Dark Victory

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

  Very truly yours,

  Sidney R. Korshak

  At the conclusion of the hearings, New Jersey gaming commissioner Joel R. Jacobson said, “In my judgment, the thirteen-year-long relationship of the Hilton Hotels Corporation with Sidney Korshak is the fatal link upon which I primarily based the conclusion that this applicant has not established its suitability for licensure in New Jersey.

  “In September of 1971, Hilton retained Sidney Korshak as outside counsel, an association which lasted until March 1984, when it was finally terminated under conditions that themselves raised questions of suitability.

  “Throughout that thirteen-year period, during which Mr. Korshak received over $700,000 in fees and expenses, the publicity and notoriety about Mr. Korshak’s unsavory reputation and associations with organized crime figures repeatedly swirled around his and Hilton’s head.”

  Jacobson also raised The New York Times series on Korshak written by Seymour Hersh and Jeff Gerth. The commissioner asked, “How did Mr. Korshak respond to such scurrilous allegations? Did he mount a vigorous challenge? Did he descend upon The New York Times by rightly demanding a retraction and apology? Did he launch a $50 million libel suit? No, he didn’t. He did nothing. And, in fact, Hilton Corporation executives responded to the information contained in the articles with a corresponding equanimity.

  “Mr. Barron Hilton telephoned Korshak to offer sympathy for the bad publicity.”

  Hilton had said that after reading the series on Korshak, he sent his lawyer a letter of condolence. “Knowing that he was depressed about this publicity …,” Hilton testified, “I dropped him a note. I personally am not aware about his guilt or association with the underworld. This is something that really I have no opinion about.”

  The commission rejected Hilton’s bid on February 28, 1985. The refusal was solely based on Hilton’s association with Sidney Korshak—whom the commission charged as being “a key actor in organized crime’s unholy alliances with corrupt union officials and its pernicious efforts to frustrate the rights of working men and women by infecting legitimate unions, to rob their members’ future by stealing the benefits they have earned in the past from honest labor.”

  Barron Hilton could only say, “I am shocked and stunned at the decision.” He also vowed to appeal, adding that he was “confident that the overwhelming evidence in support of licensing of the Hilton organization will ultimately prevail.”

  When asked to discuss the difference between the Playboy and Hilton cases—and their associations with Korshak—Jacobson said that three of the five members of the New Jersey commission had voted to license Hefner, because they found “nothing sinister or improper in the onetime retention of Sidney Korshak” by Hefner.

  Jacobson continued, “Hefner paid Korshak $50,000 seemingly simply for the purpose of having Korshak explain Hefner’s position to Wasserman, and to arrange a meeting with Wasserman, not Universal’s attorneys, to discuss a possible settlement of the lawsuit. However, Korshak’s mission failed. He apparently kept the $50,000, a high price … for simply trying to arrange a meeting and deliver a message. No commissioner drew the inference this was a venal influence-peddling scheme. Hefner testified that he engaged Korshak’s services only because he thought Korshak could influence Wasserman.…

  “Hilton clung to its relationship with Korshak until March 1984, long after everyone was fully aware of Mr. Korshak’s reputation and associations, and after warnings had been issued by both the Nevada Gaming Board and the Appellate Division of the New Jersey Superior Court.”

  On January 22, 1984, William French Smith announced that he was resigning as attorney general. Almost immediately, the White House announced that Smith would be replaced by Reagan’s chief of staff, Ed Meese, who had co-chaired the California Attorney General’s Organized Crime Commission that named Korshak as one of ninety-two underworld figures operating in the state.

  Viewed as a “tough cop,” Meese proved during the transition period to be more of a politician. His support of Jackie Presser’s appointment as a “senior economic advisor” to the Reagan transition team was viewed as nothing less than a political payoff for Teamsters support for Reagan during the 1980 election campaign. And, on December 5, 1980, before any charges had been alleged, Meese had met personally with FBI director William Webster, asking whether the bureau had any information that Ray Donovan was associated with organized crime.*

  Archibald Cox, the incorruptible chairman of Common Cause, who was fired as the Watergate special prosecutor by President Nixon, said that Meese was “blind to the ethical standards and obligations required of a public official,” and thus was “not fit” to be attorney general.

  Meese’s appointment was held up while special prosecutor Jacob Stein investigated charges that Meese had obtained federal jobs for friends who had helped him out of financial trouble. In particular, Meese had failed to disclose a $15,000, interest-free loan he received from a close friend. Another lingering concern was a $15,000 investment by the Meese family in a firm that invested $100,000 in a Nevada slot machine business. Because the company received funds from the Small Business Administration, it was prohibited by law from investing in any gambling enterprise.

  Meese was eventually cleared by Stein of any criminal wrongdoing and was confirmed by the Senate, 63–31, to become attorney general on February 23, 1985—over a year after Smith had announced his resignation.

  Earlier, in late 1983, Meese met with Teamsters president Jackie Presser—who, like Korshak, was also receiving hands-off treatment by the Reagan administration—to discuss the union’s problems with the deregulation of the trucking industry.†

  At the time of the Meese-Presser meeting, Presser was the target of a federal investigation in a $165,000 union embezzlement case in Cleveland. Two of Presser’s associates, Allen Friedman and Jack Nardi, either had been convicted or had pleaded guilty for their roles in the scheme. Friedman was also Presser’s uncle and was plea-bargaining with the government in return for his testimony against his nephew.

  On May 31, 1984, federal attorneys in Cleveland decided to ask approval from the Justice Department for a criminal indictment against Presser. A week later, it was revealed that Presser had been an informant for the FBI since the 1970s. Suddenly, the case against Presser stalled.

  On October 1, 1984, Ray Donovan was indicted by a New York grand jury on charges of grand larceny and fraud in connection with the city’s subway project, on which his construction company was a major contractor. Donovan pleaded innocent but immediately took a leave of absence from his Cabinet position.

  On February 26, 1985, William Webster and the FBI—working in cooperation with the New York Organized Crime Task Force, headed by Ronald Goldstock—arrested the heads of the five Mafia families in New York, as well as four of their top aides. The nine mobsters were charged with fifteen counts of conspiracy and operating “through a pattern of racketeering activity,” which included murder, labor racketeering, and extortion, according to the indictment.

  On April 23, 1985, two months after Meese’s confirmation and a month after Ray Donovan resigned as Secretary of Labor,* Presser—who had promised to lead the Teamsters into a new era of responsible unionism—took the Fifth Amendment fifteen consecutive times before the President’s Commission on Organized Crime, refusing to answer questions about his personal finances, his ties to organized crime, his union goon squads, and an array of other activities. That same day, a federal judge in Chicago ordered former Teamsters general president Roy Williams to begin serving time in a federal prison hospital† for conspiring to bribe Senator Cannon.

  In late July, Justice Department officials testified before a federal grand jury in Cleveland, which was investigating Presser. They convinced the grand jury to cease its investigation of Presser on the basis of his role as a federal informant. The decision not to prosecute Presser was made by the chief of the Justice Department’s Criminal Division, Stephen S. Trott, a former deputy district attorney in L
os Angeles, who had later become the U.S. attorney in Los Angeles.

  Attorney General Meese insisted during an appearance on ABC’s Good Morning America on August 6, 1985, that he had not taken part in the decision to drop the case against Presser, “because we wanted to avoid any possibility of anyone claiming that there was any political interference,” Meese said. “It’s very clear [that] at no time was there any political influence or any undue influence.”

  On August 25, The Washington Post reported that the FBI had authorized Presser “to make payments to ‘ghost employees’ on the union payroll and did not inform the Justice Department of the arrangement, thereby dooming the department’s thirty-two-month investigation of Presser.” The report added that FBI Director Webster was “not told that the FBI was not only using Presser as an informant, but was also allowing him to engage in criminal activity.…”*

  As a consequence, Presser’s uncle was released from prison—without ever testifying against Presser as he had offered to do. Later, the charges against co-conspirator Jack Nardi, as well as his guilty plea, were also dropped.

  Another surprise came when former Teamsters president Roy Williams flipped and turned state’s evidence against several former colleagues in the underworld. Williams’s testimony came during the trial in Kansas City of fifteen mobsters accused of skimming at several casinos in Las Vegas. The indictments had come as a result of an FBI investigation that began in 1978. Williams, who had been the third Teamsters president imprisoned for corruption in office, was the first to testify against his former cohorts.

  Before his testimony at the trial, Williams was interviewed by Stephen M. Ryan, deputy counsel of the President’s Commission on Organized Crime, on September 16. Ryan asked Williams about Presser’s ties to the underworld. Ryan asked, “Would you describe your conversation with Jackie Presser that indicated to you that at times he had either a relationship or a problem with the mob?”

  “He was in San Francisco one time after he became vice-president,” Williams replied, “and I was getting a lot of static, as the president of the union. ‘Why all of the big thugs around Jackie Presser?’ And I’m not arguing that they were good guys. I don’t know whether they was [sic] connected with anything or not, other than they were members of the Teamsters. And I got Jackie in a corner and asked him, because at least I was trying to find an answer for some of these questions.

  “And he told me that the Mob was split in Cleveland, and he’s afraid that he picked the wrong side.”

  During the interview, Williams also confirmed Fratianno’s previous statements that Sidney Korshak controlled Teamsters vice-president Andy Anderson. “And Sidney Korshak is an individual who was believed, by you, to be a person associated with the Mob?” Ryan asked.

  “Yes,” Williams replied.

  “Or a member?”

  “Yes.”

  When asked by The Washington Post in mid-November 1985 whether Presser would continue to have a relationship with the Reagan administration,* Edward J. Rollins, the Reagan/Bush campaign director in 1984, replied that Presser was “a very good friend and will remain that.” He added that Presser “put his money where his mouth was.”28

  On November 27, the Las Vegas skimming trial continued in Kansas City with the testimony of former Mafia boss Angelo Lonardo of Cleveland, who, like Williams, had also become a federal witness. Lonardo told the court that he had helped persuade Chicago’s top Mafia leaders Joey Aiuppa and Jackie Cerone to support the Presser bid for the union presidency in 1983. When the Chicago mobsters balked at the idea, another Cleveland mob leader, Maishe Rockman, responded, “Jackie Presser is okay, and I can handle him.”

  According to an FBI summary report, dated October 28, 1983, “Rockman told Lonardo a story that was related to him by Presser. Presser was in Washington, D.C., at a gathering attended by Roy Williams, the President of the United States, the First Lady, Jackie Presser, and Presser’s wife. When the President greeted Williams, he was merely cordial to him. When the President greeted Jackie Presser, both he and the First Lady hugged Presser and showed a great deal of personal attachment to Presser. The First Lady kidded Presser about his need to lose weight. This was all done in full view of Roy Williams, who, according to Presser, was visibly hurt.”

  Presser was to be subpoenaed to testify at the skimming trial but told the court through his attorney that he would take the Fifth Amendment if forced to take the stand.

  Two weeks later, President Reagan appointed a top associate of Presser, Charles L. Woods, a California Teamsters official, to fill a vacancy on the National Mediation Board at a salary of $72,300 a year. The board was responsible for settling labor disputes in the railway and airlines industries. Presser had personally recommended Woods to Reagan.

  A 977-page pretrial deposition by Senator Paul Laxalt* in October 1985 was leaked to the press during the discovery process in Laxalt’s $250 million libel suit against the McClatchy Newspapers of California. In 1983, Pulitzer prize–winning reporter Denny Walsh of McClatchy’s Sacramento Bee accused Laxalt’s casino, Ormsby House of Carson City, of being involved in a skimming operation with organized crime figures. Refusing to be intimidated, the McClatchy Newspapers countersued. Under questioning by McClatchy’s attorneys, Laxalt admitted to be either associated with or to have accepted campaign money from Delbert Coleman, Morris Dalitz, Allen Dorfman, and Ruby Kolod.

  On Sunday, January 12, 1986, an article appeared under President Reagan’s byline in The New York Times Magazine entitled “Declaring War on Organized Crime.” Written by Reagan aide Tony Dolan, the article celebrated the “success” of the Reagan administration’s war on the underworld. Reagan recounted some of his own experiences:

  [Organized crime’s] essential characteristics [are] not all that different from the face of organized crime a generation or two ago—a point on which I can cite personal experience. Like all too many Americans, I’ve seen the mob at work.

  In the early 1940’s, along with many members of the Hollywood community, I watched with deep concern as organized crime moved in on the motion picture industry, largely through a takeover of the stagehands’ and projectionists’ union, the International Alliance of Theatrical Stage Employees and Motion Picture Operators [IATSE], and an attempted move on the union to which I belonged, the Screen Actors Guild.… But through the commitment and efforts of people like my friend Robert Montgomery, then president of SAG, the mob’s attempted infiltration failed.

  Without ever mentioning the Teamsters Union or Las Vegas, Reagan added, “There will be no détente with the mob. It’s war to the end. We mean to cripple their organization.”

  Two days after the article was published, the President’s Commission on Organized Crime issued an interim report criticizing the Reagan administration for its close ties to the Teamsters Union, writing that “the appearance of impropriety” had been created. The Washington Post, in an editorial the following day, wrote, “The commission did not charge—and no evidence has been produced to show—that this administration has been corrupted by its ties to Mr. Presser.… [However,] it creates … the appearance of wrongdoing that leads to an erosion of public confidence in the government’s commitment to fight organized crime. The Presser case will hound the administration until a full explanation of this episode is made.”

  The commission report shook up the White House and the Justice Department so badly that Attorney General Meese called a press conference to defend the White House–Teamsters relationship, saying that he did not see anything improper about it. Meese added that “at no time have I, nor, to my knowledge, any member of the administration, done anything which was designed to assist or aid anyone involved with organized crime. The fact that people did meet with labor leaders was certainly not designed or intended to in any way interfere with the proper investigation of organized crime.”

  Despite the commission’s criticism of the White House ties to the Teamsters, its 222-page final report, entitled “The Impact: Organized C
rime Today,” was a disappointment when it was released in April 1986. Over half of the eighteen commissioners filed supplemental views or dissenting opinions on the report. In its defense, Chairman Kaufman said that the commission had “directed its searchlight on a few dark places, which will receive more attention than in the past.” However, dissenters on the commission charged that too many “dark places” had been ignored. “Poor management of time, money, and staff has resulted in the commission’s leaving important issues unexamined.… The true history of the commission … is a saga of missed opportunity.”

  One commissioner was asked why Korshak’s name had not appeared in the final report. He replied, “That’s a sensitive area. Korshak did come up in a couple of interviews and in one of the staff reports. But there was dissension about him throughout the life of the commission.… Several of us wanted to highlight him, particularly since he played such an important role in the Hilton hearings in Atlantic City. But it was just not meant to be. There were forces that didn’t want Korshak touched. So the commission just rounded up the usual suspects.”

  Another commissioner went further, citing a nine-hour meeting prior to the release of the final report. “Leaving Korshak out of the final report was no accident. A conscious decision was made to leave out any reference to him, and we were told about it at that meeting. It was too late to do anything about it. We [the commissioners] really never had a chance to see the final version of the report before it was released.… I felt that there was pressure to keep Korshak out. And where that pressure came from, well, your guess is as good as mine.”

  As American conservatives become more and more disenchanted with the prospects of a George Bush or a Jack Kemp as their next presidential candidate, the search continues for another Ronald Reagan. No less than three prominent newspaper columnists agreed that Paul Laxalt is being seriously considered to champion the Republican Party in 1988. Lou Cannon wrote, “There are conservatives who see Laxalt as a potential successor to Reagan, despite the inherent difficulties of being a senator from Nevada.”29 Mary McGrory revealed that Laxalt “has told those urging him to get into the race that he will address the question when he gives up the chairmanship of the Republican Party [in 1987]. But he’s thinking about it, and the right is yearning.”30 George F. Will stated that Laxalt was “waiting in the wings—not just waiting, actually pacing restlessly and pawing the dust.”31