-Caveat Lector-

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

Since his entry into politics, Richard Nixon has been surrounded by wealthy
contributors who have maintained extensive contacts with organized crime
leaders. One of these men, according to a New York State Crime Committee, is
former board chairman of the Schenley liquor empire, Lewis S. Rosenstiel.
Rosenstiel has been a major contributor to Nixon's political campaigns and
has employed one of Nixon's closest friends, Louis Burrous Nichols, former
assistant to the late FBI Director J. Edgar Hoover.

The New York State Joint Legislative Committee on Crime, chaired by State
Senator John H. Hughes, has heard testimony that during Prohibition,
Rosenstiel joined a "consortium" with underworld figures to buy liquor in
Canada and sell it illegally in the United States. The witness was James P.
Kelly, chief investigator for the House Interstate and Foreign Commerce
Committee. Rosenstiel's associates in the group, according to Kelly, included
Meyer Lansky, Joe Linsey, a member of the New England Mafia family of Raymond
Patriarca, and Joe Fusco, a member of Al Capone's mob.

Kelly said that Linsey and Rosenstiel were arrested during Prohibition for
counterfeiting whisky bottles and labels for illegal sale to the public. The
case against Rosenstiel was dismissed, but Linsey was convicted. When
Rosenstiel developed Schenley into one of the country's major
distrilleries[sic], Linsey and Fusco became Schenley distributors in Boston
and Chicago respectively.


Kelly testified that Rosenstiel's bootlegging group bought liquor from the
Canadian plants operated by the late Samuel Bronfman, founder of Distillers
Corporation—Seagrams Ltd. Bronfman and his three brothers had been in the
hotel business in Canada, but became the richest men in that country through
their involvement with bootlegging. The Bronfmans formed several corporations
to handle their bootlegging operation: Atlas Finance Company, Atlas Shipping
Company, and Northern Export Company. Since it was illegal to ship
liqour[sic] directly from Canada to the United States, the Bronfmans used
Atlas Shipping to send the liquor consignments to the French-owned islands of
St. Pierre and Miquelon in the St. Lawrence. Then Northern Export would
re-export the liquor to ships anchored beyond the three-mile limit off the
coast of New York. Customers would go to the sales offices of the American
bootleggers in New York City or Newark and get a receipt for their money,
which would entitle them to collect the merchandise from the ships. If the
customer didn't have a fast boat, the bootleg group would rent him one. The
idea for this operation had originated with Arnold Rothstein. It had the
advantage that, technically, no one but the final customer was breaking the

Joseph Kennedy, the future ambassador to the Court of St. James and the
father of the 35th President of the United States, is supposed to have
arranged with Frank Costello for the use of these ships on "Rum Row" to
smuggle liquor into the United States during Prohibition. Costello told the
story of his involvement with Kennedy to many people but it has never been
completely verified. It is known, however, that before Prohibition ended
Kennedy was appointed U.S. agent for many British distillers including Haig
and Haig Ltd., John Dewar and Sons Ltd., and Gordon's Dry Gin Company.
Kennedy then arranged for his newly organized Somerset

   Importers to import and stockpile thousands of cases of liquor, the whisky
coming into the United States months before Prohibition ended under
"medicinal" licenses issued in Washington. Since Kennedy could not get all
the permits he needed, it is conceivable that he had bootlegging business
relations with Frank Costello at the very end of Prohibition, if not before.

The Bronfmans' Atlas Finance Company was the investment organization for the
bootleggers and later was to invest heavily in the Tropical Park Race Track
at Coral Gables, Florida, and other tracks in Florida and Ohio. Samuel
Bronfman was to become Lewis Rosenstiel's chief rival in the legitimate
liquor business after Prohibition, and they became bitter personal enemies.
Lansky remained friends with both.

Rosenstiel, vacationing in Miami, issued a statement denying Kelly's charges,
saying: "They are utterly ridiculous, absolutely false, and without
foundation." However, he did not respond to a written invitation by the
Hughes Committee to testify and remained beyond the subpoena power of the
committee. Meanwhile Rosenstiel's estranged wife Susan had confirmed Kelly's
testimony in an affidavit filed with the New York State Supreme Court. Mrs.
Rosenstiel charged: "When I refused to bow down to Mr. Rosenstiel's demands
for an unjustified divorce, and instead pursued a course of complete
vindication in matrimonial litigation in the New York courts, he vowed that
he would break me physically and financially. He reminded me of his vast
underworld connections and high political influence, a combination which he
warned me was unbeatable. During the course of our married life he frequently
associated with (and forced me to associate with) nationally known
ex-convicts and racketeers such as Meyer Lansky; his brother, Jake Lansky;
Robert Gould, an ex-convict convicted of OPA violations; Art Samish, a former
public relations man with Schenley Indistries[sic], who served time in
federal prison; and other gamblers and racketeers such as Joe Fusco, a former
associate of Al Capone; Moe Dalitz, under indictment for tax evasion; and Sam
Tucker, known as the dominant figure controlling gambling operations in
Newport, Kentucky, with other interest in Las Vegas."

Rosenstiel denied the charges made in his wife's affidavit. However, the
Hughes Committee heard evidence from a former secretary to attorney Louis
Nizer that she had examined papers, documents and tape recordings left by
Rosenstiel in a Manhattan town-house he had turned over to his estranged
wife. This material contained numerous references to meetings, conversations
and business dealings with Frank Costello, Meyer Lansky, Joe Linsey, and a
payment by Schenley of $40,000 to Art Samish when the former California
lobbyist was serving a federal prison sentence for tax evasion. Known
associates of the late Samish included Mickey Cohen, Joe Adonis and Frank
Costello's partner in the Louisiana slot-machine racket, "Dandy Phil" Kastel.

Although Rosenstiel would like the world to believe that since Prohibition he
has had only accidental encounters with organized crime leaders, if any, and
has not had business relations with them, there is the fact that in November
1933, one month before Prohibition was repealed, Rosenstiel financed a
distributing company named Prendergast and Davies Co., Ltd. In 1935 it was
learned that the real boss of this company was Johnny Torrio, Al Capone's
teacher and top leader of the crime syndicate. When this knowledge became
public, Torrio sold his stock in the company to a group of ex-bootleggers
from Boston including Joe Linsey. Another participant in this company was the
brother-in-law of his first wife, Dorothy. Susan, quoted above, was his
fourth wife. Rosenstiel's second wife, Leonore, will appear as a main
personage in the following chapter on The Annenberg Connection.


When Louis Nichols decided to retire from his FBI position in 1957 as
assistant to the late FBI Director J. Edgar Hoover, he obtained a job with
Rosenstiel with the help of Roy Cohn, former chief counsel for Senator Joseph
McCarthy. Rosenstiel hired Nicholas as Schenley's executive vice-president,
giving him a ten year contract at $100,000 per year plus stock options. In
1958 Nicholas earned this salary many times over by using his Washington
connections to change the liquor tax laws.

After the outbreak of the Korean War, Schenley had increased its production
of liquor by many millions of gallons in the expectation that a lengthy war
would create liquor shortages and increase the price. When the war ended in
1953, Schenley was left with this enormous stock of liquor which it could not
sell. Under the tax laws then in effect, Schenley would have to pay a tax of
$10.50 per gallon after the liquor was stored for eight years or upon sale,
whichever came first. If Schenley had to pay this tax in 1958 or 1959 it
would probably have driven the company into bankruptcy. So Lou Nichols was
assigned to lobby for the Forand Bill, which would save Schenley by extending
the tax-collection period from eight to 20 years, and make it retroactive for
all liquor then in warehouses, including Schenley's huge stock.

When the Senate Finance Committee approved the proposed legislation, the
value of Schenley stock increased on the New York Stock Exchange by
$33,000,000. Schenley stock held by Lewis Rosenstiel alone rose by
$6,987,500. The bill was finally made law, over the objections of many
Senators who said that Schenley had gambled on the Korean War turning into
World War III and shouldn't be bailed out by Congress. It was then estimated
that the 12-year extension of the liquor tax deadline would defer $1.4
billion in tax payments for the following two years alone.


Nichols had been a close friend of Richard Nixon since the 1950's. After
Nixon lost the presidential election of 1960 to John F. Kennedy, Nichols was
one of the few people who kept in touch with Nixon. Whenever Nixon would come
back to New York from a trip, it was Nichols who met him at the airport with
a chauffeured limousine.

In 1965, Nichols persuaded Rosenstiel to launch a private tax-free foundation
dedicated to honoring J. Edgar Hoover. Rosenstiel, who admired the
anti-Communist position of Hoover, started the foundation with an original
gift of $35,000 worth of Schenley stock. Nichols gave a small amount of
Schenley stock and $500 was contributed by the American Jewish League Against
Communism, headed by Roy Cohen. In 1966 Rosenstiel gave this J. Edgar Hoover
Foundation another $6500 and, in 1967, contributed $60,000. In 1968
Rosenstiel gave $1 million in Schenley securities to the foundation. Almost
everyone connected with the Hoover Foundation had worked either for the FBI
or for Schenley. Evidently J. Edgar Hoover didn't think twice about accepting
money from a former bootlegger who still maintained organized crime contacts.

In 1968, Nichols served as a member of Nixon's six-man advisory committee and
recruited former FBI men to be poll-watchers for Nixon in all 50 states.
Nichols became an adviser on law enforcement policies to the Justice
Department and to then Attorney General John Mitchell. In 1969, when Nichols'
friend Roy Cohen was charged by U.S. Attorney Robert Morgenthau with paying
$23,000 in bribes in connection with the condemnation of a bus-line owned by
Cohen, Nichols complained to J. Edgar Hoover about three FBI agents
cooperating with Morgenthau. Hoover disciplined the agents and transferred
them out of New York.

Life magazine commented: "Needless to say, the episode ... thoroughly shook
up some of Morgenthau's witnesses. If Cohen, through Nichols, could bring
about the arbitrary transfer of three FBI agents, what chance had an ordinary
citizen?" Cohen was acquitted and Morgenthau, who was also probing the use of
Swiss banking secrecy by organized crime, was ousted by President Nixon.


In 1970, New York Senator John Hughes began to investigate whether there were
any connections between Rosenstiel and Nichols and organized crime. The
Hughes committee borrowed William Gallinaro, a deputy United States marshal
with a network of informers inside organized crime, to do its legwork. After
some months of investigation, Senator Hughes made a public statement
disclosing that organized crime had offered $100,000 to any hoodlum who would
assassinate Gallinaro and Michael Dorman, a journalist sharing information
with Gallinaro.

Senator Hughes said: "I do not intend to permit members of this committee or
the staff which assists the committee to become the targets of intimidation
by racketeers and thugs. I think the decision by mobsters to place a price on
the head of one of my investigators is unconscionable and I feel certain that
the decision to do so was occasioned by the pressure that our committee is
bringing to bear on the mob. I want to serve notice that such threats will
not deter either myself or the committee and will only serve to have the
opposite effect."

Michael Dorman, writing about this episode in his book Payoff, commented:
"Several times prior to the threat on Gallinaro's life, Justice Department
aides of Attorney General Mitchell-apparently fearing that the investigation
might prove embarrassing to the Nixon administration—had tried to get
Gallinaro withdrawn from his special assignment with the Hughes Committee.
Each time Hughes had prevailed upon Mitchell to allow Gallinaro to continue
the investigation. After the death threat, renewed efforts were made to get
Gallinaro pulled off the committee staff and returned to his duties as a
deputy marshal. Hughes and Gallinaro went to Washington, met with Mitchell,
and emphasized the importance of the investigation. The Attorney General
agreed to extend Gallinaro's assignment, at least temporarily ...

"A short time after Gallinaro's trip to Washington, Mafia

leaders in New York ... decided that in view of Senator Hughes' public
statement about the plot, any attempt to carry out Gallinaro's murder would
bring intolerable heat to the mob. Word was sent to mob gunmen that the 'open
contract' was not to be fulfilled. This writer later was informed that the
threat to his own life had also been removed."


Gallinaro went to Texas and Mexico to seek evidence corroborating Mrs. Susan
Rosenstiel's charges that her husband consorted with racketeers. Gallinaro,
according to Dorman, then started getting non-too subtle hints from
Washington that his investigation was stepping on influential toes.

Assistant Attorney General Henry Petersen was assigned to keep tabs on
Gallinaro. The Hughes Committee was obliged to clear Gallinaro's assignments
with Petersen. Then, in January 1971, the Justice Department pulled Gallinaro
back to Washington. And instead of being reassigned to this old job as
supervising deputy marshal in charge of organized crime cases, Gallinaro was
given the job of checking airport passengers to prevent skyjackings.
Gallinaro resigned and accepted a long-standing offer to become an
investigator for U.S. Senator John McClellan's rackets committee.

In late 1971 Gallinaro was in San Antonio, investigating the mob's
infiltration of the securities business, when he was beaten by mysterious
assailants who stole some papers and destroyed his tape-recorder. Gallinaro
was hospitalized but eventually recovered. Gallinaro has told a number of
people that be believes the FBI was responsible for the assault on him. And
the J. Edward Hoover Foundation continues, in the words of its charter, "to
promote good citizenship" with Rosenstiel's money.

pps. 302-307

--[photo captions--

Lewis S. Rosenstiel, former chairman of the board and founder of the Schenley
liquor empire, started out as a bootlegger and became an important
contributor to Nixon's political campaigns.

Johnny Torrio, national syndicate crime leader rated Public Enemy Number One
in Chicago, and Public Enemy Number Two in New York, was a silent partner of
Lewis Rosenstiel. He is shown here (center) flanked by two federal officers
in April 1936, after he was arrested for violation of Internal Revenue laws.

Samuel Bronfman, late President of Distillers Corporation—Seagrams Ltd., used
to help Lewis Rosenstiel bootleg liquor into the United States during
Prohibition, using a clever scheme that Arnold Rothstein had invented.

Lewis Rosenstiel married his third wife in December 1951, three months after
his divorced second wife, Leonore Cohen, married Walter Annenberg, the
present U.S. Ambassador to the Court of St. James. (See chapter on The
Annenberg Connection). Rosenstiel's first wife died and his fourth wife,
Susan, divorced him after complaining of his connections with organized crime.

The late FBI Director J. Edgar Hoover had a tax-free private foundation set
up for him by former bootlegger Lewis Rosenstiel with $1, 000, 000 in
Schenley stock.

Louis Burrous Nichols, retired assistant to FBI Director J. Edgar Hoover and
close friend of Richard Nixon, became an influence peddler for Schenley and
helped increase Lewis Rosenstiel's net worth by $6, 000, 000.

Roy Cohn (left) introduced Louis Nichols to Schenley's Rosenstiel and, as
head of the American Jewish League Against Communism, gave $500 to the J.
Edgar Hoover Foundation. He is shown here with Murray E. Gottesman after
being acquitted of charges of perjury and obstruction of justice in 1964.
Cohen formerly was the aide of the late Senator Joseph McCarthy of Wisconsin.

Ex-FBI official Cartha D. DeLoach retained his position as Secretary of the
J. Edgar Hoover Foundation when he became a vice-president of Pepsico
Corporation in 1970.

William B. Gallinaro was forced by former Attorney General Mitchell to stop
his investigation of the criminal connections of Lewis Rosenstiel and Louis
Nichols. He resigned from the Justice Department and became a rackets
investigator for Senator McClellan. He is shown here in November 1971, just
before he was clubbed in San Antonio, Texas, by unknown assailants.

Robert M. Morgenthau, former U.S. Attorney for the Southern District of New
York, was forced to resign by President Nixon when Morgenthau began to step
on the toes of influential people in the course of his vigorous prosecution
of organized crime.

Louis Nichols, (right), a former FBI official, talks with Morris Greenbaum,
attorney for Lewis Rosenstiel, just before testifying at the New York State
Joint Legislative Committee on Crime in March 1971. Nichols said that
Rosenstiel "shunned organized crime like a plague," but Rosenstiel wouldn't
appear before the committee himself to answer the witnesses who testified to
the contrary.
Aloha, He'Ping,
Om, Shalom, Salaam.
Em Hotep, Peace Be,
Omnia Bona Bonis,
All My Relations.
Adieu, Adios, Aloha.
Roads End

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