Dark Victory

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

  The disclosure created an enormous political flap in California. When Reagan was asked about his taxes, he claimed that he could not recall how much he paid. “I don’t know what my tax status was,” he said at another press conference. But, confronted with the Bee report, Reagan reacted angrily, calling it an “invasion of privacy” based on information that had been “illegally” obtained. When reporters continued to press Reagan for details, an aide instead explained that “he had paid no taxes because of business reverses on his investments.”*

  On November 13, 1979, at the New York Hilton Hotel—just ten days after the American hostages were taken in Iran—Reagan announced he was going to seek the Republican nomination for president. During his speech, Reagan said, “In recent months leaders in our government have told us that we the people have lost confidence in ourselves; that we must regain our spirit and our will to achieve our national goals. Well, it is true there is a lack of confidence, an unease with things the way they are.

  “But the confidence we have lost is confidence in our government’s policies. Our unease can almost be called bewilderment at how our defense strength has deteriorated.…

  “I believe this nation hungers for a spiritual revival; hungers once again to see honor placed above political expediency; to see government once again the protector of our liberties, not the distributor of gifts and privileges. Government should uphold and not undermine those institutions which are custodians of the very values upon which civilization is founded—religion, education, and, above all, the family. Government cannot be clergyman, teacher, and parent. It is our servant, beholden to us.…

  “I believe that you and I together can keep this rendezvous with destiny.”

  The overall chairman of Reagan’s presidential campaign was William Casey, the head of the SEC under President Nixon. An intelligence officer during World War II, Casey had been founder, general counsel, and member of the board of directors of Multiponics, an agribusiness firm. Originally called Ivanhoe Associates, Inc., the company was created for the purpose of industrializing scientific farming and owned 44,000 acres of farm land in Mississippi, Arkansas, Louisiana, and Florida. By midsummer 1970, the company had suffered huge financial losses. Doing little more than changing the company’s name to Multiponics, the corporation filed for bankruptcy in February 1971—owing $20.6 million to creditors, including Bernard Cornfeld, the head of Investors Overseas Services and an associate of international swindler Robert Vesco.*

  One of Casey’s partners in Multiponics was Carl Biehl, an associate of underworld figures in the Carlos Marcello crime family in New Orleans who had been attempting to penetrate waterfront operations on the Gulf Coast. Information on Biehl was based upon federal wiretaps in Washington and New Orleans which showed that Biehl had been working with the underworld since the early 1950s.

  When revelations about Biehl and other Multiponics improprieties surfaced, Casey claimed that his relationship with the firm was from a distance. However, during the Multiponics bankruptcy hearing in New Orleans on September 15, 1975, Casey testified, “I think the record will show that I had a great deal to say and a fair amount of influence in the basic decisions that the directors made.”1

  Repeatedly accused of having questionable business ethics, Casey was particularly attacked by Senator William Proxmire in 1971. “Mr. Casey,” Proxmire charged, “has cut corners when he considered it to be necessary to business profit. He has wheeled and dealed his way into a personal fortune, sometimes at the expense of his clients.… And he has made less than a complete and accurate disclosure of his activities to Congress.”

  In another case, Casey had represented SCA Services, a New Jersey–based waste disposal concern, in 1977 in an unsuccessful effort to head off an SEC action against SCA and some of its top officers. Although SEC attorneys proceeded with the complaint—which alleged the diversion of some $4 million in company funds for personal use by its officials—Casey negotiated a settlement of the case in which SCA neither admitted nor denied the charges.

  Later, a government informant told congressional investigators that SCA had “been involved with organized crime in the garbage business and now they’re moving into hazardous waste.” New Jersey State Police intelligence had identified at least three recent SCA employees as having “strong, deep-rooted connections to organized crime.” Thomas C. Viola, the president of SCA, had been forced out of the company by the SEC because of his own links to the underworld. Crescent Roselle, the manager of Waste Disposal, Inc.—which was taken over by SCA in 1973—had been personally involved with numerous Mafia figures and was later found murdered.2

  Casey’s assistant during the Reagan campaign was Max Hugel, an executive vice-president of the Centronics Data Computer Corporation of Hudson, New Hampshire. A portion of Centronics was owned until 1974 by Caesar’s World, the casino gambling company, then under federal investigation for alleged hidden mob ownership, when Hugel’s previous firm, Brother International Corporation, bought Caesar’s World’s holdings in Centronics. Also Centronics had had a consultancy relationship with mobster Moe Dalitz and his Las Vegas casinos. Hugel had also been involved in a pattern of improper or illegal stock market practices intended to boost the stock of the New York wholesale firm he had headed in the mid-1970s. He was alleged to have threatened to kill a former business associate and told another that he might be found “hanging by the balls.”3

  Hugel, who said that he had known Casey for twenty years, was in charge of organizing “ethnic, nationalities, occupational, religious, and other voting groups” for Reagan.

  Reagan’s principal competition during the Republican caucuses and primaries in 1980 was former CIA director George Bush. Although Bush spent over a month in Iowa, campaigning for the state caucuses, he edged Reagan by a mere 2.1 percentage points. Reagan had spent less than forty-eight hours there, concentrating on the New Hampshire primary instead—where he soundly defeated Bush by a two-to-one margin. Reagan continued to clean up in the primaries. By the time of the Republican National Convention, Reagan knew that he had the nomination in hand. The only mystery was the person whom Reagan would select as his running mate.

  One of the names on the short list of politicians being considered was Paul Laxalt. The public explanation of why Laxalt was not chosen was that he, like Reagan, came from the West and, on top of that, Nevada was an electorally insignificant state, ranking forty-third in population and with only four electoral votes.

  However, Reagan aide Jude Wanniski told a different story. “I was sitting having a beer at the Pontchartrain Hotel in Detroit [during the 1980 Republican convention],” Wanniski said, “and Chic Hecht, who is now the junior senator from Nevada but was then just a delegate, said, ‘My God, I just heard from somebody sitting next to me that Paul Laxalt was about to be indicted by a federal grand jury.’ And I said, ‘Aw, come on, Chic, that’s going on here because Reagan is picking his running mate.’”

  Wanniski explained that “during the two or three super-heated days of the convention … the various candidates, who were trying to be running mates, were spreading rumors about each other. And Laxalt was easy to slam because he’s from Nevada. No presidential nominee has ever picked a Nevada person because of the baggage you acquire when you pick one. Everyone in the whole world, the whole press corps, will swarm all over Nevada, writing about the Mafia.”4

  Whether Reagan would have chosen Laxalt is uncertain, but such talk about mob ties surely could not have helped the senator’s chances. Laxalt was not in attendance at the Republican convention when George Bush was selected as Reagan’s vice-presidential candidate. But even if the national GOP high command was unwilling to accept a divorced, former casino operator from Nevada as Reagan’s running mate, the citizens of Nevada saw no problem with Laxalt’s background.

  Laxalt’s 1980 campaign against Mary Gojack, a Las Vegas business-woman whom he defeated handily with fifty-nine percent of the vote, was nothing less than a Laxalt love feast. The disappoi
nted Gojack said, “The campaign against Paul involved a package of criticism that included taking big casino contributions and the fact that he had missed about a year’s worth of votes—because he had been working on Reagan’s campaign and at the same time was one of the highest earners on the speaking circuit. The gist of all of that was that he had really neglected the majority of Nevadans. There was an over-representation on his part of special casino interests here in Nevada.

  “The only people who really cared when I raised these issues were a minority of intellectuals and more thoughtful newspaper editors. Most people in Nevada think that Paul is a nice guy, that he couldn’t do anything wrong, and that outsiders are constantly trying to pick on him.”5

  Laxalt was easily returned to Washington in 1980 by the people of Nevada, who had agreed with his campaign slogan, “He’s one of us.” During the campaign, Laxalt raised a total of $1,126,826, outspending Gojack by nearly four to one. In addition to the tens of thousands contributed by legal casino operators, known associates of organized crime contributed nearly $50,000 to Laxalt’s two senatorial campaigns. The most controversial of these were two separate $1,000 contributions from reputed mobster Moe Dalitz, according to Laxalt’s own campaign records filed with the Federal Elections Commission.

  Laxalt apparently gave no thought to returning any of these questionable contributions—as did some politicians like Texas wheeler-dealer John Connally, in his unsuccessful bid for the 1980 Republican presidential nomination. Connally received a $1,000 contribution from Dalitz, but returned it, “for reasons I’m sure can be understood,” a Connally spokesman said.6

  “Moe Dalitz is a friend of mine,” Laxalt told The New York Times Magazine. “I’m not going to say to him now, ‘Get lost, you’re too hot.’ I don’t play it that way.”

  On August 27, 1980, Reagan kicked off his fall campaign by delivering a speech in Columbus, Ohio, before the Ohio Conference of Teamsters, which was run by Jackie Presser, an international vice-president of the union and the head of the Ohio Conference. Before his address, Reagan met in private for forty-five minutes with Presser and Roy Williams, another Teamsters vice-president.

  That same morning, the wire services, newspapers, radio, and television carried stories about Williams’s testimony before a Senate subcommittee the previous day, reporting that he had taken the Fifth Amendment twenty-three times when asked about his personal and financial dealings with top organized crime figures. Among the mobsters with whom Williams had been associated was New Orleans underworld boss Carlos Marcello, who had recently boasted, “We own the Teamsters,” according to a tape recording made in the course of the FBI’s BRILAB (bribery and labor racketeering) investigation.

  Williams had been twice indicted for embezzlement of union funds. He was acquitted in the first trial after a key witness was found shot-gunned to death; the second indictment in 1972 was dismissed by a federal judge who cited “procedural errors” during the investigation. In early 1974—in the midst of the sweetheart arrangement between the Teamsters and the Nixon White House—Williams was indicted for falsifying union records. But that charge, too, was aborted by the government.

  Just a few weeks before Williams’s testimony, a former Mafia figure turned government witness, Jimmy Fratianno of Los Angeles, stated before a federal grand jury that Presser had told him that he took his orders from James Licavoli, the boss of the Cleveland underworld. Presser, who started out as an organizer for the Culinary Workers Union, was the son of convicted labor racketeer William Presser—who was a close associate of Moe Dalitz, Allen Dorfman, and Sidney Korshak, all of whom Jackie Presser was now associated with.

  Soon after Reagan’s meeting with Presser and Williams, the Teamsters Union announced their support of Reagan’s candidacy for president—after Presser delivered a passionate speech on Reagan’s behalf before the union’s general executive board. The Teamsters were the only major union to endorse Reagan.*

  On Labor Day 1980, Reagan delivered another speech in Jersey City, New Jersey. Dressed in white shirtsleeves and with the Statue of Liberty casting a dramatic background, Reagan accused Carter of “betraying” American workers. “A recession is when your neighbor loses his job,” Reagan said. “A depression is when you lose yours. Recovery is when Jimmy Carter loses his.”

  The Jersey City extravaganza was engineered by Raymond J. Donovan, the executive vice-president of the Schiavone Construction Company of Secaucus, New Jersey, who had been brought into the Reagan campaign by Reagan’s attorney, William French Smith. Donovan had also raised $200,000 at a dinner for Reagan. The featured entertainer at Donovan’s dinner was Frank Sinatra. Through all of his fund-raising efforts, Donovan made $600,000 for the Reagan campaign.

  The Carter reelection campaign was having its troubles. A Carter administration official told reporter Elizabeth Drew, “The fund-raising structure is not unlike the Mafia. If you want to do business in that area, there is one person you have to deal with [Lew Wasserman].” According to Drew’s source, Wasserman “put Carter in a box.… If Wasserman doesn’t return your phone calls, you can’t do business in Los Angeles. Wasserman will put you through Chinese water torture before he’ll raise money for you, and he won’t let anyone else do it.”7 Also, it had been reported that Carter had had a falling out with Wasserman, who many suspected was really supporting Reagan.

  Following his stunning victory, Reagan made his first trip to Washington on November 18. His first official stop—accompanied by Vice-President–elect George Bush—was at the headquarters of the International Brotherhood of Teamsters, where he attended a closed meeting of the union’s executive board, which included the president, Frank Fitzsimmons, and vice-presidents Andy Anderson, Jackie Presser, and Roy Williams. According to reports of the meeting, Reagan invited the Teamsters high command to help him select his secretary of labor and other top administration officials.

  A few weeks later, Reagan and Edwin Meese, the chief of the president-elect’s staff, appointed Presser as a “senior economic adviser” to the transition team. An eighth-grade dropout who was then making over $350,000 a year as a union official, Presser boasted that he would screen potential appointees to “the Labor Department, Treasury, and a few other independent agencies.” Those departments would have jurisdiction in any future investigations of the Teamsters Union.

  Senator Sam Nunn of Georgia warned that the Presser appointment raised “serious questions of conflict of interest.” He added, “The appointment of Mr. Presser … raises several significant questions which should be addressed at the highest levels of the incoming administration.… Is it a violation of fundamental principles of government ethics for Mr. Presser to help organize the very department that has brought suit against him?”

  At the time, Presser and other former trustees of the union’s Central States Pension Fund were targets of several civil suits brought by the Labor Department, seeking reimbursement to the fund of $120 million in illegal loans made to Las Vegas casinos and to organized crime figures and their associates. The trustees had been forced to resign in 1976 because of those loans.

  Not long before Presser’s appointment to the Reagan team, New Jersey State Police officers testified before the state’s Commission of Investigations that Presser—who at that point had never been indicted, despite dozens of allegations of wrongdoing—was a contact for underworld bosses seeking loans from the union’s pension funds.

  When asked at a press conference about accusations that Presser had ties to organized crime, President-elect Reagan replied that he had not been informed of any such charges. “If that’s true,” he said, “that will be investigated and brought out.” Later, Meese contradicted his boss, saying that Presser had been investigated prior to his appointment but that the charges of mob connections had been found to be “mostly innuendo.”

  While the controversy over Presser continued, Reagan nominated Ray Donovan as secretary of labor. According to a report in The New York Times, Meese was told by Presser
in December 1980 that the Teamsters did not support Donovan and wanted Betty Murphy, a former chairwoman of the National Labor Relations Board, instead. After Meese conveyed that news to his boss, The Times reported, Reagan called Teamsters president Frank Fitzsimmons for verification. When the ailing Fitzsimmons said that Murphy was indeed the union’s choice, Reagan decided to withdraw Donovan’s nomination. No formal announcement was ever made, however, and Donovan’s name went to the U.S. Senate for confirmation.8

  What happened? According to a top Teamsters official, the union’s support of Murphy was a charade, and The Times story the result of a deliberate leak. “After the Presser thing with the transition team,” he explained, “there was a need to show that Reagan wasn’t just rolling over for us.… Donovan was our man all the way. Betty Murphy was just the smokescreen.”

  Given Donovan’s past dealings with the Teamsters, their support of him was no surprise. During his confirmation hearings, Donovan was accused of having made payoffs to a New York Teamsters official on behalf of his construction company. He was also accused of associating with top Teamsters racketeers like Salvatore Briguglio of Teamsters Local 560 in Union City, New Jersey. Briguglio—who, according to the government, was the killer of Jimmy Hoffa in 1975—had been murdered in 1978. Donovan was also charged with associating with William Masselli, a top Mafia leader in New York.

  An FBI memorandum detailing Donovan’s associations with organized crime figures and Teamsters toughs was hand-delivered to Reagan’s transition team the day before Donovan’s confirmation hearings began. It was addressed to Fred Fielding, Reagan’s conflicts-of-interest adviser. The memorandum said that numerous charges against Donovan had been “corroborated by independent interviews of confidential sources.” Also, Fielding was notified of a tape recording linking Donovan to organized crime figures. The FBI asked Fielding, “Do you want us to do any more?” Fielding said, “Not at this time.”9