The Money and the Power

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Las Vegas—the name evokes images of divorce and dice, gangsters and glitz. But beneath it all is a sordid history that is much more insidious and far-reaching than ever imagined. The Money and the Power is the most comprehensive look yet at Las Vegas and its breadth of influence. Based on five years of intensive research and interviewing, Sally Denton and Roger Morris reveal the city’s historic network of links to Wall Street, international drug traffickers, and the CIA. In doing so, they expose the disturbing connections amongst politicians, businessmen, and the criminals that harness these illegal activities. Through this lucid and gripping indictment of Las Vegas, Morris and Denton uncover a national ethic of exploitation, violence, and greed, and provide a provocative reinterpretation of twentieth-century American history. Now this neon maelstrom of ruthlessness and greed stands to not as an aberrant “sin city,” but as a natural outgrowth of the corruption and worship of money that have come to permeate American life.“The history of Vegas’s dark underside . . . has seldom been so abundantly and compellingly told.” –The Washington Post Book World

“Riveting. . . Absorbing. . . A saga of underworld subculture that intersects with that of government agents, senators, and presidents and ranges from Cuba to Dallas to Watergate.”–The Wall Street Journal

“A must-read. . . . One of the most important non-fiction books published in the U.S. in [a] half century.” –Los Angeles Times

“Something on every page hits like a meat ax. In their unsparing, meticulous reporting, Denton and Morris produce a compelling, important dossier.”–New York Daily News
Sally Denton, an award-winning investigative reporter in both print and television, has written for the New York Times, the Washington Post, and American Heritage.  She is the author of American Massacre: The Tragedy at Mountain Meadows, September 1857 and The Bluegrass Conspiracy: An Inside Story of Power, Greed, Drugs, and Murder. She received Western Heritage Awards in 2002 and 2004, a Lannan Literary grant in 2000, and, for her body of work, the Nevada Silver Pen Award of 2003 for distinguished literary achievement. She lives in New Mexico with her husband, who is her coauthor, and her three children.

Roger Morris served on the senior staff of the National Security Council under Presidents Johnson and Nixon, until he resigned over the invasion of Cambodia. He has won several national journalism prizes, including the Investigative Reporters and Editors Award for the finest investigative journalism in all media nationwide. He is the author of several books on history and politics, including Richard Milhous Nixon: The Rise of an American Politician, which was short listed for both a National Book Award and a National Book Critics Circle Award.Chapter 1

1.Meyer Lansky

The Racketeer as Chairman of the Board

He was born Maier Suchowljansky in 1902 at Grodno, in a Poland possessed by Tsarist Russia. As a child he envisioned the United States as a place of angels, "somewhat like heaven," he would say much later. When he was ten, his family fled the pogroms directed at Jews for the land of his dreams. In the Grand Street tenements of the Lower East Side of Manhattan he found not angels but what he called his "overpowering memory"-poverty, and still more savage prejudice.

In school, where he excelled, his name was Americanized. Meyer Lansky was a slight child, smaller than his peers. But he soon acquired a reputation as a fierce, courageous fighter. One day, as he walked home with a dish of food for his family, he was stopped by a gang of older Irish toughs whose leader wielded a knife and ordered him to take down his pants to show if he was circumcised. Suddenly, the little boy lunged at his tormentor, shattering the plate into a weapon, then nearly killing the bigger boy with the jagged china, though he was almost beaten to death himself by the rest of the gang before the fight was broken up. Eventually, he would become renowned for his intelligence rather than his physical strength. Yet no one who knew him ever doubted that beneath the calm cunning was a reserve of brutality.

He left school after the eighth grade, to find in the streets and back alleys of New York his philosophy, his view of America, ultimately his vocation. He lived in a world dominated by pimps and prostitutes, protection and extortion, alcohol and narcotics, legitimate businesses as fronts, corrupt police, and ultimately, always, the rich and powerful who owned it all but kept their distance. There was gambling everywhere, fed by the lure of easy money in a country where the prospects of so many, despite the promise, remained bleak and uncertain.

A gifted mathematician with an intuitive sense of numbers, he was naturally drawn to craps games. He was able to calculate the odds in his head. Lore would have it that he lost only once before he drew an indelible lesson about gambling and life. "There’s no such thing as a lucky gambler, there are just the winners and losers. The winners are those who control the game . . . all the rest are suckers," he would say. "The only man who wins is the boss." He decided that he would be the boss. He adopted another, grander axiom as well: that crime and corruption were no mere by-products of the economics and politics of his adopted country, but rather a cornerstone. That understanding, too, tilted the odds in his favor.

By 1918, at the close of World War I, Lansky, sixteen, already commanded his own gang. His main cohort was the most charming and wildly violent of his childhood friends, another son of immigrants, Benjamin Siegel, called "Bugsy"-though not to his face-for being "crazy as a bedbug." Specializing in murder and kidnapping, the Bugs and Meyer Mob, as they came to be known, provided their services to the masters of New York vice and crime, and were soon notorious throughout the city as "the most efficient arm in the business." Like other criminals then and later, and with epic consequences in the corruption of both labor and corporate management, they also hired out their thuggery first to companies, and then to unions-most decisively the Longshoremen and Teamsters-in the bloody war between capitalists and workers. Some employers "gave their hoodlums carte blanche," as one account put it, which they took with "such enthusiasm that many union organizers were murdered or crippled for life." Lansky and Siegel would be partners and close, even affectionate friends for more than a quarter century, and in the end Lansky would have "no choice," as one journalist quoted him, but to join in ordering Bugsy’s murder.

At a bar mitzvah, Lansky met Arnold Rothstein, the flamboyant gambler involved in fixing the 1919 World Series, and he soon became Rothstein’s protégé. During Prohibition they made a fortune in bootlegging while dealing in heroin as well. Their collaborators, competitors, and customers in the criminal traffic, as Lansky later reminisced, were "the most important people in the country." On a rainy night in 1927 in southern New England, a gang working for Lansky hijacked with wanton violence a convoy of Irish whiskey being smuggled by one of their rival bootleggers, an ambitious Boston businessman named Joseph P. Kennedy. The theft cost Kennedy "a fortune," one of the hijackers recalled, as well as the lives of eleven of his own men, whose widows and relatives then pestered or blackmailed a seething Kennedy for compensation.

Ruthless with enemies, Lansky was careful, even punctilious, with his partners and allies. One of his closest and most pivotal associates was yet another boyhood acquaintance and fellow bootlegger, an astute, pockmarked Sicilian named Charles "Lucky" Luciano. Their rapport baffled those who witnessed it, bridging as it did bitter old divisions between Italians and Jews. "They were more than brothers, they were like lovers," thought Bugsy Siegel. "They would just look at each other and you would know that a few minutes later one of them would say what the other was thinking."

Lansky’s share of the enormous criminal wealth and influence to come out of Prohibition in the early thirties would be deployed shrewdly. He branched out into prostitution, narcotics, and other vice and corruption nationwide. But his hallmark was always gambling. "Carpet joints," as the ubiquitous illegal casinos of the era were called, run by his profit-sharing partners-proconsuls like the English killer Owney Madden, who controlled organized crime’s provincial capital of Hot Springs, Arkansas-were discreetly tucked away and protected by bribed officials in dozens of towns and cities all over the United States. Still, Lansky’s American roadhouses were almost trivial compared to the lavish casinos he would build in Cuba in league with a dictatorial regime.

For Luciano and other gangsters, Lansky was the preeminent investment banker and broker, a classic manager and financier of a growing multiethnic confederation of legal and illegal enterprises throughout the nation. He organized crime along corporate hierarchical lines, delineated authority and responsibility, holdings and subsidiaries, and, most important, meticulously distributed shares of profits and proceeds, bonuses and perquisites. There would always be separate and distinct provinces of what came to be called most accurately the Syndicate-feudal baronies defined by ethnic group, specialty, assets, or geography, that ruled their own territorial bases and colonies, coexisting warily with the others, distrusting, jockeying, waiting, always conscious of power. It was part of Lansky’s clarity of vision to see how they might be arrayed to mutual advantage despite their unsurrendered sovereignty and mutual suspicion. He recognized how much the country-in the grip of Wall Street financial houses and powerful local banks, industrial giants in steel, automobiles, mining, and manufacturing, the growing power of labor unions, the entrenched political machines from rural courthouses to city halls of the largest urban centers-was already ruled by the interaction of de facto gangs in business and politics, as in crime. A faction unto himself, after all, he would never subdue or eliminate the boundaries and barons. Over the rest of the century their domains would only grow. In business, he preferred to own men more than property, especially public officials whose complicity was essential. He did not, like most of his associates, merely bribe politicians or policemen, but worked a more subtle, lasting venality, bringing them in as partners.

Americanizing corruption as never before, Lansky extended it into a truly national network and ethic of government and business, a shadow system. His Syndicate came to bribe or otherwise compromise, and thus to possess, their own politicians, to corrupt and control their own labor unions and companies, to hire their own intelligence services and lawyers, to influence banks with their massive deposits. But it was Lansky who gave their expedient alliance a historic cohesion, wealth, and power. Already by the thirties their shared apportioned profits were in the tens of millions of dollars, equivalent to the nation’s largest industries.

The wiry adolescent Lansky had grown into a small, unprepossessing man. He was barely five feet four inches tall, weighing less than 140 pounds. By his late thirties, he was the father of three in a colorless and arranged first marriage. With a pleasant open face, limpid brown eyes, and neatly combed dark hair, he resembled nothing so much as the earnest accountant or banker that in a sense he had become. Save for white-on-white silk shirts and the largest collection of bow ties in the country, he exhibited none of the coarse ostentation or pretensions of his colleagues. His private life was discreetly modest. At home he spent most of his time in a wood-paneled den and library lined with popular encyclopedias. Able to recite from memory the Gettysburg Address and long passages from The Merchant of Venice, he was an avid reader, a regular subscriber to the Book-of-the-Month Club, ever conscious of his lack of formal education. His personal hero, he confided to a few friends, was another figure of similar physical size and historic imprint, Napoleon Bonaparte.

Above all, he was a political man. Like most denizens of his world, he was insistently patriotic, and generally conservative if not reactionary in the usual political terms, with an understandable distaste even for reformers, let alone social revolutionaries-though he always seemed to understand, long before more educated men, that ideology and conviction in American politics commonly have a price. Like his successors over the rest of the twentieth century who learned the lesson well, he would be an inveterate contributor to Democratic politicians at all levels. Lansky paid "handsomely"-legal scholar and sociologist William Chambliss recorded his secret cash contributions-into the presidential campaigns of Al Smith in 1928, Franklin Roosevelt in 1932, Harry Truman in 1948, Lyndon Johnson in 1960 and 1964, and Hubert Humphrey in 1968, as well as the races of senators, congressmen, governors, mayors, and councilmen. At a Democratic National Convention in the 1930s he met the amply corrupt Louisiana senator Huey Long, whose partnership opened the South to the alliance, and for whom Lansky opened what would be one of the first foreign bank accounts for corrupt American politicians. Covering his bets, he also passed cash through an intermediary to the 1944 Republican presidential campaign of onetime New York "gangbuster" Thomas Dewey, and backed a few GOP candidates over the years, though generally preferring, and thus flourishing under, Democrats. Beneath the surface, Lansky knew, Dewey was a classic example of the American prosecutor and politician who exploited the public fear of criminals but in the end did remarkably little about crime, a prosecutor who convicted a few big names while imprisoning mostly street-level small fry, leaving the Syndicate and the system that fed it undiminished. "You can’t help liking Mr. Dewey," a shrewd New York socialite would say of the man in an epigram that captured his real record as well, "until you get to know him."

Lansky’s practical politics were plain. Applying the wisdom acquired on the Lower East Side and in the national underworld he came to dominate, he was unyielding and merciless with those who challenged or cheated him. But he would be very different from many of his predecessors and successors, in legitimate business as in crime, who overreached. Monopolistic greed, he believed, led to blood or headlines, rupturing society’s usual apathy, arousing if only for a moment a spasm of reform that was bad for everyone’s profits. He welcomed his competitors-the more corruption the better; the more people compromised, the more collusion, acceptance, and resignation, the less danger of change. Nowhere was this strategy more decisive than in his convoluted relations with his supposed enemy but often de facto ally, the government of the United States.

Those closest to Lansky would claim that he accomplished the supreme blackmail in the thirties, obtaining photographs of homosexual acts by J. Edgar Hoover, the increasingly powerful and celebrated director of the Federal Bureau of Investigation. The pictures were said to hold at bay this most formidable of potential adversaries. But the racketeer and the bureaucrat also had mutual friends, backers, and associates, among them prominent businessmen like Lewis Rosenstiel of Schenley Industries or developer Del Webb, or groups, like the American Jewish League Against Communism, that shared the right-wing politics the gangster and G-man had in common. Whether by crude blackmail or the more subtle influence of their common circle, over the decades Lansky enjoyed almost singular immunity from serious FBI pursuit; "Lansky and the Bureau chief in a symbiotic relationship, each protecting the other," University of California scholar Peter Dale Scott would write of the suborning.

But sexual compromising, mutual friendships, or ideology only began the collusion. In 1937, Lansky arranged for the FBI and the Federal Bureau of Narcotics (FBN) to make the highly publicized arrest of one of his associates, drug trafficker Louis "Lepke" Buchalter. The betrayal at once removed a Lansky rival, gratified Hoover and FBN director Harry Anslinger in their mutual obsession with popular image, and further compromised federal law enforcement, which was growing ever more dependent on informers and double agents for its successes.

Then, at the outset of World War II, U.S. Naval Intelligence and the nation’s new espionage agency, the Office of Strategic Services (OSS), enlisted Lansky and the Syndicate in a historic collaboration, the top-secret Operation Underworld, in which government agents employed mobsters and their labor goons in a campaign of coercion and bribery ostensibly to prevent sabotage and quell uncontrolled leftist unions on New York docks. The "dirty little secret of Operation Underworld," as a former White House official put it, "was that the United States Government needed Meyer Lansky and organized crime to force an industrial peace and a policing of sabotage on the wharves and in the warehouses. The government turned to him because hiring thugs was what government and business had been doing for a long time to control workers, and because it could conceive little other choice in the system at hand."

Working conditions on the docks, as in much of the economy, remained harsh, and the struggle between management and labor violent and unpredictable. Industrial amity was one of the many myths of World War II. The early 1940s would see more than 14,000 strikes involving nearly 7 million workers nationwide, far more than any comparable period in the country’s history. The secret little war on the waterfront was a major step beyond the Buchalter betrayal, which had redounded to the advantage of both criminals and bureaucrats, and was another mark of the self-reinforcing, almost complementary accommodation and exploitation emerging so widely out of the nineteen-twenties and -thirties. Beyond public relations or displays like Hoover’s or Dewey’s, federal and state law enforcement at this time remained widely inept, if not corrupt.US

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