Unreal City: Las Vegas, Black Mesa, and the Fate of the West

by Nies, Judith

  Another section of Nellis, Area 2, is the largest aboveground weapons storage complex in the United States. This is where the bombs are stored during atomic testing at the Nevada Test Site. Other parcels have names such as the Tonopah Test Range or Area 52, run by Sandia National Laboratories; Creech Air Force Base; the Tolicha Peak Electronic Combat Range; and the now-famous top-secret Area 51, technically part of Edwards Air Force Base but run by the Central Intelligence Agency (CIA), where U-2 surveillance aircraft such as the supersecret Oxcart were tested and from which the unmanned drones currently operating in the skies over Pakistan and Afghanistan are said to be “piloted.”

  The US Navy SEALs who mounted the raid on Osama bin Laden’s compound in Pakistan supposedly built a mock facility and practiced helicopter drills somewhere within the Nellis Air Force Range (formerly the Nevada Test and Training Range), some 5,000 square miles of land area and 12,000 square miles of restricted airspace. The men and women who work at these sites live in Las Vegas or in North Las Vegas and commute every day by air shuttle to McCarran Airport or North Las Vegas Airport. They send their children to the many private schools in Las Vegas.

  The point is that Las Vegas is far more connected to world events and to Washington than it may seem. It is mistakenly characterized as an entertainment capital, a weekend getaway, a place to get married or divorced quickly, a conventioneer’s paradise, or a glamorous setting for popular movies and television shows.

  People think that modern Las Vegas began in 1946 when Bugsy Siegel had his epiphany in the desert and saw a vision arising out of the parched sands. He saw men in tuxedos, women in evening gowns, gorgeous bejeweled showgirls, and crowds of people partying, gambling, and throwing away money like confetti at a luxurious hotel-casino called the Flamingo. That’s the Hollywood version.

  Other versions point out that Las Vegas is actually the most sophisticated military border town in the world, a shadow capital for the planet’s largest military power. Author and former Las Vegas resident Sally Denton describes Las Vegas’s style of opulence and extravagance as having radiated out to become the dominant style of money and power in America. More than money and power, Las Vegas is where the dark markets of America intersect with the upper world markets of “free-market capitalism.” As the old Mafia saying goes, “There’s a million dollars’ worth of groceries, and there’s a million dollars’ worth of influence.” Influence is the Vegas style. The Las Vegas word juice—as in “He’s got juice” or “He’s a juice merchant”—embodies the combination of money, power, influence, and the nuanced ability to cultivate and wield political power.

  CHAPTER 2

  GOLDWATER AND THE DESERT INN

  If ever a man had the right name for a western hero, it was Barry Goldwater. Gold and water are the magic elements of the West.

  Although Las Vegas locals called the Desert Inn “the classiest joint on the Strip” when it opened in 1950, the Kefauver Crime Committee called it “the most elaborate gambling establishment in America.” Cowboy boots mixed with alligator shoes on the casino floor. At the time, American mobsters were investing heavily in Las Vegas, and the Desert Inn was an upscale establishment in a town that was still pretty rough around the edges. Most of the old-timey gambling saloons were still making the transition from sawdust on the floor to carpets (thus the name carpet joints for the new places). The Desert Inn differed from Benny “Bugsy” Siegel’s more notorious Flamingo, a mile down the road, because it was a multitheme resort including a casino, hotel, and nightclub. It also boasted a giant swimming pool and the first golf course in Las Vegas. Designed by noted New York architect Jac Lessman, the Desert Inn was a luxury resort with leisure features that the Flamingo and other casino-hotels were still to imitate. The real template for the Desert Inn was in Havana, where Meyer Lansky, said to be the underworld Rothschild, invested in the Hotel Nacional, operated the stately Casino Nacional, had a gambling training school at the Oriental Park Racetrack Casino, built the Havana Riviera, and was planning a huge hotel-casino real estate development on the ocean with a marina, a yacht basin, canals, and a golf course along with the usual casinos, nightclubs, restaurants, and brothels. Everyone who knew Lansky described him as a big thinker, a man who could plan years in advance. He saw Cuba as Monte Carlo in the Caribbean. Fulgencio Batista, a former army sergeant who took power in a military coup in 1933 and rose to become head of the Cuban military and president, was a longtime Lansky ally. When Batista left Cuba in 1944 to live in exile in Florida and New York (with millions deposited in American banks), he and American gangsters had grown very rich together. President Batista was described as “the muscle behind the Havana Mob.” The Havana Mob was the American Mob, the same gangsters who moved to Las Vegas.

  The Havana Mob’s interest in Las Vegas gambling investments came about because of a California attorney general and future Supreme Court chief justice. Earl Warren had campaigned for governor on the promise to shut down the illegal gambling boats operating outside the three-mile limit off Santa Monica Pier in Los Angeles. The boats catered to a glamorous, wealthy Hollywood crowd and were staggeringly profitable. True to his word, in the 1940s Warren had shut down the boats. Nevada—remote, unscenic, sparsely populated—was the only place in the United States where gambling was legal. Would Hollywood’s gambling-boat customers and high rollers drive five or six hours to a remote town in the desert simply for the opportunity to gamble?

  Yes, said Billy Wilkerson, publisher of the Hollywood Reporter, owner of Hollywood’s hottest nightclubs and restaurants, including Ciro’s and Cafe Trocadero, and a man with a hard gambling habit. Wilkerson, who was Mob connected himself and knew everybody worth knowing in Hollywood, had been a gambling-boat customer. After the boats closed, he flew to Las Vegas and began spending a lot of time there at a carpet joint called El Cortez (still operating in downtown Las Vegas). Owned by Gus Greenbaum and Moe Sedway of the Cleveland Mob, El Cortez was more of a gambling saloon than a casino, but Wilkerson saw possibilities for creating a Hollywood-style nightclub and casino-hotel in Las Vegas. Although he was a great manager of restaurants and nightclubs, Wilkerson knew nothing about running a casino. So he entered into a partnership with Sedway and Greenbaum (at 48, 26, and 26 percent, respectively) for their professional management of a new gambling operation, nightclub, hotel, and casino called the Flamingo. Margaret Folsom, a sister of one of Greenbaum’s dealers, had inherited from her ex-husband’s family a thirty-acre parcel of ranchland that fronted the two-lane road called the Los Angeles Highway. Greenbaum proposed it to Wilkerson as a likely location. Wilkerson looked at the land and wrote a check to Folsom for $9,500 as a deposit for the future hotel-casino site. (An enlargement of his canceled check made out to Folsom is available at the Nevada State Museum and Historical Society in Las Vegas.) The land was about two miles south of downtown, outside the Las Vegas city limits, in an unincorporated township called Paradise.

  Enter Ben “Bugsy” Siegel, who had grown up with Charles “Lucky” Luciano and Meyer Lansky in New York and was now working as an enforcer for Lansky in Hollywood. (All Siegel’s associates called him Benny. No one called him “Bugsy” to his face. The nickname came from his early days as a young thug in New York, where people who saw his psychotic rages called him “crazy as a bedbug.”) Siegel controlled a number of Hollywood unions in the movie business, ran bookmaking operations, and operated several illegal gambling enterprises, including the racing wire in Las Vegas. As a high-profile regular at Ciro’s and the Trocadero, he heard about the Flamingo project in Las Vegas. Lansky told him to get participation. Greenbaum and Sedway were willing, but Wilkerson, as the majority owner with 48 percent, knew Siegel’s dark reputation and refused. So Siegel, whose backing from the New York crime families trumped the Cleveland families, terrorized Wilkerson and wrested full control of the project for himself. Siegel, however, lacked crucial management skills. By the time the Flamingo opened in January 1947, it was millions of dollars over budget and two years past dea
dline. A meeting of the major Jewish and Italian mobsters in Havana over Christmas 1946 supposedly sealed the decision to terminate Ben Siegel as manager of the Flamingo. Siegel was famously gunned down in his girlfriend’s house in Los Angeles, and the Flamingo’s management immediately “changed hands” to Gus Greenbaum and Moe Sedway. The murder was never solved.

  Over the next two years, the spectacular financial success of the Flamingo demonstrated that a clientele from Los Angeles loved to travel to Las Vegas to gamble and would spend a fortune to do so. New properties were purchased and construction begun, one of them by a former gambling-boat operator named Wilbur Clark. Although the big neon sign mounted over the entry gate read “Wilbur Clark’s Desert Inn,” Clark was a front man, a small-timer and former gambling-boat employee who had dreamed about building his own gambling empire. The real owner was Moe Dalitz.

  Clark and his brother had bought land on the north end of the Strip, started construction, and soon ran out of money. For more than a year, the Desert Inn was a stalled construction site. Then the shrewd Moe Dalitz from Cleveland and a few other Cleveland and Detroit mobsters who had made a fortune during Prohibition and invested in legitimate businesses offered Wilbur Clark a deal. They would fund the completion of construction in exchange for 74 percent ownership. Wilbur Clark’s name would be out front. The Desert Inn’s innovations included a golf course, a huge swimming pool, and an effort to appeal to women guests by including the first luxury shopping store in Las Vegas.

  The high-end women’s clothing store in the Desert Inn’s lobby was a branch of a chain of Arizona department stores called Goldwater & Sons, commonly known as Goldwaters. Its handsome, square-jawed, gravel-voiced forty-one-year-old president, Baron Goldwater Jr., known as Barry, was on hand for the hotel’s festive opening. In fact, he would be on hand for many other evenings. Opening-night guests included Bob Goldwater, Barry’s brother; Del Webb, the Phoenix contractor who built both the Flamingo and the Desert Inn; Nevada’s governor, Key Pittman; and assorted Hollywood movie stars, local politicians, and big-time gamblers last seen in Havana.

  Wilbur Clark personally handed out a corsage to every woman guest. The large swimming pool, cabanas, and luxury shopping were innovations aimed at female guests, who were waiting for quickie divorces or for their gambling husbands. At the time few women took seats at the gaming tables. Old photos of the Desert Inn casino floor show an all-male clientele with a sprinkling of cocktail waitresses. Director of the Federal Bureau of Investigation J. Edgar Hoover was known to be a frequent patron of the Desert Inn casino. No photograph of Hoover at the Desert Inn was ever found, although a frequently repeated story holds that Meyer Lansky had obtained photographs of Hoover engaged in homosexual acts, after which the FBI director focused all the bureau’s investigative energies on communist conspiracies. Steven Fox, in Blood and Power: Organized Crime in Twentieth Century America, wrote that in the early 1950s, “Hoover formed a small group within the FBI specifically instructed to ‘determine and document the nonexistence of organized crime.’” It wasn’t until the 1960s under Attorney General Robert Kennedy that the FBI began to install wiretaps and electronic surveillance of crime leaders, many at the Mob-controlled casinos in Las Vegas. (Even then, Hoover did not authorize wiretaps at the Sahara, where Hoover’s friend Del Webb was the owner, or at the Thunderbird and the Flamingo, where the skim went to Meyer Lansky.)

  Painted salmon pink, the Desert Inn had three hundred rooms built around a large swimming pool designed in a figure eight. The main building featured a ninety-foot bar, a ceiling dotted with twinkling electric stars, a “Doll Ranch” nursery for children (although few remember seeing any children among the guests), houses built around the golf course, and a nightclub that featured big-name Hollywood entertainers, including Frank Sinatra, a Las Vegas regular who would later own 7 percent interest in the Sands in exchange for an agreement to appear there exclusively. (He would later lose his license because of his public association with known Chicago mobster Sam Giancana, at the Cal-Neva Lodge at Lake Tahoe, but would get it back in 1980, when Harry Reid, currently majority leader in the US Senate, was head of the Nevada Gaming Commission.)

  Barry Goldwater was well known in Las Vegas and not just for his boutique store in the lobby of the Desert Inn. As a pilot with his own plane, he frequently made the one-hour flight from Phoenix for a weekend of gambling, partying, and drinking. He stayed at the Desert Inn but often gambled at the Flamingo, where his Phoenix neighbor Gus Greenbaum was manager. Moe Sedway, a Greenbaum associate sometimes referred to as “the ruthless dwarf” and a former Lansky hit man, was another frequent Las Vegas companion of Goldwater’s. Lansky, whose operations expanded from New York to Los Angeles, Miami, and Havana, was characterized as “the ultimate banker” for gambling operations and the only person capable of brokering deals between Jewish and Sicilian gangsters.

  The Desert Inn is gone now, imploded in 2000 by casino mogul Steve Wynn, but some of its old spirit remains on Desert Inn Road, where Steve Wynn’s sleek golden-glass skyscrapers reflect the color of desert skies. The aesthetics of Wynn Las Vegas and Wynn Encore—where lobby shopping now includes a Maserati dealership—are far removed from the ranch gate and neon cactus sign that once welcomed guests to Wilbur Clark’s Desert Inn, but the same spirit of unrestrained ambition and defiance of the desert lives on. (“It took Michelangelo four years to paint the Sistine Chapel,” reads a brochure for the latest Wynn resort. “Your room took five years.”) The pedigree of Desert Inn ownership also includes Howard Hughes—Hollywood producer, owner of Trans World Airlines and Hughes Aircraft, military contractor who once received $1.7 million a day from the CIA during one Las Vegas military test project, developer of the single largest real estate parcel in Las Vegas, now known as Summerlin—who bought it from Moe Dalitz in 1966.

  Gus Greenbaum, who ran the racing wire in Arizona, also became manager of the Flamingo and later the Riviera, where he was involved in dealing drugs, womanizing, and skimming far too much money. He was murdered in his bed in Phoenix, with his throat cut ear to ear. When Goldwater attended his funeral, he answered reporters’ questions about Greenbaum’s Mob connections by saying, “I knew him only as a businessman.”

  THE SENATOR

  By the time of Greenbaum’s funeral it was 1956, and Goldwater was the unlikely US senator from Arizona, an event that many maintained was not unrelated to Las Vegas Mob interests. Goldwater’s political career came out of nowhere; his civic experience was limited to eighteen months on the Phoenix City Council. Goldwater’s taste in Mobbed-up friends did not seem to hurt him. To have mobster friends meant you were connected, had juice. Arizona was also home to other big-time New York gangsters, including Joe Bonanno, who had a ranch outside of Tucson and investments in Las Vegas. Later, when Goldwater ran for president, his Las Vegas life was edited out of his background and his friendship with Arizona Indians emphasized instead. He was portrayed as a true son of the American West. Some might say, however, that the spirit of Las Vegas—risk, ruthlessness, guns, and greed—is the spirit that settled the West.

  Goldwater’s Phoenix–Las Vegas connections came through the Valley National Bank of Phoenix, where Barry’s brother Bob Goldwater was a board member along with Phoenix contractor Del Webb. Although it was supposedly Teamster Pension Fund money that built Las Vegas, the Flamingo was completed with a $900,000 loan from Valley National Bank to Bugsy Siegel’s builder, Del Webb. The completion of the Flamingo did not come in time, however, to save Siegel from his New York investors. Within hours after his bullet-riddled body was found in Los Angeles and long before the police publicly announced the murder, Gus Greenbaum had taken over as the “new manager” of the Flamingo.*

  The complex ownership realities of the Desert Inn came to light only during the Senate committee’s crime hearings in Las Vegas under the chairmanship of Senator Estes Kefauver. The US Senate Special Committee to Investigate Crime in Interstate Commerce traveled around the country in 1950 and 1951 a
nd held hearings in fourteen cities in order to document the existence of a nationally organized crime syndicate. The committee had power of subpoena and in Las Vegas called Wilbur Clark and Moe Dalitz to testify.

  When testifying Wilbur Clark was vague in his answers, forgetful about his ownership percentage, and contradictory about his title. “I’m secretary of the corporation,” Clark explained at one point. He did not know how much of the Desert Inn he actually owned. The committee member questioning him said, “You have the most nebulous idea of your business I ever saw.” Management of the Desert Inn Corporation was less than straightforward. Everything except the gambling was leased to outside vendors. Many unnamed investors had points. By the time Cleveland gangster Moe Dalitz testified, the Senate committee knew that Dalitz and “a few investors from Detroit” actually owned 74 percent of the Desert Inn. Up to fifty other investors had points, or partial points, of the remaining 26 percent. A year or two later and after things had quieted down, Wilbur Clark went to Havana, where Meyer Lansky hired him as entertainment director at the Hotel Nacional.

  The Desert Inn Corporation was a money-generating machine and kept at least three sets of books—one for the owners, one for the state gambling commission, and another for the Internal Revenue Service (IRS). Supposedly, there was a fourth set of books that kept track of the skim that went directly into suitcases carried by the representatives of the various crime syndicates who showed up every week, walked directly to the cashier’s cage, filled the suitcases with money, and left before the nightly count was made and reported. The take was enormous. “The Miami hotel men,” the euphemism for Lansky’s fronts, were skimming at least $3 million for every $1 million reported. Sam Giancana later admitted that his “personal” take was more than $300,000 a month, and he was only one of several dozen crime figures who had points in Las Vegas casinos. Much of the cash went first to Miami and then to numbered bank accounts in Switzerland, where it was laundered back into the United States through banks and financial institutions in the Bahamas. The money also came from heroin and opium as well as gambling. Throughout the 1950s, wrote Denton and Morris in The Money and the Power, “that secret, indirect, revolving traffic between the Strip and Switzerland was one of the heaviest flows of international capital of the era, making Las Vegas a center of world finance long before many knew its name.” By the time the Crime Commission completed its hearings, Senator Kefauver estimated the untaxed money controlled by Mob interests at $20 billion.