rT 1 1-4 h■IvEsTiF)T1Ve-- To TD 1-1 L.)G bc3 v,r) r\() r-=-0Q me 1 F----Tz3• TL11)P-S- RICHARD IL NIXON AND ORGANIZED CRIME

By JEFF GERTH

"Organized crime will put a man in the White House someday , and he won't even know it until they hand him the bill." Ralph Salerno, former New York Police Department expert on organized crime and co-author of The Crime Confederation

ne Watergate-demonstrated lesson of 's presidency is the danger of surrounding oneself in 0 public life with questionable associates. The exact relationship between those associates and their boss has been the quintessential question of Watergate. Yet behind the shadows of Watergate lurks another series of questionable Nixon associations—those with the under- world. Rather than accuse Richard Nixon of wrongdoing, this report raises a series of questions and describes coinci- dences and associations that demand further inquiry by the public, the press, legislatures, and investigative agencies. Through a number of important personal relationships and financial deals, nurtured in the recesses of his private life, Nixon has unexplainedly found himself both involved with and receiving favored treatment from associates connected with organized crime. The record of the Nixon administration in actions, decisions, and cases involving organized crime not only makes it difficult to separate the public record from the private life of Richard Nixon, but also forces us to heed Ralph Salerno's warning. Is Richard Nixon's involvement with organized crime the longest cover-up?

NIXON, THE TEAMSTERS, AND ORGANIZED CRIME On February 12, 1973, in County, Teamster Boss Frank Fitzsimmons huddled with Lou Rosanova, identified by the FBI as a major Chicago Mafia figure. Several hours later, Fitzsimmons boarded Air Force One with President Nixon for a flight to Washington. Somewhere within the classic alliance of money, power, and politics lies this particular sharp-edged triangle: the Teamsters Union and its treasure chest, the Central States, Southeast and Southwest Areas Pension Fund; the shadowy empire of organized crime and its power; and the political fiefdom of Richard Nixon. Take away the glossy veneer from both the Teamster-financed gangster Xanadus and the vari- ous lavish "White Houses"(Western, Southern, and Washing- . ton), and you begin to glimpse the sinister forces that plague the highest office in the land.

43 An FBI agent who has been investigating Nixon's reelection bid. the Teamsters, and the mob. widespread Teamster-Mafia financial deals , the former Teamster boss Nixon's action on December 23, 1971, told Los Angeles Times reporters Jack Nel- and architect of the Pension Fund–mob al- came four months after the U.S. Parole son and Bill Hazlett: This whole thing of the liance, boasted in his heyday of wanting to Board had rejected Hoffa's parole applica- Teamsters and the mob and the White control "a bank in every city." Well, a look at tion for the third time. In his book The Fall House is one of the scariest things I've ever the Miami National Bank, Hoffa's bank in and Rise of Jimmy Hoffa, former Justice De- seen." that city, illustrates the close connections partment official Walter Sheridan details at Today the underworld is a shadowy em- between organized crime and the Team- some length the roles played by presiden- pire held together by mutual arrangements, sters; and with its interesting links to Rich- tial assistants John Ehrlichman and Charles influence, and money. It uses various fronts ard Nixon, this bank will also provide a use- Colson and Attorney General Mitchell in ob- —dummy corporations, attorneys, and clan- ful starting point for an inquiry into Nixon's taining Hoffa's release from prison. (Sheri- destine foreign bank accounts—to protect involvement with organized crime. dan also comprehensively documents Hof- itself in a maze of paperwork. It is the most In 1959, three years after its founding, fa's twenty-five-year-long personal and successful of all American businesses, for control of the Miami National Bank passed business associations with leading figures with yearly revenues of at least $70 billion, to the Central States Pension Fund, which of organized crime.) organized crime is taking in about three had made a loan of over $2 million to the Perhaps, it could be argued, in releasing times as much as General Motors. principal owner of the bank, Lou Poller. Hoffa from prison two days before Christmas Organized crime has quietly entrenched Shortly thereafter, a coterie of Hoffa-Team- when an election year was coming up, itself within all levels of the social structure, sters associates became directors of the Nixon only made an astute political maneu- leading Donald Cressey, consultant to the bank, and loans became available for nu- ver. However, the flood of Watergate has President's Commission on Violence, to merous mob-connected ventures. In 1964, a brought to the surface at least eight other conclude: "The penetration of business and loan to the bank from Sam Cohen, front man questionable actions by the Nixon admin- government by organized crime has been and associate of mob chieftain Meyer Lan- istration on behalf of Teamster officials and so complete that it is no longer possible to sky, gave organized crime a foothold in the associates who have connections with or- differentiate 'underworld' gangsters from bank. By 1966, the Teamsters loan had been ganized crime. So just as the June 17, 1972, 'upperworld' businessmen and government retired and Lansky and company were in full break-in at the Democratic National Commit- officials." control. (According to a 1969 federal in- tee's headquarters in Washington was only dictment of Lansky, Cohen, and others, the the visible tip of the huge iceberg that has Since the Teamsters' exile from the rest of Miami National Bank was used between come to be known as Watergate, the De- the labor movement for hoodlum domination 1963 and 1969 as a depository for millions cember 23, 1971, commutation of Hoffa has in 1957, the nature of its relationship with of dollars in skimmed and illicit funds, mon- proved to be the apex of a triangle labeled organized crime has shifted from one of ey that also flowed in and out of the inter- Nixon, the Teamsters, and the mob. muscle to one of money, a change that par- allels the transformation of the mob itself. By "An FBI agent said, 'This In April 1973, Denny Walsh of the New York 1969 the billion-dollar Central States Pen- Times revealed that FBI wiretaps had un- whole thing of the sion Fund was considered the prime source covered a massive scheme to set up a na- of working capital for the mob, or as the Teamsters and the mob and tionwide health plan for Teamsters, with Oakland Tribune labeled it, the "bankroll for the White House is one of members of the Pension Fund and orga- some of America's most sinister underworld the scariest things nized crime playing a key organizational figures." The price for this sordid alliance I've ever seen.' " role and receiving lucrative kickbacks. But remains high: kickbacks, widespread cro- FBI requests for further wiretap authoriza- nyism, payoffs, extortion, defaulted loans, locking Exchange and Investment Bank of tion were turned down by the then Attorney bankruptcies, and an insecure financial Switzerland. Cohen and Morris Lansburgh, General, Richard Kleindienst. Principals at base for the retirement needs of rank-and- another Lansky associate indicted in the meetings to discuss the plan had included file Central States Teamsters. case, have pled guilty. Lansky's case is still Teamster boss Frank Fitzsimmons, Pension Teamster officials have consistently ne- pending.) These indictments of nine top of- Fund consultant (the man glected the needs of their membership ficers and directors of the Miami National in often considered the main link between the while catering to the desires of the under- the 1960's are just part of its sordid legacy. Fund and organized crime), and various world and certain political magnates. For In a 1967 real-estate investment in two high-level figures in organized crime, in- example, the mammoth Central States Pen- residential lots in Key Biscayne, Richard cluding Lou Rosanova. On the weekend of sion Fund is paying pensions to only a small Nixon found himself with a mortgage con- February 10, 1973, discussions about the percentage of retired union members, and nected to men who were principals of the health plan were held at the La Costa Coun- an accountant hired by the Fund estimated Miami National during the early 1960's. try Club in northern San Diego County, the that 60 percent of the membership will never (More about this investment later.) In 1968, Teamster-financed luxury hotel and spa receive their pensions. The Fund's assets of Nixon's presidential campaign manager for considered by federal law-enforcement of- $1.5 billion have been reduced to almost the state of Florida was a man who had been ficials to be the leading West Coast retreat zero liquidity because of innumerable de- chief executive officer and director of the and meeting place for organized crime. On faults, bankruptcies, and unsound invest- Miami National Bank from 1959 to 1963 In that same February weekend the trio of John ment policies. 1970, President Nixon appointed to the fed- Dean, John Mitchell, and John Ehrlichman Frank Fitzsimmons has been President eral bench a man who had been director of were also meeting at La Costa, working out Nixon's closest ally in the labor movement. the Miami National Bank in 1963 and 1964. the details of the Watergate cover-up. After The protest early in the year by independent As we shall see, one of that judge's first the details of their elaborate conspiracies truckers, many of whom are Teamster mem- decisions helped keep Nixon's best friend, were thrashed out, the La Costa schemers bers, found Fitzsimmons vigorously sup- Bebe Rebozo, an important Biscayne bank- went their separate ways. Teamster boss porting the Administration. Earlier, on July er and real-estate speculator, from testifying Fitzsimmons hitched his ride back east on 17. 1972, Fitzsimmons had huddled with fully about the passage of stock stolen by Air Force One the same day with President other top Teamster officials, influential mob the Mafia through his bank. Nixon. attorney Morris Shenker, and ex-con Allen The well-publicized commutation by Pres- At the same time, in Chicago, the Illinois Dorfman at the Teamster-financed, under- ident Nixon of Jimmy Hoffa's thirteen-year Legislative Investigation Commission filed world hangout LaCosta Country Club before sentence for pension-fund fraud and jury an intelligence report that quoted a federal going up the coast to San Clemente to make tampering is a convenient starting point for investigator as saying the Nixon administra- the announcement of Teamster support for looking at the connections among Nixon, tion had decided not to prosecute Fitzsim- CONTINUED ON PAGE 48 44 PENTHOUSE mons's son, Richard (a Teamster sters, the Mafia." One administration action the Nixon administration. One of these in- official with close ties to organized crime), questioned by that newspaper, among volved a tax case against Morris Shenker. In in a fraud case "due to the love affair" others, was the approval by John Connally 1971, Life magazine had called Shenker the between Fitzsimmons and the White House. while Secretary of the Treasury of a mora- "foremost mob attorney" in the country and The report further stated that "any informa- torium on $1.3 million in back taxes owed alleged that his mob ties may have exceed- tion pertaining to investigations of either the the government by Dave Beck, a past pres- ed legal representation. The tax case misuse of Teamsters' funds or illegal activi- ident of the Teamsters Union and a man with against Shenker had been sent to Washing- ties of Teamster officials is frowned on by strong racketeer connections. ton for a routine review after years of inves- Washington." tigation and prior to charges being filed. But In his June 1973 testimony before the Sen- Attorney General Kleindienst proceeded to In May 1973, Jeff Morgan and Gene Ayres ate Watergate Committee, John Dean sub- turn the case down, ruling "insufficient evi- of the Oakland Tribune reported that a for- mitted White House papers that revealed dence." Overdrive, which has been in the mer top White House aide had interceded in that a leading Florida Teamster official and forefront of the crusade against corruption in the massive federal investigation of some contractor, Cal Kovens, had won an early the Teamsters Union, reported that after Teamster leaders and their associates in the release from federal prison in 1972 through Kleindienst's decision "the entire file of the Beverly Ridge Estates scandal. (Beverly the efforts of former Senator George Shenker case disappeared from Justice Ridge is a housing development in Beverly Smathers, Bebe Rebozo, and Charles Col- Department files in St. Louis." Shenker, it Hills that had received over $12 million in son. Kovens, who had been convicted in the will be recalled, had sat in on the July 1972 Pension Fund loans before going bankrupt.) same Pension Fund fraud case that jailed meeting at La Costa that produced the Nix- That aide, the late Murray Chotiner—who at Hoffa and who later suffered a heart attack in on reelection endorsement. I the time of the intervention was special prison, was a frequent recipient of Pension The second case cited by Overdrive in- counsel to the president—was reported to Fund loans. Among his Southern Florida volved a Teamster official in Milwaukee who have called the U.S. Attorney in Los Angeles projects was the Fund-financed ($12 mil- was a trustee of the Pension Fund and a handling the investigation. (Chotiner, a con- lion) Sky Lakes development in North Mi- "close associate of organized-crime figures troversial troubleshooting confidant of Nix- ami. Two of Sky Lakes's more notable resi- in the city," where "pressure from Washing- on, had represented numerous underworld dents were Frank Fitzsimmons and Allen ton" threw a monkey wrench into his prose- figures throughout his career.) The Beverly Dorfman, and the owners of the develop- cution tor a $250,000 kickback fora Pension Ridge investigation ended in the indictment ment included Sam Cohen and Morris Lens- Fund loan. of only three men, all of whom pled guilty. burgh, close associates of Lansky. On February 19, 1974, Allen Dorfman, a One of the three, Leonard Bursten, a former Shortly after his release from prison, Ko- close ally of both Fitzsimmons and Hoffa director of the Miami National Bank and a vens managed to scrape together $50,000 and a man with considerable influence on friend of Hoffa's, had his fifteen-year prison for the Nixon reelection campaign. the Pension Fund, was indicted in a $1.4 sentence reduced to probation. million Pension Fund fraud indictment. In July 1973, Overdrive, the magazine of the Dorfman, who had only recently served time On June 1, 1973, the Los Angeles Times ran independent truck drivers, revealed two in a previous Pension Fund kickback case, a lead editorial entitled "Nixon, the Team- more prosecutions that had been killed by has, as we have previously said, long been considered the link between the Fund and organized crime. Agents of the Federal Bureau of Investigation were prevented from arresting Dorfman immediately following his indictment thanks to the efforts of his attorney, Jerris Leonard, a former assistant attorney general in the Nixon administra- tion. Dorfman spent the ten days between his indictment and his arrest playing golf at La Costa with Lou Rosanova. And on the day of his indictment, Dorfman was with Frank Fitzsimmons at Palm Springs.

NIXON, THE BAHAMAS, AND ORGANIZED CRIME While the combination of Nixon, the Team- sters, and the mob forms a clearly defined triangle, a clear picture of the relationship between Nixon, the Bahamas, and orga- nized crime is more elusive. In some ways, however, it is an even more ominous rela- tionship, especially as regards Nixon's per- sonal presence. Organized crime's beachhead in the Ba- hamas, a natural development after their large losses following the 1959 Cuban revo- lution, reached its fullest extent in the mid- 1960's with the control, through the Baha- mas Amusement Company, of three hotel casinos. By 1967, with a Royal Commission of Inquiry and magazines like Life leading the attacking forces, the reconstruction and investigation of organized crime's seven- year stranglehold on the islands had be- come high drama. The leading character CONTINUED ON PAGE 102

48 PENTHOUSE details of the Nixon-Resorts International husband David in Bethesda, Maryland, RICHARD M. NIXON connection had surfaced previously—for comes more from benevolence than from instance, the fact that Resorts International great riches. Rebozo's personal wealth is, had offered various facilities to Nixon and according to his own statements. surpris- his staff during the 1968 Republican Con- ingly low—certainly no match for that of an- CONTINUED FROM PAGE 48 vention in Miami Beach. Although it had other close friend of Nixon's, the Aerosol was the syndicate kingpin and financial been previously known that Nixon and Re- millionaire Robert Abplanalp, who is re- wizard, Meyer Lansky. Working through two bozo were friends of James Crosby, the ported to have $250 million. In a June 1967 wheeler-dealers, Wallace Groves and Lou head of Resorts International. Walsh re- net-worth accounting submitted to the Small Chesler, and in conjunction with corrupt vealed for the first time that it was Alter who Business Administration, Rebozo put his Bahamian officials, one of whom collected introduced Rebozo to Crosby in 1967, which wealth at a little over a half-million dollars. $1.8 million in "fees" for his services, Lan- led in turn to Nixon being Crosby's official By 1970. even after selling some real estate sky became a silent partner in all three guest at the January 1968 opening of the to the government—and receiving, as News- gambling saloons and a spokesman for the Paradise Island Casino, (Though consid- day reported, "favored treatment"—his net syndicate. ered a great poker player from his World worth had climbed to only just over a million In 1965, with the boom in full force, War II days, Nixon stayed away from the dollars. Groves made plans with the Florida-based casino.) Most of that wealth was derived from his Mary Carter Paint Company for two new Nixon needs a "clean" explanation for his ownership of the Key Biscayne Bank, the casinos. A man named Seymour Alter han- close proximity to the Bahamas-Resorts In- only bank on the prosperous island of Key dled such details as the crucial sale of ternational setup. The Resort's casinos were Biscayne. This bank, with its limited assets Paradise Island (a small island off Nassau) at least conceived and formulated, if not and lack of financial activity (it ranks dead- to the paint company, for which Alter claims operated, while the influence of Meyer Lan- last among Florida's 607 banks in the per- he collected a handsome fee. A January sky on Bahamian gambling remained centage of its deposits lent out to custom- 1966 Justice Department memo saw the strong. At present, Seymour Alter provides ers), has been described by a federal bank handwriting on the wall: "Mary Carter Paint that explanation. He has no visible links to examiner as "so conservative that it is al- Company will be in control of Paradise Is- organized crime. Yet questions remain. most not a bank.'' land with the exception of the casino which Alter has known his way around the And yet the Key Biscayne Bank is the little Groves will control. The atmosphere seems Bahamas for a long time. In 1965 it was his bank that could. ripe for a Lansky skim." In 1967, Mary Carter "consulting" ability that enabled Mary Car- It is the Key Biscayne Bank that has lent opened one of its two casinos, the Nassau ter to buy Paradise Island for its casino, at a large sums of money and handled accounts Bay Club, with Richard Nixon as an honored time when Mary Carter's partner was Wal- for various officials of the company that guest. The following year it opened its sec- owns the Paradise Island Casino in the Ba- ond casino on Paradise Island. hamas—a foreign country. It is the Key Bis- After the shock waves created by the 1967 "It is no longer possible to cayne Bank that has lent $195,000 to an Royal Commission investigations, the cen- differentiate 'underworld' Atlanta businessman with no financial ties tral question had become whether orga- gangsters from to the Miami area, a loan collateralized by nized crime's influence in the Bahamas had 900 shares of IBM stock—stock stolen by `upperworld. businessmen vanished or merely become less visible. the Mafia expressly to meet the needs of the As late as 1970 there was solid evidence of and government officials." transaction. Meyer Lansky's presence. In a June 1972 in- Washington Post reporter Ron Kessler has dictment in Miami of Lansky and his associ- lace Groves's Bahamas Amusement Ltd. disclosed that Rebozo cashed 300 shares of ate Dino Cellini, government prosecutors The certificate of exemption to run the Para- the stolen stock after an insurance company alleged that in 1968 Lansky maintained at dise Island Casino had been obtained for investigator had informed Rebozo that the least some control over running junkets (an $750,000 from the Bahamian Club, a small stock was stolen. The investigator, who tes- integral part of a casino operation) to the gaming room in Nassau. Life magazine, in tified under oath about his warning, had also Paradise Island casino. In late 1969 the its February 3, 1967, issue stated: "Under written a report about his interview with Re- Mary Carter Paint Company—by now called the Bahamian Club's present management bozo in which he stated: "This would appear Resorts International—reluctantly released Lansky and Company pull the managerial to me to be a shady deal, and I suspect that Dino Cellini's brother, Eddie, from his post strings and are slated to run the Paradise Mr. Rebozo is aware of this and did not want at the casino. Even after his dismissal, intel- Island Casino when it opens." to become involved. . . ." ligence reports by the Dade County sheriff's While there are other additions to be Rebozo, who denies knowing the stock office placed both Cell inis at Resorts Inter- made to the Nixon-Bahamas-mob network was stolen before he sold it, was saved from national's Miami office, where they checked —such as Lou Chesler's $14,000 contribu- further involvement in the case when in 1971 credits and booked junkets. As late as 1970, tion to Nixon's 1960 campaign—it brings us the Justice Department quietly settled out newspapers were quoting government in- no closer to the bottom line. They do, of of court the case against the eight mob de- vestigators as believing that the "resource- course, reinforce the belief among govern- fendants who stole the stock. Rebozo would ful Lansky is still managing to get his cut ment investigators and other observers that have had to testify under oath had the case, from the Bahamas." the mathematical probability of coinci- which had been under investigation for over On January 21, 1974, Denny Walsh of the dence as the answer is slim indeed. a year, actually come to trial, New York Times disclosed that Seymour Furthermore, a civil case involving the Alter had been the man responsible for host- The activities of Charles (Bebe) Rebozo, the stolen stock and Rebozo's bank was termi- ing Richard Nixon in 1962 on the first of his closest of Nixon's friends, have been put nated after a one-day trial by U.S. District many visits to the Bahamas. Walsh also under intense public scrutiny as a result of Court Judge James King. King, who was wrote that Atter was being investigated for Watergate, but they still remain an enigma. appointed to the bench by President Nixon possible "skimming" of funds from the The accepted legends portray Rebozo as a in 1970, shut off discussion of the proce- Paradise Island casino through Bebe millionaire banker who stays aloof from pol- dures normally used by banks to determine Rebozo's Key Biscayne Bank, a bank with itics but is willing to lend support, financial if negotiable stock (which the IBM stock which Alter had very close ties. Walsh also and otherwise, to Richard Nixon and his was) is owned by a loan applicant (which it reported that the chairman of the board of family. wasn't in this case). In 1963 and 1964, Resorts International had donated $100,000 In fact, his willingness to help finance Judge King, at that time a lawyer, was also a to Nixon's 1968 campaign and had raised at Nixon's San Clemente estate and purchase director of the Miami National Bank. This least that much again from friends. Some a home for Julie Nixon Eisenhower and her was a time during which, according to a CONTINUED ON PAGE 104

102 PENTHOUSE

government indictment, the Miami National cording to testimony given in hearings be- strange company. For this he can thank his was used by Meyer Lansky to transfer and fore the celebrated Kefauver Committee on good friend and banker Bebe Rebozo. Re- hide illicit funds. Organized Crime in 1950-51, served as bozo, who has had a hand in all of Nixon's Besides handling personal savings ac- headquarters for major New York syndicate real-estate investments, is, as we shall see. counts and certificates of deposit for Rich- figures, who owned part of the hotel in con- as adroit a real-estate speculator as he is a ard Nixon, the Key Biscayne Bank found it junction with their local representative, Abe banker. good business to handle accounts for the Allenberg. (Richard Danner was a friend of Between 1962 and 1967, Nixon bought Committee to Re-elect the President and to Allenberg's and had worked for him in 1946 stock in Fisher Island Inc., a closely held allow a $100,000 contribution from Howard at the Miami Beach Hotel Owner's Associa- corporation that owned 90 percent of the Hughes to sit in one of its safe-deposit box- tion.) land on Fisher Island, an undeveloped and es for three years. It is these activities of The Kefauver hearings, which opened in unconnected piece of land just off the, tip of Rebozo, as an unauthorized fund-raiser and Miami, painted an alarming picture of na- Miami Beach. Everything about Fisher Is- political troubleshooter, that have cast tionally known gangsters working in har- land Inc. and Nixon's involvement with it is doubt not only on his financial practices and mony with Florida public officials. (Danner, characterized by an uncomfortable cozi- those of his bank but also on his assertion as city manager of Miami from 1946 to 1948, ness. Membership in this investment syndi- that his political relationships have always found himself caught in the middle of a cate—which numbers less than twenty-five only been "social." gangland dispute over control of the city —is tightly controlled and most of the stock- It is the controversial $100,000 Hughes police and was dismissed from office.) holders know each other very well indeed. contribution—so controversial, indeed, that It is essential to Nixon's later image that For Nixon's Fisher Island investment, Hughes's emissary, Richard Danner, was these visits to Florida during the 1940's be hospitality was the byword. Rebozo, presi- eventually convinced by Rebozo to take the kept secret, for no one knows exactly what is dent of Fisher Island Inc., arranged for his money back—which triggered interest into in the Pandora's Box that contains the true good friend Nixon to buy 199,891 shares of the early roots of the Nixon-Rebozo relation- story of his relationships with Danner, Wof- stock at $1 a share. Nixon sold 14,000 of ship. Curiously enough, it is Richard Danner ford, and Rebozo. those shares at $1 a share to Pat Buchanan who seems to hold the key to much of that Most experts have found it difficult to and Rose Mary Woods, his trusted longtime early history. separate the worlds of organized crime and aides, and in May 1969 he sold his remain- For twenty years, Mr. Nixon and his biog- gambling: and unfortunately Danner, Nixon, ing 185,819 shares back to Fisher Island raphers have always maintained that he and Rebozo have made no attempt to clear Inc. for $2 a share, realizing a nifty 100 never showed up in Florida or met Bebe up their cloudy connections with organized percent capital gain_ Rebozo until George Smathers introduced crime and gambling in the 1940's. In fact, it To finance his Fisher Island purchases, them in 1951_ However, in the summer of Nixon borrowed $41,000 from Rebozo's 1972, I learned from ex-FBI agent John bank and $24,000 from another Miami bank Madala that Nixon had come down to Flori- "Most of the money (the Merchants Bank) controlled by fellow da for "numerous" pleasure excursions dur- Fisher Island investors, and he turned to the ing the "late 1940's," and that on those ex- Nixon borrowed to finance his City National Bank of Miami for a loan of cursions Nixon went fishing first with Tatum Fisher Island purchases $100,000 to finance the bulk of his Fisher "Chubby" Wofford, a Florida hotel owner came from a bank connected stock purchases. (The White House has not and real-estate speculator, and later with to organized crime." revealed the exact date of the loan, but sev- Rebozo. Madala indicated that his old eral reliable sources indicate that most of friend Richard Danner had helped make the Nixon's Fisher purchases occurred in 1966 necessary arrangements. (Danner and Ma- was Danner who in 1952 accompanied and 1967. It can be assumed that the loan dale had worked together in the Miami FBI Nixon on a quick jaunt to a mob-operated coincided with the timing of those pur- office during the Forties.) casino in Cuba, and it is his closeness to chases.) In a September 1972 interview in his Nixon that cements Danner's position as the There is no reason to assume that City plush Las Vegas office, Danner confirmed head of Howard Hughes's Sands Casino in National Bank was not part of the friendly Madala's story and told me about one of Las Vegas. As for Rebozo, in 1968 he chose Fisher tradition. After all, there was ample Nixon's Miami visits. from among the scores of construction firms financial assistance available from fellow This was in 1948, at a time when Nixon available in Miami the one headed by for- investors like Rebozo, so surely Nixon must was involved in prosecuting the Alger Hiss mer Cleveland mobster "Big Al" Polizzi to have felt comfortable in turning to City Na- case. According to Danner, George Sma- build his shopping center in Miami's Cuban tional for his largest Fisher-related loan. thers, who had introduced Danner to Nixon community. There is only one problem with that assump- in Washington in 1947, called from Wash- The trail of the Hushes $100,000—which tion. His name is Max Orovitz, a prominent ington to tell Danner, "Dick is on the verge includes meetings between Danner and trustee and director of the City National of a physical breakdown. Were all con- Nixon—has served only to tighten the web of Bank during the mid and late 1960's, a man cerned about him." So Smathers put Nixon connections among Nixon, Danner, and who despite his respectable trappings—or on the train and Danner met him at the other Rebozo. While Danner has admitted under some would say because of those trap- end in Miami. (Danner remembers that he oath that it was he who introduced Nixon to pings—finds his name inextricably linked thought Nixon looked like a "Northern hick" Rebozo, the nearest he has been able to to Meyer Lansky's. And so, in fact, the larg- coming off the train in his heavy overcoat.) place the time of that first meeting is "about est of Nixon's Fisher-related borrowing After a week in Vero Beach, where Danner 1950." (The date contradicts what he told came not from fellow-investors, but from a had a car dealership, the two headed for a this writer in September 1972 before Nix- bank connected to organized crime. Miami osteopath. Danner called Rebozo, on's troubles began.) Nixon's early trips to Max Orovitz's troubles began in the early telling him, "Bebe, get your boat and meet Florida for rest and recreation engendered 1960's with a real-estate company of which us at the doctor's office." Rebozo did as in- friendships and associations that later in he was a principal owner, the General De- structed, and the three then went out on his his career—at a time when he was at his po- velopment Corporation (GDC). Orovitz had yacht. litical and financial nadir—were to be of a supposedly respectable company—like According to both Madala and Danner, crucial importance to his recovery. the Mackie brothers whose Key Biscayne Nixon's first Florida yachting companion Inn has always opened its doors to their was Wofford, but the "wild man" (Danner's SOME DEALS NIXON COULDN'T REFUSE good friends Richard Nixon and Bebe Re- description of Wofford) had personal prob- bozo—but GDC also had gangsters "Trig- lems and moved to Georgia. Wofford had Some of Richard Nixon's shrewdest Florida ger" Mike Coppola and Lansky-associate other problems, too. His Wofford Hotel, ac- real-estate ventures have found him in Lou Chesler as its principals. Worse for CONTINUED ON PAGE 106 104 Orovitz was the fact that in 1961 he commit- Nobody has been willing to talk about the $5.8 million. During the 1960's Dorfman and ted an elaborate securities fraud involving circumstances surrounding the City Nation- World Wide Realty had been owners of the GDC stock and some fancy Swiss-bank ma- al's $100,000 loan to Nixon. And while the building in which both Miami National and neuvers. (His 1968 conviction was part of president has been forced by the pressures World Wide had their offices, U.S. Attorney Robert Morgenthau's war on of Watergate to reveal an obligation he ex- Amidst all of this Florida wheeling and organized crime.) pected to remain a secret, he still finds the dealing, World Wide Realty was unable to Orovitz hasn't been able to rid himself of cozy hospitality of Fisher Island Inc. reward- file required financial statements to the some of the friends of his GDC days. In 1963 ing, long after the sale of his stock. Securities and Exchange Commission in Meyer Lansky and his key lieutenants Take his 1967 purchase of two empty lots Washington; and in 1971, after five years of planned the installation of gambling casi- in the Cape Florida section of Key Biscayne either late or missing financial statements, nos in the Bahamas in Orovitz's office, and —one has to give him credit for the uncanny the SEC filed a complaint against the com- Orovitz was later put on the payroll as a ability to turn a simple real-estate deal into a pany. Under the terms of the consent de- "consultant," of the company that controlled hatful of magic tricks. As we have seen in the cree, reached six months later, World Wide the first casino on the island. Fisher Island investment—and as any good was required to submit the missing state- In 1967 the Royal Commission of Inquiry magician will tell you—there's more here ments and to comply satisfactorily with SEC examined Orovitz's role in handling state- than meets the eye. requirements in the future. As of March side money transfers and manipulations for In October 1968, Nixon valued his two 1974, World Wide had not met the terms of the Lucayan Beach Casino, including some Cape Florida lots at $51,382, reasonably that decree and further investigation has re- large transactions between Orovitz and close to the price of $53,100 indicated by vealed other irregularities and possible vio- Lansky couriers that produced unauthor- the tax stamps. But in a 1969 financial state- lations. For example, neither of the large ized signatures on checks after they were ment the same asset was valued at $37,600 Teamster Pension Fund loans to the com- cashed, giving rise to the suspicion that by Nixon. To further confuse matters, the pany are reflected in World Wide's financial tainted money was being laundered. At the president failed to register the deed for one statements—an apparent violation of SEC time of the transactions, Orovitz was using of the two lots until June 1971, four years regulations. the mob-controlled Bank of Miami Beach. A after its purchase, and a few days after an Nixon went to unusual lengths to cover up Justice Department memo was later to offer outstanding mortgage on the lot owed to his financial connection to World Wide Re- "proof of a collection account in the Bank of Max Orovitz's City National Bank was satis- alty. He chose to record only one of the two Miami Beach with Max Orovitz taking mil- fied. Finally, in his "fullest" disclosure of lots he purchased in 1967—the one that had lions of dollars out of the account for the December 1973. Nixon revealed that the been sold to Cape Florida Development by benefit of Lansky and Chesler." price he had paid was $38,080 and that his World Wide Realty free of mortgage or lien. Orovitz began to feel the heat, and in 1965 (The recording of a parcel of real estate is he transferred the casino accounts to the the legal instrument that conveys title to the City National Bank of Miami, of which he, land into the hands of the buyer.) together with another Lansky associate, had become a director. Orovitz and the casino "It is essential to Nixon's The other lot, also purchased by Cape Florida Development from World Wide Re- accounts remained at the City National at the image that his visits to alty, and subject to a mortgage retained by time it granted Richard Nixon his $100,000 Florida during the 1940's be World Wide, was also still subject to a mort- loan. kept secret." gage held by City National Bank when By 1970 Orovitz set his sights on Israel, purchased by Nixon in 1967. Nixon chose and when Meyer Lansky took refuge in Tel not to record this lot for four years—a highly Aviv that year, federal investigators—who unorthodox transaction that would have left consider Orovitz a "respectable associate daughter Tricia had a hidden investment of of Lansky"—were not surprised to see Lan- him liable to losing ownership of the lot and $20,000 in the two lots. This, of course, his investment if the Cape Florida Devel- sky, the aging but still active financial wiz- would have made her a greater than 50 per- opment Company had had financial trouble. ard, take up residence at the Orovitz-owned cent partner, but when it came time to divide Nixon waited until June 1971, a few days Dan Hotel in Tel Aviv. up the profits—the lots were sold in Decem- after the mortgage was satisfied and any ber 1972 for $150,000 to Robert Abplan- tainted financial connections gone, to re- By 1970, according to his December 1973 alp's attorney—Tricia got the short end and cord the lot. financial statement, President Nixon had only 40 percent of the profits. Today, mortgages on the two lots are held paid back his $100,000 loan to the City Nixon bought the lots from the Cape by Rebozo's bank. That's not surprising National—and in one lump sum we're told. Florida Development Co., which was head- since its been an "all in the family" transac- One clue to the City National loan is real- ed by Donald Berg apd whose original prin- tion all along. The only real question is, estate broker Nat Ratner, who handled the cipals included Bebe Rebozo. Berg, a busi- who's in the family? 1957 sale of Fisher Island to Rebozo's syn- ness and personal associate of Meyer dicate. Ratner later handled plans for the Lansky's front-man Lou Chesler, was found island's development, owned Fisher stock to be "unsavory" by the Secret Service, who BACK IN (at the same time that Nixon did), and then asked the president to stop frequenting Mixing it up with wheeler-dealers in those helped Rebozo distribute pieces of Fisher Berg's Key Biscayne restaurant. In 1966 Miami real-estate ventures was not exactly a stock as favors to friends. Rebozo and Berg had obtained the land new experience for Nixon. In 1961 he had But it is Ratner's large stock holdings in from the World Wide Realty Company, con- purchased one tract and part of another in the Bank of Miami Beach that is most in- sidered by federal investigators to be a the Trousdale Estates development in Bev- teresting. As we have previously seen, this "real-estate front" in Lansky's financial em- erly Hills. That land was encumbered at the bank, originally set up to service Cuban ca- pire. Headed by Arthur Desser, a close time to the Central States Pension Fund, sinos operated by organized crime, contin- friend of Jimmy Hoffa's, World Wide had which had loaned the developers over $6.7 ued to perform laundering services through close financial interlockings with the Miami million To protect the interest of the Pension the Sixties and was still considered mob- National Bank at the time it was skimming Fund, the trustees of the Fund exercised connected when Ratner unsuccessfully money for Lansky. And among the mob- tight control over how the lots were sold. The tried to take it over in 1965. (The Bank of Mi- connected principals of World Wide was the trust deeds that the Fund held as security for ami Beach was considered a sister bank Teamsters Pension Fund "consultant" Allen the loans contained complicated provisions of the Miami National Bank in those days, Dorfman, who came into his 25,000 shares to insure that control. Nevertheless, Nixon sharing many of the same directors and per- in the company at about the time the Pen- managed to get his lots at a discount—in forming many of the same services.) sion Fund loaned Desser and World Wide fact he paid only $35,000 for land that had a

106 PENTHOUSE 4 mortgage of $42,000 on it. evasion case, Smith's under-the-counter against organized crime. In addition to the Southern California is where Nixon start- stake at Caliente, and the fact that the Or- Teamster-related prosecutions killed by ed, and his leading financial angel there ganized Crime Strike Force's investigation Kleindienst, there was his December 1972 has been C. Arnholt Smith, a San Diego of Alessio was also zeroing in on Smith for commutation of the sentence of Mafia- millionaire. For twenty-seven years the po- illegal contributions to Nixon's 1968 cam- kingpin Angelo "Gyp" de Carlo after he had litical and financial empires of Nixon and paign. White House strong-arm tactics, served only two years of a twelve-year sen- Smith followed parallel paths. But today including—according to Life magazine tence. Although de Carlo, who was released Smith finds his empire in shambles, and —efforts to circumvent the IRS Commis- for reasons of health, died ten months later, —not surprisingly—he attributes his prob- sioner and personally obtain Alessio's tax the FBI maintained that once out of jail he lems to Watergate and his closeness to records, were rebuffed by IRS Special continued to engage in his same old busi- Nixon. With Smith's collapse, the extent of Agent Dave Stutz. John Alessio eventually ness of organized crime. And while various his dealings down through the years with ended up serving two years in prison for in- investigative inquiries failed to nail down organized crime has come to the surface. come tax evasion. any illegal intervention in the case, the ap- Smith joined the Nixon bandwagon early It was only three years later that Smith plication for commutation took officials of in the game—Pat Nixon gratefully remem- himself began to feel the squeeze: the larg- the Justice Department's organized crime bers "Arnie" as "one of our first supporters" est tax lien in IRS history ($22.7 million), a section by surprise and prompted Senator —and he lost no time in introducing the then suit by the Securities and Exchange Com- Henry Jackson, head of the Senate Perma- congressman to some members of his en-. mission, and continuing criminal investiga- nent Subcommittee on Investigations, to tourage. One frequent stop was a downtown tions by the FBI and a federal grand jury. remark, "Something smells." delicatessen run by Lew Lipton, a convicted Smith, the man who brought a million dol- One final legacy of Kleindienst's Attorney bookmaker and a man with extensive con- lars to the 1968 campaign and who watched Generalship in the war on organized crime nections in the Southern California under- that year's election results with the presi- is his role in a $100,000 bribe offer to stop world. Twenty-five years later. Lipton still dent in his Waldorf Astoria suite, was him- the prosecution of several underworld fig- cherishes a photo of Nixon frequenting his self caught in the Watergate developments. ures caught in a stock-fraud case. In sworn restaurant. His $250,000 contribution in 1972 had been testimony, Kleindienst admitted to being of- For Lew Lipton, the road to fortune was returned, and his guardian angel in Wash- fered the $100,000 bribe (which would be Smith's billion-dollar United States Nation- ington was himself in desperate straits. paid in the form of a contribution to Nixon's al Bank, where he was made a senior vice- Thus, federal investigators were not sur- 1972 campaign) by an aide of Senator president and loan officer. (The United prised when Smith turned to a key mob at- Hiram Fong, a Republican from Hawaii. States National collapsed in September torney and financial organizer, John Don- Kleindienst said he refused the offer but 1973, resulting in the largest bank failure in also said that it took him an entire week to U.S. history.) In an article detailing Smith's realize it was a bribe! various dealings with organized crime, in- During cross-examination, the prosecutor cluding loans by the United States National "Neither Nixon nor Rebozo asked Kleindienst, "If you had regarded the to the underworld, the New York Times noted have attempted to clear up their conversation as something regarding a that "Smith brought him (Lipton] into the bribe offer, you would have immediately re- cloudy connections with bank for the loans and accounts Mr. Lipton ported it, would you not?" would hopefully be able to create through organized crime and gambling." "Yes sir," replied Kleindienst, "I would his connections." have." Investigative free-lance reporter Lowell Kleindienst admitted that he reported the Bergman has also traced the strange pas- nelley, to save his dwindling empire. For bribe a full week later, upon learning from J. sage of over $10 million in Pension Fund Smith, his connection with organized crime Edgar Hoover that federal agents were in- money through the U.S. National via Lipton. was the last layer to be stripped away in his vestigating the case. The most obvious example of Smith's long cover-up. One would expect the Attorney General to connections with the underworld revolve be more alert. But what is most troubling are around his business and his personal rela- WAR ON ORGANIZED CRIME reports aired in the Washington Post shortly tionship with John Alessio. Alessio's empire after the indictments in the fraud case (and was originally rooted in Tijuana, Mexico—in In retrospect, one of the first "inoperative" ten months before Kleindienst's testimony the Caliente racetrack and a lucrative and statements made by President Nixon was on the bribe). Those reports quoted "sourc- legal bookmaking operation—but its funds his April 24, 1969, call for a "war on orga- es at the U.S. Attorney's office in New York" spilled across the border and into real es- nized crime." While his message was re- and indicated that after the meeting be- tate and hotels. According to Denny Walsh ceived with eager enthusiasm by dedicated tween Kleindienst and Fong's aide, "Klein- in the New York Times, American gangsters federal investigators and prosecutors dienst immediately contacted Justice's found Alessio's operation a convenient around the country, their superiors at the Criminal Division and an FBI agent was as- "lay-off book." The Times also felt that highest echelons of the Justice Department signed to infiltrate the group of alleged con- "Alessio's bookmaking operation would not had other priorities—harassment of the poli- spirators." have survived without the cooperation of the tical opposition, the press, and minorities. Kleindienst's confusion about recogniz- underworld." While Smith and his bank had On one hand, there was the 1972 conviction ing and reporting a criminal act bears a propelled Alessio from rags to riches, it was in New York of Allen Dorfman for loan kick- striking resemblance to actions of other Alessio's problems that were the start of backs (the prosecutor being Assistant U.S. Nixon team members—even the boss him- Smith's downfall. Attorney Richard Ben-Veniste, who has self—in regards to their knowledge of and About the time Smith's Westgate-Cali- since earned fame as a Watergate pro- participation in the Watergate break-in and fornia Corporation merged with the Alessio secutor); and, on the other, there was the subsequent cover-up. Corporation, federal agents began a close revelation that over half of the Justice scrutiny of Alessio's crime connections and Department's 1,600 indictments in or- History may or may not prove that Richard his fast shuffling of money. By 1970 the IRS ganized crime cases from 1969 through Nixon has fulfilled Ralph Salerno's predic- had put together a tax-evasion case against 1973 would be thrown out due to "improper tion that organized crime would one day put Alessio. He had contributed $26,000 to the procedures" followed by Attorney John a man in the White House. Yet Nixon has left Nixon campaign in 1968, but bigger guns Mitchell in obtaining court-approved au- one inescapable political legacy—the un- were needed. Smith himself took a trip to thorization for electronic surveillance. paralleled panoply of organized criminal Washington to talk to Nixon directly. There Mitchell's successor, Richard Klein- activity and offenses committed by his White was a lot hanging in the balance: the tax- dienst, was reluctant to take up the call House during his years in office. 04—ra

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