Dark Victory

by Moldea, Dan E. ; Miller, Mark Crispin;

  After MCA bought Universal Studios and made plans to produce motion pictures as well as television programs, Revue became Universal-Television in 1962, creating such shows as Marcus Welby, M.D., Columbo, McMillan and Wife, Kojak, The Six-Million-Dollar Man, The Rockford Files, The Incredible Hulk, Magnum, P.I., and Miami Vice. Under MCA, Universal Pictures has won three Academy Awards for Best Picture for The Sting, The Deer Hunter, and Out of Africa. And the studio has also produced such financial blockbusters as Airport, American Graffiti, Jaws, E. T. the Extraterrestrial, On Golden Pond, and Back to the Future.

  For years, MCA has been viewed by its clients, rivals, and the business press as the General Motors of Hollywood. Despite the company’s vast power within the entertainment industry, most Americans have never heard of MCA. Since the company was founded in 1924, it has cultivated an air of mystery about itself. In an industry that thrives on publicity, MCA’s executives have thrived on anonymity. The guiding credo at MCA has always been that publicity is for the clients, not the company.

  It is a show business legend that one of the ways MCA’s agents tried to remain anonymous was to dress extremely conservatively—in black or dark-gray suits, white shirts, and dark, narrow ties. The top executives set the example, which everyone followed. MCA’s management team was credited with bringing a correct, Ivy League dignity to a profession that had previously been characterized by plaid-jacketed, cigar-smoking agents who did nothing more than “peddle flesh.” MCA believed agents should look, dress, and act like other businessmen and bankers. With the MCA dress code came the reputation for ruthless efficiency. During the 1950s, competitors derisively called MCA’s aggressive agents “the black-suited Mafia.”

  The brains behind MCA was Jules Stein, a Chicago ophthalmologist who discovered that he could make more money booking bands. When Stein and an associate, Billy Goodheart, founded the Music Corporation of America in 1924, they began empire-building—with the help of James Petrillo, the head of the American Federation of Musicians, with whom MCA maintained a sweetheart labor-management relationship. According to Justice Department documents, Petrillo was paid off in return for favors to MCA. Taft Schreiber and Sonny Werblin were among the first two top MCA assistants, followed by Lew Wasserman, who was groomed as Stein’s heir and was named president of the company in 1946; Stein then became MCA’s chairman of the board.

  The rise of MCA and its move to Hollywood paralleled the rise of the Chicago Mafia and its infiltration of the motion picture industry. While MCA was representing some of the top motion picture stars, Chicago mobsters took control of the International Alliance of Theatrical Stage Employees (IATSE), the major Hollywood labor union—through Willie Bioff, a small-time hood, who was supervised by Chicago mob lieutenant Johnny Roselli. The studios made payoffs to the underworld for labor peace—and to keep their workers’ wages and benefits to a minimum. But when the studios’ payoff man was caught for evading federal income taxes, he plea-bargained with the government, implicating Bioff, but not the Mafia, in the extortion scheme. Bioff was indicted and convicted—and then turned state’s evidence against his cohorts, who were also convicted and sent to prison.

  The Chicago Mafia’s role in Hollywood did not end with the convictions; it simply changed. Chicago’s new liaison in the motion picture industry became attorney Sidney Korshak, who had represented Bioff. Charles Gioe, a top Chicago Mafia figure, had told Bioff that Korshak was “our man … any message he may deliver to you is a message from us.”

  A close friend of Stein’s and Wasserman’s, Korshak quickly became one of the most powerful influences in the entertainment industry and in California politics. One of his key political connections was another former Chicagoan, Paul Ziffren, who at one point was California’s delegate to the National Democratic Committee. (He would not seek reelection after his ties to major organized crime figures were exposed by a national magazine.) Korshak also associated himself with top Republican leaders to hedge his bets—and always have friends in power.

  In the late 1940s Hollywood shifted its attention away from the Mafia’s infiltration of the film industry to its infiltration by communists. Ronald Reagan, a young actor who was represented by Wasserman and MCA, was a star player during the investigation and hearings by the U.S. House Un-American Activities Committee (HUAC), serving as both an informant for the FBI and a friendly witness for the committee.

  After his performance in the war against communism—which included support for IATSE, the union formerly controlled by Bioff that was still run by his same executive board—Reagan was rewarded by being elected as president of the Screen Actors Guild, serving for five consecutive one-year terms.

  In 1952, during his fifth term, Reagan engineered a “blanket waiver,” exempting MCA from SAG rules prohibiting a talent agency from also engaging in film production. Reagan’s second wife, actress Nancy Davis, was also a member of the SAG board of directors at the time the MCA-SAG deal was made. MCA was the only such firm to have been granted such a favored status, giving it the ground floor in television production. It placed the company in a position where it could offer jobs to the actors it represented. Other talent agencies complained that this situation gave MCA an unfair advantage.

  Soon after Reagan’s tenure as SAG president ended, he found himself in serious financial trouble. With his film career on the skids, Reagan was saved by MCA with jobs in Las Vegas and on television. According to Justice Department documents, several government sources believed that the preferential treatment Reagan received from MCA was a payoff for services rendered while Reagan was the president of SAG.

  In 1959, the SAG membership reelected Reagan as president of SAG for a sixth term to lead an impending strike against the studios—despite the fact that Reagan had been producing episodes for General Electric Theater. According to SAG’s by-laws, producers, even if they were primarily actors, are disqualified from serving on the SAG executive board. Previous board members faced with similar situations had resigned; Reagan refused to do so.

  Although MCA and a handful of smaller studios made an early, separate peace with SAG and continued production, the major motion picture companies held out, causing the strike to last six weeks. In the end, according to the president of IATSE, Reagan’s final settlement with the big studios came with the help of Sidney Korshak—with whom Reagan had allegedly been associated. The 1960 contract was so unsatisfactory to the SAG membership it has since been called “The Great Giveaway.” Reagan resigned in midterm soon after the strike.

  After several abortive attempts to investigate MCA for antitrust violations, the federal government—upon the election of John Kennedy as president and the appointment of Robert Kennedy as attorney general—began a concentrated probe into MCA’s business affairs. The government had evidence that MCA had engaged in numerous civil and criminal violations of law and empaneled a federal grand jury to hear the specifics of its charges, which included restraint of trade, conspiracy with SAG to monopolize talent and film program productions, extortion, discrimination, blacklisting, and the use of predatory business practices. Among those called to testify was Ronald Reagan, who displayed a remarkable loss of memory while on the witness stand. Soon after, the federal income tax records of Reagan and his wife were subpoenaed for the years following the MCA-SAG blanket waiver.

  In the midst of the grand jury’s investigation, MCA purchased Universal Pictures and its parent company, Decca Records. The government immediately went to court, seeking to block MCA’s takeover of the corporation. However, after lengthy negotiations between attorneys for the Justice Department’s Antitrust Division and MCA, a consent decree was issued and the case was considered closed. The litigation forced MCA to choose whether it wished to be either a talent agency or a production company. Considering that its production efforts yielded nearly ten times more money than the talent agency, the decision was an easy one: MCA dissolved its talent agency.

  Reagan has admitted that the government’s breakup of MCA aff
ected his political beliefs, inclining him toward a more conservative, antigovernment stance. Beginning with the Barry Goldwater presidential campaign in 1964 and then with his own bid for governor of California in 1966, Reagan’s reactionary tone enhanced his image with other conservatives but nearly cost him his job with General Electric Theater. Among the guiding forces in the shaping of Reagan’s political philosophy were MCA’s Jules Stein and Taft Schreiber. According to law-enforcement authorities, several of Reagan’s campaign financiers were close friends and associates of Sidney Korshak.

  Stein and Schreiber—as well as Reagan’s personal attorney, Los Angeles labor lawyer William French Smith—made several questionable financial transactions on Reagan’s behalf, making him a multimillionaire overnight. Once governor, Reagan made executive decisions that were greatly beneficial to MCA and other corporations with motion picture studio interests.

  The same year that Reagan was elected governor of California, Paul Laxalt was elected governor of Nevada. Both Laxalt and Reagan had been heavily involved in the Goldwater campaign. The two men, as governors of neighboring states, became close friends while the latter tried to “clean up” Nevada’s image. However, during Laxalt’s tenure, a scandal broke out in Las Vegas over a corporation that owned several casinos. Korshak was the major target of the federal investigation that followed. Although Laxalt has been linked with Korshak’s associates and clients, he has denied any association with Korshak.

  Although Laxalt chose not to seek a second term as governor, Reagan did and was reelected. Laxalt returned to practicing law and then opened a gambling casino in Nevada—which failed. Laxalt then ran for the U.S. Senate and won. While serving as a senator, Laxalt ran Reagan’s campaigns for the presidency in 1976 and again in 1980. Laxalt then became general chairman of the Republican National Committee.

  Meantime, Stein removed himself as MCA’s chairman of the board and was replaced by Wasserman—who was succeeded by the head of Universal-Television, Sidney Sheinberg. MCA grew enormously under Wasserman and Sheinberg. Its only major failure was an attempt to mass-produce a home entertainment system—consisting of video discs, containing motion pictures and other programs, which could be played on machines hooked up to standard television sets. However, MCA’s idea was eclipsed by a similar product marketed by its rival RCA and another system developed by Sony, utilizing videocassettes that could do everything the MCA and RCA systems did as well as record television programs. Nevertheless, MCA continued to shatter box-office records with its blockbuster motion pictures while its television productions soared in the network ratings.

  Wasserman also became increasingly involved in politics. He had supported President Jimmy Carter but then had a falling out with him after Reagan announced his 1980 candidacy. Korshak, a Democrat who had supported Reagan during his 1970 reelection bid for governor of California, had been the target of a four-part series in June of 1976 in The New York Times, which described him as “a behind-the-scenes ‘fixer’ who has been instrumental in helping criminal elements gain power in union affairs and infiltrate the leisure and entertainment industries.” Although Korshak was not on record as supporting either Carter or Reagan in 1980, his close associate, Democrat Paul Ziffren, became a law partner of William French Smith, who later became Reagan’s attorney general.

  During the presidential campaign, Reagan met privately with known associates of organized crime and appointed others to his personal campaign staff. Several of these people were later given high positions in the Reagan administration after his election. President Reagan talked tough about the organized crime problem in the United States, while surrounding himself with many who were closely linked to those who have created it.

  To illustrate this web of power and manipulation, this story has been organized chronologically, minimizing whatever reader confusion might result from the proliferation of names, events, and dates contained in the narrative. The common thread throughout this story is the corporation MCA. In tracing its history I have concentrated on the parallel and sometimes intertwining careers of Ronald Reagan, Lew Wasserman, and Sidney Korshak—and how these three men have affected political, business, and labor history in America.

  I

  THE RISE

  CHAPTER ONE

  Near the end of World War I, the United States government built a naval base on the Mississippi River near the segregated Storyville neighborhood of New Orleans. The area, which covered thirty-eight blocks in the French Quarter, was a jazz musicians’ paradise where townspeople jammed together on street corners every night, playing everything from boat whistles and washboards to open-bell trumpets and slide trombones into the early-morning hours. Known as “The District,” Storyville stretched from Perdido and Gravier streets to Franklin and Locust streets and was the home of Ferdinand “Jelly Roll” Morton, the self-proclaimed “inventor” of jazz, as well as the home of a string of independent saloons, gambling joints, and brothels.

  With the passage of the Volstead Act in 1919, the Prohibition Era began. The public drunkenness, crooked gambling, and open prostitution rampant in Storyville had earned it a reputation as Sin City, a reputation that had already reached Washington, D.C. The federal government needed little impetus to expropriate the land and permanently close down the area. Within days, thousands of people, packing everything they owned, left the city, looking for places to resettle.

  “Closing the area meant the end of jobs for musicians, singers, and hundreds of other workers,” said one observer. “But it was even more. It was the coda for a fantastic era, and the termination of New Orleans as the world’s hotbed of jazz.”1

  Most of the musicians—like trumpet players Joe “King” Oliver and Louis Armstrong—traveled north. Chicago became their new home and the new capital of jazz. King Oliver’s Creole Jazz Band and Armstrong’s Sunset Band worked at places like the Dreamland Café and the Royal Gardens on Chicago’s South Side, as well as the Grand Theatre, the Colonial Theatre, and the North American Restaurant, all in and around the Loop, once again playing into the early-morning hours.

  The Original Dixieland Jazz Band and the New Orleans Rhythm Kings were not among the first jazz bands, not even among the first all-white jazz bands, but their music—patterned after the rhythmic passion of Black rag and jazz—brought jazz to a larger, more cosmopolitan audience. These white bands quickly became known to audiences in places as distant as New York and London.

  During the early 1920s, young South Side Chicago musicians—like Eddie Condon, Muggsy Spanier, and George Wettling—and West Side youths like Benny Goodman were influenced by the sound these groups produced. But Condon’s and Goodman’s music took on an identity of its own. It became known as “Chicago Style” or “White Chicago” because of its emphasis on Black off-the-beat rhythms and sharply defined notes, but with a new swing and aggressiveness. This variation of basic jazz, sometimes hard and harsh, seemed to epitomize the vitality of the Roaring Twenties and of Chicago, which had become a wide-open town.

  The notorious Mafia leader Al Capone and his rival gangs had built their empires on illegal, bootlegged liquor, which brought them millions of dollars in unreported, untaxed income. When the Depression came, they were the only people with big money, so bankers, businessmen, and politicians often came to them for help. They usually received it—but always for a price. Massive violations of state and federal banking laws, the mob’s infiltration of legitimate businesses, and political corruption became facts of life. Those who defied the system or double-crossed the people who paid them off were either personally destroyed or brutally murdered. Despite its more glorified Hollywood image, there was nothing glamorous about the real legacy of the Chicago Mafia.

  Between machine-gun shootouts in the streets, the racketeers spent a lot of their dough in nightclubs and speakeasies, some of which they had built themselves. Juiced-up mobsters foot-tapped in time with jazz and Dixieland music played by one band or another in any number of clubs. Mafia members, who fantasized
about playing a cool sax, befriended those musicians who could. Musicians—who dreamed about being rich and powerful, with plenty of dames around—allowed them to do so, usually making a few extra bucks, earning a little protection, and maybe even enjoying the favors of a mobster’s moll.

  Initially, music critics viewed jazz enthusiasts as “musical illiterates.” But as a more commercial, toned-down form of jazz evolved, this relatively new innovation in music became more widely accepted. As a result, the band-booking business blossomed and the record industry boomed into a multi-million-dollar-a-year bonanza. In 1921 alone, twenty years after the pioneering Victor Talking Machine Company and the Columbia Graphophone Company were established, over $106 million in records were sold. Two years earlier, in 1919, New York’s Radio Corporation of America (RCA) had been created.*

  On October 7, 1922, WJZ, a Westinghouse radio station in Newark, New Jersey, hooked up with General Electric’s WGY in Schenectady, New York, and broadcast the opening game of the World Series. The following year, AT&T’s station in New York performed a similar feat, cabling radio signals to WMAF in South Dartmouth, Massachusetts. By 1924, twenty-five other stations were added to AT&T. Two years later, the National Broadcasting Company, NBC—which was owned and operated by RCA—took over AT&T’s operations and became the first licensed radio network, broadcasting as far west as Kansas City to twenty-one cities.

  The demand for musical entertainment on the radio was tremendous. In spite of the fear among some people that jazz and its variations would corrupt the public’s taste in music, dance bands were in vogue. The radio made Eddie Condon, Benny Goodman, Duke Ellington, and Guy Lombardo household words. Increasingly, both well-known and lesser-known but up-and-coming bands needed managers to represent them professionally. Band members were musicians but not always businessmen, and most of them needed an agent to protect their financial interests.