-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 DECLARATION & DISCLAIMER ========== CTRL is a discussion and informational exchange list. Proselyzting propagandic screeds are not allowed. Substance—not soapboxing! 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