-Caveat Lector-

an excerpt from:
The Breaking of a President 1974 - The Nixon Connection
Marvin Miller, Compiler
Therapy Productions, Inc.©1975
LCCCN 7481547
--[12a]--

THE BAHAMAS CONNECTION

When Lansky and Company were forced out of Cuba in 1959, organized crime's
gambling operations were shifted to several of the nearby Bahama Islands. The
Bahamas consist of 700 islands (30 of them inhabited) off the east coast of
Florida and just north of Cuba. Contact with Lansky's Florida headquarters,
therefore, was as available from the Bahamas as from Cuba.

However, before the mob could set up shop, Lansky had to find the Bahamian
equivalent of Batista to make the local laws favorable to gambling casinos.
As we have seen, Lansky had to pay $250,000 to Cuban President Prio just to
bring Batista back to Cuba for this purpose. In the Bahamas the bribes to
create the proper political conditions for organized crime cost even more,
especially since Lansky had learned the lesson in Cuba not to rely
exclusively on the ruling political party.. In Cuba he had supported Batista
exclusively and, when Batista was overthrown by a people resentful of his
totalitarian brutalities, Lansky was out too. In the Bahamas, therefore, even
though Lansky was to establish a satisfactory relationship with the wealthy
group of white businessmen-politicians in Nassau known as the Bay Street
Boys, who totally dominated the black population of the islands, Lansky also
gave support to top leaders of the black opposition, the Progressive Liberal
Party (PLP). As shall be seen, this new policy saved Lansky's investment in
the Bahamas.

CORRUPTING THE CRIME FIGHTERS

Lansky's infiltration of the Bahamas began to take shape in the years between
1960 and 1968. These were the same years that Richard Nixon was out of
political office, having lost the 1960 presidential race to John F. Kennedy
and the 1962 California governorship election to Edmund Brown. Very few
people at that time believed that Nixon would ever again re-enter politics as
a candidate. His 1962 defeat was thorough and he was demoralized. This was
the time Nixon told the press in Los Angeles in an incoherent and whining
acknowledgement of defeat which shocked the nation: ". . . The last play. I
leave you gentlemen now and you will now write it. You will interpret it.
That's your right. But as I leave you I want you to know-just think how much
you're going to be missing! You won't have Nixon to kick around any more
because, gentlemen, this is my last press conference, and it will be one in
which I have welcomed the opportunity to test wits with you ... if [the press
is] against a candidate, give him the shaft, but also recognize if they give
him the shaft, put one lonely reporter on the campaign who will report what
the candidate says now and then."

   This bizarre impromptu speech gave Nixon the reputation of being a poor
loser, and the next issue of Time magazine editorialized: "Barring a miracle,
Nixon's political career has ended." Murray Chotiner commented: "I had no
idea he was going to do it. But I thought it was the right thing for him to
do. Let's face it. He was through. He thought he was finished in politics and
he was right. Why shouldn't he say what he thought? He got it off his chest."

This belief that he was finished in politics as a vote-getting candidate
probably explains why the former U.S. Vice-President stopped being cautious
and felt free to appear openly on the gambling scene in the Bahamas-until
1968—to add the publicity value of his name to help open several gambling
casinos. managed by associates of Lansky. Surprisingly, there was another
prominent Republican and former national candidate on the Bahama gambling
scene: the old New York racket-buster Tom Dewey. And Dewey was not just
having a social visit with the organized crime figures he was once so
interested in prosecuting. By this time Dewey was a big financial investor in
the mob-infiltrated chain of paint stores which transformed itself, through
the magic of high finance, into the international corporation in whose name
the Lansky -controlled Bahama casinos were formed.

Furthermore, there is every reason to believe that Dewey went into this
relationship with organized crime fully aware of what he was doing. Old
friends of his in the Justice Department had been warning him about Lansky's
influence in the new Bahamian casinos-but then it developed that these same
experts on organized crime resigned from the Justice Department themselves to
go to work for the funny-money corporation that built the casinos that Lansky
was milking.

Unfortunately this is not fiction. By the 1960's the National Crime Syndicate
had become so powerful financially, so intertwined with the legitimate
business and political structure in the United States, that a number of
government officials who had been fighting organized crime and were known as
the nation's crimebusting experts, gave up the endless and seemingly
fruitless fight, to join the enemy in the Bahamas and elsewhere. University
of California Professor Donald R. Cressey, who served on President Johnson's
Commission on Law Enforcement and then published his massive research work on
organized crime, Theft of the Nation, in 1969, flatly concludes that by now
it may well be impossible to wipe out organized crime. He suggests, instead,
a negotiated peace in which the National Crime Syndicate should be permitted
to keep the profits, after taxes, from its vast gambling empire, in return
for giving up political corruption and the takeover of legitimate businesses.
This pessimistic proposal sounds strangely like Al Capone's offer in the late
1920's, reported by Chicago Crime Commission President Frank J. Loesch, to
police the entire city of Chicago with his gang of more than 1000 men in
exchange for protection in the labor, liquor and gambling rackets.

No one in law enforcement or government today is willing to publicly concede
that Prof. Cressey may be right, within the framework of existing U. S.
political institutions. But although there is a lot of lip-service to the
fight on organized crime, the reality as reflected in Cressey's book is that
some of those who know organized crime the best and have fought it for years,
simply get discouraged by what seems to be a hopeless effort-and end up
cooperating with the Syndicate. And as we shall see, an entire segment of
Nixon's financial and political support came from a coalition of wealthy
businessmen, former FBI agents, former Justice Department officials, former
Congressmen and other powerful figures who seemingly made their first peace
with organized crime in the Bahamas-while protesting all the way to their
secret numbered bank accounts in Switzerland, that Lansky wasn't involved in
the Bahamas action.

LANSKY AND THE BAY STREET BOYS

In 1960 Lansky turned up in the office of Sir Stafford Lofthouse Sands,
Minister of Finance and Tourism for the Bahamas. Sir Stafford later reported
to a four-man Royal Commission of Inquiry headed by Sir Ranulph Bacon, former
assistant commissioner of Scotland Yard, that Lansky offered him $2 million
to "see what he could do" about establishing casinos on the islands even
though there was a law forbidding gambling. However this was not the first
time that Lansky had done business in the Bahamas.

The Bahama Islands have always played a special role in American history
because of their geographical position. In the 17th and 18th Centuries, the
islands were the home base of pirates. During the American Revolution the
British colony of some 4000 people was augmented by the immigration of
approximately 7000 Southern Americans who disagreed with the idea of colonial
independence. These newcomers planted cotton with the labor of black slaves,
and the whites became a minority ruling by force and terror. In 1838 slavery
ended in the British Empire, and the colony turned to the business of
salvaging wrecked ships.

A total of 313 ships were lost on treacherous rocks of the Bahama Islands
between 1858 and 1864 alone. The islanders kept 300 salvage ships occupied
picking up the pieces, until an effective system of lighthouses was built.

        During the American Civil War, when the North was blockading the
South, the merchants of Nassau's Bay Street used their fleet of ships to
smuggle weapons to the South from Europe, and ship Southern cotton to the
mills of England. Sixty years later, the Prohibition Era again brought
prosperity to the Bahamas.  Just before
Prohibition started, a lot of U. S. whisky was legally exported to the
Bahamas, and after Prohibition began, a lot of British and Canadian liquor
was legally exported to the Bhamas[sic]. In Nassau the mer-chants ran out of
warehouse space, and the cases of liquor waiting to be smuggled into the
United States were piled high in the streets.

Sam Blum of Chicago, backed by the guns of Al Capone, had managed to attain
control over the liquor in Nassau and was supplying most of the Midwestern
United States. When Frank Costello and Joe Adonis needed liquor for the East
Coast, they had to turn to Blum. He agreed to bring in 10,000 cases at a time
for the New Yorkers. Lucky Luciano then suggested to Blum that he hire the
Bugs and Meyer Mob to protect his smuggling operations against hijacking.
Blum thought that was a good idea. Bugsy Siegel, as usual, took care of the
guard duty with a number of tough killers. Meyer Lansky, considered at the
time as kill-crazy as Siegel, spent a lot of time talking with gangs who
expressed interest in hijacking the Blum shipments. Very often he was able to
convince them that there was enough business for all without preying on each
other. Playing the role of a diplomat, Lansky established working
relationships with many New England and Midwest bootleggers. When there were
shortages of one kind of liquor in one area, Lansky worked out a trade system
to bring in the surpluses that might be accumulating elsewhere. This was an
extension of the street-trading that took place each day in New York City at
a regular place, so the bootleggers could exchange their surplus stocks and
keep their customers satisfied.

However, the fees of the Bugs and Meyer Mob were very high. After Blum was
given a few expense accounts totaling as much as $30,000 each, Siegel and
Lansky were made equal partners in the federation of bootleggers that was
developing. With the new information that was available to him, Lansky soon
knew more about Blum's business than Blum did. At this time the guard
services for Blum's shipments began to deteriorate. An informant later told
federal agents that trucks transporting liquor for Blum would make
unauthorized stops to drop off a number of cases, sometimes as much as 10 per
cent of the shipment. Blum realized that the guards had to be lying when they
said they had no idea how Blum's liquor was disappearing. Consequently, Blum
demanded that the New Yorkers pay for the missing cases. Blum wanted to be
reimbursed for what he claimed was $500,000 worth of liquor missing since he
had been paying for the Eastern mob's protection service. But by this time
Blum was no longer considered essential to the operation, and his one-time
protector, Al Capone, had been convinced by Lucky Luciano that a new
arrangement for bringing in booze from the Bahamas was desirable.

In 1929 Blum mysteriously disappeared from his New York apartment, never to
be seen again. As soon as Blum had been eliminated Meyer Lansky and Bugsy
Siegel began traveling. First they visited the ports in Florida and South
Carolina where Blum's liquor had come ashore. Then they voyaged to the
Bahamas and told the liquor suppliers there that Blum had absconded with some
money and they were authorized by the U. S. bootleggers Blum had been
servicing to arrange for direct shipments. This was Lansky's first contact
with the Bay Street merchants of Nassau. Thus, as early as 1929 Lansky dealt
with Sir Roland Symonette and other members of the ruling white aristocracy
of the Bahama Islands. With Lansky's help Sir Roland became wealthy from
smuggling liquor into the United States during Prohibition. By the time
Lansky came back to the Bahamas in the 1960's wanting to open up gambling
casinos, Sir Roland had become Premier of the islands and was able to give
Lansky considerable assistance.

THE GROVES EMPIRE

The groundwork for Lansky's gambling empire in the Bahamas was laid by
Wallace Groves, a man who was once called "The Boy Wonder of Wall Street."
Groves got his start with a small fortune amassed in the small-loan business
in Maryland; in less polite words, he was a loan shark charging outrageous
interest rates. When the 1929 financial crash came, Groves had enough cash to
establish an investing company, Phoenix Securities, which was able to take
over the business of a large investment trust that went bankrupt in October
1930. By 1936, Groves personally and through Phoenix became a significant
participant on the winning side in a legal fight involving ownership of the
Pepsi-Cola Company. This fact is important because Richard Nixon as a private
lawyer was to represent Pepsi-Cola and, as President, was to help Pepsi-Cola
obtain an exclusive contract with the Soviet Union making it the only
American soft drink sold there. Given these involvements, it is certainly
likely that Nixon had heard of the prominent role played by Wallace Groves in
the financial history of Pepsi-Cola before Nixon encountered him in the
Bahamas.

Groves pyramided company upon company with amazing success, until it was
discovered in 1941 that the former loan shark had engaged in a $750,000 stock
swindle. After investigating Groves' financial empire, the Securities
Exchange Commission observed: "Almost all the companies which came under the
control of Mr. Groves suffered extreme losses." Groves was convicted on the
stock-swindling charge and served five months of a two-year sentence. He was
released from the federal penitentiary at Danbury, Connecticut, in December
1942.

But Groves is a man credited, with having extra-sensory perception when it
comes to business deals, and has been called "a natural genius at making
money." Although his financial empire was wrecked in 1941, he next appeared
in Florida in 1945 as the controlling interest in the Biscayne Beach
Corporation, and became the intermediary in the transfer of Key Biscayne land
allegedly owned by Al Capone interests to a real estate company owned by
Meyer Lansky associates-which in turn sold two lots to Richard Nixon at a
substantial discount.

'Four of the eight directors of this real estate company, Desser and
Garfield, were at one time or another also directors of Lansky's two major
Miami banks-the Miami National Bank and the Bank of Miami Beach. Arthur
Desser, a major partner in Desser and Garfield, was a friend of Jimmy Hoffa's
and negotiated a $5 million loan from the Teamsters to help cover the cost of
buying the Key Biscayne land. Desser arranged for Nixon to buy his two lots
at a little more than $25,000 each, although they were worth in excess of
$75,000, after Bebe Rebozo had arranged for the former VicePresident to pose
for a Key Biscayne land promotional photo for Desser and Garfield.

Since the country has learned that it is often easier to prove guilt by
revealing the existence of a cover-up than by tracing actual responsibility
for a crime, it is of interest that Nixon did not record one of the lots he
obtained from Desser and Garfield for four years. The only conceivable reason
for this delay is that Nixon wanted Desser to pay off two existing mortgages
on the property in Desser's name. As soon as Desser had paid off the
mortgages-four years later-Nixon was able to record the deed without
revealing a direct financial association with a friend of Meyer Lansky's.
Nixon must have attached some special importance to concealing the extended
nature of his relationship with Desser, because by not recording the deed of
purchase, he was jeopardizing his ownership rights.

While still involved in the Key Biscayne land development, Wallace Groves
moved from Florida to a private island in the Bahamas, Little Whale Cay.
Groves had built a house for himself on this island in the 1930's. Since the
island was not a U. S. possession, this piece of property was the only Groves
holding to survive the 1941 collapse of his financial empire. But Groves
could not stay away from business, and within a short time he purchased the
Abaco Lumber Company Ltd., which was engaged in cutting timber on Grand
Bahama, a large island close to the Florida coast. This purchase was made in
the name of his wife, a legal maneuver that Groves was to employ many times
in the ensuing years to keep his previous creditors away from his new empire
in the Bahamas.

As Groves became familiar with Grand Bahama, he learned that there was enough
fresh water just below the coral-limestone surface to support a large
population, and deep water surrounding the island that could accommodate the
largest ships. Groves began to see that the island had the natural resources
to develop into an important port. As the idea took shape, it seemed to
Groves that the political situation of the islands as a British possession
with possibilities of independence made a special kind of port possible: a
free port where all imports and exports would move through duty-free. This
would lure many industries which wanted to escape American and British taxes
and yet take advantage of the island's proximity to the U. S. mainland. To
realize this plan, Groves turned to Stafford Sands, the as yet unknighted but
already undisputed boss of the Bay Street Boys' political party, the United
Bahamian Party.

By August 1955 Sands had signed into law one of the strangest agreements ever
made between a government and a private individual. Groves was permitted to
buy 150,000 acres of land on Grand Bahama at $2.80 an acre, many of which he
later resold for as much as $50,000 an acre. He had an option to buy the
remaining half of the island at a price almost as low. He was exempt from
paying taxes on his land or any activity conducted thereon until 1990,
although he could impose license fees on anyone wanting to do business on his
land. The Grand Bahama Port Authority that Groves was to set up to develop
the area under the agreement was to have almost absolute feudal powers,
including the right to deport anyone it considered undesirable. In exchange
for all this, Groves' primary responsibility was to dredge a deep-water
harbor at the mouth of Hawksbill Creek. Groves thus had formed the basis for
a new financial empire which provided him with many of the trappings of an
actual old-time emperor.

Groves began to call his 211 square miles of Grand Bahama property Freeport.
And he began to sell percentages in the Port Authority to investors for the
capital he needed to dredge the harbor and develop port facilities. Allen and
Company, a Wall Street brokerage and investment firm headed by Charles Allen,
a Nixon supporter who later became president of Pepsico, bought a 25 per cent
interest in the Grand Bahama Port Authority. Another 25 per cent was bought
by the Firth-Cleveland Group in England for $2.8 million. And Daniel Ludwig,
a mysterious billionaire friend of Nixon's who prominently figures in the
later gambling development, got the contract to dredge the harbor for Groves
and took $5.6 million from the Port Authority for his services.

By 1960 Groves and his Port Authority were almost broke. They had their deep
harbor but industries had not flocked to the new tax haven. It was at this
time that Lansky made his $2 million offer to Sir Stafford to "see what he
could do" about getting laws passed to permit gambling casinos. It soon
became clear that both Groves and Sands, in exchange for bailing out the Port
Authority, were willing to expand their idea to include tourism and legalized
gambling.

On July 11, 1960, a new agreement between the Bahamian government and Groves'
Port Authority was signed, permitting Groves to sell for residential purposes
land originally designated for industry. In return, the Port Authority agreed
to build at least one first-class hotel of 200 rooms by December 1, 1963. And
to accomplish this there was suddenly a new source of money available from
Lou Chesler, a Canadian financier with public links to both Nixon and Lansky.
Chesler contributed $14,000 to Nixon's campaign in 1960, and was a traveling
companion of Nixon's during part of the campaign. Chesler was also a
contributor to Nixon's 1968 campaign. Chesler is a close friend of Donald
Berg, the Cape Florida Development executive who sold Nixon his lots on Key
Biscayne.

"UNCLE LOU" CHESLER

Chesler appeared in the Bahamas with $12 million, much of it raised through
his Canadian TV production corporation, Seven Arts. (In 1967 Seven Arts
bought Jack L. Warner's stock in Warner Brothers for $32 million and then
merged with the famous Hollywood motion picture studio). But Chesler also was
able to draw on the resources of two other powerful corporations he had
formed. One of these was General Development Corporation (GDC), which was
eventually to become the largest real estate developer in Florida, with three
entire small cities to its credit. Other original investors in GDC besides
Chesler included Nixon's personal friend, Key Biscayne hotel owner Frank
Mackle; Miami Beach businessman Max Orovitz, a close friend of Meyer Lansky's
who was convicted in 1968 for willful violation of stock registration laws;
and "Trigger Mike" Coppola, former boss of the numbers racket in East Harlem
and a high-ranking member of the Vito Genovese Mafia family until he died in
1966.

Chesler's business background includes ownership of Universal Controls, an
electronic equipment manufacturer, and Baltimore's American Totalizator which
owns and leases pari-mutuel machines for horse-racing. Besides this latter
corporation, one of obvious interest to gamblers, Chesler also had engaged in
a number of Canadian mining deals with Lansky and had operated night-clubs in
Miami Beach with John Pullman and Pullman's brother-in-law, A. C. Cown.

Former bootlegger John Pullman is an international courier for Meyer Lansky,
who uses Swiss banking connections for laundering gambling skim. Pullman was
also involved with Lansky in plans to takeover gambling operations on the
French Riviera, in Lansky's London gambling operations, and as a go-between
with Adrien Jedai, an Egyptian financier who owns half of the world's largest
gambling establishment, the Casino du Liban in Beirut, Lebanon. It is
believed that Lansky owns the other half. On Lansky's behalf Pullman is known
to have met in rapid succession during 1965 with a Miami Beach hotel-owner, a
government official in South America, an ex-Teamster official in Los Angeles,
a plantation owner in Honolulu where the syndicate hoped to legalize
gambling, narcotics wholesalers and syndicate casino operators in Hong Kong,
casino operators in Lebanon, and banking officials in Switzerland. Even if
nothing else were known about Chesler than his business relations with John
Pullman, that one fact would point to a connection with Meyer Lansky and
organized crime.

Chesler used the $12 million at his disposal to set up the Grand Bahama
Development Company (Devco) and gave Groves' Port Authority 50 per cent of
Devco's stock. Devco spent the next three years building the Lucayan Beach
Hotel on Grand Bahama, and roads, sewers and stores for the city of Freeport.
Devco also was interested in selling nearby residential lots to Americans who
might like to live near a gambling casino. In 1960 no one was publicly
speaking about a casino at the Lucayan Hotel, as Bahamian law forbade
gambling-unless the government granted a special "Certificate of Exemption."
But insiders already knew that Meyer Lansky had arranged with the hotel
architect, A. Herbert Mathes, to include in the plans a large space for a
"Handball Court." When the Certificate of Exemption was obtained for the
Lucayan Beach Hotel on April 1, 1963, a meeting was held in Max Orovitz's
Miami Beach office including Orovitz, architect Mathes, and Meyer Lansky, to
determine the layout of casino tables and security devices in the "handball
court."

Another meeting was held in Orovitz's office to pick casino personnel. Since
the Certificate of Exemption provided that Americans could not work in the
casino—a concession to those who were concerned about the influence of U. S.
organized crime—Lansky arranged to have a number of Sicilians, then working
in a new casino on the Isle of Man in the Irish Sea, transferred to Grand
Bahama. He also set up a training school for casino personnel in London with
Dino Cellini in charge. Cellini and his brother Ed had worked in gambling
casinos in the U.S. for Lansky and then had been transferred to Lansky's
operations in Cuba. Dino Cellini was last reported organizing gambling
junkets to the Colony Club in Lisbon, Portugal.

THE BAHAMIAN PAYOFF

        After the exemption was granted, Sir Stafford Sands, attorney for
Wallace Groves' Bahamas Amusements Ltd., negotiated a license fee for the
casino with Sir Stafford Sands, the Minister of Finance. The terms were very
favorable to the casino: $280,000 per year no matter how great the volume of
business, plus $280 per slot-machine. In Puerto Rico the casinos pay a flat
30 per cent of their earnings to the government. And A&P multi-millionaire
Hun-tington Hartford had previously been turned down on his applica-tion for
a gambling casino on the Bahama island of Nassau, al-though he had offered
the government 50 per cent of the gambling proceeds. It wasn't until 1966
that the Wall Street Journal was able to prove that Sir Stafford Sands,
Premier Sir Roland Symonette, Dr. Raymond Sawyer, and C. Trevor Kelley, all
members of the Governor's executive council which had approved the
Certificate of Exemption for the Groves -Chesler-Lansky casino, had
personally profited from giving the casino its favorable terms. In an
interview with the Saturday Evening Post in 1967 Groves admitted that he had
paid these men off, despite their denials, and said: "How else could I
express my gratitude to men like that? Besides, it wasn't that they didn't do
something for their money." Sands got $519,000 for his services at this time,
an amount which Lou Chesler transferred from his account at the First
National Bank of Boston to Chesler's account at Irving Trust to Sands'
account at Irving Trust. Throughout his relations with Lansky, Sands got a
total payoff estimated at $1.8 million. Five lesser members of the government
received $87,000 a year from Chesler.

However, just one day after the grand opening of the Lucayan Beach Hotel and
Casino on January 22, 1964, a story appeared in the Miami Herald linking the
operators of the casino with organized crime in the United States, describing
their arrest records and previous employment at Lansky -controlled casinos in
Las Vegas and Havana. This was the first of a series of shocks which
eventually brought about the overthrow of the Bay Street Boys and the
formation of a "black" government under Premier Lynden 0. Pindling in
February 1967. But then it was discovered that Pindling had received help for
his campaign from Mike McLaney, who had run the gambling casinos in Cuba with
Lansky's permission, just before Castro's victory over Batista.

Some investigators have speculated that Lansky got tired of dealing with the
money-hungry Bay Street Boys, who lined their pockets at the expense of the
people, and wanted a government which would openly use gambling-tax revenues
to provide social benefits for the natives. In any case, when Pindling formed
his government, Lansky faded from the spotlight but remained a force in the
Bahamas. Columnist Jack Anderson reported as late as 1972 that Moncrieff J.
Spear, the U. S. Consul General, had filed a secret report with the State
Department alleging that "recently there has been evidence suggesting that
some government leaders of the Bahamas are getting criminal financing and are
playing politics with security at the casinos."

>From its opening night in January 1964, the Monte Carlo Room of the Lucayan
Beach Hotel never had a losing night. At the end of five months it had made a
profit of $1 million. By the end of 1966 the casino was grossing $8 million a
year, according to the available records. However, the accounting firm which
checked the casino's records for 1966 did not trust them, and eventually
resigned because of a belief that extensive skimming of profits was taking
place before the official count was made. Some U. S. Justice Department
officials estimate that the actual gross of that one casino for 1966 was
actually $20 million and that Lansky was taking $6 million of this, deducting
his personal cut, and sending the rest by courier to the Syndicate leaders he
represented, including Sam Giancana in Chicago, Angelo Bruno in Philadelphia,
Steve Magaddino in Buffalo, Carlo Gambino in New York, and possibly Joe
Zerilli in Detroit.

In 1965 the Lucayan Beach Hotel's casino "gave" a bonus of $490,511 to three
Lansky agents, Max Courtney, Frank Ritter and Charles Brudner. By 1966 this
visible bonus had been raised to $1 million plus a combined, untaxed salary
of $109,200, plus free housing. Ritter and Courtney, incidentally, were close
associates of Dutch Schultz.

But if the casino prospered, the Lucayan Beach Hotel did not. The hotel,
which had cost Chesler $8.6 million to build, making it one of the most
costly hotels in the world on a per-room basis, was sold at a $1 million loss
to Allen Manus, a Canadian financier. Despite a subsidy of $500,000 a year
from the casino, the hotel eventually went into receivership. Manus had
financed his purchase of the hotel by large loans from Canada's Atlantic
Acceptance Corporation, which had also invested $11 million in various Grand
Bahama enterprises. Atlantic Acceptance collapsed in June 1965 as a result of
these bad investments in the Bahamas, defaulting on $104 million to
creditors, most of them Americans.

GROVES vs. CHESLER

In the course of these difficulties, Groves and Chesler had a falling-out and
Chesler tried to buy out Groves' half-interest in the Grand Bahama
Development Company for $17 million. Groves countered with an offer to buy
Chesler out. Chesler was forced to accept the counter-offer in 1964 because
of Groves' authoritarian control over Freeport. Also it seems that Lansky
wanted Chesler out of Grand Bahama too, after the hotel was built and the
casino was running nicely. Some investigators have speculated that Chesler's
links to Lansky were too obvious, and Lansky needed to have a lower profile
in the Bahamas. When in 1967 the Royal Commission of Inquiry investigated
Lansky's role in the development of Bahamian gambling, it noted: "At one
stage we began to wonder whether the name of Meyer Lansky was not some vast
journalistic piece of fiction, so ghostly and mythical a figure did he
appear." But the Commission decided Lansky was not a piece of fiction. When
the Commission questioned Chesler about Lansky, he blandly admitted that he
had sought Lansky's advice on gambling potential in the Bahamas because he
considered Lansky "the dean of gambling." He told the investigators that it
was not an easy job to organize a large-scale gambling operation, and he
needed the advice of an expert.

In any case, when Chesler at first tried to fight Groves for control of Devco
stock, he found that his money support in Seven Arts began to desert him.
Seven Arts held 20 per cent of the stock of the Grand Bahama Development
Corporation, and Chesler sought to prevent Seven Arts from selling that Devco
stock to Groves. He turned to his money-man in the First National Bank of
Boston, Serge Semenenko, for a loan to buy enough Seven Arts stock to retain
control of that company. However, Semenenko, a Russian-born graduate of the
Harvard Business School who had originally helped Chesler get the $12 million
to invest in the Bahamas, now was more interested in helping Chesler's
enemies in Seven Arts. Investigators of organized crime believe that Lansky
had passed the word that Chesler was now a bad risk. Ex-convict Groves, on
the other hand, had no trouble in buying enough of the Seven Arts Devco stock
to oust Chesler. Max Orovitz, in whose Miami Beach office Lansky had designed
the Monte Carlo Room of the Lucayan Beach Hotel, replaced Chesler as
president of Devco.

Chesler's decline did not stop with his loss of Seven Arts, the Grand Bahama
Development Corporation and the Lucayan Beach Hotel. Years later Steve Allen
was asked to do a commercial for the General Development Company. Allen, a
dedicated opponent of organized crime, remembered Chesler's relationship with
GDC, and asked some questions before accepting the job. According to crime
reporter Hank Messick, he was told in reply by the big Florida real estate
developer that: "In 1963, General Development was completely reorganized with
a new. management. Mr. Louis A. Chesler resigned from the board of directors
in December 1965. In 1966 Mr. Chesler's interests in General Development
ceased. From this point on, we have endeavored to build a corporation of the
highest ideals."

DANIEL LUDWIG

Earlier in this chapter, it was seen that Nixon's friend Daniel Ludwig took
all of Wallace Groves' original financing to dredge the harbor for the Grand
Bahama Port Authority. Later Ludwig built the King's Inn on Grand Bahama, an
800-room hotel surrounded by an 18-hole golf course. Ludwig wanted to build a
gambling casino in connection with his hotel, but Groves' Bahamas Amusements
Ltd. held the monopoly on Grand Bahama casinos. Groves eventually built his
own El Casino just across the street from King's Inn. By this time Ludwig had
leased the King's Inn to Miami hotel-owners Morris Lansburgh and Sam Cohen,
Lansburgh and Cohen were owners of record at the Flamingo Hotel in Las Vegas
between 1960 and 1967, and were indicted along with Lansky and five others on
charges that they had skimmed more than $36 million in gambling profits
during those years. Lansburgh and Cohen pleaded guilty to two counts of
impeding the collection of taxes.

Daniel Keith Ludwig is the only man in the U. S. to have joined the small
ranks of American billionaires since World War II. The only men in the
country richer than Ludwig are oilman H. L. Hunt, self-appointed spokesman
for the extreme right wing; oilman J. Paul Getty, the columnist for Playboy;
and Howard Hughes, the landlord of Las Vegas. Ludwig's basic fortune was made
by putting together the world's largest tanker fleet, under the corporate
name of National Bulk Carriers. This is also the largest privately-owned
fleet of vessels of any kind in the world. He also owns or has owned a salt
mine in Baja California; a 10,000-acre orange grove and a large oil refinery
in Panama; coal mines in West Virginia; oil wells in Canada; a marine
insurance company and two hotels in Bermuda; a potash mine in Ethiopia; iron
mines in India; leased the huge Japanese naval shipyard at Kure; and since
1968 has bought up at least five California savings and loans associations
with combined assets of at least $200 millions.

Ludwig has been able to amass such wealth in. modem times because he is the
greatest tax-dodger of all time. A client of Richard Nixon's former law firm
of Mudge Rose, Ludwig has registered his fleets in "flag of convenience"
countries like Liberia, Bermuda and Panama, which impose no tax on earnings
and allow complete freedom from seamen's unions and stringent safety
regulations. It has been said that respectable tanker operators look on
Ludwig's ships as hardly more humane than the ships of the old African slave
trade. His crews tend to be non-unionized dark-skinned men from the West
Indies, Okinawans or Cayman Islanders, with a few American officers who can
deal efficiently with port operators. When one of Ludwig's employees was
asked to suggest a design for a fleet flag, he recommended two hands
stretching a rubber dollarbill.

Of all the people mentioned so far in terms of Bahamian gambling, Lansky and
Ludwig are the only ones remaining with an active interest. The Bay Street
Boys are still an economic force in the islands, but after it was revealed
that he had demanded almost $2 million to legalize Bahamian gambling, Sir
Stafford Sands exiled himself to Spain, where he died. Groves sold his
interests in Grand Bahama for $80 million to Benguet, a Phillipine mining
corporation. He is now living in La Costa, the Syndicate's retreat in
Southern California, where he still has the opportunity of associating with
the organized crime figures who developed the international gambling resorts.

Ludwig is now 77 years old, having been born in 1897. He is five years older
than Lansky. Obviously neither man will remain active in their respective
areas for many more years. tiowever, both of them have become institutions,
titular heads of vast and powerful organizations which will survive them.
When Lansky dies, it will be the end of an era of organized crime, but
organized crime will continue. And in some form the corporate empire of
Daniel Ludwig will also continue.

It is known that Ludwig's corporate empire has, at least in the Bahamas, made
a substantial and willing contact with the world of organized crime. It is
also known that Ludwig's international empire has developed an ability to
function with and manipulate politicians in many countries. It is also
possible that in his growing need for capital, Ludwig may have already had to
secretly turn to the world of organized crime, and that his Bahamian contacts
were just a result of unknown previous contacts. Ludwig personally is known
to be a long-time supporter of Richard Nixon and a political conservative of
the order of Meyer Lansky. It is possible then that Ludwig's huge financial
operation will tend increasingly to cooperate with organized crime in the
next period? Only the question can be asked at this point but, speculative as
this inquiry may be, it is important enough to investigate, even if a
negative answer results. The known interest of National Bulk Carriers in
Lansky's gambling ventures can not be ignored.

HUNTINGTON HARTFORD

Nassau Island, the capital of the Bahamas, is not much farther east of the
coast of Florida than Grand Bahama, and because of its greater population,
was a more natural location for a gambling operation than the undeveloped
Grand Bahama. As early as 1939, Stafford Sands obtained a Certificate of
Exemption to permit gambling at the Bahamian Club in Nassau and, if war had
not broken out, Lansky might have taken advantage of the Bahamas situation
then. Later Lansky did consider developing the Bahamas as a gambling center,
but Batista's return to Cuba in 1952 was a more developed opportunity. And
when Wallace Groves made his arrangement with Sands for the development of
Grand Bahama, that attracted Lansky's energy, although he would have
preferred Nassau.

At the same time that Wallace Groves was envisioning a free port in Grand
Bahama, the A&P grocery-chain heir, model-agency magnate and theater-arts
devotee Huntington Hartford took control of a small island in Nassau Harbor.
Hartford's island is listed on navigation charts as Hog Island, but,
visualizing it as a tourist resort, Hartford renamed it Paradise Island.
Between 1959 and 1963, Hartford claims he spent $25 million on his island to
develop a marina, hotel-rooms, golf course and restaurant but the tourists
simply didn't come in large enough numbers with the boat service he supplied.

Hartford had originally opposed the idea of introducing any kind of gambling
to the Bahamas, but in 1963 he reversed his position and tried to get a
Certificate of Exemption for Paradise to permit gambling, and a permit to
build a bridge. He said a casino on Paradise Island would be beneficial to
the natives because: "Babies are occasionally being born blind, and worms and
amoebic dysentery and tuberculosis are prevalent due to poor sanitation and
overcrowding. If gambling would be permitted on Paradise, it goes without
saying that there will be employment for thousands, and I trust that my past
record in giving employment will confirm the responsibility of my statement."

But all his efforts to obtain a gambling license and a bridge permit failed.
Not only did he not hire Sir Stafford Sands, who could have cleared all the
obstacles for a price, but Hartford contributed $15,000 to black political
oppositionist Lynden 0. Pindling and retained Pindling, Sands' enemy, as one
of his attorneys. By 1964 Paradise was costing him $1 million a year. In
January 1966 Hartford decided to bail out, and announced that for $3 million
in cash and the assumption of a $9 million mortgage, he had sold 75 per cent
of his holdings on Paradise Island to the Mary Carter Paint Company. The 25
per cent he retained included an interest in the new hotel-casino to be built
on the island.

MARY CARTER PAINT

All the difficulties began to melt away. Gambling became possible on the
island merely by purchasing for $750,000 a Certificate of Exemption held by
the Bahamian Club, a small gambling room in Nassau controlled by Groves. The
government also quickly decided that a $2 million toll bridge across the bay
would not endanger shipping, and granted a permit. The attorney who
represented Mary Carter Paint in all of this, of course, was Sir Stafford
Sands.

In 1964 there were about 1000 Mary Carter dealer-and -company paint stores
throughout much of the United States, Puerto Rico and the British West
Indies. A subsidiary operated the National Biff-Burger System drive-in
restaurant franchises. Another subsidiary, Bahamas Developers, acquired 3500
acres of land on Grand Bahama Island in 1963, part of which was developed in
1965 into a residential community called Queen's Cove. Why Groves and Chesler
let Mary Carter move into their private empire is not clear, unless Mary
Carter had some muscle that wasn't obvious.

Part of the hidden muscle behind Mary Carter Paint was revealed in a New
Brunswick, New Jersey, trial over a death threat connected with loan-sharking
activities. A car-wash owner named Pereira claimed that he had paid more than
$6400 for a loan of $2000 made from Gerald Grimaldi, manager of a Mary Carter
Paint store in Woodbridge, New Jersey. Pereira testified that in 1968, after
paying weekly interest ranging from $50 to $100 a week for almost two years,
he decided he "had enough." Shortly thereafter he was visited at his business
by men who used blackjacks to smash windows, and received telephone threats
on his life. Pereira testified he frequently made his weekly payments through
the Mary Carter Paint store. Then Pereira tried to withdraw his charges.
Investigators learned later that he had received company rebates totaling the
$6400 he had paid on the usurious loan, in return for a promise to drop the
charges. Through some hidden history, the Mary Carter organization had
evidently become infiltrated by the "soldiers" of organized crime.

Another part of the muscle exercised by Mary Carter Paint was political. The
company was filled with staunch Republicans and Nixon cronies including major
stockholder Tom Dewey (who nominated Nixon for Vice-President in 1952);
Richard Pistell, another major stockholder who contributed $17,500 to Nixon's
1968 campaign; and company president James Crosby who donated $100,000 to the
1968 campaign. The latter's brother Peter had been arrested on a charge of
possession of stolen securities. According to 1971 testimony before the
Permanent U. S. Senate Subcommittee on Investigations, Peter Crosby "has
operated in all phases of stock fraud, and has used stolen securities many
times as underlying security."

The man who was in charge of Nixon's security during the 1968 campaign, James
Golden, was also employed by Mary Carter. Golden had long been a personal
friend of the President. He headed up security for Nixon on his trips to
Asia, Latin America and Russia. Investigators claim that on Nixon's trip to
Russia, Golden, must have been blind not to have identified Frank Vitale, an
impor-tant former bootlegger on the West Coast, who accompanied Nixon to
Moscow on the invitation of Murray Chotiner.

Dewey's involvement with Mary Carter Paint began in 1958 when he, along with
his son, invested in the Crosby-Miller Company. In 1959, Crosby-Miller merged
with Mary Carter Paint, and stockholders of Crosby-Miller received 50 shares
of Mary Carter stock for each one they held in Crosby-Miller.

In 1963, Mary Carter Paint was involved in a peculiar deal with Miami Beach
attorney Alvin MaInik, who is currently being mentioned as Meyer Lansky's
heir. Mary Carter had loaned $100,000 in 1963 to a Miami company used by
Malnik and others as a vehicle for a stock promotion deal. An FBI wiretap on
Malnik's penthouse office in Miami Beach monitored discussions about the
loan, including reassurances by Malnik to his associates that Mary Carter
could not demand return of its $100,000 because the original loan was illegal
according to Florida law. When the stock promotion deal fell apart and the
assets of the company were sold at auction, Mary Carter further extended
itself by buying the assets and renting the physical facilities back to the
reorganized company, thus cushioning the blow for Mainik. Some experts on
organized crime have flatly stated that Meyer Lansky is the real power behind
Mary Carter Paint.

In 1965 the U. S. Justice Department began to closely examine the arrangement
that Sir Stafford Sands had made for Mary Carter Paint with Huntington
Hartford, and the details in Sands' application for transferring the
Certificate of Exemption from the Bahamian Club to the Paradise Island
Casino. Since the Bahamian Club was controlled by Wallace Groves through his
wife-as an exconvict Groves had almost nothing in his own name-the Mary
Carter Paint Company was going to have to give four-ninths of the Paradise
Casino profits to Mrs. Groves. Furthermore, since Sir Stafford explained that
the Bahamian government preferred to handle gambling through one group,
Wallace Groves' Bahamas Amusements Ltd. would have complete control over the
management of the new casino. But everyone knew that Meyer Lansky was a
strong silent partner in Bahamas Amusements Ltd.

When Robert Peloquin, top trouble-shooter for the Justice Department,
obtained these details, he outlined them in a lengthy memorandum dated
January 18, 1966, and concluded: "Mary Carter Paint Company will be in
control of Paradise Island with the exception of the casino, which Groves
will control. The atmosphere seems ripe for a Lansky skim."

And the 1967 Royal Commission of Inquiry, commenting on the Paradise Island
corporate maze in which five new corporations were set up to help Mary Carter
and Bahamas Amusements Ltd. run the resort and casino, including one separate
corporation to build the toll bridge from Paradise to Nassau, said: "For the
second time in our inquiry the Commission found a complex of companies
unnecessarily woven together in their responsibilities, thus providing
facilities for inter-company financial maneuvers . . ." The first time the
Commission found this potential for financial scam was in the arrangement for
gambling on Grand Bahama.

Richard Nixon first visited the Bahamas in 1962 as the guest of Huntington
Hartford. The New York Times of January 21, 1974, disclosed that a man named
Seymour Alter arranged for this first of many subsequent Nixon trips to the
Bahamas, and that Alter was being investigated for possible skimming of funds
from the Paradise Island casino through Bebe Rebozo's Key Biscayne Bank.
Seymour Alter somehow also collected a finder's fee from Huntington Hartford
for the sale of Paradise Island to Mary Carter Paint. In 1967, when Mary
Carter Paint opened the first of its two Nassau casinos, the Nassau Bay Club,
Nixon was one of the guests of honor. The New York Times claims that in 1967
mystery man Seymour Alter introduced Rebozo to Mary Carter Paint President
James Crosby, which in turn led to Nixon's being Crosby's official guest at
the January 1968 opening of the Paradise Island Casino.

Between the opening of the two Nassau casinos, Mary Carter Paint sold its
paint division and changed its name to Resorts International. The directors
remained the same, and Nixon's close friend James Golden became Resorts'
deputy director of security. The stock of the new casino corporation began to
be sold by private arrangement. As early as June 1967 one of the subsidiaries
of the large off-shore mutual fund, Investors Overseas Service (IOS), bought
$2,546,000 worth of shares at $9.50 each. In the summer of 1968 the
Securities Exchange Commission began investigating how promissory notes of
Resorts International mysteriously had become converted into shares sold on
the American Stock Exchange although they were unregistered. And trading in
Resorts International stock was suspended for three weeks in March 1969 when
the new-born casino company made a bold bid to take over Pan American World
Airways, the world's largest international airline.

Testimony before the U. S. Senate Permanent Subcommittee on Investigations
declared that Meyer Lansky "was involved in the attempted purchase of the Pan
American Airlines, which was blocked by the government. One of his
corporations was involved in that. He is a very sophisticated operator."
Lansky was also believed to be heavily involved in investments in the IOS
mutual fund structure, as an untraceable method of moving his funds into
gambling casinos around the world, where he would have his own operatives
supervising the play and arranging for skim. It was also rumored in the
Bahamas that Richard Nixon had used this same untraceable method of
investment to buy the stock of Resorts International.

In June 1972 an IRS-inspired indictment of Meyer Lansky and his lieutenant,
Dino Cellini, read in part: "On or about May 17, 1968, unindicted
co-conspirator Vincent Teresa met with defendants Meyer Lansky and Dino
Cellini in Miami and had a discussion wherein defendants Lansky and Cellini
gave Teresa permission to conduct gambling junkets to the Paradise Island
Casino." The junket racket is an essential part of the casino operation, and
as recently as 1971 Dino's brother Eddie was allegedly still arranging
junkets to the Paradise Island Casino.

--[cont]--
Aloha, He'Ping,
Om, Shalom, Salaam.
Em Hotep, Peace Be,
Omnia Bona Bonis,
All My Relations.
Adieu, Adios, Aloha.
Amen.
Roads End
Kris

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