Boardwalk Empire: The Birth, High Times And Corruption of Atlantic City (42 page)

The Marlborough-Blenheim was one of the few remaining palatial Boardwalk hotels. The marriage of two grand old buildings—the quaint Marlborough, a wood frame hotel with deep red shingles and a slate roof, built in the Queen Anne style, and the Moorish-style Blenheim, a poured-concrete sand castle—the Marlborough-Blenheim was an architectural gem. Unfortunately, the aging hotel wasn’t adaptable for use as a casino and had to be demolished. O’Donnell and Bally’s then bought the neighboring Dennis Hotel and combined the two sites. The Dennis was gutted and renovated to provide the required 500 hotel rooms, while new construction on the site of the Marlborough-Blenheim housed the casino, restaurants, and convention space. Upon completion it became Bally’s Park Place Casino Hotel.

While Bally’s main base of operations was Chicago, O’Donnell was no stranger to New Jersey. The company’s biggest distributor of pinball machines and amusement games was based in New Jersey. And that distributor was owned, in part, by one of the state’s most notorious mobsters, Gerardo Catena. A well-known racketeer and underboss in the Genovese crime family, it was Catena who ran the family business when Genovese went to prison on federal drug charges. The Division of Gaming received evidence suggesting that during the 1960s some of the funds skimmed from Las Vegas casinos “were ultimately funneled from Las Vegas to New Jersey, where they were shared by, among others, Gerardo Catena.”

Runyon Sales, a vending machine company in Springfield, New Jersey, was Catena’s front. Runyon was Bally’s largest distributor, with the exclusive for New York, New Jersey, and Connecticut. Through Runyon, Bill O’Donnell had regular contact with Catena’s people, especially Abe Green. O’Donnell had met Catena during a visit to Runyon Sales and had heard rumors about his mob ties. When he asked Green about the roles of both Catena and Joseph “Doc” Stacher in Runyon, he was told they were still partners. At the time of the O’Donnell-Green conversation, Catena was in prison for contempt of court. He had been called to testify before a New Jersey grand jury hearing testimony on organized crime. Despite a grant of immunity, Catena refused to answer the grand jury’s questions and spent five years in prison.

While Catena’s interest in Runyon linked Bally’s to the mob, there were even stronger ties. Bally’s corporate predecessor was Lion Manufacturing Corporation. When Lion’s founder died, the bank managing the estate decided to liquidate the company, creating an opportunity for O’Donnell to buy the company. His efforts to raise money failed, and he turned to Green for help. Together with five other investors, they put together a corporation known as K.O.S. Enterprises, which bought Lion for $1.2 million. Gerardo Catena acquired an interest in the company through Abe Green and Barnet Sugarman. When Sugarman died in 1964, Green and Catena acquired his interest. While Catena’s name was never listed officially as a stockholder, he owned 12.5 percent of the company. In July 1965, O’Donnell bought out Catena for $175,000, in a transaction filtered through Green. In April 1968 K.O.S. became Bally Manufacturing Corporation. O’Donnell and Green each owned 22.2 percent of the company. Sam Klein and Irving Kaye controlled the balance of the stock. Both Klein and Kaye had links with Catena through a Brooklyn-based billiard table company. These acquaintances were heavy baggage for Bill O’Donnell.

Before Bally’s could be licensed to sell slot machines in Las Vegas, Nevada’s regulators demanded O’Donnell and Bally sever ties from Catena, Green, and Kaye. Nevada later forced Sam Klein to leave the company after he had been seen playing golf with Catena in Florida. Even though Bally’s wasn’t supposed to use Klein in any capacity, he was the one who approached Caesar’s Palace President William Weinberger to see if he’d be interested in running Bally’s new casino in Atlantic City. Klein also tried to put together a deal for Bally’s to buy the Howard Johnson’s Regency Hotel. While the deal never went through—the property was bought by the Perlmans—O’Donnell had promised Klein a “finder’s fee” if it had. Abe Green also kept doing business with Bally’s despite the Nevada Gaming Commission’s ruling.

Green’s son, Irving, formed a company called Coin-Op, which was separate from Runyon and in which his father owned no interest. New Jersey regulators claimed that the younger Green told O’Donnell that the new company was just another name for Runyon. That was true. Bally’s kept receiving purchase orders from Runyon and listed it on service orders, even though the bills went to Coin-Op, whose offices were next to Runyon’s. In late 1977 to ’78, at the time Bally’s was beginning construction of its new casino, Coin-Op physically separated itself from Runyon, but Runyon remained its only customer. And if Coin-Op/Runyon weren’t enough, there was Dino Cellini. O’Donnell had hired him as a slot salesman despite the fact that Cellini had run a casino in Cuba for Meyer Lansky—even more baggage. O’Donnell had to know he’d have big problems being licensed.

Despite his many ties with unsavory people, Bill O’Donnell refused to go quietly. At the hearing on his application, he offered an impressive parade of character witnesses to convince the commission he should be licensed. The witnesses included the former head of the Chicago Strike Force; a retired agent in charge of the FBI’s Chicago office; and a former U.S. Attorney with a record of prosecuting organized crime. Touching every base he called a federal judge, two Jesuit priests, and a half dozen bankers who tried to convince the regulators O’Donnell should be licensed. The commission members were impressed. They found, “He is obviously a man with many fine attributes, including those of kindness, generosity, loyalty, intelligence, and leadership ability.” But it wasn’t enough. The taint of dealing with the mob was too much. Like the Perlmans, O’Donnell was forced to leave Bally’s before the casino could be permanently licensed.

Setbacks with the Perlmans and O’Donnell didn’t discourage the mob. They tried to infiltrate casinos that had already been licensed. Golden Nugget, Inc. was an example.

Golden Nugget Chairman Stephen Wynn represented the new, mob-free Las Vegas, and when he decided to branch out to Atlantic City he was licensed without a hitch. Wynn had visited the resort shortly after the 1976 referendum. He was one of a large number of out-of-town investors who came to town to size things up, but most of them couldn’t see past the burned out buildings and squalor. They went away—Wynn included—believing it was a big joke, satisfied that Atlantic City could never compete with Las Vegas.

Shortly after Crosby and friends opened Resorts International, Wynn made a return visit. He was dumbfounded by the thousands of people waiting in line for hours to get onto the casino floor. The line went through the hotel lobby and out the door, spilling onto the Boardwalk where police were needed to control the crowd. Once inside, there was pushing and shoving for seats at the blackjack tables. Wynn was in awe of Resorts’ success. “I had never seen anything like it. It made Caesar’s Palace on New Year’s Eve look like it was closed for lunch.”

The unexpected success of Atlantic City’s first casino was like an explosion. It sent out shock waves that stirred interest across the nation. Not since the coming of the railroad had Absecon Island been such hot property. Within no time, there were dozens of firms beating a path to the resort, investing fortunes and gobbling up real estate.

Steve Wynn is typical of the “moneymen” lured to Atlantic City by the news of Resorts International’s profits. Handsome, charming, articulate, and polished, Wynn is a gambling prodigy. His entire life has been involved with gambling. “Since the day I took my first breath I have been a kid who has never had a meal, a dollar for tuition, or a piece of clothing on my back that didn’t come from gambling.” The son of a bingo parlor manager who grew up in suburban Maryland watching his father gamble away his earnings, Wynn learned an important lesson while still a child. “One thing my father’s gambling did was that it showed me at a very early age that if you wanted to make money in a casino the answer was to own one.”

After graduating from the University of Pennsylvania in 1963 where he was an English major, Wynn went home to Maryland to run his family’s bingo games. Things went well but Wynn was frustrated; bingo was small time and merely whetted his appetite for the real thing—he headed for Las Vegas. Wynn wasn’t there long before he came into contact with a banker named Parry Thomas, who at the time was a major figure in Las Vegas. Thanks to Thomas, when Howard Hughes bought the Frontier Hotel in 1967, Wynn got his first break. At the age of 25 he was named vice-president and put in charge of the slot machine operation. The following year he bought a liquor distributorship, which he owned until 1972 when he parlayed everything for his first big gamble. The $1 million he had raised was used to purchase a casino site from the Hughes organization next to Caesar’s Palace. Wynn knew that Caesar’s didn’t want a competitor right next-door and waited for Caesars to make him an offer; eventually they did—the sale price was $2.5 million.

With the profits from Caesar’s, Wynn bought more than 100,000 shares of stock in the Golden Nugget. Parry Thomas felt the stock was undervalued and told Wynn that if he wanted control of a casino, this was his chance. While the Nugget had a prime location and a popular name, it was poorly managed and had no hotel rooms. Wynn’s stock purchase was enough to gain a seat on the Board of Directors and appointment as executive vice-president. But he wasn’t satisfied; he wanted to be boss, and at the age of 31, made a bold power play. He confronted Golden Nugget President Buck Blaine with proof of mismanagement and stealing by casino employees. Wynn threatened Blaine with a stockholder’s suit, exposing his incompetence, unless he stepped down immediately. Blaine couldn’t take the heat and agreed to exit with a contract as a consultant.

By August 1973, less than a year after his initial stock purchase, Steve Wynn was in charge of the casino. Within a year casino profits skyrocketed from $1.1 million to $4.2 million. By 1977 he completed construction of a 579-room hotel tower, with the casino’s profits soaring to $12 million. Steve Wynn had come a long way from running bingo games.

When Wynn learned of the money being raked in by Resorts International, he decided to fly east again. One look at the lines of people was enough to convince him. He wasted no time looking for a casino site. By the time he left Atlantic City to return to Las Vegas, Wynn had an agreement for a choice piece of real estate. The property chosen was the Strand Motel on the Boardwalk. The Strand was one of the motels built during the ’50s when Atlantic City was trying to capture part of the tourist market traveling in cars. There were a few good seasons but as its novelty wore off, most of the Strand’s rooms were empty. Had Wynn wanted to purchase the site prior to the ’76 referendum, he probably could have acquired it by simply assuming the mortgages against the property; however, by summer 1978, the Atlantic City real estate market was on fire and the sale price was now $8.5 million.

Within months Wynn demolished the Strand and began construction of a tinsel palace that soon became a magnet. Golden Nugget invested nearly $200 million in creating a glittering Victorian hotel casino. With huge murals depicting early 1900s beach scenes, mirrored ceilings and walls, crystal chandeliers, stained glass, marble columns, and gold-colored slot machines, the Golden Nugget was a dazzling, and purposely overstated, piece of architecture (later sold to Bally’s and now the Atlantic City Hilton). It was designed to appeal to the middle-class’s craving for nostalgia and established Wynn’s name in Atlantic City.

Steve Wynn thought he had found a new marketing executive in Mel Harris. He was the person Wynn needed in Atlantic City. They had met during college and Wynn’s wife Elaine had known Harris since high school. The three rekindled their relationship in the early 1980s, and Wynn was so impressed he hired Harris in the summer of 1984 to be vice-president of marketing at a salary of $400,000. Wynn admitted that he thought so highly of Mel Harris he believed Harris might move quickly into the position of chief operating officer, a step below Wynn.

The decision to hire Harris was made with the knowledge that there were some skeletons in his closet. Harris admitted to a “social” relationship with some mob figures. After all, his father “Big Allie” Harris had been one of the biggest bookmakers in the Miami area. In addition, Harris’ first wife was the daughter of Louis Chessler, another Lansky associate who had worked to bring the mob to the casinos in the Bahamas. His security staff was aware of these links, but Wynn concluded that Harris’ social relationships weren’t enough to prevent hiring him. What Wynn didn’t know was that a few months before he was hired, Harris had met with Anthony “Fat Tony” Salerno. Fat Tony was head of the Genovese crime family in New York. In December 1984, a month after Mel Harris was elected to Golden Nugget’s Board of Directors, the Division of Gaming learned of the meetings with Salerno. Harris, who insisted he had nothing to do with the mob, was captured on videotape during an FBI stakeout of Salerno. On at least two occasions, he was seen entering the Palma Boys Social Club in Manhattan where Salerno held court. Harris claimed he only stopped to talk to Salerno about the death of his father. The FBI was skeptical of his explanation because there had been two meetings with Fat Tony, one of which lasted an hour. Learning of Harris’ meetings with Salerno, the Division of Gaming called him in for questioning. When it was over, he reported back to Golden Nugget officials and said the Division’s staff had asked a lot of questions about his contacts with Salerno. That was enough for Steve Wynn. Within days, Harris was gone.

The Harris episode caused Wynn some uncomfortable moments, but he survived it. At the time of its license renewal, Golden Nugget was criticized by the commission Chairman:

I must note that the prospect of a person having uncontested access to Anthony Salerno sitting as an officer and director of a casino enterprise is, to say the least, frightening … It is simply unacceptable for a company functioning in this most highly regulated of all industries to place a person of Harris’s known background in its highest operational and policy making echelons based on hit-or-miss investigations and haphazard and conclusory oral reporting to the chairman.