By JEFF GERMAN
LAS VEGAS REVIEW-JOURNAL
Benjamin “Bugsy” Siegel had
been at the helm of the Flamingo for only six months in June 1947 when he was
killed in a hail of gunfire at his girlfriend’s Beverly Hills, Calif., home.
But his vision for the
Flamingo, the first resort-style hotel on the Strip, was the beginning of a
50-year relationship between Las Vegas and traditional organized crime that
helped define “Sin City”and turn it into one of the world’s top tourist
destinations.
“The general perception on the
part of the public is that Las Vegas and the mob have been inextricably linked,
and I don’t think it will ever be extricated,” former longtime state archivist
Guy Rocha says.
Groundbreaking books such as
“The Green Felt Jungle” in 1963, which revealed the mob’s early grip on the
city, and popular movies such as “The Godfather” in 1972 and “Casino” in 1995
enhanced this perception through the years.
So did the buzz on the Strip
over the Rat Pack, led by headliner Frank Sinatra and his associations with high-profile
underworld figures.
In reality, Las Vegas was
regarded as an “open city” for more than two dozen Mafia families across the
country. Many had representatives in Las Vegas for decades, with Chicago being
the most dominant.
The colorful mob era has long
since passed, but Rocha believes it should not be forgotten.
“We owe a debt of gratitude to
the Mafia for developing Las Vegas, and there’s nothing to be ashamed of,”
Rocha said. “It was the mob that moved (Las Vegas) forward, with the good, the
bad and the ugly.”
Siegel, a hit man and trusted
associate of Charles “Lucky” Luciano, who organized the Mafia from New York
into a national crime syndicate, had financed the Flamingo with the help of the
mob’s money man, Meyer Lansky.
Kefauver comes to Las Vegas
Historians believe the
flamboyant Siegel may have been killed because he was stealing money from the
casino operations. Journalistic photos of his bloodied, bullet-riddled body
lying in the Beverly Hills home are a stark reminder of what can happen when
the mob is crossed.
Lansky brought in new
underworld associates to run the Flamingo after Siegel’s death, and the resort
became the model for a string of mob-backed joints, including the Thunderbird
and Desert Inn, that later sprang up on the Strip.
“You might say it was a perfect
storm in a good way for Las Vegas,” says Michael Green, a College of Southern
Nevada history professor who has been chronicling the mob’s presence in Las
Vegas. “There were people running casinos who weren’t in the mob but didn’t
have the money to expand, and there were people in the mob who had the money
but didn’t know how to run a casino.”
It didn’t take long for the
mob’s involvement in Las Vegas casinos to catch the attention of U.S. Sen.
Estes Kefauver, a politically ambitious Democrat from Tennessee who was holding
hearings across the country on organized crime.
Kefauver brought his committee
to Las Vegas for a Nov. 15, 1950, hearing at the old federal building downtown,
now the site of the National Museum of Organized Crime and Law Enforcement,
better known as The Mob Museum.
Green, an advisory council
member and researcher for the museum, said Las Vegas was proof to Kefauver and
other anti-mob crusaders that organized crime was bad and shouldn’t be running
a big business.
One of the mob-connected
figures the Kefauver committee wanted to question under oath was Moe Dalitz, an
old-time bootlegger and racketeer from Cleveland who had led the group of
investors that developed the Desert Inn.
Dalitz, who had strong ties to
Lansky, managed to duck the committee, but later wound up testifying in
Detroit, where he also had business interests.
The televised Kefauver hearings
forever tied Las Vegas to the mob in the eyes of the American public and
inspired reforms and organized crime prosecutions elsewhere in the country,
Green said.
But it did not slow the growth
of gambling in Nevada, the only state where it was legal, and the mob’s
influence in Las Vegas.
Gambling lifeblood of organized
crime
The 1950s brought the onslaught
of more mob-connected casinos on the Strip — the Sahara, Sands, Dunes, Riviera,
Tropicana and Stardust.
Several were financed or
refinanced with millions of dollars in loans from the mob-dominated Teamsters
Central States Pension Fund.
Dalitz, who was close to Teamsters
Union President Jimmy Hoffa at the time, played an instrumental role in helping
secure some of these loans and would become a pillar of Las Vegas society until
his death in 1989, even once being named humanitarian of the year for his many
philanthropic contributions. Dalitz cemented his ties to the community by
building Sunrise Hospital and the Desert Inn Country Club. Hoffa’s
disappearance in 1975 remains one of the country’s biggest mysteries.
By 1960, with the mob’s rise on
the Strip, state gaming regulators created the notorious List of Excluded
Persons, more commonly known as the Black Book of “undesirables” banned from
casinos, to keep a closer eye on the mob. In the first wave of inductees,
regulators placed the names of 11 underworld figures, including then-Chicago
Mafia boss Sam Giancana and Kansas City crime lords Nick and Carl Civella, into
the book.
Months later after President
John F. Kennedy was elected, his younger brother Attorney General Robert
Kennedy went on a crusade against the mob nationwide and sought to rid Las
Vegas casinos of its influence.
“Bobby Kennedy believed
gambling was the lifeblood of organized crime, so to throttle organized crime
he wanted to go after the casinos,” said David Schwartz, director of UNLV’s
Gaming Research Center.
According to Green, the
attorney general wanted to deputize a slew of state gaming agents to allow them
to participate in massive Justice Department raids on the Strip.
Fearing a public relations
nightmare for the state, then-Gov. Grant Sawyer persuaded the Kennedys to hold
off on the raid, but the attorney general proceeded with his crackdown, which
included secret wiretapping at casinos.
Little came of Kennedy’s
anti-mob campaign, and the casino industry continued to grow with financing
from the Teamsters pension fund. Caesars Palace opened with Teamsters money in
1966 under the tutelage of casino visionary Jay Sarno. Two years later, Sarno
opened Circus Circus.
“It basically was a flawed law
enforcement strategy,” Schwartz said. “They thought they would get people to
flip, but as it turned out, people were more afraid of the mob bosses than they
were of the Justice Department.”
Enter Anthony Spilotro
In the late 1960s, billionaire
recluse Howard Hughes did what Kennedy was unable to. Hughes changed the face
of gaming when he bought the Desert Inn from its mob-connected owners and
several other casinos on the Strip.
Hughes’ foray into Las Vegas
led to corporate America’s push to take control of the casino industry from the
mob.
By 1969, the Nevada Legislature
passed a law easing the way for corporations to own casinos, and a year later,
Congress passed the Racketeer Influenced and Corrupt Organizations Act, giving
the Justice Department more ammunition to fight the close-knit crime
syndicates.
“The RICO Act made it easier to
go after the mob, and the Justice Department put more effort into going after
them,” Green said.
For the first time, the Justice
Department was allowed to use criminal statutes to investigate Mafia families
as ongoing criminal enterprises. Organized crime strike forces were created in
major American cities, including Las Vegas, to focus solely on the mob’s
activities.
But organized crime was far
from losing its foothold on the city.
In 1971, the Chicago mob sent
Anthony Spilotro to Las Vegas to take over loan-sharking and other street
rackets from Marshall Caifano, one of the 11 original Black Book members.
Spilotro was also instructed to
keep an eye on Frank “Lefty” Rosenthal, a vocal longtime oddsmaker who was in
charge of the crime family’s skimming operations at the Stardust and Fremont
casinos. Money was being taken directly from count rooms and sent back by
courier to mob bosses in Chicago, Kansas City, Milwaukee and Cleveland, right
under the noses of Nevada gaming regulators.
The crime syndicates installed
San Diego businessman Allen R. Glick at the helm of the Stardust and Fremont as
a licensed frontman who secretly answered to Rosenthal and Spilotro. At the
Tropicana, Joseph Agosto was given the job of entertainment director to quietly
oversee skimming for the Kansas City mob.
Breaking mob’s hold
Spilotro, a “made member” who
rose through the Chicago mob’s ranks as an enforcer and hitman, ran his Las
Vegas rackets from the gift shop of Circus Circus until authorities forced him
out.
From there, he moved to the
Gold Rush jewelry store on West Sahara Avenue near the Strip, where he became
adept at fencing stolen jewelry with one of his top lieutenants and childhood
chum, Herbie “Fat Herbie” Blitzstein.
Spilotro also ran a burglary
ring, later dubbed the “Hole in the Wall Gang,” because of its practice of
drilling holes through the walls and ceilings of the buildings it entered.
For years, Spilotro managed to
stay out of prison, both in Las Vegas and Chicago, with the help of his loyal
criminal defense lawyer, Oscar Goodman, who courted media relationships and
became the outspoken “mouthpiece” for Spilotro and other mob figures in an
ongoing war of words with lawmen.
But by 1981, federal
authorities began making headway in their intensive investigation of Spilotro,
the Chicago mob and other Midwest crime families suspected of skimming money
from casinos.
Spilotro’s fencing operation
had been broken up, and key members of the Hole in the Wall Gang were arrested
by Las Vegas police in an undercover burglary sting at Bertha’s gift shop, then
on West Sahara Avenue.
Months later, Frank Cullotta, a
childhood Spilotro friend who was arrested with five others in the burglary,
decided out of fear for his own life to cooperate with Las Vegas police and FBI
agents.
Cullotta’s cooperation marked
the decline of Spilotro’s reign on the streets.
In June 1986, as federal
authorities kept up the pressure, the battered and bloodied bodies of Spilotro
and his younger brother, Michael, were found buried in an Indiana cornfield.
Years later, their killers, who acted under orders from mob bosses, would be
convicted in Chicago.
By the time of Spilotro’s
slaying, federal authorities had convicted a string of Midwest Mafia bosses for
skimming money at the Stardust, Fremont and Tropicana casinos. Other mob
figures had been convicted in Detroit and Las Vegas of wielding hidden
influence at the Aladdin.
The mob had lost its grip on
the Strip, and its control over street rackets diminished.
New Organized Crime
Federal and local authorities
kept an eye on traditional organized crime in the 1990s, but it did not rise to
the level of previous decades.
In 1997, Blitzstein was
murdered in a plot by Buffalo and Los Angeles mobsters to take over his
loan-sharking operation.
At the time, although not on
the day of his death, FBI agents had been conducting surveillance of Blitzstein
and other mobsters in what was regarded as the last big racketeering
investigation of the Mafia in Las Vegas.
Two years after Blitzstein’s
death, Goodman took a new career path and was elected mayor of Las Vegas, where
he held office for 12 years. During his tenure, he pushed for the creation of
The Mob Museum.
Cullotta, who is out of federal
prison and witness protection, is doing his part these days to keep alive
memories of organized crime in Las Vegas. He’s running a business that provides
tours around town of old mob haunts.
Law enforcement authorities
also have changed their priorities.
They have taken notice of less
colorful but more sophisticated organized criminal groups — those with roots in
Asia adept at pulling off casino cheating and marker schemes, and those from
Russia and Eastern Europe knowledgeable about financial fraud, credit card and
cyberschemes.
Las Vegas and organized crime,
it turns out, are still inseparable.
Green puts it in terms Bugsy
Siegel would appreciate:
“Traditional organized crime
may be gone, but there will always be organized crime of some kind here, as
long as we have gambling and there’s money to be made from it.”
Contact Jeff German at
jgerman@reviewjournal.com or 702-380-8135. Follow @JGermanRJ on Twitter.
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