan M. Voloshen, an old friend of the Speaker of the House, John W. McCormack. Korshak friend and D.C. power attorney Edward Bennett Williams had told him that Voloshen had the requisite congressional contacts. Korshak later said, "It was a matter of common knowledge that Mr. Voloshen was known around Washington."53 Korshak wanted Voloshen to bring pressure on the SEC to relax its trading restriction on Parvin-Dohrmann.

  According to lobbyist Robert Winter-Berger, McCormack was illegally renting Voloshen a portion of his rent-free Speaker's office for $2,500 a month. From this point of influence, Voloshen and Dr. Martin Sweig, chief administrative aide to McCormack, were essentially providing "access" for a fee; and even the most notorious criminals were able to buy influence, among them Mafia gambling expert Salvatore Granello; Manuel Bello, a close associate of New England Mafia boss Raymond Patriarca; and New York labor racketeer Jack McCarthy.54 Interestingly, Voloshen was getting these crime syndicate contacts through New York labor racketeer George Scalise,55 who'd risen to prominence with the assistance of Sid Korsh
ak (see chapter 3).

  Korshak later testified that Voloshen initially wanted $150,000 for his efforts, but that Korshak talked him down: "I stated to Mr. Voloshen that there was a possibility of getting him some future business from Mr. Cole­man." Korshak then revealed a bit of his secret negotiating style: "I have had conversations like this with lawyers many, many times, saying to them, 'Don't worry about your initial fee, there may be other work. You may find yourself being used again,' and so forth. It is part of bargaining with a lawyer on the possibility of a reduction of a fee."56

  The day after the stock sales were suspended—and the day after Korshak made his call—mountains were moved for Del Coleman. "With amazing speed," wrote lobbyist Robert Winter-Berger, "Speaker John McCormack set up a meeting for eleven o'clock the next morning, May 6, in the office of [SEC chairman] Hamer Budge." And one week later, the trading ban was indeed lifted, albeit temporarily.57 Throughout the summer of 1969, as the SEC investigated the labyrinthine world of Korshak, Coleman, and Parvin, the stock valuations for Parvin-Dohrmann were in free fall.

  Lurking in the shadows was Korshak nemesis Howard Hughes, hoping to buy the beleaguered Parvin-Dohrmann. Unbeknownst to Korshak and Coleman, on June 6, 1969, Hughes wrote a memo to aide Robert Maheu that read: