Dark Victory

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

  After spending a few anonymous years in Arizona, Bioff became friends with Gus Greenbaum, another Chicago hoodlum and bookmaker who was pals with Tony Accardo and Jake “Greasy Thumb” Guzik. After Bugsy Siegel was murdered in Beverly Hills, Greenbaum had been tapped to be Siegel’s successor as the manager of the Flamingo hotel/casino. Greenbaum was a success in the gambling business, making friends with his underworld bosses as well as a few other people in legitimate businesses. One of his political friends was Barry Goldwater, then a Phoenix city councilman, who was a frequent guest at the casino, along with Goldwater’s brother, Robert, who had a reputation in Las Vegas as a high-roller.

  After a series of illnesses, Greenbaum retired and returned to Arizona, where Goldwater, a Republican, had become a United States senator. While Greenbaum and Bioff were becoming fast friends, Bioff met Goldwater. Goldwater and Bioff were frequently seen together at a variety of social and political functions. Bioff gave Goldwater campaign contributions and accepted the use of Goldwater’s private-air-plane on occasion when he needed to get somewhere quickly.

  Meantime, Accardo and Guzik placed pressure on Greenbaum to return to Las Vegas to operate their new casino, the Riviera. Greenbaum reluctantly accepted—after his sister-in-law was killed under mysterious circumstances—and took Bioff along with him, naming him as the Riviera’s entertainment director.

  When Accardo heard that Greenbaum had hired Bioff in 1955, he dispatched Marshall Califano—a prime suspect in no less than ten syndicate murders—to protest Bioff’s employment on behalf of the casino’s “investors.” Korshak was allegedly among those with a financial interest in the Riviera. Despite Califano’s efforts, Greenbaum refused to fire Bioff.

  Two weeks after Califano’s visit, Bioff returned to Phoenix with Senator Goldwater in his private plane. On November 4, 1955, Bioff stepped into his car and turned on the ignition, detonating a bomb under the hood. He was killed instantly.

  When Goldwater was asked why he had been hanging out with Bioff, he denied knowing that “William Nelson” was really Willie Bioff. When challenged on specifics, Goldwater retracted his initial story and said that he “was making a study of the labor movement, and that Bioff was helping him explore union racketeering.”3

  Shortly after, Greenbaum and his wife were found dead in their home with their throats cut. Goldwater attended both Bioff’s and the Greenbaums’ funerals. The murders of Bioff and the Greenbaums have never been solved.

  On January 30, 1957, the U.S. Senate Select Committee on Improper Activities in the Labor or Management Field was created. Chaired by John L. McClellan, an Arkansas Democrat, the committee consisted of four Democrats: McClellan, John Kennedy of Massachusetts, Sam Ervin of North Carolina, and Pat McNamara of Michigan; and four Republicans: vice chairman Irving Ives of New York, Joe McCarthy of Wisconsin, Karl E. Mundt of South Dakota, and Barry Goldwater of Arizona. Senator Kennedy’s brother Robert Kennedy—who had convinced McClellan to do the investigation—was selected as the Senate Rackets Committee’s chief counsel.

  As with the Kefauver Committee, Sidney Korshak was the first among those associated with the Chicago underworld pursued by the McClellan Committee. Robert Kennedy and staff investigator Pierre Salinger visited Korshak at his office in Chicago and asked him questions about the sweetheart contracts he negotiated in concert with Nathan Shefferman and Labor Relations Associates, Inc. Of course, Korshak denied any wrongdoing. Salinger, in his background report on Korshak to Kennedy, described him as having “a reputation of being extremely close to the old Capone syndicate.”4

  On October 30, 1957, Korshak appeared before the full committee. The questioning of the witness was conducted entirely by Robert Kennedy. Aside from the Shefferman arrangement, Kennedy asked Korshak about a labor dispute he had settled for Max Factor, the Hollywood-based cosmetic company. The union organizer during the campaign was Michael Katz, who had identified himself during his appearance before the committee as an organizer for Processing Fabricators Union Local 802 and “a communist exterminator.”

  “I believe I was in the Friars Club in California,” Korshak explained. “I received a telephone call from Mr. Katz. He met me in front of the place. He told me that he was organizing the company, and that he was having difficulty getting together with management. He understood that one of the Factors was from Chicago. He asked if I would arrange a meeting with management.”

  “Which Factor was that?” Kennedy asked.

  “This was a Mr. John Factor [“Jake the Barber”]. Mr. John Factor was in the club at this particular time. I asked Mr. Katz to wait. I walked in and told Mr. Factor what I had just learned from Mr. Katz. Mr. Factor said that the only one that he knew at the plant was his half-brother, and that he was in Europe at the time, so he couldn’t or wouldn’t talk to anyone else. I went out and communicated that to Mr. Katz.…”

  “As a matter of interest, is he the one who was kidnapped by [Chicago mobster and Capone nemesis] Roger Touhy?”

  “That is correct.…”

  “What was his half-brother’s name?”

  “I believe that would be Max Factor.”

  Korshak said that he could not recall having anything further to do with the matter, even after Kennedy confronted him with his own telephone toll-call records, showing an eighteen-minute, nine-second call from Korshak to Katz.

  “A great deal of my business is transacted on the telephone,” Korshak replied. “I would be hazarding a guess if I said other than I can’t recall. Was that telephone call, Mr. Kennedy, around the same time that the Max Factor Company was being organized?”

  “That is correct,” Kennedy responded.

  “Then if I guessed, I would say that I called him to tell him—he may have tried to reach me. He may have wired me, or attempted to reach me. I may have been returning the call. I am sure that it would have to do with the Max Factor Company. I am sure that I would have told him that I have no interest whatsoever in the Max Factor Company, and that John Factor wasn’t interested in the Max Factor Company.”5

  Sidney Korshak had become closer to Chicago mobster Gus Alex. The two men had become business partners in several ventures. Alex had applied for a Chicago apartment and used Korshak as a personal reference. Korshak, according to the files of the Lake Shore Management Company, described Alex as “a man of excellent financial responsibility whom he could recommend as an excellent tenant.”6

  Their wives, Bernice Korshak and Marianne (Ryan) Alex, were inseparable friends. A confidential FBI report stated that in 1958, “Gus Alex had moved up to an important position in the crime syndicate of Chicago.… Sidney Korshak, well-known Chicago attorney, was the person who advised top racketeers in Chicago insofar as their legitimate enterprises were concerned.… Gus Alex was the hoodlum closest to Korshak and … this was the basis for the belief that Alex had moved into a high echelon of the syndicate.”7

  During the spring of 1958, Gus Alex disappeared—after he had been subpoenaed to testify before the McClellan Committee. While U.S. marshals searched for Alex, Korshak provided Alex with a temporary home in Palm Springs, as well as the use of his automobile. Soon after, the Chicago FBI went to Korshak and asked him what he knew. “Korshak advised that he did not represent Alex as an attorney but through his wife, Bernice’s, friendship with Alex’s wife, he knows Alex as well …,” the FBI report of the interview stated. “At that time Korshak indicated that he would attempt to get word to Alex that he should accept the subpoena. In July 1958, when attempts were made [by the FBI] to contact Korshak’s wife, Korshak contacted the Chicago Office [of the FBI] and advised that his wife was in California and was having dinner that night in Beverly Hills with Peter Lawford [John and Robert Kennedy’s brother-in-law].… In July 1958, Alex was served with a subpoena in Chicago by a representative of the Senate Rackets Committee.”8

  When Alex appeared before the committee, he took the Fifth Amendment thirty-nine times, refusing to answer whether he had been Jake “Greasy Thumb” Guzik�
�s bodyguard, whether he had been the Capone mob’s top enforcer, whether he was involved in the Dome, a Chicago gambling casino, or even whether his sister was married to mobster Joey Glimco’s brother.

  With Senator McClellan’s patience wearing thin, he chided Alex. “You stated that you were an American citizen. Do you have enough love and respect for your country that you would in any way and to any degree cooperate with your government and those who are trying to preserve the very freedoms you exercise and now enjoy …?”

  “Under the Fifth Amendment to the Constitution of the United States,” Alex replied, “I decline to answer on the grounds that my answer may tend to incriminate me.”9

  *On August 8, 1954, long-time Korshak associate Charles “Cherry Nose” Gioe was machine-gunned to death, and his body was stuffed into the trunk of a car. The police had no clues. Just the previous month, according to the FBI, Gioe had allegedly asked Korshak to make arrangements for the naturalization of Paul Ricca, another member of the Chicago mob convicted in the Bioff-Browne-Schenck Hollywood scandal. Ricca was another close associate of Hoffa’s.

  *Nate Shefferman was the owner of the Chicago-based firm Labor Relations Associates, which the Sears, Roebuck Company and its subsidiaries employed for union-busting activities. Shefferman, like Korshak, was a close friend of both Hoffa and Teamsters president Dave Beck and “had received $85,000 in union funds from Beck to purchase a variety of items for him wholesale.”2

  CHAPTER SIXTEEN

  In 1957, the Antitrust Division of the Justice Department once again became interested in possible litigation against MCA. On April 16, 1957, Walter K. Bennett of the division’s Los Angeles office wrote a memorandum to Richard B. O’Donnell, chief of the New York office, stating: “It will be recalled that Music Corporation of America has been the subject of a number of complaints; the last one considered, according to our records, was dated February 8, 1954, and consisted of a charge by an independent motion picture producer who claimed that MCA had a monopoly on entertainment talent which it built up and maintains by predatory practices.

  “… Previous inquiries conducted by this office indicate that MCA has bought out other agencies and that it has had artists under exclusive contract, as well as writers. Complaints by independent producers of motion picture and television shows suggest an attempt to monopolize these businesses. The claim has been made that MCA, with another agency, the William Morris Agency, controls at least seventy-five percent of the top writers, directors, and artists. Dependent on the results of … interviews in Boston, you may care to recommend that the investigation closed in 1954 be reopened.”

  Nine days later, Leonard Posner, a government antitrust attorney who had been working part-time on the case, assumed the role of point man in the day-to-day preliminary investigation. Posner’s initial probe was two-pronged; he wanted to investigate both MCA and the William Morris Agency, both of which represented artists as well as packaged and distributed shows. A package for either a motion picture or television show could simply be an idea or a script. It would usually be generated by a writer. Sometimes it would be a joint effort of several artists with various talents or a unilaterally owned package. Occasionally, a package could be a finished film.

  When a talent agent received a package, it usually required at least a final editing or, at most, the selection of the right studio, a budget, insurance, the necessary copyrights, financing, and the physical production of the program.

  MCA would receive a ten-percent commission on the sale of the package from first exhibition over a national television network; twenty percent from any network rerun; thirty percent for runs on regional networks; forty percent for runs on local television stations; and fifty percent for foreign distribution.1

  Posner’s interest in MCA was greater because, unlike William Morris, MCA was involved in production. Although William Morris packaged programs for such production companies as Four Star, Lou Edelman, Sheldon Leonard, and Danny Thomas, the agency only took its ten-percent commission from those individual artists they packaged.

  The focus of Posner’s investigation was the “tie-in” device by which a producer was forced to take an entire package rather than selected individuals. “If scripts are copyrighted (as they probably are),” Posner wrote, “the ‘tie-in’ may well be a ‘per se’ violation of the antitrust laws. Even when there is no copyright involved, the argument could be made that both scripts and performers … are highly unique and, in effect, represent monopolies. Even assuming that monopoly is not involved, the restraints may be unreasonable.”

  In February 1958, MCA’s subsidiary, Management Corporation of America, bought the television distribution rights to over 750 pre-1948 feature films from Paramount for a guaranteed $35 million—$10 million in cash and payments of $2.1 million a year for twelve years. MCA agreed to pay Paramount as much as $15 million if rentals exceeded $51.25 million prior to 1974. At the time the deal was made, Stein was still Paramount’s second largest stockholder.

  Of the films purchased, sixty-four were “dogs” and were immediately dropped, and 430 were considered “C” pictures, defined as “poor” or “unsuitable.” Since it would be difficult to find sponsors for these films, they were primarily used for “fringe time” viewing, or for bargaining for the rest of the package.

  MCA’s intent was to sell television stations as many films as possible through its wholly-owned subsidiary, the EMKA Corporation. As in a catalogue, each film had a price and stations could order the films from any of dozens of MCA salesmen who would come calling. The cost of distributing these movies varied. If MCA was distributing numerous films simultaneously, its salesmen blanketed local television markets and offered a large selection of films at a lower price than a smaller distributor with fewer films. Consequently, smaller distributors had a higher distribution cost. If a station bought one movie at a time, it would have to decide whether it wanted to pay, for instance, $5,000 for a lesser movie for five viewings over seven years or whether it would be better to purchase a better film, like the 1944 Academy Award–winning production Going My Way, for $5,000 for two runs over three years. As a general rule, the first station in a particular local market that offered to buy the entire film package would get it. Usually these stations would have to take the 430 “C” pictures in order to get the other “A” and “B” movies. This practice of “block-booking” had been outlawed by the U.S. Supreme Court in the Paramount case in 1948. MCA, in attempting to sell its newly acquired films, was accused of this practice.

  Other companies had purchased other film companies’ backlists. Screen Gems, for example, bought 998 pre-1948 and 372 post-1948 films from Columbia; and Seven Arts purchased fourteen pre-1948 and 326 post-1948 motion pictures from Warner Brothers and Twentieth Century–Fox in 1956. A year earlier, Desilu, a new production company formed by Desi Arnaz and Lucille Ball (I Love Lucy had begun in 1951), bought out the RKO studio and its entire backlist of 740 films. Desilu’s vice-president for public affairs was former SAG president George Murphy.

  MCA’s acquisition of Paramount’s film library prompted Assistant Attorney General Victor R. Hansen of the Antitrust Division to write Jules Stein a letter, saying in part, “While we do not mean to imply that such acquisition necessarily violates the antitrust laws, it does raise certain questions under those laws.” Those questions revolved around the legality of MCA’s multiple role as agent, producer, and, now, distributor. Hansen then asked for MCA to provide the federal government with all information pertaining to the sale.2

  The FBI’s routine public-records search with Dun and Bradstreet, the corporate financial analysts, yielded little. “This company,” the respected firm concluded, “is not actively engaged as a seeker of mercantile credit. However, it is reported to be prompt and satisfactory for payment of purchases on credit terms.” Dun and Bradstreet also noted that MCA had “declined to release financial information, and financial statements have been obtained from industry sources.”3

 
Soon after the purchase of the Paramount film library, Charles Whittinghill, also of the Antitrust Division, requested the authority “to empanel a grand jury in the Southern District of New York to investigate possible violations of the Sherman Act arising out of alleged tie-in sales by NBC and CBS of network time and network-produced shows.” Among the tie-ins Whittinghill hoped to investigate were those of MCA because of its “extremely close relationship with NBC, to which it supplies numerous ‘live’ properties.”4

  A Justice Department document stated that “NBC is being completely ‘snowed under’ by CBS in the program ratings.… NBC’s personnel are far inferior to CBS’s in caliber and cannot turn out the quality product. Because of this, NBC is forced to rely on MCA’s stable of stars and upon MCA’s show production facilities. Hence, NBC sticks close to MCA and to MCA’s ‘Revue Productions.’”5

  MCA’s program packager was attorney and talent agent Henry Jaffee, who also represented Robert Sarnoff, the chairman of the board of NBC, and had previously represented former NBC president Sylvester “Pat” Weaver. Because of these relationships, Jaffee allegedly kept down the price of talent sold to NBC.

  Further, there was a sweetheart relationship between MCA vice-president Sonny Werblin, who was in charge of television sales, and NBC vice-president Robert Kintner, who later became network president and stated during the spring of 1957 in the presence of Sarnoff and others, “Sonny, look at the [NBC] schedule for next season; here are the empty spots, you fill them in.”6

  Werblin did so, rearranging the NBC prime-time schedule and replacing set programming while the NBC programmers watched with their hats in their hands. When the NBC programming bloodbath was completed, MCA had fourteen shows on the air—eight and a half hours of MCA-produced programs on prime-time television. Among MCA’s programs were Wagon Train, Wells Fargo, and M Squad. However, the rest of the NBC-MCA schedule was filled with clinkers.