by Connie Bruck
Meanwhile, according to Wasserman, Barnett and Chasin temporized, worrying about what the government might do to them. “Their temperament was such that when you mentioned the FBI and Justice Department they ran out of the room. Some people are that way, you know,” Wasserman commented. “They could have bought a worldwide business for $10 million.” But on July 13, the government intervened. “I was in New York with our lawyer, Don Rosenfeld. We had been sued Friday night, and we caught an early flight back Saturday morning. The stewardess said, ‘I want your autograph.’ I looked at her like she was crazy.” And then, he continued, she showed him the story in the New York Times, with his photograph. He also said, with unmistakable satisfaction, that at this moment, when the government filed its case, “I had four folders in my files.” (He had long prided himself on keeping virtually no written records, and now that policy had paid off.) The Justice Department had brought a civil antitrust suit against MCA, and named the Screen Actors Guild as a co-conspirator; it charged the company with a series of violations and asked for court orders to halt them. Most critically, the suit asked that MCA be required to divest itself of its newly acquired Decca Records and Universal Pictures. It also asked that it be ordered to dissolve—not spin off—the talent agency.
Wasserman and Stein appeared to be caught off guard by the government’s action. Stein later said that he had believed until the last moment that the government would be content to let MCA carry out its voluntary spin-off. He speculated that Bobby Kennedy, in the end, had succumbed to pressure from “a famous Washington lawyer” who was representing a rival talent agency. Indeed, Herbert Siegel, who had recently acquired General Artists Corporation, said years later that he had hired Washington lawyer Abe Fortas to persuade Kennedy to break up MCA. Siegel had also hired an extraordinary New York public relations guru, Ben Sonnenberg, who often worked hand in hand with Fortas. “Sonnenberg had files on everyone,” Siegel commented. “And Fortas was very effective. He used a rifle shot, not a cannon.”
Whatever had informed Kennedy’s decision-making process, its result was very threatening to MCA. “We were absolutely stymied for a while,” Stein said later, “and if we hadn’t made a deal or come to a consent agreement, chances are we could have been squeezed out of everything. We could have been out of business.” As Wasserman had noted, Stein was a pessimist; so the situation was probably not quite that grave. But if MCA were to be cut off from the agency business and prohibited from becoming a full-scale entertainment company—if it were, essentially, allowed to be only a TV production company, and one whose practices were closely overseen by the government—then certainly its growth would be stunted. After the suit was filed, Stein continued, MCA’s lawyers were negotiating with the government lawyers, “and they were getting noplace. And I finally said to Wasserman, ‘Lew, you go to Washington and you stay there until you make a settlement.’ ”
Wasserman went, and stayed for four days; by the time he returned to Los Angeles, the outlines of the settlement were plain. Spivack said he vividly remembered sitting in Washington with his colleague, Harry Sklarsky, the Justice Department’s chief of field operations, and Wasserman. They told Wasserman that MCA simply could not be in a position to control both the production business and the agency, even indirectly. “And he said, ‘I’ll get out!’ ” Spivack recalled; Wasserman was altogether willing to dissolve the agency, rather than pass it along intact to Barnett and Chasin. Thus, ten days after the government had filed its suit, the Justice Department announced that MCA had agreed to the agency’s dissolution. It would take two months more for the terms of MCA’s consent decree to be ironed out, but the major elements had been decided during Wasserman’s four-day trip. And while MCA would ultimately accept certain restrictions on its dealings (for example, it was barred from acquiring or merging with any major television, motion picture, or record company for seven years without the approval of the Justice Department), the dissolution of the agency was the only major concession it had to make. What Wasserman cared most about—the acquisition of Decca and Universal, and his ability to become a full-scale entertainment conglomerate—was preserved. Spivack said that he and Sklarsky negotiated the settlement with Wasserman. “After that, Wasserman would do little things for Sklarsky—not money,” Spivack said. “But Wasserman arranged some tour when Harry went to Israel. Things like that. Harry would call Wasserman.”
Stein said later that he did not know what transpired in Washington. “I was satisfied with the results. I was not concerned with the conditions that produced the results. I have always believed that you let your chief executive handle affairs as they think best. Lew never told me the details of the trip to Washington and I have never asked him.” Remarkable as that might seem, it was consistent with the nature of the two men’s relationship as it had evolved over the years; there was no free-flowing exchange between them, and Stein did not want to know the details of Wasserman’s dealings (and not only because of his views on business management). In this instance, Stein could not argue with the merits of what Wasserman had achieved. If they were forced to choose between the agency and production businesses, the choice was clear; in 1961, MCA’s gross income was about $82 million, and the agency’s was only about 10 percent of that. Stein, who would never place sentiment over dollars, had some time before acceded to the inevitable—moving away from the agency business, and further into production. But despite appearances, he was deeply emotional, and very tied to the business he had fathered. “That was the agency I loved and I wanted to see it remain in existence even if MCA got no money from it,” he declared. Referring to the deal Wasserman negotiated, requiring that the agency be dissolved, Stein said, “I didn’t suffer financially, I suffered mentally.”
For many of his employees, too, it was a harrowing time. Daniel Welkes, an agent in the bands and acts department, recalled that in early July, simultaneous meetings had been held at MCA in New York and Los Angeles to announce what the agents knew had been brewing for about a year. “They were going to spin off the agency—it would have a new name, new address, not an ashtray left with the MCA logo. The actors who could have left the company were told about it and they said they would stay in. We were in heaven.” But before the press conference to announce the spin-off could be held, the Justice Department had filed suit. After that, meetings were held at MCA twice a day, at 9:00 a.m. and 5:00 p.m., to give the agents an update. “Lew kept saying, ‘We’re going to work it out,’ ” Welkes recalled. On July 18, he and his colleagues attended the 5:00 p.m. meeting. “Lew said, ‘We’re still in court. We don’t know what will happen. So if any of you would like to resign, it will not be treated as an act of disloyalty.’ Jack Findlater [a company lawyer] had a stack of papers in his briefcase. Ronnie Leif got up and said, ‘We’ve got to go out on our own!’ He and others went up and signed the [resignation] papers. It was chaos! And then we all ran off to form splinter groups. But if we’d gone off together, the agency could have stayed intact.” Later, Welkes and some of his fellow agents speculated that Wasserman had orchestrated this scene, so that the agency would more likely break up into many small pieces than reconstitute itself as a powerful and independent bloc. Leif, who had led the stampede, was Wasserman’s new son-in-law; he had married Wasserman’s daughter, Lynne, less than three weeks earlier.
Jules Stein, Lew Wasserman, and Ed Muhl (head of Universal Studios when it was acquired by MCA) surveying a model of MCA’s black tower. Bison Archives
Al Rush was one of the relatively few agents who were offered the opportunity to join the production company. “In New York and California, most of the agents were let go—suddenly, overnight, they had no jobs—and they were very bitter,” Rush said. Moreover, the MCA profit-sharing trust, hit by a stock market crash the previous spring, had lost as much as 30 to 40 percent of its value; so these agents did not have the cushion they otherwise would have. “They were very shaken up. The profit sharing was so low, they thought maybe Jules and Lew would give them a g
ift for years of service. But they didn’t,” Rush said. Some agents—like George Chasin, Herman Citron, Arthur Parks, and others—would do exceptionally well on their own; but many would never find their footing again.
On September 19, the consent decree was filed in a Los Angeles federal court. And at MCA’s Universal lot the next day, the earth-moving equipment went into action, preparing a foundation for a fifteen-story, forbidding black sheath of a building, the largest ever constructed at a studio. Wasserman said that he had seen a black glass skyscraper in San Francisco and liked it; also, he had visited the new Seagram tower in New York—the most refined version of the new symbol of corporate America, the modern glass skyscraper, designed by Ludwig Mies van der Rohe and Philip Johnson—and copied the silver metal braiding of the elevator walls there. There was no mistaking, in any event, that this would be Wasserman’s building—a radical counterpoint to Stein’s beloved “White House,” now shuttered—and that this, more than ever, was now Wasserman’s company. Once again, as he had done earlier when he moved into TV production, he was plotting his own rather contrarian course. While the other studios were selling off much of their property, and filming increasingly was being done abroad, Wasserman was buying, and betting that movies could be made more efficiently in a properly run Hollywood studio, as long as it was operated like a large factory, at close to full capacity—much as had been done when the studio system was at its height. In an interview with Murray Schumach in the New York Times, Wasserman gave his rejoinder to Selznick’s words of more than a decade earlier, declaring, “Now, we will see if Hollywood will become a desert. I don’t think so. But I could be wrong.” Spoken with the ease of a man who knows that the record suggests otherwise.
However painful the resolution of the government’s antitrust case may have been for many ex-MCA agents, and, in a way, for Stein, it was an unmitigated triumph for Wasserman. The agency had become his albatross; he had to be rid of it. To spin it off, however, carried several disadvantages. Although it was to be run by those loyal to him, they could not really do his bidding without arousing objections from the government. And if they didn’t do his bidding, then he would find himself on the wrong side of the equation that he had created. After all, when Wasserman had come on the scene, the biggest stars were salaried employees of the studios; he had driven their salaries so high that studios finally found it more economic to give them a share in their movies; and then Wasserman had set the stars up as producers. He had changed the economy of Hollywood. But now, if he—a producer himself—had to deal with the mammoth agency he had created but which was no longer his, it could all come back to bite him. He could not, however, have dissolved the agency voluntarily; the talent that he would now want to hire for his movies would be outraged at being summarily abandoned. But if the government were forcing his hand, no one could blame him. Finally, if MCA were to have sold the agency, they would have received about $10 million. In dissolving the agency, though, Wasserman decided that MCA would demand a split commission (5 percent) on everything related to deals MCA had negotiated for its clients—which would continue for many years to come. As Wasserman commented, “If we had sold it, we would have gotten about $10 million; this way, we got about $100 million.”
The outcome, then, was so sublimely advantageous that many who knew Wasserman would remain forever convinced that the government ended up doing for him what he could not do himself. Jack Dales of the Screen Actors Guild said, “Lew would most have wanted it the way it turned out—but he couldn’t have just cut off the agency himself. This way, he was free and clear.” For his part, Wasserman declined to shed any light on exactly how this resolution was achieved, saying, “No one but me knows how I solved it.” What he did volunteer, however, was this: “Some people—even people not in the government—believed we had a monopoly . . . Well, I plead the Fifth.”
The general perception that all had ended happily for MCA was underscored by a note from Jackie Kennedy to Doris and Jules in March 1963. By this time, the prohibition on gifts from the Steins had been lifted; they were contributing substantially to her White House restoration project, and they were also guests for dinner at the White House (after which they sent a gift of a whale tooth box, mounted in vermeil, which, Jackie wrote, thanking them, “is my husband’s favorite thing in the world. He collects them with a passion. . . . May I also say that it is the only whale’s tooth I have found beautiful, too!”). Though she rejected two of their breakfronts, she declared herself thrilled with their other offerings: two English eighteenth-century mirrors and a rare En-glish eighteenth-century octagonal pedestal writing desk, inlaid with satinwood. “The superb eagle mirrors and the octagonal desk would be marvelous for the Long Hall. I always loved them more than anything,” she wrote. And, referring to the antitrust case, “You know, this whole thing upset me terribly—and I felt so badly and upset for you and Mrs. Stein. In the beginning no one wanted to give anything to the White House—and you were among the very first to come forward—and give so generously of your time and offer us such beautiful things.
“Then came the anti-trust suit—and the enormous wheels of government started to grind. I felt rather like a fly trapped in a machine and kept saying I don’t care—I don’t even know what an anti-trust suit is. All I care about is to behave as graciously towards the Steins as they have to me. And months went on and we all lost track. . . . As it turned out, I suppose it was best to have waited, though that never was my opinion. Because you won your suit—which I am so happy about and now nobody can tell us what we can or can’t do any more.”
Much as Bobby Kennedy had taken a personal interest in the MCA investigation, he was more riveted in this period on other targets—his nemesis, Jimmy Hoffa, for example, and the Mafia. Shortly after he had taken office in 1961, the attorney general had declared war on organized crime, calling on all government agencies to pool information on the nation’s top gangsters, and to coordinate their investigations. The Wall Street Journal described his undertaking as “the most sweeping campaign against gangsters, labor racketeers and vice overlords that the country has ever seen.” Las Vegas came under the government spotlight; the government knew that organized crime was well entrenched in the lucrative hotel and gambling business that had sprung up, almost overnight, in the desert oasis—and Hoffa had now become the mob’s partner, loaning massive amounts of Teamsters pension fund money to the construction of hotels there. A lucky break, moreover, had occurred in the summer of 1959, when FBI agents, tailing Murray Humphreys, realized that they had stumbled on the headquarters of the leadership of the Chicago mob—the back room of Celano’s Custom Tailors on North Michigan Avenue. They had obtained permission from J. Edgar Hoover to break into the tailor shop and install a hidden microphone, in the type of covert activity known as a black-bag job. What FBI agents learned from listening in on Celano’s would lead to electronic surveillance in Las Vegas as well, and ultimately they would gain considerable familiarity with the denizens of this world: Murray Humphreys, Tony Accardo, Sam Giancana, Moe Dalitz, Sidney Korshak, and many others. Obtained illegally, this information could never be used in court—but it would provide the kind of intelligence that would, some years later, help bring an end to the Vegas idyll.
A primary target in the FBI’s “Top Hoodlum Program” was Wasserman’s close friend Moe Dalitz, who was popularly known as “the godfather of Las Vegas.” In later years, Wasserman would staunchly defend Dalitz as someone who, though admittedly a bootlegger during Prohibition, had been a legitimate businessman ever since. But these wiretaps told a different story. In January 1961, Dalitz and Morris Kleinman (Dalitz’s longtime associate from the Cleveland syndicate, who had served time in the penitentiary) came to Chicago to meet with Humphreys, Accardo, and Giancana, and they worked out a deal making the Chicago group a secret partner in the Desert Inn, the Riviera, and the Fremont, as well as a bigger partner than it already was in the Stardust. Judging from Humphreys’s statements in Celano’s a couple d
ays later, the relations between Dalitz and the Chicago contingent were less than cordial. “We’re right at the point where we can hit him right in the head. But being a Jew guy, it’s a little different,” Humphreys commented about Dalitz to Gus Alex, a member of the Outfit from the Capone days who was designated to keep in close contact with Korshak. “. . . Anyway, we got harmony now. It’s all worked out . . . we didn’t have to go through a showdown. . . . If we ever get the gun in there, Gussie, a guy has to put his foot down. . . . Suppose somebody tries to run away on us. You think we’d let them get away with it?”
From 1961 to 1963, the FBI installed microphones in the executive suites of at least seven casinos in Las Vegas, including the Desert Inn—and from these transcribed tapes a fuller portrait of Dalitz and his activities emerged. Based on its surveillance, it was the FBI’s estimate that about one third of all gambling revenues in Nevada were being skimmed—that is, unaccounted for, untaxed. At the Desert Inn, according to an FBI report, it worked this way. “Once a month, money which has been taken ‘off the top’ at the Desert Inn Hotel is distributed among the various owners of record and others who have an interest in the hotel. Sums in excess of $100,000 are distributed monthly. Dalitz usually receives in excess of $10,000 from each cut. Money is also designated to sources in Chicago during these distributions. Other individuals are also paid from this pool before the regular distribution is made when it is desired there be no record of these payments. This includes payments to entertainers who are in high income tax brackets. These people are frequently paid cash ‘under the table’ in order to induce them to appear at a particular hotel. It also includes occasional payments to public officials.”
