Dark Victory

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

  Although Ferraro characterized such reports as “lies,” the evidence against her mounted and severely crippled any chance Mondale had of unseating the popular incumbent.*

  The Republican Party, headed by Senator Paul Laxalt† and his Nevada protégé, Frank J. Fahrenkopf, never made an issue out of Ferraro’s links to the Mafia. That decision might have been more self-serving than politically tasteful, because the refusal to make Ferraro’s associations a campaign issue also made such ties to Reagan and members of his administration moot.

  “There was an unspoken understanding,” said a top aide to the Mondale-Ferraro campaign, who refused to go into any further detail. “It was just one of those ‘I’m okay and you’re okay’ things.”

  After the Congress passed Reagan’s anticrime package on October 10, Reagan’s attack on the Democrats for foot-dragging on that issue also became moot. To demonstrate that Reagan was doing something about the Mafia, the Justice Department indicted the entire leadership of the Colombo crime family in New York. The fifty-one-count indictment, naming eleven leaders of the group, was timed just a week before the national election.

  The cavalier treatment by the Reagan administration of the serious national organized crime problem, as well as the blatant underworld ties of several of the president’s top advisers, casts a long shadow over the sincerity and the willingness of this administration to combat organized crime in America. The end result will likely be a further tolerance of these activities by the general public.

  The questions raised here do not necessarily allege guilt by association within the Reagan administration. However, there are legitimate reasons to question these patterns of association, particularly when President Reagan claims to be taking the hard line on the organized crime problem in America.

  SIDNEY KORSHAK

  Based in Washington, D. C., and a home for scholars, the American Enterprise Institute is a conservative think tank used extensively by the Reagan administration. In 1973, the Institute published an anthology of essays on the problem of crime in America. Entitled The Economics of Crime and Punishment, it included the chapter “A Defense of Organized Crime?” written by James M. Buchanan, a professor of economics at the Virginia Polytechnic Institute and State University.23 Buchanan argued that organized crime was preferable to disorganized crime because a degree of control and discipline was implicit with organized crime. Conceding that such a suggestion could be misunderstood, the author wrote:

  Emotions may be aroused by the thought that one implication of the whole analysis is that governments should “deal with the syndicate,” that law enforcement agencies should work out “accommodations” or “arrangements” with those who might organize central control over criminal effort.… It merely suggests that there may be social benefits from the monopoly of organized crime. Policy implications emerge only when we go beyond this with a suggestion that government adopt a passive role when they observe attempts made by entrepreneurs to reduce the effective competitiveness of criminal industries. In practice, this suggestion reduces to an admonition against the much-publicized crusades against organized crime at the expense of enforcement effort aimed at ordinary, competitive criminality.

  A very strong argument can be made that this belief was shared by the Reagan administration, supported by Reagan’s personal history and those of his top aides, as well as his administration’s shabby performance in this area. Although no official close to the president had admitted it, the Reagan administration appeared to have divided people associated with organized crime into two categories: tolerable mobsters and intolerable mobsters. Those gangsters’ associates who had relationships with Paul Laxalt, Ray Donovan, Jackie Presser, Roy Williams, William Casey, Frank Sinatra, Walter Annenberg, and the members of Reagan’s Kitchen Cabinet were apparently viewed as tolerable mobsters. Those with no political connections to this administration were intolerable.

  From all indications, Sidney Korshak* was a tolerable organized crime figure to the Reagan administration. Since Reagan was inaugurated, no one in the Justice Department or any other federal agency has laid a glove on him. Although the President’s Commission on Organized Crime scheduled hearings to be held in Los Angeles, where Korshak was sure to be a major target, the planned trip was aborted at the behest of the Justice Department, which ostensibly did not want to prejudice the drug trial of auto executive John DeLorean, who was later acquitted.

  According to charges brought by Jerry Van, a former mob legbreaker turned federally protected witness, members of the Los Angeles Strike Force Against Organized Crime “delayed or quashed grand jury action” against underworld figures in California. The investigation of Van’s charges had been prompted by Congressman Charles Rangel (D-NY), who had received information about the alleged fixes while serving as the chairman of the U.S. House Select Committee on Narcotics Abuse and Control. According to one report, Van “made allegations of wrongdoing in the administration of cases by the organized crime strike force in Los Angeles.… The allegations were general in nature,” but it was determined by mid-level Justice Department employees “that there was smoke there.”24

  Many frustrated law enforcement observers who have realized the damage he had already done and how dangerous he continued to be feared Korshak was being protected. “It’s not like Korshak operates in some specific area, like one particular business or labor union,” said a former Justice Department official. “If that was so, the government could move in on that target and disrupt his interests. Korshak is unique, because he has the ability to deal with anybody, to fix anything. For that reason, Korshak himself has to become the target. And this administration doesn’t seem to be interested in that idea at all. I honestly believe that their punch is being pulled.”

  Former California mobster turned government witness Jimmy Fratianno was deposed in Los Angeles on behalf of Penthouse on January 15, 1981.* The magazine had been sued by organized crime figure Moe Dalitz for a 1976 story published about Dalitz’s La Costa Country Club, which has been frequently referred to as a playground for the top figures in organized crime.

  “Are you familiar with a man by the name of Sidney Korshak, a lawyer?” Fratianno was asked.

  “Yes, sir.”

  “Through which [crime] family?”

  “The Chicago family.”

  “You have told us today that the present head of the Chicago family is Joey Aiuppa and under him is Jack Cerone. Now, in the hierarchy of that family and how it works, is Korshak a member of LCN [La Cosa Nostra]?”

  “No, he is not, sir.”

  “How would Korshak deal with Joey Aiuppa? Who would control whom to get to Korshak?”

  “Well, he has a man he goes to.”

  “Who is that?”

  “Gussie Alex.…”

  “So Korshak would deal with Gussie Alex. Who would Gussie Alex deal with?”

  “Well, he deals with Joe Batters.”

  “That is Joey Aiuppa?”

  “No. Joe Batters used to be the boss, [Tony] Accardo. You see, that is his man for years, Gussie Alex. This is what I was told. Now, I don’t know if it is true or not.”

  “Who told it to you?”

  “[Johnny] Roselli said something like that, him and Joe Batters. In fact, Joe Batters brought Gussie Alex into the picture when he was the boss of the LCN, sir.…”

  “Who in turn controlled Korshak?”

  “The Chicago family. Gussie Alex and the Chicago family.”

  The Chicago Crime Commission reported that Alex was still in “a key position of leadership … who has served his organization well and now desires to put some distance between himself and the ordinary problems of his group. Alex still maintains his condominium on Lake Shore Drive in Chicago, but spends most of his time at his other condo on Galt Ocean Mile in Fort Lauderdale, Florida. There is really no way the mob is going to let Alex simply fade away. His contacts among politicians, public officials, labor leaders, and members of the judiciary are simply too valuable to
waste.”25

  Fratianno explained that he had met Korshak in 1975 at the Bistro restaurant in Beverly Hills, where they tried to work out a dispute between two Teamsters that was causing Fratianno some business problems. When the problem was not resolved, Fratianno returned to Korshak with reputed syndicate hitman Mike Rizzitello. At that second meeting, there was no attempt to intimidate Korshak beyond the presence of Rizzitello. Later, however, Rizzitello accidentally ran into Korshak on the street. According to Fratianno, the chance meeting scared Korshak, and he complained to Gus Alex that he was being muscled. Alex then told Accardo, who told Aiuppa.

  Mafia figure Tony Spilotro, who oversaw the Chicago underworld operations in Las Vegas, then called Fratianno and asked to meet with him and Rizzitello. The three men had a sitdown with Accardo, Aiuppa, and Cerone, the underboss. Fratianno was told in no uncertain terms that he was no longer to have any further contact with Korshak—“because it is putting heat on him,” Aiuppa explained. “Now, if you had anything that you want from Sid Korshak, come to us. He … has been with us thirty years. We don’t want him loused up.”

  “Had Korshak reported that a dead fish had been left in his mailbox?” the Penthouse attorney asked Fratianno.

  “Yes, sir.”

  “Does a dead fish have a special meaning in the world of the LCN?”

  “Well, it means that somebody is going to kill him.”

  Korshak later came back to Fratianno and asked him if he knew who had left the dead fish. When Fratianno said he did not know, Korshak asked him to find out, which Fratianno never did.

  On January 11, 1982, Playboy publisher Hugh Hefner was questioned under oath by the New Jersey Casino Control Commission about his 1978 fee of $50,000 to Korshak for the purpose of making peace with Wasserman over a copyright suit Universal had filed against Playboy. Hefner was trying to get a license for his new hotel/casino in Atlantic City. Dressed in a dark blue suit, a white shirt, and even a tie, Hefner said that he thought Korshak would be a good mediator between him and Wasserman. Although he said he regretted the entire matter, he thought there had been “nothing inappropriate” about it. New Jersey Deputy Attorney General James F. Flanagan III described Hefner’s $50,000 as a payment to Korshak to “whisper in Lew Wasserman’s ear.”

  Although three of five commissioners voted to grant Hefner and Playboy Enterprises, Inc., a gaming license, the law required approval of four of the commissioners. The commission found that Hefner was “unsuitable for licensure and association with a licensed New Jersey casino.” However, the commission—which did not consider the Korshak incident alone the disqualifying factor—indicated that it would grant a license to Playboy’s partner, Elsinore, with the condition that Hefner be disassociated from the project.*

  In April 1983, the U.S. Senate Permanent Subcommittee on Investigations received evidence that the international presidents of the Culinary Workers Union (also known as the Hotel Employees and Restaurant Employees International Union) and the Laborers were “handpicked” by Chicago Mafia, leader Tony Accardo. The information was provided by Joseph Hauser, a convicted insurance swindler who had flipped and turned state’s evidence. After being convicted with former U.S. attorney general Richard Kleindienst in a multimillion-dollar insurance swindle involving the Teamsters Central States Pension Fund, Hauser had allowed himself to be used as the hub of several FBI sting operations during the Carter administration that yielded a pending indictment against Santos Trafficante of Florida and the bribery conviction of Carlos Marcello of Louisiana. Hauser had also received thinly veiled admissions on tape from Marcello during the FBI’s BRILAB sting operation that he had been directly involved in the assassination of John Kennedy twenty years earlier.

  During his testimony before the subcommittee, Hauser stated that Korshak was Accardo’s contact to these corrupt union bosses from the Culinary Workers and the Laborers. Hauser explained, “Organized crime leader Tony Accardo, who I have known for many years as Joe Batters, told me on several occasions that he had sent Korshak to Los Angeles to represent the mob there.”26

  Prior to Hauser’s testimony, Korshak had been sent a letter from the subcommittee, informing him that the Senate wanted him as a witness. Responding for Korshak was his attorney, Harvey Silets, who wrote: “After consultation with Mr. Korshak and a careful review of the contents of your letter, we wish to advise you, on behalf of Mr. Korshak, that he will not provide testimony, with or without a subpoena, based upon his constitutional privilege against self-incrimination.”27

  Hedging his bets between labor and management, Korshak had done legal work for the Hilton Corporation since the early 1960s on a case-by-case basis. After Conrad Hilton’s son, Barron Hilton, took control of the business, Patrick Hoy, a vice-president of the General Dynamics Corporation,* who was a close friend of both Hilton and Korshak, recommended that Korshak be kept on retainer by Hilton.

  Hilton took Hoy’s advice and retained Korshak. Between 1971 and 1984 Korshak had made over $700,000 from Hilton alone. Korshak was chiefly responsible for handling some tax and real estate matters, as well as Equal Opportunity cases. Because of Korshak’s association with the Culinary Workers Union in Las Vegas, Hilton claimed to have considered Korshak an adversary in Las Vegas labor relations cases.

  Hilton had begun construction on a $270 million hotel/casino in Atlantic City, scheduled to open in May 1984. Hilton applied for its casino license from the New Jersey Casino Control Commission. During the commission’s preliminary inquiry, state investigators discovered Hilton’s links to Korshak. In a report filed with the commissioners, the staff stated, “It is quite evident that over the years [Korshak] has made good contacts with very powerful politicians.… Korshak’s list of past and present associates reads like a who’s who of prominent southern Californians.…”

  The previous March, after Hilton officials realized that their Korshak connection could cause them some licensing problems, Hilton fired Korshak. Hilton, through its legal counsel, sent Korshak a letter, stating: “I appreciate very much your understanding regarding the action we feel we’re forced to take in dissolving the longstanding relationship between you and Hilton Hotels Corporation. As I stated in our telephone conversation, we very much regret this situation. We feel, however, that we cannot risk jeopardizing in any way the huge investment we have committed to New Jersey.…

  “You can rest assured that you continue to be held in high esteem and affection by those of us at Hilton who have had the privilege of having you as a friend and adviser.”

  In the midst of the opening round of testimony in July 1984, Barron Hilton received a barrage of hostile questions from the commission on his association with Korshak. Hilton said, “I wish to hell we would have never hired him, because I can see it’s a very distinct problem here in the minds of you gentlemen about this fellow’s integrity.”

  Questioned again about Korshak in November, Hilton stated, “I want to say that I certainly appreciate the concern that this commission has that any applicant be free of any type of association [with] an individual such as Mr. Korshak, and I can say that today we would not be involved in any fashion with Mr. Korshak, and as you are aware, we, this latter year, discontinued our relationship with the individual, and I have to agree with you that it should have been done before, rather than now.”

  Corporate officials added that had they known that Korshak was going to take the Fifth before the Senate Subcommittee on Investigations they “would have fired him on the spot.”

  Korshak, who was feverishly loyal to his friends and expected to be treated in kind, was livid when he heard about Hilton’s statements about him. In retaliation, the secretive Korshak, who rarely puts anything in writing, wrote Barron Hilton a letter, dated November 29, 1984.

  Dear Sir:

  I find it extremely difficult to address you in any other fashion.

  I read with interest your disparaging remarks about me to the New Jersey Gaming Commission. When did you discover that I was unworth
y of being an attorney or that I was associated with characters that shocked your most decent sensibilities?

  I have in my possession a number of letters from your staff extolling my virtues as an attorney and telling me how happy the hotels were with my representation of your corporation. Those letters were also sent to your office for your personal perusal.

  I am sending them to you again today.

  Was I in a sorry plight with you when I met you in New York and worked out a deal with Charlie Bluhdorn of Gulf & Western [who died in February 1983], giving you their airport hotel and the Arlington hotel to manage without you investing one penny, despite your offer to pay Gulf & Western some $10,000,000 for a one-half investment in these hotels? If you recall, you will remember that I never billed you for my services in these matters. My fee ordinarily would be a very high one. Do you remember calling me in Las Vegas at 6 one morning while you were with Kirk Kerkorian and Frank Rothman [Kerkorian’s chief executive officer at MGM-United Artists] for me to ask the [Las Vegas] unions involved not to strike you, namely Dick Thomas of the Teamsters and Bob Fox of the Engineers? As you well know, there was no fee involved.

  You have caused me irreparable harm, and as long as I live I will never forget that. When did I become a shady character? I imagine when you were having difficulty getting a license in Atlantic City.