The Outfit

by Russo, Gus

  Although visionary, The Meadows was a huge gamble for the Depression era. In southern Nevada especially, there were not yet enough well-to-do patrons to sustain the business. In just a couple years, The Meadows closed, only to reopen as a high-class bordello. Cornero would resurface in the 1950s to open another Vegas hotel-casino, the Stardust, which was quickly appropriated by the Outfit.

  The Outfit’s fingerprints can be seen in other parts of the state in the immediate aftermath of legalization. In downtown Reno, a large crew of laborers began tearing out the walls of adjacent buildings on Center Street even before the bill was signed. The gambling parlor that would occupy the space in a matter of days was John Drew and Bill Graham’s Bank Club. According to Chicago FBI agent Bill Roemer, Joe Accardo had given Drew his start at Joe’s Owl Club in Calumet City, Illinois, before dispatching Drew to Reno to manage the Bank Club. Bryn Armstrong, former chair of the Nevada State Parole Board, revealed in a recent interview that none other than Johnny Rosselli, a good friend of Graham’s, represented “hidden financial interests” (read “the Outfit”) in the Bank Club. Graham was likely critical for the legalization push in the first place, since, according to Rosselli’s autobiographers, “he knew every politician in the state and could obtain licenses and government concessions when other men could not.”

  Despite their best efforts and visionary concepts, Outfit liaisons such as Detra, Cornero, and Drew were ultimately the victims of bad timing. The nation’s depressed economy kept the number of available affluent high rollers to a minimum. Economic conditions around Las Vegas were even worse, since after the Hoover Dam was completed in 1935, the area saw the exodus of the five-thousand-man workforce and their families. The situation thus remained in stasis as Vegas once again became synonymous with low-rent dude ranches, cowboy casinos (with gamblers’ horses harnessed out front), and sawdust-floored gambling roadhouses. Out-of-towners were dispossessed of a bit more cash by state legislators, who passed no-fault quickie-divorce codes. But roadhouse gambling and quickie divorces were not panaceas for a flat state economy. However, redemption would come soon after World War II in the form of a handsome New York hoodlum who had been peddling the Outfit’s Trans-America wire service to the downtown gambling joints. The movie-star-handsome thug came up with the best scam idea of his life: He decided that the time was right for Las Vegas (and the Commission) to revisit the hotel-casino notion pioneered by Tony Cornero in 1931 with The Meadows. With the Chicago-New York Commission’s financial backing, Ben Siegel gave new life to Nevada while ironically sacrificing his own. In doing so, the fortunes of Nevada, and particularly Las Vegas, would forever improve.

  The Bugsy One

  He is best remembered as Meyer Lansky’s childhood pal and crime partner. Together with Meyer, Brooklyn-born Benjamin Siegel graduated from terrorizing pushcart vendors for chump change to organizing the infamous murder-for-hire racket known as Murder, Inc. By the age of twenty-one, Siegel was said to have perpetrated every crime in the book, including white slavery, bootlegging, hijacking, robbery, rape, extortion, narcotics running, and numerous contract murders. Ben Siegel’s hooligan thoroughness was equally matched by his borderline pathological outbursts, which earned him the nickname Bugsy, a moniker no one dared use in his presence. Until the end of his life, Siegel was known to pistol-whip those who committed the transgression, regardless of whether the faux pas occurred in private or by a crowded Las Vegas poolside. Lansky once said of his childhood friend, “When we were in a fight, Benny would never hesitate. He was even quicker to take action than those hot-blooded Sicilians, the first to start punching and shooting. Nobody reacted faster than Benny.”

  By 1936, the thirty-year-old Siegel himself became a marked man in New York, much as had Al Capone, after committing an ill-considered high-profile gang rubout (that of Tony Frabrazzo). Instead of boarding the New York to Chicago underground railroad like Capone, Siegel was ordered to Los Angeles by his superiors, Lucky Luciano and Meyer Lansky. It was a fitting venue for the movie-star-handsome Siegel, whose legendary vanity was right at home in a city that had turned self-love into an art form. Soon after his arrival, Siegel hooked up with another transplanted Brooklyn pal who had already scored in Hollywood, actor George Raft. Siegel also made the acquaintance of the town’s social lioness, Countess Dorothy Dendice Taylor di Frasso, who became one of Siegel’s countless lovers. With the well-placed Raft and di Frasso as his connections, a starstruck Siegel soon met celebrities like Clark Gable, Jean Harlow, Gary Cooper, and many others. Through Johnny Rosselli, Siegel met studio barons like Harry Cohn and Louis Mayer, and labor thug Willie Bioff. And although Siegel had relocated to Hollywood with his wife and daughters, he bedded more starlets than most single lotharios.

  Siegel quickly established himself financially, since Luciano had greased the skids by ordering Los Angeles boss, and Rosselli associate, Jack Dragna to partner in his lucrative gambling and labor racketeering operations with the outcast Siegel. “Benny is coming west for the good and health of all of us,” Luciano had told Dragna. Expanding his empire, Siegel formed a partnership with another Rosselli cohort, Tony Cornero, and began fronting for the Outfit’s Trans-America wire service, scattering agents throughout the Southwest. Siegel guaranteed his new empire’s success by bribing countless state politicians and law enforcement officials, all the way up to the state attorney general’s office.

  Bugsy Siegel’s selection as the Outfit’s wire representative in the Southwest was understandable: He had known the gang’s patriarch, Big Al Capone, since both their formative days in the Williamsburg section of Brooklyn, where they had worked in consort as strikebreaking thugs for garment-industry upperworlders. When Capone had come under intense heat from rival Arthur Finnegan in 1920, he had gone into hiding with one of Siegel’s aunts before subsequently making for Chicago. In later years, Al entertained Siegel at his Palm Island estate in Florida.

  Siegel took to the superficiality of Tinseltown as though he had been born there. His vainglory now in overdrive, Siegel began dressing in custom-made designer clothes, every item of which was monogrammed; he took acting lessons; he combed his hair every five minutes; and he applied face creams and eye shades nightly. Once, when George Raft sent him a toupee as a joke for a birthday present, Bugsy drove over to Raft’s house in a rage and screamed at the actor, “I oughta shoot you, you motherfucker!”

  Inevitably, Bugsy’s voracious sexual appetite drew him to his female alter ego, the Outfit’s money courier/spy/nymphomaniac, Virginia Hill. Opinions vary as to how the pair met, but since they floated through the same New York/Chicago/Los Angeles hoodlum cliques, their meeting was inevitable. According to Joe Adonis (Doto), New York gambling boss and Commission partner of Lansky’s and Luciano’s, he set Hill up with Bugsy. As he told UPI correspondent Harold Conrad in 1946, “Great broad, but she was out in front all the time, giving orders and fighting me for the dinner checks. That can de-ball you when you got a broad always grabbing the checks. So I hedged her off to Benny.”

  As unstable as Bugsy’s, Hill’s fiery temper matched that of her paramour slug for slug. The tempestuous pair became known for their furious rows, after which the regularly bruised Hill would often attempt suicide by overdosing. To their friends, Bugsy and Virginia explained that the painful fisticuffs were more than ameliorated by their conjugal bliss, which was said to feature explosive sex. In later years, this woman of a thousand liaisons never hesitated to say, “Benny was the best sex I ever had.” During rare moments of solitude, Virginia called Siegel “Baby Blue Eyes,” while Siegel gave her the pet name Flamingo, referencing her red hair and long legs. Although Hill assisted Siegel in setting up a Mexican narcotics pipeline, she never relinquished her allegiance to the Outfit, and especially her Chicago handler, Joe Epstein. Through Epstein-Hill, Ac cardo and Humphreys were kept well informed of Siegel’s management of their affairs.

  The Vegas Idea

  In 1941, just after the race wire was legalized in Nevada, Siegel s
ent his aide and lifelong Brooklyn friend Moey Sedway to Las Vegas with a charge to install the Outfit’s Trans-America wire service in the downtown Vegas haunts of the serious gamblers - casinos such as the Golden Nugget, Horseshoe, Golden Gate, and Monte Carlo. The task was virtually effortless, since the “Glitter Gulch” casino owners saw bookie wagering as a draw and hoped that in between races the bettors would sample the other games of chance on-site.

  The money was huge. In no time, Siegel was receiving a $25,000-per-month cut from the Las Vegas wire alone, which he called the Golden Nugget News Service. Sedway became a civic-minded philanthropist, who, for a time, considered running for public office - that is, until Bugsy set him straight. In a typical fit of rage, Siegel screamed at Moey, “We don’t run for office. We own the politicians.”

  Soon, Siegel let Sedway in on another secret, when, on a 115-degree summer day in 1945, he drove Moey out of Las Vegas on Highway 91. About five miles out, they pulled to a stop in the middle of nowhere, and Bugsy pointed to a couple of dilapidated buildings, leaving Moey befuddled.

  “For God’s sake, Ben. What is it?” Moey asked “

  Thirty acres, Moe,” said Siegel. “Thirty acres for a few nickels and dimes.”

  After Sedway had questioned his buddy’s sanity, Siegel described his master plan: “Moe, we’re going to buy this hunk of land. And we’re going to build the goddamnest biggest hotel and casino you ever saw. I can see it now. ’Ben Siegel’s Flamingo” - that’s what I’m going to call it. I’m going to have a garden and a big pool and a first-class hotel. We’re going to make Reno look like a whistle-stop.’

  In truth, Siegel’s vision, like so much else in his life, had been stolen, this time from one of Johnny Rosselli’s best friends, Billy Wilkerson. As the publisher of The Hollywood Reporter and the owner of successful L.A. nightclubs on the Sunset Strip, Wilkerson had hoped to create a new “strip” on the Las Vegas outskirts. After Wilkerson made the initial land purchase, his financing fell through. Enter Bugsy Siegel. Wilkerson’s gangster friend not only agreed that the time was right to revisit the idea of Tony Cornero’s ahead-of-its-time Meadows, but Siegel knew that he could avoid haggling with city commissioners for a casino license if he built his dream outside the Las Vegas city limits. Siegel estimated that his pleasure palace would need $1.5 million in financing. In no time, Siegel, as majority stockholder, formed a partnership with Wilkerson and a handpicked group of other investors, such as Meyer Lansky, who chipped in an initial $25,000, adding $75,000 more later. Years later, the FBI would learn that there was also a hidden partner in the Flamingo project. As Chicago FBI agent Bill Roemer recounted, “We learned how Hump [Curly Humphreys] went there in 1946 to assist Bugsy Siegel in establishing the first hotel-casino on what is now known as the Strip . . . Hump worked with Siegel, Meyer Lansky, and others of the New York mob putting the Flamingo together . . . Chicago gained an early foothold in Vegas through Humphreys” work.’ Two decades later, the FBI would listen via hidden microphones as Curly recounted this period to a protege named Gus Alex. “I was there when Bugsy Siegel was there,” Humphreys said. “[Contractor Del Webb] was the big boss there at the time, ’cause he used to sit with Bugsy Siegel when Bugsy was building that joint, you know? And I sat there with him. He used to come over and meet Bugsy every morning.”

  By 1948, Virgil Peterson of the Chicago Crime Commission had determined the exact amount of the Outfit’s investment in Siegel’s operation. In a letter to the Nevada Gaming Commission, Peterson notified the Nevadans that, via the Fischetti brothers, Chicago had transmitted over $300,000 to Bugsy. If the figure is accurate, it would make the Outfit the most substantial shareholder in the Flamingo, since the largest investor of record, Siegel, had endowed only $195,000.

  Bugsy’s Fall

  At about the same time that ground was broken on the new casino (December 1945), Bugsy received bad news that presaged his coming downslide into tragedy: His long-suffering wife, Esta, had finally filed for divorce in Reno. The adulterous Siegel was remorseful in his decision not to fight Esta, and he readily agreed to pay her a settlement of $600 per week for life, a staggering amount at the time. Back at the job site, the inexperienced Siegel was being robbed blind by his subcontractors, who marked up their raw-material costs or stole material off the site at night only to resell the same products to Siegel the next day. During the construction, Siegel’s chief builder, the popular Del Webb of Phoenix, picked up a key insight into his employer’s psyche. In conversation with Webb, Siegel let on that he had personally killed twelve men. “He must have noted my face, or something,” Webb later recalled, “because he laughed and said that I had nothing to worry about. ’There’s no chance that you’ll get killed,’ he said. ’We only kill each other.’”

  Siegel’s flair for extravagance contributed to the project’s spiraling cost overruns. His insistence on using only the best imported marbles and woods was made all the more unrealistic given postwar supply shortages. With costs skyrocketing, Siegel obtained emergency moneys from his Hollywood friends such as George Raft, but he needed more than they could produce, so Bugsy went East to secure additional investment from his gang friends. With Lansky’s approval, and Siegel’s passionate guarantees of success, the New York Commission staked Siegel an extra $5 million.

  As the Flamingo absorbed money like a black hole throughout 1946, rumors began to waft eastward that Siegel was skimming the gangs’ investment. Although one of the goals of the Flamingo enterprise was to skim money off the top of losers’ trove before the owners were assessed for taxes, some Commission and Outfit members began to suspect they were the ones being taken for a ride. Under pressure, Bugsy decided to open the casino even before the hotel was completed. When the big day arrived on December 26, 1946, everything seemed to conspire against Siegel. Bugsy had spared no expense for entertainers such as George Jessel, Rose Marie, George Raft, Jimmy Durante, and Xavier Cugat’s Orchestra. In 1996, Rose Marie recalled her stint at Bugsy’s place: “The show was spectacular, everything was great, but no locals came. They were used to cowboy boots, not rhinestones. Las Vegas was cowboy hotels; this was Monaco . . . We worked to nine or ten people a night for the rest of the two-week engagement.” But despite his best efforts, Siegel was thwarted by Mother Nature and local politics, the combination of which guaranteed the Flamingo’s opening would be a disaster. In Los Angeles, a winter storm grounded the two planes Siegel had chartered to ferry celebs to the gala; those who did arrive, such as Clark Gable, Lana Turner, and Joan Crawford, either drove the 350 miles from L.A. or took a train. While in Nevada, most local gamblers, accustomed to the sawdust joints, had no desire to don dinner jackets and buy overpriced drinks merely to play a round of blackjack.

  Although most of the serious players were in absentia, those who did show appeared to have entered into a conspiracy against Siegel and the Flamingo. Some owners of competing downtown casinos tried their luck at the tables, and with the collusion of some of the dealers, beat the house consistently, a virtual impossibility. When Siegel learned of one big cheat, he had to be restrained after screaming, “I’ll kill that son of a bitch.” (Ironically, one of the only big losers, to the tune of $65,000, was Siegel’s pal George Raft.) It thus came as no surprise that the Flamingo lost $100,000 in its first ten days.

  Frantic to stop the casino’s money hemorrhaging, Siegel closed the operation down in January for six weeks, affording him time to complete hotel construction and repopulate his pit crewrs. In April, Siegel took Virginia Hill to Mexico, where, it is widely believed (but has never been proven) that the two married. When the casino reopened in March, it was a rousing success, so much so that it reported a $250,000 profit by June. However, all was not well in the inner sanctums of his powerful backers. Back East, both the Chicago Outfit and the New York Commission remained convinced that much of their combined $5-million investment had found its way into Siegel’s and Hill’s Swiss bank accounts. In California and Nevada, smaller investors held similar grudge
s. In addition, West Coast bookies were also infuriated, because they were now forced to buy both the Outfit’s Continental and Siegel’s Trans-America.

  And Bugsy had still other problems nipping at his heels. A number of powerful gangsters, including Joe Epstein, were furious over Siegel’s continued battering of Virginia Hill, the gang’s courier and spy whom Epstein and the Outfit had been bankrolling for over a decade. One key adviser to a Commission founder recently stated in no uncertain terms that his boss (whom he asked not be named) had told him that Siegel’s treatment of Hill was the straw that broke the camel’s back. “Just before Bugsy was killed,” says John DeCarlo (pseudonym), “he had beaten the hell out of Virginia, who had carried on a secret affair with my boss. To this day, only a handful of people are aware of the relationship. When Virginia showed him what Bugsy had done, the contract went out.”

  Although DeCarlo is reluctant to name his boss, one other knowledgeable Angeleno is not. Screenwriter Edward Anhalt (The Pride and the Passion, Becket, Jeremiah Johnson, Not as a Stranger, etc.) recently recalled a conversation with the Outfit’s West Coast negotiator, Sid Korshak, who also represented Bugsy Siegel. Anhalt had sought out Korshak with the intent of getting background for a possible film on Siegel.

  “You know all that bullshit about Ben being killed because he spent too much money?” Korshak asked. “Absolute fiction.” Korshak then gave the same rationale as DeCarlo, only he added one more detail. The man who ordered the contract was Hill’s first lover, “the guy from Detroit . . . the guy from the Purple Gang.” The only man from the Purple Gang with the power to order such a hit was none other than future Las Vegas sachem Moe Dalitz, about whom more will be seen. “He was very offended by it [Siegel’s battering of Hill],” said Korshak. “He warned Siegel, and Siegel paid no attention to the warning, and they whacked him.”