The Syndicate Never Left

New Face of the Mob, Part 2

How a billionaire octogenarian casino owner with long Mob ties is maneuvering with others to subject Nevadans to heavy taxes and feudal tyranny.

By Del Tartikoff & W. W. Anderson

THE SAVAGE AND PREDATORY instincts at the heart of the casino business—the same instincts that have always animated organized crime but supposedly were domesticated when mob figures were accepted into Las Vegas—are now being focused directly on the taxpayer-citizens of Nevada.

If the Syndicate-oriented gaming industry moguls who dominate the Nevada Resort Association are successful, the people of the Silver State will, in the next few months, be herded into a long-term economic box—to which only the NRA will then have the key. 

That “box” is the so-called gross receipts tax. The gaming industry is driving hard to get lawmakers to impose this tax on the entire non-gaming sector of the Nevada economy. The goal, as we pointed out in Part 1 of this series, is to end the diversification of the Nevada economy. It is that continuing diversification that the NRA sees as a mortal threat to its continued total supremacy over the political processes of the Silver State—a supremacy it must continue to have if it is to continue to be exempt from meaningfully independent oversight.

There are two reasons why the gross receipts tax is the NRA’s instrument of choice: First, as a comprehensive Las Vegas Review-Journal analysis of the gross receipts tax was headlined today, the tax would be “The kiss of death for business and economic growth.” That means the tax would stop any more non-gaming companies from moving into Nevada and would even begin driving business out of the state.

The second reason was made clear by an R-J poll released earlier this week: Average Nevadans don’t understand the full implications of the tax—many think that “business,” not themselves and their families, will end up bearing its brunt. These poll results suggest that casinos laid the groundwork for their current campaign by first putting significant money into market sampling studies. In this way they identified a soft spot in taxpayer understanding— a soft spot which they now, like the predators they are, are seeking to exploit.

The deep and dark cynicism of the Nevada Resort Association was on full display January 30 when MGM Mirage Chairman and Chief Executive Officer J. Terrence Lanni spoke before the Las Vegas Chamber of Commerce.

In what was reported as “an impassioned half-hour talk,” Lanni -- an employee of MGM Mirage majority-owner Kerkor Kerkorian -- declared that “the governor's proposed tax package is right, fair and responsive to the needs of Nevada.” What made Lanni’s performance so offensively dishonest is what this business mogul knew very well as one of the leaders of the Nevada Resort Association. And that was that the centerpiece of what he called the “governor's proposed tax package”—the schemes for a gross receipts tax—had actually originated with the Nevada Resort Association!

Senate Majority Leader Bill Raggio noted this fact last September when he told the Reno Gazette-Journal that he was “pleased with the resort association’s gross receipts tax proposal.”

But of course the NRA companies already had long had their bases covered. First they’d gotten Assemblywoman Chris Giunchigliani to include the idea of a gross receipts tax in the resolution that became the blueprint for the Governor’s Task Force on Tax Policy. Then, controlling the panel for the better part of a year, they had insured that the panel would recommend their scheme. As many visitors to the sessions noted, two panel members—Nevada Resort Association spokesmen Mike Sloan and casino-owner Brian Greenspun—were always the loudest and dominating voices on the committee. Meanwhile, the task force’s “technical working group” had been consigned to the tender mercies of the president of the Nevada Resort Association himself, Bill Bible. And serving as public front man for Bible and the technical group was one Jeremy Aguero, a self-annointed “economic analyst” who Electric Nevada has been informed has only an undergraduate degree in hotel management. But most significantly, Aguero’s company, Applied Analysis, gets the great bulk of its income from serving as a paid functionary for the gaming industry and for state and local governments with a vested interest in more and larger taxes.

The foul odor rising from this organized conspiracy against average Nevadans suggests, of course, something systemically rancid. But the source of the smell is not hard to find—it is the state’s feudal gaming industry elite.

The “old days” continue

Many—perhaps most— Nevadans believe that the bad old days of organized crime’s control of the big Las Vegas casinos are gone. But many times in the past such was the belief of average Nevadans, who would learn only later that they were wrong.

At the time of the Kefauver hearings in the ‘50s, the early ‘60s when Bobby Kennedy was U.S. Attorney General, the early ‘70’s, the late ‘70s and early ‘80s when Special Agent-in-Charge Joseph Yablonsky headed the Las Vegas FBI office, southern Nevadans were each time surprised to learn how much control the Mob had been exercising at the top of their communities. And each time what happened was that the mobsters just proceeded to get smarter, more politically powerful and more deeply burrowed behind the corporate fronts thought to “own” the casinos.

Is that still the reality in Nevada today? We believe so; just recently some very good sources told us how, at a world-famous Las Vegas Strip casino, the surveillance cameras in the counting room go black for an hour every week. In other words, it’s a weekly opportunity for the owners to play once again that Golden Oldie, “Skim Me, Daddy, Eight to the Bar”. All that appear to be changed are the corporate fronts.

Find it hard to believe?

Consider this moment three years ago, recorded by Sally Denton and Roger Morris in their book, The Money and the Power:

As the millennial midnight approaches, ABC’s Connie Chung appears outside the Bellagio to interview longtime Las Vegas entertainer Wayne Newton, now a jowly, heavily made-up intimation of the plump teen star of Glitter Gulch, under contract to play the Stardust for the entire first decade of the new century. They chat for a while, Chung visibly searching for something amusing and interesting to say. What will Las Vegas be like in the new millennium, she finally asks the singer, adding in jest one of the city’s forbidden questions: Will the mob come back to run it? She asks him with a smile. But instead of dismissing the question as the banter it was meant to me, Newton flares in nervous alarm, revealing how close beneath the surface the elaborately masked reality still is. For those who understand the city, Chung’s question is no lighthearted joke. “Oh, I wouldn’t know anything about that,” Newton says too quickly in utter seriousness, looking at the camera as if at an audience he can see in the flesh. “I just want everyone to know that I don’t have anything to do with that kind of thing.

The 61-year-old Newton has been performing in the heart of the Las Vegas Strip since the late 1950s. For decades and decades—when there was no question that the Mob had a death grip on the city—he watched it up close. If, on December 31, 1999, the man known around the world as “Mr. Las Vegas” could have finally, publicly, celebrated the freeing of his namesake city from its long serfdom to organized crime, wouldn’t he have leapt at the opportunity?

But the fact is, men who were cutting deals with the Mob when Newton first came to Vegas—and during all the subsequent years when the Mob unquestionably ran Vegas—still run the place.

Kerkorian

Take, for example, the octogenarian billionaire Kerkor “Kirk” Kerkorian. Today he is the majority stockholder of the MGM-Mirage conglomerate that owns more than half of the major world gaming resorts, over a quarter of the large hotels on the Strip and has a more-than-50-percent share of the city's high-end gambling market. Yet his is a history of over 40 years of cooperative partnerships with the Mob:

• Shortly after World War II, the young Kerkorian bought a single-engine Cessna and with it began a tiny air charter firm called Los Angeles Air Service. It ferried gamblers from California to Nevada.
• In 1955 Kerkorian made his first investment in Las Vegas. He went into partnership with Mob figures Morris Shenker and Raymond Patriarca in order to obtain a small piece of the organized-crime-dominated Dunes Hotel. Shenker was a Mob attorney and a dedicated functionary for the organized crime outfits in St. Louis, Kansas City and Chicago. Patriarca was head of the New England Mafia. Criminal activities conducted in the Dunes while Kerkorian was an investor included the illegal ‘skimming’ of large sums of cash and the laundering of funds from drug and other rackets.
• In 1962 Kerkorian purchased land across the Strip from the Flamingo for $960,000; in 1968 he would sell it for $5 million to the Teamster-financed and mob-controlled Caesar’s Palace.
• By 1967 Kerkorian’s air carrier was a world-wide operation, renamed “Trans International Airlines.” Kerkorian sold the carrier for a reported $100 million and with his profits purchased the Mob-built and still-mob-controlled Flamingo, while erecting the largest hotel in the world at the time, the International.
• In 1969 the International opened. But by then the U.S. Justice Department was probing the skim at Kerkorian’s Flamingo. Discovering that Mob mastermind Meyer Lansky had been a hidden co-owner, and that Kerkorian had concealed the information, the SEC blocked a stock offering Kerkorian needed to pay off some European loans. That forced him to sell both properties to Hilton Hotels in July 1970.
• According to a Kerkorian lawyer, the SEC’s blocking of the stock offering had been an effort to “get information out of us,” but Kerkorian would not cooperate. A source close to the story told Denton and Morris that the government had been “attempting to blackmail” Kerkorian into “providing derogatory information about Lansky and others.” Kerkorian, however, rather than turn on his Mob associates, chose to stonewall the SEC. Forced to sell both the Flamingo and the International at fire-sale prices, he took a $164 million loss.
• But in 1971, less than a year later, Kerkorian was back in Vegas with new financing and breaking ground once again for the new “world’s largest resort hotel”—this time to be named the “MGM Grand.”
• While the new $107 million mega resort was being built, Kerkorian’s executive team bribed and/or intimidated Clark County building inspectors into ignoring numerous building code violations. In an example that would, tragically, become world famous, Clark County and Kerkorian operatives conspired to evade building code requirements for a deli restaurant on the hotel’s ground floor. Without a sprinkler system, without proper ventilation for a refrigerator’s compressor, and with improperly grounded electric wiring, the restaurant was a glitzy-looking firetrap. Nevertheless, in 1973, the MGM Grand opened.

·        The result, seven years later in November 1980 was that the biggest hotel in Las Vegas became the site of the city's biggest disaster. A fire, after smoldering undetected for seven hours and building up enormous heat, exploded out of the deli and raced through the casino and upper floors of the MGM Grand. From 84 to 89 lives were lost—the exact number still is a matter of debate—and over 700 people were injured. Despite the clear criminal negligence, no one in Kerkorian’s organization or in county government was ever arrested or charged; the matter was entirely swept under the rug. In order to stay out of court, however, Kerkorian eventually paid out three-quarters of a billion dollars in settlements.

·        But Kerkorian has never changed his spots. Even after an adroit hostile takeover of Steve Wynn’s Mirage Resorts in the Spring of 2000, Kerkorian the very next year was attempting to work one more deal with the Mob. Specifically, the new MGM Mirage drafted a deal with a mob-controlled Chicago company to buy from it an Illinois gaming license that the state gaming board later said was not available for the MGM to purchase. Historically in Las Vegas, such deals allowed the mob to continue to operate in the background, perhaps even continuing to run the gaming operations they had “sold.” The Chicago company, Emerald Casino, had been denied plans to transfer the license from an earlier, failing property, to the wealthy Rosemont, Ill. suburb of Chicago when Illinois regulators learned of the organized-crime links of two Emerald Casino investors and of a construction company that Emerald was employing. Nevertheless, Kerkorian had sought to ride to the rescue of the now-unmasked organized-crime investors. As reporters Denton & Morris noted in their book, such behavior has been a life-long pattern of the billionaire. “Over nearly four decades, they observed, Kerkorian “had moved without challenge, in and out of a Las Vegas in which the Syndicate was arbiter….”

Implicit in such a lifelong career can be nothing other than a callous disdain not only for the rule of law but also for humane values—for the value of the lives of average men and women and the well-being of their families.

Kerkorian’s real attitude toward the working people of Nevada was brazenly on display on January 30 in the speech of MGM Mirage Chairman Lanni, who is Kerkorian’s top hireling. Lanni would never have performed his deeply cynical public dance before the Las Vegas Chamber of Commerce without the approval of this infamous octogenarian predator, Kerkor “Kirk” Kerkorian.

To be continued.