At the end of the 1964–65 season, Werblin decided to spend his time concentrating on his sports investments and resigned as president of MCA-TV. Upon his departure from MCA, George Rosen, a reporter for Variety, wrote in January 1965: “Last week’s resignation of Sonny Werblin from MCA (after thirty-five years with the entertainment complex), expected as it was, signaled the end of an era. For in those more than three decades, Werblin wielded more influence, made more money, made and broke more careers than perhaps any other show biz impresario in New York.
“If he was not broadcasting’s greatest showman, he certainly qualified as its greatest promoter and salesman.
“No one had better contacts, knew more secrets, swapped more information, flew so many airline miles, ate more meals at ‘21,’ made more deals, or sold so many hundreds of millions of dollars worth of programming.”
In 1965, the U.S. Borax Company needed to find a new host for its television show, Death Valley Days, a Western anthology series, to replace Stanley Andrews, who had introduced each episode since the program started in 1952. Borax’s advertising agency was McCann-Erickson, of which Reagan’s brother, Neil Reagan, was a vice-president. “I wanted to sign him for a contract,” Neil Reagan explained. “He didn’t want any part of it. I rather suppose he didn’t want to work.”5
Nevertheless, Reagan was offered and accepted the job as the host for Death Valley Days, with the help of his brother and the considerable influence of Taft Schreiber. He received $125,000 annually.
MCA fortunes were further enhanced with the creation of a series of “World Premieres” for NBC—which, in 1965, had moved network president Robert Kintner to chairman of the board. Out of this concept—which was nothing more than making movies exclusively for television—MCA was able to sell several long-running dramas, including The Rockford Files, Columbo, McCloud, and Emergency. Of the 116 “World Premiere” movies MCA produced, thirty-one were turned into regular television series. MCA also made a record $60 million deal with NBC for the television broadcast of one hundred Universal pictures.
“One major executive in our industry told me at the time that I was an idiot to make the deal,” Wasserman said. “He thought I’d sold the product for too low a price. We did spend a hell of a lot of our own money on it, but we wanted to be certain we’d have enough production to keep the facility fully occupied.”6
More money was being made on other fronts. MCA’s wholly owned Columbia Savings and Loan Association of Denver had become the largest state-chartered S & L in Colorado. Since MCA’s takeover of Columbia in 1962, the S & L’s assets had risen eighty-three percent and totaled $115 million. In order to attract customers, MCA had authorized Columbia to begin a flashy public relations campaign, spending over a half million dollars on advertising and promotion. As a result, revenues in 1964 were up forty percent over the previous year. Jack Benny, a member of Columbia’s board of directors, had also been sent by MCA to open a new branch office in Fort Collins. “The line of people waiting for Benny’s autograph on a deposit book,” one report stated, “stretched for a block.”7
After Barry Goldwater’s presidential defeat, conservative financier Henry Salvatori, the founder of Western Geophysical Company, and two of his political associates—Los Angeles car dealer Holmes Tuttle and A. C. Rubel, the chairman of the board of Union Oil—began to view Ronald Reagan seriously as their hope for the future. Salvatori explained, “After that speech, we decided we better keep that fellow on TV. We realized that Reagan gave the Goldwater speech better than Goldwater. He had more self-control. He could say the same things but in a more gentle way.”
In 1965, the three Los Angeles millionaires formed the Friends of Reagan committee, consisting of, among others, Taft Schreiber; Leonard Firestone, a top executive of the Firestone Tire and Rubber Company; drugstore magnate Justin Dart; and Reagan’s personal attorney, William French Smith. Rubel, serving as the committee’s spokesman, announced, “Ronald Reagan, out of a deep sense of duty and dedication, is willing to serve as Republican candidate for governor, providing a substantial cross section of our party will unite behind his candidacy. To this end, Mr. Reagan has agreed to exhaustively explore the depth of filing and the possible commitment to such an endeavor.”8
When Reagan was convinced by his political supporters to run for governor of California against incumbent Pat Brown, who was seeking his third term, the Friends of Reagan became the Reagan for Governor Committee. Schreiber was Reagan’s chief fund-raiser and co-chaired his campaign, which was arranged and financed by Jules Stein and a group of conservative southern California businessmen.
Reagan even published his autobiography, Where’s the Rest of Me?, a sanitized, revisionist look by Reagan at his Hollywood past and his wars with communism during his years with the Screen Actors Guild. Published by Duell, Sloan and Pearce, a New York publishing house, the book was co-authored by Richard G. Hubler. The appendix of the book included statements by Reagan indicating his views on issues ranging from “Fiscal Irresponsibility” to “Youth Aid Plans,” and “Appeasement or Courage” to “Karl Marx.”
With his background in films, Reagan mastered the art of the television political campaign, capitalizing on his image as a totally honest man with an endearing “golly-gee” naivete about him. After easily brushing off former San Francisco mayor George Christopher in the Republican primary, Reagan and his backers set their sights for Governor Edmund G. (Pat) Brown.
Pat Brown faced major problems, not the least of which was his opponent in the Democratic primary, Los Angeles mayor Sam Yorty, who was a close friend of Henry Salvatori and supported Reagan after Brown defeated him. When Reagan charged that Brown had “looted and drained” California’s economy, the voters listened—regardless of how baseless the charge was.
Running on a tough “law and order” platform, Reagan accused Brown and the Democrats of being “soft on crime.” Reagan’s emphasis was on street crime and violence. He made no known statements on California’s organized crime problem. When Reagan spoke of “the mob,” he was generally talking about “the mob of students” at the University of California at Berkeley.
Reagan whipped Brown with fifty-seven percent of the vote and left his job as the host of Death Valley Days to become California’s chief of state; his running mate, Robert Finch, became lieutenant governor.* Less than three months after becoming governor, Reagan, upon being asked during a press conference about his legislative program, said he did not know what it was. “I could take some coaching from the sidelines,” Reagan said only half-jokingly, “if anyone can recall my legislative program.”
Considering all the help Reagan received from Stein and Schreiber, the standing joke in Hollywood was that “MCA even had its own governor.”† The Justice Department’s 1962 antitrust settlement with MCA and the inconclusive audit of Reagan might have ended speculation about Reagan’s relationship with MCA—if it hadn’t been for the additional questions that had cropped up about Reagan’s finances during his political career. Most of the relevant facts about these financial dealings surfaced only after the Kennedy Justice Department, the IRS, and the FBI had closed the books on the MCA investigation. In the years after the 1962 consent decree, Reagan made more than seventy-five percent of his personal fortune—which would later be estimated to be more than $4 million. Most of this wealth was amassed through a series of extremely shrewd real estate transactions in California—with the help of his friends at MCA.
Aside from the Reagans’ purchase of their principal residence on San Onofre Drive in Pacific Palisades, Reagan was involved in another lesser-known deal—secretly orchestrated by Jules Stein and Taft Schreiber—which made him a millionaire.
As noted earlier, Ronald Reagan had purchased 290 acres of property in Malibu Canyon in 1951. Reagan paid $85,000 for the property, or $293 per acre. Ronald and Nancy Reagan never lived at this site, using it only as a weekend hideaway and for such activities as horse riding, barbecues, and cattle raising. The Reagans mad
e no substantial improvements to this property, which contained only a small, fairly run-down house.
A little over a month after Reagan’s election as governor, he sold 236 of his 290 acres to the Twentieth Century–Fox Film Corporation. The studio then owned 2,500 acres of adjoining land, which it sometimes used as a background site to film some of its movies. The controlling interest of Twentieth Century–Fox was still held by Darryl Zanuck and his family, who had supported Reagan in his race for governor.
The arrangement between Reagan and Twentieth Century–Fox was handled by Stein and Schreiber, with the legal work handled by Reagan’s personal attorney, William French Smith, a Los Angeles labor lawyer working for management since 1942 and senior partner in the huge Los Angeles firm of Gibson, Dunn, and Crutcher.* “I’ve spent thirty years dealing with the Teamsters Union and the construction workers’ union and a few others,” Smith said.9
The Reagan-Fox transaction occurred on December 13, 1966. Twentieth Century–Fox—via its real estate company, Fox Realty—purchased the 236 acres for $1,930,000, or $8,178 per acre. Reagan made more than a 3,000 percent profit on his purchase of fifteen years earlier.
According to a rider to the deed, signed the next day, Fox also received an option to buy the remaining fifty-four acres of Reagan’s ranch at some later date—at the same price of $8,178 an acre.
It was unclear why Fox would have wanted any of the land at that price. According to published reports, Fox’s own appraisers had judged the larger portion of land to have a market value of only $4,000 per acre. County appraisers estimated that the property was worth even less. The fifty-four optioned acres, all on very steep terrain, were actually worth only about $550 an acre. To explain the deal, the movie company announced that it planned to move its headquarters and studios to the property. But no such construction was ever undertaken.
One month later, on January 31, 1967, the Assignment of Deed of Trust for Reagan’s property was filed with the Los Angeles County Recorder’s Office. The paperwork showed that two of the trustees of Reagan’s property sale to Fox were William French Smith and Jules Stein. Three days after the land sale, on December 19, 1966, the Reagans had signed over their power of attorney to Smith.
Reagan later told a reporter, “I could not have run for office unless I sold the ranch.”10
Reagan added to his story later on, saying that he could not afford the property taxes for the ranch on his governor’s salary of $44,000 a year. Nancy Reagan also said, “We had to sell our ranch at Lake Malibu when Ronnie became governor … [because] Ronnie had taken a large cut in income when he left television to become governor. We simply could not afford the luxury of a ranch.”11
*In September 1962, Carlos Marcello allegedly threatened to kill President Kennedy, according to Pulitzer Prize–winning reporter Ed Reid in his 1969 book, The Grim Reapers. Reid’s source for the information was Ed Becker, a Los Angeles private investigator who had been present when Marcello made the threat.
While Reid was writing his book, there was pressure on him not to implicate Marcello in the assassination. According to the U.S. House Select Committee on Assassinations, “FBI files … contain repeated references to the Bureau’s use of allegations about Becker received from Sidney Korshak, an alleged associate of various organized crime leaders. The files indicate a high level of awareness at the Bureau’s headquarters that the Los Angeles FBI office was using the information received from Korshak in an effort to persuade Reid not to publish the Marcello allegations. There was, however, no reference in the files to Korshak’s own possible background and activities, nor to his possible motives in supplying the information at that time.”2
†Jimmy Hoffa was convicted of jury tampering and defrauding the Teamsters Central States Pension Fund in 1964; he was sentenced to thirteen years in prison. In 1971, he was replaced as general president of the Teamsters by Frank Fitzsimmons.
*According to published reports, Wasserman had been offered and had rejected the post of Secretary of Commerce in the Johnson Administration.
*In California, each party’s nominees for governor and lieutenant governor run as a ticket but are elected separately, making it possible for the governor to be a member of one party and the lieutenant governor to be a member of the other. Robert Finch had managed Richard Nixon’s 1960 campaign for the presidency and George Murphy’s 1964 campaign for the U.S. Senate.
†Reagan’s millionaire friends did own the governor’s home. After Nancy Reagan refused to live in the official but run-down governor’s mansion, California’s First Couple rented a home in Sacramento for $1,250 a month. In 1969, Reagan’s wealthy backers bought the governor’s residence for $150,000 and leased it back to Reagan for the same price he’d been paying for rent.
*Smith was a close personal friend of Beverly Hills attorney and former Democratic Party boss Paul Ziffren, who had been linked to major organized crime figures during the late 1950s; Smith was also at least acquainted with Sidney Korshak, according to several sources. Attempts to interview Smith for this book were unsuccessful.
CHAPTER TWENTY-NINE
Since the rise and fall of Bugsy Siegel, Nevada had become a haven for major organized crime figures throughout the United States. When the gaming industry—which already had a history of corruption—became popular in the postwar era, “the people who were available to run it when the decriminalization process began were the same people who were running it under the old illicit period,” explained attorney G. Robert Blakey, who served in the Justice Department under Attorney General Robert Kennedy. “The public demanded regulation upon legalization—that is, the screening of ownerships, the licensing of casinos, and the subsequent oversight over these operations. The public pressure placed the power to regulate the gaming industry in the hands of the politicians. And it followed naturally that the politicians reached out to corrupt the industry.”1
During the early 1960s, Nevada caught the attention of the Kennedy Justice Department, which had launched a major campaign to prosecute organized crime figures. For fifteen months, secret FBI wiretaps placed on the business telephones of five major casinos yielded an astonishing history of syndicate involvement in Las Vegas, including massive skimming operations that were being funneled into other Mafia-backed activities, such as narcotics and payoffs to politicians.
While the intelligence collected from this FBI surveillance was unprecedented, the operation presented a very touchy problem, since all of the taps had been installed illegally. None of the data could be used in court. As a result of this nondisclosure bind, numerous public officials in Nevada—led by Democratic Nevada governor Grant Sawyer—were able to charge convincingly that the federal government had launched into nothing more than a campaign of harassment against the casino operators, whom Sawyer and his followers viewed as legitimate businessmen. “Give us your evidence,” Sawyer insisted, “or call off your dogs!”
Without hearing any rebuttal from the Justice Department, Governor Sawyer continued to speak out against the FBI. His aim, naturally, was to protect his state’s gaming industry, which in 1965 grossed $330 million, employed 35,000 people, and contributed thirty percent of all tax revenues to the state.
Sawyer’s voice fell silent when crime reporter Sandy Smith of The Chicago Sun-Times—armed with leaked Justice Department documents—published evidence of the mob’s Las Vegas skimming operations. Smith’s exposé made a mockery of the state’s gaming licensing requirements and enforcement practices.
In 1966, this situation, in addition to a depressed state economy, set the stage for the emergence of Governor Sawyer’s 44-year-old opponent, Paul Laxalt.
Laxalt was born in 1922 in Reno, the oldest of the six children of Dominique and Theresa Laxalt. His father was a sheep herder who immigrated to Reno from the misty valleys of the French Pyrenees and later moved his family to Carson City, Nevada’s capital but still a small, Ponderosa-like town. Working in the family’s restaurant as a young boy, Paul Laxalt was able to
obtain his political baptism by serving such people as long-time Nevada senator Patrick McCarran, the Democrat who ran Nevada’s bipartisan political machine.
A star athlete in high school, Laxalt later attended Santa Clara University, a Jesuit school in California, receiving his undergraduate degree in 1943. At that point, his mother had wanted him to go to a seminary to become a Roman Catholic priest, but Laxalt had more ambitious plans for his future.
After a tour of duty in the U.S. Army, serving in the South Pacific, he went to law school at the University of Denver, graduating at the top of his class in 1949. Meanwhile, he married Jackie Ross, the daughter of John Tom Ross, a powerhouse in Nevada’s Republican Party, who later became a respected federal judge. Fresh out of law school, Laxalt joined his father-in-law’s law firm.
Ross was Laxalt’s early mentor, introducing the young attorney to the intricacies of Nevada state politics. Wasting little time, Laxalt was elected district attorney of Ormsby County within a year of his graduation, but he left office after one term in 1954 to return to private practice. In 1962, he was elected lieutenant governor of the state, running on a ticket under the gubernatorial candidate, Rex Bell, a former cowboy movie star who had found Laxalt after approaching Judge Ross for advice on a possible running mate. During the campaign, however, Bell died. In the wake of his death, Laxalt, because of his inexperience, decided not to step up and seek the office of governor. He remained as the candidate for lieutenant governor and won by a large margin; the GOP’s last-minute replacement for governor lost to Democratic incumbent Grant Sawyer.
The following year, while simultaneously running Barry Goldwater’s presidential campaign in Nevada, Laxalt received the Republican nomination for the U.S. Senate. That November, he lost by just forty-eight votes to the incumbent Democrat, Howard Cannon, who was seeking his second term.
In 1966, while the embattled Sawyer, who was running for his third term, was waging his civil war against the Justice Department, Laxalt decided to challenge him for governor.
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