Bugsy Siegel Page 14

  Ostholthoff had no doubt, he told Hoover, that Siegel had bribed various officials to push the Flamingo along. Nor did he doubt that Siegel would bribe or kill anyone else who stood in the way of his dream. But proving bribery of an elected official like McCarran would mean showing the money had bought a specific favor in return, and wasn’t just a campaign contribution. “In other words,” Ostholthoff wrote Hoover, “we must prove intent.”7

  As the Civilian Production Administration’s formal review loomed that August, the Flamingo’s construction bills soared, forcing Siegel to forage for cash. His best chance lay in making Trans-American a monopoly race wire by knocking out Continental Press. Siegel had made a fortune in Vegas with his Continental Press franchise. But James Ragen still owned the rest of Continental and seemed disinclined to sell it at any price. By the late spring of 1946, Siegel and the Chicago mob were opening Trans-American wire offices all over the country, competing with Continental. But they wanted the rest of Continental, too. This was a messy and embarrassing situation, so the Chicago mob, and apparently Siegel, agreed that James Ragen had to go.

  That April, Ragen barely eluded a car full of hit men. Rather than retire summarily from the race wire business, he hired more bodyguards, to no avail. On June 24, 1946, Ragen was driving in rush hour along Chicago’s State Street, alone in his car with his bodyguards in a car behind him. “A shabby old truck pulled alongside Ragen’s auto,” recounts historian Allan May. “As he waited for the light to change, a tarpaulin on the left side of the truck was pulled up and two shotguns blasted away, riddling Ragen’s upper right arm and shoulder.”8

  Tough old bird that he was, Ragen survived the onslaught and was rushed to a hospital. He began to recover, only to have his kidneys fail. Still in the hospital, he was rushed into surgery on August 8 but died six days later. An autopsy revealed traces of mercury in his blood. In all likelihood, a doctor or nurse hired by the mob had crept into Ragen’s hospital room and administered the deadly dose.9

  Though it fell beyond their purview, the FBI agents now tapping Siegel’s phones had no doubt that Siegel and his uneasy ally, Jack Dragna, knew exactly who and what had killed Ragen. In a phone chat within hours of Ragen’s death, one of them told the other the good news: Ragen had been poisoned. “Both men laughed heartily at this discussion of Ragen’s death,” the FBI transcript noted. Dragna closed the conversation by saying he would let others know what a good job “the doctor” had done.10

  More than money was needed to keep the Flamingo rising from Nevada’s desert sands. From Washington, D.C., that August came a distinctly chilly missive from the Civilian Production Administration. The CPA, Siegel reported to Lansky in disbelief, was issuing “an order to cease building immediately or they will indict us criminally.” This, despite the April go-ahead from E. S. Bender in the CPA’s Reno office. “Now they tell us this order supersedes their April order!”11

  Siegel would just have to make the best of it. He would have to work with lawyers and architects, and humbly appear before the CPA’s regional offices in San Francisco. A first meeting was scheduled for mid-August.

  If the commissioners could still be bribed, of course, Siegel was all for it. Knowing his phone was tapped, he tried to convey that in coded language to his somewhat slow-witted sidekick, Moe Sedway.

  “Did you get that money from the places like I told you?”12 Siegel asked Sedway in an August phone call recorded by the FBI.

  “The what?”

  “The money!”

  “From where?”

  “From the place where we made up you were to get it from.”

  “Yeah.”

  “Do you know what I’m talking about, Moey?”

  “No, I don’t.”

  “Well, did we discuss about you getting it?”

  “I don’t remember, just tell me.”

  “You have a wonderful memory. I only discussed one thing about getting some money with you for you to give some people. Don’t you know where you are supposed to get it from?”

  “The four thousand.”

  “Four thousand! Am I getting the four thousand, Moey?”

  “Huh?”

  “Well, what does the four thousand got to do with giving money to some people.”

  “Oh, you mean—I know what you mean.”

  “Do you get it?”

  “No, I don’t get it. He don’t want to give no money.”

  “Why don’t he want to give?”

  “He says he don’t have to give no commissioners any money. . . .”

  “Alright,” Siegel relented. “Don’t give anybody anything.”13

  The CPA had Siegel rattled. He needed to blow off steam, and Meyer Lansky seemed resigned to listening by long distance. “I should have busted a leg before I got into this thing,” Siegel told him on the phone one day. “Every time I go, I see something this jerk did, you know: contracts he signed.”

  One day the target of Siegel’s ire was Sedway. The next day it might be Gus Greenbaum or Billy Wilkerson. Either way, the story was always the same. Siegel’s partners got everything wrong, and Siegel had to fix their mistakes. “Got an ice machine for $18,000, makes 20 tons of ice a day . . . we need two. And it needs four guys to make the ice! All he is is a lot of headaches.”14

  Lansky was too discreet to note that the worst mistakes, the three-alarm headaches, were all Siegel’s.

  By now, Billy Wilkerson, the wax-mustached entrepreneur, wanted out as much as Siegel wanted him out. But he didn’t want to just walk away, not when he owned a hefty chunk of the Nevada Projects Corporation and part of the land under which the Flamingo sat. In June, Siegel had browbeaten Wilkerson into selling him half the land for an additional 5 percent of the Nevada Projects Corporation. By August, Siegel was pushing to buy the remaining half of the land for another 5 percent in corporate stock. Again, Wilkerson acquiesced. He deeply regretted letting the land go, but he now owned 48 percent of the Nevada Projects Corporation, which was to say 48 percent of the Flamingo.15 With a rational business partner, the future should have looked bright. But Siegel was hardly a rational partner.

  Everything depended on the CPA, and on Siegel’s ability to charm the commissioners in a meeting scheduled for August 13 in San Francisco.

  The CPA’s investigators had paced the Flamingo site more than once. It certainly seemed to them that the complex consisted of more than one building, and that the hotel in particular stood on its own, apart from the casino. But the builders showed their original blueprint of January 12, 1946, noting that it called for one large, horseshoe-shaped building. That was the project the CPA had approved in April, Siegel declared.

  For a hearing likely to be rancorous, the commissioners brought in a neutral party as overseer and kept him under wraps before the meeting. Somehow, Siegel learned who he was: Stanford law professor William Owens. FBI surveillance picked up a conversation in which Siegel asked someone, in regard to Owens, “How we can get to him?” The FBI agents were concerned enough to meet privately with Owens, but the professor said no one had approached him.16

  The meeting lasted some hours. When it was done, A. E. Ostholthoff and his fellow FBI agents were chagrined to hear Owens declare the CPA’s case weak. Owens gave the government agency a choice: drop it or come back on September 5 with persuasive new evidence. The CPA chose to reconvene.

  A. E. Ostholthoff suspected that the whole hearing “may have been a cover-up as they obviously did not present much of a case,” he reported. He was no less irked that the Flamingo’s builders now planned to erect a high fence around the hotel “in order that no one can see what is going on there.” Duly blocked from sight, builder Del Webb’s team poured concrete walls and floors, and added roofs that would physically connect all of the buildings. “They feel that this will completely fool the CPA,” Ostholthoff wrote in disgust.17

  Days before the September 5 meeting at which the Flamingo’s fate would be decided, an FBI informant reported a fascinating meeting with S
iegel that showed how vulnerable the gangster felt. Judging from how the talk turned out, the informant might well have been Professor Owens, who could honestly report that no one had approached him when the FBI asked earlier but seemed the likely contact now. In the interim, Siegel had made some calls and concluded that Owens was an “alright guy.” He had learned, too, that the CPA would pay Owens just $25 a day for his expertise. “Why don’t we pay him $100 and have him work for us?” Siegel said, only half joking.18

  The FBI informant, at any rate, reported getting a call on August 29 from someone whose voice he failed to recognize. “This is your cousin from San Francisco,” the caller said. The caller asked the informant to meet him at the intersection of Eighth Street and Wilshire Boulevard in L.A. The informant realized that he was speaking with Ben Siegel, and agreed to meet with him. After hanging up, the informant tipped off the FBI, then drove as directed. When he arrived at the intersection, he noticed a car parked there, and on approaching it found that it contained Ben Siegel.

  Siegel declined to talk either in his own car or the informant’s. Instead, he asked the informant to go for a walk with him.

  “Siegel was of the opinion that he was being persecuted by the government in connection with the construction of the hotel,” the FBI reported of the conversation. “He told the informant that every red cent he owned in the world was invested in the Flamingo. If the project was not permitted to continue, he would be ruined financially.”

  The informant was actually quite sympathetic to Siegel, and said as much to the FBI. He stated that as far as he was concerned, Siegel’s background did not enter into the picture. Whether it was “Siegel or the King of Siam,” the informant continued, “the hotel [is] completely dependent on one point: the stage of construction on March 26.” Siegel just needed detailed plans to show when construction began and prove, in the process, that the Flamingo was one building, not several. If Siegel could bring those plans to the CPA’s follow-up meeting, the informant felt all would go well.19

  On the morning of the CPA review—September 5, 1946—Siegel convened a war room in his suite at San Francisco’s St. Francis hotel. There he met with his lawyers and architects in advance of the 1:00 P.M. CPA meeting. The FBI was listening in; its agents had bugged his suite, along with an adjacent one occupied by Virginia Hill.

  The main topic of war room debate was who should take the stand and make the case that construction had started before March 26. One candidate was declared too nice, another not suitably informed. The consensus pick seemed to be an architect from Del Webb’s office, though he seemed reluctant. “Here’s one thing I don’t want you to ask me and that is how the two buildings connect,” he declared, “because I don’t know!”20

  Siegel and his war cabinet trooped over to the CPA offices for a meeting that went on all afternoon without a verdict. That night in Siegel’s suite back at the St. Francis, a marathon card game commenced. Siegel groused that he had lost $200,000 in the stock market in the previous three days. But that only whetted his appetite to win it back at poker. The game went on until 4:15 A.M., the FBI duly reported.

  The CPA was to meet again on September 6, but the meeting was postponed to September 12, in order to get the opinion of a “non-interested” architect whose name would be held until the start of the final day of deliberations. “They are going to indict us now so what’s the difference,” Siegel grumbled.21

  The September 12 meeting started badly. The CPA’s D.C. office relayed that in its judgment, the Flamingo was clearly three separate buildings. Siegel’s team said no: the buildings were in fact connected by underground tunnels with foundations conjoining them. What about the outside windows and doors at either end of the casino and the Flamingo’s hotel? Didn’t they indicate separate buildings?22

  To the surprise of many in the room, particularly FBI agent A. E. Ostholthoff, the architect brought in as a neutral party found Siegel’s argument persuasive. He had no problem with the buildings being conjoined by their foundations. Builder Del Webb’s team admitted construction on the hotel had not begun until April. But so what? All that mattered was that some other part of the project had gotten under way beforehand.23

  After seven hours’ deliberation, the CPA’s San Francisco chairman announced his decision. The Flamingo was a single building, and construction had begun before the CPA’s freeze order. Its builders could go forward after all.

  Siegel had done more than stymie the CPA. He had won a battle against A. E. Ostholthoff, the FBI agent set on bringing him down. In effect, he had fought off the agent’s boss too: J. Edgar Hoover. Not many targets of the FBI could make that claim.

  Construction on the Flamingo had never stopped. Now, with the CPA appeased, it went into high gear, the bills piling ever higher. Sometime in late September, Del Webb, the builder, informed Siegel that he was owed nearly $500,000—again. Webb vowed to shut down construction and throw the Flamingo into bankruptcy if he wasn’t paid soon.24 Webb was the one who had a jarring chat with Siegel one night about how many men Siegel had killed. That was when Webb had turned pale, and Siegel had begun to laugh. “There’s no chance that you’ll get killed,” he told the builder. “We only kill each other.”25

  Siegel knew the money they had sunk into the Flamingo was already approaching $4 million. Still, he felt the end was in sight. He needed a loan of $1.5 million, he figured. With that, he could get Webb to finish the hotel, and the Flamingo would open at last. But he knew that no bank would lend him even a fraction of the money he needed. He would have to get it from his East Coast associates.

  In early October 1946, Siegel flew to New York. He stayed with his family at 88 Central Park West, as FBI surveillance confirmed, but spent most of his time selling his dream of the Flamingo to Syndicate leaders. He hung out at the Copacabana with Frank Costello, the Italian boss who, like Siegel and Lansky, had started on bootleg runs years ago for Arnold “The Brain” Rothstein. According to Costello’s lawyer, George Wolf, the gangster heard Siegel’s pleas and sympathized. Not long after Siegel’s return to Vegas, the lawyer recounted, Costello sent an underling with $1 million in two suitcases of cash to the Flamingo.26 Another version had Costello and others ponying up $3 million to Siegel.27 Whatever the exact amount, Costello soon learned that Siegel needed even more. “What worried Frank was that many members of the mob had put in money on his say so,” the mob lawyer recounted. “Now that crazy Bugsy in Vegas was swallowing up millions and the damn hotel would never be finished and even if it was, it would be so deep in the red it would go bankrupt.”28

  In a phone call with Meyer Lansky, Siegel shared his financial woes, perhaps hoping that Lansky might put in more money to get the Flamingo done. Instead, his old friend urged him to sell it at a loss and wash his hands of the whole thing. Siegel talked openly of doing that. If he gave Del Webb $250,000 in cash and the balance of $250,000 in corporate notes, maybe Webb would wipe the slate for bills due. Some unnamed third party might then take a hefty interest in the Flamingo. One story had Siegel flying west to Webb’s office and dumping a case of cash on his desk: $400,000.29

  If Siegel had hoped Del Webb would absolve the bills due for a case full of cash, he was mistaken. Some money must have changed hands, however, because Del Webb kept his men on the job, enough of them that the casino might still get finished by Siegel’s self-imposed deadline of March 1947. Reportedly, Siegel also offered to sell the Trans-American race wire to get the Flamingo finished. “The problem was,” suggests mafia historian Thomas Reppetto, “the Chicago mob thought they already owned it.”30

  That fall, A. E. Ostholthoff and his agents learned of a flight that Siegel and Hill took to Mexico. They felt sure the two were coordinating a big drug deal to pay Del Webb’s mounting bills. But again, no evidence of drug trafficking surfaced.

  A girlfriend of Virginia Hill had her own version of why Siegel and Hill made that trip to Mexico: to get married. “Siegel had bought a ruby and diamond ring,” Hill’s friend recalle
d, “and he slipped it on her finger. When the Spanish ceremony was over, they left there as man and wife.” It was a $500 ring—$6,500 in today’s dollars. For a woman who spent $10,000 on a dinner party, the ring was a trinket, but perhaps a sentimental one. Hill was thrilled, recounted her girlfriend in Bugsy biographer Dean Jennings’s account, and declared, “I’ll never take it off.”31

  By now the money pit was so deep that Siegel felt he might as well spend lavishly on the Flamingo’s finishing touches. One flourish was an illuminated tower at the entrance that would be visible for miles around. Another was a moat, furnished with . . . pink flamingos.

  “There were between six and eight of these birds,” Ben’s daughter Millicent later recalled, “and as the days went by, they were dropping like flies.” The climate was just too hot for them. “My dad stood out there and said ‘Those goddamned flamingoes are dying on me!’ They never lasted very long. I think he replaced them once or twice and that was it.”32

  As Del Webb’s bills kept mounting, Siegel spent as he pleased. Surprisingly, his personal expenses included worthy causes, particularly Jewish ones. The story of Meyer Lansky and his vigilantes breaking up Bund rallies before the war was one inspiration. In fact, most Jewish gangsters increased their giving to Jewish causes as the Holocaust’s scale became known. Lansky gave generously to his synagogue, Temple Sinai in Hollywood, Florida, as well as to Brandeis University, as mafia historian Robert A. Rockaway notes. He gave more to the cause of creating a state of Israel.33 So did Siegel, in a memorable scene recounted by Rockaway.

  To help create and sustain a Jewish state, a seasoned military officer named Reuven Dafni came to L.A., raising funds from prominent Jews in the movie industry. One day he got a call from Siegel’s pal and right-hand man, Allen Smiley. “Tell me what you’re doing,” Smiley said. “The boss is interested.”