Boardwalk Empire: The Birth, High Times And Corruption of Atlantic City (36 page)

By mid-summer Weiner moved into high gear, and C.R.A.C. was right in step. When the national political parties held their presidential nominating conventions, the resort’s politicians seized on the opportunity to court New Jersey’s power brokers. A contingent screened and prepped by C.R.A.C. was sent to each convention. There was a series of lavish receptions sponsored by Resorts International where the state’s leading politicians were stroked. The message delivered to Democrats and Republicans alike was the tack Hap Farley had used for years: “I
need
your support, but if you can’t help, whatever you do, please don’t hurt me.” Typifying the gains derived from such contacts was an exchange for benefit of the media between Pat McGahn and State Senator Anne Martindell. McGahn: “She said she’s made her last speech against casinos.” Martindell: “I didn’t say that.” “Then you said you would be too busy working for Jimmy Carter to campaign against it.” “That’s it.”

The state’s political leaders weren’t the only ones wooed by C.R.A.C. One of Weiner’s criticisms of the 1974 failure was that it was an elitist campaign. He decided to create a troupe of more than 100 average citizen volunteers from every walk of life and train them in public speaking. They were briefed on the campaign statistics, which Weiner wanted them to use in their talks to ensure every audience got the same message. Engagements were made for these people throughout the state to speak to groups of their peers: construction workers spoke to construction workers; teachers to teachers; doctors to doctors; accountants to accountants, and so on. In addition to getting out the message by ordinary people on common terms, Weiner had regional campaign headquarters established with primary emphasis on the populace in urban areas of northern New Jersey. Paid campaign workers, assisted by busloads of Atlantic City residents, hit the streets giving out literature and recruiting supporters. In many instances they had the help of the local political organizations who made casino gambling part of their campaigns. Weiner’s troops were on the move.

As Election Day approached, Weiner launched a media blitz that surpassed anything ever done in support of a referendum in New Jersey. From mid-October to November 2, C.R.A.C. bought more than $750,000 worth of advertising. High-powered commercials were placed on the area television networks, and airtime was bought on nearly every local radio station. During the last two weeks of the campaign, Weiner prepared 14 different television commercials and scheduled more than 1,200 spots on the Philadelphia and New York stations that covered New Jersey. As for radio, during the final 14 days there were nearly 4,500 ads on 70 different stations. In a typical radio spot a sincere voice described the plight of a 72-year-old woman. “Although old and alone, she can still be helped if only you vote YES for casino gambling in Atlantic City.” The announcer explained how the money raised by casinos would help this poor old woman with her rent and utility bills. Everyone had an aging mother, grandmother, aunt, or neighbor. It would cost the voter nothing to lend her a hand with her utility bills and prescriptions. It was Atlantic City marketing at its best.

In addition to the electronic media there were thousands of billboards, posters, and bumper stickers saturating the state’s highways and shopping centers. The main pitch was to the voters’ pocket-book—what casinos in Atlantic City will do for people all over New Jersey. The campaign slogan was “Help Yourself—Casinos Yes.” The telephone polling continued in order to gauge the campaign’s impact. Where the results showed a large percentage of undecided voters, television and radio spots were increased to saturation levels and campaign workers were sent door-to-door to distribute C.R.A.C. propaganda.

As a final measure of insurance, $170,000 in “street money”—the amount reported—was paid out on Election Day. Street money is a tradition in New Jersey politics; without it, voters in some areas don’t get to the polls. In many neighborhoods it takes paid Election Day workers to knock on doors, drag people out of their homes, drive them to the polls and, when necessary, buy them lunch, give them a bottle, or slip them a few dollars. C.R.A.C. saw to it that there was enough money on the streets of every major city in the state to guarantee that when these voters finally did get to the polls, they pulled the right lever.

Sanford Weiner left nothing to chance. By the end of the campaign, New Jersey’s electorate had been massaged to vote for the casinos. The election was a mere formality. The referendum was approved by more than 350,000 votes. Several days later Weiner returned to San Francisco. In less than four months he had played a major role in reversing Atlantic City’s fortunes.

In the years to follow there would be many winners in casino gambling. In the short term, the biggest winner was the one that had gambled the most to finance Weiner’s efforts—Resorts International.

There’s a lot to be said for being first. From the start of the referendum campaign there was never a doubt Resorts International would own the first casino to open its doors for business. What no one could foresee was the dominant role this newcomer would play in the early years of casino gambling. Not since Jonathan Pitney and his Camden-Atlantic Land Company had there been anyone with the opportunity to reap the type of profits realized by Resorts International. Ironically, Resort International’s beginnings were as foreign to casino gambling as Pitney’s were to the founding of a beach village.

The story of Resorts International begins with a family named Crosby and a company known as Mary Carter Paint. John F. Crosby was a businessman-lawyer who had served as Connecticut’s attorney general and as a deputy attorney general in the administration of President Woodrow Wilson. Crosby had four sons: One was a real estate developer, another a plastic surgeon, the third a convicted felon, and the last one a stockbroker. The Crosbys got involved in the business world through the Schaefer Manufacturing Company, a foundry business in Wisconsin. In 1955 the Crosbys purchased Schaefer and changed the name to Crosby-Miller. Several years later, Crosby-Miller, with the assistance of financing from an investment group headed by former New York Governor Thomas E. Dewey, purchased the Mary Carter Paint Company. The Crosby son behind this move was James Crosby, the stockbroker.

James Crosby was born in Long Island, New York, in 1928. Educated in prep schools and a graduate of Georgetown University, Jim Crosby’s first position was a brief stint with the management of a paint company. From there he moved to a New York City brokerage firm, buying and selling securities. Eight years later, Crosby went to work with Gustave Ring, a Washington, D.C. financier. It was while working with Ring that Crosby became interested in a New Jersey-based firm, Mary Carter Paint.

The thing most noteworthy about Mary Carter wasn’t its paint—it was mediocre—but rather its advertising techniques. The company engaged in a merchandising program in which it offered a second can of paint for every can purchased, advertising, “Buy one—get one free.” From the start, the company’s sales pitch was criticized by consumer groups as deliberately misleading. The Federal Trade Commission agreed and in 1955 filed a complaint, which eventually forced Mary Carter Paint to halt its novel approach to selling. Despite the notoriety, Crosby viewed Mary Carter as a good investment and urged his family to buy control of the company.

By 1960 the character of the corporation that would eventually become Resorts International was taking shape. Crosby recruited Harvard Business School graduate Irving “Jack” Davis to help manage things. Together, they headed a tightly knit group of family and friends who ran the business. Crosby’s determination to keep things a family affair was shown by the structure of the stock offered when they decided to go public. Two classes of stock were created: “A” and “B” shares. There were many more A than B; however, a B share had 100 times the voting power of an A share. Nearly all of the B shares were in the hands of Crosby’s inner circle. While outside investors were welcomed, real power in the corporation was kept beyond their reach. Because of this arrangement, which they continued as Resorts International, the stock was barred from trading on the prestigious New York Stock Exchange and was sold only on the American Stock Exchange.

With the resources obtained from their new shareholders, Mary Carter Paint reached out for more customers. By the early 1960s, it owned more than 70 stores and had franchised nearly 200 outlets. Despite the success in expanding Mary Carter’s operation, its share of the paint market was eroding. There were too many established competitors and the profit margin was slim. Crosby knew he’d have to diversify Mary Carter’s operation if his family’s business interests were to survive. Crosby and Davis found an opportunity in a world far removed from the American paint industry—the Caribbean.

When Fidel Castro deposed Cuban dictator Fulgencio Batista, he put an end to capitalism in every form. With his revolution, Castro drove Batista’s friend, Meyer Lansky, from the island. Under Lansky’s direction, organized crime had been making a fortune through operating gambling casinos in Cuba, catering to American and European tourists. With Batista gone, Meyer Lansky and company needed a new island to do business. They looked to the Bahamas.

Lansky’s people found an ally in Sir Stafford Sands, the most powerful man in the Bahamas. In short order, several licenses for casinos were issued in the early 1960s to persons linked to Meyer Lansky. One of those people was convicted stock swindler Wallace Groves. When Groves opened his casino in 1964 the key positions were filled by people who had worked in Lansky’s casinos in Cuba. At about the same time Lansky’s henchmen were setting up shop, there was a legitimate investor trying, without success, to obtain a casino license. He was A&P heir Huntington Hartford. Groves, Hartford, and Mary Carter—you couldn’t find a more unlikely combination.

Crosby was introduced to the Bahamas as a place for real estate speculation in 1962 by a Miami attorney, Richard Olsen. That year, Mary Carter Paint made several purchases on Grand Bahama Island. Three years later, Olsen approached Crosby again. This time it was with Huntington Hartford’s failed resort development, Paradise Island.

Beginning in the late 1950s, Huntington Hartford had poured nearly $30 million of his personal wealth into what had previously been known as Hog Island. Hartford had done more than change the name; he had built a luxurious hotel, restaurant, golf course, tennis courts, swimming pools, and exotic terraced gardens. But without a gambling license, Hartford’s investment was doomed. After several rejected applications, he got word from the Bahamian government that in order to obtain a license he needed a suitable partner. Hartford was friendly with Richard Olsen and told him of his troubles with Sands. Olsen recalled Crosby’s interest in the Bahamas and made the contact on behalf of Hartford.

In February 1965, Crosby and company lawyer Charles Murphy met with Hartford in New York City. Hartford’s personality made the negotiations difficult, but they eventually came to an understanding. Before Crosby would put any money into Paradise Island, he needed assurances he’d receive a gambling license. Crosby went directly to Stafford Sands, who gave him the same routine he had given Hartford, namely, that a license could be obtained but that Crosby needed a suitable partner. This time Sands was more direct and told Crosby his partner would have to be Wallace Groves. Crosby agreed and after several months of negotiations in early 1966, the Mary Carter-Groves-Hartford partnership was formed.

It was necessary to create several new companies, and Stafford Sands was retained as the partnership’s lawyer. For his services, Sands was paid $250,000 by Mary Carter Paint. The arrangement engineered by Stafford Sands called for Mary Carter Paint to purchase a 75 percent interest in Paradise Island for the sum of $12.5 million. The remaining 25 percent would be retained by Hartford. As for the all-important casino, it would be operated by Groves who would own four-ninths of the business, with Crosby’s company controlling the rest. Mary Carter Paint was in the gambling business.

The machinations with Mary Carter, Groves, and Hartford didn’t go unnoticed by the United States Department of Justice. The federal government had dispatched a team of investigators to the Bahamas looking for investments in casino gambling by American organized crime families. Justice Department attorney Robert Peloquin—who later joined forces with Intertel, a security firm owned by Resorts International—reported to the government on the casino operation in which Mary Carter Paint was involved. In a memorandum that would later prove embarrassing, Peloquin detailed the arrangements made between the parties and concluded, “The atmosphere seems ripe for a Lansky skim.”

The Mary Carter Paint-Wallace Groves partnership didn’t last long. In early 1967 articles published in the
Saturday Evening Post
and
Life Magazine
exposed the corruption in the Bahamas casino licensing procedures. The articles focused on the criminal associations of people involved in the Bahamian casino industry, in particular Wallace Groves. Crosby was worried by the publicity and immediately obtained approval from the Bahamian government to purchase Grove’s interest. While Groves was gone, the casino staff he had hired, several with links to Meyer Lansky, remained in place running things.

As the paint business continued to dwindle and the gambling casino on Paradise Island prospered, Crosby finally left Mary Carter Paint behind. In 1968 the entire paint operation was sold and Resorts International was born. It wasn’t long before Crosby began looking elsewhere to establish new resort hotels and to expand his gambling operation. Inquiries were made around the world without success, and for the next several years Resorts International was confined to the Bahamas. But when the second gambling referendum allowing private investors surfaced in New Jersey, Crosby took a look at Atlantic City.

The city that Jim Crosby found waiting for him in the winter of 1976 was a bleak place, but the locals still knew how to roll out the carpet. When Crosby and his key associates toured Atlantic City for the first time, they were welcomed like conquering heroes. Arrangements were made for the contingent from the Bahamas to ride in a caravan of limousines escorted by local police. No one was sure why the locals were making such a fuss. What mattered was that the resort had an out-of-towner with money.